The Hindu Business Line : `Sheer value buying may be a difficult proposition'

THAT the stock broking business is going full steam ahead is clear from the sheer number of new players it is attracting these days. The RR Financial group, hitherto known for its operations in the staid fixed-income market, is now diversifying into equity broking.

Mr Jayant Manglik, Vice-President, RR Equity Brokers, shares his views with Business Line.

"The way Indians are taking to equity investments, aided by advances in technology, is prompting many players to think differently", he told Business Line.

Excerpts:

You missed the two best years in the Indian market. Agreed?

True, our stock broking operations have gone on stream only recently. The equity market has seen a great run in the past couple of years. A Sensex level of 7500-8000 was a far-fetched thing till some time ago.

Earlier, many investors were satisfied with no more than moderate returns from stocks. Not so any longer. This market has ramped up expectations, thanks to so many scrips doing well. Investment trends are currently on a strong wicket.

A number of sectors have gained from positive government policies. Valuations are a reflection of good cooperate results that have flowed in - but sentiments have been genuinely upbeat in many cases.

Where do you see the indices going from here?

I will not answer that pointedly as taking a direct call on the indices can often be imprudent. Some would think the market is overheated and a collapse is imminent, while some others are sure that there will be further advances. The way it has moved has amazed a lot of people.

Whatever the case may be, one thing stands out very clearly - this market has been a stock-picker's delight. Prices of many stocks have simply doubled and trebled in no time at all. It still remains so.

At the same time, sheer value buying may be a difficult proposition. Also, prices of some stocks are fluctuating wildly. That can make life difficult for a lay investor.

So, does it make more sense to buy mainly the index stocks or the large-cap leaders?

Whoever has not invested in select mid-cap counters or even small-cap ones have lost an opportunity to create wealth. However, you may still draw comfort from the fact that the index constituents are all heavyweights - the companies concerned are the dominant players in the sectors they represent.

With this serving as the backdrop, you may continue to view them in a positive manner. In fact, right at this moment this belief seems to be driving some sections to commit fresh allocations to such stocks. Overall, it is not an easy choice.

What is RR Equity's expansion plan?

We have started operating at several new centres, while others are being identified. Franchises are being worked out. This is a model that many players have started to follow.

In the days to come we propose to offer a PMS to high-end customers. But plans on this front are yet to be firmed up.

For the moment, we are catering to our clients through various research products. For broking firms, even smaller centres are quickly shaping up in terms of business generation. Together, they now provide investors with multiple options. That is a good thing. And it would not have been possible without technological advancement and the good regulatory framework that is now in place.

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