'There is increased interest for algo products now among retail investors'

The broking, wealth management industry is likely to see a consolidation phase over the next 6 to 9 months, driven by challenging market conditions, said Ashok Jain of Arihant Capital

It has been a volatile few weeks for the Indian equity markets. ASHOK JAIN, chairman, Arihant Capital Markets, tells Puneet Wadhwa in an email interview that they had been sitting on cash while maintaining a cautious approach in the markets. The recent market correction, however, has created opportunities to generate returns. Edited excerpts:

 

Do the Indian stock markets lack trigg​ers to move up from here on?

 

The Indian stock markets have potential triggers for growth, including domestic economic reforms and strong corporate earnings. However, risks persist both locally, such as inflation and policy changes, and globally, including geopolitical tensions and inflationary pressures. While these factors create uncertainty, markets tend to price in risks over time. Careful monitoring and selective stock picking can help investors navigate this mixed environment and capitalize on emerging opportunities.

 

Will it be harder for investors and fund managers to generate returns from the markets in 2025?

 

Fiscal 2025-26 (FY26) is expected to be relatively challenging, but there are still opportunities in the market. For instance, investors who entered just a month ago have seen over 15 per cent return in the past six weeks. Performance largely depends on the fund manager’s objectives and stock selection. Those with heavy exposure to the IT sector, for example, have faced slowdown due to sector-specific challenges.  

 

What’s been your strategy at Arihant in the last few months?

 

We had been sitting on cash while maintaining a cautious approach. However, the recent market correction created opportunities to generate returns, allowing us to reposition our portfolio effectively.

 

Is the worst of the dip in corporate earnings growth over?

 

Earnings are currently mixed, with some stocks performing better than others. The full impact of tariffs is expected to be seen in the first quarter of FY26 (Q1-FY26), while a high base effect from last year may weigh on consumer durables. Sectors aligned with the domestic growth theme, such as infrastructure, capital goods, and defense, show a promising future. Notably, recent geopolitical tensions between India and Pakistan have renewed investor interest in defense.

 

Is new money (in retail stock broking and PMS) hard to come by now?

 

Our PMS has been a strong outperformer, even during recent market volatility. In fact, many of our investors have shown increased confidence by allocating more capital over the past month, despite tough conditions. Rather than cashing out, they see this as an opportunity to invest in quality stocks for generating long term wealth. 

 

Can the tough market conditions trigger a consolidation phase for the broking and wealth management industry over the next few months?

 

The broking and wealth management industry is likely to see a consolidation phase over the next 6 to 9 months, driven by challenging market conditions and a tight treasury environment. Reduced participation from HNIs and PMS investors is also contributing to the slowdown. Only well-capitalised, tech-driven, and client-focused firms are likely to navigate and survive this phase successfully.

 

To what extent are you using algo in PMS & stock broking?

  While adoption varies across the industry, algo trading has gained substantial acceptance among larger firms and sophisticated investors. It helps optimize trades and manage risk, but traditional methods still coexist, especially among retail investors and smaller players.

 

We have noticed an increased interest in and demand for algo products among retail investors; and with new Sebi regulations allowing their participation, I think this segment looks very exciting. We are building some really interesting algo-trading products and believe this will help in our next leg of growth.