After four years of frenzied growth and record retail investor participation, the stock market’s upward trajectory may be losing steam.
“Given the euphoria of the last few years, it’s difficult to continue with the same optimism for the next few,” Zerodha co-founder Nithin Kamath was quoted as saying in an Economic Times report.
This anticipated 'plateau' in the market, Kamath believes, could reshape the growth outlook for major firms in the sector.
The BSE Sensex, which recently hit a high of 85,000, has pulled back to around 77,500, marking a steady decline over recent trading sessions. Yet, despite this pullback, retail engagement remains robust, especially with a recent surge of initial public offerings (IPOs) bringing a new wave of companies into the market. Kamath views this trend positively, suggesting it could further encourage younger investors.
"While retail participation in stock trading has held steady over the past six to eight months, there are broader economic factors at play,” Kamath added in the report, expressing caution about the larger job market and macroeconomic trends, especially the impact of artificial intelligence on employment.
Zerodha, valued at $3.6 billion in 2023, is feeling the heat as startup Groww and veteran Angel One ramp up competition, particularly in active user numbers. According to NSE data from October, Groww leads with 12.5 million active traders, overshadowing Zerodha's 8 million and Angel One’s 7.5 million.
“Multiple players growing in the same ecosystem is a positive—it strengthens the capital markets overall,” Kamath said. To stay competitive, Zerodha recently slashed its account opening fees to zero, boosting new account creation by 20%, with over 250,000 accounts opened monthly.
Despite competition, Zerodha remains financially robust, reporting Rs 8,370 crore in revenue and Rs 4,700 crore in net profit for FY 2024. Expanding beyond trading, the company is building a credit portfolio, with new offerings like loans against shares and mutual funds. Already holding Rs 350 crore in assets under management, Zerodha disburses Rs 80-90 crore in secured loans each month. Alongside its core brokerage, it also has stakes in its asset management arm, Zerodha Fund House, and its venture capital wing, Rainmatter Capital, backing over 90 companies.
Meanwhile, Tuesday’s session brought a welcome rally, with the Sensex climbing over 1,000 points and Nifty50 crossing 23,750, driven by renewed sector-wide buying. Heavyweights like HDFC Bank, Reliance Industries, and Infosys buoyed the gains, while auto, IT, and real estate stocks also posted positive moves. Lower volatility, indicated by a drop in the India VIX, added to the day’s momentum.