Retail Investors Sell Rs 13,000 Crore In 4 Months, But Zerodha Users Defy Trend: Nithin Kamath

Retail investors sold nearly Rs 13,000 crore worth of direct equities in four months, according to Zerodha Founder & CEO Nithin Kamath, even as clients on his platform emerged as net buyers during the same period.

In a post on X, Kamath said, “Individual investors apparently sold Rs 13,000 crores of direct equities from December 2025 to March 2026. Our clients were net buyers to a similar tune.” He added that most retail participation is now being channelled through mutual funds, noting that “direct retail ownership has been pretty much flat to declining.”

Data shared by Zerodha shows a broader shift in ownership patterns in India Inc, with domestic investors steadily increasing their shareholding in companies listed on the National Stock Exchange. Domestic institutional investors (DIIs) now hold 19.2% of NSE-listed firms, surpassing foreign institutional investors (FIIs), whose ownership has declined to 16.1% as of 2026.

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A key driver behind this transition is the rapid rise in mutual fund participation. Holdings by mutual funds have climbed to 11.5%, more than tripling over the past decade, supported by strong inflows through systematic investment plans (SIPs) and growing retail participation in financial markets.

Retail investors' direct ownership has risen gradually to 7.1%, while high net-worth individuals (HNIs) have remained relatively stable at around 2%. FIIs, once dominant with over 20% ownership during 2015–2017, have seen their share decline amid global volatility and shifting capital flows.

The data highlights a structural pivot in India's equity markets, where domestic capital is increasingly driving flows. Rising financialisation of savings, deeper mutual fund penetration, and improved investor awareness have reduced reliance on foreign capital, while domestic inflows have helped cushion markets during periods of FII outflows.

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In a separate post earlier this week, Kamath flagged mixed signals in the market. “If you look at listed brokers, you'd probably think we are in a bull market, but the data shows something else,” he said.

“Cash market turnover is still below where it peaked in late 2024. Net direct equity inflows, for example, are negative for the first time since FY19,” Kamath noted, adding that strong enthusiasm around capital markets may be driven by record mutual fund inflows. “Gross SIP flows are at a record ~32,000 crores.”

He also pointed to rising speculative activity. “The MTF book across the industry has grown significantly. Our own book has grown from 0 to ~7000 crores in about 1.5 years,” he said.