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Time of India
3 days ago
- Business
- Time of India
Are asset managers a safer bet than brokers in India's capital market?
Mumbai: Investors looking to bet on India's thriving capital markets would be better off buying shares of asset managers rather than exchanges and brokers, said money managers. While exchanges and brokerages are likely to feel the heat of the various regulatory actions aimed at curbing excess speculation in futures and options, mutual funds and allied businesses may continue to benefit from flows into their products, making them a safer bet at this juncture. "While the downgrade cycle in capital market stocks has bottomed out, there could be degrowth in broking stocks given the slowdown, but AMCs could perform better," said Mahesh Patil, CIO, Aditya Birla Sun Life AMC . The Nifty Capital Market index has been the best performer among all NSE indices in the last three months. After slumping 20% from its peak in October, it has rebounded in the past three months. Since mid-April, the index has surged 31.4%, while the benchmark Nifty gained 7.6% in the same period. Explore courses from Top Institutes in Select a Course Category Data Science Healthcare Product Management Project Management MBA CXO Degree Technology Operations Management Public Policy Data Science Leadership Digital Marketing Artificial Intelligence others Management Design Thinking MCA Others Data Analytics Finance PGDM Cybersecurity healthcare Skills you'll gain: Duration: 11 Months IIT Madras CERT-IITM Advanced Cert Prog in AI and ML India Starts on undefined Get Details Skills you'll gain: Duration: 30 Weeks IIM Kozhikode SEPO - IIMK-AI for Senior Executives India Starts on undefined Get Details Skills you'll gain: Duration: 11 Months E&ICT Academy, Indian Institute of Technology Guwahati CERT-IITG Postgraduate Cert in AI and ML India Starts on undefined Get Details Skills you'll gain: Duration: 10 Months E&ICT Academy, Indian Institute of Technology Guwahati CERT-IITG Prof Cert in DS & BA with GenAI India Starts on undefined Get Details Skills you'll gain: Duration: 10 Months IIM Kozhikode CERT-IIMK DABS India Starts on undefined Get Details by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like 목어깨 아플땐 "이모양 베개" 절대 쓰지마세요. 7년차 개발자 더 알아보기 Undo Agencies Nippon Life India AMC jumped nearly 50% in this period. CDSL and Anand Rathi Wealth gained 40% and 45% respectively. While the index remains 6% below the peak, money managers said valuations of most of these entities, especially brokers, may be rich, making them vulnerable to a sell-off. "The current valuations appear expensive for broking companies, given their cyclical nature and high correlation with market movements, and we remain cautious on them," said Vikas Gupta, CEO, OmniScience Capital. "What we have done, and suggest for investors, is to take selective exposure to banking stocks that own AMC subsidiaries, as they offer more attractive valuations and meaningful upside potential from current levels." The rich valuations are encouraging companies to sell shares in the primary market, with NSDL and ICICI Prudential AMC looking to launch their initial public offerings over the next few months. Live Events 'When large IPOs from a sector are expected to list in the market, buying interest emerges for other listed players as well, but investors should keep tabs on the valuations as well,' said Chirag Mehta, chief investment officer, Quantum AMC. Profitability of exchanges has taken a hit of late after the Securities and Exchange Board of India's actions to temper retail investor activity impacted activity. In the case of broking firms, the regulator's steps to tighten regulations also squeezed their profits. 'When the markets corrected last year, capital market stocks witnessed a sharp fall from the peak due to reduced activity, followed by a regulatory clampdown on F&O volumes and margin requirements,' said Mahesh Patil, CIO, Aditya Birla Sun Life AMC. The bearish sentiment has stablised since, and capital market stocks have been inching higher in line with broad market performance, said Patil. Analysts said technical indicators are not showing a reversal yet despite the rebound. 'We may see some consolidation in these names, as they have massively run up in the last three months,' said Ruchit Jain, vice-president, head, technical research, Motilal Oswal Financial Services . Traders and investors can use a 'buy on dips' approach in the near term, especially for CDSL and MCX, which could run up as these stocks have seen strong trading volumes despite some decline, said Jain. 'While capital market stocks offer higher relative growth, valuations are elevated after recent run-up and private banks and insurance stocks are a better bet as they offer comfort in valuations and decent growth prospects,' Mehta said.
