How D-Street Is Turning Losses Into Lessons

The first four months of 2026 have been tough on equity market investors. The year opened with volatility in the markets, which saw deep drawdowns after a war broke out between the US and Iran on February 28. The benchmark indices, the Nifty and the Sensex, have delivered negative year-to-date (YTD) returns of 5.94 per cent and 6.97 per cent, respectively, as on April 22, 2026. Moreover, in the seven weeks since the conflict began, the Sensex and Nifty have fallen over 2.14 per cent and 1.20 per cent between March 2 and April 22, respectively.

Periods of such market volatility, typically, breed nervousness among investors who end up making knee-jerk decisions.

The most common mistake is booking losses in the fear that markets will go down further. That could be one of the worst strategies for a long-term investor because, historically, markets rebound after crashes. The 2020 market crash during the Covid pandemic is one such example.

Another mistake that people usually make during such times is pausing their systematic investment plans (SIPs). That’s counter-productive. The very idea of SIPs is balancing out the ups and downs in the market. When the market falls, you end up collecting more units of the fund, and vice-versa.

Instead, those with extra cash should resort to topping up their SIPs as market drawdowns provide opportunities to invest at a lower price and collecting more units.

Mistakes are made, but lessons are learnt too. For recent first-time investors, market crashes can be scary as they may see their initial investments losing significant value. If they are patient enough to stay invested and go through the recovery phase, they are likely to become dedicated long-term investors.

We spoke to some bull market babies, who entered the market during 2020 and are facing the first real market crash of their lives in 2026 to gauge how they’ve reacted to this new event in their lives. The ones who entered the market in 2020 before the crash were too new to feel the real impact at the time.

It may be noted that a record number of investors entered the market during the period, and the number has been steadily increasing over the years. According to data from the NSE, the number of unique investors in India was 129.89 million as on March 22, 2026, compared to just 42 million in mid-2020. Notably, the expectations of this cohort are framed by the vertical rise of the Nifty and Sensex post the 2020 market crash. In the near six-year period between March 23, 2020, and the end of 2025, the Nifty and the Sensex surged 243.34 per cent and 228 per cent, respectively.

Sachin Jasuja, a Securities and Exchange Board of India-registered investment advisor (Sebi RIA) and founding partner at Centricity WealthTech says that bull market babies often build their investment personalities in uni-directional markets, which is not a true-risk calibration, but merely a pattern recognition. “They began their investment journey on a slightly wrong footing because the market only ever showed them one side of the coin—Up and fast. Repeatedly.”

The stress test was much needed for them, adds Jasuja. “What a bull market baby needs to do right now is mentally stress-test their portfolio: if the market fell 35 per cent tomorrow, would you stay the course or exit? If the honest answer is the latter, your asset allocation needs to be fixed today, not when the fall happens.”

Niyati Pande, certified financial planner, and research and quantitative analyst at Artham FinoMetry says investors should recalibrate their expectations towards realistic long-term returns, as the post-2020 surge is unlikely to sustain itself.

Interestingly, some veteran investors we spoke to made similar mistakes when they first entered equities, but have learnt to navigate volatility with experience. One of the people we spoke to has been through three market crashes in the past.

But Pande has a word of caution for them too. “Investors assume history repeats exactly in the same way, ignoring that today’s risks, supply constraints, and global environment are different from the past,” she says.

While they may see green days as all-clear signals, Jasuja prescribes caution. “Green days in a volatile market are often relief rallies rather than trend reversals, and investors must know the difference between the two,” he says.

There are lessons from each experience, whether it is of a bull market baby or an experienced investor. In the end, remember that the market may be red today, but for the informed investor, the long-term horizon remains green. Read on for real-life reactions and lessons from the recent market upheaval.

Top Investor Lessons

• Equity investing should not be linked to short-term goals.

• Follow disciplined investing through market ups and downs helps.

• Ignore market noise. don’t give in to panic and fear when markets crash.

