Street Signs: HDFC Bank's quiet climb stumbles, demat accounts surge, more

HDFC Bank’s quiet climb stumbles: Optimism to ominous headwinds

Shares of HDFC Bank have been on a silent upward march over the past few weeks amid optimism that its weighting in the MSCI Emerging Markets Index will be doubled, leading to potential inflows of $3–4 billion. However, its business update on Friday, which showed a sequential decline in both advances and deposits for the quarter ending June 2024, caught those who had mounted bullish bets on the counter running for cover. “HDFC Bank’s update pointed to a seasonally weak quarter. However, it didn’t warrant such a big correction. The large fall was on account of stop-losses being triggered by some high networth individuals who had long positions. We believe Rs 1,600 is a strong support, and the stock could rebound as the MSCI weight increase is bound to happen next month,” said an analyst.

Who will blink first? Brokerages navigate fee tightrope

With market regulator Securities and Exchange Board of India directing brokers to be true to label when it comes to charging customers, the zero-cost brokerage model is expected to upend. Currently, brokers enjoy a decent spread between what they charge their customers as exchange fees and what they pay. With this spread set to disappear in October, when the flat-fee structure becomes effective, brokerages are expected to increase the actual brokerage they charge. It remains to be seen, however, who will blink first given the cutthroat competition in the industry and the easy onboarding process if one has to make a switch to another brokerage. “There will definitely be a hike in brokerage rates. But we are waiting for the Big Three to initiate the first step and see the approach they take,” said the chief executive officer of a mid-sized broking house. Currently, Groww, Zerodha, and AngelOne are the top three brokerages in terms of active clients and have a combined market share of over 40 per cent. Meanwhile, full-scale brokerages are hopeful that the industry pivot will give them some edge, as they don’t need to alter their cost structures.

Demat accounts surge: Ignite a firestorm in global markets

The domestic broking industry added a record 23.1 million new dematerialised (demat) accounts during the first half (H1) of the calendar year (CY) 2024, taking the total account to 162.3 million. This rally was almost 90 per cent more than the 12.2 million accounts added in H1 of CY 2023 and surpassed the previous record of 16 million accounts in H1 of CY 2022. The total demat account tally has jumped three times from 49.8 million in December 2020 (pre-pandemic period). Easy onboarding, a proliferation of zero-cost brokering houses, and sustained upmove in the market have underpinned this surge.