TL;DR
India’s capital markets ecosystem is evolving rapidly, and regulatory fine tuning is becoming more frequent. The recent discussion around the KRA charge cut has again brought National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) into the spotlight.
Both depositories play a critical role in India’s demat infrastructure. Whenever there is any change in compliance costs or KYC related charges, the Street immediately evaluates its potential impact on their earnings.
But the key question investors are asking is simple.
Will the KRA charge cut materially hurt NSDL and CDSL profitability, or is the concern overblown?
Let us break it down.
Before assessing the impact, it is important to understand what KRAs do.
KRA stands for KYC Registration Agency. These agencies maintain and validate investor KYC records across intermediaries such as brokers, mutual funds, and portfolio managers. The system was introduced by SEBI to streamline onboarding and avoid duplication of KYC processes.
In simple terms:
Any rationalisation in KRA charges can therefore have a ripple effect across the value chain.
SEBI has been working toward reducing friction in investor onboarding and lowering compliance costs. The proposed or implemented KRA charge rationalisation aims to:
From a policy standpoint, the move is investor friendly and aligned with India’s push toward financial inclusion.
However, for listed market infrastructure institutions like NSDL and CDSL, even small fee changes attract attention because of their high operating leverage.
Based on current industry understanding, KRA related income is not the primary revenue driver for either depository. Their major earnings come from:
Therefore, the direct hit from KRA charge reduction is likely to be manageable rather than severe.
That said, depository businesses operate on strong margins and high operating leverage. Even a small fee reduction can create:
This is why the market reacts quickly to regulatory tweaks.
Despite near term noise, the structural growth drivers for NSDL and CDSL remain very strong.
India is still in the early stages of financialisation. Over the past few years:
Every new investor ultimately strengthens the depository ecosystem.
Between FY20 and FY25, India saw a massive jump in retail demat accounts. Even during volatile phases, the structural investor base continued to expand. This trend acts as a natural buffer against small regulatory fee cuts.
Depositories have largely fixed cost structures. As volumes rise:
So while regulatory changes may create temporary concerns, volume growth often compensates over time.
The KRA charge rationalisation is actually positive for the broader market.
Reduced KYC costs can:
Tech enabled brokers may benefit from:
This is particularly relevant in a competitive broking landscape.
In an evolving regulatory environment, choosing the right broker becomes crucial for investors.
Swastika Investmart continues to stand out because of:
For investors navigating changing market structures, having access to reliable research and a stable platform can make a meaningful difference.
While the long term outlook remains constructive, investors should monitor a few variables.
Market infrastructure institutions operate under tight regulatory oversight. Any future fee rationalisation across services could affect sentiment.
Depository revenues are partly linked to:
A prolonged market slowdown could temporarily moderate growth.
As India’s capital market ecosystem deepens, efficiency expectations from regulators may continue to rise.
The buzz around the KRA charge cut has understandably brought NSDL and CDSL into focus. However, the actual earnings impact appears limited in the near term and unlikely to derail their long term growth trajectory.
India’s financialisation story, rising retail participation, and expanding demat penetration continue to provide a strong structural tailwind for depositories.
For investors, the smarter approach is to avoid overreacting to regulatory noise and instead track:
If you are looking to participate in India’s evolving equity markets with strong research backing, Swastika Investmart offers a reliable, tech enabled investing platform designed for modern investors.
Q1. What is the KRA charge cut?
It refers to the rationalisation or reduction of fees related to KYC Registration Agency services aimed at lowering investor onboarding costs.
Q2. Will the KRA change significantly hurt NSDL and CDSL profits?
The direct impact is expected to be limited because KRA income is not their primary revenue driver.
Q3. Why did the market react to this news?
Depositories operate with high margins, so even small regulatory changes can trigger short term sentiment driven volatility.
Q4. Is the long term outlook for depositories still positive?
Yes. Rising demat penetration and increasing retail participation continue to support long term growth.
Q5. How can investors navigate such regulatory changes?
Using a research backed platform like Swastika Investmart and focusing on long term fundamentals can help investors make informed decisions.
COVID 19 has increased the use of digital technologies which turned out well for the IT sector. If we talk about the pharma sector, there has been a much increase in the pharma stocks as investors focus shifted to COVID 19 related opportunities.
Till December 2020, many things have changed as many SMEs faced a huge decline in their growth. Also, top-notch companies have gone through crises that can’t be ignored.
In such a deeply problematic situation, one thing that performs exceptionally well during a financial and economic crisis in Indian Stock Markets.
The Nifty 50 index has experienced a remarkable recovery from its all-time lows in March. At the beginning of January 2021, the index had risen to 14%.
If you look at the top ten stocks that have generated outstanding stock market trading returns in 2020, it's none other than IT and Pharma companies that have emerged as the largest stocks.
In 2021, stocks of pharma companies remain on the top yet best-performing sectors in the Indian stock market.
In addition to this, the importance of pharma companies has been rising continuously as the demand for medicines, immunity boosters, and life-saving drugs take superiority to save lives.
