New technologies like artifi cial intelligence and advanced analytics will make managing and investing money easier than ever before

MAHESH NAYAK

The Indian equity market has remained subdued with downward bias for the past few weeks. Weak domestic

and global cues saw the market grap-pling with volatility. In such a scenario everyone today wants to know what is happening to the Indian markets and most importantly how does one protect its capital while making good returns from investing in the stock market.

On 16 March 2018, the Economic Times along with discount broking firm SAMCO Securities held its Giga Trading Summit in Mumbai inviting six industry experts for a panel discussion on the use of technology to shape the future of trading in the Indian stock market. The event also saw the launch of a new market trading app –Stock Note by SAMCO Securities giving a new experience and ease of trading for traders and investors.Edited Excerpts:

When it comes to investing in the market whether or not technology work and does technology helps in making better choices?Sunil Singhania, Founder, Abakkus Asset Managers LLP: Earlier informa-tion was privy of a select few but today investor is more empowered and in-formed as information is almost in-stant. Technology is an opportunity and also a challenge in the market. While these tools have increased the efficiency in the markets and increas-ing efficiency is good for investors, you have to be clear of what you are plan-ning to do. Are you an investor or a trader? For instance if you are an inves-tor you don’t need the technology where you can trade instantaneously, while for trader the new app based technology is Godsend. Use of tech-nology from an investment perspec-tive is different from that of a trading perspective.

How easy is to bring customers to the market and how are they adapting to technology?Jimeet Modi, CEO, SAMCO Securities: We’re targeting this to young custom-ers or so-called millennial customers who are in the age bracket of 18 to 40 years. Today’s millennial customer is very different from the one 20 years ago. Earlier the customer wanted a

relationship manager to call him and talk to him, whereas today’s millenni-al customer is impulsive in nature, wants to go online and make instant purchase decision and therefore ad-aptation of technology is extremely high. Today 75 per cent of all (SAMCO’s) clients are below the age of 35, so it’s essentially a customer who is always on the go, who is al-ways on his mobile phone or on the web wants to make quick decisions. What we believe is that technology adaptation in the next 5 to 10 years is going to be at a pace which we have never seen before in the past few years and that’s where we are.

How do you see some of these instru-ments democratising the use of technol-ogy for first time users?Pranav Haldea, managing director, Prime Database Group: We have to look at who is an investor and who is a trader. I would like to bring in a slight differentiating factor in terms of, while consumers you would want to close a transaction in five minutes, but do we want a huge section of our retail inves-tors to be buying and selling stocks in the five minutes closure rates versus looking at a long-term investment strategy. Stock markets are not simple. Investing is a full time profession and therefore my advice to first-time inves-tor always remains that they should come through mutual funds, they should use the services of profession-al fund managers and if they are com-ing through stocks then they have to come as an investor and not really as a trader.

Having lot of information at your dis-posal is very good but it can also be very bad. What people are looking for is actionable insight. If the app like Stock Note that runs through huge volumes of data can produce action-able insight than of course it is going to benefit retail investors.

How will such app (Stock Note) help in-vestors in a holistic view and attract con-sumers?Adhil Shetty, CEO, BankBazaar.com: The very fact that these tools are now available to people who potentially never thought of using a mobile app and today to do things like this are go-ing to come into the fold. One of the big roles the Fintech have played is to bring millions and millions of people that would otherwise wouldn’t have transacted online.

I think we are effectively collaborat-ing with various manufacturers, it could be a mutual fund manufacturer or it might be an insurance manufac-turer, to say that every stakeholder has a USP be that of the fintech or the mo-bile app provider that has the USP to

get people online and get people to engage online over a period in time. I’m seeing a lot of collaboration wherein the mobile phone app pro-vider has a key strength and the man-ufacturer have some key strength and everyone is realising that it is not a ze-ro-sum game and we can actually col-laborate and help each other out here.

