The Indian capital market is likely to witness steady inflows in the medium to long term following formalisation of the economy post demonetisation.

According to Ajay Saraf, Executive Director, ICICI Securities, a majority of the incremental inflows into the capital market will come from Tier 2 and Tier 3 towns.

“Formalisation (of economy), which has happened post demonetisation, has helped channelise inflows into the capital market. In the medium to long term, we see steady inflows into the capital market,” Saraf told newspersons at the company’s IPO roadshow here on Monday.

Net inflows into equity mutual funds in February 2018 was close to ₹16,200 crore. According to Ketan Karkhanis, Head, Retail Sales, ICICI Securities, while the top 30 cities accounted for a major share of the total assets under management in equity mutual funds, incremental growth in inflows was coming from Tier 2 and 3 towns.

ICICI Securities would look to tap this growth coming from smaller towns by expanding its reach, either by way of direct branches or through its network of independent financial advisers (IFA) and the sub-broker model.

The company also plans to focus on distribution of financial products, such as mutual funds in order to diversify its revenue mix and reduce volatility.

“Our brokerage income as a proportion of total revenue has come down to 64 per cent from about 70 per cent in four years back and the share of other income sources, including distribution and investment banking, has increased to around 36 per cent (up from 29 per cent),” Saraf said.

The price band for the company’s IPO, which is set to open on March 22, has been fixed at ₹519-520 an equity share. The proceeds from the offer will be headed to the bank.

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