Retail investors exit stock markets in February, Groww worst hit
What's the story
The National Stock Exchange (NSE) data has shown a decline in active investors among eight out of the top 10 broking firms for February.
The drop comes as retail investors have been reluctant to engage with the market after five consecutive months of correction.
HDFC Securities and Dhan were the only two firms that managed to attract more active investors during this period.
Market leader's dip
Groww, India's leading brokerage, sees significant drop
Groww, India's largest brokerage firm with 1.3 crore users at the end of February, saw a drop of over 2.2 lakh active investors during the period.
This is the first time that Groww has seen a decline in active users since March 2023. The company started direct stock investments in mid-2020.
Other leading brokers, Zerodha and Angel One, also saw a dip of over a lakh in active investors last month.
This was the third consecutive month of falling active investors for Zerodha and the second consecutive month for Upstox.
Regulatory impact
SEBI's crackdown on derivatives trading affects brokers
The Securities and Exchange Board of India (SEBI) had restricted derivatives trading late last year, after research showed that nearly 90% of retail investors lost money in F&O trading.
This move has greatly contributed to the fall in active investors for many brokers.
The overall market sentiment has also been marred by elevated valuations, a slowing economy, weak earnings growth, and global tariff war under the new Trump administration.
Account creation dip
New demat account creations hit 21-month low
The creation of new demat accounts has also declined, hitting a 21-month low.
About 22.6 lakh new accounts were added during the month, the slowest growth since May 2023 and the second consecutive month of deceleration.
In January, new demat account additions stood at 28.3 lakh against December's 32.6 lakh.