Zerodha CEO Nithin Kamath reacted to the Indian stock market crash on Friday, February 28, pointing out that the decline in trading volumes and the reduced number of traders highlight the market’s lack of depth.
Sharing his thoughts on social media platform X, Kamath noted that the stock markets are currently experiencing a correction, emphasizing the “massive” drop in trader participation and trading volumes.
Market Correction and Trading Volume Decline
“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,” Kamath stated in his post.
He further explained that markets often lose momentum during a correction phase and tend to fall more sharply than they rise to their peak.
Citing trading volume data from the National Stock Exchange (NSE), Kamath highlighted that brokerages across India have witnessed a 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,” he said.
According to Kamath, the current market activity involves around 1 to 2 crore Indian investors. He also commented on the Securities Transaction Tax (STT), noting that the government aims to collect ₹80,000 crore through STT in the financial year 2025-26.
Stock Market Performance
The Indian stock market faced a steep decline of 1,400 points in early trading due to heavy selling pressure. Sectors such as IT, tech, auto, and telecom were among the hardest hit.
The BSE Sensex closed 1.9% lower at 73,198.10 points, down from 74,612.43 in the previous session. Similarly, the Nifty 50 index dropped 1.86%, closing at 22,124.70 points compared to 22,545.05 in the prior 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.