India’s largest discount brokerages, namely, Groww, Zerodha, Angel One, and Upstox—have shed nearly 20 lakh active investors in the first half of 2025, despite the stock market clocking in gains for four straight months.
Fresh NSE data shows June alone saw a net outflow of six lakh clients from these platforms, capping a sobering six months marked by regulatory friction and fading retail enthusiasm.
This second straight quarter of decline comes as retail appetite for derivatives tapered, with the Securities and Exchange Board of India (Sebi) introducing a tighter leash on F&O trading norms. From higher margin requirements and reduced expiries to stricter eligibility criteria and higher taxes, the ecosystem has been decisively tilted away from casual traders.
Groww, which is also prepping for its public market debut, has lost six lakh clients since January. Zerodha, the industry leader, has seen 5.5 lakh users exit. Angel One and Upstox followed suit, with losses of 4.5 lakh and just over 3 lakh, respectively.
That said, the scale of the drop needs context. The four platforms together also added close to a crore new investors in 2024. So, this 5% dip in H1 2025, while worth talking about, is hardly alarming yet.
A correction, not a crisis
According to Trivesh D, COO of Tradejini, the dip reflects more of a structural recalibration than panic selling. “The stricter rules for trading in Futures and Options (F&O) have made some retail traders step back, especially after Sebi’s report showed that retail losses in derivatives rose 41% to over ₹1.05 lakh crore in FY25,” he said.
“Despite this, total derivatives turnover has remained steady, which suggests serious traders, institutions and algo players are still active. Many retail users have also stopped juggling multiple or dormant accounts. Switching between brokers based on fees or promotions is common, so active investor numbers are always a bit fluid. But yes, after volatile expiry sessions and losses, many step aside, at least for a while.”
Trivesh added that sentiment was further dampened by the rollercoaster market move in the first half of 2025. “The first couple of months were dominated by global jitters: tariffs, Middle East tensions, India-Pakistan conflict. After that, the markets largely moved sideways, which left little room for retail thrill-seekers. Add that to the withdrawal of global traders like Jane Street and you see the broader picture: cautious volumes, thinner retail churn.”
But he also suggested the tide may turn. “The market has held up, and if macro clouds clear, retail investors may come back once clarity and confidence return.”
Beyond the numbers
In addition to active users, new client additions have slowed too. Just 6.91 million demat accounts were opened in Q1 FY26, only marginally down from 6.93 million in the previous quarter. But it marks the slowest pace of growth in eight quarters. As of June-end, India had 199.14 million demat accounts.
Broking firms are feeling the heat from multiple sides, including higher taxes, lower exchange incentives, and tighter F&O rules. Historically, changes in retail participation tend to lag market moves. And while equities have gained since March, the volatility that began in late 2024 likely pushed newer investors to the sidelines.
“During the first six months, markets have been volatile, and recent changes in derivatives have also impacted activity,” noted Kranthi Bathini, Director at WealthMills Securities. “Many retail investors who had entered during the post-COVID bull phase have, for the first time, encountered prolonged market uncertainty. This has caused many to step back.”
Retail investors, typically more reactive to near-term returns and market stability, are showing signs of caution after a sustained period of speculative enthusiasm. The post-COVID boom drew millions of first-time investors into the market, many lured by the promise of quick gains in a rising tide. Now, faced with tighter norms, choppy expiry sessions, and lacklustre near-term returns, a section of this cohort appears to be sitting it out, at least for now.
IPO Watch
The lull in the primary markets during the first half of 2025 has only added to the dormancy in investor sentiment. Despite a slight revival in June, when 15 mainboard IPOs raised over ₹29,600 crore and 47 SME issues brought in ₹1,973 crore, subdued listing performances have kept many retail investors on the sidelines. The once-vibrant IPO frenzy has been replaced by a more cautious approach, with investors prioritising stability over speculative punts.
Retail investors, it seems, are no longer chasing momentum. They are choosing to sit out the noise and that, in some ways, might be a sign of a maturing market.
