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India’s recent market selloff is hurting retail investors more than institutional buyers as bets on widely hyped stocks turn sour.

Shares of companies where individual investors own a higher stake than domestic or foreign institutions saw a median decline of nearly 33% from their 52-week highs, according to a Bloomberg analysis of the largest 500 companies in India as of Sept. 30.

The fall for 114 such companies identified from primeinfobase.com data was much steeper than the median decline of 24% for the rest under consideration.

The disproportionate decline is a warning sign for retail investors who have piled on to the stocks in vogue, often at valuations unpalatable to institutional investors.

“The lack of fear and the focus on greed (of returns) among retail investors have pushed valuations to absurd levels in several cases,” Kotak Institutional Equities analysts led by Sanjeev Prasad wrote in a report earlier this week, adding that they were willing to believe random narratives about sectors and stocks.

The correction also comes at a time when many young Indians are starting to embrace equities as a mainstay of their investment portfolio.

“Retail investors were turning euphoric during the uptrend, while institutions turned cautious,” said Kranthi Bathini, a strategist with WealthMills Securities Pvt., adding that the sharp fall has made them focus more on long-term investing.

The benchmark Nifty 50 Index has declined more than 11% from its peak in September, hitting a seven-month low on Monday. Shares of Sterling and Wilson Renewable Energy Ltd., Cochin Shipyard Ltd. and Titagarh Rail Systems Ltd., are among those with dominant retail holdings that have about halved from their 52-week highs.

--With assistance from Shinjini Datta.