• Treat crashes as opportunities to invest idle cash.

• Don’t be in a hurry to deploy all your cash during a market correction.

• Diversify portfolio beyond equity investments.

• Keep your financial goal in mind before making any decision.

• Research and acquire knowledge before investing in the markets.

Venkatesh, 32

Consultant at a non-profit foundation, Ranchi, Jharkhand

Year of market entry: 2020

Market experience: Has seen the 2020 crash, but since the portfolio was small, did not see significant loss.

Loss shocker in 2026: Rs 2 lakh

Mistakes:

• Overexposure to small-and micro-cap stocks.

• Bought penny stocks without research.

Lessons from the current crash:

• Equity investing should not be linked to short-term goals, as markets can be volatile.

• Disciplined long-term equity investing is central to achieving goals, such as retirement.

“Equity investments should not be linked to short-term financial goals. I have seen peers who invested for near-term objectives face stress during this correction.”

Ravi Prakash Kumar, 32

Communications Manager, New Delhi

Year of market entry: 2018-2020

Market experience: Meaningful entry post 2020 crash, so this one is the first real crash.

Loss shocker in 2026: 30-35 per cent, translating into notional loss of around Rs 10 lakh.

Mistakes:

• Portfolio tilted heavily towards small caps.

• Booked losses worth Rs 5 lakh due to fear.

Lessons from the current crash:

• Don’t give in to panic and fear when invested in equities.

• Treat crashes as opportunities to invest.

“Don’t be in a hurry to deploy cash. Be reluctant. Sit on cash long enough to get bored. Don’t let dopamine drive financial decisions.”

Khelan Thakrar, 37

Chemical Engineer, Bharuch, Gujarat

Year of market entry: 2014

Market experience: Has weathered the 2020 crash, when he learnt that it’s important to keep portfolio diversified beyond equities.

Loss shocker in 2026: 20-25 per cent, but these are long-term investments and he doesn’t need to book losses.

Earlier Mistakes:

• Following TV channel recommendations without proper strategy.

• Not having enough knowledge about equity investing and its benefits and drawbacks.

Lessons from market crashes:

• Diversify portfolio beyond equities. He has diversified into gold and real estate.

• Research and acquire knowledge before investing in the markets.

• Have a fixed goal in sight and invest towards that.

“In the first three years till 2017, I had more losses than profits. At that time, I was following TV channels, which didn’t guide me on how to exit investments.”

Rajeev Singh, 45

Professor, Sikar, Rajasthan

Year of market entry: 2015

Market experience: Seasoned investor who has used lessons from the 2020 crash to navigate the current one cautiously.

Loss shocker in 2026: 18-22 per cent, representing a loss of roughly Rs 3 lakh, but these are long-term investments.

Earlier Mistakes:

• Was not diversified in 2020 and had to withdraw entire equity portfolio for personal requirement.

• Didn’t time withdrawal for emergencies and short-term goals.

Lessons from market crashes:

• It’s necessary to be patient and stay invested, so ignore market noise.

• Regular investment should continue through markets ups and downs.

• Market can’t magically double your money in two months.

“You have to understand that this war will not continue for years. They have to put an end to this. So, you just need to have patience and stay invested.”

Zindagi Dholakia, 55

Retired Education Research Professional, Ahmedabad, Gujarat

Year of market entry: 2007

Market experience: Veteran investor who has witnessed multiple market crashes, including in 2008, 2013 and 2020.

Loss shocker in 2026: Notional loss of Rs 15 lakh but she is confident of regaining her losses.

Earlier Mistakes:

• Bought bad stocks based solely on tips and without research.

Lessons from market crashes:

• Markets in red is a happy event as it allows you to invest idle money.

• It’s an opportunity to buy stocks at a discount.

“I am very happy when the market goes down because it’s like a sale. When I see my favourite brands on sale, I go and buy. It’s the same for stocks.”

ayushkhar@outlookindia.com