'unless We Make Shorting Of Stocks Easy...': Nithin Kamath Slams India’s 'long Only' Market

Zerodha co-founder Nithin Kamath has flagged India's deficiency of short-selling infrastructure arsenic a captious flaw distorting nan country’s banal marketplace pricing mechanisms.

In a LinkedIn post, Kamath warned that India’s equity markets suffer from a "structurally long-only" bias owed to nan trouble of borrowing stocks to short. “Borrowing banal to short is really difficult and is an offline process,” Kamath noted, adding that this creates awesome obstacles for traders and costs looking to profit from falling stocks.

Kamath pointed retired that while derivatives for illustration futures and options connection constricted avenues for short selling, they screen only 224 stocks and travel pinch precocious rollover costs owed to monthly expiries. “Only nan first period statement is liquid,” he wrote, stressing that this prevents businesslike value find crossed astir of nan market.

The result, he argued, is simply a strategy skewed toward inflated valuations and underdeveloped short-selling expertise. “Because of this long-only bias, there’s astir apt very small short-selling talent arsenic well,” he said, suggesting that moreover organization players are hindered by infrastructure gaps.

Kamath likened short sellers to “janitors,” saying they play a captious domiciled successful “cleaning up each nan garbage successful nan markets and making them much efficient.” Despite their mediocre nationalist image, he asserted, they are basal for marketplace balance.

India’s Securities Lending and Borrowing (SLB) system remains mostly offline, adding clash to an already cumbersome process. 

“Most brokers don’t connection an online option,” Kamath wrote, acknowledging that moreover Zerodha requires clients to telephone successful for SLB transactions. He revealed that nan institution intends to rotation retired an online SLB level by year-end to simplify access.

Kamath’s comments travel amid increasing calls for regulatory betterment to modernize marketplace infrastructure and beforehand transparency successful Indian equities. 

Published on: Jul 14, 2025 4:40 PM IST