“You see a lot of activity from Pune and Bangalore because….”, Zerodha CEO Busts Myth of Tier 2-3 Trading Boom
"You see a lot of activity from Pune and Bangalore because….", Zerodha CEO Busts Myth of Tier 2-3 Trading Boom
Nithin Kamath clarifies misleading investor data, says top 20 cities like Pune and Bengaluru still dominate trading activity.
Amid rising reports of increased retail investor participation from India’s Tier 2 and Tier 3 cities, Zerodha CEO Nithin Kamath has issued a clarification that challenges this popular narrative. In a recent post on X (formerly Twitter), Kamath explained that the Know Your Customer (KYC) address data often misrepresents the actual locations from which trading takes place.
There's a lot of talk about a huge influx of traders from Tier 2 and 3 towns. This data may be a little misleading. Let me explain.
— Nithin Kamath (@Nithin0dha) May 20, 2025
If one looks at trading activity by looking at the addresses of users as per their KYC, you'll see a lot of users from Tier 2 and 3 towns.… pic.twitter.com/A5CoP1Bvrw
Kamath warned against reading too much into KYC data, noting that many users fail to update their registered addresses after moving to metropolitan areas for work. As a result, while their accounts may reflect smaller towns, their actual trading activity often originates from major cities like Pune and Bengaluru.
“You see a lot of activity from Pune and Bangalore because they are among the go-to destinations for people relocating for work,” Kamath wrote.
He emphasized that a more accurate way to measure trading activity is through IP address analysis, which reveals that the majority of trades still stem from India’s top 20 urban centers.
“If you look at user activity by IP addresses, the bulk of it comes from top cities, not Tier 2 and Tier 3 towns. The KYC data creates a misleading picture,” Kamath added.
The Zerodha founder’s post serves as a reality check at a time when headlines often suggest a grassroots boom in equity participation from smaller towns. Kamath’s insights underscore the importance of contextualizing data when assessing trends in investor behavior.
He concluded with a disclaimer, stating that his observations are based on Zerodha’s internal customer data and may not necessarily reflect trends across other platforms.
