Amid escalating global tensions and regulatory shifts, India’s financial markets are witnessing a significant transformation, with bank-backed brokerages poised to reclaim their edge over discount platforms and the IPO pipeline experiencing a notable slowdown.
Illustration: Dominic Xavier/Rediff
Key Points
- Bank-backed brokerages are expected to regain market share from discount platforms due to recent regulatory tightening in derivatives trading and an upcoming hike in securities transaction tax (STT).
- Discount brokers like Zerodha are reportedly increasing fees for intraday derivatives trades, indicating a shift in their low-margin business model.
- The primary market is experiencing a subdued period with no new IPOs expected to open due to heightened volatility linked to the Iran conflict.
- India no longer has a company in the $200-billion market-cap club, as both Reliance Industries and Tata Consultancy Services have slipped below this threshold.
- Several companies are rushing to launch IPOs before their Sebi approvals or financial validity lapses, creating a crowded pipeline despite muted investor sentiment.
Selloff knocks India Inc out of $200-bn club
Reliance Industries, the country’s most valuable company, saw its market capitalisation fall nearly 5 per cent on Friday — its steepest single-day decline in almost two years.
Its valuation now stands at ₹18.24 trillion ($192 billion).
With this, India no longer has a company in the $200-billion market-cap club, as both Reliance Industries and Tata Consultancy Services have slipped below the threshold.
The latest selloff, triggered by escalating tensions in West Asia, has also thinned India’s presence in the $100-billion club.
Apart from Reliance, only HDFC Bank ($122 billion) and Bharti Airtel ($113 billion) remain above the mark. State Bank of India, ICICI Bank, and Tata Consultancy Services have dropped out, leaving the global $100-billion club with around 75 companies.
Bank-backed brokers may regain edge
Bank-backed brokerages, which ceded ground to discount platforms during the post-pandemic retail trading boom, may be poised for a comeback.
Recent regulatory tightening in derivatives trading, along with the upcoming hike in securities transaction tax (STT) from April 1, is expected to weigh on the high-volume, low-margin model of discount brokers.
Industry chatter suggests Zerodha has already doubled brokerage fees for select intraday derivatives trades to ₹40 per order, with peers likely to follow.
Market participants say the shift could mark a turning point.
“We may see the dominance of discount brokers reduce.
“They will have to diversify revenue streams and reduce dependence on futures and options,” said a senior executive at a bank-backed brokerage.
IPO Pipeline Stalls Amid Volatility
The primary market is set for a subdued week, with no new issues expected to open amid heightened volatility linked to the ongoing Iran conflict.
Activity will be limited to listings, with Central Mine Planning slated to debut on Monday, followed by Amir Chand Jagdish Kumar, Powerica, and Sai Parenterals on Thursday.
A strong listing performance could help lift sentiment, though that appears unlikely.
Grey market premiums for all four remain muted at 0-4 per cent, signalling modest investor appetite.
Meanwhile, the pipeline remains crowded.
Several companies are racing against the expiry of their Sebi approvals, while others have rushed to tap the market before the validity of their September 2025 financials lapses on March 31, leaving limited room to defer launches.
