Indian stock markets are undergoing a significant correction, leading to a sharp decline in trading volumes across brokerage platforms.
With indices sliding and investor sentiment turning bearish, brokerage firms are witnessing their first major slowdown in over a decade, which is likely to hit their revenues, according to industry experts.
Nithin Kamath, Chief Executive Officer of Zerodha, highlighted a significant drop in trading activity, with volumes across brokers plunging over 30 per cent.
“Across brokers, there’s a more than 30 per cent 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,” his post read.
The Nifty 50 has recorded its longest losing streak since inception, falling for the fifth consecutive month and down over 15 per cent since its peak in September.
Since all time high levels, the average daily turnover of options trading has fallen 46 per cent to ₹47,897.3 crore in 2025, while that of equity has fallen 42 per cent from highs to ₹88,408.6, according to NSE data. The drop in retail turnover in both categories is seen around 41 per cnet with an estimated drop of retail turnover has declined 41 per cent.
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“There is a step back from all investors, primarily because the markets are falling — and they are falling sharply. Activity across brokerages will only pick up when the markets go up,” said Tejas Khoday, Co-founder & CEO of FYERS.
He also noted that the rate at which new accounts are being opened has slowed, especially from tier 2 and tier 3 cities.
“Before the correction, people started to feel like it was the right time to take some chips off the table. That led to a continuous fall in stock prices,” said Khoday.
Regulatory changes
Apart from market volatility, regulatory changes are also playing a role in curbing trading activity. SEBI’s recent measures, including increasing contract sizes and limiting expiries in the derivatives segment, have reduced retail participation. “Brokers had an incentive to promote the options segment, but new rules have taken that away, leading to less aggressive promotion,” said Khoday.
Including true-to-label and the other futures and options regulations, all discount brokers are facing 15-20 per cent hit on their revenues, according to a top official at a large broking firm.
‘Worst over’
“There has been a market-wide impact on volumes across brokers. Once people get used to the newer regulations such as margin requirement, and lot size changes, among others, activity could improve. Most of these regulations are in place now, so the worst is over,” said Amit Lalan, director at Upstox. “At the same time, market sentiments are also currently down. Once the market trend reverses, volumes will improve,” he said.
Kamath, in his post, pointed out that the decline in trading volumes underscores the market’s limited depth, as most activity is concentrated among just 1-2 crore traders. The slump could have wider implications, including a potential shortfall in the government’s securities transaction tax (STT) collections. If the trend persists, he estimates STT revenues for FY25/26 could fall below ₹40,000 crore — not even 50 per cent of the ₹80,000 crore being estimated.
The STT is a type of tax that is charged on the purchase and sale of securities like stocks, mutual funds, and derivatives on recognized stock exchanges in India.