Zerodha's Nithin Kamath Admits Traders Are Fleeing The Market

The Indian markets are undergoing a long overdue correction, and the broking industry is witness to the repercussions, said Zerodha Co-founder Nithin Kamath.

Though the equity markets remain unpredictable, the broking industry has seen "a massive drop" in terms of both the number of traders and volumes, he said in a post on X.

"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," Kamath said.

He highlighted how this drying up of volumes shows the shallowness of Indian markets.

If the situation persists, the government will fail to make even Rs 40,000 crore in fiscal 2026 from Securities Transaction Tax — the tax levied on the sale or purchase of stocks and other securities on recognised stock exchanges, as compared to an estimated Rs 80,000 crore, Kamath said.

In February, over 450 of the Nifty 500 stocks saw declines, marking a challenging month for the market. Nifty recorded its longest monthly losing streak in 28 years, slipping nearly 6% by falling for the fifth consecutive month, a trend not seen since November 1996.

All sectoral indices posted losses, with realty and IT sectors being the hardest hit. Nifty Realty had its worst month since the onset of the Covid-19 pandemic in March 2020, while the Nifty IT recorded its worst performance in 35 months, since April 2022.