Reliance Securities, the broking and distribution arm of Reliance Capital, has been in business for over 15 years now. It has seen many ups and downs. Lav Chaturvedi, ED and CEO at Reliance Securities shares the journey of the industry during the present COVID-19 pandemic scenario and how the company is looking at this as an opportunity. Chaturvedi is also Co-chairman, Assocham Capital Market Committee. In an interview with FPJ’s Jescilia Karayamparambil and R N Bhaskar, he talks about its digital strategy as well.

Edited excerpts:

What is the breakup of your business in terms of equity and debt?

At this point in time, we are primarily into equity (around 93 per cent). Debt (3 per cent) will be through our distribution mechanism. While debt is less in percentage, we are building our technology and distribution capabilities to ensure that we can deliver more and more debt products. The share of commodities is also low. So, I also want to grow that in an integrated manner. There were regulatory changes where SEBI allowed unified registration for equity and commodities markets.

We will want to take our clients overseas and get overseas clients to participate in India’s financial market. We would like to expand in debt and other asset classes as well. The company is evaluating ways in which it can integrate and make it a proposition for retail.

At present, we are not fixated on any new ratio (as we look at other asset classes). But we just wish to increase the share of other asset classes as well.

Last month, the regulator announced direct market access. How does it affect business?

The market has changed for pledge and re-pledge. If you look at the US market, it has the most developed capital market. That market is driven by retail.

In the case of India, this change is the best thing to happen to the industry. But the changes that are done for the end consumer are always good provided that they are done in a calibrated manner.

All brokerages are looking at exploring international markets for Indian customers. How much of the money will go to the international market? Why should I buy a gold ETF from India which is heavily-taxed compared to overseas instruments?

Both of these things are not mutually exclusive. Any portfolio is part of asset allocation. There are some pros and cons if you opt for an ETF or sovereign bond as well. As a part of the portfolio, both have space in the client portfolio. The amount will be as part of the client’s journey.

It is not about who will invest how much, but it is about having access.

AUM of Mutual Funds has still not reached pre-COVID-19 levels. When do you think the market will reach its buoyancy?

The buoyancy of the market (with lag or lead) is the function of the economy. The market sees 10-20 years ahead (and that is) discounted today. As long as what is being factored in and what is the reality are not significantly different from each other, then the market will rebound.

If there is a black spot that will keep happening frequently then there is a problem at a structural level. As long as it is factored in, the market will continue to be buoyant.

Excess liquidity is driving markets up and there are reports that suggest market growth is out of sync from fundamentals among other issues. In this scenario, how healthy is the growth of the market?

The frontline 10-20 stocks in the capital market are not the actual stocks, India is much broader, deeper, intense and diverse than what it is today. There is some level of liquidity play in the frontline stocks. The index would be discounted by 10-15 per cent if it was not for RIL. There is a lot to come up in that space. The market appears to be buoyant but fundamentals are weak. Once there is policy or support like foreign participation, government and companies’ earnings, then the market is sorted. However, liquidity play is different.

There have been a lot of issues with your group company in the past. After which you’ll did a lot of structural changes. How would you build on the trust factor in that background?

This company has been there for retail clients for over 15 years. Beyond the group and all other factors, the association with our clients is much deeper and longer. That journey was there and we will continue it further.

How do you see foreign participation in the market?

Foreign participation is the function of two things — liquidity and policy. Liquidity is ample at present and it will continue to be ample for the near future.

In the case of policy, we have enough of tailwind. There were a lot of initiatives that were taken by the government recently. All the policy initiatives — that are taken by the industry and the government —will encourage foreign participation. The participation will be robust for the next two-three years. It will sustain if we strengthen our policies too.