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Original Article
ISSN (Online): 2350-0530
ISSN (Print): 2394-3629
International Journal of Research - GRANTHAALAYAH
March 2022 10(3), 176–193
How to cite this article (APA): Jawa, R., Kabra, R., and Aggarwal, R. (2022). Investment Tech: The Rise of Discount Brokers in India.
International Journal of Research - GRANTHAALAYAH, 10(3), 176-193. doi: 10.29121/granthaalayah.v10.i3.2022.4544
176
INVESTMENT TECH: THE RISE OF DISCOUNT BROKERS IN INDIA
Dr. Rachna Jawa 1, Rahul Kabra 2, Ria Aggarwal 3
1 Associate Professor, Shri Ram College of Commerce, University of Delhi, New Delhi, India
2, 3 Student, Shri Ram College of Commerce, University of Delhi, New Delhi, India
Received 19 February 2022
Accepted 27 March 2022
Published 14 April 2022
Corresponding Author
Dr. Rachna Jawa,
drrachnajawa@srcc.du.ac.in
DOI
10.29121/granthaalayah.v10.i3.2022
.4544
Funding:
This research received no
specific grant from any funding agency in
the public, commercial, or not-for-profit
sectors.
Copyright: © 2022 The Author(s).
This is an open access article
distributed under the terms of the
Creative Commons Attribution
License, which permits unrestricted
use, distribution, and reproduction in
any medium, provided the original
author and source are credited.
ABSTRACT
This paper analyzes the emergence of discount retail investment platforms in India which
have disrupted the Fintech landscape of the country, especially for the traditional
brokerages, by presenting a technologically cost-efficient solution to the general public.
Through this expository paper, the aim is to highlight the rising prominence of discount
brokerages and their role in revolutionizing the Indian stock market. This analytical
study endeavors to decipher the key reasons for the shift of retail investors to discount
brokers recently and uses time-series data from 2013-14 to 2020-21 to gauge the
strength of the relationship between mobile and internet-based trading and the broking
leaders, like Zerodha.
Keywords: Online Trading, Brokerage, Fintech, Retail Investments
1. INTRODUCTION
"The individual investor should act consistently as an investor and not as a
speculator." — Ben Graham
Since the establishment of the National Stock Exchange (NSE) in 1992, there have
been huge strides in technology and NSE led the charge on the Internet-based
trading system in 2000, followed by other exchanges like the Bombay Stock
Exchange (BSE) which launched exchange-based online trading in 2001. This
m
eant ease of use, enhanced control, and lower transaction costs for the
customers.
Table 1 Stock Market Turnover Ratio 2013-2020
Year
Stock Market Turnover Ratio
2013
45.14
2014
45.14
2015
45.97
2016
46.29
2017
47.14
2018
56.77
2019
56.21
2020
74.95
Source: SEBI
Dr. Rachna Jawa, Rahul Kabra, and Ria Aggarwal
International Journal of Research - GRANTHAALAYAH
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The steady increase of the stock market turnover ratio1 to 74.95 indicates the
increasing level of activity in the capital market over the years.
With the inception of the new system, brokers raced to provide a trading
platform that could facilitate marginal fees in transactions. Every top broker
launched a mobile application for their customers, providing access to trading at
their fingertips. The technology-savvy millennials were attracted to this subset of
Fintech, aptly named Investment-Tech, which reached $2.8 billion in 2018, growing
at a CAGR of 47% from 2008 Deloitte (2019).
According to the SEBI, mobile as a medium of trading in the direct equity
segment as a share of NSE’s total turnover) has increased from 0.01% to 23.11% in
2020-21 within ten years. Individuals participating in retail investments have
several fintech platforms at their disposal to leverage worldwide financial systems
and markets from home. Users can benefit from trading strategy applications that
offer them an opportunity to learn the tools of the trade and capitalize on global
opportunities. They are part of a wave of fintech apps that aim to make banking and
other financial transactions more user-friendly.
