NSE Nifty 50 is just 100 points away from its all-time high. While analysts believe that the benchmark index will touch a fresh high soon, Zerodha founder and CEO Nithin Kamath is not convinced that the bull run has started. He pointed at the active NSE clients and social media trends, which are way below their all-time highs. He further said that the real competition of Zerodha is not its peers but the bank’s high FD rates which have attracted retail investors over time.
Markets are back at all-time highs, but it doesn’t feel like a bull run because retail activity isn’t picking up. Active clients on NSE, Google & social media trends are way below all-time highs. Unlikely that activity will pick up given the higher interest rate environment 1/3 pic.twitter.com/0n0AWZrV0f
NSE Active Clients Data
Meanwhile, the total number of active clients at NSE declined for the tenth consecutive month by 16.3% on-year and 4.6% on-month to 31.2 million in April 2023, according to Motilal Oswal’s report. The intensity of the fall was higher at 1.5 million accounts in April 2023 against 0.9 million in March 2023. The top five discount brokers account for 60.1% of the overall NSE active clients, an increase from 60% in March 2023. In April, Zerodha reported a 1.6% on-month decline in its client counts to 6.3 million, with a 62 bp rise in market share to 20.2%.
Apart from the declining active clients, the Google trend shows that while the search for the keywords ‘Nifty 50’ and ‘BSE Sensex’ was at its peak in 2022, it has declined over time and the graph shared by Nithin Kamath suggests that the interest is still decreasing.
I keep telling our team that our competition is really the bank’s fixed-deposit rates, not our peers. Most retail investors question whether taking the added equity risk is worthwhile when govt bonds and FDs yield 7%+. 2/3
— Nithin Kamath (@Nithin0dha) June 16, 2023
“I keep telling our team that our competition is really the bank’s fixed-deposit rates, not our peers. Most retail investors question whether taking the added equity risk is worthwhile when govt bonds and FDs yield 7%+,” Nithin Kamath added.
While the govt bonds and FDs give 7%+ returns, in equities it is not fixed and is riskier. So to avoid risk, some retail investors choose FDs over stocks. From a returns perspective, Bank Nifty has gained over 1.1% year-to-date, Nifty Financial Services rose 1.3%, Nifty Private Bank jumped 1.6% while Nifty PSU Bank has fallen 7.8% in the same period. In comparison, the benchmark, Nifty 50 has jumped over 3% YTD.