How is technology making markets crazy?Singhania: Today information is avail-able to vast majority and at the same time and everyone wants to act on

that information in the same direction at the same time and that causes huge volatility. I think if you’re clear on fundamentals you can use technolo-gy to strengthen your fundamentals, you can make very big use of increas-ing volatility and I think every chal-lenge is in an opportunity and frankly I would try to use every challenge which technology throws as an op-portunity. Ultimately each one of us should be clear as to what we’re get-ting into. There is no single thing in isolation that can make you money, it has to be a combination of lot of things and technology is one that will

aid you. What works for one is not necessarily going to work for every-one. The simple logic is you’ll make money if you’re away from the crowd and if technology alone is going to point out to one direction, it is going to point to million and billions of them in the same direction, you have to work out your own path and use technolo-gy as an assistant.

How do you see the use of different tools and technology to get information?Dhiraj Sachdev, Sr VP & Fund Manager, HSBC: We are living in an information excess world that has reached the consumer like never be-fore and there is no difference be-tween institutional and retail investors on getting information. Every informa-tion can have an exaggerated reac-tion, stocks can be volatile but an in-vestor has to have the EQ level high enough to ensure that he doesn’t lose the state of equanimity. They have to be wise to ignore lot of information which can be useless and that is very important.Technology is useful for trader’s com-

munity while for the investment com-munity they should use it as a starting point. It’s not just price that one has to

look but one has to look at other hy-giene factors like understanding the cash flow, balance sheet, the business outlook and primary research which cannot be eliminated by an investor, time immemorial this has been the basic of investing. While you have technology and access to information ecosystem that we are living in but the basic hygiene of investing should not go away.

How imperative is it for company to start adapting to technology?Vivek Belgavi, Partner & Leader, Fintech, PWC: From a broader per-spective what we need to solve is the larger problem of saying how do we increase adoption in the ecosystem and use of technology to increasing broad-based participation. The way I see, first an incumbent would solve the problem or someone from out-side who owns the consumer, be a Google or Amazon will solve the ex-perience problem for the consumer. Most importantly how do you build trust in these models. In a digital world how you get technology to build trust. If you are able to build trust you will grow, if you’re not able to built trust you will not grow.

What is your view on AI and machine learning in investment?Rajeev Arora, CEO, FINO Finance: The whole debate about AI (artificial intelligence), it’s a black box. You’re not sure why the decision was made in the first place and there is whole lot of effort going into AI to understand why it has reached to a particular deci-sion. When you make a recommen-dation on a platform you could actu-

ally be starting a chain reaction on the underlying basis one will really have to analyse, the good thing is you have access to more information apart from the recommendation that is be-ing made to you and if you are invest-ing then you should have the neces-sary skills to be able to collaborate recommendations with independent data sources and make that inde-pendent choice.

What has been your take on machine learning?Haldea: As Ridham Desai of Morgan Stanley calls it JAM – Jandhan Aadhaar and Mobile. Combination of all these three things is going to play a significant role. Smart phone pen-etration is already 300 million and it’s going to 600 million. Just 4 years back there was 3500 Aadhaar trans-action a day which is 61 million trans-actions a day. So you are already us-ing a base for a lot of financial sector transaction. The other point which I want to make is slightly off topic but since we’re talking about large data and machine learning and AI. There is a bit of downside to it and I’ll give you an example, we all agree the world is becoming increasingly more polarised and the large part is to do with machine learning which we all have access through social media app. Because of machine learning we’re going to get more good things and similarly bad things. We have also to think about the downside.

What it you view on the downside for the use of technology?Modi: There are very valid sort of concerns around how technology works. What I would like to say is the beauty about machine is they are dis-passionate. We live in a century were book cooking is easier than it ever was. One can’t rely simply on the bal-ance sheet or a P&L of a listed corpo-rate so you need to look into and deep dive into a variety of factors, machine and systems are made smart enough to look through the entire spectrum of things that are likely to affect both investing and trading. What will happen is that you will have systems which are going to be superior than the human mind and the same time dispassionate be-cause they do not have emotional attachment to a particular corporate or to a particular stock. So I think every form of technology that exist that is good and bad the important thing we need to look at how we can pick the good that exist across the board and an amazing platform is available to the end consumer and this is what we are trying to attempt to do with the new app stock note