Chart 1 Mode of Trading in the Equity Delivery Segment
1.1. INCREASING PARTICIPATION OF RETAIL INVESTORS IN
THE STOCK MARKET
Retail participation in the stock market has been rising for a few years due to a
variety of reasons. The declining saving avenues amidst the low-interest rate regime
has led to greater interest by individuals in investing. The significant increase in
global liquidity has also led to an increase in retail investments in the stock market.
Moreover, the coronavirus pandemic, which has resulted in people spending more
time in their homes has also been another reason for individuals’ tilt towards the
stock market trading leading to increased investment in stocks and mutual funds.
Client-wise participation in the capital market at NSE suggests that the share of
retail investment has risen to 45 % in May 2021 from 39 % in March 2020, while
that of domestic institutional investors (DIIs) and foreign institutional investors
1 Turnover ratio=Annualized value of domestic shares traded/Market Capitalization. The value is annualized by multiplying the
monthly average by 12
Investment Tech: The Rise of Discount Brokers in India
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(FIIs) has declined to 7% (from 10% in March 2020) and 10% (from 15% in March
2020), respectively during this period.
Chart 2 Share of Client Participation in Capital Market at NSE (%)
Source: NSE
Note: PRO: Proprietary Traders, FII: Foreign Institutional Investor, DII: Domestic Institutional
Investors
1.2. ROLE OF BROKERS IN THE STOCK MARKET
In order to invest in the stock market, one needs access to a broker/brokerage
platform2. Stockbrokers are people/organisations who are licensed to trade in
shares. They have direct access to the share market and can act as agents in share
transactions. For this type of service, they charge brokerage fees. Stockbrokers also
offer additional services such as portfolio management or advice. The type of broker
depends on the investor’s confidence in trading shares.
Brokers are of two types: full-service brokers and discount brokers.
A full-service broker provides us with advice on which stocks to trade. They
often operate as financial planners and help with other aspects of the investment
portfolios. Since they offer advice, a full-service broker usually charges between 2
and 2.5 % fees, depending on the size of the transaction.
Discount brokers execute trades, but usually do not provide any advisory
services. Discount brokers generally operate via the telephone, internet, or both.
They give limited facilities for reduced overall charges by supplying a simplified
trading platform, often technologically driven, so that their clients can easily
participate in the stock market via user-friendly mobile apps and web tools
provided. As a result, brokerage charges are lower than their traditional
incumbents.
2. BROKERAGE FEES AND STRUCTURE
A stockbroker’s earnings depend on three factors: trading volume, number of
active clients, and brokerage fees. The higher the volume, the higher will be the
2 A trading platform is software used for trading: opening, closing, and managing market positions through a financial intermediary,
such as an online broker.
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International Journal of Research - GRANTHAALAYAH
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brokerage generated for the brokers. A similar kind of relation applies to the other
two factors. They are also characterized by ease-of-use and an assortment of helpful
features, such as news feeds and charts, for investor education and research.
A brokerage fee is charged by a broker to execute transactions or provide
specialized services. Brokers charge them for services such as purchases, sales,
consultations, negotiations, and delivery. At a full-service broker, one pays a
premium for research, education, and advice.
The charges and fees of trading platforms vary significantly between discount
brokers and full-service brokers as depicted in the table-
Table 2 Charges and charges and Fees
Charges (Equity
Delivery)
Discount Brokers
(Zerodha/Groww/Upstox)
Traditional Brokerages (ICICI
Securities)
Brokerage Fees
Zero Brokerage
0.55%
SIT/CTT
0.1% on buy and sell
0.1% on buy and sell
Transaction
charges
0.00345% (NSE/BSE) 0.0031%(NSE) 0.0028%(BSE)
GST 18% on (Brokerage+Transaction
chage+SEBI fee
18%% on (Brokerage+Transaction
Change+SEBI fee)
SEBI Charges
? 10/crore.