Time of India
08-07-2025
- Business
- Time of India
BSE shares tumble over 13% since Sebi action on Jane Street; down another 8% today
Shares of BSE Ltd , Asia's oldest stock exchange, plunged as much as 7.5% on Tuesday, extending their three-day decline to 13.5%, as investors continued to exit capital market stocks following Sebi's order barring U.S. trading firm Jane Street from Indian markets. The regulator's action has cast a shadow over the exchange's lucrative derivatives segment and exposed vulnerabilities in India's high-speed trading infrastructure. The sharp correction in BSE shares comes after Sebi accused Jane Street of manipulating expiry-day moves in India's benchmark indices, including the Sensex, to profit from its derivatives positions. The regulator barred the firm and four affiliates from the Indian market and ordered the seizure of Rs 4,840 crore in alleged unlawful gains. Sebi's 105-page order alleged that Jane Street 'participated in the cash & derivatives markets as an FPI as well as a member' and had 'engineered expiry-day moves' to mislead traders and benefit from its options positions. The case, involving an estimated Rs 36,500 crore in questionable profits, has jolted India's Rs 6.2 lakh crore capital markets ecosystem and placed new scrutiny on index-linked derivatives trading. Capital market stocks hit The ripple effects were visible across the broader capital markets space. The Nifty Capital Market index fell 2.4% on the day, with Angel One, CDSL , and 360 ONE WAM among the worst performers, slipping up to 6%. While benchmark indices continued their sideways movement, capital market stocks faced sustained selling pressure as the fallout from Sebi's order deepened. The impact has been particularly pronounced for BSE, where derivatives are expected to contribute nearly 58% of FY26 revenues. With foreign portfolio investors (FPIs) accounting for 3–4% of turnover in this segment, concerns have surfaced about the potential knock-on effects of Jane Street's abrupt exit. Jefferies sees limited direct earnings hit International brokerage Jefferies attempted to temper investor anxiety, stating that Jane Street's contribution to BSE's overall business is likely marginal. 'For BSE, derivatives drive ~58% of FY26E revenues. In this segment, FPIs drive ~3–4% of turnover, and we estimate that contribution from JS would be a smaller subset of that (~1% as per JEFe),' the brokerage said in a client note. The brokerage added that Jane Street's activity would have been reflected under both FPI and proprietary trading volumes. 'Jane Street participated in the cash & derivatives markets as an FPI as well as a member, hence, its contribution in market volumes would be included in FPI as well as prop categories.' Still, Jefferies flagged ongoing uncertainty about the broader impact on market structure. 'What is unclear & how to judge impact,' the brokerage said, pointing to the week's derivatives expiry sessions on Tuesday and Thursday as a key test for how Dalal Street absorbs the shock. Also read | Rs 735 crore in 1 day! Jane Street's most profitable day on Dalal Street was built on Nifty Bank's fall Calls for deeper reform Sebi's action against Jane Street has triggered a wider conversation about the regulator's ability to keep pace with the speed and complexity of modern-day derivatives trading. As the investigation widens to other entities and indices, the case has become a flashpoint for structural reform in India's options market, a space where 93% of retail traders are already losing money. With India now accounting for 60% of global equity derivatives volume, the episode has underscored the need for more sophisticated surveillance tools and risk controls. For BSE and its peers, the regulatory overhang may persist until the full extent of Sebi's clean-up becomes clear. Also read | Jane Street clampdown raises big questions for Sebi: Can the regulator stop another derivatives fraud?
