Despite the growing buzz around rising investor participation from Tier 2 and Tier 3 towns, Zerodha co-founder and CEO Nithin Kamath believes the reality may be different.
In a recent LinkedIn post, Kamath pointed out that while KYC data suggests a surge in users from smaller towns, actual trading activity tells another story.
He explained that most users do not update their addresses after relocating to larger cities for work. As a result, their accounts may still show Tier 2 or 3 locations, even though they are trading from major urban centers.
“When we look at trading activity based on IP addresses — which show where users are actually logging in from — most of it still comes from India’s top 20 cities,” Kamath said.
He highlighted cities like Pune and Bengaluru as examples, noting that these are common destinations for professionals moving for jobs.
This often creates a misleading impression that more people in smaller towns are actively trading in the stock market.
Kamath advised caution when interpreting such data, especially when drawing broader conclusions about retail investor participation and the deepening of financial markets across India.
Kamath clarified at the end of his post that his conclusion was based on the data which came solely from Zerodha’s customer base. He added that it may not reflect trends across the entire industry.