The stock market is witnessing a significant correction, and Zerodha co-founder Nithin Kamath believes the downturn could continue, just as the market previously surged to record highs.
In his recent post on Twitter, Kamath highlighted a massive drop in trading activity, with volumes declining by more than 30% across brokers. This slump, coupled with the implementation of the true-to-market circular, has led to the first instance of business degrowth in Zerodha’s 15-year history.
The markets are finally correcting. Given that markets swing between extremes, they can fall more just like they rose to the peak.
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… pic.twitter.com/wHO6hSRdbA
— Nithin Kamath (@Nithin0dha) February 28, 2025
Kamath also pointed out a major concern—the Indian stock market remains shallow, with active participation largely limited to 1-2 crore investors. This decline in trading activity could also impact government revenues, as Securities Transaction Tax (STT) collections for FY 25/26 might fall to ₹40,000 crore, nearly 50% below the estimated ₹80,000 crore.
A sharp decline is visible across indices, with Nifty down 15%, Nifty Midcap falling 21%, and Nifty Smallcap dropping 25% from their peaks. Sectoral indices have also taken a hit, with Nifty Metals down 20%, Nifty IT falling 19%, and Nifty Bank declining 10%. Public sector enterprises and real estate stocks have been hit the hardest, with Nifty PSE and Nifty Realty both falling 30%.
So far in 2025, Nifty is down 6.5%, Nifty Bank has declined 5.11%, Nifty Midcap has dropped 17%, Nifty Realty has fallen 24%, and Nifty Pharma is down 15%.
