The Hindu Business Line : For small investor, opportunity online

Online share trading has witnessed tremendous growth in the recent past and is emerging as a popular tool for investments in the stock market. Business Line caught up with Mr Kedar Deshpande, Assistant General Manager, ICICIdirect.com, to discuss the advantages that the e-broking platform offers to the retail investor.

Excerpts from the interview:

Unlike in the West, online trading in India is still at a nascent stage. Your comments.

About 75 per cent of the population in the US invests in equities or mutual funds, whereas in India the investor population is just two per cent. Further, only seven million (roughly about 0.7 per cent of the population) of them hold shares in dematerialised form.

One of the main reasons for this low investor base is that for a vast majority of people, access to the capital market is difficult. There are not enough intermediaries to service the potentially huge investor base.

As a result most of these intermediaries tend to concentrate on high net worth individuals at the expense of the small investor. The Internet changes all this.

Can you elaborate on how online trading helps the cause?

Online trading allows market access to anyone with an investible surplus — no matter how small. All you need is access to a PC and the Internet, both of which are spreading rapidly. It is also the perfect answer to an investor's concerns on efficiency and security of trades, transparency, control, advice, as well as hassle free and seamless pay in and pay out of money and shares every day.

Online trading is growing phenomenally. In the last year alone it has, in terms of percentage of overall traded volumes, almost trebled. Today it accounts for 20 per cent of overall traded volumes, up from seven per cent last year. The perceptible benefits of trading online will push more and more investors to this medium.

In six years, the number of online subscribers for ICICIdirect has gone up to about 1.6 million. Since our inception in 2000, we have grown from just 10,000 transactions to 3,50,000 transactions per day.

With the entry of many players, do you think we will see some softening of brokerage fees? What do you make of the on-going brokerage wars?

Brokerage is after all a small fraction of the total transaction cost. People who invest in equities are investing their hard earned money in an asset class where both the risk and reward ratios are high.

So it is important to make well-advised and researched investment decisions. Any investor would focus on the service quality and value that the broker offers. A complete product basket and ease of execution is far more critical.

When the markets are erratic, as they have been recently, do your clients feel the need for personal interaction?

We believe in the old adage that it is better to teach someone to fish than to buy him a fish.It is far more important that investors make rational, informed decisions about their investments, learn to spot trends and generally navigate safely through the minefield of capital markets than depend on "hot tips."

Fortunately, with the Internet and stiffer disclosure norms, corporate analysis and financial results are available at the click of the mouse. The issue is to be able to read and analyse these properly. We are empowering investors to become more informed and take better investment decisions.

In that case, do you conduct special customer education sessions?

To educate investors we conduct over 300 customer education sessions a month and during any given week we are in direct touch with about 2,000 of our customers. The workshops cover a whole gamut of topics from the basics to how to read a balance sheet or a research report.

We also educate customers on such issues as derivatives, commodities etc. Based on our analysis of a customers trading pattern, portfolio choices and risk appetite, we give our subscribers customised advice.

The idea is to be able to give an investor all the necessary information and tools to analyse information in a useful manner.

In our experience, this approach has proved to be invaluable to our subscribers.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
For small investor, opportunity online

Portfolio with potential

Index Outlook