Though the Indian capital market is billed as ‘mature’, using the parameters of market capitalisation and trading volumes, it is still concentrated in a handful of cities, with Mumbai, Delhi, Ahmedabad, Kolkata and Chennai cornering a whopping 71 per cent of brokers’ trading terminals, according a Dun & Bradstreet India study.
“Our study found that only 29 per cent of the terminals of the major broking houses are located outside these five cities. About 40 per cent of the 43,500 broker terminals enlisted in the survey are located in Mumbai, followed by Delhi (12 per cent), Ahmedabad (8 per cent), Kolkata and Chennai (4 per cent each),” said Bandi Ram Prasad, consultant of D&B, and author of the report.
In a first of its kind study based on primary information, D&B, the world’s leading provider of business knowledge and information solutions, covered broking houses that account for 43,565 terminals or about 90 per cent of the total number of broker terminals in operation in the country. The company also ranked 210 broking houses based on the number of terminals they employ.
The study also highlighted that the branch network of the broking houses is not spread evenly across the country. It also found that brokers in North India preferred to set up their own branches in smaller towns, while in the South, they appointed sub-brokers.
About 40 per cent of the broker branches are located in the north, while West (31 per cent), South (24 per cent) and East (5 per cent) were lagging behind. Of the total number of sub-brokers of the surveyed firms, almost 55 per cent are based in South, while West, North and East follow with 30 per cent, 11 per cent and 4 per cent respectively. There were about 23,479 sub-brokers in the capital market as on March 31, 2006, according to the Securities and Exchange Board of India.
About 84 per cent of the broking honchos were planning to focus on building institutional broking business, 66 per cent of them intend to increase their FII client base, and 43 per cent the surveyed brokers are open for joint ventures in India or abroad. Broking firms are still lagging in technology with only 62 per cent having websites.
“Unlike depending on secondary information we have relied on primary information (from the broking houses themselves) to capture industry developments based on various parameters like regional distribution, terminals, market, branches, sub-brokers, products and growth areas,” said D&B COO Kaushal Sampat.