Broking stocks under pressure; 360 One, Geojit, JM Financial fall up to 8%

Shares of broking companies were under pressure on Monday on concerns that any significant volatility in the market's performance can directly put pressure on their overall income profile.

Shares of stock broking and related companies were under pressure and fell over 8 per cent on Monday. The stocks have extended their losses on concerns that regulatory measures, coupled with significant volatility in the market’s performance, could hit their revenues.

 

The shares of 360 One WAM dropped 8 per cent to ₹894.3 on the BSE, while JM Financial and Geojit Financial Services were down 7.2 per cent each to ₹90.4 and ₹73.2, respectively.

 

Other notable losers were Dolat Algotech, which fell 6.8 per cent, while Anand Rathi Wealth shed 3.7 per cent.  In comparison, the BSE Sensex was flattish, ending the day marginally down at 74,115.

 

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The stock broking industry has seen a continuous transformation with technology-based discount brokers entering and dominating the market. The competition is expected to remain high, intensifying the price war in the industry. Over the last couple of years, the broking industry has witnessed continuous regulatory revisions.

 

Among individual stocks, Angel One was down 5 per cent from its highs over the last three trading sessions. In the past one month, the stock slipped 12.8 per cent, as compared with 4.3 per cent decline in the BSE Sensex. The stock had hit a 52-week low of ₹1,944.15 on March 4 this year.

 

In the past five financial years and through December 2024, the Angel group’s revenue has been highly skewed towards broking income, which accounts for two-thirds of total income. Given the higher reliance on broking income, any significant volatility in the market’s performance can directly put pressure on the Angel group’s overall income profile. Also, compared to other equally established large capital market entities, the group’s share of broking income is relatively high, according to Crisil Ratings. 

 

However, Crisil Ratings believes the Angel Group will continue to strengthen its market position through a steady increase in active clients and income stream diversification. This improvement in market position and revenue diversification will benefit the group’s earning profile and core profitability over the medium term, the rating agency said.

 

Angel One’s number of orders fell 21 per cent month-on-month to 99 million in February 2025 (down 43 per cent year-on-year), reflecting a 10 per cent month-on-month decline in the number of orders per day to 5 million. Regulatory changes and a weak market environment continued to impact the order run rate, according to Motilal Oswal Financial Services.

 

According to Kotak Institutional Equities, with a large part of retail-focused future & options (F&O) regulations now in play, it has seen a 20 per cent drop in retail premium turnover and active retail traders. Prop/institutional trading has seen a slightly higher drop in premium (25 per cent), with uncertainty from the potential introduction of new position limit rules (in consultation at this stage).

 

While more immediate measures to tighten the F&O markets seem unlikely, it is unclear on what metrics deliveries are crucial to settle this issue, the brokerage firm said.

 

While volume decline is already evident, any second-order impacts will be visible over the next 6-12 months. Another round of tightening seems a low-probability scenario for now. However, fundamentally, it is unclear what metrics regulators will see while assessing the impact, i.e., traded volume or number of active retail participants or pace of growth, it said.

 

Meanwhile, activity in cash markets has also moderated in recent months from the elevated levels (June-July). Retail cash average daily volumes (ADV) has declined to ₹30,000 crore from the peak of ₹50,000 crore, even as these levels are still higher than previous years. Another measure of activity, i.e., cash delivery volume, has also come off the peak levels, reflecting weak markets. Lastly, the margin funding book also reflects the weak retail sentiment, even as the decline is less pronounced as compared with trading volumes, analysts said.