How fintech startup Stratzy is helping retail investors trade in equities

Three out of every four Indian demat accounts today are inactive, according to a report by stock market tracking firm MarketMojo. In fact, some leading online brokers have nearly 70 percent inactive investors, the report said.

Three main reasons behind this, according to the report, are:

• Investors have suffered huge losses trading in equity and don’t want that to happen again, so they’ve given up on the asset class as a whole.
• Demat account holders are not happy with their brokerage.
• They don’t have time to look at their portfolios, track stock movement, and predict future signals.

All this means that even though there is an appetite for equity trading, new-to-market investors need a system that can not only tell them where to invest and prevent losses, but also automate trading in the background and rebalance their portfolios without having to constantly sign in to their trading accounts or sit in front of a screen, monitoring stock movements.

Mohit Bhandari and Gaurav Sangle, two recent graduates of BITS Pilani, realised the need for handholding new investors as they play the stock markets during their college’s finance club meetings.

“Being the vice-president of the Wall Street club, we used to teach juniors about stock investing and quantitative trading. That was when I realised that a lot of people don’t really have the time and resources to actively invest, even if they’re interested in it,” Mohit tells YourStory.

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“I realised that if we can save investors’ time and effort, we can truly provide some value to them,” he adds.

Mohit and Gaurav founded Stratzy — a platform that uses research and insights to recommend trading strategies to online investors. It positions itself as a no-broker platform where users don’t have to pay hefty management fees or cuts from their profits to an investment manager.

The startup currently has 10,000+ users on its platform, with 3,000 monthly active users.

How it works?

Stratzy offers a variety of trading strategies, and each of these strategies has a melange of different stocks to ensure a diversified portfolio.

The strategies are broken down into two main parts:

• Ideas: This product recommends stocks that users should buy and give them a simple reason why they should.

Mohit explains: “Let’s go back to 2020 when every doctor was prescribing COVID-19 patients paracetamol. There’s one company in India that makes the chemical required to make paracetamol — IOL Chemicals. And its share price rose more than 2X in the weeks since COVID-19 hit India.”

Analysts on the platform track not only macroeconomic market developments to make decisions about lucrative investment opportunities, but also look at developing news.

• Strategies: Under this umbrella, Stratzy recommends cyclical battle-tested trading options that “pick flavour of the season stocks”. For example, Vadilal is a stock that particularly clocks in higher sales during summer and the stock trends higher in those months.

“Under this, we pick out stocks and create a diversified stock portfolio to generate maximum returns while minimising risk,” Gaurav explains.

The startup says it has integrated with a number of online broking platforms, including 5paisa, Fyers, and Kotak Securities, where people can execute Stratzy’s trading game plans.

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The business

The startup’s revenue depends on the strategies it helps people execute on broking platforms, and it mostly gets anywhere between 50 percent to 90 percent in commission. The app also has a premium version where it sells ideas for emerging HNIs and people who have a corpus of more than Rs 2 lakh.

Stratzy’s main competitors include Smallcase, RAIN Technologies, Algobulls, PickRight, and KyaTrade, among others. It has raised $800,000 from investors including Leo Capital, Titan Capital, and First Cheque.

Since its inception, the startup has been growing 20 percent to 30 percent month-over-month, it said.

The Indian brokerage market has been growing at a CAGR of 7.69 percent since 2016 when it was valued at Rs 13,500 crore. The industry also saw steep growth during the COVID-19 crisis when retail investors flooded the market and took to online broking platforms to invest in financial instruments.

With more and more retail investors joining the markets and looking for products that can ease pain points associated with equity trading, up and coming companies like Stratzy have a large addressable market.