Wambai : Shares of financial services firms focused on the stock market have surged in the past two weeks on expectations that their earnings will remain strong amid vibrant stock markets fueled by increased retail customer engagement.
Since April 20, Motilal Oswal Financial Services Ltd shares are up 22.7%, Geojit Financial Services Ltd – 21%, Arihant Capital Markets Ltd – 16%, Emkay Global Financial Services Ltd – 11.6% and LKP Securities Ltd – on 10%.
“We believe the impact of covid has increased the need for financial planning, especially among young people or millennials. Equities are expected to play a key role in financial planning due to their long-term advantages over other asset classes. Therefore, we expect the upward trend in demat account openings to continue in the coming years, benefiting financial brokers with technical support and extensive research coverage, ”said Vinit Bolinkar, research manager at Ventura Securities.
The profit potential of brokerage firms increased as more retail investors opened demat accounts. The total number of active accounts of demats in India was 56.9 million as of April 30, up from 40.8 million at the end of March 31, 2020 and 35.9 million as of March 31, 2019. Of the 16.2 million accounts opened since March 2020, about 5.4 million were opened in the past three months. Strong growth in equity markets last year and new investment opportunities in the form of initial public offerings (IPOs) have attracted retail investors. Analysts said while other asset classes such as fixed income and real estate provided lower returns, stocks offered both returns and capital gains opportunities.
In addition to hassle-free online account opening, analysts believe that dynamic trading platforms and easier access to research reports are other key factors for more active retail participation.
Motilal Oswal Securities reported 86% jump in Q4 revenue with net income of ₹448 crore from loss ₹Rs 254 crore last year. Angel Broking’s revenue grew 112% in Q4 and profits rose 230%. ICICI Securities’ profit rose 111% and revenue rose 53%. 5Paisa Capital recorded a net profit of ₹Rs 5.86 crore from loss ₹Rs 1.70 crore a year earlier, while revenue jumped 40%.
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