"Indian Markets Still Shallow": Zerodha's Nithin Kamath On Sensex Crash

Zerodha co-founder and CEO Nithin Kamath has raised concerns over the drop in a number of traders and trading volume as the Indian stock market continues its downward trend.

In a post on X (formerly Twitter), voicing his concerns over a massive drop in trading volume, Nithin Kamath said that if the current trend continues, the government may see a significant drop in the Securities Transaction Tax (STT) revenue estimate. He wrote, "I've no idea where the markets go from here, but I can tell you about the broking industry. We are seeing a massive drop in terms of both the number of traders and volumes."

"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. By the way, if this continues, the government will not make even Rs 40000 cr from STT in FY 25/26, at least 50% below the Rs 80,000 cr estimate," he said.

The markets are finally correcting. Given that markets swing between extremes, they can fall more just like they rose to the peak.

I've no idea where the markets go from here, but I can tell you about the broking industry. We are seeing a massive drop in terms of both the number… pic.twitter.com/wHO6hSRdbA

— Nithin Kamath (@Nithin0dha) February 28, 2025

STT is a direct tax levied on the sale/procurement of stocks, derivatives and mutual funds on recognised domestic markets.

The threat of tariffs by the Donald Trump administration and global bearish outlook led to Sensex sliding over 1,400 points in trade on Friday. NIFTY also marked its worst losing run since 1996 by plunging below 22,150 levels. Nearly Rs 9 lakh crore of the investors' wealth was wiped out in a single session amid the market meltdown.

According to Nithin Kamath, the negative outlook of the stock market has led to massive drops in the broking industry in terms of both volumes and traders.

The Zerodha CEO said that the markets were now finally correcting after a hot streak. Given the fact that the markets swing between extremes, they can decline more just like the movement to the peak.

Mr Kamath shared some data on equities trade and said that he witnessed degrowth for the first time in the business since he founded Zerodha 15 years ago. Indicating the shallowness of the domestic markets, Nithin Kamath said that the market activity is concentrated among one-two crore traders.

Mr Kamath's statement comes as Nifty 50 logged its fifth consecutive monthly losses on February 28, its longest losing streak in almost three decades. All 13 major sectors opened in the red.

Investors are worried over a negative global outlook in the future as a tariff war could take shape between the US and other nations. This has driven a bearish mood in the market over the past few months due to weak corporate earnings, rising economic uncertainty over Trump's tariff plans and sustained foreign fund outflows.