Zerodha CEO Nithin Kamath has offered a reality check on the perceived rise in trading activity from India’s Tier 2 and Tier 3 towns. In a post on X (formerly Twitter), Kamath clarified that Know Your Customer (KYC) data might not accurately reflect where trading is actually taking place.

Though KYC addresses often point to smaller towns, Kamath explained that this is misleading. Many users move to cities like Pune and Bengaluru for work but don’t update their registered addresses. As a result, their trades appear to originate from Tier 2 or 3 cities—even though they’re logging in and trading from urban metros.

Kamath emphasized the importance of analysing IP addresses instead. When you look at where traders are actually operating from, India’s top 20 cities still dominate the trading landscape. Pune and Bengaluru, in particular, are hotbeds of trading activity—not because locals there are suddenly trading more, but because these cities attract professionals from all over the country.

In essence, Kamath warns that interpreting KYC-based location data without context can paint a distorted picture of market participation. With cities like Bengaluru and Pune serving as magnets for working professionals, it’s no surprise they also show up as trading hubs.

As the market matures and participation deepens, data accuracy remains critical in understanding investor behaviour and regional trends.

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