Mobile payment apps, digital banks, online stock monitoring systems, and trading apps are just the crust of the vast fintech industry, which is booming in India. According to Inc42’s latest Funding Report, fintech, with $631.29 Mn invested across 70 deals, was the top sector in terms of the number of deals in H1 2018.
But despite the increasing proliferation of fintech solutions, trading is one area that hasn’t been completely disrupted or automated. Human involvement is necessary to make any trading decision, considering the volatility of stock markets around the world. Algorithmic trading seeks to change this. It is a method of executing a large order using automated pre-programmed trading instructions, accounting for variables such as time, price, and volume to send small slices of the order out to the market over time.
Algorithmic trading came to India only in 2008 when the Securities And Exchange Board of India (Sebi) allowed direct selling and buying of stocks and shares without the need for a broker. Though algorithmic trading is efficient and eliminates human errors and delays, one needs to learn coding to be able to do it. Kuants is changing the game altogether with its coding-free algorithmic trading platform.
Kuants, accelerated by India Accelerator, is a web-based platform that can be used by anyone and doesn’t require the person to have knowledge of computer programming. “Currently, almost 42% of the trade in the Indian market is done through automated algorithmic trading systems. But most of this trading activity is done by high net worth individuals (HNIs) and AIMs. We feel that the retail guys haven’t been given enough horsepower in it. So, we are trying to do just that,” says Ayush Gangwar, CEO of Kuants.
According to a NIFM report, the volume of trade that utilises algorithmic trading has witnessed a jump from 26.32% to 42% in four years. In March this year, 44.8% of the cash market volume and 48.2% of the equity derivatives market was driven by algo-trading, showed NSE data. On the BSE, 37.22% of trade in March 2018 was driven by algo-trading.
Kuants: How Two IIT Graduates Ended Up Making An Online Stock Simulator
The journey of Kuants started when Gangwar and his friend, Mohit Bansal (CTO, Kuants), started working on an online system to test trading strategies while studying at the prestigious IIT, Kharagpur. At the end of the project, the team ended up creating an online stock simulator and trading system.
In October 2017, after passing out of IIT, Ayush and Mohit, instead of taking up high-flying jobs, decided to take the plunge and launch their startup officially. About eight months later, their team has launched the algorithmic trading platform and is focussing on marketing it.
The Kuants simulator is already live on the platform and has a free one-month trial period. With just a simple login, anyone can develop trading strategies on this platform. It comes with Portfolio Optimization and Stress Testing Modules to help investors arrive at the best possible investment alternatives.
Kuants solves various problems faced by traders such as buying data from a data vendor, buying charting software, learning a new programming language, and connecting the system to the brokers’ terminal. The software incorporates the data, made by a programme that reads strategies in English and connects it internally with their broker’s terminal so that users wanting to deploy their own algorithmic trading strategies don’t have to go through the hassle of learning coding.
Gangwar further iterates, “On this platform, anyone can develop algorithmic trading strategies without writing a single line of code. In fact, strategies based on machine learning can also be implemented without any coding through our platform.”
The team emphasises that their methods are on par with the industry standards and can test the strategies developed by traders effectively.
‘Hit And Trial Is The Key To Our Success’
Kuants may have taken a relatively short time to go to market, but the going hasn’t been all that smooth. Gangwar says that trying and testing various methods and strategies to arrive at the right one was a big challenge and it also took them considerable time to arrive at the final solution. Another challenge that Kuants is facing is creating awareness regarding algo-trading among Indian investors.
Traders who know of algorithmic trading shy away from it because it traditionally required complicated codes, and those who aren’t aware of it are skeptical of relying entirely on technology for making investment decisions.
Though Kuants has overcome the first challenge, they are addressing the second one by creating tutorials, providing free access to resources on algo-trading on their website, and also compiling a set of lessons on investment strategies, and employing algo-trading.
By spreading awareness and knowledge, Kuants is not only addressing its own challenges but creating industry-wide awareness that will pay off in the long run for everyone.
Kuants: Keeping Their Sights Set On The Ground And Looking To Market Well
The Indian investment market is currently witnessing its most ripe period. The number of listed companies on the NSE and the BSE increased from 6,445 in FY10 to 7,501 in March 2018.
Meanwhile, with the two exchanges launching dedicated platforms to make listing attractive for startups, an increasing number of startups such as SaleBhai, IndiaMART, etc are preparing to launch IPOs.
Ninjatrader and Amibroker are two of the leading players in the algorithmic trading segment. Both offers automate trading and enable back-testing of strategies. Though Ninjatrader seems to be a direct competitor of Kuants with similar offerings such as tutorials about trading and automated software, Kuants claims to has an edge because of the less time it takes to process the information and the ease of use of its platform.
Investors mainly use algo-trading in Indian markets where the daily turn over is about 25,000 Cr in the equities and 4,000,00 Cr in the Futures and Options. Investors mostly prefer algo-trading because of its bulk trading options and accuracy. SEBI has even announced that it will try to come up with certain measures to strengthen algo-trading.
When asked about their plan ahead, both Gangwar and Bansal emphasise that they want to concentrate on what is already in process. Instead of making plans to scale so early into the game, the duo wants to get the basics right, and rightly so, as the concept is new in the market.
The young founders are focussed on marketing their product to the target audience and getting a loyal and sturdy customer base rather than launching new products or features and going for more investments. Gangwar says, “We want to market extensively on social media because most of our target audience is active on platforms such as Facebook and LinkedIn.”
The Centre’s strong push for digitisation and financial inclusion has proven to be a boon for fintech startups in India. Through India Stack, the government is providing a world-class technological framework to entrepreneurs, innovators, and corporations, which has accelerated the growth of fintech ventures in India.
Innovative platforms like Kuants that take the pain of coding out of algo-trading and make the lives of retail investors easy hold a great potential to disrupt the investment sector in India.