Further, as the news of the third wave of COVID has come out, the people of India again keep their eyes on the pharma sector to save the country from the upcoming disaster.
Few companies have benefited from the vaccination drive.
Cadila Healthcare, popularly known as Zydus Cadila, is a leading pharmaceutical company headquartered in Ahmedabad.
India primarily engaged in the manufacture of generic drugs and the company is ranked 100th in the Fortune India 500 list in 2020.
Cadila Healthcare has produced the first vaccine called ZyCoV-D, built on a DNA platform.
Also, it has received a EUA (Emergency Use Authorization) from regulators. As per the sources, ZyCoV-D is considered India’s second home-grown vaccine post-Covaxin. The vaccine has come in 3 doses with a success rate of 66.6%.
In the June quarter of 2021, Cadila Healthcare witnessed a rise of 29.3% net profit Year on Year. Also, the huge demand for the vaccines made outstanding sales in the Indian market as it has witnessed a revenue increase of 14.5% year on year.
Introduction:
Cipla Limited is an Indian multinational pharmaceutical company, known for manufacturing medicines to treat depression, respiratory diseases, cardiovascular diseases, arthritis, weight control and other medicinal conditions.
Furthermore, the Drugs Controller General of India has given a go-ahead signal to import India’s Moderna’s Covid 19 vaccine.
The success rate of Moderna’s vaccine is 94.1%. It will be imported in ready to use form. As per the prescription, the vaccine can be stored for seven months, however, if a vial is opened, it can be used for a maximum of 30 days.
As of June 2021, Cipla witnessed a sharp rise of 24% in net profits Year on Year. Furthermore, the revenue also saw a massive increase of 27% year on year. The figures for profit have clearly shown that the Cipla has benefitted from the impact of the second wave of Covid-19.
Introduction:
Dr Reddy’s Laboratories is an Indian multinational pharmaceutical company. Headquartered in Hyderabad, the company is committed to providing affordable and innovative medicines for normal people.
Dr Reddy’s Laboratories entered into a partnership with the Russian Direct Investment Fund and produced a vaccine called Sputnik V. According to sources, the vaccine has marked a success rate of 91.6%.
From September 2021 onwards, the company is likely to begin the production of this vaccine. However, the company saw a slight decline in operating profits in June 2021. Profits declined 13% year on year as there was a marginal slump in the profits of Rs 5.7 billion.
Introduction:
Panacea Biotec is a pharmaceutical company and vaccine maker company registered in India. With principal offices in Delhi, Mumbai, the company got listed in 1995 as Panacea Biotec.
The company has tied with Dr Reddy’s Laboratories, Human Vaccine and Generium to produce nearly 25 million doses of Sputnik V. In other words, it acts as an intermediary between Generium and Dr Reddy’s Laboratories.
Panacea purchases the products from the company Generium prepares vaccines and distributes them to Dr Reddy for the overall supply within the country.
Even though the company manufactures vaccines, it also suffers from losses. In June 2021, the net loss observed for Panacea is $ 574 Million. Unfortunately, the revenue is still flat for the company.
Introduction:
Wockhardt Limited is a pharmaceutical and biotechnology company that manufactures biopharmaceuticals, nutrition products, formulations, active pharmaceutical ingredients and more.
Headquartered in Mumbai, the company has manufacturing plants in India, UK, Ireland, France, the US, Ireland and France.
Besides panacea, Wockhardt is the next company that is responsible for the supply of Sputnik V and Sputnik Light vaccines. The deal had taken place among three companies: i.e. Wockhardt, Enso Healthcare and Human Vaccine LLC.
Human Vaccine LLC is a subsidiary of the Russian Direct Investment Fund. Wockhardt is likely to supply nearly 600 million doses of vaccine Sputnik V and Sputnik Light Vaccines.
In the June 2021 quarter, the company received 3 patents and currently holds 766 patents. However, the company also faced a huge loss of Rs 65.8 billion for the first quarter.
The pharma stocks stated above are likely to benefit from the vaccination drives. Hence, it is essential to figure out how much time is left for the vaccination approval. Some companies already have their vaccines out in the market, while few just started their manufacturer setup.
Also, check out the companies that have completed all the clearances required by the regulators. Select those companies’ stocks whose products are being prepared or ready to release in the future. It will be a more profitable long-term plan.
Paras Defence is India's sole Infrared Optics producer. It is a leading private sector company in India engaged in designing, manufacturing, developing, and testing defence and space engineering products and solutions.
The company has five major product category offerings - Defence & Space Optics, Defence Electronics, Heavy Engineering, Electromagnetic Pulse Protection Solutions, and Niche Technologies.
The Tier 2 defence engineering firm is one of the most advanced and offers a large number of defence goods and solutions. They have an excellent client base with names such as ISRO, Bharat Dynamics, HAL, TCS, Tata Power and others.
The first public offering (SME IPO) for Paras Defense and Space Technologies will all begin next week from 21 September to 23 September. The IPO's size concerns Rs.170 crore including Rs.140 crore fresh and Offering for Sale (OFS) of Rs.30 crore.
