75% of new investors haven't experienced a bear market: Report

Seventy-five per cent of investors today in India haven't experienced a bear market, as per a research report by DSP MF in October 2024. The report also states that the number of investors going for small-cap funds has increased more rapidly than large-cap funds.

As of 2020, there has been an increase of 296% in terms of investors investing in small caps, whereas only a 41% increase was seen in the number of investors investing in large-cap funds.

Markets have been on a steady upward trend since the COVID-19 lows, driven by a combination of loose fiscal policies, liquidity inflows, and historically low interest rates. This ongoing market rally has resulted in high returns for many small and mid-cap stocks that have also attracted a growing number of investors.

This trend is reflected in the surge of new investor demat accounts and the unprecedented number of new investors in small-cap funds. The total number of investor accounts has increased from 4.09 crore in March 2020 to 16.23 crore in June 2024.

Small-cap stocks have been the market's focal point for the past four years, delivering exceptional returns, while large-caps have largely been neglected by investors.

In fact, for the first time in history, the number of small-cap fund investors has surpassed that of large-cap fund investors. However, 75% of these new small-cap investors have never experienced a bear market.

On talking to markets experts on the current markets they suggested that investors need to be careful and not expect too high returns and be realistic in their expectations as valuations are under pressure at the current time, when compared to historical averages.