Reliance Securities, a full-services equity broking house, sees the capital market regain its pre-Covid-19 level of about 12,000 (Nifty50) by the end of this calendar year, a top official said.
“Whatever the market had lost due to Covid-19 should be gained by the end of the year. This is what my expectation is. My sense is markets should regain January 2020 levels by the end of this calendar year,” Rajeev Srivastava, Chief Business Officer, Reliance Securities, told BusinessLine.
It might take a little longer for actual economic activity to return, but usually markets react in advance, he pointed out.
Reliance Securities is of the view that normalcy in economic activity is expected to return by the end of this financial year.
“It might take some time for mass consumption to come back, whether it be for travel, movie watching or shopping at malls. Mass production will fall in place first and then mass consumption, which will take some time to stabilise,” Srivastava said.
Srivastava said that customer acquisition numbers for Reliance Securities has gone up by 50 per cent in April and May, compared to the first two months of this calendar year.
Healthy clientele
The trend of strong growth in new customer addition in the stock broking industry has been positive in the last four to five years. “It’s not something that is happening now. In 2015, the industry added 18 lakh new customers, and in calendar year 2019 the industry added 41 lakh customers. It’s almost doubled in five years,” he said.
Due to the Covid-19-induced lockdown, people have got more time and stock markets have given people a productive outlet to utilise their time.
“Due to Covid-19, market had also crashed from 12,000 plus to 7,500. Many saw this steep fall as a right opportunity to go and acquire quality companies.
“Market correction had played a role. There is a sense of opportunity. People have been increasing their participation in the market. Also, now investment options are limited, especially when the real estate sector in India has not been doing well in terms of return on investments,” Srivastava said.
With fixed deposit rates being what they are, the whole logic of equities covering inflation post tax is stronger now, he added.
For Reliance Securities, which now has over a million customers, growth in customer base mainly comes from Tier 2 and Tier 3 towns.
“Growth is coming from ease of opening of accounts and the fact that customers are not having too many other options for good returns. We will try to make account opening even more frictionless,” he said.
Discount broking, not now
Srivastava said that Reliance Securities would continue to remain a full services broking house and not venture into discount broking.
On the customer transaction side, Reliance Securities is now offering ‘Basket Advisory Services’ where a customer can allocate a certain sum of money for a basket of four to five stocks. There could be any underlying theme for this basket, including say, healthcare stocks; thematic stocks, such as Budget or monetary policy-specific ones, or even market-cap-based ones, he added.