India’s Investing Boom Has Changed the Market
India is going through one of the biggest investing shifts in its history. Over the last few years, investing has moved from being a niche activity to something millions now do directly from their phones. Demat accounts in India have crossed nearly 22 crore, compared to around 4 crore accounts in 2020. SIP inflows have also surged sharply, regularly crossing ₹30,000 crore a month.
Retail participation in equities, mutual funds, and trading platforms has expanded across Tier-2 and Tier-3 cities as well. AMFI data shows investors from beyond the top 30 cities now contribute nearly 28% of individual mutual fund assets in India, with more than half of all new SIP registrations now coming from B30 locations.
CFA and Co-founder
Growthvine Capital
At the same time, AI tools are becoming deeply integrated into investing. Investors today can use AI-powered apps to summarise earnings calls, compare mutual funds, screen stocks, analyse portfolios, and generate investment ideas within seconds. What earlier required professional research is now available on a smartphone.
This is a positive development in many ways. Investing information is becoming more accessible, and participation in financial markets is expanding rapidly across India. But there is an equally important question that deserves attention.
Are investors understanding risk any better?
Because while access to investing tools has improved rapidly, investor behaviour often continues to tell a very different story.
Information Has Become Easier. Understanding Risk Has Not.
AI tools are making investing feel simpler than ever before. A first-time investor can now read a quick summary of an annual report, compare mutual funds in seconds, understand financial ratios through simple explanations, and get portfolio insights through chat-based tools.
For millions of new investors entering the markets, especially from smaller cities, these tools reduce complexity and make investing feel more approachable. But while information has become easier to consume, understanding risk still remains far more difficult.
That is because investing is not only about identifying opportunities. It is equally about understanding uncertainty, volatility, and the possibility of being wrong. Most investors focus far more on potential returns than on potential risks. Very few people search for “what can go wrong with this investment” when markets are doing well. The attention is usually on upside, recent performance, and how quickly wealth can grow. Risk often becomes an afterthought until volatility actually appears.
Successful investing depends less on speed and more on discipline, patience, and risk management. These are behavioural qualities that technology cannot fully automate. An investor may know how to buy a stock within minutes through an app, but that does not necessarily mean they understand concentration risk, liquidity risk, or how they would react if markets suddenly corrected sharply.
This gap between access to information and actual understanding of risk is becoming increasingly visible in India’s markets today.
The F&O Boom Shows the Real Problem
The sharp rise in futures and options trading perhaps explains this trend better than anything else. Over the last few years, retail participation in the F&O segment has grown rapidly, driven by easy-to-use trading apps, social media content, and AI-assisted trading tools. Investors today have access to charts, indicators, instant alerts, and analysis tools that were once largely limited to professional traders and institutions.
But while access to trading tools has improved dramatically, outcomes for retail investors continue to remain worrying.
According to SEBI’s latest study, nearly 91% of individual traders in the equity derivatives segment incurred losses in FY25. Retail investors collectively lost more than ₹1.05 lakh crore during the year. Over the four-year period between FY22 and FY25, cumulative retail losses in F&O trading crossed ₹2.87 lakh crore.
What makes this important is not just the scale of losses, but the contradiction it reflects. Investors today have more information, faster execution, and far more sophisticated tools than ever before. Yet better access is not necessarily translating into better risk management.
In many cases, technology is shortening the distance between discovering an investment idea and acting on it. An online stock tip can quickly turn into a leveraged trade within minutes. The speed of decision-making has increased significantly, but the time spent understanding risk often has not.
Trading is becoming more frequent, more reactive, and sometimes more driven by momentum and online narratives than by long-term understanding. The tools have become smarter, but investor behaviour remains emotional.
Social Media and AI Are Creating Faster Market Narratives
The rise of AI investing tools is also happening alongside a massive surge in financial content online. Market opinions now spread instantly through reels, podcasts, Telegram groups, and AI-generated summaries.
This shift is already influencing investor behaviour in a meaningful way. According to SEBI’s Investor Survey 2025, nearly 56% of investors said they rely on finfluencers for investment advice, while almost 62% admitted that such content directly influences their investment decisions.
The problem is that social media rewards certainty much more than caution. A video promising “the next multibagger” spreads much faster than conversations around valuation risk or downside protection. AI tools can unintentionally accelerate this cycle by making financial information easier to create and distribute at scale.
Investors today consume far more financial content than ever before, but that does not always translate into a better understanding of risk. Many know how to track returns during rising markets. Far fewer understand how much volatility they can actually handle when markets correct sharply.
Risk Looks Different During Bull Markets
One reason risk often gets ignored during bull markets is because almost every strategy appears successful when prices keep moving higher. Concentrated portfolios look smart, aggressive trading feels easy, and high-risk products begin to appear safer than they actually are. Bull markets can sometimes make risk feel invisible. Much like an empty road can make high speed feel safe, rising markets often create the impression that aggressive strategies are easier to manage than they actually are.
Recent market volatility has already shown how differently investors react during downturns. A March 2025 report by Business Standard noted that stocks with high retail ownership saw some of the sharpest corrections during the recent market fall, with panic selling becoming more visible among smaller investors. At the same time, AMFI data showed SIP stoppage ratios remaining elevated at around 75% in recent months, reflecting rising churn as many investors paused or discontinued SIPs during volatile phases despite strong overall inflows.
Risk is not just about volatility on a screen. It is also about behaviour. Two investors may hold the same portfolio, but react very differently during uncertainty. One may stay invested, while another may exit after a sharp correction.
That is why long-term wealth creation has always depended not only on access to information, but also on emotional discipline and the ability to handle uncertainty.
The Next Role of AI May Be Behavioural, Not Analytical
AI will continue to reshape investing in India, and this shift is still at a very early stage. But the bigger opportunity may not lie in helping investors discover more stock ideas or react to markets faster. Its real value could come from helping investors make better long-term decisions.
Most investing mistakes today are not caused by lack of information. They are caused by behaviour – chasing returns during rallies, taking more risk than one can handle, or panicking during corrections. This is where AI tools could become far more useful in the years ahead. Instead of only focusing on market predictions, they could help investors understand concentration risk, highlight unrealistic return expectations, simulate downside scenarios, or even identify emotional investing patterns over time.
The real challenge now is helping investors understand risk in a world where information is unlimited, decisions are instant, and confidence often rises much faster than experience.
Technology can simplify investing, but it cannot remove uncertainty. And perhaps the real success of AI in investing will not be measured by how quickly it helps investors enter the market, but by how calmly it helps them stay invested when markets become difficult.
–Authored by Shubham Gupta, CFA and Co-founder of Growthvine Capital