Small investors may bear brunt of crash
MUMBAI : Retail investors who entered the market in the past two months through September will be worst affected if the broader market indices pull back further from current levels amid surging bond yields in the US and the Israel-Hamas war in West Asia. According to National Stock Exchange (NSE) data, retail investors who directly buy and sell shares on its secondary market made net purchases for a second straight month in September, amounting to ₹7,500 crore.
These purchases came on top of the ₹14,400 crore they invested in the previous month, resulting in a cumulative investment of ₹21,900 crore over these two months. This came after net sales of ₹21,400 crore from April to July.
Market experts warned that those entering the rally at the peak, driven by a fear of missing out (FOMO) and seeking quick gains, will likely bear the brunt of a deeper cut in case of a more substantial market downturn. “If you’ve entered only for near-term gains, you’re in for rough weather," said Gaurav Dua, head of capital market strategy at Sharekhan by BNP Paribas.
“However, if you’re in for the long haul, say with a time horizon of two years, then you shouldn’t worry about this correction as the economic growth engine will be led by fundamentally sound mid- and small-cap firms." The present leg of the Nifty Midcap 150 and Nifty Smallcap 250 rally from their 20 March lows saw the two indices gaining twice as much as the Nifty’s 20% rally to a record high of 20,222.45 in mid-September from a low of 16,828 on 20 March. While the Midcap gauge rose by 40% to a record high of 15,599.05 by 12 September, the Smallcap index gained 44% to its all-time high of 12,590.45 on 18 October.
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