? 5/crore
Stamp Charges
0.015%
0.015%
2.1. RISING PROMINENCE OF DISCOUNT BROKERS
Over the years, discount brokers have emerged as the prominent type of
brokers in the stock market. Online discount brokerage apps have been termed as
disruptors in the financial industry. Moreover, the top 5 discount brokers had a 25-
30% market share in the overall equity and commodity ET Markets (2019, ETMoney
(2020)
Chart 3 Increasing Share of Discount Brokers
Source: Spark Capital
Investment Tech: The Rise of Discount Brokers in India
International Journal of Research - GRANTHAALAYAH
180
As per a report by ICICI Securities on the Brokerage Industry of India, discount
brokers like Zerodha, Upstox, 5Paisa and Angel broking have been major
beneficiaries, especially in 2020 in terms of incremental client acquisition.
Zerodha Broking, one of the first discount brokerage platforms went live for
retail trading in 2010. Breaking barriers that traders and investors face in terms of
cost, support and technology, the market share for Zerodha has increased to over
13% in 2019-20. Similarly, the client size of Angel Broking has increased by 312%
from 2013-14 to 2019-20 while traditional industry leaders like ICICI Securities and
HDFC Securities have grown at a slower pace, losing market share to the
Investment-tech firms.
Early mover advantage in this segment benefited discount brokers. Zerodha
introduced a new pricing structure in the Indian market by introducing a deeply
discounted flat fee-per-trade model. Digitalization with proprietary technology,
improved user experience and R&D-oriented nature of business has attracted more
clients especially New-to-Market customers. This has led many traditional
brokerages like Share khan, Kotak Securities, ICICI Securities etc to come up with
their own discount plans.
Table 3 Growth of market players (2013-20)
Active
Clints in
(000)
2013
-14
2014
-15
2015
-16
2016
-17
2017
-18
2018
-19
2019
-20
Average YOY
Growth
Net
Growth
Zerodha 18 30 62 166 541 909 1414 107.0% 7757.6
%
ICICI
Securities
501 595 560 618 798 844 1076 13.6% 114.8%
HDFC
Securities
279 348 408 483 602 672 720 17.1% 158.1%
Angle
Broking
140 160 171 230 364 413 576 26.6% 311.7%
Kotak
Securities
223 268 247 274 369 438 572 17.0% 156.4%
Sharekha
n
275 343 336 366 535 510 550 12.2% 99.9%
Motilal
Oswal
123 153 166 207 308 319 377 20.5% 206.6%
AXIS
Securities
77 120 184 259 405 419 270 23.3% 251.2%
SBI CAP
Securities
68 114 126 169 214 209 250 24.20% 267.5%
NSE 4288 5092 5170 5951 8290 8782 1079
6
16.6% 151.8%
Source: NSE
Note: Average Year-on-Year Growth Rate and Net Growth Rate include churn rate
2.2. REASONS FOR SHIFT TO ONLINE DISCOUNT BROKERS
Digitally enabled discount brokers can adapt to technological advancements
quicker because of higher agility, flexibility, and decisiveness, like with Robo-
advisory, block-chain, cloud computing etc, to make their processes more cost-
effective and time-efficient.
There are a variety of reasons which have aided the discount brokers ranging
from the ease of trading service to regulations by the government.
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2.2.1. LOWER FEES
Aimed at self-directed investors, working with a discount brokerage service can
provide cheap access to instruments, ultimately leading to greater profits for the
client over time. Their offer of minimal or no brokerage charges drives more retail
participation to their platforms. Even small charges are reported to reduce stock
market participation for less wealthy households Vissing-Jørgensen (2002).
Taking this example to prove the significance of investment fees to an investor
in terms of the amount lost, an investor puts ₹500 a month into a brokerage account
each year for 30 years, depositing a total of ₹180,000 over that time and earning an
average annual 7% return.
