A turmoil in Indian markets : Opportunity for Indian firms

The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.

Sameer Jain, MBA 2015-17, Vinod Gupta School of Management, IIT Kharagpur.

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Financial-Advisory

Indian stock market is still facing a downward trend with the public sector bank facing high pressure due to increased provisioning for the NPAs. Sensex is down nearly 7% in February and around 11%. Given the growth outlook of the world and the challenges in overseas market several foreign players had either scaled down or sold their wealth management businesses and exited the Indian market. With the foreign players slowing down and Indian players are now rushing to gain the additional market share of business and acquire talents from them.  IIFL Wealth Management has increased its advisor count by roughly 20 per cent in the past year, recruiting senior executives from foreign entities such as Citibank, Morgan Stanley and Standard Chartered. Domestic companies are trying to fill the gap created by the foreign companies. Other players such Anand Rathi Financial Services and ASK Wealth Advisor have also increased or planned to increase the their advisors count.

Last year, RBS sold its Indian wealth management business to Sanctum Wealth,  HSBC shut its private banking business in India, through which it provided asset management services to wealthy individuals. UBS and Morgan Stanley exited their wealth business in 2014. A few years earlier, Credit Suisse scaled down its Indian wealth management operations and DSP Merrill Lynch sold its domestic wealth management business to Swiss banking group Julius Baer. (source – Business Standard )

With promoters selling their stakes before the budget on 29th Feb, a  lot of new wealth is being added in the market. This have created an opportunity for the companies to cater high net worth investors. Given the volatility and the uncertainty in the market the role of the wealth advisors has become crucial. Given the various options of investments such as stocks, real state, bullion, etc quality of advice plays a critical role. As observed the stock market was declining while at same time real state price were stable and the gold prices have gained around 10%. Only the time will how the Indian wealth advisory firms are able to capitalize on this increased need of wealth advisors and gain the market share left by the foreign players.

References-

http://www.business-standard.com/article/markets/indian-wealth-managers-rush-in-as-foreign-players-exit-116022400896_1.html

http://www.business-standard.com/article/markets/sensex-braces-for-worst-monthly-show-in-4-years-116022600915_1.html

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