Retail Investors Will Stay the Course Despite Market Corrections, Says Morgan Stanley’s Ridham Desai

Poonam Sharma
New Delhi: Ridham Desai, Head of Research at Morgan Stanley India, reaffirmed his confidence in the strength and perseverance of retail investors. He addressed concerns regarding retail participation amid recent market corrections, stating, “A lot of people have been asking me when retail investors will give up, and I’m tired of saying they won’t.” His remarks come as the Indian stock market faces a notable correction, with the Nifty 50 index dropping 15% from its peak of 26,277 in September 2024. The broader market indices have experienced even steeper declines, with the Midcap index down 20% and the Smallcap index falling by 25%. These downturns, along with a slowdown in new Initial Public Offerings (IPOs), have raised questions about retail investor engagement. Additionally, recent data indicates a slowdown in the opening of new demat accounts, suggesting that some retail investors may be losing confidence amid market volatility. Nevertheless, Desai remains hopeful about the continued involvement of retail investors, attributing this to a long-term evolution in India’s financial landscape. He noted that this shift began in 2015 when policy changes allowed retirement funds, such as provident funds and the National Pension System (NPS), to invest in the stock market. Desai compared this to the U.S. policy changes in the 1980s under President Ronald Reagan, which permitted 401(k) plans to invest in stocks and led to a 20-year bull market that ended with the NASDAQ bubble burst. He also pointed out that, unlike the U.S., where the 401(k) shift coincided with a large baby boomer generation nearing retirement, India’s demographic situation is quite different. He emphasized, “Nobody’s retiring.”