Shares of brokerage houses have been rising continually over the past few months, as they have seen their fee incomes increase, thanks to a healthy secondary market.

The stock of Geojit BNP Paribas Financial Services, after registering a new 52-week peak at ₹46.10, settled at ₹44, up 2 per cent over the previous day’s close.

Geojit’s December quarter results showed spectacular improvement, with profit before tax rising 28 per cent to ₹25.89 crore year-on-year, backed by a 23 per cent rise in consolidated revenues to ₹76.01 crore. Its assets under management — the corpus of funds handled by the firm — crossed ₹23,000 crore in the third quarter.

Active accounts CJ George, Managing Director, Geojit BNP Paribas Financial Services, said the rise in brokerage revenues was due to about 60 per cent of dormant investor accounts becoming active again in the last quarter.

“As the markets started rising midway through last year, we saw dormant investors returning to the market. In the September quarter, many of them took advantage of the rally to sell stocks they were holding on to from 2008. In the December quarter onwards, retail investors have begun to buy as well.”

“The price of a stock today is the discounted value of future expected earnings. Global bodies such as the IMF and consultancies such as PWC and McKinsey predict India can surpass Chinese economic growth in the next few years,” George added. “Additionally, cumulated savings of the past seven years were parked in bank deposits.

All that will be redirected to stock markets soon.” Motilal Oswal Financial Services moved up by 2.65 per cent to close at ₹322.95, creating a new 52-week intraday at ₹324.80. Indiabulls Securities moved up 1.45 per cent at ₹31.50.

Turning weak after highs

IIFL Holdings Ltd rose three per cent to ₹187.85; during the intraday, IIFL Holdings, erstwhile India Infoline, registered its 52-week high at ₹190. Religare Enterprises closed flat at ₹362. However, Edelweiss Financial Services, which reached a new 52-week high during Tuesday’s session at ₹82.25, failed to maintain the momentum. The stock on Wednesday edged down 5.3 per cent at ₹72.25. The company’s December quarter results had shown a doubling of commission income while fund income increased over 40 per cent from the corresponding quarter in the previous year. Consolidated profit after tax rose from ₹49.45 crore to ₹74.96 crore quarter-on-quarter.

The company also recently declared an interim dividend of 80 paise on each equity share of face value of ₹1.

Emkay Global Financial Services and Networth Stock Broking, which registered their year highs on Tuesday, turned weak on Wednesday.

B Gopkumar, Executive Vice-President and Head — Broking, Kotak Securities, says they themselves have seen average volumes in the cash segment increase to ₹20,000 crore in the current fiscal from ₹12,000 crore last fiscal. “High networth individuals have already returned to the stock markets. Retail investors usually come through SIPs (systematic investment plans in mutual funds) first. So direct investing by retail clients will only go up.”

Retail investors have been wary of the markets, ever since the Sensex fell from 20,000 in early 2008 to below 10,000 in early 2009.

“But it’s been six years since then, and that’s time enough to forget the pain of the last crash,” said George of Geojit. “The number of enquiries we get for new account openings are on the rise,” he added.

comment COMMENT NOW