- After raising LTCG from nil to 12.5%, STCG from 15% to 20%, STT from 0.01% to 0.05%, removing indexation benefits on debt funds and taxing them at slab rates, and imposing 12.5% tax on SGBs in the secondary market, investors believe several policy blunders have hurt sentiment. Rupee depreciation and lack of concern over FII exits have further weakened confidence. As per market grapevine, Government should reduce STT & long-term capital gains tax to attract FFIs, FPIs & NRIs.
- Risk watch: Early signs of SIP fatigue are emerging. For the first time in 11 months, SIP stoppage ratio crossed 100% in both March & April 2026. March SIP discontinuations stood at 53.38 lakh against 52.82 lakh new SIPs while April saw 51.29 lakh discontinued against 50.71 lakh new SIPs. New mutual fund investor additions hit a 3-year low, indicating exhaustion in retail momentum. However, seasoned high-ticket investors continue buying the dip, expecting the correction to remain temporary.
- Risks to consider: (a) SIP investors may not need a massive market crash to stop SIPs. A prolonged 18–24 month flat-to-negative market phase itself can psychologically exhaust especially young post-Covid investors who entered expecting 12–15% returns. (b) Unlike seasoned investors, they lack past compounded gains and continue deploying fresh money despite weak returns while FDs may outperform. (c) Persistent inflation, rupee depreciation or Balance of Payments pressure may force RBI to raise rates. If FD rates move to 7.5–8% while SIP returns remain weak, many retail investors may shift back to safer assets. (d) The real risk to Indian equities is non-linear as markets are heavily dependent on SIP inflows. If monthly SIP inflows decline sharply, domestic fund managers may struggle to absorb FII selling, leading to liquidity stress and redemption pressure. (e) A risk-adjusted portfolio in such times may include 30% FDs, 20% Gold, 30% Indian MFs and 20% S&P 500 ETFs. (f) Legendary investor Howard Marks once shared a story of a gambler who sold his house to bet on a race with only one horse, only to watch the horse jump the fence and run away midway. The lesson — always respect risk.
- Big wisdom: “Never give your profits back to the market” is among the most important lessons in investing. (a) Markets first create hope, then profits, then greed, and finally take back gains from those who stop thinking rationally. (b) The key is not selling everything quickly, but protecting realized gains more seriously than chasing unrealized profits. (c) Profit on screen is not real wealth until protected. Partial profit booking helps reduce fear and greed while improving decision-making. (d) Markets reward discipline more than intelligence, and many investors lose money because they become emotionally attached to narratives. (e) Investors must differentiate between temporary corrections and structural breakdowns by focusing on earnings growth, margins, cash flow, order books and sector tailwinds. (f) If prices rise much faster than fundamentals, profit booking becomes rational especially in SMEs, microcaps and momentum-driven stocks. (g) The goal should be wealth preservation, not catching the exact top. Missing the final 20–30% upside is acceptable if it helps avoid a large downside. (h) Experienced investors gradually become defensive during euphoric phases and aggressive during panic phases, while most retail investors do the opposite. (i) Big wealth is created by holding strong businesses, but permanent wealth is protected through disciplined profit management.
- What’s easier than predicting the market? Staying disciplined and sticking to the plan. Timing the market remains difficult even for experienced investors. Markets can swing sharply between optimism and panic, making patience and long-term investing more important than frequent predictions.
- China continues attracting investors with lower taxes while India faces criticism for higher taxation. India levies 20% STCG tax, 12.5% LTCG tax, STT on every trade along with brokerage and other charges. In contrast, China offers lower transaction costs and, in many cases, zero capital gains tax for retail investors. As per market grapevine, global capital may increasingly look toward markets with more investor-friendly taxation policies.
- Big names but limited returns over several years continue disappointing investors. Stocks like Hindustan Unilever, HDFC Bank, Kotak Mahindra Bank, Asian Paints, Infosys, Tata Consultancy Services, ITC and Reliance Industries have delivered muted returns over the past 4-6 years despite their strong brand value.
