Even as Indian stock markets soared through the first half of 2025, an unexpected trend emerged: the country’s top four discount brokerages — Groww, Zerodha, Angel One, and Upstox — collectively lost nearly 2 million active investors. This decline has raised eyebrows across the financial ecosystem, especially after a blockbuster 2024. So, what’s causing investors to walk away?
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Credits: Business Standard
From Boom to Blip: A Tale of Two Years
2024 was a golden year for discount brokers. Together, they added nearly 10 million new active investors, riding the wave of retail enthusiasm, bullish market sentiment, and easy access to tech-powered trading platforms. But 2025 has told a different story.
In the first six months of the year, these four platforms witnessed a combined loss of 1.9 million users:
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Groww: Lost 600,000 users
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Zerodha: Down by 550,000
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Angel One: Declined by 450,000
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Upstox: Shed just over 300,000
June alone accounted for 600,000 of these exits, even as the broader indices remained in the green for four consecutive months. This mismatch between stock market performance and investor activity points to deeper structural shifts.
SEBI’s F&O Shake-up: A Game-Changer for Retail
The most immediate culprit? New regulations from the Securities and Exchange Board of India (SEBI) around Futures & Options (F&O) trading.
In an effort to curb speculative behavior and protect novice traders, Sebi rolled out a series of changes in early 2025:
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Stricter margin requirements
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Reduced number of weekly expiries
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Higher capital requirements for F&O positions
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Increased taxation on derivative profits
These moves, while welcomed by risk-aware market veterans, have made F&O trading significantly less attractive — especially to retail investors who were drawn to the high-return potential of derivatives. Many of them are now either taking a break or exiting trading platforms altogether.
Banks and New-Age Players Seize the Moment
Interestingly, while top discount brokers lost steam, other players have been gaining ground.
Traditional, bank-backed brokers like HDFC Securities, ICICI Securities, and Kotak Securities are quietly expanding their active user bases. Their reputations for stability, advisory services, and full-stack financial products seem to be drawing in users who are disillusioned with the F&O-heavy discount model.
At the same time, newer platforms like INDMoney, Dhan, and Share.Market (by PhonePe) are managing to attract fresh investors. Their focus on long-term investing, integrated financial tools, and user education is resonating with a more cautious and digitally-savvy generation of investors.
IPO Frenzy Fails to Lift Sentiment
Despite the weakness in retail trading activity, the primary markets have been booming. From April to June 2025, ₹29,600 crore was raised through 15 IPOs, underscoring strong institutional interest and the depth of India’s capital markets.
Yet, this hasn’t translated into higher retail participation. In fact, Demat account additions slowed to 6.91 million in Q1 FY26 — the lowest in eight quarters. For context, Demat growth had been on fire for much of 2022–2024, often exceeding 10 million new accounts per quarter.
Credits: Moneycontrol
What Lies Ahead?
Experts believe that a mix of global economic uncertainties, a narrow stock market rally led by select large-caps, and disappointing Q1 earnings from key sectors have led to weak investor sentiment — especially among younger and first-time investors who entered during the 2021–2023 bull run.
The key question is whether these investors will return if market volatility eases and returns become more broad-based. Or will they continue to drift toward safer, longer-term investment options — like mutual funds, bonds, and fixed deposits?
For now, India’s top brokerages are facing a reality check. The days of easy growth may be behind them. To stay relevant, they’ll need to shift gears — from high-frequency trading to sustainable wealth creation, and from flashy UX to trust and education. The retail investor isn’t gone — they’re just evolving. And the platforms that adapt fastest to this shift will shape the next chapter of India’s investing revolution.
