Bears Bite Zerodha: Seeing Degrowth For The First Time In 15 Years, Says CEO Kamath

Amid the bloodbath in the Indian equities market, Zerodha founder and CEO Nithin Kamath said that the brokerage is seeing a degrowth in its business for the first time in 15 years.

In a post on X, Kamath said, “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 that the markets are “finally correcting”, which has resulted in the broking industry seeing a “massive drop” in terms of trades and volume.

It is pertinent to note that the benchmark index Nifty 50 has slumped about 15% from its September peak.

Kamath also opined that the decline in trading volumes shows the shallowness of the Indian markets. “The activity is more or less among those 1-2 Cr Indians,” he added. 

He feels that if the correction continues, the Indian government is likely to see a 50% decline in its Securities Transaction Tax (STT) for FY26 from INR 80K Cr to INR 40K Cr. To be clear, the STT is a tax on buying and selling stocks and other securities on Indian stock exchanges. 

The Union Budget 2025-26 has estimated a revenue of INR 78,000 Cr from STT for the year. In the ongoing financial year, the government has collected over INR 44,500 Cr from STT.

The Indian equities markets, in tandem with the global markets, crashed on Friday (February 28) after US President Donald Trump doubled down on his tariff war agenda. While Sensex fell 1.90% to 73,192.35, Nifty 50 closed 1.86% lower at 22,126.35. 

On Thursday (February 27), Trump announced that the imposition of 25% duties on imports from Canada and Mexico to the US will go into effect on March 4. Meanwhile, goods from China to the US will be subject to an additional 10% duty. Earlier in the week, he also promised 25% tariffs on shipments from the European Union.

Besides the tariff war, weak earnings and a selling spree of foreign institutional investors (FIIs) have hit the Indian equities market hard.

Amid this, new-age tech stocks are also facing the music. Last week, 13 of the 32 new-age tech stocks under Inc42’s coverage, including Swiggy, Ola Electric, FirstCry, and MobiKwik, touched fresh lows. The trend continued this week as well.

Experts have warned that the market correction may last for the whole year as well. “If the data set is bad, then a leg of pricewise correction is expected,” Manish Jain, chief strategy officer of institution business at Mirae Asset Capital Markets, said.

Meanwhile, this is not the first time when Kamath has shared a bearish outlook about Zerodha and the broking industry. At the beginning of the year, he said that while 2024 was arguably the best year for the brokerage industry, the moment could soon be ending. He cited regulatory changes, including true-to-label norms and new derivatives framework among the reasons for this.

On the financial front, Zerodha, which competes with the likes of Groww, Dhan, Angel One, among others, posted a profit of INR 5,496.3 Cr on an operating revenue of INR 9,372.1 Cr in FY24.