Steel City Securities Ltd Management Discussions

ECONOMY OVERVIEW:

The global economy is at a critical juncture. Signs of stabilization were emerging through much of 2024, after a prolonged and challenging period in the preceding years, global growth was stable yet underwhelming through 2024 and was projected to remain so in the January 2025 World Economic Outlook (WEO) Update. However, the landscape has changed as governments around the world reorder policy priorities. A series of new tariff measures by the United States and countermeasures by its trading partners have been announced and implemented, ending up in near-universal US tariffs on April 2 and bringing effective tariff rates to levels not seen in a century. The swift escalation of trade tensions and extremely high levels of policy uncertainty are expected to have a significant impact on global economic activity.

Under the reference forecast that incorporates information as of April 4, global growth is projected to drop to 2.8 percent in 2025 and 3 percent in 2026—down from 3.3 percent for both years in the January 2025 WEO Update, corresponding to a cumulative downgrade of 0.8 percentage point, and much below the historical (2000–19) average of 3.7 percent.

Growth in the United States is expected to slow to 1.8 percent, a pace that is 0.9 percentage point lower relative to the projection in the January 2025 WEO report, on account of greater policy uncertainty, trade tensions, and softer demand momentum,

Growth in emerging and developing Asia is expected to decline further to 4.5 percent in 2025 and 4.6 percent in 2026. Emerging and developing Asia, particularly Association of Southeast Asian Nations (ASEAN) countries, has been among the most affected by the April tariffs. For China, 2025 GDP growth is revised downward to 4.0 percent from 4.6 percent in the January 2025 WEO Update. Growth in 2026 is also revised downward to 4.0 percent from 4.5 percent in the January 2025 WEO Update on the back of prolonged trade policy uncertainty and the tariffs now in place. (Source: IMF)

INDIAN ECONOMY:

India showcased resilience and is likely to remain the worlds fastest-growing major economy on the back of growing demand, moderate inflation, stable interest rates and robust foreign exchange reserves. For India, the growth outlook is relatively more stable at 6.2 percent in 2025 and 6.3 percent in 2026 supported by private consumption, particularly in rural areas. (Source: IMF)

INDIAN EQUITY MARKET:

Since the Covid-19 pandemic, the capital market ecosystem has gained momentum, driven by simplified account-opening processes, mostly bullish market trends, and reduced trading costs. In the financial year 2024-25(FY25) nearly a record-breaking 4.1 crore Demat accounts were added, bringing the total number of such accounts to 19.24 Crores, the highest annual increase ever in absolute numbers. The monthly average of 34.2 lakhs new accounts also set a new record for a financial year. However, due to the larger starting base, the growth rate in percentage terms dipped from 32.2 per cent in FY24 to 27.1 per cent in FY25.

Indian equity markets navigated a rollercoaster year in FY25. Despite an overall positive performance, the year saw phases of strong rallies that took indices to record highs by September 2024 followed by sharp corrections and ended with a sigh of relief by the fag end of the financial year making it a challenging landscape for investors. The initial part of the fiscal year was bullish, but concerns over global economic conditions, high valuations, and sectoral rotations contributed to volatility in the latter half.

Despite volatility, Sensex gained 5.1% and Nifty rose 5.3% in FY25, the indices hit their lifetime highs of 85,978.25 and 26,277.35, respectively in September. Nifty also made an infamous record of longest monthly falls for five straight months since its launch in 1996. March 25s 6% surge offset five consecutive monthly declines. The period after October was testing and eroded most of the gains made till September. Shri Narendra Modi secured a third term, while Donald Trumps return to power introduced fresh tariff policies that stirred global uncertainty and did not allow the markets to settle.

Sectoral, the Nifty Defence index topped the charts, surging 37% during FY25, making it the most attractive space for investors during the year. Nifty Financial Services, Nifty Pharma, Nifty Metal and Nifty Consumer Durables also delivered double-digit returns between 19% and 11%. Among the laggards were Nifty Media, Nifty Energy, Nifty PSU Bank and Nifty Oil & Gas which were down between 16% and 8%.

Foreign Institutional Investors (FII) were net sellers during the fiscal year FY25. FIIs having a net outflow of $15.57 billion in Indian stock markets, they turned net buyers in the month of March25. Domestic Institutional Investors (DIIs) Provided consistent support throughout the year, helping stabilize markets during periods of volatility.

Where the Nifty Stood Globally

The Nifty delivered positive returns for its investors in fiscal 2025, outperforming certain Asian indices such as the Nikkei 225 and the Korea Composite Stock Price Index. Hang Seng remained at the top of the leader board, delivering a staggering 41.61% return.

Broader Market vs Benchmarks in FY24

The midcap index outperformed the Nifty 50s 5.3% gains, posting 7.48% growth.

FUTURE OUTLOOK

As FY25 ends with modest but positive returns, FY26 promises to be another eventful year for Indian markets. With robust economic fundamentals but lingering global uncertainties, investors should prepare for volatility while staying focused on long-term opportunities. Experts say the global tariff war and uncertainty related to it could also be a key trigger for global and Indian markets this year.

In the budget FY26, the government aim to enhance middle-class spending power through targeted personal income tax reliefs, while also increase allocations for rural schemes and social sector programs can prove to be a major market mover. The underlying goal: spark a broad-based consumption revival from both urban and grassroots levels. These reforms will be closely watched in FY26 for their actual impact on consumption-driven sectors like FMCG, autos, and retail.

To sum up the outlook, cautious optimism is a fair stance. Many ingredients for a positive FY26 are falling into place – a stable government in its stride, potential tailwinds from lower interest rates, positive FIIs inflows, consumption revival and an earnings revival.

OUTLOOK FOR STOCK BROKING INDUSTRY

The stock broking industry is poised for significant growth in FY26. The Indian stock broking market is estimated to reach $4.25 billion in 2025 and is projected to grow to $6.21 billion by 2030, with a CAGR of 7.89% during 2025-2030. Indias strong macroeconomic fundamentals and potential revival in corporate earnings are expected to drive market optimism. Domestic retail investors are increasingly influential in the Indian equity market, contributing significantly through Systematic Investment Plans (SIPs).

Key factors driving growth in FY26 for stock broking industry are Increasing Trading Activity, Digital Transformation, Technological Advancements and Increased Financial Literacy. Factors that Could Influence Growth are regulatory Changes, Market Volatility, Geopolitical Uncertainties, Global Economic Trends and Government Policies

Few of the initiatives which will be stepping stones for the growth of our Company in coming years:

• Digital continues to be a game changer: Digitization has been a key driver for the financial services industry. Advances in technology, increasing smartphone penetration, and increasing digitization at systemic level are expected to lead more retail investors to adopt and consume financial services through Online. We strongly believe significant growth of business transactions through our Mobile app ("Steel City Smart Plus") will grow day by day.

• Completely digital on-boarding process (Quick KYC & Re KYC) whereby clients can open SCSL Demat & Trading accounts instantly will also help to onboard new clients quickly and hassle free.

• Plans to set up over 50,000+ E-governance centers by FY26

• We have plans to broaden and deepen geographical presence and expand distribution networks in the Northern and Western market of India

• Focus on augmenting product line under the e-governance segment with emphasis on NPS promotion. Leveraging its TIN centers for distribution of third party products i.e. Prosure(Doctor teleconsultation), fixed deposits, personal, educational & home Loans, mutual funds, insurance schemes and other products.