Sunk cost and FOMO.

"India's stock market rally is ramping up its index weighting and creating a dilemma for global fund managers: sit back and watch as their relative exposure shrinks while the market grows, or buy in at increasingly eye-watering prices. Most find the latter uncomfortably risky." Reuters. "The Indian banking sector is facing challenges in attracting deposit growth due to increasing competition from mutual funds (MFs) and other alternative investment options." "Bankers across the sector have expressed concerns about the systemic risks," as "most MF investors are not conducting proper analysis and may face significant risks in the future if market cycles shift." ET. Markets in India have just opened and already the Nifty 50 is up 136.75 points to 25,055.20 points (NSE), while the Sensex is up about 346 points to 81,867.22 points (BSE). "With the capital markets at historic highs, startup IPOs are seen as exciting opportunities," and not just at listing, but, "In fact, out of the 10 best performing main board IPOs of this year so far, three belong to new age companies,..all of which have soared above 100% within just three months," wrote Abhishek Mukherjee. "In the last five years that the Sensex took to double to 80,000, retail investors have emerged as counterbalance to deep-pocketed foreign funds who have held sway on Dalal Street for decades." The Asset Under Management (AUM) for mutual funds has more than doubled to Rs 59 trillion from Rs 26 trillion in five years. TOI. "With their rising interest and participation in equity markets, small & semi-urban regions are becoming a big part of India's growth story. West Bengal's North 24 Parganas, home to the Sundarbans yet virtually unknown to many, has been among the biggest contributors of new stock market investors since Sept 2023." TOI. In the dotcom bubble, "merchant bankers did inflate that value of many dotcom companies with barely any business prospects, projecting a prosperous future to sell retail investors these shares at excessive valuations." "A similar scenario has unfolded in India in the 2000s." "Chartered accountants and merchant bankers play a crucial role in producing numbers that make these companies appear much stronger than they are," wrote Vivek Kaul. "Seven out of 10 individual intraday trades in cash segments made losses in the financial year ending March 2023, a study done by the Securities and Exchange Board of India (Sebi) revealed." ET. Why do Indians keep trading in the markets when they are making losses? "Naturally- occurring Ponzi schemes do arise," when "Investors, their confidence and expectations buoyed by past price increases, bid up speculative prices further...there by enticing more investors to do the same, so that the cycle repeats again and again," wrote Nobel Prize winning economist Robert Schiller. Investors are lured by past gains and are then compelled to go on playing the markets because of 'sunk cost fallacy' where the investor spends more money to reverse past losses (Investopedia). Why isn't anyone trying to stop people from gambling on stocks? Maybe because "The jobless rates for graduates was 29.1%, almost nine times higher than the 3.4% for those who can't read or write, a new ILO report on India's labor market showed." BS. They probably do not want these people out in the streets. Also, if this is a bubble, how can you gently puncture it without causing a collapse and massive losses for millions of Indians? They are terrified to try. Paralysed, like 'deer in headlights' (idioms).