Zerodha co-founder and chief executive officer (CEO) Nithin Kamath on Wednesday issued a stark warning for the Indian stock market amid the ongoing bloodbath in the backdrop of US tariffs, saying that investors might stay out of the market for years if it continued to fall sharply.
In a post on X, Nithin Kamath shared data chart to show the net flows into equity-oriented mutual fund schemes, which took a sharp fall between 2008 and 2014. He also highlighted how retail investors have consistently been the net buyer of equity in the last five years, since the Covid-19 lockdown.
Nithin Kamath wrote in his post, “One of the crazy things about the last five-odd years is that retail investors have consistently been net buyers of equities. Whether they will continue to buy the dip is anybody’s guess.”
Nithin Kamath warned, “By the way, if markets fall sharply, investors might stay out of the market for years — just like they did after 2008.”
The 2008 market crash
In 2008, the collapse of Lehman Brothers and the unfolding subprime mortgage crisis in the United States triggered a market crash.
The Sensex plunged more than 60 per cent, tumbling from 21,206 points in January to 8,160 points by October. A mix of government stimulus and improved global liquidity had contributed to a recovery the next year.
Trump tariffs trigger global crash
The sweeping reciprocal tariffs announced by US President Donald Trump last week triggered a global-level markets crash, a condition that Indian stock market also witnessed.
Indian stock market on Monday suffered heavy losses amid concerns of a global trade war and increasing fears of recession in the US. Sensex had opened 3,939.68 points to 71,425.01 in early trade, while Nifty tumbled 1,160.8 points to 21,742.65. All of the major sectors in the market recorded losses. The crash was said to be the biggest opening fall in the Indian markets since the 2020 Covid pandemic.
On Tuesday, the stock market rallied towards a rebound after having logged its steepest single-day drop in the past 10 months. The benchmark BSE Sensex was up by 1,542.37 points or 2.11 per cent, reaching 74,680.27 at 12:45 pm. The broader NSE Nifty was 478.85 points up or 2.16 per cent in the green, reaching 22,640.45.
On Wednesday, the markets went back into the red as Trump’s 26 per cent tariffs on India came into effect.
