"The result of lack of depth in the market is that it has become a bourse for the global hot money investors who are driven by a set of issues, especially the tapering timings of the US Federal Reserve," the study said.
While the benchmark BSE Sensex is trading well above the 20,000 mark for some time, it does not really reflect the real state of affairs, the study observed.
"Once prices fall sharply after the retail investor has bought in, he tends to wait for years since the feeling of suffering losses in one counter and making it up in another does not sink in," Assocham Secretary General D S Rawat said.
Besides, retail investor confidence in the equity market does not see chances of restoration anytime in the near future, the study said.
"The retail investors' lack of confidence in the stock market is damaging the Indian rupee as well since it has become dependent on the inflows and outflows of hot money," it added.
FIIs were gross buyers of shares worth Rs 7,46,334 crore and sellers of equities worth Rs 6,45,757 crore till December 6. This translates into a net inflow of Rs 1,00,577 crore (USD 18 billion), according to Sebi data.