Table 4 Investment Fees and its Implications
Case
Total annual investment fees
Account value after 30 years
Amount Lost to fees
Case1
0%
?588,032.77
?0
Case2
0.25%
?561,5151.53
?26,517.24
Case3
0.50%
?536,320.22
?51,712.44
Case4
1.00%
?489,628.12
?98,404.65
Case5
1.50%
?447,454.73
?140,578.04
Case6
2.00%
?409,348.84
?178,683.93
The last column in the chart shows how much would be lost to fees over 30
years. An investor who paid 2% in fees each year would give up more than ₹178,000
over 30 years, almost as much as the ₹180,000 deposited in the account during that
time.
Working on a ‘low margin and high volume’ model, firms like Zerodha do not
charge brokerage for equity delivery transactions and a minimal fee for other
transactions, driving more users to their platform which further makes the trading
volume high. While it already offers highly competitive fees, it also offers flat
discounts to low and high-value transactions. By charging a negligible amount to the
dealers for transactions, the exchanging volume is generally high, leading to a
greater number of customers and hence. The collection of fees from a large number
of clients leads to a sizable revenue.
Moreover, the high-profit revenues are supported by fewer operational
expenses which are very low compared with top brokers, creating a ‘low operating
leverage’. Zerodha was operating on fixed operating costs of Rs 1.2bn and total
operating costs of Rs 2.0bn (FY18). This is considerably lower than that of ICICI
Securities, which was operating at a total cost of Rs 9.4bn in FY18. Furthermore,
ICICI Securities had 3700+ employees compared to Groww which had 400+
employees. Legacy companies run as full-time brokerage houses providing research
and advisory services in addition to broking revenues. Thus, the operating costs in
the full-service brokerages are much higher, skewing their cost metrics. On the other
hand, the online structure and interface enable discount brokerage platforms to
maintain low operational costs. Zerodha reduced its IT costs by 50%, which is the
primary fixed cost allocated to fintech start-ups, by using Amazon Web Services to
build their cloud infrastructure. It no longer has to overprovision because it can
align its processing power with trading activity, decreasing time and expense on IT
capability management and post-trade processing.
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2.2.2. FINTECH ADOPTION AND INNOVATION VACUUM
Technology has been the primary reason for improving business for market
participants3, with web access (51%) and improved trading technology (50%)
leading the top reasons for the improvement of their businesses in the past five
years. Both of these are reasons which can provide better margins and expansion
possibilities across geographical boundaries. Among the top 5 identified from a
Market Participants’ Survey conducted in SIS 2015, SEBI Regulations and
Government Policies are external market factors, under no control of the
organisation. All the internal factors are dependent on the digital capability and
adoption of the brokers, who state clients’ access to the Internet, can improve their
business significantly. Only about 18% of rural Indians have access to the internet,
compared to nearly 65% in urban India. According to Bain PRICE research, rural and
urban consumers within the same income segment conveyed nearly the same
degree of comfort trying out new technologies. Thus, it is the authors’ opinion that
there is tremendous opportunity due to the significant appetite of those in rural
India to try out new technologies. 5 PAISA has already stated that a large number of
its customers are from tier 2 and tier 3 cities.
Chart 4 Reasons for Improvement in the Market Participants’ Business
N = 1,016 (Market Participants’ Survey, SIS 2015)
Retail brokers introduce technological solutions to keep with the consumer
demand, enhance customer experience and optimise costs. But despite the presence
of online platforms before discount broking platforms were launched in India, an
innovation vacuum existed among the brokers. With the onset of discount broking
platforms in India, various technological facilities were introduced, and rapid
innovation was seen in these platforms with respect to digitalisation. The digital
journeys of ICICI Bank and Zerodha have been tracked from when they first
launched their electronic and online trading platforms, respectively.
