India’s financial sector is entering a phase where a new income tax framework replaces the 1961 law while market activity remains elevated, bringing together higher compliance requirements and strong trading volumes in the same operating window. Meanwhile, rising derivatives activity and steady retail participation are becoming basis of brokerage preferences in the capital markets space.
According to a latest note by Jeffeires strong growth in options trading, improving monetisation metrics at exchanges and continued traction in platform-led businesses, even as initial public offerings and margin funding activity remain subdued.
Against this backdrop, Jefferies has narrowed its focus to a few names where earnings visibility and operating momentum remain intact. Groww, KFin Technologies and ICICI Prudential Asset Management Company emerge as its key buy-rated ideas within the space.
Jefferies on Groww: ‘Buy’
Jefferies retains a ‘Buy’ rating on Groww, supported by strong traction in client additions and rising derivatives participation. The brokerage notes that Billionbrains Garage Ventures continues to gain share in active clients on the National Stock Exchange, reinforcing its position in a competitive brokerage space.
The report highlights that engagement trends remain steady across metrics such as app downloads and active participation, which supports sustained activity in options trading, a key revenue driver.
Jefferies builds in around 60% year-on-year revenue growth for Groww in 4QFY26, driven by higher derivatives volumes. While the margin trading funding book has declined over the past two months, the brokerage does not see this offsetting the gains from derivatives activity.
“Rise in derivatives contracts should benefit brokers,” Jefferies says, adding that “option contracts traded were up 46% y-y/20% QoQ.”
“Groww continued to add NSE active clients in Feb 2026,” the report says.
Jefferies on KFin Technologies: ‘Buy’
Jefferies assigns a ‘Buy’ rating to KFIN Technologies, placing it among preferred names within capital market infrastructure. The brokerage favours companies that are linked to long-term growth in financial savings and mutual fund participation, which provide steadier earnings visibility.
The report positions KFin in a segment that is less volatile compared to areas dependent on trading cycles, given its role as a registrar and transfer agent.
Jefferies notes that segments such as asset managers, registrars and depositories may face pressure in a weak equity market, but still identifies KFin among preferred picks within this space.
“AMCs, RTAs and Depositories are most at risk from a weak equity market,” Jefferies says, while adding that “within this space, our preference is for ICICI AMC and KFIN.”
Jefferies on ICICI Prudential Asset Management Company: ‘Buy’
Jefferies maintains a ‘Buy’ rating on ICICI Prudential Asset Management Company, even as recent data shows moderation in equity flow market share. Net equity flows declined 8% month on month to Rs32,800 crore in February, with market share falling to 15% from 25% in January.
Despite this, the brokerage continues to back the stock, citing steady systematic investment plan inflows and continued participation in equity schemes. SIP inflows stood at Rs29,800 crore, up 15% year on year, indicating resilience in retail participation.
The report also highlights that flows into mid-cap and small-cap schemes remained firm, supporting overall asset growth.
“SIP flows were down 4% MoM to Rs298bn (+15% YoY) on account of lower days,” Jefferies says.
“Net flows were up MoM for primarily mid & small cap schemes,” the report adds.
Conclusion
The rollout of the new tax framework adds a cost layer for compliance-heavy financial firms, particularly in asset management, even as market activity remains strong. At the same time, Jefferies’ data points to sustained strength in derivatives volumes and client activity, supporting revenue momentum for select players.
Groww, KFin Technologies and ICICI Prudential Asset Management Company stand out on the back of volume trends, steady inflows and positioning within core segments of the financial ecosystem, even as broader sector dynamics remain mixed.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to ‘Buy’ or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.