Revenue hit looms for all brokerages, says CJ George, CMD, Geojit Financial

George tells that the impact of tariffs on domestic corporates is expected to be limited, owing to the strong capital raised over the past three to four years

The flip-flop in tariffs has kept markets on edge and investors guessing. C J George, chairman and managing director at Geojit Financial Services, tells Puneet Wadhwa in an email interview that the impact of tariffs on domestic corporates is expected to be limited, owing to the strong capital raised over the past three to four years. Edited excerpts:

 

You are one of the largest full-service brokerages in India with nearly ₹1 trillion worth of assets under management. How are you as a brokerage, and the industry, coping with the sudden dip in trading volumes and lack of interest among traders and investors? 

The brokerage business has always been historically volatile, and preparing for downward cycles is in our organisational DNA. Through cost optimisation and building alternative revenue streams, we have always managed downturns. That said, brokerage revenues for all players in the industry will take a hit. Geojit has been expanding the distribution business for some time now, which is relatively less affected than brokerage flows. We will continue to focus on growing the retail wealth business, as we have in the past.

 

By when do you see primary markets reviving? 

If the secondary market is dull, the immediate fallout is felt in the primary market, which is what we are witnessing now. However, the strain is heavier when the primary market freezes. The industry needs a steady pipeline of capital for investments, and if that pipeline dries up, industrial growth will also slow down due to weaker investments.

 

The next wave of activity in primary issues will likely come after US trade policies settle and there is greater predictability in the world’s largest economy. Until then, the industry will have to tap private equity to raise capital.

 

Is India Inc prepared for tariff wars? 

The impact of tariffs on domestic corporates is expected to be limited, owing to the strong capital raised over the past three–four years, which has addressed short-to-medium-term capital expenditure needs. The private corporate sector’s balance sheet is also healthy, limiting the immediate need for fresh equity financing.

 

How should first-time investors go about building a stock portfolio now? 

New investors need to assess their risk appetite and choose investment instruments in line with their profile. Current market conditions offer a favourable entry point for long-term wealth creation through systematic investment plans (SIPs) and disciplined accumulation strategies. Stock valuations are becoming more attractive, creating compelling investment opportunities.

 

A prudent approach would be to start with investments in domestically focused sectors such as consumption (fast-moving consumer goods and durables), infrastructure, cement, telecommunications, and financial services, particularly by targeting sector-leading largecap companies.

 

Mutual fund schemes offer ample scope for diversification and balanced allocation across sectors. Given India’s relatively lower dependence on global trade and its position as a potential beneficiary of regional supply chain shifts, new equity investors can start SIPs immediately.

 

What should be the ideal asset allocation strategy for investors? 

A diversified multi-asset strategy — with fair exposure to debt instruments, safe-haven assets like gold, and domestic defensive sectors — offers a sensible approach to managing risk and capturing upside. That said, the best strategy for retail investors remains the SIP route.

 

What are your expectations from the 2024-25 January-March quarter (Q4) corporate earnings season? 

The market has been upbeat about corporate earnings, buoyed up by higher government spending since December-January, strong high-frequency economic indicators, and positive commentary from corporate management during the third quarter (Q3) results.

 

Fourth-quarter performance is expected to outpace Q3; however, growth may appear muted year-on-year due to the high base of Q4 2023-24. We currently maintain our estimate of 12–14 per cent earnings growth for India in 2025-26.

 

Have the commodity markets priced in higher tariffs? 

Commodities like bullion are likely to benefit from the weak global growth outlook and recession risks. Although crude oil was spared from direct tariffs, fears of demand destruction from slower global growth pushed prices to their lowest levels since 2021.

 

Crude oil and industrial commodities could remain under pressure amid concerns about demand erosion and recession. As a result, volatility in commodity markets could be heavier than in equities, given their direct link to real-world Main Street. 

A STARTER’S PLAYBOOK

 

*  GAUGE YOUR RISK: Match investments to your risk profile

  *  SEIZE THE MOMENT: Markets offer a prime entry point for long-term gains

  *  CHASE VALUE: Stock valuations are turning attractive

  *  PICK YOUR SPOTS: Focus on domestic sectors — consumption, infrastructure, cement, telecom, and financial services; stick to sector-leading largecaps  *  DIVERSIFY WISELY: Use MFs for smart, balanced exposure

  *  START NOW: India’s resilience to global shocks makes it a good time to launch SIPs