Broking shares rally; Angel, IIFL, ICICI Securities, MOFSL surge up to 18%

The outlook for Indian capital market related businesses continues to remain positive over the medium to long term.

Shares of stock broking & allied services companies were in demand and rallied by up to 18 per cent on the BSE in Tuesday’s intra-day trade amid heavy volumes on positive business outlook.

IIFL Securities rallied 18 per cent to hit a new high of Rs 262.15 on back of over 10-fold jump in average trading volumes. At 03:02 pm; the stock was trading 13 per cent higher at Rs 249.60, as compared to 0.51 per cent rise in the BSE Sensex. A combined 8.2 million shares changed hands on the NSE and BSE.

Shares of Angel One soared 16 per cent to Rs 2,714.95, followed by ICICI Securities 11 per cent to Rs 881.25 and Motilal Oswal Financial Services (MOFSL) 6.5 per cent to Rs 675.

 

The outlook for Indian capital market related businesses continues to be positive over the medium to long term. This is primarily owing to low penetration of financial products, increased financialisation of savings, technology development and an evolved regulatory regime.

With sustained momentum expected in India’s economic growth, IIFL Securities said it is confident of witnessing secular growth, going ahead. The government’s emphasis on capital expenditure, increased foreign investment, robust capacity utilisation in manufacturing, double-digit credit growth, and moderation in commodity prices are estimated to continue providing support to manufacturing and investment-related activities.

Sustained growth in domestic flows, both institutional (principally provident and pension funds) and non-institutional, and buoyancy in profit cycle will likely keep valuations rich over the medium term, IIFL Securities said in FY24 annual report.

IIFL Securities along with its subsidiaries offers broking services, financial products distribution, institutional research and investment banking services.

Meanwhile, MOFSL reiterated its BUY rating on Angel One with a target price of Rs 3,300 per share. The stock price of Angel One had hit a record high of Rs 3,900.35 on January 9, 2024.

Angel One is well positioned to grow business across key parameters such as client acquisition, number of orders and MTF book. Additionally, new segments, such as loan distribution and fixed income product distribution, should scale up in the near term. Over the longer term, asset management company (AMC) and Wealth Management will start contributing to revenues. The brokerage firm has cut its FY25/FY26 earnings estimates by 1 per cent/3 per cent to factor in the Q1 performance.

Meanwhile, India experienced a robust increase in demat accounts, reflecting a growing interest in retail equity participation. The total demats accounts surged at a compounded annual growth rate (CAGR) of approximately 33.3 per cent from fiscal year 2019 to fiscal year 2024, rising from 35.9 million accounts to 151.4 million accounts. This growth can be attributed to increased awareness among retail investors, increased accessibility to trading platforms facilitated by technological advancements, and a reduction in brokerage costs.

The active client base on the National Stock Exchange (NSE) expanded significantly, registering a CAGR of 37.8 per cent from 8 million in March 2019 to approximately 40.8 million in March 2024. This trend underscores the growing influence and participation of retail investors in the Indian equities market, indicative of a democratization of investment opportunities, MOFSL said in its FY24 annual report.