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Portals see life to be brighter after July 2

Janaki Krishnan & Anusha Subramanian

Despite poor volumes and losses in the first year of operations, portals, which provide on-line trading are upbeat about future prospects, especially in the vastly altered trading scenario after July 2.

Portals also see themselves as the investors' preferred vehicle for participation in the derivatives markets. They argue that on-line trading is all about direct empowerment of the individual (retail) investor, who will increasingly find himself marginalised in the emerging trading systems expected to be dominated by institutions.

Also, with the markets regulator mandating uniform settlements across all exchanges, individual investors will no longer need the support of their brokers to switch positions from one exchange to another.

Says Arun Bagchi of ICICI Web Direct, one of the larger participants in on-line trading, "We expect a jump in volumes after July 2, and then to really pick up onwards the end of the year."

His portal is ready to apply for membership to trade in options and futures in which case its on-line clients can also participate in it, thus bringing derivatives to the small investors' doors.

There is no separate requirement for it, only the risk management measures for it will be more stringent than for the cash market.

At present, volumes in on-line trading are nothing to write home about. ICICI has 106,000 trading clients, while the average is 4,000 trades per day with traded volumes at around Rs 150-160 million. The trading volumes have actually gone down since January this year when the portal was averaging at around Rs 300 million per day.

Though the site expects a secular upward movement, Bagchi was unwilling to commit to any figures. The portal ended last fiscal with total net losses, though it made operating profits.

New Delhi-based IndiaBulls averages trading volumes of around Rs 80 million per day. The company expects its on-line trading business to go up to Rs 200 million in the coming months.

Roughly, its on-line and offline business is split in the ratio of 25:75. In January and February, IndiaBulls' volumes were around Rs 100-120 million per day, which came own to Rs 35-40 million per day in March-April.

The fact that volumes have picked up is reflected in the last settlement's turnover, which was at around Rs 700 million translating into a daily turnover of Rs 100 million. Gagan Banga, chief marketing officer of IndiaBulls, said that the on-line trading sector is growing at the rate of 20 per cent per quarter.

Darshan Mehta, who manages Moneypore.com, said that his portal has seen a 60 per cent surge in volumes between February and May. The number of clients has also gone up to more than 4,000, while currently the portal does 200 trades per day. With volumes pitifully low for his offline business, which is done through Anagram Finance, Mehta is tuned full-blast on his on-line venture.

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