“Markets are back at all-time highs, but it doesn’t feel like a bull run because retail activity isn’t picking up,” he said. And the reason is the high-interest rates.
“Active clients on NSE, Google, and social media trends are way below all-time highs. Unlikely that activity will pick up given the higher interest rate environment,” he added.
Kamath, who is known for his educational tweets on all things stock markets, said the real competition to Zerodha is not its peers, but the bank fixed deposit rates.
“I keep telling our team that our competition is really the bank’s fixed-deposit rates, not our peers. Most retail investors question whether taking the added equity risk is worthwhile when govt bonds and FDs yield 7% plus,” the Zerodha boss said.In a bid to arrest high inflation levels, the Central Bank effected six consecutive rate hikes since last year May before opting for a pause earlier this year. High-interest rates in the economy meant that banks had to follow suit and raise the deposit and lending rates, thereby offering investors lucrative options with lesser risk compared to equity markets.
Benchmark Nifty has offered about 5% returns in the last two months and analysts estimate the positive run to continue in the next 12 months.
Brokerage Prabhudas Lilladher valued Nifty at a 12% discount to the historical 10-year average PE (20.8x) with March 2025 EPS of 1,148 and arrived at a twelve-month target of 21,013.
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