A CONSUMER CONNECT INITIATIVE

Presents The Giga Trading Summit

Why is the trading and investing space in India for disruption?Historically, competition in the in-dustry was always based on price and distribution, never on products. There is a huge opportunity to dis-rupt this space with compelling and innovative solutions. Technology is an enabler and the industry is now ripe for disruption.How did Giga Trading happen?We wanted to build an engine for captive consumption, which could churn market information to gener-

ate simple ideas for investment and trading. In the process we ended up creating the Giga Trading engine, which essentially uses artificial intel-ligence (AI) and advance analytics to process huge volumes of market in-formation and give filtered ideas.How will AI and advance analyt-ics change investing in India?AI and advance analytics can ex-pand the horizon of opportunities for investors. Technologies like these can overcome limitations of the human mind to process limit-

ed information and therefore track limited opportunities. The applica-tion of AI in trend analysis and pat-tern recognition in other walks of life is known, and is likely to be used in stock markets extensively. SAMCO with its StockNote plat-form hopes to lead this revolution in India. How will you distribute the pow-er of this platform to retail inves-tors?So far, the power of all advanced technologies has been restricted to

select institutional investors and algorithm-based trading. The retail

market has mostly been distant from these technologies. We plan

to distribute the Giga Trading en-gine through our StockNote plat-form - initially on Android and IOS, and subsequently on the web. Smartphones are likely to be the biggest enablers for financial inclu-sion, and we expect apps like StockNote to lead this financial in-clusion initiative.What’s your customer base and where do you plan to take it to?We have roughly 75,000 customers, and hope to close the next financial year with 2 lakh.

What will be the biggest enablers for market expansion?Smartphones, cheap data services and the Aadhaar ecosystem.What’s the competitive landscape in the broking industry and how will it change?The industry is consolidating; it will move away from being price-com-petitive to driven by products and technological innovations. The fu-ture will belong to those who cre-ate great financial products, not traditional service businesses.

Interview with Jimeet Modi, CEO and Founder, SAMCO SECURITIES

“You’ll make money if you’re away from the crowd....you have to work out your own path and use technology as an assistant.”SUNIL SINGHANIA FOUNDER, ABAKKUS ASSET MANAGERS LLP

“One of the big roles the Fintech have played is to bring millions and mil-lions of people that would otherwise wouldn’t have transact-ed online.”ADHIL SHETTY CO-FOUNDER & CEO, BANKBAZAAR.COM

“Having lot of information at your disposal is very good but it can also be very bad. What people are looking for is actionable insight.”PRANAV HALDEA MANAGING DIRECTOR, PRIME DATABASE GROUP

“If you are investing then you should have the necessary skills to be able to collaborate recommendations with independent data sources and make that independent choice.”RAJEEV ARORA CEO, FINO FINANCE

“Today’s millennial customer is impulsive in nature, wants to go online and make in-stant purchase decision and therefore adapta-tion of technology is ex-tremely high.”JIMEET MODI CEO & FOUNDER, SAMCO SECURITIES

“In a digital world how you get technology to build trust. If you are able to build trust you will grow, if you’re not able to build trust you will not grow.” VIVEK BELGAVIPARTNER & LEADER, FINTECH, PWC

“While you have technology and access to information ecosystem that we are living in but the basic hygiene of investing should not go away.”DHIRAJ SACHDEVSR VP & FUND MANAGER, HSBC ASSET MANAGEMENT (INDIA)

wouldn’t have transact-

(L-R): Pranav Haldea, MD, Prime Database Group, Rajeev Arora, CEO, FINO Finance, Jimeet Modi, CEO & Founder, SAMCO Securities, Sunil Singhania, Founder, Abakkus Asset Managers LLP, Abha Bakaya, Panel Moderator, Adhil Shetty, Co-founder & CEO, BankBazaar.com, Vivek Belgavi, Partner & Leader - Fintech, PwC India, Dhiraj Sachdev, Sr.VP & Fund Manager- Equities, HSBC Asset Management (India) Pvt Ltd.

THE NEXT BIG BET