Smart Tools to Assist the Small Share Investors..!


A handful of startups are providing specialised services, from trading platforms to technical analysis,f or Indias growing number of retail share investors, finds Mr. Biswarup Gooptu (ET)

In this age of spiraling prices that make it extremely difficult to live within ones salary, Mr. Dhruv Kumar (age 40), had been on the lookout to earn a little extra to augment his monthly income. Mr. Kumar,who works with a manufacturing company in Bangalore, always had more than just a passing interest in the equity markets, dabbling occasionally, and making the odd trade here & there.

CapitalVia..!

But 3 months ago, while looking for tips on trading in futures,he came across a website that promised him all the empirical data that he needed and much more. I am quite new to trading, and was looking for futures trading support. While I have my own track sheet of stocks, I was never too sure of when to start trading.Thats when I came across the CapitalVia website, Mr. Kumar said.

CapitalVia,a 4 year-old startup founded by Mr. S.P. Jain graduate Rohit Gadia,is a research firm that caters to the day traderan individual investor, who buys & sells not just stocks but options, futures, currencies & other derivatives within the same trading day.

The Indore-based startup, CapitalVia which was set up through Gadias own funds, provides technical research & analysis to individual investors, giving them real-time financial market recommendations, or trading signals, for intra-day & shortterm trading on real time data.

Technical research evaluates securities,by relying on their historical market data,which it then uses to predict future, usually short - term trends. No one caters to the day traders in India. It is a massively underserved market, and they receive no support from brokerages, and have to depend on tips & market speculation in order to make money on the stock market, 28-year-old Mr. Gadia points out.

Small Trade..!

Traders have to subscribe to CapitalVia, which has not yet received any institutional funding, to access its research & analyses. Subscriptions range from Rs. 4,000 a month to Rs. 25,000 per month.The latter gets a subscriber more personalised attention from the research firms analysts. Quarterly & annual packages are also on offer.

The research is sent out daily to CapitalVias 2,700 clients, and is authored by the firms 55 analysts who,according to Mr. Gadia,are all either MBAs, chartered financial analysts or / chartered market technicians. We analyse the live prices with historical data on the charts.There are hundreds of technical indicators that we make use of, including, cycles, moving averages, fundamental checks & risk management. You have to be aware of your customer profile, he said. And it is the same profile that has undergone a marked change. Once known as a group that used to panic at the first signs of trouble and pull out funds, the Indian individual investor is now seen as much more restrained, in spite of the worsening global macro-economic scene.

The trajectory that we are seeing when it comes to the maturity of the Indian retail investor is on the positive side for sure.There has never been a level playing field in India, when it comes to information. Access to research, through brokerages, has always been difficult, said Mr. Paavan Choudary, Chief executive of analytics &  research firm Meritus Knowledge Centre.With the domestic equity market maturing, there has also been a corresponding rise in Indias investment culture as more retail investors seek data to better investment decisions.

2.04 Crore Demat Accounts..!

To give you an idea, currently there are more than 2.04 crore demat accounts in India,and at last count, nearly 3.5 crore equity folios in mutual funds..!

Granted that the number of individual investors is less than the number of equity folios,it is still representative of the size of the industry, said Mr. T Srikanth Bhagavat, MD,Hexagon Capital Advisors, a wealth management & financial planning company.

He also points out that barely 5% of Indian household savings flow to the capital market, bringing into focus the potential of the market for entrepreneurs looking to cater to the rising Indian middle-class. Its a demographic that spells riches for Gadia and CapitalVia. The research company,at last count, had 500 employees, and has projected its topline for the current fiscal to touch $ 45 lakh (Nearly Rs. 24 crore), up from revenue of $ 30 lakh in the last financial year.(2011-12) I earned Rs. 45,000 a month for the last two months. Therefore, I dont mind paying the Rs. 25,000 subscription fee. Now I plan on trading in commodities soon, Mr. Kumar said.

Zerodha..!

Other entrepreneurs, albeit using different business models, have also identified the opportunity. Zerodha, which has built an online trading platform designed to allow active traders to buy & sell financial instruments such as stocks,f utures & options and mutual funds, is one such. The 2 year - old startup, founded by 32- year old Mr. Nitin Kamath, allows users to choose to download its software,opt for a web-based platform or go for a mobile platform.

According to him, less than 20 per cent of his over 15,000 users are full-time traders.Online trading is the future. Except for initial paperwork there is no need for any offline interaction, said Mr. Kamath, who started trading when he was 17 years old and was previously a sub-broker for Reliance Money.

The Bangalore-based company charges a flat brokerage of Rs. 20 for every trade done through its platform, irrespective of the size of the trade.In comparison, a stock broker charges between Rs. 50 and Rs. 100 per lot, depending on the clients ability to negotiate. Our focus is on the aam admi (common man) &  most of our users are people with regular jobs or / whose primary source of income is not trading, Mr. Kamath said, echoing CapitalVia chief executive Mr. Gadias words.

Change in Mindset..!

Indias individual investors are slowly, yet increasingly, moving away from just investing in traditional safe instruments like bank FDs (fixed deposits),and investing in more complex futures & options. This is opening up opportunities for companies like us.

Only 1 per cent of Indians hold a demat account compared with 25% in the US. This number will grow, Mr. Kamath said.

MilkorWater..!

Separately, MilkorWater uses data analytics technology &recommendations from professional analysts to help the man on the street make smarter investment decisions. The Hyderabad startup, which is barely a year old, connects investors to professional analysts actively followed by institutional investors. The startup ranks these analysts based on the performance of their stock recommendations. It has also built specialised systems that can chew through billions of bits of data, analyse them via self-learning algorithms & package the insights for use by their clients. It processes above 10,000 recommendations a month for over 800 stocks traded on the NSE (National Stock Exchange).

Retail investors in India are becoming a lot savvier now. 5 years down the line, you will not only see higher trading volumes, but better quality trades, Mr. Meritus Choudary said.

Src: ET 
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