These are my 3 reasons.
First some data on Nifty 50.
It's down 12.3% from the peak
It's down 6% from the July ’24 budget when capital gains tax was increased
It's down 0.9% since this government was formed for the 3rd time.
By the was Nifty has fallen by 10% or more 10 times in the last 10 years, so this is nothing new.
But it has hurt a certain set of people a lot more than others. The reasons.
1. Duration: During all the falls earlier the correction day averaged just about 90 days. This time around the correction days have already crossed 140 days. This is the second longest since 2015 correction. As we are used to seeing market bounce back the pain of the fall this time is more
2. Increase in number of investors: Thanks, the excellent returns and increased financial awareness, India today has lot more equity investors. We have about 5 crore Mutual Fund investors & close to 20 crore demat account holders. The fall has therefore hurt a greater number of people and many more than usual are talking about it.
3. High expectation: Many new investors thought or were told you can become overnight rich by investing in equities. Their friend said I make 10% return per month. The didn’t hire good investment managers because they thought they can make 15% returns easily. They came with a set of wrong expectations. Forget making 10% they are now losing 30%-50% of their money. Even after the current fall nifty has generated 6% returns on yoy basis. In markets making high returns consistently is impossible. People thought otherwise and hence this fall pains them a lot more.
Setting portfolio expectation right is a crucial part of the investing journey. Let the expert do it!
Regards
Anand K Rathi