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FOMO-driven investing is reshaping India's stock market. Swati Saxena explains how social media hype fuels risky bets and how to protect your wealth.
The fear of missing out (FOMO) is reshaping India's investing landscape, luring millions into high-risk bets driven by social media hype. From IPO frenzies to crypto booms, investors are chasing trends, not fundamentals. But is this strategy sustainable?
Discover how FOMO is influencing markets and how to protect your wealth.
'Buy now or regret forever.'
'Last chance to enter before the stock doubles.'
'Don't miss the next multibagger.'
Every day, millions of Indians wake up to such messages flooding their phones. From WhatsApp groups to Telegram channels, from Instagram stories to YouTube shorts -- the message is clear: invest now or miss out forever.
Behind these shifts lies a force more powerful than any market analysis or company balance sheet -- FOMO, the fear of missing out. The numbers tell a striking story.
According to this report (external link), India has been witnessing at least 30 million (3 crore) new demat accounts being opened every year since 2021, leading to a total of 185 million (18.5 crore) demat accounts by 2024. That's more than the population of Britain, all trying their hand at the market. Why? Not because they studied market patterns or discovered value investing. They may have jumped in because everyone else was making money.
The real action is on social media. Those Instagram reels showing fancy cars and luxury homes, courtesy 'smart investing'? They're working.
A study (external link) published in the Journal Of Risk And Financial Management indicates that 57 per cent of millennials and Gen Z ranked advice on stock and bond investing as the most encountered topic on social media. So many unregistered advisers popped up that SEBI had to crack down on few of them last year.
This digital transformation of investing has changed how millions approach money. Traditional banks and mutual funds are seeing a shift as young investors bypass conventional wisdom for quick gains.
The surge in trading apps and social media platforms has created a 24/7 investment culture where every moment feels like a missed opportunity.
When Bitcoin soared in 2023, the Indian cryptocurrency market experienced significant growth, leading to increased trading activities on various exchanges. While a lot of people bought crypto, many of them were just following the wave and may have not have developed deep understanding on the subject.
The IPO market has become a perfect showcase of these new dynamics. Last year, there has been a notable surge in retail investor participation in IPOs.
The prevalent influence of FOMO on investor behaviour has been widely discussed in financial literature; in today's market, people fear missing profits more than losing money.
The same study showed how investors, both salaried professionals and business owners, follow the herd rather than their own research. This behaviour has created new market patterns, where stock movements are increasingly driven by social media buzz rather than fundamentals.
Market volatility, combined with heightened social media activity, has created a perfect FOMO storm.
Some of conservative portfolios turned aggressive, fixed deposit lovers became options traders and long-term investors started day trading.
The traditional financial industry is adapting to this new reality.
This isn't just India's story. From Seoul to Sao Paulo, FOMO drives markets in eerily similar ways. A recent global study confirmed what every market watcher suspects: in today's connected world, fear of missing out knows no borders. Markets move not just on news and numbers but on tweets and trends.
Yet, beneath the FOMO frenzy, a quiet shift is happening.
According to this report by Reuters (external link), the average monthly SIP inflows reached $2.7 billion in 2024 with around $3 billion in each of the three months through January. Young investors who actually studied finance show more resistance to FOMO trades. Traditional investment wisdom isn't dead -- it's evolving.
Where does this leave the Indian market?
FOMO isn't going anywhere. Not when your phone buzzes with stock tips every hour. Not when social media celebrates every market high. The real skill isn't in avoiding FOMO -- it's in working despite it.
As India's markets mature and new investment avenues emerge, success won't come from chasing every hot tip or rushing into every trending investment.
The future of Indian investing hangs in this balance -- between the excitement of quick gains and the wisdom of patient wealth creation.
In this new landscape, the biggest winners might not be those who jump on every trend, but those who master their FOMO while others chase shadows. After all, in the age of instant everything, maybe the most valuable investment skill is knowing when to slow down.
Swati Saxena is founder & CEO of 4Thoughts Finance, a wealth management firm.