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Nithin Kamath, founder of Zerodha, warns that if the market correction continues, India’s revenue from Securities Transaction Tax could drop by 50% to Rs 40,000 crore in FY 2025-26.
Zerodha’s Nithin Kamath Warns of 50% Drop in STT Revenue Amid Market Correction.
Stock Market Today: Nithin Kamath, founder of online brokerage firm Zerodha, believes that if the current market correction continues, the Indian government’s revenue from Securities Transaction Tax (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, 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 the X post.
He stated that this is the first time Zerodha has experienced such a downturn since its inception 15 years ago. This decrease in trading volumes, according to Kamath, reveals the limited depth of the Indian stock market, with participation largely concentrated among 1-2 crore Indians.
The Indian stock market has been experiencing a correction phase in recent months, with benchmark indices Nifty and Sensex falling sharply from their record highs last year. Factors contributing to this correction include concerns over US President Donald Trump’s tariff policies, weak global economic indicators, and sustained selling by Foreign Institutional Investors (FIIs).
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
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 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, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates Ltd.
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,” Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
