The S&P BSE Sensex index’s rally to an all-time high is giving Magnum Equity Broking Ltd.’s Nilesh Karani little reason to cheer.
The 45-year-old broker has shut more than 60 percent of Magnum Equity’s branches after client orders shrank to 10 percent of their level four years ago. His listed rivals, including Motilal Oswal Financial Services Ltd. (MOFS) and India Infoline Ltd. (IIFL), have lost 30 percent of their value on average in Mumbai trading this year, lagging behind the Sensex by the widest margin since at least 2008.
“The business is not at all viable,” Karani said in a phone interview. “Our staff is looking out for jobs.”
While the Sensex closed at a record high on Nov. 3, trading commissions are shrinking as the combined turnover on India’s two-largest equity bourses falls to the lowest levels since 2006. Brokerage profits will stay under pressure as individual investors withdraw funds, according to Future Generali India Life Insurance Co. HSBC Holdings Plc (HSBA), Europe’s biggest bank, said last month it will close its retail stock-trading unit in India.
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