'2024 poll will be major event for mid/smallcaps'

'It will dictate the flow of funds into the index. We will maintain caution on mid/smallcaps.'

Retail investors have taken to equity markets like never before, with the dematerialised (demat) account tally hitting the 132 million mark recently.

Gurpreet Sidana, CEO, Religare Broking, tells Puneet Wadhwa/Business Standard in an e-mail interview that the successful players going ahead may not be the ones who charge zero brokerage, provide additional limits to their users, or offer intraday calls resulting in more turnover or trades.

Instead, the successful ones will be those who create a moat or an edge for investors.

How do you see the broking industry's fortunes shaping up in 2024 and beyond?

While 2023 was the year of inclusion, we believe 2024 will be a year of consolidation and transition.

The number of demat accounts has trebled since 2018-2019 (and crossed 132 million during November 2023.

The retail brokerage sector's revenue has already doubled, from Rs 14,000 crore (Rs 140 billion) in FY19 to Rs 27,000 crore (Rs 270 billion) in the last financial year, according to a recent report.

The differentiator for 2024 and beyond lies in the exhaustiveness of services that brokerages offer.

New players will emerge as leaders, and the market opportunity is too big for each one to have a fair share.

How big a threat are discount brokerages? They are ruling the industry now.

The broking industry has moved beyond pricing, additional exposure limits, and tips.

So, the successful players may not be the ones who charge zero brokerage, provide additional limits to their users, or offer intraday calls resulting in more turnover or trades.

Instead, the successful ones will be those who create a moat or an edge for investors.

The edge can be through faster execution capabilities through innovation in technology and infrastructure, customer experience, wealth management, portfolio management services, or a combination of some of these.

From where will the Next Big Disruption come for the Indian broking industry, and how soon?

India's investor base is rising, and there is good headroom for scaling up, particularly in Tier-II and Tier-III cities.

Our growth numbers are huge when compared with developed economies; thus, to serve one of the largest and most diverse populations in the world, brokerages need to bring customised services to the table.

We believe advisory services and technical innovations would lead to the next disruption.

Are brokerages and financial intermediaries ready for the T+0 and instant settlement proposed by the Securities and Exchange Board of India?

T+0 settlement will be a watershed moment for us.

Even in the current scenario, India is already one of the fastest globally in terms of the settlement cycle with the T+1 settlement window.

Unlike bank transfers, where instant and same-day fund transfers could be made a reality, the same cannot be said for stocks.

The stock market involves both stocks and money being interchanged between two parties, with several entities playing middlemen.

What's the road ahead for the primary markets in 2024?

The primary market is expected to remain exuberant, with some Big Tech companies eyeing their debut.

Technology companies are expected to give listing gains to investors as the focus looks to be shifted to profitability and generating cash flows.

Investors will focus on the valuation of the companies and look for opportunities with reasonable valuation and growth prospects.

Companies, too, are keen to raise capital due to the revival of the investment cycle and take advantage of the deluge of liquidity hitting the markets.

When can we see Religare Broking list on the bourses?

We are looking forward to the eventual listing of our stockbroking business, contingent upon achieving a certain milestone in business scale.

Our immediate focus is on reclaiming Religare's initial leadership position by diversifying beyond core broking avenues of growth.

We aspire to transform into a comprehensive platform, offering a complete array of services to our investors and establishing ourselves as a financial inclusion platform.

What's your outlook for equity markets for 2024?

Equity markets in 2024 will remain favourable for investors as macros look optimistic.

We expect largecaps, which remained muted during 2023, to make a comeback, led by banking, information technology, and fast-moving consumer goods sectors, as valuations turn favourable.

The outcome of the 2024 general election will be a major event for midcaps and smallcaps as it will dictate the flow of funds into the index. We will maintain caution on mid/smallcaps.

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Feature Presentation: Rajesh Alva/Rediff.com