Stocks of broking firms in demand; Angel Broking hits new high

Angel Broking, IIFL Securities, Aditya Birla Money, Geojit Financial, Edelweiss Financial, Motilal Oswal Financial and ICICI Securities gained between 4% and 15% on the BSE

Shares of broking firms rallied up to 15 per cent on the bourses in an otherwise subdued market on Wednesday amid expectation of strong earnings growth.

Angel Broking, IIFL Securities, Aditya Birla Money, Geojit Financial Services, Edelweiss Financial Services, Motilal Oswal Financial Services and ICICI Securities gained between 4 per cent and 15 per cent. All these stocks were trading at their respective 52-week highs on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was down 0.02 per cent at 52,851,  at 11:01 am.

Among individual stocks, Angel Broking hit a record high of Rs 983.80 after surging 10 per cent on the BSE in intra-day trade. The stock surpassed its previous high Rs 963.95, hit on June 8, 2021. The broking firm reported strong business update for the month of June 2021.

The company's client base jumped 145.4 per cent year on year (YoY) to 5.29 million clients in June 2021 over June 2020. On a sequential basis, client base grew by 9.3 per cent last month from 4.84 million clients in May 2021.

Gross client acquisition stood at 0.46 million in June 2021, up 221 per cent over 0.14 million in June 2020. On a sequential basis, gross client acquisition grew 8.2 per cent in June 2021 over May 2021. Number of trades in June 2021 stood at 88.97 million, up 71.1 per cent over 52 million trades in June 2020. The figure was up 2.9 per cent over May 2021.

Angel Broking is one of the largest retail broking houses in India in terms of active clients on NSE. Its a technology-led financial services company providing broking and advisory services, margin funding, loans against shares and financial products distribution to clients.

The year 2020-21 witnessed broking firms registering a surge in the number of retail investors from Tier II, III and beyond cities, who aspire for better returns over fixed income securities. With deeper penetration of equity culture, rising disposable incomes, and more population entering the working age bracket, the demand for equity investment will continue to grow further. In this scenario, players with robust digital capabilities will undoubtedly be the direct beneficiaries.

Digital broking firms are poised to grow strongly, underpinned by their advanced technology architecture, seamless digital on boarding journeys, improved customer satisfaction and increased revenues.

In addition, after witnessing record number of active client additions and average daily turnover (ADTO) in a pandemic marred fiscal, brokerage companies will continue to see positive revenue growth in fiscal 2022. Also, gradual economic recovery, sufficient liquidity and falling interest rates will lead to a more optimistic economic outlook, Angel Broking said in financial year 2020-21 (FY21) annual report.

Going forward in FY 2021-22, the Indian markets will have its eyes on how soon the 2nd Covid wave peaks out, the smooth expansion of the vaccination drive, recovery in corporate earnings, acceleration of both public and private capex and the government’s privatisation and divestment drive. Successful privatisation of a few Public Sector Undertakings will aid sentiment and provide the Government with major resources to prop up the economy. The broking industry will look for sustenance of the direct investing trend and growth in trading volumes leveraging the various technological tools available, Aditya Birla Money said in FY21 annual report.