8 of top 10 brokers see a drop in active investors in February as market gloom deepens

Most brokers see a decline in active investors

Eight of the top 10 brokers saw a drop in active investors in February as retail investors shied away from the markets after five consecutive months of correction, according to data from the National Stock Exchange.

The market leader and the country’s largest brokerage house Groww saw its active investors drop by more than 2.2 lakh, a decline in active users for the first time since March 2023. Bengaluru-based Groww started direct stock investments in mid-2020 and had around 1.3 crore users at the end of February.

The decline comes even as Groww is preparing for an IPO, even though the company’s wide margin with other brokers gives it an advantage. Zerodha and Angel One had 79.5 lakh and 76.5 lakh active investors as of February.

The top three brokers, Groww, Zerodha and Angel One, had investor bases of around 1.32 crore, 81 lakh and 78 lakh, respectively as of January. Among the top ten broking firms, only HDFC securities and Dhan saw a growth in active investors.

According to NSE, anyone who has done at least one active trade in the last 12 months is considered an active investor.

Zerodha and Angel One also saw more than a lakh decline in investors during the last month. This is the third straight month of decline in active investors for Zerodha while the second consecutive month of decline for the fourth largest broker, Upstox.

The top four players – all discount brokers –  thrive on futures and options (F & O) trading. The market regulator Sebi clamped down on derivatives trading late last year after several studies found that around 90 percent of retail investors lost money in F & O trading. This affected the active investor decline by most of the brokers. Discount brokers dominate the country’s broking industry.

Elevated valuations, a slowing economy, weak earnings growth and the global tariff war under the new Trump administration have further weighed on the overall market sentiment.

The new demat account creations have also dropped to a 21-month low. Around 22.6 lakh new accounts were added during the month, the slowest growth since May 2023 and the second consecutive month of deceleration, data showed. In January 2025, new demat account additions stood at 28.3 lakh versus 32.6 lakh in December 2024. As of February, the total number of demat accounts registered with NSDL and CDSL has reached 19 crore, up from 18.8 crore in the previous month.

Broking firms are also bracing for higher taxes on trading, lower exchange rebates, and stricter restrictions on retail futures and options trading during the current financial year. Most broking firms could see a 30-50 percent hit to the topline during the second half of FY 25.