3 Market participants (financial intermediaries): brokers, sub-brokers, depository participants and authorized persons across the
country
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Table 5 Key change of ICICI Bank and Zerodha across the years
Year
ICICI Bank
Zerodha
2000-
2009
Launched ICICi Direct-Electronic Tranding Platform
in 2000 and online mutual fund platform in 2001
2010-
2011
Launched online national Pension System facilities,
SIP in equity and F&O @ FingerTips
Launched Indias first discount
stockbroking platform and went
live on retail trading
2013 Launched inflation-indexed national savings
securities-cumulative, e-volting facility, investment
advisory services and flexi cash facilities on ICICI
direct
Built a tech product to enable
people to buy and sell stcok on a
more suer friendly platform
2015 Launched Insta account facility track and Act robo
advisory platform and bullet trade facility on
ICICIDirect
Launched Kite-online tranding
platform revolutinzing the
tradeing ecosystem in India
2017 Introduced One-Click Investment for investment in
mutual fund on ICICIDirect
Launchrd Coin-Mutual Fund
Investing Platform
Discount brokers continue to invest in new platforms−Zerodha on boarded
small case (index creating and thematic investing platform), Sensibull (simplified
option strategy trading platform) and Streak (algo trading without coding, back
testing platform). Rising dependency on the internet and digital-enabled platforms
is supported by increased Fintech funding which has seen a major boom for discount
brokers. As stated by a Deloitte Research Report, increasing investments by
brokerage firms are indicated by the level of overall funding in Investment-tech
which reached a record high of $2.8 billion in 2018, growing at a compound annual
growth rate of 47% from 2008. The surge in large late-stage deals for this subset of
Fintech, specifically targeting retail investors, has boosted the funding. These
companies are developing cost-friendly solutions for potential and existing retail
investors through community and crowd sourced advice and investing platforms
Due to the interface and technology, investors in the age bracket of 25-35 have
become inclined to discount brokerage firms, according to Nitin Kamath. 75% of
Zerodha’s clients are aged less than 35 years, positioning the platform for first-time
traders while around 67% of net client additions were first-time investors as of
2019. Similar patterns can be observed in other online discount brokers. The
average age of investors trading through Upstox is 29.5 years. 5 PAISA too have a
younger customer profile, according to company reports.
2.2.3. PARTICIPATION IN INVESTMENT DECISION
When it is time to trust someone to make an investment decision, more than
40% of investors depend on themselves. As discount brokers like Zerodha are
execution-only platforms without necessary financial-advisory products, this
becomes the ideal option for investors. This is a visible self-confidence bias
indication, a much-documented phenomenon observed in behavioural finance
where the individual investor makes glaring mistakes in investments resulting in a
loss of wealth due to over-trading, over-confidence, and behavioural biases like
name recognition.
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Table 6 Trust Vis-à-vis Investment Decision-Making
Self
42.5%
Broker
20.1%
Friend/Family
16.2%
Fund Manager
21.2%
N=5,365(all urban investors, SIS 2015)
3. FINANCIAL EDUCATION AND REGULATORY MEASURES
According to the NABARD SIS data, while 25% of the highly educated (15+ years
of education) invest in the securities markets, less than 1% of those with 1 to 7 years
of education do so. This percentage increases to 6% and 15% for 8-10 years and 11-
15 years of education, respectively.
Only 24% of the Indian adult population is financially literate Klapper et al.
(2015). This situation worsens if we consider only the rural population. According
to the NABARD All India Rural Financial Inclusion Survey 2016-17, only 2.5% of
rural households invested in any financial asset while only 9.4% of individuals from
rural areas and over 13.2% from semi-urban areas reported having been exposed
to any session on financial education or training. Nearly 95% of relevant investors
found that investor education programs helped them make the right decisions
concerning their investment choices SEBI (2020).
The Government of India, RBI and SEBI are actively promoting financial
inclusion with schemes like Jan Dhan Yojana, Aadhaar enrollment and licensing of
Payment Banks /Small Finance Banks, to name just a few. Investment-Tech
companies across the nation are taking the advantage of these initiatives for
expanding financial inclusion in the following areas by leveraging technology.
