Nithin Kamath Warns Indian Stock Market May Face Long-Term Investor Exodus Like 2008
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Zerodha co-founder and CEO Nithin Kamath has issued a serious caution to Indian investors, drawing parallels to the 2008 financial crisis. In a post on ‘X’ (formerly Twitter), Kamath highlighted that if markets plunge sharply, Indian retail investors may exit equities and stay away for years—just as they did after the 2008 global crash.
One of the crazy things about the last five-odd years is that retail investors have consistently been net buyers of equities. Whether they'll continue to buy the dip is anybody's guess. 😬 1/2 pic.twitter.com/cKFzDQG7gq
— Nithin Kamath (@Nithin0dha) April 8, 2025
Indian Investors Have Backed the Market—So Far | Nithin Kamath
Kamath noted that retail investors have been the backbone of the market’s post-COVID recovery. Over the past five years (2020–2024), they’ve consistently bought into market dips despite global risks, fueling a sustained rally.
“Retail investors have consistently been net buyers of equities. Whether they’ll continue to buy the dip is anybody’s guess,” said Kamath.
However, he warned that sentiment could quickly reverse if the correction deepens.
Lessons from 2008: A Long Freeze in Participation
Kamath backed his concern with data from 2008 to 2014, showing how net flows into equity-oriented mutual funds sharply declined in that period following the Lehman Brothers collapse and global recession.
The BSE Sensex had plunged over 60%, from 21,206 in January 2008 to 8,160 by October that year. While markets eventually recovered by 2009, retail participation took years to bounce back.
What Triggered This Market Panic?
Kamath’s caution comes in the wake of a massive sell-off in global equity markets driven by US President Donald Trump’s aggressive tariffs and growing recession fears.
On Monday, the BSE Sensex fell 2,226.79 points (2.95%), and the Nifty 50 dropped 742.85 points (3.24%)—their worst single-day fall in 10 months.
What’s Next for Indian Retail Investors?
With volatility spiking and global trade tensions escalating, the question now is:
Will Indian retail investors continue their historic trend of “buying the dip,” or will fear push them out of equities, as seen in the post-2008 era?
Kamath’s warning is a sobering reminder that sentiment-driven exits can stall even the most resilient markets.
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