The domestic broking industry is likely to grow at a moderate 5-10 per cent in the current fiscal amid cautious investor sentiments and market volatility, says a report.
In the previous fiscal, the industry had grown at over 30 per cent, with turnover of Rs 18,000-19,000 crore.
"The Indian broking industry is estimated to post a moderate growth of 5-10 per cent in FY19 with an estimated revenue projected at Rs 19,500-20,000 crore," according to a report by rating agency Icra.
It said, while on one hand, the volatility in the markets is expected to encourage trading turnover, on the other, the recent corrections in valuations, coupled with the cautious investor stance, would have a bearing on industry revenues in the current fiscal.
The report said the domestic capital markets are expected to remain rangebound over the near term with a prolonged period of volatility given the weakening of investor sentiment and challenging domestic and global cues.
Going forward, the foreign portfolio investment (FPI) flows are expected to remain muted, with a net outflow of USD 8-10 billion in FY19 compared to inflows of USD 4 billion in FY18, considering the weak macro-economic outlook, the agency noted.
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"Factors such as corporate earnings, state election outcome, result of the resolution of NPAs and its impact on the health of the banking sector would be other determinants for FPI flows," it said.
The domestic institutional investor (DII) segment, a net buyer of equities since FY16, is expected to remain steady over the near-term and would provide support to the domestic capital markets.
While the FPI segment will remain a key market participant, a growing DII segment is a positive development for the domestic capital markets, providing them with much-needed resilience.
"Going forward, a meaningful revival in corporate earnings and abatement of liquidity and capital availability issues would be a key for further fillip to the capital markets and for boosting FPI equity inflows," Icra's vice president and co-head (financial sector ratings), Samriddhi Chowdhary, said.
She, however, said the near-term outlook for the domestic broking industry is stable.
The report said the markets reported a resurgence in the current fiscal after a slide in February and March 2018, before witnessing a correction from September 2018.
On an aggregate basis, the equity markets reported a turnover of Rs. 1,191 lakh crore in H1 FY2019, registering a growth of 55 per cent over Rs 770 trillion in the year-ago period, the report said.
The average daily turnover (ADTO) increased to Rs 9.53 lakh crore from Rs 6.21 lakh crore during the same period and was Rs 7.04 lakh crore in FY18, it said.
Equity mobilisation through public issuances slowed down significantly in the current fiscal with Rs 0.13 lakh crore raised through 81 issuances in the first half of FY19 compared to over Rs 1 lakh crore through 229 issuances in FY18, the report added.