Government-led efforts like Digital India are aimed at providing access to many
civic and governance-related services to rural consumers electronically. This helps
widen the presence of the internet and promotes the growth of brokers and the
stock market with increased participation. This coupled with financial literacy
programs and access to banking facilities address critical barriers facing rural India
and lack of financial inclusion in the country.
In 2014, the Indian government launched Pradhan Mantri Jan Dhan Yojna
(PMJDY) under the National Mission for Financial Inclusion, which envisages
universal access to banking facilities for every Indian citizen. There is still, however,
a huge need to improve banking infrastructure (e.g., ATMs and bank branches)
required to help new consumers through the banking process.79.9% of the
population aged 15+ reported having an account at a financial institution and 32.3%
of internet users aged 16-64 use banking and financial services via mobile each
month. RBI has allowed regional rural banks with a net worth of at least $15.28
million to launch internet banking facilities.
Along with government initiatives, firms are taking an active approach as well.
Zerodha Varsity is the market leader’s tactic to educate and prepare their users for
such scenarios and potential losses through an extensive and in-depth collection of
financial resources. Upstox Learning Centre and Grow’s Blog pursue similar
strategies which provide fundamental lessons to help investors grow out of their
speculator outlook. This is seen as an alternative to financial guidance, by giving
control to the users, thereby enhancing trust between people and discount brokers
simultaneously.
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4. PANDEMIC
90% of Indian consumers have witnessed a change in personal spending
behaviour since the onset of the pandemic, according to the ‘Consumer Spending
Sentiment Index Report’ by InterMiles. The Covid-19 induced lockdown has been a
boom for discount brokerage firms as their market shares have risen substantially.
The discount brokerage firms have also offered cash rewards to people bringing in
new clients to the platform.
Investors opened 3.4 million new Demat accounts in the September quarter
FY21 (SEBI). Meanwhile, the number of Demat accounts, which contain retail
investor holdings in securities in electronic format, increased 27% last year to stand
at 49.8 million at the end of 2020.
Chart 5 Investor Demat Accounts (in million)
Source: CDSL Annual Presentation
4.1. LITERATURE REVIEW
This paper pertains to the various strands of the discount stock brokerage
industry and innovation in the investment ecosystem. Since the discount brokers
are differentiated from full-service brokers basis the absence of additional services
relating to financial and market advice, investors on such a platform have no
guidance from the broker while making trading decisions.
Grable (2000) extended the investigative query initiated by Carducci and Wong
(1998) regarding risk-taking, by examining demographic, socioeconomic and
attitudinal characteristics as determinants of financial risk tolerance using
descriptive discriminant analysis. It ascertained a significant relationship between
multiple underlying socio-demographic factors (like education, income, age, and
marital status) and financial risk tolerance. It was concluded that higher levels of
financial knowledge and attained education correspond with higher levels of risk
tolerance. The SIS data complemented Grable’s argument by establishing a direct
linear relationship between risk appetite and education in India, as equities (riskier
instruments) were the more preferred investment instrument choice among
Investment Tech: The Rise of Discount Brokers in India
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investors with more years of education. Additionally, it also proved that the investor
distribution in urban India is skewed towards the higher educated groups.
The findings further revealed that the negligible amount of securities markets
investors among rural households, despite possessing income and savings rates that
allow them to invest in market-related instruments, exhibits a singular lack of
awareness and dearth of outreach. The All-India Debt and Investment Survey
(2013) also concluded that although savings rates have significantly increased, the
investment in securities markets still remains extremely muted amongst the rural
population.
The available literature in the form of various articles and reports have
explored Investment-Tech but the authors of this paper find a gap in the research
compiled with context to the Indian trading players and participants and have thus,
endeavoured to create a research repository for the same.
5. RESEARCH METHODOLOGY
Assumptions:
• The clients are not the total customer associated with the brokerage but
are the active customers who have traded on the specific platform.
• The active clients are the number of clients who traded in the last month
of the last financial year or in the previous month of the relevant financial
year.
• The clients are not exclusive to the platform, as some participants in the
secondary market participate via multiple accounts and/or multiple
platforms as well.
