Don’t treat LIC like a fintech stock: IIFL Sec CEO

Synopsis

” There are no real signs of retail interest waning. Instead, we believe that the more the market corrects, the more the new investors are likely to be added. This is because people who missed out on the rally post-March 2020 fall, will look at this correction as an opportunity for the long term,” says Sandeep Bhardwaj.

ETMarkets.com

Dashing hopes of scores of retail investors looking to make a quick buck in IPO, dubbed as India’s Aramco moment, the PSU stock has fallen 29 per cent from its issue price. Sandeep Bhardwaj, CEO, Retail, , says one cannot treat it as a new-age fintech company that has seen 60-70% fall from its IPO price. “It is one of the largest shareholders in several companies, and hence, once the market recovers, the stock will see a recovery in its investments and see good buying interest as well. Earlier, the stock was a bit expensive but definitely, it will look attractive at lower levels,” he says. Edited excerpts:

As the stock market is in a volatile phase, do you see signs of retail interest waning?

FIIs have sold around Rs 2.5 lakh crore worth of stock since January 2022 and around Rs 3.70 Lakh crore worth since July 2021. The fury of the selloff would have been enough for the markets to see a much sharper correction. However, DIIs have bought around Rs 2 lakh crore since January 2022 through active participation of retail investors in mutual funds and SIPs. There are no real signs of retail interest waning. Instead, we believe that the more the market corrects, the more the new investors are likely to be added. This is because people who missed out on the rally post-March 2020 fall, will look at this correction as an opportunity for the long term.

How mature do you think the current lot of retail investors on Dalal Street are in handling the selling pressure of FIIs?

We think that the retail investors are much more mature compared to a decade ago armed with better financial literacy and on-demand availability of financial knowledge. The retail investors, we believe, are looking at the long-term prospects of the companies and are investing with a mindset of owning the businesses rather than trading them. It’s true that they have limited capital and they are investing a small percentage only in each fall. Nevertheless, they continue to hold on to their longs and are buying the dip. But there will come a time when they would have used up all their capital and the real maturity of the investor would be tested when the market keeps falling and they hold on to their portfolio.





Zerodha CEO Nithin Kamath had recently pointed out that the number of unique demat accounts are only 6 crore and those holding over Rs 10,000 are less than 3 crore. Do you think we are getting over-excited about the strength of retail investors?



We have always heard that the start of doing something new is the most difficult part, and this applies to investing as well. The more time retail investors spend in the market, the more their confidence will grow, leading to a rise in their ticket size. However, 6 crore retail investors means just over 4% of the population are currently investing. On the other hand, 56% of the US population invests in the stock market. A thought to wonder about is that with just 4% of the population participating in the financial market, imagine the liquidity when a modest 10% of the population starts investing! We feel the strength of retail investors is worth being excited about.

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The LIC IPO had created a lot of buzz on Dalal Street, especially among first-time investors. With the stock slipping to a record low, do you think those new investors are now left disappointed and may rethink their involvement with the stock market?

Yes, the disappointment would be there. But one must remember that it is the market leader in the life insurance space and is a profit-making company. One cannot treat it as a new-age fintech company that has seen 60-70% fall from its IPO price. It is one of the largest shareholders in several companies, and hence, once the market recovers, the stock will see a recovery in its investments and see good buying interest as well. Earlier, the stock was a bit expensive but definitely, it will look attractive at the lower levels. However, one should wait for fresh investments and let the stock form a base before looking to average it.

What kind of trends are you noticing in the retail broking industry? Can you also talk about the various technology initiatives that IIFL Securities is planning this year?

Across the industry, the digital transformation process has become the theme besides focus on product innovation and creation of a platform that can bring loyalty. IIFL Securities has been a disruptor in the broking industry in terms of technology usage, research and products innovation. We have embarked on an accelerated digital transformation since the last one year, during which, we have almost tripled our active clients’ base and moved up four positions.

We have built a 200 strong technology and digital team drawing talent from IITs, NITs and IIMs. The ‘IIFL Securities Innovation Hub’ has helped in end-to-end innovation of many industry first products like – Gemrush and OneUp. The company has also stitched dozens of partnerships and invested in many fintechs to produce a cutting-edge hassle-free platform for investors for all kinds of products and suitable for investors of all categories like retail, mass affluent and HNIs.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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