GCM Securities Ltd Management Discussions

ANNUAL OVERVIEW & OUTLOOK

India will have to navigate geopolitical headwinds, tame domestic inflation and nudge the private sector to further loosen their purse strings as the worlds fastest-growing major economy seeks more purple patches in 2025, leaving behind September quarter growth blues. Economists at the Reserve Bank of India (RBI) say that high-frequency indicators for the third quarter of 2024-25 indicate the economy is recovering, driven by strong festival activity and a sustained upswing in rural demand. In what has been described as a "temporary blip" by Union Finance Minister Nirmala Sitharaman, the countrys economic growth slid to a seven-quarter low of 5.4 per cent in the July-September period after clipping a healthy rate of 7-8 per cent. For 2024-25, the real GDP growth is projected at 6.6 per cent and 6.9 per cent for the first quarter of 2025-26. In the next fiscal, the June quarter expansion is pegged at 7.3 per cent, as per the Reserve Bank of India (RBI). In the year ahead, continued progress in real wage growth should broadly support consumers, but consumption is likely to contribute less to growth going forward as the tailwind of pent-up savings and debt has largely faded. Interest rate-sensitive sectors continued to face challenges but began to stabilize as interest rates peaked. The scope of its acceleration will depend on how much long-end yields move lower next year. Residential investment contracted in 2Q and 3Q as homebuilder sentiment struggled under elevated long-term interest rates, which may persist even as the Fed lowers the federal funds rate. The manufacturing sector, grappling with slow global demand, has also experienced weak job growth and new order activity. However, potential rate cuts could stimulate activity in these sectors, thereby broadening support for GDP growth. Despite high borrowing costs, business investment has been buoyed by strong corporate balance sheets and fiscal support from legislation such as the CHIPS Act and the Inflation Reduction Act. Tech companies, in particular, have accelerated investment amidst an AI-arms race, and lower rates could facilitate similar investments across other sectors. The re-election of Donald Trump and the Republican sweep of Congress could lead to significant policy changes, casting a fog on the economic outlook. While the specifics and timing of potential policy shifts remain unclear, we anticipate tax cuts, higher tariffs, reduced immigration and deregulation of various sectors. An area of potential economic concern is the incoming Trump administrations stance on tariffs. President-elect Trump has proposed a 10% tariff on all imports and a 60% tariff on all Chinese goods, which could be interpreted as a bargaining tool in trade negotiations. If these tariffs were enacted as stated, they could lead to higher inflation and reduce overall demand, as well as higher interest rates and a stronger U.S. dollar.

INDUSTRY OVERVIEW

Indias economic landscape in FY25 is undergoing a profound transformation, driven by steady growth and investor participation. According to the Economic Survey 2024-25, the countrys financial markets have demonstrated resilience amidst global uncertainties, with Indias stock markets remaining among the best-performing globally. But, as we look ahead, the real question is: how will Indias capital markets evolve to not only sustain this growth but also drive wealth creation for millions. Despite current volatility, Indias financial ecosystem has seen remarkable progress, delivering sustained growth as compared to its global counterparts. By the end of December 2024, India had outpaced its peers in emerging markets. The Nifty 50 index, despite global uncertainties, delivered positive returns, and the BSE market capitalization reached a staggering 445.2 lakh crore. These figures are reflective of the countrys ability to attract capital and foster investor confidence. What stands out in this growth story is the sharp increase in investor participation. The pandemic served as a catalyst for individuals and households to enter the market, and the momentum has only continued to grow. Demat accounts have surged by 33% to 18.5 crore as of December 2024, while the number of unique investors in mutual funds has reached 5.6 crore.

OPPORTUNITIES & THREATS Opportunities

Indias capital markets have always mirrored the countrys economic pulse fast-moving, adaptive, and full of opportunity. As someone preparing to step into the world of investment banking, with focused training in Capital Markets, Settlements, and Reconciliation, Ive spent the past year not only learning the foundations but also observing the forces that are reshaping our financial landscape.

From regulatory reforms to technological breakthroughs, Indias capital markets in 2025 are entering a transformative era. This blog is my humble attempt to capture the top trends influencing this space from the eyes of a young finance enthusiast looking to make his mark. The Indian market is witnessing an explosion in retail participation, thanks to easy access through platforms like Zerodha, Upstox, and Groww. With over 15 crore demat accounts and rising, retail investors now account for nearly 45% of daily trades on NSE - a figure unheard of a decade ago. In 2025, India is not just adapting to global trends were setting new benchmarks. The combination of a young, tech-savvy population, proactive regulation, and strong macroeconomic fundamentals is making our capital markets more resilient, inclusive, and innovative. As a young learner preparing to step into this space, Im inspired by the pace of change and motivated to grow with it. My goal is not just to find a place in this system but to contribute meaningfully whether thats through accurate settlements, efficient reconciliation, or simply being a finance professional whos ready for whats next.

Threats

In early 2025, the strongest headwind facing the market is the US macros. The Trump trade has pushed the dollar index up to above 108 in early January. Perhaps, more importantly, the US bond yields have been steadily climbing up and are hovering above 4.5 per cent in early January. The yield differential between US and Indian sovereign bonds has narrowed to 2.7 percent from a high of above 5 percent in 2022. Most developed and emerging market currencies have been steadily depreciating against the dollar in response to the bull run in the US markets, and the pace of currency depreciation has gathered momentum after Trumps victory in the US presidential elections. Depreciating currencies can trigger more capital outflows from emerging markets like India, further impacting market sentiments. The high US bond yields have the potential to trigger more FII selling in India. The important question is: Why should FIIs invest in an expensive Indian market when the 10-year US bond is yielding a risk-free return of 4.5 percent? The Indian market continues to be one of the most expensive markets in the world. Nifty at 24000 is trading around 20 times estimated FY26 earnings. This is higher than the long-term (10 to 12 year) average PE of about 18 times. Since the US economy continues to be surprisingly resilient and many other markets developed and emerging are relatively cheaper compared to India, FIIs are likely to continue selling in India. An important feature of FII activity in 2024 had been their dualistic behaviour. They sold heavily in the cash market through exchanges; but were consistent buyers in the ‘primary market and others category. In Calendar Year 2024, FIIs sold equity for Rs 121210 crores through the exchanges. They have been selling in the highly-valued secondary market and buying in the fairly-valued primary market. This distinction is important since the popular perception is that FIIs are leaving India.

RISKS AND CONCERNS

GCM Securities Limited (GCM) has exposures in stock market. GCM are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, high volatility risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

MARKET RISK

The Company has quoted investments which are exposed to fluctuations in stock prices. GCM continuously monitors market exposure in equity and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility.

LIQUIDITY AND INTEREST RATE RISK

The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility. The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2024-25, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis. The Company has complied with all requirements of regulatory authorities during the last three years.

Mumbai, August 28, 2025	By order of the Board
	For GCM SECURITIES LIMITED
	Sd/-
Registered Office :	I. C. Baid
805, Raheja Center, 214, Free Press Journal	DIN: 00235263
Marg, Nariman Point, Mumbai-400021	Chairman