Soutik Biswas and Nikhil Inamdarbbc
Rajesh Kumar released most of his bank savings and moved to the stock market
Two years ago, on the suggestion of his banking advisor, Rajesh Kumar achieved his savings – of the fixed deposits included – and moved to common investment funds, shares and obligations.
With the Bourse Market in India, Mr. Kumar, a Bihar -based engineer, joined millions of investments in listed companies. Six years ago, only one in 14 Indian household channel their savings on the stock market – now, it’s one in five.
But the tide turned.
For six months, India markets have slipped while foreign investors withdrew, the evaluations remained high, the profits were weakening and world capital has passed to China – annihilating $ 900 billion in investors since their September peak. While the decline started before the pricing announcements by US President Donald Trump, they have now become a larger obstacle as more and more details are emerging.
The reference sharing index of India NIFTY 50, which follows the top 50 listed companies in the country, is on its longest sequence in 29 years, down five consecutive months. It is a significant collapse in one of the fastest growth markets in the world. Stock brokers report that their activity has dropped a third party.
“For more than six months, my investments have been in red. It is the worst experience of the last decade that I have been invested on the stock market,” said Kumar.
Mr. Kumar, 55, now keeps little money at the bank, after having moved most of his savings on the stock market. With 1.8 million rupees from his son ($ 20,650; £ 16,150) private medical college fees in July, he worries about selling investments at a loss to cover him. “Once the market is recovered, I think of returning money to the bank,” he said.
Its anxieties reflect those of the millions of Indians in the middle class who flocked to the stock market in large and large cities – part of a financial revolution.
The essential investment road is systematic investment plans (SIP), where funds collect fixed monthly contributions. The number of Indians investing through SIPS has climbed beyond 100 million, almost 34 million five years ago. Many investors for the first time, attracted by the promise of high yields, come with a limited risk awareness – often influenced by a wave of “finfluancers” on social networks on platforms like Instagram and YouTube, a mixed bag of experts and amateurs.
Tarun Sircar moved his pension fund on the stock market last year before the crash
Meet Tarun Sircar, director of retired marketing, and you have an overview of the new investor of India.
When his public provident fund – an investment in tax franchise supported by the government – matured last year, he sought a way to secure his retirement. Burned by past stock market losses, he turned to common investment funds – this time with the help of an advisor and a dynamic market.
“I put 80% of my savings in the common funds, keeping only 20% at the bank. Now my advisor had planned me – do not check your investments for six months, unless you want a heart attack!”
For the moment, Mr. Sircar is not quite sure whether the trip to his pension fund on the stock market was the right decision. “I am both ignorant and confident,” he said with Wry Candor. “Ignoring what’s going on and why the market reacts in this way, but confident because Instagram” experts “make investment sound like a quick track to millions. At the same time, I know that I could be taken in a network of deception and media threw.”
Mr. Sircar says that he was attracted to the markets by HYPING STOCTS TV shows and excited chatter in WhatsApp groups. “Television anchors speak of the market and the people of my group WhatsApp are boasting of their stock market winnings,” he said.
In his sprawling apartment complex, even adolescents discuss investments – in fact, during a badminton game, a teenager gave him a hot tip on a stock of telecommunications. “When you hear all this around you, you start to think – why not the opportunity? So I did it, then the markets crashed.”
Mr. Sircar lives in the hope. “My fingers are crossed. I am sure that the markets will restore and my fund will be back in green.”
Reuters
One in five Indian households put its savings on the stock market
There are others who have taken more risks and have already lost money. Attracted by videos from Get-Rich-Squick, Ramesh (name changed), an accounting employee of a small industrial town in western India, borrowed money to invest in actions during the pandemic.
Hung on to YouTube’s influencers, he plunged into risky soup actions and derivative exchanges. This month, after losing more than $ 1,800 – more than his annual salary – he closed his brokerage account and swore from the market.
“I have borrowed this money, and now the creditors are looking for me,” he said.
Ramesh is one of the 11 million Indians who have lost $ 20 billion in the long term and options of options before regulators penetrate.
“This crash is different from that of the cocovio pandemic,” said financial advisor Samir Doshi. “At the time, we had a clear path to recovery with vaccines on the horizon. But with the factor Trump in the game, uncertainty is looming – we just don’t know what is the next step.”
Fucked by digital platforms, low -cost brokerage houses and government -focused financial inclusion, investment has become more accessible – smartphones and user -friendly applications have simplified market participation, attracting a larger and younger audience looking for alternatives to traditional assets.
On the other hand, many new Indian investors need a verification of reality. “The stock market is not a game den – you must manage expectations,” explains Monika Halan, author and financial educator. “Invest in equity only what you will not need for at least seven years. If you take risks, understand the disadvantage: how much could I lose? Can I allow me that loss?”
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Monika Halan says that new investors must learn to manage expectations
This market crash could not have hit the middle class of India at a worse time. Economic growth slows down, wages remain stagnant, private investments have been slow for years and the creation of jobs does not follow the pace. In the midst of these challenges, many new investors, attracted by growing markets, are now struggling with unexpected losses.
“In normal times, savers can take short -term setbacks because they have stable income, which continue to add to their savings,” noted Aunindyo Chakravarty, financial analyst.
“Now, we are in the midst of a massive economic crisis for the middle class. On the one hand, the work opportunities in white collar reduce and the increases are low. On the other, real inflation being confronted by the households of the middle class – as opposed to the average detail inflation that the government compiles – is at its average medium -class memory.”
Financial advisers like Jaideep Marathe think that some people will start with money from the market and move them to safer bank deposits if volatility continues for six to eight additional months. “We spend a lot of time telling customers not to liquidate their portfolios and treat this as a cyclic event.”
But clearly, all hope is not lost – most believe that the market is correcting previous summits.
The foreign sale of investors has been held since February, suggesting that the slowdown in the market could approach its end, explains Ajay Bagga, expert in the veterans market. After the correction, the evaluations of many stock market indices fell below their average at 10 years, which gives a respite.
Mr. Bagga expects the profits of GDP and companies to improve, helped by a 12 billion dollar income tax gift in the federal budget and the drop in interest rates. However, geopolitical risks – the conflicts of the Middle East and Ukraine, and Trump’s pricing plans – will keep prudent investors.
In the end, the collapse of the market could serve as a hard lesson for new investors.
“This correction is an essential awakening for those who entered the market only three years ago, taking advantage of 25% of yields – it is not normal,” explains Ms. Halan. “If you do not understand the markets, respect bank deposits and gold. At least you have control.”
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