Indian brokerages’ shares rebound after initial fall

Indian brokerages’ shares rebounded on Thursday after an initial slip, as analysts reassured investors that the new rules from the Securities and Exchange Board of India (SEBI) for derivatives trading were not as severe as anticipated.

SEBI announced on Tuesday that it would increase entry barriers and costs for trading in equity derivatives, with the changes taking effect on Nov. 20. This move follows SEBI’s initial proposal to tighten derivatives trading in July.

Discount broker Angel One’s stock price rose 6.5 per cent to 2,767 rupees at 11:15 am IST after initially dropping by 5.8 per cent.

Investec analysts increased the price target to 3,000 rupees, the second-highest on the Street, due to reduced regulatory uncertainty.

BSE’s shares increased by 7.2 per cent after a three per cent decline. Motilal Oswal noted that BSE would be less affected by the new rules compared to the National Stock Exchange of India, its larger unlisted peer.

Indian authorities are worried about the rapid growth of retail investor trading in derivatives, which could pose risks to the markets, investor sentiment, and household finances.

A recent SEBI study revealed that individual Indian traders lost a total of 1.81 trillion rupees ($21.56 billion) in futures and options over three years, with only 7.2 per cent making a profit.

Attribution: Reuters

Subediting: M. S. Salama