“Every form of addiction is bad, no matter whether the narcotic be alcohol, morphine or idealism.”
Carl Gustav Jung, the Swiss psychiatrist and psychotherapist, played a big part in the creation of Alcoholics Anonymous almost a century ago. And although he may have cited only three forms of addiction he would have included a fourth type had he observed India over the past few years.
What’s that, you may ask? Intraday and futures and options, or F&O, trading.
Indeed, over the past few years, stock market participation has become faster, cheaper and more continuous. For many investors, this has been empowering. For some, it appears to be doing something else.
Researchers at the National Institute of Mental Health and Neuro Sciences (NIMHANS) in Bengaluru recently documented a clinical case of compulsive stock trading in a young professional.
The case involved a 29-year-old who began trading through mobile apps to supplement his income. Over time, he shifted from small investments to frequent intraday and F&O trading. Losses intensified participation instead of slowing it down. Trading became preoccupying and emotionally regulating. Debt accumulated to more than Rs 80 lakh, thanks again to the convenience of loan apps. This had social consequences, too—avoiding friends, lying to family and so on.
Clinicians treated the behaviour using methods adapted from gaming addiction therapy. The intervention focused on impulse control, deep breathing, distance from triggers, restoring boundaries around screen time, and involving family in financial decision-making. Over several sessions, the patient regained stability and his Stock Addiction Inventory (SAI) score dropped from a severe 24 to a 4, according to the NIMHANS report.
The case comes at a time when retail participation in Indian markets is at record levels, particularly among younger investors. A large share of this participation is concentrated in products that reward immediacy – intraday trades, leverage, and short-cycle outcomes. Digital platforms reduce friction. But they also reduce pause. Feedback is instant. Losses are visible. And recovery often feels one click away.
As regular readers of this weekly newsletter would know, we have been pointing out the flip side of F&O trading for more than a year. Market regulator SEBI has also sought to tamp down on the F&O frenzy, but only after its own data showed that over 90% of F&O traders make losses.
Markets have always involved risk. What appears to be changing is how that risk is experienced. When price movement becomes continuous and access is always on, behaviour starts to matter as much as conviction. The line between investing and responding narrows. This is not an argument against participation or technology. It is a reminder that markets do not only price assets. They shape habits. So, choose yours wisely.
Switching Piggy Banks
Trading addiction is just one part of a broader trend. The government’s annual economic survey, tabled in parliament this week, highlighted that trend.
The survey noted that, over the past decade, Indian households have been reworking how incremental savings are deployed. A growing share of new financial savings is finding its way into market-linked instruments, particularly equities, even as older anchors such as bank deposits remain in place.
Markets are adjusting to the fact that household balance sheets no longer look the way they did. The survey documents a convergence of forces: Access has widened, products have multiplied, participation has deepened and, at the same time, household risk preferences appear to have shifted gradually.
Between 2011-12 and 2024-25, the share of equity and mutual funds in annual household financial savings rose from around 2% to over 15%. At the same time, the share of deposits dropped from over 58% to about 35%.
The survey frames this transition as diversification rather than displacement. Households are layering equity exposure on top of existing savings habits, building portfolios that look more mixed than before.
The rise of systematic investing helps explain the texture of this shift. Average monthly SIP flows have increased roughly seven-fold since 2016-17, crossing Rs 28,000 crore in 2025-26 so far. Regular, automated flows have turned equity participation into an ongoing process rather than a timing decision.
The rebalancing is also visible on household balance sheets. The share of equity and investment funds in total household financial assets has risen from about 16% in 2019 to roughly 23% by March 2025.
Ownership patterns tell a similar story. Individual investors now account for close to one-fifth of aggregate equity market ownership, up from around 11% a decade ago. Direct equity ownership by households has risen only gradually, but indirect ownership through mutual funds has nearly tripled over the period.
That steadiness has had broader implications. Domestic inflows into equity markets have, over the past five years, exceeded those from foreign investors. As of September 2025, domestic institutional ownership in NSE-listed equities stood at nearly 19%, with mutual funds alone holding an all-time-high share by value.
