Major brokers see active investor addition fall dramatically in Jan, Zerodha sees decline for second straight month

Active investor addition decline dramatically for brokers

Most large brokers saw a dramatic fall in active investor addition in January as the stock markets saw the fourth consecutive month of negative returns, according to National Stock Exchange (NSE) data.

Zerodha reported the second straight month of declining active investors, while market leader Groww and third largest broker Angel One also saw a tepid response from retail investors. It is usual for the brokers to see customer addition mirroring the market sentiment, though Groww was an exception to the norm until recently.

Bengaluru-based Zerodha saw its active investors decline by around 37,000 in January. It had seen a small decline of 5,000 users in December. The fourth largest broker Upstox has also seen a decline of 28,000 active investors.

The country’s largest broker Groww only added 76,000 users in January, its monthly additions falling below one lakh for the first time in more than a year. The country’s third-largest broker, Angel One, added 13,000 users during the first month of the year, again the lowest in more than a year.

The active investor addition has been on a decline since June 2024 for the top three brokers. During that month, Groww added more than 5.5 lakh investors.

Top 3 brokers' active investor data for January

“A slowdown in investor addition was expected after the prolonged bearish sentiment in the markets. It often happens with a lag and we are starting to see this impact the brokers now. No amount of advertising and marketing can attract retail investors to this market as of now,” said a chief executive of a mid-size broking firm.

To put these numbers in context, Groww was adding 4 lakh users every month on average last year and 2 lakh in 2023. Zerodha was adding more than a lakh users every month in 2024 and Angel One was adding two lakh active investors.

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.

Last year turned out to be a blockbuster year for brokers despite lower returns compared to 2023. Even in October, November and December, when the markets hit the lowest levels this year, the customer addition remained better than most months of 2023.

However, the overall market sentiment over the last four months has been bearish following the US election, a slump in Indian urban consumption, the global economic slowdown and the new tariff war since Trump took the US presidency.

While 2024 saw around 9 percent return in the stock market, Indian equity markets saw good returns of around 20 percent in 2023. But the new investor addition was better in 2024.

While the number of demat accounts or investors is around 160 million or 16 crore, the number of unique users is around 5 crore.

“There is a lot of room to grow before we reach any saturation point. The growth will be cyclical according to market sentiment and returns, the economy continues to grow and we will see more investors coming for a couple of decades,” Ujjwal Jain, CEO of Share.Market, told Moneycontrol last month. The discount broking platform is run by payments firm PhonePe, which has seen rapid user growth since April.

Broking firms are, however, 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.