Jain said while more investors are entering the market, understanding of risk and returns has not evolved at the same pace, leading to repeated mistakes such as herd-driven investing, fear-and-greed cycles, and inadequate due diligence on stock selection.
He noted that retail participation tends to peak during market rallies, often driven by fear of missing out (FOMO), while interest weakens during periods of correction or volatility.
This pattern, he said, reflects a lack of long-term discipline and valuation awareness among first-time investors.
“Investors continue to follow momentum rather than fundamentals. Entry decisions are often driven by sentiment rather than analysis of business quality or valuation,” Jain said.
A key concern, he added, is the growing influence of social media-based financial advice. Many investors, particularly new entrants, are increasingly relying on so-called finfluencers for stock recommendations, despite a large number of them not being SEBI-registered or formally qualified to provide investment advice.
This shift away from traditional advisory channels, he said, has contributed to misinformed decision-making.
Jain also pointed to regulatory data showing that a large majority of futures and options (F&O) traders have incurred losses, highlighting the risks associated with leveraged and speculative products.
He said many investors underestimate the complexity and risk embedded in derivatives trading, treating it as a short-term wealth creation tool rather than a high-risk instrument.
At the same time, India is witnessing a structural shift from a savings-led culture to an investment-led one, supported by rising financial awareness and systematic investment behaviour.
Monthly systematic investment plan (SIP) inflows have grown sharply to ₹32,087 crore as of March 2026, compared with ₹3,660 crore in March 2017, indicating a strong trend toward disciplined investing.
However, Jain noted that this long-term investment behaviour exists alongside a parallel rise in speculative trading activity.
While SIP investors typically focus on wealth creation over time, a separate segment of retail participants continues to engage in high-risk derivatives trading, often with adverse outcomes.
He cautioned that negative experiences in speculative segments frequently lead investors to exit the market altogether, undermining long-term wealth creation potential.
On the role of technology, Jain said digital trading platforms have made investing more accessible than ever, but have also reduced friction to the point where speculative behaviour is often encouraged. Features such as instant execution and simplified interfaces, he said, can blur the distinction between investing and trading.
“Technology has democratised access, but it has also made it easier to take risks without understanding them,” he said.
He suggested that platforms can play a stronger role in investor protection by improving pre-trade disclosures, offering contextual research, and introducing behavioural safeguards that encourage more informed decision-making. He also emphasised the importance of combining digital tools with human advisory support to help investors navigate complex products.
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According to Jain, platforms that build long-term trust will be those that focus not only on acquiring investors, but also on educating them and making risk more visible.
“Low-cost trading alone does not build trust. Outcomes and understanding do,” he said.
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