'Money is with Gujjus': Nithin Kamath reveals Gujarat's financial clout
What's the story
Zerodha co-founder Nithin Kamath has underscored the importance of Ahmedabad and Mumbai in India's stock market. The two cities contribute 80% of equity delivery trades in the country. Kamath brought this fact to light in a recent post on X, saying "Essentially, the real money is with Gujjus." With this, he highlighted the financial strength of Gujarat's trading community. Interestingly, despite their massive contribution to equity trades, Gujarat only accounts for 8% of India's total registered investors.
Investor decline
Gujarat's investor base is shrinking
Kamath pointed out that this investor percentage is on a downward slope. This poses a paradox as to how a region with a shrinking investor base can hold such tremendous sway over the stock market in the country. The answer could be in the distinctive investment strategies of the Gujarati community.
Strategic approach
Gujarati community's investment strategies
Trustscore founder Shweta Sharma, replying to Kamath's tweet, implied that the Gujarati community's success in investing is due to their patience and abundant resources. She wrote, "Investments require a blend of patience and substantial resources, and when it comes to these qualities, the Gujarati community shines brighter than most in India." Their tactical approach has allowed them to deftly maneuver through the intricacies of investing with grit.
Investor distribution
Maharashtra leads in investor registrations
Kamath's data reveals that Maharashtra still remains the top state in terms of registered investors among Indian states, despite a marginal decline over the years. Its share fell from 20% in FY10 and FY15 to 19% in FY20, and then to 17% by FY25. Meanwhile, Uttar Pradesh has shown consistent growth, going from 6% in FY10 to a steady 13% by FY25.
Market influence
Gujarat's influence on the stock market is waning
Gujarat's share of registered investors has steadily fallen from 12% in FY10 to 9% by FY25, showing a gradual decline in its dominance. Other states such as Karnataka, Tamil Nadu, and West Bengal have kept their shares stable at 6-7%. Delhi and Madhya Pradesh have witnessed slight declines, with Delhi dropping from 7% in FY10 to 4% by FY25. These trends indicate shifts in India's equity market landscape.
Market dominance
Mumbai and Ahmedabad dominate stock exchange turnovers
Mumbai remains India's financial powerhouse, dominating turnover contributions across major exchanges. In November 2024, it contributed around 31.15% of turnover on the BSE and 27.20% on the NSE. Ahmedabad also was a major player, contributing 25.37% of turnover on the BSE and 16.87% on the NSE. These numbers highlight the importance of these cities in India's stock market activity.
IPO involvement
Gujarat's high participation in IPOs
Despite a shrinking investor base, Gujarat remains a key player in the stock market. Kamath had once praised the state for having the highest participation in initial public offerings (IPOs) at nearly 40%. He had said, "Gujarat accounts for about 9% of the total investor customer base, but they account for 40% of IPO participation in both retail and HNI categories." This only emphasizes the financial clout of the region.