
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