Retail investors may flee for years if a sharp correction hits Indian markets, Kamath says, citing 2008 as a cautionary tale.
April 8, 2025: Nithin Kamath, CEO and co-founder of Zerodha, issued a sobering warning for India’s equity markets on Tuesday, cautioning that a steep market correction could drive retail investors away for years — just as it did after the 2008 global financial crisis.
Kamath highlighted that India’s retail investor base has been the driving force behind the stock market rally from 2020 to 2024, consistently buying the dips despite volatility and global risks. But in a recent post on social platform X, he expressed concerns that their resilience might not last forever.
“One of the crazy things about the last five-odd years is that retail investors have consistently been net buyers of equities,” Kamath wrote. “Whether they’ll continue to buy the dip is anybody’s guess. If markets fall sharply, investors might stay out of the market for years—just like they did after 2008.”
Between 2008 and 2014, net flows into equity mutual funds in India dropped sharply, mirroring the broader retreat of retail investors. Kamath warned that history could repeat itself if another major crash shakes investor confidence.
📉 Backdrop: 2008 Crash & Current Concerns
The comparison is timely. During the 2008 crisis, triggered by the collapse of Lehman Brothers and the global credit crunch, the Sensex fell over 60% — from 21,206 in January 2008 to just 8,160 in October. It took strong policy interventions to revive market sentiment.
Also Read: Sensex Soars 1,000 Points, ₹8 Lakh Crore Wealth Added Amid Global Relief Rally
Now in 2025, similar fears have resurfaced. Following US President Donald Trump’s new round of global tariffs, the BSE Sensex crashed 2,226 points (2.95%) on Monday, and the Nifty 50 plunged 742 points (3.24%) — their biggest single-day fall in 10 months.
📈 Markets Rebound, But Outlook Still Cautious
Tuesday saw a partial recovery, with the Sensex rebounding 1.49% to 74,227.08, and the Nifty 50 gaining 1.69% to 22,535.85, adding over ₹7.3 lakh crore to investor wealth. Yet, market experts urged caution, stating that volatility will remain elevated due to ongoing geopolitical and trade-related uncertainties.
💬 Kamath on Gold vs Nifty
In a separate post, Kamath pointed out that gold has outperformed the Nifty 50 since 2000. While acknowledging that the data is “cherry-picked,” he noted that gold has grown by 2,000%, compared to 1,470% gains in the Nifty 50. In 2025 alone, gold has returned 18%, while the Nifty LargeMid 250 has lost 6%.
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Nithin Kamath, Zerodha, stock market warning, Indian stock market, retail investors, 2025 market crash, mutual funds, Sensex, Nifty 50, gold vs equity, Donald Trump tariffs, market volatility, Indian economy, stock market strategy, equity investing, financial crisis 2008