In an interaction with Trivesh D, COO of Tradejini
The outlook on the Indian broking industry is positive, believes Trivesh D, COO of Tradejini
How would you describe the current state of the Indian equity markets?
The Indian equity markets are experiencing a very positive outlook, with both benchmark indices reaching all-time highs in July 2023. IPO interest has increased, and some profit booking has been observed among small retail investors, while Foreign Portfolio Investors (FPIs) continue to be net with record participation in July 2023 (>Rs 42k crore), indicating strong market sentiment. Caution is advised due to potential headwinds from international factors like the U.S. Fed's rate hike indications and the ongoing war in Ukraine. The bet on Bharat continues to be very strong, positive, and attractive.
In light of the evolving global economic landscape, what are some of the major headwinds impacting the Indian equity markets?
Major headwinds impacting the Indian equity markets include the global economic downturn, leading to a slow start in IPOs in Q1FY24 compared to the same period last year (9 in Q1FY24 vs 16 in Q1FY23). The Indian IT sector, which serves global clientele, is already going through a slump phase and the same may face challenges in the coming months as well. However, there has been a significant movement of business from China to other Asian countries, especially India, resulting in improved performance in Indian manufacturing and allied services. Despite the global recession, Indian markets continue to attract huge foreign investments, and FPIs continue to be net buyers.
What is your outlook on the Indian broking industry?
The outlook on the Indian broking industry is positive. With an active regulatory authority in SEBI, compliance is increasing, benefiting investors and bringing discipline to the industry.
Indian broking has transformed from traditional broking houses to technology and content companies at their core. With very low penetration in the Indian capital markets, there is substantial potential for broking houses to expand to untapped markets and improve their product offerings. Trust and stability in platforms are the key factors driving the industry's growth.
With the recent advancement in AI in the trading fraternity, what technology will most likely now disrupt the broking industry and how is the industry prepared for it?
People confuse algo trading with AI and use the two terms interchangeably. Artificial Intelligence refers to the simulation of human intelligence in machines that are programmed to think and learn like humans.
On the other hand, algos, short for algorithms, are sets of rules and instructions that guide computer programs in executing automated trading strategies. Algos are expected to generate a lion's share of trades as the Indian market matures. Machine Learning has good potential given enough time and the right training, but it's still at a nascent stage to determine its full effectiveness.
AI-enabled customer support is likely to enhance the broking industry and its offerings. Leveraging AI for these activities can significantly reduce manpower costs and improve query resolution, enhancing efficiency and customer focus. API-based trading is transforming the way clients communicate with brokers and also aids other fintech companies to build products on top of these API’s.
Disclaimer: The opinions expressed above are personal and may not reflect the views of DSIJ.