Delhi News

Markets up, but demat openings moderate in July in continuing trend

made gained in July, but new dematerialised (demat) accounts did not see much growth.

About 1.8 million new accounts–needed for holding shares in an electronic format–were opened with two depositories, CDSL and NSDL, to take the total to 98.33 million. The number was slightly more than 1.77 million in June, but nearly 30 per cent lower than the average 2.7 million new accounts opened during the first half of calendar 2022.

The Nifty 50 index rallied 8.7 per cent in July, snapping three straight months of losses. Foreign portfolio investors (FPIs) who were net sellers since October turned buyers in July.

New demat account openings hit a high in October 2021, when the Sensex and the Nifty gained too. Since then the market trend has largely been downwards amid headwinds such as monetary tightening, the Russia-Ukraine war, rising commodity prices and fears of recession.

Trading volumes have slowed down as well. The average daily turnover for the cash segment—dominated by retail investors–was Rs 46,602 crore in July. The amount was up 4.5 per cent month-on-month (MoM), but 26 per cent lower than the 12-month average.

A moribund initial public offering (IPO) market is weighing on new account openings. There has not been a single offering since after May.

have been magnets of sorts that attract new investors to the market. The recent not performing has affected sentiment. The sentiment towards the IPO market will only revive after a few issues do really well,” Nitin Kamath, founder and chief executive officer of Zerodha.

E Prasanth Prabhakaran, managing director and CEO of Yes Securities, said the euphoria around for Life Insurance Corporation’s IPO contributed to new account openings last year.

“There was a slowdown in primary and secondary in the last few months. The IPO pipeline is large, but unless there is market stability, these won’t come for a launch.”

Total were expected to cross 100 million in July. However, given the drop in pace, the milestone is expected to be hit sometime this month. Last week, CDSL announced it had crossed 70 million . Drying of the IPO market and trading volumes has made brokerages scale back their promotional activities.

“Some of the new age brokerages have slowed down on their advertising and cut the incentives they gave for opening new accounts,” said Kamath.

Brokers said retail investors are by nature bullish, and market volatility is discouraging investors. New and trading volumes are likely to remain stagnant till the rise consistently. Hence, the sharp rebound seen in the market from June lows is once again proving to be a bright spot for brokerages.

“The reaction to gain in markets is not immediate. In the last two weeks, the new Demat accounts openings is 20 per cent more than during the same time last month,” said Kamath.

However, for the demat account opening tally to top last year’s mark will require the market to do consistently well.

“Unless volatility subsides, and there is a one-sided bull market, you won’t see the kind of account openings we saw last year,” said Prabhakaran.

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Delhi News

No plan for IPO as of now, says Bajaj Allianz Life Insurance CEO

Bajaj Allianz Life Insurance, which has entered the third decade of operations this month, is not planing to go public with a listing because it is “the highest-capitalised life insurance company with over Rs 10,000 crore of equity capital”, says a top company official.

The Pune-headquartered life insurer has been topping industry growth chart for long and has repeated it in the June 2021 quarter logging in 48 per cent growth in premium sales, thanks to “going digital well ahead of the pandemic that forced others to do so”.

As of June, its overall AUM stood at Rs 77,270 crore, up from Rs 73,773 crore in FY21, which was only Rs 56,085 crore in FY20, said Tarun Chugh, managing director and chief executive at Bajaj Allianz Life.

He added that with clipping at 28 per cent in FY21, the company was the fastest growing large life insurer in the year.

“There is no IPO (initial public offering) plan as of now, because we don’t need any money.

“We are the highest capitalised life insurance company in the country with over Rs 10,000 crore of equity capital and a solvency ratio of 666 per cent,” Chugh told told PTI from Pune on Friday.

There is nothing on my table or with the board on taking the company public, Chugh, who joined the Bajaj group firm in mid-2017, said.

There are only four listed insurers among 57 now — SBI Life, HDFC Life, ICICI Prudential and ICICI Lombard — even after 20 years of liberalisation with 23 life and 34 non-life players.

The regulatory amendments for insurers going public mandate promoter holding capping at 50 per cent; while in all unlisted entities, the same much higher.

Recalling the past two decades of operations, wherein it services over 23.6 million customers, he said that one of the most notable features is the “radical change in the outlook of both agents and customers towards life insurance” — from being a post-death benefit investment to a life protection and savings investment.

There has also been a more radical change in the manner the business of insuring life is done now — from the primary interaction with a prospective customer to doing the verification and to finally on-boarding the customer all of this is now done digitally.

This, for the industry , was forced by the pandemic but for Bajaj Alliance Life, “it was the result of our deeper focus and investment into digital technologies since early-2018”, Chugh said without offering the investment made.

Effectively as much as 99 per cent of the company’s sales are through the digital mode now, as nothing is happening physically now due to the lockdowns, “but we consider agents who number of 1 lakh to be our backbone and will continue to be so”, he said.

Currently, 44-45 per cent of the business come through agents who also sell digitally now. Down from 90-91 per cent in the beginning, direct selling is around 11 per cent, bancassurance is 10 per cent, online/web is another 10 per cent and the rest is through brokers and other means, he said.

On the hit from the pandemic, Chugh said the industry is not at the end of the tunnel as there has been mounting claims even in July and that the industry will have to wait till September-October to get some granularity.

“While we settled Rs 50 crore in pandemic claims in FY21 from around 1,000 customers, the first quarter of this fiscal saw death claims almost doubling to Rs 96 crore from over 1,600 death customers,” he said.

Chugh added that so far, it has set aside Rs 310 crore, net of reinsurance, in reserves for possible claims, which can be increased to Rs 460 crore, if need be.

Within the publicly traded Bajaj Finserve, which is the holding company, Bajaj Life is the third-largest profit centre after Bajaj Finance and Bajaj Allianz General Insurance.

He attributed the better than industry growth to the well-diversified product portfolio of Ulips, traditional, term and now annuity plans.

“We have a well-balanced product mix ranging across Ulips, which contribute 40 per cent of sales, down from 74 per cent four years ago, to traditional products, which chip in with the rest 60 per cent,” Chugh added.

He added that the portfolio also includes term, annuity and protection products that get us six per cent. Last year, annuity brought the company 15 per cent of sales but this year, there is nothing at all.

Refusing to offer a growth forecast saying that’s against their policy, he said “we will grow over industry average for sure” as they are diversifying their product mix and marketing and also the way their presence is felt.

“As we expect work from home continuing for some more time, we are recasting our branch model, which envisages having more of digital branches; wherein there will be more space for the customers and not for the staff as was the case earlier,” Chugh added.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

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