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Net stock trading sees rapid growth

C.J. Punnathara

KOCHI, Dec. 14

REFLECTING the emerging trends of US and Europe, Internet stock trading in Indian capital markets has grown at an explosive pace during the last ten months.

ICICI's online trading has grown almost seven fold to Rs 20-30 crore per day as against Rs 4-5 crore per day a few months back.

However, the surge in volumes was also on account of margins which was introduced at the end of October, Ms Madhabi Puri Buch, Managing Director and CEO of ICICI Web Trade, told Business Line.

With Internet trading still accounting for a very small fraction of the total business on Indian bourses, the current volumes are just a tip of the iceberg and the potential remains huge.

``There has been no looking back ever since we entered into Internet trading in February and we have recorded consistent and strident growth to date,'' Mr C.J. George, Managing Director of the country's first Internet stock trading company, Geojit Securi ties, said.

With an online customer base of 48,000, ICICI Web Trade is said to have the highest Internet customer base in the country.

Clocking close to 10,000 trades a day, this company is the biggest player in the Internet stock market in India.

``Two months after we introduced margins, we are already on par with the 15th largest online broker in the US and conduct an equal number of transaction as the US company does,'' Ms Buch said.

Geojit Securities has also recorded an equally strident growth in volumes. The business transacted on the Net by Geojit grew six-fold from Rs 7 crore in the first quarter to Rs 45 crore during the second quarter of 2000-01.

The volumes further surged and today the company does Rs 1.5-2 crore per day on the Net.

During the November-December period, Geojit did Rs 80 crore worth of business on the Net. The company expects its business volumes from the Net to touch Rs 1,000 crore next year.

Geojit Securities, which has a very strong presence of NRIs in its customer base is confronting one major handicap, as far as its online trading is concerned.

The volume of business by NRIs has not reflected their inherent purchasing power as they are permitted to undertake only delivery-based trading.

Mr George said that he hoped the Government would soon lift this limiting factor and permit NRIs to undertake non-delivery business and augment the business volumes on the Net.

Just 50 per cent of the 48,000 Internet customers of ICICI Web Trade are very active.

This is because of the considerable time lag between registration with the Internet broker, and opening the account with a bank which has Internet trading as well as an interface with the broker, opening similar account with a DP again with an interface with the broker, etc., Ms Buch said.

``The active interest in Internet trading has emerged just recently and we expect a large number of the late entrants to become active once the connectivity between the customer, broker, bank and DP is fully in place,'' she added.

Ten months after Internet trading was first introduced by the Kochi-based broking company, the volume and customer base of Internet trade has surged manifold.

Now, having tested the efficiency, speed and flexibility of Internet trading, the demand is expected register strident growth.

Most Internet customers still retain their link with the traditional broker.

When these customers become more confident and repose greater faith on Net trading, they are expected to severe their active links with the traditional brokers.

``That is when Internet trading will have emerged as a true force in Indian capital markets,'' Ms Buch said.