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