The bleeding in Indian brokerage volumes isn't over, but the worst is likely behind us. Jefferies India projects that the sharp 10-15% sequential drop in order book activity seen across August and September will stabilize, with a clear inflection point expected starting December. This isn't a guess; it's a direct reaction to the Securities and Exchange Board of India’s (SEBI) overhaul of expiry-day settlement mechanics. The shift from Closing Auction Session (CAS) prices to Volume-Weighted Average Price (VWAP) for options settlement is finally removing the volatility that spooked traders.
Supratim Datta, Vice President at Jefferies India, laid out the timeline bluntly: October and November remain weak zones where the adverse impact of the rule change persists. But from December onwards, he argues, the uncertainty drains out of the system, allowing order volumes to normalize. For active traders, this means the current slump in commission income for brokers is a temporary regulatory hangover, not a structural break.
Within the sector, Jefferies is drawing hard lines on where value lies. Brokerages top the preference list, followed by firms with commodity risk hedges. Registrar and Transfer Agents (RTAs) are gaining ground as they diversify beyond mutual funds, while Asset Management Companies (AMCs) sit lower in the ranking. Exchanges are viewed through a penetration lens—specifically those with room to grow in commodity derivatives, where options trading is still nascent compared to equities. Single-product exchanges are being shunned due to concentrated revenue risks.
Risk management has tightened on the margin trading front. After the March market crash spiked delinquencies in Margin Trading Facility (MTF) books, brokers have pulled back on leverage. Datta noted that lenders are now adjusting limits based on individual stock risk, with smaller companies facing tighter constraints than largecaps and megacaps. The September data already shows improvement over the March crisis, suggesting the sector is managing its downside while waiting for the volume recovery to kick in.