All four of the country's top stock brokers saw a third straight month of decline in active investors, according to data available with the National Stock Exchange (NSE) of India.
While the country’s largest broker, Groww, and third-largest broker, Angel One, saw around 75,000 fewer active investors in April, the second-largest broker, Zerodha, saw its active investor base decline by more than 55,000 users.
For Bengaluru-based Zerodha, which pioneered the discount broking/zero brokerage model in India, this was the fifth consecutive month of decline in active investors.
Active investors are those who have made at least one trade (buy or sell) during the preceding 12 months.
Groww had lost around 3 lakh active investors from its peak figure of around 1.32 crore. Zerodha’s active investor base shrank to 78 lakh active investors in April from 81 lakh active investors in November 2024.
Declining active investors
The declining trend comes even as the markets saw more than a 3 percent gain in April on top of the 6 percent gain in March. However, these modest gains came after markets corrected by around 20 percent between last September and February this year.
Usually, the trend of customer addition or decline happens with a lag of a few months to the market sentiment or returns. Even though markets started falling from September 2024, the brokers saw a decline in customer base only from around November-December.
Despite the rise in returns for two months, brokers say that May is unlikely to see a revival as the India-Pakistan war and Donald Trump’s tariffs created uncertainties apart from the lacklustre corporate earnings during the Q4 of FY25.
While the number of demat accounts or investors is around 160 million or 16 crore, the number of unique users is around 5 crore.
Interestingly, bank-backed traditional full-service brokers have continued to see the addition of active investors even during the last six months. These include HDFC Securities, ICICI Securities, SBI Cap and Yes Securities.
Smaller brokerage houses like INDMoney, Dhan app, and PhonePe’s Share.Market has also seen new active investors coming to their platform during the last six months.
More headwinds
Broking firms are, however, bracing for higher taxes on trading, lower exchange rebates, and stricter restrictions on retail futures and options trading since late last year. Most broking firms could see a 30-50 percent hit to the topline during the second half of FY 25.
Angel One, which is listed in the markets, reported a 49 percent fall in net profit for the three months ended March 31, 2025, to Rs 175 crore, compared to Rs 340 crore reported in the corresponding quarter in FY2024. Consolidated revenue sank 22 percent to Rs 1,056 crore, sinking from Rs 1,357 crore posted in the same period last year.
Angel One's managing director, Dinesh Thakkar, attributed the poor results to the industry headwinds from the implementation of F&O regulations alongside a volatile geopolitical backdrop.
Other than Angel One, all the other top four players are private companies, and the impact of these regulatory changes will be known only later this year when they announce their FY 25 results.
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