Trading volumes to soar in H2 as investors regain confidence: Roop Bhootra

Margin will remain under pressure in Q2, as investors might take time to regain confidence. However, we expect a turnaround in sentiments by Q4-FY23, says CEO - Investment Services of Anand Rathi

After a sharp fall from their peak, ROOP BHOOTRA, CEO - Investment Services, Anand Rathi and Stock Brokers, tells Lovisha Darad in an interview that investor sentiment will turn around in the second half of fiscal 2022-23 (FY23). Retail investors, especially the new entrants who are not accustomed to varied market cycles, have turned cautious now. Edited excerpts:

What is your outlook for the markets? Will the second half of the calendar year 2022 be as painful as the first? Is there any hope of reprieve for investors?

The worst is over for the markets now. They have already slipped around 17 to 18 per cent from the peak level. We expect inflation to peak out by the second half of 2022. Markets will consolidate as commodity prices correct and volatility reduces.

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Is some sense of caution now creeping into retail investors' mindset on how they approach equities as an asset class?

Yes, they are a cautious lot now, especially the new entrants who are not accustomed to varied market cycles. However, we see the experienced investors are holding on to their investments and using any decline in valuations to buy. A long-term approach for investment towards growth or value stocks is highly recommended.

What are your current margins? Do you expect them to come under pressure  going ahead?

We have delivered 14.9 per cent margin (PBT) for FY22. A pressure on margin existed in the first quarter (Q1), as the market volumes were down and investors lost money due to sharp fall in the markets. Margin will remain under pressure in Q2, as investors might take time to regain confidence. However, we expect a turnaround in sentiments by Q4-FY23. Trading volumes, too, should pick up. As we shift focus to distribution products in the broking segment, we estimate higher income from the same in this year.

So, adding new customers will be a challenge then if the markets remain volatile?

In the current scenario, customers have a wide range of options to choose from, hence acquisition and retention is a challenge. We strive to generate alpha returns from index over the long term. We believe that the right approach to meet customer needs requires an in-depth study of the user. Also, in order to make applications user-friendly, we have continuously tried to change it according to recent needs.