Zerodha's Nithin Kamath offers stark warning to investors: Markets are falling and will fall more, seeing degrowth for the first time

/2 min read

ADVERTISEMENT

Nithin Kamath, Zerodha's co-founder, noted that the downturn has thus, led to over 30% drop in trading activity across brokers, marking the industry's first contraction in 15 years.
Zerodha's Nithin Kamath offers stark warning to investors: Markets are falling and will fall more, seeing degrowth for the first time
Nithin Kamath, co-founder and CEO, Zerodha 

The Indian stock market is volatile, driven by both domestic and global factors. The BSE Sensex dropped almost 400 points during intraday trade today to 72,784.54, while the NSE Nifty 50 has declined 120 points to hover near 22,000.

Amid this ongoing market turmoil, Zerodha co-founder Nithin Kamath has raised concerns about the impact on the broking industry.

“[The broking industry is] seeing a massive drop in terms of both the number of traders and volumes,” Nikhil Kamath’s brother Nithin Kamath wrote in a post on X on February 28.

The downturn has, thus, led to over 30% drop in trading activity across brokers, marking the industry's first contraction in 15 years, Kamath noted.

He warned further that if the trend continues, STT collections for FY 25-26 could fall to ₹40,000 crore—half the government's ₹80,000 crore target.

Fortune India Latest Edition is Out Now!
India's Top 100 Billionaires

August 2025

As India continues to be the world’s fastest-growing major economy, Fortune India presents its special issue on the nation’s Top 100 Billionaires. Curated in partnership with Waterfield Advisors, this year’s list reflects a slight decline in the number of dollar billionaires—from 185 to 182—even as the entry threshold for the Top 100 rose to ₹24,283 crore, up from ₹22,739 crore last year. From stalwarts like Mukesh Ambani, Gautam Adani, and the Mistry family, who continue to lead the list, to major gainers such as Sunil Mittal and Kumar Mangalam Birla, the issue goes beyond the numbers to explore the resilience, ambition, and strategic foresight that define India’s wealth creators. Read their compelling stories in the latest issue of Fortune India. On stands now.

Read Now

“The markets are finally correcting. Given that markets swing between extremes, they can fall more just like they rose to the peak. We are seeing a massive drop in terms of both the number of traders and volumes. Across brokers, there's a more than 30% drop in activity. Combined with the true-to-market circular, we are seeing degrowth in the business for the first time since we started 15 years ago,” he added.

The market downturn has sharply reduced trading volumes, with options trading averaging ₹47,897.3 crore in 2025—46% below its all-time high—while equity trading stands at ₹88,408.6 crore, down 42%. Retail turnover has declined 41% in both segments, highlighting the Indian market’s dependence on a limited trader base and raising concerns about its depth and resilience.

February has been brutal for Indian equities and March seems to be no different, with the Sensex losing as much as 5%. Since peaking in late September, both the Nifty and Sensex have declined 15%, with broader indices seeing even sharper falls. Added to this is the fear of consistent FII outflows, along with geopolitical tensions and trade concerns. Market sentiment has worsened following Trump’s tariff policies, including an additional 10% duty on China, signalling aggressive trade negotiations.

“This drying up of volumes shows how shallow the Indian markets still are. The activity is more or less among those 1-2 crore Indians,” Kamath added.

Fortune India is now on WhatsApp! Get the latest updates from the world of business and economy delivered straight to your phone. Subscribe now.