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    Brokers may report Rs 23,000 crore revenue in FY21: ICRA

    Synopsis

    Shares of all broking firms have also managed to deliver positive returns to investors since April 1

    broker
    The increase in retail investors in the capital market can be measured by new account openings in the industry.
    While maintaining a cautiously stable outlook for brokers, rating agency ICRA sees double-digit topline growth for the broking industry in FY21 due to a significant increase in trading activities during the past five months.

    An assessment by ICRA projected 10-12 per cent rise in aggregate revenue to Rs 23,000 crore for the broking industry in FY21.

    Samriddhi Chowdhary, Vice President and Co-Head-Financial Sector Ratings, ICRA said, “Equity markets have emerged as an unlikely beneficiary of the pandemic. The option of work from home coupled with limited investment opportunities given the challenging economic environment and attractive valuations following the correction in March 2020 have helped drive investor interest to capital markets.”

    Shares of all broking firms have also managed to deliver positive returns to investors since April 1. With a rally of 207 per cent, 5Paisa Capital emerged as the top gainer in the list. It was followed by Emkay Global (up 111 per cent), Aditya Birla Money (up 39 per cent), Geojit Financial Services (up 103 per cent) and Arihant Capital Markets (up 102 per cent). On the other hand, Sensex advanced 33 per cent during the same period.

    The increase in retail investors in the capital market can be measured by new account openings in the industry. The total number of demat accounts increased to 4.32 crore as of June 2020 from 4.08 crore in March 2020 and 3.59 crore in March 2019.

    Since the beginning of the ongoing financial year, trading activities remained subdued in April 2020 with the industry registering a total average daily turnover (ADTO) of Rs 12.02 lakh crore, down 2 per cent QoQ.

    ICRA highlighted that trading volumes were impacted after the Securities and Exchange Board of India (SEBI) revised market-wide position limit in March 2020, in a bid to curb speculative trading and manage market volatility.

    Thereafter, there has been a steady increase in trading volumes. The equity capital markets reported a growth of around 25 per cent to Rs 1,719 lakh crore in aggregate turnover for the five-month ended August 2020.

    As a result, the total average daily turnover also increased to Rs 16.69 lakh crore during April-August 2020 compared to Rs 13.26 lakh crore in the comparable period last year.

    “Rising trading volumes have been supported by the growing participation of retail investors. This trend coupled with the steady cash volumes is expected to be value accretive for stock brokerage companies, given the higher yields associated with these segments,” ICRA said.

    It further added that large established entities with a strong presence in online broking have increased their market share in the current environment. As per information from NSE, top 20 brokerages together attributed to about 77 per cent of total active clients as of June 2020 compared with 75 per cent as of March 31.

    “Discount brokerage houses, however, garnered a predominant share of the new accounts supported by their technology-driven business model,” ICRA said adding entities with established information technology (IT) infrastructure, processes and controls will fare better.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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