Brokerage blues: Why Hemang Jani suggests weighing your options with AMCs

Amid volatile market conditions, investors are grappling with where to allocate their funds as falling valuations present new opportunities. Market expert Hemang Jani advises caution when investing in brokerage firms, including BSE, citing uncertainties in their growth prospects.

In his interaction with ETNow, he added that he sees asset management companies (AMCs) and wealth management firms as better investment opportunities, backed by strong mutual fund inflows and the resilience of select financial players.

Jani was clear in his stance against brokerage firms, including BSE, citing concerns over market uncertainties and a lack of clarity in future growth prospects. “One should definitely stay away from pure brokerage, even BSE because of the way things are shaping up on the expiry day front, there is going to be less clarity about what sort of growth one is really looking at,” he said.

He emphasized the strength of AMCs, pointing to the continued inflows into mutual funds through SIPs and lump sum investments. He believes this provides stability and growth potential, making the AMC sector a more attractive option for investors. “I do think that AMC would be a space where there is going to be comfort,” Jani noted.

He also pointed to wealth management firms as another key area of interest, highlighting stocks like 360 One and Nuvama, which have already seen significant corrections. “Apart from the, of course, pure wealth plays like 360 One or Nuvama, which also have, by the way, corrected quite a lot,” he said, adding that investors should focus on companies that are better positioned in the current environment.

Also read: Rs 6,500 cr pulled out of debt funds in February. Is there trouble ahead?While commenting on the market outlook, Jani acknowledged the prevailing market uneasiness despite significant corrections already taking place. While several indicators are turning positive, including regulatory support, stable crude prices, and improving fund flows into emerging markets, he noted that India has yet to see a strong rebound in inflows.”Maybe a little bit of more grind or consolidation, but things should do better from here on,” he added.

He also highlighted a significant shift in investor behavior, with retail investors showing more resilience compared to previous downturns. Unlike in the past, when major sell-offs led to volatile fund flows, domestic investors have remained engaged through consistent SIP contributions and Demat account openings.

“What we had seen in earlier periods is that when you have such a big sell-off, there used to be a lot of lumpiness in the flows and the mindset change has happened big time,” he said.

Despite a $30-35 billion sell-off in the past four to five months, the market has declined only 12-13%, which Jani sees as a sign of increasing market depth. “This is a very good sign and it brings an element of stability to the domestic mutual fund industry which has been supporting the market for an extended period of time,” he added, highlighting how the retail investor has provided stability to the market.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)