>INDIAN BROKING INDUSTRY (KREDENT FINANCE)

Poised For Growth

INTRODUCTION
India is one of the oldest stock markets in the world with a strong presence of domestic and local
intermediation. Stock markets in India surged over a decade on back of a wide range of economic
reforms, liberalization of financial markets buoyed by greater freedom and flexibility. Some of the fundamental changes that fuelled rapid pace of market growth was the introduction of electronic trading (secondary markets), allowing foreign ownership (FII’s) of shares, permitting Indian companies to raise capital from abroad (ADRs/GDRs), expansion in the product range (equities, commodity, currency, derivatives and debt), book building process and transparency in IPO issuance, T+2 settlement cycle, dematerialization of shares and internet trading (e-broking). These changes resulted in dramatic growth of the stock markets in India as well as the equity broking firms. The broking industry is emerging as a rapidly growing segment in Indian finance, in terms of business growth, distribution & network and enterprise value.

The first signs of trouble appeared in the US and Western Europe in August 2007. Indian economy kept growing at a considerable pace till the middle of 2008. The Indian market continued to rise till January 2008 and appeared to be going through a relatively mild correction till the middle of 2008. It was in September 2008 that Lehman filed for bankruptcy and the whole world was shaken. The credit markets froze in the west and Indian corporate which were accessing western credit markets found their credit drying up and therefore, wanted to borrow in India. Our markets went through a period of unusual liquidity squeeze with its attendant impact on interest rates, foreign exchange rates, and mutual funds till liquidity was restored through aggressive steps (stimulus package) by the Central Bank and Government.

MARKET CAPITALIZATION AND TURNOVER
The market capitalization of BSE was up by 37.23% from Rs. 3,545,041.0 cr as on December 2007 to Rs. 4,865,044.91 cr as on May 2009. The market capitalization of NSE was up by 35.55% from Rs. 3,367,350.0 cr as on December 2007 to Rs. 4,564,572.18 cr as on May 2009. Business has been exceptionally good in primary and secondary markets, in the equities and derivatives segments across both the national level stock exchanges. India’s combined turnover in NSE and BSE in the equity segment which was around Rs. 2,901,471 cr in the year 2006-2007 has grown 1.33 times to Rs. 3,852,097 cr in the year 2008-2009, despite the market fallen by approximately ~50% in the same year. The derivate segment during the same period has gone up by 1.50 times to Rs. 11,010,482 cr.

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