Mumbai: Revenue growth at stock brokerages is likely to slow sequentially in the July-September quarter as lower derivatives and cash-market trading volumes weigh on their core broking businesses, analysts said.
The average daily premium turnover (ADPT) in index options on the National Stock Exchange of India (NSE) fell 27% sequentially in the September quarter, according to exchange data. Average daily turnover in the cash segment declined 19% over the same period.
The Securities and Exchange Board of India (Sebi) reset the framework for the closing auction session (CAS), affecting futures and options (F&O) activity, while weak market sentiment weighed on cash-market volumes, Motilal Oswal Financial Services (MOSF) said in its preview for the September quarter. Billionbrains Garage Ventures, the parent of Groww, and Angel One are likely to be among the listed brokers most affected, as cash and derivatives broking account for a larger share of their businesses, it added.
The weakness in cash-market activity comes amid foreign investor selling and global uncertainty stemming from the war and elevated oil prices, which have weighed on market sentiment. Reduced participation in equities has added to the pressure on trading volumes for brokers.
For Angel One, gross income from cash and derivatives brokerage accounted for 60% of total gross income in the June quarter (Q1FY27), according to its investor presentation. For Groww, cash and derivatives brokerage contributed 73.3% of total income in the same quarter.
“Capital market companies do benefit from operating leverage, but its true potential is realised when revenue growth drives profitability rather than dependence on controlling operating expenses. In certain quarters, such as the current one, stock broking companies may struggle to show operating efficiency and sustain profitability, which could result in a decline in profits,” said Lalit Deo, research analyst at Equirus Securities.
Groww has the highest number of unique client codes (UCCs) at 4.4 crore as of April 26, as per the National Stock Exchange data. UCCs mean the total number of traders registered with the broker. Angel One had the second-highest number of UCCs at 3.9 crore at the beginning of FY26.
Growth cushion
However, growth in other business segments could cushion the impact of lower equity trading volumes, analysts said.
Shrikant Chouhan, head of equity research at Kotak Neo, said steady expansion in brokers’ margin trading facility (MTF) books, along with strong commodity orders, could offset some of the pressure from falling equity-market participation.
Average daily premium turnover in metals and energy options on the Multi Commodity Exchange of India (MCX) rose 15% in the September quarter from the previous quarter. MCX’s options ADPT climbed to ₹10,450 crore, supported by sharp moves in crude oil and natural gas prices.
Looking ahead, stockbrokers could see some improvement in trading volumes in the coming quarters, potentially supported by regulatory relaxations around the proposed CAS framework, Deo said.
Angel One’s business update for the September quarter showed that its average daily turnover in the cash segment fell 13.6% sequentially, while its F&O ADPT declined 22.1%. In contrast, its commodity ADPT rose 3% over the previous quarter.
