Tax harvesting drives biggest domestic equities selloff by retail investor

In March, individual investors pulled out over Rs 15,000 crore-most since data is available

Individual investors withdrew more than ₹15,000 crore from domestic equities in March — their biggest monthly outflow since 2016, when data first became available.

 

March, the final month of the financial year, is typically a weak period for retail inflows. However, a market decline to nine-month lows at the start of the month pushed more individuals towards “tax-loss harvesting”.

 

Barring 2020, 2021, and 2022, retail investors have consistently been net sellers in March since 2016.

 

Tax-loss harvesting is a strategy where investors sell loss-making investments to offset taxable gains from other investments, thereby reducing their overall tax liability. This approach