Sharp corrections in the equity market can damage sentiment and expenditure by Indian retail investors, the government’s economic survey said on Friday.
The survey, presented a day before the annual budget, detailed the economic situation while marking economic problems and long -term policies.
The participation of retail investors in the Indian equity market is in the highest record, and many enter the market after the Covid-19, never witnessed a significant and prolonged market correction, the survey said.
“Therefore, if someone happens, the impact on sentiment and expenditure may not be trivial,” said the survey.
Indian equity benchmarks have declined after reaching the highest record in September last year with several major indexes entering technical corrections towards the end of 2024.
The number of people who trade once a month in the cash market of the National Stock Exchange increased from 3.2 million in January 2020 to 14 million in November 2024.
In the last five years, individual investors have invested 4.4 trillion rupees ($ 50.79 billion) in the cash market, with additional investments also entered through mutual funds.
Greater participation in equity, coupled with strong benefits produced by Indian equity in recent years has increased household wealth by 40 trillion rupees in the last five years, data from NSE shows.
However, Indian equity became increasingly correlated with the US market, which could pose a risk to the view in 2025, the survey said.
“The assessment of the assessment and sentiment of the market is optimistic in the US increases the possibility of meaningful market correction in 2025,” he said, adding that such corrections could have a “cascading effect” in India, given the increasing participation of relatively new relatively new young retail New new new new new, relatively new, relatively new new investors.
Source: Reuters
