Why do retail investors suffer losses?

The market is continuously making new records. Both Nifty and Sensex have reached all-time high. But the thing to note is that the benefits of this boom are not reaching most of the common investors. Many people are wondering that when the market is so high, why is its effect not visible in our portfolio? So the real reason for this is something else, which is important to understand.

Only selected stocks rose, the entire market did not rise.

Market experts say that the rise seen in the index is actually due to some big large-cap stocks. Some heavyweight stocks in Nifty and Sensex are performing well, due to which the entire index is going up. But the bigger truth is that in such minutes the rest of the market is still struggling, and those same stocks make up most of the portfolios of retail investors.

Retail is more inclined towards small-caps

In the last few years, there has been a special attraction towards small-cap stocks among retail investors. New investors who came into the market after the Covid-crash invested a large number of money in small-cap and micro-cap companies, because they felt that small stocks always give big returns.

But the situation is completely opposite, Nifty Smallcap is still about 9% below its old high. Whereas the microcap index is trading down by about 10%. That is, while retail investors invested more money, the same segment is still showing weakness.

Some big stocks are bearing the weight of the index

According to SAMCO Research, the stocks that are driving Nifty higher are only 810 big heavyweights. Due to their bullishness, it seems that the entire market is shining, while the rest of the segments are stuck down. This confusion is disappointing retail investors, because the brightness of the index does not indicate the entire market situation.

When will retail investors see recovery?

Experts believe that as long as the rise is limited to only big stocks, there will be no major change in the portfolio of retail investors. True improvement will be seen when the rally spreads across the market and buying starts in mid-cap, small-cap and micro-cap also. The current circumstances indicate that the small market may remain under pressure for some time.