India’s retail investing boom appears to be tapering off, as the country’s four largest brokerage firms – Groww, Zerodha, Angel One and Upstox – have collectively lost around 20 lakh active investors in the first six months of 2025, despite decent returns in the equity markets during the same period. This drop signals a deeper shift in investor sentiment, particularly among the retail crowd that had flooded into the market over the past few years. June alone witnessed a sharp contraction, with over 6 lakh clients becoming inactive across these platforms. According to internal exchange data, the breakup of client attrition since January 2025 stands as follows: Groww: 6 lakh Zerodha: 5.5 lakh Angel One: 4.5 lakh Upstox: Over 3 lakh F&O Cooling Off Industry experts attribute this exodus largely to a sharp decline in Futures and Options (F&O) trading interest, which has been under regulatory pressure. The Securities and Exchange Board of India (SEBI) had implemented a series of stricter norms in 2024 aimed at cooling down retail speculation in derivatives, including stricter margin requirements, reduced weekly expiry offerings, higher capital thresholds, and increased taxation on F&O gains. Retail participation in high-risk instruments like F&O has seen a sharp dip. SEBI’s regulatory tightening, combined with a greater understanding of the risks involved, has led many small traders to withdraw, said Rajesh Palvia, Senior Vice President at Axis Securities, in a statement to Moneycontrol. During the stock market bull run of 2023 and early 2024, lakhs of first-time investors and traders, many from Tier 2, 3, and even Tier 4 cities, flocked to discount brokers to ride the wave. But the subsequent volatility, market correction, and losses sustained by these unassisted retail investors have triggered disillusionment. Many of these new-age investors lacked access to quality research, risk management tools, or financial guidance, making them highly vulnerable in choppy markets. As losses mounted, account activity dropped. Adding to the problem, the onboarding process for new investors has become more complex, owing to tighter Know-Your-Customer (KYC) rules and compliance checks. This has slowed the inflow of fresh clients, putting additional pressure on brokerages. Where Are the Investors Going? According to Nirav Karkada, Senior Research Analyst at Fisdom, the exodus from discount broking is not a retreat from investing altogether – rather, it marks a shift toward regulated and structured investment vehicles like: Mutual Funds Portfolio Management Services (PMS) Alternative Investment Funds (AIFs) These products offer a professionally managed approach, which is less speculative and more aligned with long-term wealth creation, Karkada said. NSE Data And Broader Trends While the National Stock Exchange (NSE) saw a 44% surge in active investor accounts in 2024, reaching 5.01 crore, the momentum has visibly slowed in 2025. Broking firms are being squeezed by higher taxes, reduced exchange incentives, and SEBI’s clampdown on F&O speculation. The investor decline began around November-December 2024, tracking with the broader market’s downward trend since September. Even demat account growth, a key retail market indicator, has decelerated. Only 69.1 lakh new demat accounts were opened in Q1 of FY26, marginally down from the 69.3 lakh recorded in the previous quarter. As of June 2025, the combined demat accounts with NSDL and CDSL stood at 19.91 crore. IPO Ambitions Under Cloud? Meanwhile, Bengaluru-based Groww, which recently filed for an IPO with SEBI, may face investor scrutiny over its declining active user base. However, experts argue that a 5% drop in client activity is relatively modest considering the firm’s overall size and could be seen as a sector-wide issue rather than a company-specific concern.