Sebi's Surprising Move: Asset Management Companies and Brokers Rally 7% After Fee Structure Overhaul

The stock market saw a significant surge in shares of asset management companies and brokers on Thursday, following Sebi's overhaul of the mutual fund fee structure and cap on broking fee. The changes were less severe than initially proposed, leading to a relief rally in the market.

Key Changes to Mutual Fund Fees

The capital market regulator cut the total expense ratio, now called base expense ratio (BER), by 10 basis points, which is less than the proposed 15 basis points. Additionally, the 5-basis-point exit load allowance was removed. This move is expected to have a moderate impact on the profitability of asset management companies.

Impact on Asset Management Companies

Among mutual funds, HDFC Asset Management Company surged 7.2%, Canara Robeco AMC gained 6.6%, and Nippon Life India Asset Management gained 2.7%. Most AMC stocks had fallen between 4% and 15% after the initial proposals were introduced, but have now seen a relief rally.

• HDFC AMC: up 7.2%
• Canara Robeco AMC: up 6.6%
• Nippon Life India Asset Management: up 2.7%

Brokerages Also See a Surge

Brokerages such as Motilal Oswal Financial Services, Anand Rathi Share and Stock Brokers, and IIFL Capital Services saw gains after Sebi reduced the cap on brokerage fees for mutual funds. The cap was reduced to 6 basis points from 8.59 for cash trades and to 2 basis points from 3.89 for derivatives transactions.

• Motilal Oswal Financial Services: up 3.7%
• Anand Rathi Share and Stock Brokers: up 1.7%
• IIFL Capital Services: up 0.4%

Remember, this is a market perspective, not a prediction. It's essential to do your own research and consider your own financial situation before making any investment decisions.