Is India’s online trading boom facing a reality check?

Kausen Jahan, a 27-year-old marketing professional who lives in Udaipur, India, started trading for the first time in late 2020.

Like millions of retail investors in India who flocked to various brokerage platforms amid the Covid-19 pandemic, Jahan wanted to earn additional income. Initially, she started off with Groww and then opened accounts with both Zerodha and Angel One.

Image credit: Timmy Loen

“I found Zerodha’s interface to be a bit trickier and more difficult to navigate. So I mostly used Groww,” she says. However, according to Jahan, Groww’s app has been crashing during trading hours in recent months.

Founded in 2017 by former Flipkart employees, Groww, which has raised close to US$400 million, has been in a fierce competition with Zerodha, which was considered India’s hottest stockbroking app at one point.

However, maintaining growth beyond the Covid-19 surge has posed significant challenges for these firms due to market volatility, a decline in new account opening, and limited customer engagement in stock trading.

Passing the peak?

Brothers Nithin Kamath and Nikhil Kamath launched Zerodha in 2010. Since then, they have bootstrapped the company, with the goal to make trading in the stock market accessible to everyone.

Zerodha co-founder and CEO Nithin Kamath / Photo credit: Nithin Kamath’s Linkedin profile

See also: Trial by fire awaits Zerodha, India’s hottest stockbroking app

With its zero-brokerage model, Zerodha’s popularity exploded, particularly during the Covid-19 pandemic. Faisal Mohammed, the firm’s associate vice president of business, tells Tech in Asia that most of the company’s new retail investors entered the market during this period.

Zerodha says that its user base jumped from 800,000 in 2018 to nearly 12 million in 2023. According to data from India’s National Stock Exchange (NSE), Zerodha had about 6.5 million monthly active users (MAUs) as of October. Active users refer to those who trade at least once in the last 12 months.

Jimeet Modi, CEO and founder of stockbroking firm Samco Securities, says Indian users became more risk tolerant toward stock investment during the pandemic. In May 2020, India’s commercial banks also increased the home loan interest rates and decreased fixed deposit interest rates, which made stock investments a more viable option than other asset classes.

But that enthusiasm might be fading as people get used to the new normal.

Emerging challengers

Diversifying strategies