India markets' long-term fundamentals strong, says HDFC Securities

Indian markets continue to show strong fundamentals in terms of valuations, earnings, and macroeconomic parameters from a long-term perspective, according to Dhiraj Relli, Managing Director of HDFC Securities.

 

Relli made these remarks during the 25th-anniversary celebrations of the brokerage firm.

 

The brokerage house anticipates that foreign portfolio investor (FPI) outflows will stabilise, suggesting that India is nearing the end of a period of significant selling by overseas funds. However, Relli cautioned that this does not signal an opportunity for aggressive buying in the market.

 

“In the long term, India’s growth story remains intact. All high-frequency indicators are favourable, and we have managed inflation effectively. Our fundamentals are strong,” Relli said when asked about the implications of the recent tensions between India and Pakistan.

 

“While short-term escalations may impact the market, our long-term outlook remains positive,” he said.

 

Despite facing competition from tech-led discount brokers who dominate the derivatives segment, HDFC Securities maintains a strong position with a double-digit market share in margin trading funding and the cash segment.

 

“We have seen significant disruption from discount brokerage houses, but our customers have continued to thrive with us. We will remain focused on providing full-service brokerage,” Relli added. 

 

The brokerage firm aims to expand its market share in the derivatives segment through its discount offering HDFC Sky.

 

Relli highlighted that the firm has acquired over 1.8 million customers in the last 15 months through this platform. He also advocated for a “suitability exercise” based on experience or certification to qualify traders for participation in the derivatives segment.

 

The stock broking industry has experienced pressure on earnings due to regulatory changes in the Futures and Options (F&O) segment. Another official from the brokerage house noted a 35-40 per cent decline in annual maintenance charges for basic service demat accounts. To compensate for the revenue decline, brokerage houses may soon increase charges or adopt cross-selling and distribution models.

 

In addition, HDFC Securities released a list of 25 stock picks across various sectors, identified for their long-term growth potential. The portfolio includes sector leaders such as Reliance Industries (RIL), State Bank of India (SBI), Larsen & Toubro (L&T), and Maruti Suzuki. The 25-stock model portfolio allocates 20 per cent to the consumer segment, 16 per cent to BFSI, with additional exposure to automobiles, healthcare, real estate, and infrastructure.