Shares of Nuvama Wealth Management declined over 5% on Wednesday, October 29, following SEBI’s release of a new consultation paper on mutual fund (MF) regulations, which includes a significant reduction in brokerage and transaction cost limits. The stock opened lower and traded at Rs 7,022, down 5.65% from its previous close of Rs 7,442.50 on the NSE.
Regulatory Development
The Securities and Exchange Board of India (SEBI) has proposed multiple revisions to simplify mutual fund regulations and lower costs for investors. Among the key measures, the market regulator has suggested reducing the brokerage and transaction cost cap from 12 bps to 2 bps for cash transactions and from 5 bps to 1 bps for derivatives transactions.
This revision, aimed at improving transparency and reducing the overall expense ratio for mutual funds, could impact revenue streams for wealth management and investment execution firms such as Nuvama Wealth and DAM Capital.
Impact on Nuvama Wealth
According to brokerage estimates, Nuvama Wealth derives around 10–15% of its revenues from the investment execution (IE) business as of FY25. The proposed cut in brokerage limits could therefore negatively affect earnings from this segment.
In comparison, DAM Capital, which generates over 30% of revenues from IE, may face an even sharper revenue impact. Analysts expect the proposal, if implemented, to reshape profitability models across the brokerage and wealth management space.
Stock Performance and Market Metrics
As of 9:26 AM on Wednesday, Nuvama Wealth shares were trading at Rs 7,022, marking a 5.65% intraday decline. The stock’s day range stood between Rs 6,760.50 and Rs 7,170, with an average volume of 125,000 shares.
The company’s market capitalization was recorded at Rs 25,137 crore, with a price-to-earnings ratio of 25.09 and a dividend yield of 1.89%. Over the past year, Nuvama Wealth has traded between Rs 4,735.45 and Rs 8,508.50 on the NSE.
Conclusion
The SEBI consultation paper, while beneficial for investors through lower total expense ratios (TER), could lead to margin compression for distributors, brokers, and wealth management firms. Market participants await further clarity on implementation timelines and potential adjustments by asset management companies.
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