The Hindu Business Line : A cool stockbroker

Earlier there was a complete lack of information and now there is an explosion of information. There is so much info available that you can't digest it.

Fit for the bourses: Motilal Oswal works out at the well-equipped gym in his stockbroking office.

He is that rare stockbroker who doesn't "talk about stocks. I read about leadership, management and many other subjects but I don't read about investing. I'm a stockbroker who doesn't give any advice on what to buy; that is left to our professionals and research people. The least I talk about is stocks."

But surely people seek tips from Motilal Oswal, the Chairman and Managing Director of Motilal Oswal Securities, one of the three top stockbroking firms in India. "Of course I keep in touch and keep track of one or two ideas. But that's not the most important thing in my head," he says.

Small wonder then that this "cool" stockbroker has set apart a meditation room and a well-equipped gym in the firm's spanking new facility in Mumbai. On the meditation room Oswal says, "Many people work here for 15-16 hours a day. We start with Hong Kong and end with the US markets; so a de-stressing environment is necessary."

The gym has a trainer and the meditation room provides a quiet corner for peaceful thinking. "If somebody needs to think through a problem, find a solution, he/she can take a pad and retire there. This is a peaceful place where you can only think, not discuss anything. Here you have no e-mail, mobile phone or people walking in and out talking loudly. Somebody might want to write a speech... or read a book; I call it a non-talking John!"

Fascination for equity

Oswal grew up in the Barmer district of Rajasthan; his father was a grain merchant and after his graduation he came to Mumbai in 1981 for his CA, which he completed in 1985. Two years later, along with Ramdeo Agarwal, he started the brokerage.

He was drawn towards this business because "the stock market is so dynamic and always changing." Around that time a lot of IPOs were out and the market was booming. Agarwal was also doing the CA course and they lived in the same hostel. "I used to hitch a ride on his bike, even at that time he had fascination for research in equity."

He laughs when you ask him about the capital. "We started with zero capital as a small broking firm with a South Indian broker called Sundar Iyer." In 1990, they bought a Bombay Stock Exchange (BSE) membership, later added National Stock Exchange (NSE) and never looked back. In its 20th year the firm has 1,400 employees at its branches all over India.

Looking back, he says a fundamental difference between equity investing in those days and the present is that "earlier there was a complete lack of information and now there is an explosion of information. There is so much info available that you can't digest it; we've gone from a scarcity to an abundance situation."

Balance sheets were available only once in a year "and the managements were reluctant to talk. In fact, they used to discourage journalists. Now they woo people; they come to our place and are willing to talk. They've understood market economy and the importance of investors and treat them like customers. In fact for most companies, their shareholders are more important than their customers."

The importance of sound advice

But, cautions Oswal, right advice was as important then, as it is now. In the earlier years independent research was not available and stock-broking was largely in the hands of the "typical Gujarati and Marwari brokers, who lacked both vision and professionalism. The market size was small, communication facilities were limited and technology was not too great."

The regulatory environment was weak and with "one month settlements, there were huge risks, the papers did not come in time; in short it was quite a drastic situation!"

So how did he survive and flourish?

"That time everybody was small; you got 200-300 customers and managed the risk in the manual system with whatever technology available. It was more a personalised business and the clients had to trust you." He recalls an era when he knew every single customer, "his risk profile, pedigree, history."

Now of course, with interest in equity exploding, the firm has over 1.5 lakh customers and gets 2-3 new ones every day. "Now interest in equity is huge; we've always seen that when the market is in a bullish phase new money comes in. This is a typical market phenomenon."

He finds the two biggest changes in the last two decades to be technology and a strong regulatory environment. "The Securities and Exchange Board of India (SEBI) came in 1993-94 and I think they have really worked very methodically towards regularising and bringing all the participating segments into a strong regulatory framework."

So would he say the risk of scams has reduced?

"Very much; you have an audit trail, the technology is there, and professionals and larger institutions are coming into this business. So investor confidence is high with the systems and technology in place. Today we have a strong proactive surveillance."

Oswal says the booming equity market is seeing two new segments of investors who were not there five years ago. "The self-employed professionals with a lower income — those earning lakhs and crores were always part of the market. But today we're seeing advocates, doctors, police officers and government servants looking at equity as a long-term investment instrument. They don't want to speculate, they want a long-term participation."

He is also seeing more women stepping in as intermediaries — brokers and sub-brokers — and investors. "When we started, there were hardly one or two women brokers, but that has changed."

What everybody would like to know is which stocks he has invested in. His response: "Personally we don't invest in our individual capacity because it creates an unnecessary conflict and one more point of accounting. So whatever money we have we put into the company."

Meditating to de-stress

Oswal sets great store by yoga and meditation and has even attended S.N. Goenka's 10-day Vipassana (mediation) programme in Igatpuri. When asked how difficult it was to not talk for a full 10 days, have no access to mobile phone, newspapers, etc, he says, "It was not difficult but you need to control your emotions. You can't talk, no reading or TV is allowed, and you're completely cut off from the world. You're supposed to meditate for 10 hours a day."

He says it helped him a lot "but I'm not able to practise it. They recommend 30-60 minutes of meditation every morning and evening. If you really practise it, it will give a lot of relief from stress. Sometimes I do it in the train or the car. Basically you just close your eyes and keep quiet. They make you focus from the top of your body to your toes... drawing attention to different parts of the body and what is happening there and to concentrate on your breathing."

His dream is to expand the company, increase its outlets all over India and acquire smaller firms. "The South is our favourite hunting ground. Today, we have 950 outlets... including in Jammu and Kashmir, and Bihar. In Bihar, we have a branch in a place called Jhumri Thilaiya. Yes, it is actually a real place!"

Response can be sent to rasheeda@thehindu.co.in

Picture by Paul Noronha

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