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Broking firms seek cut in transaction cost

June 29, 2009 18:38 IST

Want removal of commodity transaction tax, which was never notified amidst strong protests, reduction in securities transaction tax to cut transaction cost & boost volumes.

The sharp upturn in the Indian equity markets since March 2009 with impressive surge in volumes has helped substantial sequential surge in revenues of the broking firms. Earlier, they were affected by global financial meltdown, which lead to crash in markets and volumes. Smaller broking house took greater hit, as they struggled to meet their margin requirements due to liquidity constrain.

Nevertheless, the fortunes of brokerage companies have revived along with the improvement in stock prices over the last three months.  Increasing turnover in cash and derivative segments as well as fund-raising plans of India Inc spells good news for these companies. But still raising cost of trading is putting pressure on margins. Hence lowering statutory duties to bring down cost tops the agenda of budget wish list. 

Industry Expectations

Analyst Expectations

Companies to watch

Edelweiss Capital, Geojit BNP, India Infoline and Motilal Oswal Financials, Religare Enterprises

Outlook

The strong revival in the market has adds cream to the stock and commodity broking sector.  The risk aversion has come down significantly, which coupled with improving economic fundamentals augurs well.

Broking firms are hoping the Union Budget shall not levy extra burden on them or investors by way of additional taxes. Instead they seek reduction in the overall transaction cost, which should spur investment and trading in securities.

Capital Market
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