The Hindu Business Line : ‘Buy today sell tomorrow’ traders have been badly singed: Mayank Shah

Market intermediaries are facing the brunt of investor apathy in the current turbulent phase. Business Line caught up with Mr Mayank Shah, CEO, Anagram Stock Broking, when he was in Chennai recently to explore how the intermediaries are coping with the current situation, the likely impact of short selling in cash segment, which is slated to kick-off from April 21, mobile trading and other issues.

Excerpts from the interview:

With the global markets showing signs of recovery, can we say the worst is over for the equity markets?

While it is difficult to say, whether the worst is over, the adverse news flow now is of low magnitude. It is not of the type that will make a bank go belly up. The bad news is not bothering the market as much now. So investors globally are tip toeing back.

FIIs continue to be net sellers despite recent correction. When are they likely to change their stance?

FIIs have begun to turn buyers already. I think this has largely to do with the easing of the redemption pressures back home. Earlier we had seen net outflow due to normal profit booking but there was some forced selling as well.

Short-selling in cash is going to commence soon. Your comments on that

Short selling will lead to better price discovery, especially in the low volume cash stocks. For some of the buy and hold institutions, this will be an opportunity to earn some income from lending their shares. Allowing of short selling need not necessarily result in stocks going down.

The present market condition is quite challenging with trading volumes drying up for brokerages. How are they coping with this situation?

Lower volumes not only take a toll on the brokerages, they also result into larger gaps between ask and bids. This prevents market orders being given, which was the case when the spread was less. As a result, the turnover has suffered. Traders take time to realise the changed scenario.

The biggest problem currently being faced is the increased uncertainty of the global markets. This is reducing the volume of business carried over for the day as the ‘Buy Today Sell Tomorrow’ traders have been badly singed.

Paired trades, where a trader buys one stock and sell another is getting popular.

With competition getting intense in the broking space – one broking house is offering technical analysis for retail investors, flat brokerage fees – what is the future of broking houses, particularly the small ones & sub-brokers?

Consolidation is the name of the game in the stock broking arena. If companies are offering better advice and also arming the trader with trading tools and training it is good for the consumer/trader.

I believe that the sub-broker will eventually get replaced with relationship managers from competent broking houses. The process will get faster with investor education.

Lot of brokerages listed in FY-08 when the market was booming. Have you missed the bus? Any IPO plans?

Listing of more companies from the broking space is essentially a recognition of the fact that the industry has arrived. I also believe that listing increases the confidence of the trader in the company, with which he associates.

We are a long term player in the field and are in no hurry to enter the markets. One of the objectives of listing, whenever we do, is to use stock options as a currency to attract talent. Our retention at the senior level has been good.

How is the mobile trading segment expected to grow?

I think, mobile will continue to be used as a facilitator of a trade for some more time. The clumsy keyboard is the main hurdle, coupled with a mind set that takes comfort in placing orders and asking a trained person to do it. Besides, there is always a risk of keying in wrong orders.

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