While he did not disclose specific impacts on Zerodha, Kamath highlighted broader industry trends. Bengaluru-based Zerodha is the second largest stock broker in India, with approximately 8.1 million active traders on its platform.Kamath wrote, “We are witnessing a significant drop in both trader numbers and volumes.”
Looking at the market slowdown, Kamath said the trends show that the Indian equity markets continue to be very shallow, with only 10 to 20 million Indians actively trading in the country.
Kamath added that brokers feel the impact of the ‘True to Label’ circular issued by Sebi in July last year, which became effective in October 2024. The circular mandates that stock brokers charge customers the exact prices paid to exchanges and prohibits additional charges. Industry insiders suggested that this move will likely affect brokers’ gross revenues.
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Kamath cautioned that a sustained decline in trading volumes could lead the union government to lose substantial revenue from the securities transaction tax (STT). “By the way, if this continues, the government will not make even Rs 40,000 crore from STT in FY 25-26, at least 50% below the Rs 80,000 crore estimate,” he wrote.