Zerodha’s Nithin Kamath After 1,400-Point Sensex Crash: ‘No Idea Where The Markets Go From Here’

Nithin Kamath, founder of online brokerage firm Zerodha, has expressed concerns about the ongoing market correction and its potential impact on the Indian government’s revenue from Securities Transaction Tax (STT). Kamath believes that if the current market correction continues, the government’s revenue from STT could plummet by 50% to Rs 40,000 crore in FY 2025-26, significantly lower than the estimated Rs 80,000 crore.

Kamath highlighted the sharp decline in trading activity, which is down over 30% across brokerages. “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,” he added in a post on X (formerly Twitter).

This is the first time Zerodha has experienced such a downturn since its inception 15 years ago. According to Kamath, this decrease in trading volumes reveals the limited depth of the Indian stock market, with participation largely concentrated among 1-2 crore Indians.

*Why Market Is Down Today?*

On Friday, February 28, 2025, the Indian benchmark indices, Nifty50 and Sensex, experienced a significant drop, driven by the impact of President Trump’s tariffs, ongoing Foreign Institutional Investor (FII) selling, and weak global cues. The BSE Sensex crashed 1,400 points to 73,189, while the Nifty50 slipped below the 22,150 level.

The domestic benchmark index, Nifty, commenced the day with a downward gap due to weak global cues, faced heavy selling pressure, and settled negatively at 22,125. The volatility index, India VIX, surged by 4.39% to 13.89, indicating heightened market volatility. Moreover, the broader market underperformed Nifty, with the Nifty Midcap 100 and Nifty Smallcap 100 indices losing around 2.49% and 3.01%, respectively.

“Domestic investors went into a panic mode and offloaded equities at will, as weak global market cues sparked a major selloff causing benchmark indices to crash nearly 2%. There is a lot of discomfort amongst the investors over Trump announcing imposition of import levies on several nations,” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.