New Delhi, April 9 -- Throughout this decade, India's household savings have steadily left the safety of bank deposits to chase returns in equities. This was supposed to provide a stable pool of risk capital to entrepreneurs and act as a shock absorber against fickle hot-money inflows from overseas. The Iran war punched holes in this cheery thesis that a ceasefire may not mend.

For the first time since the pandemic, individual investors were net sellers in the secondary market in the first 11 months of 2025-26. That sign of pessimism, which pre-dates the war, could become more pronounced because of the conflict.

Much of the 19% annualized three-year return on the Nifty Smallcap 100 Index came from a bumper performance in 2023 and early ...