In a recent LinkedIn post, Nithin Kamath, founder of Zerodha, discusses the opportunities and implications of retail investor participation in stock market auctions. Kamath highlights how his platform has enabled clients to engage in these specialized markets, noting a significant impact on smaller proprietary brokers due to increased liquidity and tighter spreads.
Kamath explained the nature of auction markets, stating:
“Auctions are held to procure shares when a seller fails to deliver shares and a trade results in short delivery. In auctions, shares are typically purchased at a significant premium to the last traded price due to illiquidity.”
Democratizing Access to Auction Markets
Kamath emphasized Zerodha’s unique position in the brokerage landscape, asserting that it is likely the only major broker providing retail investors access to these auctions. He observed a steady increase in participation since Zerodha enabled it in 2023. This move, according to Kamath, has not only benefited retail investors but has also inadvertently affected smaller proprietary brokers who previously profited from the higher premiums associated with illiquid auction markets.
“We enabled participation in auction markets in 2023, and someone told me a few small prop brokers who were making money on auctions were apparently hit pretty hard because liquidity improved and spreads tightened,” Kamath shared in his post.
Identifying Profitability in Auctions
The post further elaborated on the potential for retail investors to profit from auction markets. Kamath pointed out that by selling shares eligible for auction, investors could potentially achieve almost risk-free profits due to the premium prices typically offered. He provided specific details for interested clients, including the timing of the auction window and how to access eligible stock information on Zerodha’s Kite platform.
According to Nithin Kamath:
“By the way, if you have a stock that’s eligible for auction, you can sell it at a premium and make an almost risk-free profit.”
He also specified the operational details, noting, “The auction window opens at ~2:30 PM for 30 minutes. Eligible stocks show up under Bids → Auctions on Kite.”
Impact of Retail Participation
Kamath’s insights suggest that increased retail participation, even with a relatively small percentage of his platform’s vast client base (~25,000 out of over 1.7 crore clients), has had a noticeable effect on market dynamics. The improved liquidity and narrowed spreads in auction markets, as highlighted by Kamath, indicate a shift towards greater efficiency and potentially fairer pricing for all participants.
Kamath concluded by underscoring the value proposition for retail investors, positioning Zerodha’s offering as a way to leverage market inefficiencies for profit. His post serves as an informative piece for traders interested in exploring alternative market segments beyond traditional trading hours.
📝 About This Content
This article is based on insights shared by Nithin Kamath on LinkedIn.
📅 Originally posted on April 29, 2026 | View original post on LinkedIn →