Zerodha And Upstox: Dons Of Dalal Street
Brokers trade at their computer terminals at a stock brokerage firm in Mumbai. (Bloomberg News)

Zerodha And Upstox: Dons Of Dalal Street

A new breed of retail investors piled into equities to ride the record rebound during the pandemic lows. That only boosted the dominance of online brokers like Zerodha and Upstox.

Brokers added 72.27 lakh new active clients since April 1, 2020, taking the total count of accounts to 1.73 crore as of Feb. 28, according to data shared by the National Stock Exchange. That’s a jump of 71%.

The top 10 broking firms, five of them discount brokers, accounted for 84.5% of the new clients, according to data collated by BloombergQuint.

Internet and discount brokers disrupted market trading long before the pandemic struck as mobiles and cheap data allowed investors to switch to online platforms charging a fraction of the prevailing fee.

The shift began in 2013-14. The new broking firms helped broaden the market, increasing the number of active clients of NSE from 39.42 lakh in 2013-14 to 1.72 crore as of February this year.

During the pandemic, work from home, job insecurity and gaining stock markets prompted more people to invest in equities. One crore new demat accounts were added in the first 10 months of the ongoing financial year, according to SEBI Chairman Ajay Tyagi.

Older broking firms including ICICI Securities Ltd. and HDFC Securities Ltd. have been replaced by Zerodha and Upstoxx at the top. Zerodha Broking Pvt. now commands nearly 20% of active clients on the NSE, while Upstox (Rksv Securities Pvt.) follows at 11.3%.

The internet trading turnover also rose during the last one year. According to data on NSE’s website, the daily traded turnover nearly doubled from Rs 8,261 crore in March 2020 to Rs 15,784 crore in March 1-12.

In the equity derivative segment, the average daily internet trading turnover surged 3.65 times over a year earlier to Rs 8.6 lakh crore in March 1-12.

In February, internet and mobile trading accounted for 34.5% of total trade in the cash market.

Online financial services firms, including brokerages, are now expanding portfolios. While Zerodha plans to foray into asset management business, Paytm is eyeing stock trading and mutual fund distribution.

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