This paper uses the time-series data from 2013-14 to 2020-21 of Mobile and
Internet-based trading as a share of total turnover on NSE. To build up the research
in the subsequent time-series data regression analysis, the dependent variable is
Mobile and Internet-based trading as a percentage of total turnover on NSE. The
independent variables are the market shares of clients of three different kinds of
brokerages (as a percentage of the total number of clients on NSE) during the
analysis period.
Table 7 Regression Analysis
Variable Type of Brokerage Data Source Expected sing
of coefficient
Mobile and Internet Based
Tranding (Dependent variable)
- National
Stock
Exchange
-
Zerodha (Indeoendent variable) Disount Broker National
Stock
Exchange
Positive
ICICI Securities (independent
variable)
Full-Service Broker National
Stock
Exchange
Negative
Angle Broking (independent
variable)
Full-Service Broker with
Discount Brokerage Rates
National
Stock
Exchange
Positive
Firstly, in order to examine the extent of the change in Mobile and Internet
Based Trading as a percentage of total turnover on NSE, a statistical tool to
scrutinize how strongly each independent variable is related to the dependent
Dr. Rachna Jawa, Rahul Kabra, and Ria Aggarwal
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variable is calculated. Independent variables have been taken as:
1) Zerodha
2) ICICI Securities
3) Angel Broking
A positive correlation indicates the extent to which the pair of variables
increase or decrease in parallel while a negative correlation indicates the extent to
which one variable increases as the other decreases.
Secondly, to further analyse the relationship between the explained or
dependent variable (Y) and the independent or explanatory variables (x)-Ordinary
Least Squares ^1 regression is undertaken.
The general expression of the model can be written as:
Y=₁ +₂ + (sample regression function)
Where:
Y is the dependent variable
X is the independent variable
e is the residual term
The sample regression functions obtained in the paper are as follows:
Mobile and Internet-based trading=₁ +₂ +
Mobile and Internet-based trading=₁ +₂ +
Mobile and Internet-based trading=₁ +₂ +
In the above regression model the following parameters are analysed:
• The goodness of fit of a regression line is measured by the coefficient of
determination, r which measures the percentage of the total variation in
Y explained by the regression model.
• In order to check that whether the independent variable is significant or
not i.e., the independent variable has an effect on the dependent variable
or not, the following hypothesis is made:
Null Hypothesis: H₀: Independent variable is insignificant
Alternative Hypothesis: H₁: Independent variable is significant
If the |t-ratio| is greater than t-critical, then the null hypothesis is rejected and
hence the independent variable is significant. In order to check whether the
regression equation is relevant or not, F statistic is calculated, and the following
hypothesis is made:
Null Hypothesis, H₀: Model is irrelevant
Alternative Hypothesis, H₁: Model is relevant
Then we calculate-
If the F calculated is greater than F-critical, then the null hypothesis is rejected
and hence model is relevant.
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Table 8 Summary of result for period 2013-14 to 2020-21
Dependent Variable (Y) Independent
Variable (X)
Correlation Regression
Equation
r^2
mobile and Internet-Based
Trading
Zerodha 0.9982233 Y=11.775+1
23.512X+e
0.996449697
Mobile and internet--Based
Tranding
ICICI Secrities -0.90677 Y=95.966-
735.535X+e
0.822232331
Mobile and Intemet-Based
Trading
Angle Broking 0.9899397 Y=1.1985+4
68.560X+e
0.921484263
The results shown in the table explains that the strongest uphill (positive)
linear relationship exists between Mobile and Internet-based trading and the
number of clients of Zerodha Also, all the independent variables have a significant
impact on the dependent variable and all the regression equations are relevant but,
r^2 is highest between Mobile and Internet-based trading and Zerodha which
implies approximately 99% of total variations in Mobile and Internet-based trading
are explained by the variation in the number of clients of Zerodha.
