Glory Days Behind Us: Zerodha Predicts A Bearish 2025

Zerodha cofounder and CEO Nithin Kamath has predicted a tumultuous year for the Indian brokerage industry in 2025. 

In a post on social media platform X, Kamath observed that while 2024 could arguably be the best year for the brokerage industry, the moment could soon be ending. 

“Looking back, 2024 was probably the best year for the brokerage industry, and it’s starting to look like the best is behind us, at least for the foreseeable future,” his post said. 

In a detailed blog post on the market trends of 2024, Zerodha observed that while it was a good year for the markets, there were some deterrents underneath the indices.

“… It’s possible that the glory days of the industry are behind us. Things might soon revert to the mean. This is due to both, all these new regulations, which will have a significant impact on revenues, as well as the fact that the Indian markets going forward may be subdued,” the post read. 

The online brokerage giant added that the year saw a slew of significant regulatory changes that impacted “pretty much” everyone in the markets. These regulatory changes included: 

• Limiting weekly expires to one contract per exchange and only one benchmark index — Nifty 50 for NSE and Sensex for BSE.
• All index options contract to have a 2X to 3X increase in lot size from January 1, 2025. 
• SEBI norms that mandate an option buyer to pay the entire option premium upfront starting February 1.
• All market infrastructure institutions have to be “true to the label” in how they levy charges.
• Restrictions on how much AMC can be charged for a basic services demat account (BSDA).

While the aforementioned new regulations are set to bring about changes across the market, Zerodha believes that futures and options (F&O) trading has been the worst impacted till date. 

“Given all these measures, there’s been a 20-30% drop in F&O activity on the exchanges and across the brokers from the time these regulations kicked in. Most of these measures haven’t even been fully implemented, and so, the fullest extent of these measures will be felt next year. Assuming that markets remain sideways, it’s fair to assume that F&O trading will dip even further,” the post read. 

In October, when the Securities and Exchange Board of India (SEBI) announced the new derivatives framework, Kamath had said that the regulator’s new directives, such as one weekly expiry of index derivative per exchange and rise in contract sizes, will also likely impact nearly 60% of “overall” futures and options (F&O) trades.

In its latest post on December 2, the discount brokerage observed that trading sentiment in the equity segment is cooling down as well. Zerodha observed that the total equity turnover was back to the year-ago levels. 

“We’re still well above where the markets were before the COVID-19 pandemic, but it looks like the craziness may be ending,” it said. 

Pertinent to mention that other brokerages have projected different market conditions for 2025 than Zerodha. For instance, Bajaj Broking predicts a broader market bull run to continue in CY25. 

“All findings confirm that the bulls will dominate in CY25, with the Nifty expected to deliver a 19% return and reach a potential target of 28,700 over the next 12 months,” the brokerage said in its CY25 Market Outlook report. 

Meanwhile, this year is poised to see more and more new-age tech companies lining up plans to list on the bourses. As per Inc42 data, as many as 23 startups have underlined plans for a potential IPO later this year. 

While the likes of ArisInfra, Ather Energy, Ecom Express, and Smartworks have received nod from the Securities and Exchange Board of India (SEBI) for their respective IPOs, BlueStone, IndiQube and DevX have filed their draft red herring prospectuses (DRHPs) and are awaiting the market regulator’s go ahead. 

Moreover, IPO discussions are also underway at startups like Infra.Market, Ola Consumer, OfBusiness, boAt, IndiQube, among others.