Stock Market Crash Sparks Panic Among Retail Investors on WA

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With both foreign and domestic investors treading cautiously, experts warn that without a strong trigger, the market may continue to drift

By S JHA

MUMBAI, July 26, 2025 — Retail investors across India are voicing growing despair in stock market-focused WhatsApp groups, as the ongoing market correction wipes out gains and drives small-cap portfolios deep into the red.

A widely circulated message captures the sentiment: “More than 50% of my shares have given me negative returns despite holding for the last 10 months. Most of the small caps haven’t even returned to their 52-week highs. My 70% portfolio is stuck there.”

This pessimism is led by persistent selling pressure from Foreign Institutional Investors (FIIs), who are said to be pulling back due to stretched valuations and underwhelming earnings performance. Adding to the concern is the risk-off stance triggered by fears over potential “crazy moves” by US President Donald Trump.

“Despite heavy selling, FIIs have paradoxically increased shareholding in select Nifty500 companies last quarter, indicating a selective long-term strategy,” wrote one investor in one of the WhatsApp groups. However, market analysts argue this doesn’t offset the broad risk-aversion trend.

“FIIs are exiting where valuations seem unjustified and reallocating to cheaper emerging markets,” said a market expert. He also claimed that “domestic mutual funds are sitting on large cash piles but are compelled to deploy due to SIP inflows.”

Volatility Deepens as Nifty and Bank Nifty Slip

According to data from StockEdge, the Nifty 50 closed at 24,837, down 0.90%, and Bank Nifty ended at 56,519, down 0.96%, led by losses in IT, Financials, and FMCG. Infosys, HUL, and Kotak Bank were among the top drags. On the flip side, Pharma and Auto stocks showed strength, with Cipla, Sun Pharma, and Tata Motors gaining ground.

Technical analyst Amit Seth remarked, “Nifty has been under pressure for nearly a month now, with 18 sessions of sideways to negative momentum. Nifty IT has dragged the market consistently.”

Market watchers point to 24,350 as immediate support for Nifty and 25,056 as resistance, while Bank Nifty sees key levels at 56,330 (support) and 57,337 (resistance). Options data reveals heavy call writing at 25,000 (Nifty) and 57,000 (Bank Nifty)—a sign that traders are capping their upside expectations.

Retail Churn but No Exit

Despite mounting losses, many retail investors remain invested. One investor noted, “I’ve managed to churn about 20% of my portfolio, but honestly, I have very little hope left.”

With both foreign and domestic investors treading cautiously, experts warn that without a strong trigger, the market may continue to drift or correct further.

(Disclaimer: This article makes no recommendation for any kind of trades in the stock market)