The Truth Behind Surge in Tier 2 & 3 City Traders, according to Nithin Kamath
Zerodha founder and CEO Nithin Kamath has cautioned against jumping to conclusions about the increasing number of investors from Tier 2 and Tier 3 cities in India.
While KYC records suggest a rise in users from smaller towns, Kamath points out that actual trading activity tells a different story. “If you look at trading activity based on IP addresses, most of it comes from the top 20 cities,” he explained on social media. This discrepancy arises because many investors don’t update their addresses after moving from smaller towns to metros like Pune or Bangalore.
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This discrepancy arises because many investors don’t update their registered address after moving to bigger cities for work or other reasons. As a result, their accounts still show a smaller town as their location, even though they are actively trading from metros like Pune, Bangalore, or Hyderabad.
Nithin Kamath noted that this leads to a false impression that stock market participation is booming in non-metro areas. He urged caution when interpreting such data, especially when used to assess the growth of retail investing across the country.
He also clarified that his observations are based on Zerodha’s customer data and may not reflect the entire market, but emphasized the importance of understanding the nuances behind the numbers.
This insight serves as a reminder that data can sometimes be misleading without proper context, especially in the rapidly evolving Indian retail investment landscape.
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