In this exclusive interview, Nirmal Jain, founder & chairman, IIFL group, talks about retail frenzy in the stock market and how the retail broking business is faring against this backdrop
 "Q&A: Retail investors now a significant force, says IIFL's Nirmal Jain")
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Should we be concerned about the runaway rally in equity markets right now? Or should we be happy that retail investors have tasted blood and latched on to the equity bandwagon? And how is the retail broking business faring against this backdrop? Nirmal Jain, the founder & chairman of the IIFL group, gave answers to these and many other questions in an exclusive interview with Business Standard’s Puneet Wadhwa. Here are the highlights of the Q&A:
Are you concerned about the runaway rally in the equity markets or are you happy with how retail investors have latched on to equities?
- Equity market rally and corrective phases are equally scary
- Long-term investors in equity make more money than in other avenues
- Retail participation encouraging
- Foreign investors’ equity ownership rose at the cost of retail investors
- Retail investors have now become a significant force to reckon with
So how is retail broking business doing? Have discount brokerages made life difficult for traditional ones?
- Discount broking business has seen a rapid addition of customers
- Millennials more on the discount broking platform
- Full service and discount broking businesses will co-exist
Sebi recently suggested the T+1 settlement structure from January 2022. Is the infrastructure ready with brokers?
- Infrastructure needs to be ready with a number of participants
- Challenge is with those who operating in different time zones
How is the credit off-take shaping up across segments?
- Credit off-take is picking up, especially in the festival season
- See significant pick-up in the second half of 2021-22
Will this demand sustain post the festival season?
- Demand will sustain, and probably pick up
- Real estate segment is picking up; low interest rate regime key
- Gold loan and SME loan segments should also do well
- Covid third wave is a threat
With the RBI giving licences for small finance banks, is the lending space becoming overcrowded?
- Capital gives power to leverage
- Economy is doing well
- A few licences will not impact demand-supply dynamics much
What are the risks to the economy and hence markets do you foresee over the next six months?
- Risks: Geopolitical, over-leverage, easy money policy
What's your advice to investors now?
- Diversify and remain selective
- The rally has been broad-based
- Avoid speculation and avoid being greedy
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First Published: Oct 18 2021 | 10:19 AM IST