Time of India
07-07-2025
- Business
- Time of India
Jane Street vs Sebi case places Rs 6 lakh crore multibagger corner of Dalal Street on edge
Sebi 's explosive crackdown on American hedge fund Jane Street has sent tremors through India's Rs 6.2 lakh crore capital market infrastructure, with the regulatory action targeting alleged market manipulation worth Rs 36,500 crore in profits threatening to reshape Dalal Street's derivatives landscape. The Nifty Capital Market index, comprising 15 stocks with a combined market capitalization of Rs 6.2 lakh crore, traded flat on Monday after Friday's selloff as investors grappled with the implications of Sebi's interim order barring Jane Street from India's securities market. Capital market infra-related stocks have been giving multibagger returns on the back of surge in retail as well as institutional participation in India's growth story. In the last 3 years, BSE shares are up over 1,100%, while others like MCX India, Anand Rathi Wealth, Motilal Oswal, 360 One WAM, CDSL and others have also been multibaggers. Jefferies said as Jane Street "participated in the cash & derivatives markets as an FPI as well as a member, hence, its contribution in market volumes would be included in FPI as well as prop categories." The brokerage estimates that Jane Street's contribution to BSE would be around 1% of the exchange's business. According to Jefferies' analysis of exchange data, "FPIs form 3-8% of equity derivatives turnover and prop traders form 60-65% of total; rest by individuals & others," highlighting the critical dependence of India's derivatives market on proprietary trading firms. The global brokerage noted that Jane Street can "contest the claim or settle it and continue participation in the market," while observing that "given that the inquiry was already underway, we understand its activity levels have declined over the past few months." Also Read | Jane Street aftermath: 4 stocks suffer Rs 12,000 crore wipeout in collateral damage Jefferies' detailed impact assessment shows stark differences across market participants. "For BSE, derivatives drive ~58% of FY26E revenues. In this segment, FPIs drive ~3-4% of turnover, and we estimate that contribution from JS would be a smaller subset of that (~1% as per JEFe). Hence, we see a limited impact of JS on BSE's earnings," the brokerage stated. However, Nuvama faces significantly higher exposure. "In the case of Nuvama, asset services form ~26% and IB & IE form ~20% of our FY26E revenues, while contribution to profits is higher given lower C/I ratios. We understand that JS could be an important client for Nuvama and assuming ~15-20% of asset services and IE revenues come from it, we expect an impact of ~5-6% on overall revenues and ~7-8% on earnings," Jefferies warned. Jefferies' conversations with market participants reveal mixed signals about the fallout. "Prop traders/ HFTs see a manageable impact from JS' exit as the fall in its turnover may be made-up by props/ HFTs as manipulative factors potentially reduce," the brokerage noted, adding that "there should not be a counterparty risk on JS' contracts as trades are covered by the clearing corporations and JS has 3 months to unwind open positions." The brokerage emphasized that "the key unknown is whether this instance can lead to a knock-on impact on trading vols, and we feel that trends over the next week on derivatives volumes will be key to watch, especially the index derivatives expiries on Tuesday & Thursday." Also Read | Explained: What is Jane Street and how it made Rs 36,500 crore profit by gaming Dalal Street Interestingly, Jefferies observed that "index options premium turnover was a tad higher week-on-week (Wow) for both exchanges (i.e. this Friday vs. last Friday) and a tad lower than 2-month averages," suggesting immediate market resilience despite the regulatory shock. Industry voices echo concerns "Prop trading firms like Jane Street account for nearly 50% of options trading volumes. If they pull back— which seems likely —retail activity (~35%) could take a hit too. So this could be bad news for both exchanges and brokers," warned Nithin Kamath, CEO of Zerodha. Dinesh Thakkar, Managing Director, Chairman and Founder of Angel One, emphasized the structural nature of India's market growth: "Retail participation in equity derivatives has surged from just 2% in 2018 to over 40% in 2025. India's market opportunity is structural, not cyclical and certainly not dependent on any one firm." "Jane Street is one of the largest traders contributing to Indian markets," explained Siddarth Bhamre, head of institutional research at Asit C Mehta. "When big players are banned for wrongdoing, others become cautious and reduce activity, leading to lower volumes." Regulatory ramifications Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, observed: "The regulatory action on Jane Street and its implications will be closely watched by the market. The volume of derivative trading is likely to take a hit impacting stock exchanges and some brokerages." Ashish Nanda, President & Chief Digital Business Officer at Kotak Securities, outlined broader implications: "HFT's will surely be feeling the heat. Many will be re-assessing their strategies. The fact is that HFT firms provide a lot of liquidity in the markets. If there is reduction in activity by HFT's, it will also impact retail volumes." Veteran market expert Ajay Srivastava struck a defiant tone: "Let us be honest, every market in the world, including the US market, had these problems of being the bad guys... Just catch the guy, penalise him, show him this thing, who the brokerages who are part of it penalise them heavily, does not matter. Make them an example that no one dares do it again." As Jefferies noted, "What is unclear & how to judge impact," with the next derivatives expiry cycles on Tuesday and Thursday set to reveal whether India's Rs 6 lakh crore capital market infrastructure can absorb the shock or if Jane Street's exit marks the beginning of a broader algorithmic trading exodus from Dalal Street.
