Amid market fall, Zerodha's Kamath warns of degrowth in broking industry

Nithin Kamath, founder of stock brokerage firm Zerodha, on Friday expressed concerns about the sharp decline in trading activity and volumes, warning of further potential market downturns and challenges for the stock broking industry.

 

Kamath highlighted that the industry is already grappling with a substantial drop in activity following recent regulatory changes. He noted that both the number of traders and trading volumes have plummeted significantly.

 

“I can’t predict where the markets are headed, but I can speak about the broking industry. We are witnessing a massive decline in both the number of traders and trading volumes. Across brokers, activity has dropped by more than 30 per cent. Combined with the impact of the true-to-market circular, this marks the first time in 15 years since we started that we are seeing degrowth in the business,” Kamath wrote on his social media platform X.

 

He further emphasised that the shrinking volumes reveal the limited depth of the Indian markets, where trading activity is largely concentrated among 1-2 crore Indians.

 

“If this trend continues, the government’s securities transaction tax (STT) collections for FY25/26 could fall to ~40,000 crore— significantly below the estimated ~80,000 crore and at least 50 per cent lower than projections,” Kamath added.

 

The government had initially projected robust STT collections of ~78,000 crore for 2025-26. However, the Union Budget revised the STT estimate for the current financial year (FY25) upward from ~37,000 crore to ~55,000 crore, reflecting stronger-than-expected collections. As of now, the Centre has already collected ~42,000 crore through STT in FY25, prompting the upward revision.