'Like 2008 all over again': Zerodha's Nithin Kamath fears retail exit if panic selling erupts

Retail investors have been the backbone of India’s equity rally over the past five years, consistently buying into dips even when global risks loomed. 

But Nithin Kamath isn’t sure that resolve will last if markets take a deeper hit. The Zerodha co-founder fears a sharp fall could drive retail investors away from equities for years—just like it did after 2008.

“One of the crazy things about the last five-odd years is that retail investors have consistently been net buyers of equities. Whether they'll continue to buy the dip is anybody's guess.” Kamath wrote on X.

His post comes amid heightened market volatility and rising fears of a global slowdown triggered by U.S. tariffs. Kamath warned that a deeper market correction might push retail investors to the sidelines for an extended period—mirroring the aftermath of the 2008 financial crisis.

Back then, retail investors bore heavy losses. Portfolio values fell by over 30%, eroding confidence and risk appetite. Many, especially older investors, stayed out of equities for years. 

In India, the Sensex crashed over 60% between January and October 2008, from a high of 21,206 to a low of 8,160.

Although a recovery followed—driven by RBI’s liquidity push, fiscal stimulus, and a rebound in global flows—it took nearly two years for the Sensex to reclaim previous highs. Confidence, however, took much longer to return.

Kamath’s warning comes at a time when Indian markets remain on edge. A three-day selloff wiped out ₹24 lakh crore in market value before a rebound on Tuesday, when the Sensex jumped over 1,000 points and the Nifty regained the 22,500 mark. 

Still, analysts caution that risks remain elevated, and investor sentiment could shift quickly if global cues worsen.