Zerodha CEO Nithin Kamath reacts to Indian stock market crash: ‘Drying up of volumes shows how...’

Online brokerage platform Zerodha's Chief Executive Officer Nithin Kamath reacted to the stock market crash on Friday, February 28, saying that the drying up of trading volumes, along with the lower number of traders, shows how shallow the Indian stock markets are. 

Taking to social media platform X, Nithin Kamath highlighted that the stock markets are witnessing a correction at this stage, underscoring the “massive” drop in the number of traders and volumes.

“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,” said Kamath in his post.

In his post, Kamath mentioned the tendency of markets to lose their momentum and, in a correction phase, can fall more than their rise to the peak. 

Drop in trading volume

The Zerodha chief, citing the trading volume data from the National Stock Exchange (NSE), said that across brokers in the Indian market, there is a 30 per cent 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,” said Kamath in his post.

According to the post, Kamath pegged the market activity to nearly 1 to 2 crore Indian investors. The Zerodha chief also commented on the Securities Transaction Tax (STT). The government expects to collect ₹80,000 crore through STT in the financial year 2025-26. 

“If this continues, the government will not make even ₹40000 cr from STT in FY 25/26, at least 50% below the ₹80,000 cr estimate,” said Kamath in his post.

The Indian stock market lost 1,400 points in the early morning session due to intense selling pressure from investors. The IT, tech, auto, and telecom sectors lost the most.

The BSE Sensex closed 1.9 per cent lower at 73,198.10 points, compared to 74,612.43 points in the previous market session. The Nifty 50 index lost 1.86 per cent, closing at 22,124.70 points, compared to 22,545.05 points in the previous stock market session. 

“This sharp decline was largely influenced by negative global cues, including a substantial drop in US markets overnight and renewed fears of trade wars following comments from US President Donald Trump on tariffs,” said Vaibhav Vidwani, Research Analyst at Bonanza, a wealth management firm.