Shankar sharma take on current situation

Read an article on MC by Shankar Sharma. He is blaming MFs and financial media for making retail investors give free money to FII. He has a very good premise of 90s but is it really mistake of retail investors now? summary of his long article.

In the late '90s, I wrote about the potential chaos if Foreign Institutional Investors (FIIs) pulled out of India. The consensus was that the market would crash, but I disagreed. The logistics of an FII exit were complicated: without enough local buyers, the market would collapse without volume, making it impractical for FIIs to exit en masse. In essence, they could only enter, not leave, making the Indian stock market a "Financial Hotel California."

Fast forward to today, and we’ve created a generation of retail investors who are buying when FIIs sell, completely distorting the logic of foreign capital inflows. Fund managers and the media promote an overly optimistic view of the market, ignoring important realities like volatility, government spending, and the short lifespan of bull markets. Investors are lured by slogans like "Achhe Din," but they lack the knowledge to understand market dynamics.

The result is a macroeconomic disaster. Retail investors are absorbing FII selling without questioning it, while funds export profits through derivatives. This is the largest transfer of wealth from the poor to the rich in modern history—worse than colonial exploitation. We’ve effectively created a system where the poor subsidize the rich, with no real education on investing, and it’s a situation that will haunt us for decades.

What are your thoughts?