The recent conflict in West Asia has prompted increased activity among retail investors in India, even as overall market participation shows signs of stabilizing following the post-pandemic surge, according to Ravi Kumar, cofounder and CEO of discount brokerage Upstox. In an email interview, Kumar described a shift toward more risk-conscious and disciplined trading approaches amid the heightened volatility.
Kumar noted that the crisis has driven investors to engage more actively with market fluctuations by rebalancing portfolios and employing hedging strategies to manage uncertainty. He emphasized that volatility is an inherent characteristic of financial markets and suggested that Indian retail investors are maturing in their response to such conditions.
Data from the financial year 2025-26 (FY26) indicates a moderation in new demat account openings and a contraction in the active client base. Kumar attributed this trend to a normalization phase following the extraordinary retail investing boom during the pandemic years. He also pointed to regulatory tightening in derivatives trading and broader market corrections as contributing factors. Rather than signaling structural weakness, he characterized these developments as a transition from hyper-growth toward more sustainable market engagement. Kumar highlighted the potential for significant growth in equity market participation given India's relatively low retail investor penetration.
The moderation in derivatives trading volumes, which remains an important revenue source for discount brokers, has created short-term pressure for firms like Upstox. However, Kumar outlined the company's strategic pivot toward diversification. Upstox’s commodities segment has seen a fivefold increase in monthly revenue, while its margin trading facility (MTF) portfolio has more than doubled year-on-year. Additionally, the company is expanding into insurance, lending, and asset management services to build a comprehensive financial platform beyond any single product line.
Since regulatory tightening and a market downturn in September 2024, Kumar observed a notable change in derivative traders’ behavior. Retail participants have reportedly become more selective and cautious, moving away from momentum-driven, euphoria-fueled trading toward more informed and methodical strategies.
Regarding recent Securities and Exchange Board of India (SEBI) norms aimed at ensuring that products adhere strictly to their described features ("true-to-label"), Kumar affirmed the importance of investor trust and transparency for long-term market health. While acknowledging implementation challenges, he maintained that these rules ultimately enhance credibility within the financial ecosystem.
Kumar also expressed guarded support for SEBI’s proposal to enable algorithmic trading access for retail investors. He called for responsible implementation that balances innovation with robust risk management and investor protection, suggesting that such automation could broaden retail participation meaningfully.
Responding to the sharp decrease in Upstox’s active clients during FY26 and the decision to discontinue costly Indian Premier League (IPL) advertising campaigns, Kumar explained the company’s focus on quality over quantity in client acquisition. The drop in active users, he said, largely mirrors industry-wide normalization and regulatory shifts. The reduction in high-profile marketing was described as a strategic move to enhance cost efficiency and improve profitability rather than a retreat from growth ambitions.
Looking ahead, Kumar reported that Upstox remained profitable with earnings before interest, taxes, depreciation, and amortization (EBITDA) up nearly 120% year-on-year, and net profits more than doubling compared to the previous year. Average revenue per user increased by over 40%, and retention among high-value traders stood at approximately 90%. The company’s outlook for FY27 centers on further strengthening its business through diversification, deeper customer engagement, and expansion of its financial product offerings.