Brokers feel the pinch of regulatory actions, market slowdown in Q3
stock broking firms took a beating in the December quarter, bringing the winning run in recent years to a screeching halt in the wake of the regulatory tightening to curb excessive speculation in futures and options, and weakness in the secondary market. Revenues and profits of five leading broking firms in the third quarter showed stress in the sector as firms scramble to recalibrate their growth strategies in a challenging business environment.
Angel One, the third-largest broker by client base, posted a 17% quarter-on-quarter (QoQ) decline in revenues for the December quarter. Its net profit plunged 34%, falling from ₹423 crore in September to ₹281 crore in December.
HDFC Securities, another prominent player, saw revenues decline 13% QoQ to ₹790 crore, while net profit fell 16% QoQ to ₹270 crore. Similarly, ICICI Securities posted a 7% QoQ drop in revenue to ₹1,586 crore with net profit slipping 5% QoQ to ₹504 crore.
«In the December quarter, foreign investors sold nearly ₹1.5 lakh crore in the secondary market, causing a 10% plus drop in Sensex and Nifty, impacting cash market activity and brokerage revenues,» said Shripal Shah, MD, Kotak Securities. «Additionally, new regulatory measures to strengthen the derivatives market reduced volumes, adding further pressure.»
Combined cash market volumes on the BSE and NSE declined by 20% in the December quarter, averaging ₹1.10 lakh crore in daily turnover. Futures volumes on NSE dropped 15% QoQ to ₹1.73 lakh crore per day while options volumes fell 18% QoQ, marking
