Nifty has been flat for a year and a half. Or has it?

Comforted by the belief that the Indian financial markets will inevitably continue to rise, tens of thousands of crores of retail investor money pour into the markets each month. 3.34 lakh crores in 2025, to be precise. The result has been a market that has been optically resilient through wars, tariffs, currency depreciation, and relentless selling by controlling shareholders (also known as promoters) and foreign investors.

I have nothing interesting to say about the first two.

In INR terms, the indexes are roughly at the same level they were in mid 2024, not a great outcome in any case. In Euro terms, the indexes are down 13% since then. While the rupee has depreciated ~5% against the dollar in 2025, it has declined ~19% against the Euro, and ~14% against the pound. These poor investment returns in forex terms, combined with expensive valuations, are the cause of the exodus of foreign investors from our markets, with net sales of 1.58 lakh crores in 2025. This shows no signs of reversing anytime soon.

If foreigners are selling, are well informed promoters buying? No. For an investor, meaningful share buybacks and insider share purchases are the strongest signal management can send of their confidence in the company. In contrast, Indian promoter ownership of Nifty 500 stocks has fallen to an all-time low as of the end of December, with promoters selling 1.5 lakh crores' worth of their holdings in 2025.

The greatest source of investment risk, to quote Howard Marks, is the belief that there is no risk. When times are good, investors believe they will always be rewarded for taking more risk. Until now, retail investors have bought whatever foreign investors and promoters are selling, and then some. If these inflows moderate, then the markets will lose a major source of support.