Indian stock markets are witnessing a significant correction, with trading volumes plummeting across brokerage firms, Zerodha Founder Nithin Kamath said in a LinkedIn post on Friday. Kamath highlighted that markets, which tend to swing between extremes, could experience further declines after their recent peaks.
“The markets are finally correcting. Given that markets swing between extremes, they can fall more just like they rose to the peak,” Kamath said.
While he refrained from making market predictions, Kamath offered insight into the broking industry’s downturn. “We are seeing a massive drop in terms of both the number of traders and volumes,” he stated. According to him, trading volumes across brokers have seen a sharp decline of over 30%.
Adding to the slowdown, regulatory changes such as the true-to-market circular have contributed to the degrowth of the brokerage business—an unprecedented trend in Zerodha’s 15-year history. “This drying up of volumes shows how shallow the Indian markets still are,” Kamath noted, pointing out that market activity largely remains confined to just 1-2 crore Indian investors.
The drop in trading volumes could have broader implications for government revenue. Kamath cautioned that if the trend persists, the Securities Transaction Tax (STT) collection for FY25/26 might not even reach Rs 40,000 crore—falling at least 50% short of the Rs 80,000 crore estimate.
“By the way, if this continues, the government will not make even Rs 40,000 cr from STT in FY 25/26, at least 50% below the Rs 80,000 cr estimate,” he added.
The revelation comes at a time when market participants are closely monitoring global economic trends, inflationary pressures and domestic policy decisions that could influence investor sentiment in the months ahead. Whether the markets will stabilise or continue their downward trajectory remains uncertain, but the slowdown in trading activity has raised concerns across the financial sector.
» Read More
