Indian stock markets have been witnessing relentless selling pressure over the last few days amid uncertainty fuelled by a global trade war launched by US President Donald Trump. On Tuesday, the blue-chip Nifty 50 ended in red for the tenth consecutive session, mirroring global sell-offs after the United States imposed tariffs on China, Canada and Mexico.
From its record peak of 85,978.25 on September 27 last year, the BSE benchmark index is down over 13,000 points or 15.15 per cent as of session ending March 4. Similarly, Nifty has plummeted 4,198 points or nearly 16 per cent from its lifetime high of 26,277.35 on September 27, 2024.
With Trump's tariffs taking effect on March 4 and countries like China and Canada announcing retalitatory measures, the uncertainty is only expected to extend.
Notably, data suggests that the impact of wealth erosion this time is far deeper and wider than previous stock market crashes due to the growing interest in equities across the country.
Data for Nifty 50 for the last 10 sessions:
| Date | Open | Close | |
| Feb 18 | 22,963.65 | 22,945.30 | |
| Feb 19 | 22,847.25 | 22,932.90 | |
| Feb 20 | 22,821.10 | 22,913.15 | |
| Feb 21 | 22,857.20 | 22,795.90 | |
| Feb 24 | 22,609.35 | 22,553.35 | |
| Feb 25 | 22,516.45 | 22,547.55 | |
| Feb 27 | 22,568.95 | 22,545.05 | |
| Feb 28 | 22,433.40 | 22,124.70 | |
| Mar 3 | 22,194.55 | 22,119.30 | |
| Mar 4 | 21,974.45 | 22,080.80 |
Thus, it’s not just institutional investors feeling the pinch—retail investors, particularly in smaller cities, are also bearing the brunt of the market downturn.
Over the past five to ten years, equity markets have witnessed a shift, with investment culture spreading far beyond metro cities into Tier-2 and Tier-3 regions. Mutual funds have played a pivotal role in making stock market participation more accessible to a wider audience.
Equity is now a mass-market product, with the number of NSE-registered investors soaring over fivefold to nearly 22 crore by February 2025. A report by The Indian Express reveals that in terms of the extent of geography covered now, one in every five rupee invested in MFs comes from smaller cities beyond the 110 cities — highlighting the broadening reach of stock market investments.
A study by Zerodha Mutual Fund conducted last year revealed that the share of smaller cities in the overall assets under management (AUM) of the mutual fund industry may well be a minority but investors from such locations account for more than half of all SIP accounts.
The study revealed that the number of new investors coming from smaller cities has been rapidly rising with nearly 50 per cent of the 2.3 crore new investor folios (added between April and August) coming from smaller cities. More importantly, about 54 percent of all SIP accounts in the mutual fund industry are originating from smaller cities, as of August 2024.
The report highlighted that between April and August 2024, the growth rate of SIP accounts in smaller cities for Index Funds was around 18.7 percent, which is higher than the growth rate of any other category.
Retail investors beyond top cities betting big on equity
Back in March 2014, cities beyond the top 110 cities contributed Rs 23,624 crore in assets under management (AUM), representing 2.61 per cent of the overall industry’s average AUM of Rs 9.05 lakh crore, The Indian Express report revealed citing data by industry body Association of Mutual Funds of India.
Fast forward to March 2020, and their share had climbed to Rs 2.98 lakh crore (11 per cent of the total industry average AUM of Rs 27.15 lakh crore). By December 2024, the figure skyrocketed to Rs 12.9 lakh crore, accounting for 18.6 per cent of the industry average AUM of Rs 6.59 lakh crore, the report added.
Demat accounts saw an explosive rise as well, reaching 18.8 crore in January 2025—nearly five times the 4.1 crore accounts in March 2020.
Equity markets, once dominated by well-informed, high-net-worth investors, have become far more accessible to a broader audience. As a result, the impact of a prolonged downturn is now felt across a much wider income and geographic spectrum.
Northern and western states have seen the biggest spike in NSE-registered investors, regions that have traditionally backed the BJP and its allies. Maharashtra saw the highest increase in absolute numbers, adding 2.73 crore new investors, followed by Uttar Pradesh (1.97 crore) and Gujarat (1.28 crore).
VK Vijayakumar, chief investment strategist at Geojit Financial Services, told news agency Reuters that in the near-term, there are no chances of a rebound in the Indian market even though valuations are fair. “Investors should remain cautious and wait to see how the scenario (on tariffs) unfold,” he said.
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