Fortunes of brokerage firm seem to be on the rise, thanks to the prevailing bullish sentiment at the bourses. An analysis of brokerage stocks listed on the NSE shows a significant rise in their value in the last 20 days.
Significant change in sentiment along with rise in trading volumes in the cash segment, was the major reason for the buying in brokerages, said analysts.
The Aditya Birla Money stock rose as much as 90 per cent in the last 17 trading sessions to Rs 24.15 from Rs 12.70 . Edelweiss Financial Services gained 43 per cent to Rs 42.95 (Rs 30.05).
‘Overall change’
“There is an overall change in the market sentiment. Also, volumes in the market have gone up resulting in higher revenues. There are huge FII inflows also,” said Motilal Oswal, Chairman and Managing Director, Motilal Oswal Financial Services.
The buoyancy at the marketwas due to the various announcements made, both globally and domestically. Early in September, European Central Bank’s announced unlimited bond buying programme. Then the US Federal Reserve agreed to introduce third round of monetary easing programme.
From September middle, the Centre has been making a slew of announcements such as allowing FDI in retail, aviation and broadcasting and also increased the diesel price.
All these announcements led to an improvement in the global liquidity system and in investor sentiments.
Spike in participation
Broking firm officials said that there was definite increase in trading activity and client participation in the market post these announcements. However, they added it is too early to say if these are net inflows or outflows because the changes have happened over the last 15-17 days. They added that in some cases the increase in client participation at some brokerages was about as high as 40 per cent.
The revival in trading was reflected in the increased trading activity in September. Number of shares traded on the NSE during September increased 18 per cent to 1.43 lakh shares. The total turnover of the exchange saw a 17 per cent rise to Rs 2.40 lakh crore, up from Rs 2.04 lakh crore in August. This is the sharpest increase seen so far in the fiscal year. The BSE recorded a turnover of Rs 45,501 crore in September — the highest so far in current fiscal.