Mumbai: Riding a bull market, brokerages are offering bonuses to employees after a gap of a year, when an unprecedented credit crunch hit the global financial system and stocks plunged in a liquidity-starved market.

India’s bellwether equity index, the Sensex, has risen at least 100% since its March low and this means higher volume of trade and more earnings by the brokerages.

“Hum log toh Diwali aur Christmas saath saath mana rahe hain itna achha bonus hua is baar (The bonus has been so good this time that we can celebrate Diwali and Christmas together)," said V.K. Sharma, director, research, Anagram Stockbroking Ltd, an Ahmedabad-based brokerage.

Anagram, one of the many brokerages that skipped them last year, is paying 30% higher Diwali bonuses than in 2007. Most foreign brokerages follow the calendar year when it comes to giving incentives to their employees but the older local brokerages give bonuses during the festival.

“Diwali is one occasion when the whole country gets into a celebratory mood," said Rakesh Goyal of Bonanza Porfolio Ltd. “No Indian company can afford to spoil the mood. We are definitely giving bonuses this year."

R. Venkatraman, executive director, India Infoline Ltd said the bonuses are a matter of tradition, contributing to the “feel-good factor".

According to a 14 October note from the UK financial services firm Noble Group Ltd, stockbroking volumes have bounced back by a strong 55% in the first half of 2009-10 on the back of strong dollar inflows. Foreign institutional investors (FIIs), the main driver of the Indian equity market, have invested $13.04 billion (Rs59,853.6 crore) so far in local stocks after pulling out $12.18 billion in 2008. In the first half of this fiscal, trading volume was around 30% higher than what was seen in 2008, the best ever, but some analysts feel this may not be sustained in the second half if the retail participation continues to be low and FII flows dry up.

The daily average trading volume dropped sharply, by around 40%, between January 2008 and March 2009. The trend reversed after the United Progressive Alliance government returned to power in May. Between April and September, the average daily volumes were close to 3,000 crore, up 55% from 1,000 crore a year earlier. It had dropped to 55,400 crore in the January-March quarter.

There is a direct correlation between trading volumes and brokerage earnings as fees and commissions are the mainstay of their income.

Kamlesh Dangi, corporate head of human resources, Religare Enterprises Ltd, said though they do not give a Diwali bonus, October being the first month of the new quarter, employees will get quarterly incentive payments. “There will be considerable incentive payouts for our equity and commodity broking sections. Business performance is significantly better as the market is doing well," he said. Religare did not pay any bonus last year. Sourav Arora of Jaypee Capital Services Ltd said his organization is giving at least a month’s salary as bonus. “It can go up, depending on an employee’s performance."

New Delhi-based Jaypee Capital is one of the local brokerages that paid bonuses to its employees even last year. “Our payouts are comparable to last year’s, but nothing extravagant," Arora said.

The market is booming but the brokerages seem to be acting cautious when it comes to paying bonuses. Typically, during the boom years, the average bonus payouts range between 30-40% of salaries while some of them give as much as a full year’s pay as a one-time incentive. But this time around, people are sticking to one month’s salary as bonus, said P.S. Balasubramanian of Muthoot Securities Ltd.

Ajay Pandey of Link Intime Securities too said most brokers are giving at least one month’s salary as bonus.

There is a consensus among brokerages that good times are back even though not everyone is rushing to give bonuses. Anish Jhaveri of Antique Finance Ltd said his firm doesn’t give bonuses during Diwali. “Our normal incentives will come in March-April."

“We did not sack anybody, we have full faith in our employees," Jhaveri added.

Raamdeo Agrawal, co-founder and director of the listed brokerage Motilal Oswal Financial Services Ltd, said he would pay a bonus at the end of the financial year. “We give bonuses at the year-end (March) and the amounts will depend on the market movement. If the market reaches 21,000 mark by March, I can assure that our employees would receive a bumper bonus," he said.

Anand Rathi Securities Ltd too will give bonuses to senior employees by the end of the financial year. During Diwali, the firm pays incentives to the employees who are paid a relatively lower salary.

Ravi Krishnan contributed to this?story.