Why CDSL shares have surged 35 percent in 6 days, CAMS 20 percent in 3 days

15 Jul , 2021 By : Kanchan Joshi

Shares of Central Depository Services (India) Limited (CDSL) have been surging in the past few days with the stock gaining around 35% in the last six sessions. Meanwhile, Computer Age Management Services (CAMS) shares have gained around 20% in the last three days. On Thursday, CDSL shares jumped more than 6% on the National Stock Exchange (NSE) while CAMS jumped over 1%.

CDSL is one of the two depositories in India and the only listed one in the country, the other being National Securities Depository Limited (NSDL). It generates income from several charges like transaction, IPO/corporate activity, online data charges. Its shares have rallied around 250% in the past year.

CAMS is a technology-driven financial infrastructure and services provider to mutual funds (AMCs) and other financial institutions. It is a transfer agent of MFs with an aggregate market share of approximately 70?sed on average assets under management (AAUM) managed by its clients.

The capital markets witnessed an unprecedented monthly addition of 2.4 million new retail investors over the past four months. Among the primary reasons behind these stocks' rally could be given to the rise in the demat accounts that have surged during the pandemic as new investors turn up and these companies are the dominant players in their space.

''We expect the larger organised players to see sustained market share gains. Increased retail activity and a market clocking all-time highs have supported higher volumes, thereby boosting broking revenues,'' HDFC Securities said.

Domestic brokerage and research firm HDFC Securities expects strong tailwinds for AMCs as active equity witnessed net inflows of Rs222 billion during Q1FY22, aided by healthy SIP flows. ''Higher equity prices and lower fixed income yields are expected to boost treasury gains,'' it said.

CDSL recently become the first depository to open more than four crore active Demat accounts. ''With the action happening in the IPO market, there may be new depositary accounts opening only for these IPOs as July and August look to be the busiest month for IPOs. That, technically means that there may be lot of business for CDSL,'' said Avinash Gorakshkar, Head of Research at Profitmart Securities.

''So, this may be one of the reasons why markets looking at large topline and profit jump coming in for CDSL as there business is dependent on these accounts that they open,'' he added.