What has not kept pace is the debt side of the household portfolio and corporate bonds still form a small slice of household financial assets. India’s corporate bond market, at roughly 16-17% of GDP, remains shallow relative to equity markets and to peer economies. The survey is explicit in identifying this as the next gap in portfolio diversification.
A deeper debt market would widen the menu of income-generating options for households, improve risk pricing and mobilise long-term savings more efficiently. For now, equities have carried most of the weight of financialisation.
Long story short, Indian households have not suddenly become more speculative. They have become more engaged. Incremental savings are being spread more deliberately across instruments, with mutual funds acting as the primary conduit. And, markets, in turn, are learning to price this new source of domestic capital.
Check the Balance Sheet
The economic survey didn’t just talk about changes in household savings. At a broader level, it reads quite like a balance-sheet check – not just of the Union government but also of India’s public finances as a whole. And in that combined view, a quiet divergence is becoming harder to ignore.
At the Centre, the fiscal story remains one of consolidation with intent: Deficits have narrowed steadily from pandemic highs, capital expenditure has risen sharply, and markets have responded. The survey notes that sovereign bond yields have declined, spreads over US Treasuries have compressed, and rating agencies have upgraded India’s outlook. Lower yields, alongside an easier monetary stance, are now feeding into borrowing costs across the economy.
At the state level, the picture is more strained. Unconditional cash transfers have expanded rapidly, particularly schemes targeted at women. The survey acknowledges their immediate effects. In several states studied, transfers form a meaningful share of household income and consumption, easing financial stress and meeting unmet needs.
The concern lies in the arithmetic rather than the intent. Aggregate state spending on unconditional cash transfers is estimated at about Rs 1.7 trillion in 2025-26. The number of states running such schemes has increased more than five-fold in three years, even though roughly half are in revenue deficit. Most schemes lack sunset clauses or formal review mechanisms, turning temporary support into a permanent claim on revenue. This matters because state budgets are already tight. Committed expenditures absorb close to two-thirds of state revenues.
The survey draws attention to the trade-off without prescribing outcomes. As revenue spending hardens, capital expenditure increasingly becomes the adjustment variable. Over time, that shift narrows fiscal flexibility and weakens the channels through which public spending supports growth.
This is where markets enter the story. Government debt is priced on a consolidated basis. Persistent revenue deficits at the state level do not remain confined to state balance sheets. They influence perceptions of sovereign risk. The survey flags this channel clearly, even if it stops short of prediction.
The linkage is visible in state development loans. SDLs already trade at a spread to central government securities, reflecting fiscal variation across states. A widening gap between central discipline and state slippage risks keeping those spreads elevated or volatile, even as central gilt yields benefit from consolidation.
The survey’s argument is not anti-welfare, to be sure. It is more about design and balance. Conditionality, review mechanisms and time-bound structures preserve fiscal flexibility while supporting households. The alternative is a gradual hardening of revenue budgets that leaves less room for capital formation. And, over time, weakens the foundations that lower borrowing costs depend on.
Trade On
India and the European Union this week announced the conclusion of a long-negotiated trade agreement. Markets noticed the event but did not rush to price it – a restraint that is telling. Trade deals tend to matter less for what they announce and more for how, and how quickly, they transmit into everyday economic reality. At its core, the agreement expands market access between India and the EU, lowering tariffs across a wide range of goods over time.
For consumers, the headlines are familiar: cheaper European cars within quotas, lower duties on wine and olive oil, broader availability of imported products. For exporters, particularly in textiles, leather, marine products and jewellery, the promise is improved access to one of the world’s largest consumer markets. But none of this arrives at once, and little of it arrives without conditions.
The agreement is phased, capped and conditional. Automotive tariff reductions apply within strict quotas. Many product categories face long glide paths rather than immediate cuts. Access to European markets also comes with compliance requirements – on quality, traceability, environmental standards and carbon reporting – shaping who benefits and when. The deal opens doors, but it does not remove thresholds.
For investors, this distinction matters. Trade agreements are often framed as growth catalysts. In practice, they function more like frameworks: reducing uncertainty at the margins while introducing new forms of execution risk.
