Stock Broking Competition Heats Up as Angel One Gains Ground on Zerodha
The stock broking industry is witnessing a fierce battle for market share. The gap between the second and third largest players by active client count has reached its narrowest point in five years. This development signals a significant shift in the competitive landscape.
Active Client Numbers Tell the Story
Recent data from the National Stock Exchange reveals a tight race. Zerodha reported 6.85 million active clients for the nine months ending December. Angel One followed closely with 6.76 million active clients. The difference between the two stands at just 90,000 clients.
This represents a dramatic narrowing from previous years. The gap was 311,000 clients in the last fiscal year. It was a much larger 1.17 million clients in FY24. The trend clearly shows Angel One is catching up quickly.
Officials from Angel One chose not to comment before their third quarter results announcement. A query sent to privately-held Zerodha remained unanswered at the time of reporting.
Angel One Reports Market Share Growth
Angel One provided a business update to stock exchanges last Thursday. The company reported a retail turnover market share of 20.4% for Q3FY26. This represents a year-on-year growth of 34 basis points.
The market share covers overall equity including cash segment turnover, notional turnover for equity futures, and premium turnover for equity options. However, it showed a slight decline of 4 basis points from the previous quarter of the current fiscal year.
Zerodha's Philosophy on Client Engagement
Nithin Kamath, co-founder of Zerodha, shared his company's approach on social media platform X in December. He explained their strategy differs from typical finance applications.
"From day one, we've avoided the standard playbook for finance apps," Kamath stated. "We don't use push notifications to encourage trading. Our landing screens don't display 'trending stocks' or 'most traded F&O contracts.' We avoid dark patterns designed to manufacture activity."
He emphasized that Zerodha has actually built features that reduce trading activity. "We want customers who trade thoughtfully to stay with us longer. This benefits both customers and our company," Kamath added.
The co-founder revealed an important policy detail. "No one at Zerodha receives incentives based on brokerage revenue. This has been our policy since the beginning." He acknowledged the challenge of resisting shortcuts that could boost revenues.
Industry-Wide Slowdown Hits Client Numbers
The entire stock broking industry is experiencing a slowdown in active client growth. The overall active client count dropped by 4.63 million to 44 million as of December 2025.
This decline stems directly from regulatory changes. The Securities and Exchange Board of India implemented a graded crackdown on weekly options trading starting November 2024. The measures included several key changes:
- Ticket sizes for Nifty and Sensex contracts increased to ₹15–20 lakh from ₹5–10 lakh
- Extreme loss margins rose on weekly expiry days
- The number of weekly expiries an exchange could launch reduced to one from multiple earlier
These reforms particularly affected new age digital brokers. They reduced participation at the lower end of the trading spectrum.
Market Leader Also Feels the Impact
The regulatory changes impacted even the industry leader. Groww, the number one broker by active clients, saw its count fall by 790,000. The company reported 12.1 million clients as of December this year, down from FY25 numbers.
Amit Chandra, vice president of research at HDFC Securities, explained the situation. "The rise in contract sizes, increased loss margins, and rationalization of weekly expiries have driven the participation decline," he said.
Chandra predicted future market dynamics. "Going forward, we will see more algorithm versus algorithm trading rather than algorithm versus human trading. High-net-worth individuals and ultra HNIs will increasingly spar with high frequency traders."
Market Reaction and Stock Performance
Despite the industry challenges, Angel One shares performed well on Tuesday. The stock closed almost 3% higher at ₹2,439.3 per share. This gain occurred even as the benchmark Nifty ended 0.22% lower at 25,732.3.
The stock broking sector continues to evolve rapidly. Regulatory changes reshape participation patterns while competition intensifies among major players. The narrowing gap between Zerodha and Angel One highlights how quickly market positions can change in this dynamic industry.
