Avoid panic exit, replace underperformers with quality stocks

SLUMP IN DIRECT EQUITY INFLOWS

- HIMALI PATEL

With the markets remaining flat over the past year, many investors who had begun direct equity investing in the recent bullish phase have exited.

Retail investors’ net inflows into direct equities plunged from ₹1.16 trillion in January-September 2024 to ₹12,408 crore in the same period of 2025, a fall of nearly 90 per cent.

Why have inflows declined

Indian equities cooled after September 2024 following a prolonged rally. “Concerns around valuations, a reset in earnings expectations, and general investor fatigue led to a time correction. Subdued 12-month returns and a lack of momentum tempered direct-equity flows,” says Ajay Menon, managing director & chief executive officer (CEO) - wealth management, Motilal Oswal Financial Services.

Regulatory changes in the derivatives segment have also contributed. “Changes like ending weekly contracts and raising lot sizes on index derivatives have impacted participation,” says Sandip Raichura, CEO - retail broking & distribution and director, PL Capital.

Newcomers and small-ticket investors, who entered during the last upcycle, have exited. HNIs, say experts, have largely remained invested and used this phase to accumulate quality names.

Bull-market follies