Zerodha CEO Nithin Kamath Warns of Market Fall Risks

Nifty and Sensex Rally, But Kamath Sounds the Alarm

On Tuesday, April 8, 2025, domestic stock markets rebounded sharply with Sensex jumping over 1,000 points and Nifty gaining more than 350 points, ending the day up by 1.49% and 1.69%, respectively. Despite this positive momentum, Zerodha CEO Nithin Kamath cautioned investors with a data-backed warning.

“If Markets Crash Sharply…” – Kamath’s Insightful Warning

Just before markets closed, Kamath took to social media to share key insights gathered over the last five years. He pointed out a “crazy thing” — retail investors have been net buyers of equities throughout this entire period, regardless of volatility.

"One of the crazy things about the last five-odd years is that retail investors have consistently been net buyers of equities. Whether they'll continue to buy the dip is anybody's guess," said Kamath.

Retail Investors Bought ₹8,000 Cr in One Day

Kamath highlighted that the highest spike in retail buying happened on Election Results Day in 2024, when investors poured over ₹8,000 crore into equities. However, he warned that the trend could change dramatically if markets decline further.

Lessons from History: 2008–2014 Equity Drought

Referring to the post-2008 financial crisis, Kamath shared a sobering reality: from 2008 to 2014, equity inflows were virtually non-existent. This historical parallel serves as a reminder that sharp market downturns often scare away retail investors for years.

Kamath’s Key Data Points:

• Retail investors consistently net buyers since Jan 2020

• Peak buying in 2024 during Election Day

• 2008–2014 saw stagnant retail participation

• Current fear: another long-term withdrawal if crash occurs

Broking Industry Facing Volume Decline

This isn’t the first time Kamath has spoken out. Earlier in 2025, he noted that trading activity has dropped by over 30% across brokers, signaling a slowdown in retail participation. “We’re seeing degrowth for the first time in 15 years, which shows how shallow Indian markets still are,” Kamath added.

Market Sentiment Mixed Amid Recovery

Despite Tuesday’s rally, investor sentiment remains fragile. Volatile global trends, uncertain monetary policy, and domestic political uncertainty ahead of the 2025 general elections continue to keep markets on edge.

Key Takeaways for Investors

What Kamath Suggests:

• Retail investors should remain cautious, especially during sharp rallies or sell-offs.

• It’s important to assess long-term goals and not follow market noise.

• The behavior of retail investors can determine market stability in coming months.

Final Word

While markets may appear bullish in the short term, Nithin Kamath’s warning serves as a critical checkpoint for investors to reassess their strategy. With data-backed insights and historical parallels, it is clear that stability, not speculation, will define investor success in 2025.