Brokers make hay in Gujarat as markets shine

With the stock market touching the magical figure of around 6,000 in December, the brokers and sub-brokers in the state have started making huge profits. This has accompanied a more than 30 per cent rise in the number of investors in the state.

The big broker community in the state dealing in stocks on different bourses are brimming with confidence about doing well. Incidentally, most of them started business after the stocks started picking up in April 2003.

The Sensex was around 2,800-levels in April 2003, and it has now more than doubled to around 5,900 as on December 30, 2003, and is just 250 points behind its all time high of 6,150.69 points recorded on February 14, 2000.

The investors have returned to the stocks market in hordes adding to the business of the broker community.

Most the sub-brokers in the state have around 75 to 100 clients. More than 50 per cent of the trading takes through instructions over the telephone.

"Most of the clients trade with us on delivery basis, while few continue to trade on rolling basis. People are purchasing even at higher rates, expecting the market to rise further," said Nikunj Patel, an operator at Maruti Investment Services.

"We are expecting the market to cross the 7,000 mark, as the financial results for the third quarter of various companies start streaming in showing marked improvement this year," said Patel.

The customers are charged a brokerage of 0.75 per cent for the delivery-based transactions, while 0.10 per cent is charged for the rolling transactions. Apart from it, other charges include service charge and service tax.

Moreover, these brokers and sub-brokers assist the clients to open demat accounts in various banks. The brokers keep a deposit of around Rs 10,000 from their clients for the transactions while several brokers even provide credit limit to their customers depending on the volume of trade and relationship with them.

Although the bad memories of Ketan Parekh and Harshad Mehta-led stock scams when a lot many investors burnt their hands in the stock market must not have faded from the investors' mind and must be a grim reminder to the fickleness of the market.

The much traded stocks in December were software biggies such as Infosys, Satyam, pharma majors Dr Reddys, Ranbaxy and Cipla, public sector giants such as ONGC, GAIL and others.

At present, on an average a sub-broker earns around Rs 20,000 per month, while major brokers earn more than a lakh every month. The commission sharing between the brokers and the sub-brokers stands in the ratio of 40 to 60.

On-line trading introduced by ICICI, Kotak Mahindra and others which provide demat account, bank account along with an online trading account, have failed to affect the brokers in any significant way.