Based on the above results it would be safe to conclude that the change in the
number of clients of Zerodha has a significant impact on the Mobile and Internet-
based trading penetration in India.
APPENDIX
Table 9 Regression of Mobile and Internet-Based Trading on Zerodha
Coefficients
Standard Error
t stat
Significance
Intercept
11.77568
0.284768
41.35177
Yes
Zerodha
123.5129
3.009828
41.03653
Yes
Regression Statistics
R square
F
Relevant
0.99645
1683.997
Yes
Dr. Rachna Jawa, Rahul Kabra, and Ria Aggarwal
International Journal of Research - GRANTHAALAYAH
189
Table 10 Regression of Mobile and internet-based trending on ICICI securities
Coefficients
Standard Error
t stat
Significance
Intercept
95.96673
14.44938
6.641583
Yes
ICICI Securities
-735.535
139.623
-5.26801
Yyes
Regression Statistics
R sqare
F
Relevant
0.822232
27.75192
Yes
Table 11 Regression of mobile and internet-based trending angel broking
Coefficient
Standard Error
t stat
Significance
Intercept
-1.19853
2.713898
-0.44163
Yes
Angle Broking 468.5606 55.83731 8.391532 Yes
Regression Statistics
R-square
F
Relevant
0.921484
70.4178
Yes
Investment Tech: The Rise of Discount Brokers in India
International Journal of Research - GRANTHAALAYAH
190
Table 12 Number of clients of key market players (2013-2021)
FY
Angel Broking Private Limited
ICICI Secuetites Limited
Zerodha
NSE
2013-14
140174
500733
17523
4288171
2014-15
1160354
594714
30379
5091737
2015-16
170808
560438
61970
5169963
2016-17
230194
618359
165586
5951301
2017-18
363663
798355
540905
8289801
2018-19
412809
843975
9099008
8782207
2019-20
576414
1075956
1414376
10795660
2020-21
1564667
1580233
3602074
18356146
Table 13 Data for Regression Analysis
FY Angel
Broking
Limited
ICICI
Securities
Limited
Zero
dha
Mobile and Internet-Based Tranding
(as% of toal turnover of NSE)
2013
-14
3.27% 11.68% 0.41
%
11.66%
2014
-15
3.15% 11.68% 0.60
%
12.58%
2015
-16
3.30% 10.84% 1.20
%
13.48%
2016
-17
3.87% 10.39% 2.78
%
15.90%
2017
-18
4.39% 9.63% 6.52
%
19.67%
2018
-19
4.70% 9.61% 10.35
%
24.84%
2019
-20
5.34% 9.97% 13.10
%
27.11%
2020
-21
8.52% 8.61% 19.62
%
36.38%
Table 14 Marker share of top brokerage in india (as a share of toal active clients on NSE)
Market Share 2013-
14
2014-
15
2015-
16
2016-
17
2017-
18
2018-
19
2019-
20
Zerodha
0.40%
0.60%
1.20%
2.80%
6.50%
10.40%
13.10%
ICICI Securities
11.70%
11.70%
10.80%
10.40%
9.60%
9.60%
10.00%
HDFC Securities
6.50%
6.80%
7.90%
8.10%
7.30%
7.70%
6.70%
Angel Broking
3.30%
3.10%
3.30%
3.90%
4.40%
4.70%
5.30%
Kotak Securities
5.20%
5.30%
4.80%
4.60%
4.50%
5.00%
5.30%
Sharekhan
6.40%
6.70%
6.50%
6.10%
6.50%
5.80%
5.10%
Mmotilal Oswal
2.90%
3.00%
3.20%
3.50%
3.70%
3.60%
3.50%
AXIS Securities
1.80%
2.40%
3.60%
4.40%
4.90%
4.80%
2.50%
SBI CAP
Securities
1.60% 2.20% 2.40% 2.80% 2.60% 2.40% 2.30%
Dr. Rachna Jawa, Rahul Kabra, and Ria Aggarwal
International Journal of Research - GRANTHAALAYAH
191
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