Indian benchmark indices, BSE Sensex and Nifty50, witnessed a sharp decline in Friday’s session. The Sensex slipped below 73,300, while the Nifty50 dropped under 22,150 amid heavy selling pressure in banking and IT stocks.
Today around 3:30 PM, the BSE Sensex was trading at 73,192.35 down 1.90%, Nifty50 stood at 22,126.00,
Market sentiment remained cautious ahead of the GDP data release, with investors also reacting to recent comments from US President Donald Trump on tariffs, adding to the uncertainty.
Zerodha co-founder Nithin Kamath has highlighted a significant slowdown in trading activity, stating that the markets are undergoing a correction, and the number of traders and trading volumes have dropped sharply across brokerages.
Kamath noted that market cycles tend to swing between extremes, and while he does not predict where the market will go next, he emphasized that the broking industry is experiencing its first degrowth in 15 years.
He shared a trading volume chart, which indicates that activity across brokerage firms has declined by more than 30%. This trend, combined with SEBI’s true-to-market circular, has led to a decline in business for brokers. Kamath also pointed out that this drop in trading volumes highlights the shallow nature of Indian markets, where participation remains largely restricted to 1-2 crore active traders.
Furthermore, he warned that if the current trend persists, the government’s Securities Transaction Tax (STT) collections for FY 2025-26 could fall to ₹40,000 crore, significantly below the estimated ₹80,000 crore, reflecting a potential 50% decline in revenue.
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 of traders and volumes. Here is the trading volume chart. Across brokers, there’s a more than 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. This drying up of volumes shows how shallow the Indian markets still are. The activity is more or less among those 1-2 crore Indians. By the way, if this continues, the government will not make even Rs 40000 cr from STT in FY 25/26, at least 50% below the Rs 80,000 cr estimate – Nithin tweeted
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
Fall from highs across indices:
- Nifty: -15%
- Nifty Midcap: -21%
- Nifty Smallcap: -25%
Sector-wise decline from highs:
- Nifty Metals: -20%
- Nifty IT: -19%
- Nifty Bank: -10%
- Nifty PSE: -30%
- Nifty Realty: -30%
