Dhiraj Relli On Volatility, Retail Investing, SIP Growth & The Future Of Broking In India

In this episode of Simple Hai!, veteran finance journalist Vivek Law welcomed Dhiraj Relli, Managing Director and Chief Executive Officer of HDFC Securities. The conversation explored the evolution of Indian investor behaviour, the rise of retail participation in markets, the risks of speculation, the role of technology and fintech disruption, and the future of the broking industry. Relli also spoke about leadership, mindfulness, and personal discipline in navigating a high-pressure career.

Changing Investor Behaviour

Law began by asking Relli about the constant volatility in the stock markets, particularly during the recent global turmoil.

Relli averred that volatility had always been an inherent part of markets. What had changed over the past 25 years was investor perception. Earlier, volatility used to frighten retail participants. But over time, especially after crises like the Harshad Mehta scam, the 2008 financial meltdown, and the Covid-19 pandemic, investors had begun to view volatility as an opportunity rather than a threat.

He emphasised that the most significant shift had occurred over the last 5–6 years, when retail investors began to understand the importance of long-term participation. Many no longer exit the market in panic. Instead, they have learned to stay invested and even use dips to their advantage.

Relli recalled how he had personally marketed Systematic Investment Plans (SIPs) as early as 1999 during the tech boom. Very few investors had stayed the course for 25 years, but SIPs had fundamentally changed the way people approach wealth creation. Today, SIP flows of over Rs. 27,000 crore every month are powering the markets, often offsetting foreign institutional selling.

Mutual Funds, SIPs and Retail Discipline

Relli explained that in the last five years, the percentage of investors who remained invested in mutual funds had jumped from 5% to 30%. While average holding periods were still short, confidence in the stock market ecosystem had improved significantly. Relli also reflected on tax-saving products like ELSS, which once encouraged investors to commit for at least three years. Even after tax benefits were reduced, many stayed invested, signalling that people now viewed equity as a legitimate long-term asset class.

Rise of Trading, Derivatives and Speculation

Law then asked about the surge in new demat accounts during Covid, when SEBI reported that 9 out of 10 retail investors lost money, especially in derivatives. Relli admitted that this was true and called it a reflection of India’s age-old gambling instinct. From lotteries to chit funds, speculative tendencies had always existed. The pandemic only magnified it, as young investors with smartphones and pocket money believed they could outsmart the markets. Many initially made small profits, but most eventually incurred substantial losses.

He was critical of how the ecosystem, brokers, fintechs, and even regulators had allowed easy access without adequate investor education. He emphasised that HDFC Securities had consciously limited its exposure to derivatives, which accounted for only 10–12% of its revenue, compared to 90% for the industry.

“Derivatives are for hedging, not for speculation. Unfortunately, many investors treated it like a casino,” he shared.

Role of Fintech Disruption

Law questioned Relli on whether fintech startups that removed brokerage fees and built sleek platforms had disrupted legacy firms.

Relli acknowledged their success, saying fintechs had brought democratisation and accessibility, leveraging technology to reach investors in small towns and rural areas who were historically underserved. They had simplified investing and made transactions seamless. However, he warned that lower transaction costs also encouraged reckless trading. The disruption, while positive in terms of technology and reach, had a downside in feeding speculative behaviour.

He also explained that disruption was easier in transaction-oriented businesses, but difficult in fund-based or lending activities that required trust and capital. For HDFC Securities, technology adoption had been embraced without abandoning prudence. Today, 92% of its customers transact digitally, compared to just 30% a decade earlier.

Investor Segments and Behavioural Patterns

Law asked how beginners, especially from smaller towns, should start investing.

Relli categorised investors into two broad types:

1. Corpus allocators – those who had inherited or accumulated funds and needed structured asset allocation.

2. Wealth accumulators – the working population who saved a portion of their monthly income.

For the latter, he recommended SIPs as the simplest and most disciplined route. Even small shop owners, traders, and professionals could use SIPs to build long-term wealth. For absolute beginners, he suggested starting with balanced advantage funds or asset allocation funds that included equity, debt, and gold. For younger investors willing to learn, he advised creating baskets of fundamentally strong companies from leading industries like technology or banking. “Discipline and consistency are the most important tools for wealth creation. If you follow these two mantras, you will always do well,” he clarified.

Traders vs. Investors

On the question of who made more money, Relli was clear: investors, not traders. He stated that trading profits were extremely difficult to sustain, with only a small minority succeeding. Even on HDFC Securities’ platform, only about 3 out of 10 traders made money, a higher ratio than the industry, but still very low. He urged investors to avoid speculation unless they were hedging existing portfolios.

The Future of Broking

When Law brought up the conversation about the future of investing, Relli believed the broking industry would evolve into a holistic financial services ecosystem rather than remain limited to stock trading. Investors needed insurance, debt products, short-term parking options, and mutual funds alongside equities.

He highlighted the need for personalised advice tailored to each investor’s risk profile. While technology had eliminated information gaps between institutional and retail investors, credible research and advisory remained the true differentiator.

Relli explained that HDFC Securities offers research across institutional and retail segments, covering both technical and fundamental analysis, to help investors make informed decisions in equities, mutual funds, and IPOs.

Market Outlook and Earnings

When Law asked about corporate earnings and geopolitical uncertainties, including Donald Trump’s shifting policies, Relli reiterated that markets were ultimately slaves of earnings and valuations. Short-term noise did not matter unless it directly impacted earnings. He maintained that Nifty earnings, though muted in FY25, would recover in subsequent quarters, with consumption, particularly in rural areas, driving growth.

He expected double-digit earnings growth in FY26, supported by political stability, favourable monsoons, and strong domestic-facing businesses.

Leadership, Mindfulness, and Personal Discipline

Towards the end, Law asked how Relli managed stress in such a high-pressure environment. Relli shared how he managed stress through mindfulness, fitness, yoga, and deep breathing. He believed in celebrating small wins, ignoring negativity, and practising involved leadership by working closely with his 5,000–6,000 employees. He concluded that the best investment one can make is in personal health, learning, and growth.

The episode offered a comprehensive look at India’s investment landscape, with Relli tracing the evolution of retail behaviour, the impact of technology, and the importance of discipline in wealth creation. He emphasised that markets are shaped by earnings and valuations rather than speculation, while also underlining the importance of leadership and mindfulness in balancing financial success with personal well-being.

This conversation underscored the core philosophy of Simple Hai! that while finance may seem complex, the fundamentals of investing and living well are, in fact, simple.