Mumbai: With the benchmark equity indices at a high and retail investors starting to trickle back into the equity markets, brokers are aggressively pitching schemes that offer brokerage services at little or no fee to lure more customers.

At least two leading brokerages—ICICI Securities and India Infoline Ltd (IIFL)—have recently launched such schemes. While ICICI Securities is offering a product called I-Gain, where clients need to pay only for derivative trades in which they make money, IIFL has launched a flat-fee model of 9.99 for online trades, claiming that it is one of the cheapest in the world.

The S&P BSE Sensex hit a record high of 28,822.37 points on 28 November 2014, and has gained 28.68% so far this year.

Retail investor participation has also picked up, directly and via mutual funds. The average daily turnover in the retail segment rose to 7,540 crore in March, from 6,431 crore and 5,708 crore in January and February, respectively, and reached a peak of 12,475 crore in June. It has been above 10,000 crore in all months after May, except August and October. Retail investors have also pumped money into mutual funds. Equity funds received net inflows of 4,963 crore in November, said Crisil Research in an 8 December report. This is the seventh consecutive month that they have bought more units than they sold.

Most brokers charge brokerage as a percentage of the trade value. Plus clients have to bear statutory levies such as securities transaction tax (STT), Securities and Exchange Board of India (Sebi) charges, service tax, and an education cess.

The scheme will be available on the ICICIDirect platform, which is the retail arm of ICICI Securities and has one of the largest number of online clients in the country.

ICICI Securities, however, is not the first entity to offer such a scheme. In July, Bengaluru-based WealthRays Securities Ltd offered a scheme where clients were offered three recommendations and paid only for the profitable trades. Last month, IIFL introduced its 9.99 flat online brokerage product.

Amar Ambani, the head of research with IIFL, says that the flat brokerage model is for the technology- and information-savvy investors who do their own research and just require a platform to execute trades. With smartphones in every hand and rise of the savvy investor, IIFL believes this product is the right offering, he says.

At the time of the launch in November, IIFL founder and chairman Nirmal Jain was quoted as saying that the brokerage is ready to cut the rates further and even go down to zero, if needed. “This could hurt our earnings for a few quarters, but our portfolio of services will be a hook to bring customers and market share," he had said.

This is not the first time though that IIFL has introduced a low or flat-fee structure. Nearly a decade ago, it introduced a 5 paise brokerage product.

Discount brokerages are not a new fad in India or overseas.

US-basedRobinhood Markets Inc. offers a mobile app through which clients can trade on zero commission. According to start-up database CrunchBase, Robinhood received $3 million in seed capital in September.

In India Zerodha, which launched operations in August 2010, charges a flat fee of 20 per trade with no upfront brokerage or turnover commitments.

Nithin Kamath, founder and chief executive of Bengaluru-based Zerodha, says that brokerages will have to shift to the low-cost brokerage model in the coming years or come up with a real unique model. “Giving research reports or a relationship manager, who coerces you to trade/invest, and charging a higher brokerage, won’t work in times to come, which is going to be online, where people have easy access to information and want to be independent," he says.

The launch of retail-investor-friendly schemes are coming at a time when a number of market participants are predicting that India has entered a multi-year bull run. This expectation is premised on improving economic growth, lower domestic interest rates and a steady flow of overseas capital.

UBS Securities India Pvt. Ltd, which is the local unit of Swiss lender UBS AG, expects the benchmark CNX Nifty index to touch 9,600 points by the end of 2015, it said on 11 November.

In a 2 December note, Macquarie Capital Securities India (Pvt.) Ltd set its 12-month Nifty target at 9,940 points.

Citi Research expects the Sensex to hit 33,000 by 2015-end, the brokerage house said in a note on 1 December.

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