The EU is already India’s largest trading partner in goods, and bilateral trade has been growing even without a deal. This agreement is therefore less about opening new channels and more about stabilising and deepening existing ones, at a time when global trade is fragmenting. There is also a defensive logic at work, as both sides navigate a more protectionist and unpredictable global environment. In that context, the deal signals diversification rather than acceleration.
Markets appear to recognise these layers. There has been no sharp repricing, no sweeping re-rating of sectors. Instead, the agreement is being absorbed as a medium-term structural shift – important, but not decisive on its own. The agreement creates a framework within which outcomes can evolve, but it does not guarantee them. For long-term investors and consumers alike, its significance lies in the process that follows.
Market Wrap
India’s stock markets eked out a gain this week but that wasn’t enough the end up with the biggest monthly loss since February last year.
The Nifty 50 inched up almost 1% this week and the 30-stock Sensex climbed 0.9%, helped by optimism over the India-EU trade deal. For January, however, the Nifty 50 lost 3.1% and the Sensex dropped 3.5%.
Equity markets have been weak this month due to concerns related to US tariffs, tepid corporate earnings and foreign outflows continued to weigh. Foreign portfolio investors sold shares worth $4 billion this month, according to NSDL data. This also pushed the rupee to fresh record low near 92 to a dollar.
Asian Paints was the biggest loser for the week, plunging nearly 10% after reporting a surprise drop in quarterly profits. Carmaker Maruti Suzuki was no.2 on the list, falling 5.6% after earnings missed market expectations.
Kotak Mahindra Bank, Max Healthcare, Mahindra & Mahindra, IndiGo parent InterGlobe Aviation, Sun Pharma and Infosys were the other major stocks that ended in the red.
State-run companies ONGC and Bharat Electronics were the top performers, jumping over 9% each. Axis Bank also surged nearly 9% after reporting higher profit and strong loan growth.
Adani Enterprises and Adani Ports bounced back this week, rising over 8% each, as concerns about the US bribery allegations eased. Zomato and Blinkit parent Eternal, state-run companies NTPC and Coal India, Larsen & Toubro, SBI, and JSW Steel were the other major gainers.
For the month of January, ITC plunged almost 20% on worries the excise duty hike on cigarettes effective February 1 will hurt future earnings. This is ITC’s worst monthly drop in more than 25 years, according to Reuters data. Reliance Industries slumped 11.1% in January, its worst performance in nearly six years, after quarterly profit missed expectations.
Other Headlines
- Govt to cut food’s weighting in new consumer price index series to 36.75% from 45.86%
- Govt designates coking coal as critical and strategic mineral
- India’s industrial output grows 7.8% year-on-year in December, fastest pace in two years
- Adani, Embraer sign pact to make aircraft in India
- Renault unveils new Duster SUV in bid to revive India presence
- China stops sale of Sun Pharma drug used to treat dementia
- ITC standalone profit falls 10% in Q3 to Rs 5,089 crore
- Larsen & Toubro consolidated profit after tax falls 4.3% to Rs 3,215 crore, misses forecasts
- Asian Paints net profit falls to Rs 1,060 crore from Rs 1,110 crore year ago, lags estimates
- Commercial vehicle maker Tata Motors Q3 profit slumps 60.4% to Rs 561 crore
- Maruti Suzuki profit rises about 4% to Rs 3,794 crore but lags analysts’ estimates
- TVS Motor profit jumps 52% to Rs 940 crore but misses analysts’ expectations
- Dabur’s consolidated net profit rises 7% to Rs 560 crore, meeting analysts’ estimates
- Colgate-Palmolive (India) net profit rises 0.3% to Rs 324 crore
- Voltas Q3 profit sinks 35.7% to Rs 84.95 crore from Rs 132 crore a year ago
- Blue Star consolidated net profit falls 39% to Rs 80.66 crore
- Vedanta consolidated net profit jumps to Rs 5,710 crore from Rs 3,547 crore a year ago
- Adani Power consolidated net profit slips 18.9% to Rs 2,480 crore
- Paytm swings to a profit of Rs 225 crore in Q3 from a loss of Rs 208 crore a year earlier
- Swiggy Q3 consolidated loss widens to Rs 1,065 crore from Rs 799 crore a year earlier
That’s all for this week. Until next week, happy investing!
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