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How can retail investors benefit from experienced broking firms?


The share market has had its fair share of ups and downs this year. Post the unanticipated nosedive in March 2020, Nifty50 has recovered by nearly 112 percent this year with occasional corrections marring the retail investors’ spirit that had turned optimistic due to the bull market run. Besides the foreign institutional investors (FIIs), retail investors have driven the market ahead with their share of investments. Though equity penetration in the country’s market is still at a nascent stage, the lure of quick profits has prompted many young investors to various financial markets. Experts even hailed 2020-2021 as the year of retail investors as government stimulus packages into the hands of the people during the pandemic encouraged many to start their hand at trading.

Investment trends in numbers
True that the amount invested by retail investors equalled only a percentage of what FIIs put in the market, the sheer rise in the number of people who opened Demat accounts to trade and invest surprised even the investment gurus known for more than their decade-old experience. A downturn in economic activity coupled with the shutting down of many businesses due to the pandemic effect in 2020 did not dampen investor spirit as Central Depository Services (India) Limited (CDSL) numbers revealed a steep rise in investor accounts from 2.12 crore in March 2020 to 4.64 crore in September 2021. The CDSL numbers also revealed an increase in the numbers of retail investors by a humongous 14.2 million in 2021 with the National Securities Depository Limited (NSDL) adding nearly 27 lakh accounts from April to September 2021 alone.

Neophytes entering the market
The market belongs to all as many stock brokerage firms advertise to encourage new investors in their fold. These new-age investors, mostly in their 20s, underestimate market swings as they focus on profits alone. An analysis of investor behaviour underscores how a large number of them are trading in futures and options that are deemed a more risky segment than others. The most frightening aspect of this trend is that most investors are inexperienced and have no understanding of how the market works.

As the famous American billionaire entrepreneur Mark Cuban exclaims, “Everyone is a genius in a bull market”. The bull run in Sensex and Nifty50 has caused many new-age investors to be proud of their money-making skills without realizing that actual learning is possible in the bear market only.

Benefiting from broker experience
Experience counts and it is the prolonged experience that is gradually translated into unparalleled expertise that helps you override the alternating bull and bear market trends. Modern-day investors notwithstanding the value of experience get drawn to brokerage firms offering discount brokerage. Investing through mobile apps is another trend that has caught the fancy of investors who prefer the ease of access to correct information regarding market trends, financial news, and their effect on the value of their investments. What many fail to realize is that more money is often lost due to money spent on buying unreliable penny stocks, untimely selling of some valuable stocks, or investing in them at their high points than that is saved on low-cost or discounted brokerage services.

While new-age brokerage firms rely on technology alone to manage risk, experienced broking firms rely more on research and have a full-fledged analytical team to assess the fundamentals of different stocks and monitor their behaviour while evaluating how certain factors (external and innate) affect their movement. More than helping you to earn during the upward trend, experienced broking firms ping you details about the right stocks for your portfolio and inform you when they must be bought, sold, or held for prolonged periods.

Selecting the right stocks begins with the right sector selection. The idea is to identify sectors with strong growth prospects from a long-term perspective. The focus is on betting on sectors with a high entry barrier that remains comparatively unaffected by government policies. Sector and management quality are important as they enable sound decision-making through great execution owing to sustained strong financial performance. The investment philosophy of experienced broking firms focuses on the right valuation with increased scope for earnings through dividends and price changes while also aiming to re-rate instruments after every shift in the market movement.

As goes the popular saying, “You can never time the market.” True to word, no one knows how the market will behave tomorrow or will respond to some particular information. However, experienced broking firms help forecast market weather to ensure that your investments are on the right track irrespective of how the market behaves. This they do by carefully selecting stocks of high-quality companies that must be a part of all investors’ long-term core portfolio.

Last but not the least, experienced broking firms promise a gamut of whole new investment options than the mere options available for intra-day traders and long-term stock market investors. Unlike today’s new-age discount brokers who advise investments in frivolous stocks for easy money without taking charge of the possible losses, brokerage firms use their experience to advise their clients to park their savings in options, exchange-traded funds, sovereign bonds, and others depending on the latter’s risk appetite.

Experience matters
As the famous saying goes, “Experiences are the spectacles of intellect.” However, intellect stems from wisdom that in turn is the outcome of education and intelligence backed by prolonged experience. And that is why investors should make the best use of experienced institutions like Sharekhan. Full service brokerage firms like Sharekhan have a team of experts and work with conviction backed by market experience with its continued swings and springs.



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