Despite Indian markets performing well in 2024 with Nifty gaining 8.5 per cent YTD after going up 20 per cent in 2023, there could be interim correction “driven largely by global factors and local macro issues”, according to Sandeep Bharadwaj, Chief Operating & Digital Officer at HDFC Securities. He said that retail investors have once again realised the importance of equities as a wealth-building asset class, adding, HDFC Securities is “optimistic about five sectors — Banking & Financial Services, Healthcare, Consumer Discretionary, Consumer Staples and Consumer Durables.” Excerpts:
For HDFC Securities, how has business been? How would you compare your low-cost broking platform vis-a-vis bigger competitors in that space?
Our business has demonstrated consistent growth across all key metrics. A review of the financial statements available on our website will reveal that a significant portion of our revenue is generated through fees and commission income, in addition to interest income. Both our top and bottom lines have exhibited steady sequential and year-on-year growth. While the InvestRight platform, catering to customers wanting RM service, keeps growing, the discount platform SKY has seen a sharp increase in number of users and volumes over the past few months.
Recently, we launched Exchange Traded Funds (ETFs) at no cost and introduced Managed Trading Funds (MTFs) at a competitive rate of 1 per cent per month on our discount broking platform, HDFC SKY. Additionally, we have simplified IPO investments, making them easily accessible through a seamless one-click process.
Our newly launched Youth Plan, for aged between 18-25, offers benefits, including zero brokerage for the first year, no maintenance charges for the first year, access to our educational resources via SKY Learn, and stock recommendations from our experts.
Furthermore, HDFC SKY offers in-depth research reports, personalised recommendations, and advanced features like charting tools and trading interfaces.
There were rumours recently that HDFC Securities is shutting shop, which you denied promptly and clarified it as a strategic pause. Throw some light on that issue.
The note that we issued was to clarify certain misconceptions circulating on WhatsApp regarding compliance concerns. The decision to pause partnerships was made earlier this year as a strategic initiative aimed at streamlining operations and enhancing service quality, rather than being driven by compliance issues. Also, franchisee business for HDFC Securities has always constituted a small portion of our overall business strategy.
Over the past several years, our primary focus has been on expanding our digital presence. Both the InvestRight and HDFC SKY mobile applications have been integral to this digital transition. Currently, over 94 per cent of new accounts are opened through our mobile applications or website, and we are witnessing nearly 100 per cent of transactions being conducted digitally.
As we are at the fag end of 2024, how would you look back at the year gone by? What is the biggest lesson for retail investors?
Indian markets have performed well in 2024 with Nifty up 13.2 per cent YTD after a 20 per cent gain in 2023. The broader market has performed even better with Midcap index gaining 28 per cent. FPI flows have been volatile and still play a large role in determining the trend of our markets even though local flows have gained importance over the past few years.
We expect acceleration in growth after a subdued Q2 post the political stability that could result in a fresh reform thrust. Further, Trump 2.0 could reduce geopolitical uncertainty and stabilise crude prices. Government capex could revive post a poor H1.
Retail investors have once again realised the importance of equities as a wealth-building asset class. They should try and maximise their equity exposure after reviewing their return expectations and risk tolerance capabilities. Retail investors would do well to be well grounded and be selective in stock pick as a bear run will show the true colours of individual stocks. They also need to do regular asset rebalancing and portfolio reviews so that they make the most of the up-run in stocks and protect their downside.
How different would 2025 be? What are the sectors that you expect to do well in 2025? And why?
At HDFC Securities, we foresee 2025 as another promising year for the Indian economy, with the growth narrative continuing to gain momentum. We firmly believe that the entire next decade will be characterised as India’s era of growth. According to a recent report by S&P Global Market Intelligence, India’s GDP is projected to reach $7.3 trillion by 2030, indicating significant economic expansion on the horizon.
For 2025, we are particularly optimistic about five sectors — Banking & Financial Services, Healthcare, Consumer Discretionary, Consumer Staples and Consumer Durables. We believe large banks are well-valued and maintain clean balance sheets, and with anticipated interest rate cuts likely to structurally enhance credit demand. The healthcare sector, particularly formulation businesses, are expected to perform well due to improved product mixes and effective pricing strategies.
However, investors need to be prepared for heightened volatility in the markets after nine straight years of Nifty gains and could see interim correction driven largely by global factors and local macro issues.
Published on December 23, 2024
