Insights on When to Step Back From the Stock Market

The stock surge since 2020 has made it harder to convince investors to step back if needed

- Ananya Roy

As terrible as covid-19 was for the world, a positive outcome was that stock markets piqued the interest of the youth in India. As work-from-home ensued and stock markets rallied, retail investor participation in Indian equities skyrocketed. From just 4 crore demat accounts in FY20, the number of demat accounts in FY24 jumped 350% to a whopping 140 million.

While this rise in retail investor participation indicates a shift in stock market dynamics, it doesn't necessarily mean that financial literacy has improved. Before covid-19, it was difficult to get individuals to start investing in stocks. But now, the problem has reversed. Given the supernormal returns delivered by the stock markets since 2020, 200% in about five years, it has now become a task in itself to convince investors to take a step back from stock markets, even when taking a step back is crucial.