Skip to main content

Stock Brokers feel the pinch

Brokerage Stocks were downgraded a few months back by Deutsche Bank. JM Financial, Emkay and Centrum are among the broking firms that have seen a steep decline in their net profits on a sequential basis. Others like Edelweiss Capital, Geojit Financial and India Infoline have witnessed a decline of net profit around 32%, 36% and 18%, respectively, during the same period. The net profit is derived after deducting income from other sources.
The results paint a bleak picture for broking firms. Most of the listed broking firms have reported either a fall in net profit or at best only a marginal rise in their bottomline for the period.
Rising interest cost is pushing up operational costs for most broking outfits even as they are simultaneously faced with declining revenues. Having suffered massive losses during the early part of this year, most retail investors are now reluctant to return.
The plight of the smaller broking companies is even worse, as they are struggling to meet their margin obligations due to liquidity constraints. In October, trading terminals of 95 broker-members were deactivated in the futures and options segment and 29 deactivations occurred in the cash segment. In September, the terminals of 36 broker members were deactivated whereas in August it was only 11. There were 885 active trading members in the F&O segment and 984 in the cash segment on NSE in October.
These woes are reflecting in the stock prices of broking firms. Most of them have fallen more than 75% from their highs early this year. After banking stocks, broking outfits are the next best proxy on the economy. If the macro picture is rosy, invariably stock markets do well.
Source: ET

Popular posts from this blog

Historical Sensex Returns Updated - 2024

Historically Sensex has given returns of about 15% per year, despite volatility and price fluctuations of about -20% to +60%. The following table shows S&P BSE Sensex historical data - start  & close values and the yearly returns of the sensex from 2000 to 2024. So far during the year the   index has hit an all-time high of  75,124   and despite markets hitting all time highs not all stocks make all-time highs. There are many stocks still below their highs. Stocks like HDFC Bank, ITC, Asian paints are still well below their highs and some of them have given low returns over last 3-5 years. Individual or Retail investors can achieve consistent returns through investing via mutual funds , whether it be active or passive. Chasing returns from individual stocks is futile. Be a wise investor !

Walmart and Costco Selling Gold and Silver

Costco Wholesale and Walmart are both starting to sell gold bars. First, Costco sold gold bars to its members looking to invest in more than bulk household purchases. Now the warehouse retailer is selling silver coins too. Walmart has also started selling precious metals such as gold and silver in its online store, following in the footsteps of Costco Wholesale. Against the backdrop of high inflation, gold has become the new favorite of American consumers. The value of gold and silver is expected to continue to climb in 2024 on expectations that the Federal Reserve will start cutting interest rates. Gold currently trades at $2255. Will Indian supermarkets sell gold?  Gold has been always been one of the favorite investments for Indians, as evident from the fact that Indian households hold over 21,000 tonnes of gold. Indians prefer to buy gold jewelry and this trend could change if Gold is sold in supermarkets. There are Gold ETFs and Sovereign Gold Bonds  (SGB) as well. Addi...