‘NRIs have started showing renewed interest in equities’

The rally in the stock markets has triggered hopes at many of the leading broking firms of better business volumes this fiscal. CJ George, Managing Director, Geojit BNP Paribas, is confident of the Sensex crossing 60,000 points in the next three-four years. Excerpts from an interview:

How does the market judge the first 100 days of the Government?

The market is not generally unhappy with the first 100 days of the new government although it missed a lot many trigger points as far as the economy is concerned.

The market expected a lot in 100 days, while the Centre has different priorities. However, investors both domestic and international have taken note of the way in which the government machinery is being put into action. The command and control is visible and the machinery is made to move impressively, which is new in the country.

Why are retail investors shying away from the capital markets?

I am of the view that retail investors have been shying away from the market due to the quality and availability of intermediation. The authorities must acknowledge the fact that intermediation is a valuable economic activity and then only we will see vibrant intermediation re-emerging in India.

If we consider all brokers as crooks since a few are, the country will not able to attract retail investors into the equity markets. Retail investors need hand-holding and we need quality hands to hold them. The faster we recognise this, the quicker will be the re-entry of retail investors.

What are the cues emanating from the global markets?

The country is in a fortunate position as India is considered the best investment option among emerging markets by global investors. Although, we will continue to see high volatility in the short term, arising from liquidity flows either ways, the current positioning of the Indian market is to its advantage.

What is the take of NRIs on investment at the present juncture?

NRIs have been avoiding equity investments in India mainly due to the exchange rate depreciation during the past few years. Also, the interest rate liberalisation for NRIs helped them to aggressively invest their savings in FDs with Indian banks, making equities not a preferred option.

However, as the equity markets started moving up and the exchange rate has shown stability, there has been renewed interest in equities from NRIs.

What is the near-term outlook for the broking houses?

The broking houses have been suffering from a sluggish capital market for the last six years. When the market started turning around, the industry also started seeing investors returning to the market in a stable manner. This upside movement in the markets has resulted in improved margins and volumes for brokers.

When the IPO market also perks up, we will see significant addition of new investors in the market making both secondary and primary markets very vibrant. Broking firms will be the biggest beneficiaries of such vibrancy.

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