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Share prices rise after you sell? Data from 967 retail-sold stocks confirms your worst fear
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Every retail investor knows the sinking feeling: you finally pull the trigger and sell, only to watch helplessly as the stock rockets upward. Now, hard data from India's equity markets reveals this isn't just a cruel coincidence but a pattern that cost small investors crores in the June quarter data shows retail investors pared stakes in 967 stocks during Q1, yet these very stocks delivered a staggering average return of over 24% in the same period. In RIL alone, small investors are estimated to have sold stocks worth around Rs 6,000 crore, just as the stock surged 18%, according to calculations by Prime Database RBL Bank , retail ownership plummeted from 22.15% to 15.73% while the stock rallied 43%. Tourism Finance Corporation of India (TFCI) witnessed retail holdings drop from 30.14% to 21.37% as the stock soared 40%.Validating the oft-used phrase that retail buys at the peak and sells at lows, retail investors were also seen missing the bus in shares of Eternal, BEL, BSE, Jio Financial, Adani Ports, and and volatility drove the exodusThe perfect storm began brewing in the months leading to Q1FY26. "The period preceding Q1FY26 ie Sep'24 when the market made a peak to Mar'25 witnessed a significant correction followed by a consolidation," explains Sunny Agrawal, Head - Fundamental Research at SBI Securities."This tested retail investors' patience who had gotten used to making quick returns in the post Covid period. 'Buy the Dip' no longer gives instant gratification."The volatility was relentless. "Q1 witnessed heightened volatility driven by Trump's tariff tantrums and the geopolitical tensions in the Middle East as well as between India-Pakistan," Agrawal notes. "Many retail investors took the 1st exit when these stocks rallied in Q1 with the fear in the market high due to the geopolitical tensions during the quarter."Adding insult to injury, margin pressures forced additional selling. "Some investors must also have pledged these shares as collateral for margin funding as well as for F&O which must have been sold to offset the losses in the F&O segment," Agrawal Read | 7 multibagger stocks that FIIs are hoarding in 2025. Are you missing out? Momentum trapThe irony cuts deep: retail investors consistently miss the very momentum they're chasing. "The market bottomed out around April 7, and then staged a sharp rally — particularly in small- and mid-cap stocks," observes Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities. "The Retail investors are the last lot to enter the counter which are in momentum.""They always tend to react after the initial move, likely entering late, missing the momentum bus as the prices had already surged and risk-reward turned unfavourable."The fundamental flaw? "Momentum works only when one rides the trend with discipline, not by reacting to recent performance or crowd sentiment. Also, it works over a longer horizon of time," Sheth latest data reinforces a harsh reality about retail investor behavior. "The three glaring characteristics of the retail investors are their investment decisions are based on emotion, poor timings of entry-exits and instead of investing they resort to trading," Sheth states bluntly. "As a result, they often buy into euphoria (peaks) and sell into fear (bottoms)."The cycle feeds on itself. "Retail participation is heavily influenced by news cycles, social media buzz, stock rallies, and peer performance. When markets peak, there's optimism and FOMO (fear of missing out), prompting retail inflows. When markets correct, the fear of capital loss kicks in, leading to redemptions or panic selling."The root cause remains unchanged: "Many retail investors approach markets like a casino and treat stocks akin to a lottery — chasing quick returns without understanding valuations or business fundamentals. They often exit during short-term drawdowns, even if the long-term trend in the stock is intact."Also Read | FIIs increase stake in 264 smallcap stocks, 3 of them turn multibagger in 2025. Do you own any? (Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
