Angel One Rally Explained: A Silver Lining Amid Declining Metrics Sends Shares Higher

Shares of Angel One opened 5% higher and was trading 7% in the green on Wednesday, at the time of publishing, after the stockbroking firm released its monthly business updates for January, 2025, despite highlighting declining trends in some of its key operational metrics.

Average daily orders executed by clients on the brokerage have now fallen for the third month in a row, when compared against the month that came before, while gross client acquisitions have also seen slowing trends. However, there may be a silver lining.

The declining trends may not be a result of poor performance by the company, but a product of the sector it operates in.

Indian equities' benchmark Nifty 50 recorded its fourth consecutive month of decline in January, 2025, something the index had not seen in over two decades. From its highest point on Sept. 27, 2024, the benchmark trades 10% lower, breaching into a "correction zone."

Of the fourth months of decline that the index has seen, two — namely October, 2024 and January, 2025 have seen the largest selling done by foreign investors monthly, surpassing even that seen during the Covid-19 pandemic led sell-off in March, 2020.

While the bearish turn taken by the markets amidst what had been coined a "secular bull run" and a broad-based rally in Indian markets may have spooked investors, regulatory updates introduced by the Securities and Exchange Board of India also came into effect in November to address the booming derivatives market in India.

Limiting weekly expiry contracts to only one per exchange, and an increase in lot sizes are some of the first changes that have already come into effect, leading to an increase in premiums — or the amount paid for executive transactions in the options space.

Average daily turnover in the futures and options space had been on a decline for the last two months, falling as much as 32% in December against the month that came before, based on notional turnover for derivative contracts.

In January, this declining trend in average daily turnover has turned positive, based on notional turnover for derivatives as well as premium turnover for equity options.

While operation metrics like gross client acquisitions and average daily orders continue to indicate a tough environment, the stockbroker highlights one key metric that has been improving in a tough environment for growth: market share.

Retail turnover market share for the company has grown in three out of the last four months, and two out of four months in the futures and options space, with no change in one.