Motilal Oswal, CMD of Motilal Oswal Financial Services is still hopeful of recovering money from National Spot Exchange Ltd (NSEL). His hopes are up on the back of new additions in the management of Financial Technologies and NSEL who are likely to focus on recoveries.
Speaking on the trading side od market, he said the Option volumes have gone up but the cash volumes have remained flat. However, one is seeing a slight improvement in investor confidence and a little bit of optimism coming back on the corporate side.
Motilal Oswal is positive on IT, telecom, pharma and private sector banks. .
Below is the verbatim transcript of his interview on CNBC-TV18
Q: Wanted a word on the latest on the NSEL issue. We have seen the Financial Technologies stock is down about 10-12 percent today are you losing hope in terms of recovering the money or is there still some hope, what is the latest on that issue?
A: We definitely have lost about two months or so, without any serious efforts on recovery of the money but for last couple of weeks, there is a lot of action happening at the exchange level. We are also actively in dialogue with the Financial Technologies (FT) board in terms of how we can resolve the issue from the investor’s perspective.
Government also has come out with an action plan, which is visible on the ground. My hopes now are slightly better than what they were two weeks back. So let us hope that the FT and the NSEL - new management is able to put in serious efforts on recovery and the whole group takes some kind of financial responsibility on behalf of investors so that investors are being compensated.
Q: We also had the finance minister last week comment that everyone knew what was happening, it was unregulated and investors were investing with their eyes open - it looks like almost everyone is throwing in the towel, what is going to be your next?
A: I definitely think it was not an unregulated exchange, it was being regulated by the ministry of corporate affairs and they had provided some exemption.
Secondly, I don’t think everybody was knowing what is happening because investors were not aware of what was happening; maybe the ministry of consumer affairs had some information of what was going on but nothing was there in the public domain where the brokers or investors knew that there was something wrong or illegal.
That is the real fact because we as a company had done due diligence, we as a company had invested our own money along with that of investors. As far as we are concerned, we thought things are alright and we had complete faith and trust at that point of time, in NSEL and FT management. However, fraud situation was never expected by anybody except maybe by some people in the government or some people within NSEL. That is the hard fact which we cannot ignore.
Q: To concentrate on the brokerage business as well, there is anecdotal information that we have read that Barclays is shutting down its wealth management business in a 130 countries and that there is more interest, which is now emerging in the commodities and currency segment as opposed to equities. Could you give us a reality check or an on-ground check on what exactly the brokerages are doing and whether there is some amount of consolidation, which is taking place within the companies?
A: If you look at the market data on the trading side, the index Option volumes are going up and the cash volumes are more or less flat. In overall pie, institutional investors’ participation has gone up and the retail has come down.
However, overall from brokerage volume perspective, it is more or less same condition that is there last year. On the wealth management, on investment in private equity; in the private equity business we have been able to raise Rs 1,000 crore in the tough times. On the investment banking side the pipeline is good but execution is taking more time.
I would say that the corporate confidence is slightly higher and we see that the execution happening now for a lot of transactions which are there in the pipe.
On the wealth management perspective, headwinds remain with currency, commodies, real estate seeing volatility. Although for people like us who are building wealth business in a different way by taking the right people at the right cost, so we are not losing money on that but the market conditions or the headwinds remain on that base.
Overall, things were slightly better in July, August in terms of market volumes or slightly better and investor’s confidence is slightly higher. On corporate side as well little bit optimism is coming looking at the various kinds of discussions and decisions happening across.