The Hindu Business Line : Broking firm stocks fare poorly

Mumbai, Jan. 24 Listed broking firms took a beating on the bourses on Thursday, among the exceptions being Motilal Oswal Financial Services and Religare Enterprises.

Broking firms had been beaten down both on Monday and Tuesday. Though some of them recovered on Wednesday, they once again sank on Thursday.

F&O segment

India Infoline was down 12.10 per cent on Thursday; Geojit down 5 per cent; Edelweiss and Kotak were down 9.84 per cent and 5.12 per cent respectively, while India Bulls and LKP Merchant Financing lost 7.45 per cent and LKP 5 per cent respectively.

There are fears that these companies might face losses on account of clients not paying up, said an analyst with another broking firm.

Another analyst pointed out that those broking firms that gained on Thursday — Motilal Oswal (10.08 per cent) and Religare (9.9 per cent) — were not in the F&O segment.

This means people don’t have huge speculative positions in these stocks as on the other stocks. In the F&O segment, the situation is forcing people to square off their positions, and everything is on a mark-to-market basis, he said. When you don’t have that exposure to the F&O segment, you are saved, he said. This could be a reason why some of the broking stocks gained rather than lost, he added. Broking firms are facing payment problems as well as reputation problems. There were unconfirmed reports about physical attacks and threats to broking firms.

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