Subscription Dates21 – 23 September 2021Price BandINR165 – 175 per shareFresh issueINR140.6 croreOffer For Sale1,724,490 shares (INR28.45 – INR30.18 crore)Total IPO sizeINR169.05 – 170.78 croreMinimum bid (lot size)85 sharesFace Value INR10 per shareRetail Allocation35%Listing OnNSE, BSE
This SME IPO shows that the QIB part is 50 per cent reserved, while the Retail portion is reserved at 35 per cent. on the other hand, 15% of the NII component is retained.
For the six months ending on 30 September 2020, the firm has recorded overall revenues of Rs. 149.05 crore and Rs.37.94 crore. Consolidated PAT (profit after tax) in FY 2020 was Rs. 19.65 and for the six-month period ending 30 September 2020, it caused a loss in the amount of Rs. 14 lakh.
In 2021 the profit was Rs.15.79 crore compared with Rs.19.66 crore in 2020. In recent years the company has performed stably and will continue to do the same thing that will result in consistent business growth.
According to Swastika Investmart Analyst, eyeing the government's focus on the Space and Defense sector, it is expected that both the segments of the company are likely to be benefited. The "Make in India" campaign by the government to be self-reliant by 2027 will give a boost to the industry.
Since there are no listed players in the industry it is difficult to make an apple to apple comparison. The company is going to be listed in T2T-Segment.
The financials of the company has been mixed. However, in the long company may benefit from the initiatives by the government and is expected to perform well. The company has a strong order book and the IPO is priced at PE of 31x. Thus, we recommend a "Subscribe" rating to the IPO.
Bulls are taking a breather after a strong bull run but they are still in a mood to take forward the market towards a new milestone as there are no signs of weakness in the Indian markets.
There has been less participation from the institutional, which is leading to some consolidation in the market but in the last week, we saw there is decent buying in many quality midcaps and smallcap stocks beneath the flat headline indices.
Global Markets are also in a consolidation mood while Japanese markets are outperforming the developed markets. Global cues will be a key tracker for market behavior as there are some macroeconomic data are lined up next week like China's industrial production, US inflation numbers.
China's industrial production data for August will be announced on 15 September 2021. The US will announce the inflation rate for August 14 September 2021. US Retail Sales for August will be announced on 16 September 2021.
On the domestic front, The Wholesale price index (WPI) inflation for August 2021 is due on 14 September. After a muted or less than expected monsoon in August, the market will eye on September as the monsoon is picking up.
The dollar index is again cooling off after facing resistance at the 92.8 marks and if it continues to fall from here then we can again see FIIs' buying to pick up which may help headline indices to gain momentum for new highs. Rising COVID cases in many countries could be a challenge but the markets are ignoring it as of now because of liquidity and strong economic recovery.
In technical terms of the stock market trading, Nifty is in a strong bullish momentum but it ends last week with a small indecisive Doji candlestick formation.
Last week's high and low of 17436 and 17254 respectively will be important reference points where if Nifty starts to trade above 17436 levels then we can see levels of 17600/17750 in coming days while a move below 17254 can lead to some short term weakness where 17050/16900 will be the next support levels.
If we talk about bank nifty then it is still underperforming as investors have fintech companies as an alternative investment option to traditional banking business but it may catch up momentum soon.
It is consolidating above its 20-DMA of 36088 where 37000-37250 is an immediate resistance zone; above this, we can expect a move towards the 37700-38000 zone. On the downside, 36000 is strong support; below this, we can expect any weakness towards 35500/35000 levels. Open demat account with us and start your trading journey at an affordable brokerage rate.
India is currently the world's second-largest telecommunications market, with 1.16 billion subscribers, and has had rapid development over the previous decade. India's mobile economy is quickly developing and will contribute significantly to the country's Gross Domestic Product In 2019.
We can ascribe this growth to the government of India's liberal and reformist policies, as well as strong consumer demand, which has aided in the fast expansion of the Indian telecom sector. India overtook the United States as the second-largest market for app downloads.
Reliance Jio's entrance into the telecom market in 2016 sparked a price war among competitors vying for subscribers. The telecoms, on the other hand, have recently hiked rates.
As of September 2020
OperatorsSubscribers in MillionsMarket Share (Sep’20)JIO404.1235.3%Airtel326.6128.5%Vodafone-Idea295.4925.8%BSNL118.8910.4%Total1145.11100.0%
while as on 31 May 2021
The country's biggest telecom players include Jio, Vodafone Idea (Vi), Bharti Airtel, and the state-run BSNL. According to data from the Telecom Regulatory Authority of India, Jio has the greatest market share among wireless customers, with 36.15 per cent, followed by Airtel with 29.83 per cent and Vi with 23.83 per cent as of May 31st.
BSNL had a market share of 9.89 per cent, whereas MTNL had a market share of 0.028 per cent. 0.001% of the market was taken up by Reliance Communication.
The companies financial and operational profiles are resilient enough to respond to the industry's next phase of consolidation.
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