With the Indian equity markets facing headwinds, Motilal Oswal, CMD, Motilal Oswal Securities, talks to Business Line about his outlook on the market and their long-term strategy to stay afloat in the markets.
After recently hosting the Motilal Oswal Global Investor Conference, Oswal also points out how foreign institutional investors are gauging the markets at this point.
What is your outlook on the markets?
The beauty of the market is that there will always be some positives and some negatives. Right now, markets have become a more bottom-up kind of investing. If the rupee stabilises then there will be a lot of inflow from FIIs.
Retail investors are definitely not as active as they were, FIIs are slightly better. Overall activity levels are down. However, in bad times you become better, in good times you become bigger. Our efforts are on. The markets will keep giving surprises. No one had expected that volumes will be so low. That’s the fact of life. Business building is on.
What sense did you get from the FIIs who attended the investor conference?
Global investors have interest in India but they may not convert it into action right now. FIIs have already put in more than $11 billion in the last seven months. People are very concerned about the GDP growth. FIIs are not hesitant to invest but the overall headlines are not very positive.
This time there is more pessimism. Between last year and this year, the rupee has taken a big beating. That is where the foreign investors are concerned. Second thing is that policy decisions are slow — this is a big concern. Despite macro headwinds, some of the sectors have really done well.
Right now there are no takers for bad sectors, but people are putting money into wherever corporate performance is there.
Is the worst over for brokerages?
We are not going to see worse days than what we have seen last year. I am not sure when market activity will improve because IPOs are not there, mergers and acquisitions are not happening. Private equity deals are happening to some extent and there is a bit of divergence that is happening.
The brokerage business is cyclical. Private equity, mutual fund and wealth management business are doing slightly better than the brokerage business.
Last year our revenue break-up was 80:20 (broking business as compared to other businesses), this year our revenue break up is 70:30.
What is your strategy now?
Focus is to get more revenues from the bigger city branches. In bigger cities we already have branches — we are trying to make them bigger.
This will be by acquiring more customers. We want to make the same unit revenue much higher.
We are trying to improve the quality of advisors, training through seminars and by educating them.
We are focussing more on the qualitative side, not very aggressively on the quantitative side. In the coming years, I feel that the broking business will remain big. In other businesses growth will be linear but in broking it will be volatile.