Zerodha CEO Nithin Kamath's talks about the psychology of the market and investors…'

On the 9th of April, when the global market was pushed to hit the bottom of the recent years by Donald Trump's tariff policy, which later has been paused for 90 days, Kamath took to his Twitter account, discussing the psychology of the market and advising investors to not take unnecessary pressure but instead take a break.

He started his tweet with, “Good time to follow this advice. Over the next 10 days, there are only 4 trading days. It’s not a bad idea to take a break from trading and recharge.” He referred to the market sentiment and implied, “Judging by what’s happening, you’re going to need it. 😬”

Good time to follow this advice. Over the next 10 days, there are only 4 trading days. It’s not a bad idea to take a break from trading and recharge. Judging by what’s happening, you’re going to need it. 😬

"Trading profitably requires that you monitor the market moods and your… pic.twitter.com/5nKdi8qWwX

— Nithin Kamath (@Nithin0dha) April 9, 2025

As an investor, he said, to be a profitable investor, you need to understand the psychological moods of the market. If the mood is not suitable, it’s best to stand at the shore and watch the tempest on the sea.

 

I agree with his statement, having a lot of experience myself. Just like many others, I did try to surf on the waves of the market and was swept away by the strong current.

He said, “...when you’re in a peak performance mental state and the market conditions are optimal."

He added, Retail investors from the last five years were the major buyers of equities. See the data given by NSE.

Source: NSE

Source: NSE

Kamat said the last financial year added 14.3m new investors combined NDSL and CDSL.

The question is, how much did we lose in the last six months?

As the data is still continuing, the calculation so far estimates ₹14 lakh crore wiped out from the Indian stock market since Trump's tariffs were imposed. The global market didn't left untouched.

Leading business newspaper Business Standard said, “Such a synchronous sell-off in risk assets occurred only in the global financial crisis in 2008 and the Covid pandemic of 2020.”

The continued sell-off in the Indian equity market has wiped out a staggering 94 lakh crore of investor wealth in the past five months, with the market pluming around 17% from its all-time high on September 24.

Look at the picture

Kamth's Fear

Although the retail investors were the ones who have been consistently buying equities besides the odd one, he shared his doubts. Will this continue? Will the buyers still continue to buy the dip?

He also stated, if the fall continues, it is possible for investors to stay out of the market for years, referring to the 2008 market crash.

So, we need to focus on psychology in the market so that you won't be stuck for years, unlike many.

What Is Investor Psychology?

 

The study of the emotional and cognitive factors that drive the decision of an investor is called Investor Psychology.

We make decisions based on two main factors: mental and emotional. So, the investors do. Occasionally, his buying, holding, or selling decisions are driven by both mental and emotional factors.

Take an example: Mohit buys equity at the rate of 70, and it falls. He thought he should buy more because it’s cheaper now, and when its price takes a jump, he will catch a big fish, a big profit. But the market doesn’t work only on this thought; it has many other factors to settle the price of a share, and nobody knows how much time it will take to make his decision a profitable one. So, he got trapped for years. The emotion of becoming profitable made him ignore other factors.

The market said it's not always good to put your hard-earned money blindfolded; sometimes you need to wait and watch to lower the tides. Only then should you put your boat into the water.