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What Are Pink Sheet Stocks: Meaning, Benefits, Risks

Not every stock gets listed on major exchanges like the NYSE or Nasdaq. Some trade in lesser-known markets, popularly known as the Pink Sheets. This blog is for beginners, young earners, salaried people, and Indian investors curious about US and global markets. If you want to learn how to buy pink sheet stocks safely, it matters to know about them before putting money anywhere. We will cover everything in plain English so you can make smarter money choices. Keep reading to find out how these global investments actually work.

What Are Pink Sheet Stocks?

Let’s break down the pink sheet stocks meaning in simple words. Basically, these are shares of companies that trade “over the counter” (OTC). This means they are not listed on big, famous stock exchanges like the New York Stock Exchange (NYSE) or Nasdaq in the US.

Years ago, the daily price quotes for these unlisted shares were printed on physical pink paper. That is how the catchy name “Pink Sheets” was born. Today, everything is done online. The market is now run by the OTC Markets Group and is simply known as OTC Pink.

It helps to know this before you invest because these shares play by a different set of rules. Here is a simple comparison between them and regular shares.

Pink Sheet Stocks vs Main Exchange Stocks

Feature	Pink Sheet Stocks	Main Exchange Stocks (NSE, BSE, NYSE)
Where they trade	Over The Counter (OTC)	Big central exchanges
Rules and Checks	Very few or none at all	Strict rules and heavy checking
Risk Level	Extremely high	Moderate to high
Company Size	Usually small or early stage	Medium to very large

How Do Pink Sheet Stocks Work?

Trading over the counter means buyers and sellers trade directly through a network of brokers. There is no central trading floor taking care of the orders. The OTC Markets Group manages this system and sorts companies into three main levels. This depends on how much business information they share with the public.

OTC Market Tiers Explained

Market Tier	What It Means
OTCQX	The top tier. Companies here must share regular financial reports and pass basic background checks.
OTCQB	The middle tier. Mostly built for early stage or growing companies. They still have to report their finances.
Pink (Open Market)	The lowest tier. Companies have no strict rules to share information.

Inside the lowest Pink tier, things are divided even further based on public details. A company might provide current information, limited information, or no information at all. Because the listing requirements are so loose compared to main exchanges, almost any company can join. However, this also means no big regulator is strictly watching out for your money.

Examples of Pink Sheet Stocks in Simple Rupees

Let’s look at a simple math example using Indian numbers. We will assume the US Dollar to Indian Rupee rate is Rs 84 for $1. Imagine you decide to put Rs 10,000 into a pink sheet company.

Example of a Rs 10,000 Investment

Situation	What Happens	Your Final Amount
Price goes up by 20%	You gain Rs 2,000	Rs 12,000
Price falls by 40%	You lose Rs 4,000	Rs 6,000

Please remember that these numbers are only examples and not promised returns.

In the real world, the math gets complicated because of the wide gap between the buy price and the sell price. Very few people might be trading the stock on a given day. You might want to sell your shares quickly, but you cannot find a buyer at a fair price. This forces you to sell at a huge loss. Also, because very few people trade them, the price can jump up or fall down heavily in just a few hours. Notable real world examples of companies that trade on OTC markets include foreign giants like Nestle or Nintendo (through special receipts), but the Pink tier is mostly filled with tiny, unknown names.

Benefits of Pink Sheet Stocks

Now we need to look closely at the benefits and risks of pink sheet stocks. We will start with the benefits.

Many of these shares cost pennies. You can buy a large number of shares with a very small amount of money.
You have the opportunity to back a small business that may someday grow into a large company, then gets listed on a major exchange.
You get exposure to some foreign companies that have decided not to incur the costs of listing on a major US exchange.
When a small company makes a rapid increase or reports large news, the % rises can be huge.

Just keep in mind that these potential benefits are directly tied to massive risk.

Risks of Pink Sheet Stocks

The risks here are very serious. In fact, the US SEC regularly issues warnings to investors about the dangers of OTC and penny stocks.

Low liquidity: This means very few people are buying or selling. You might get stuck holding shares you simply cannot sell.
Wide bid and ask spreads: The difference between the buying price and the selling price is often huge, which eats into your money the second you buy.
Limited or no information: Many companies in this space do not publish their financial health. You are practically flying blind.
Price manipulation: Bad actors easily hype up a cheap stock, push the price up artificially, sell their own shares, and leave regular buyers with massive losses. This is known as a pump and dump scheme.
Total loss: Because these companies are small and unregulated, they can go bankrupt quickly. You could lose the full amount you put in.

A golden rule to remember: the benefits and risks of pink sheet stocks should always be seen together. Never look at the bright side without weighing the dark side.

Pink Sheet Stocks vs Stocks on NSE and BSE

When you buy shares on the National Stock Exchange (NSE) or Bombay Stock Exchange (BSE) in India, the environment is tightly controlled. The Securities and Exchange Board of India (SEBI) watches over the markets constantly. Indian companies must publish audit reports every quarter. If they hide things, they face heavy fines. There is high liquidity, clear price transparency, and strong investor protection.

Pink sheet stocks lack this strict regulation. There is no SEBI like authority forcing them to show their daily books.

You might also hear the term penny stocks. People mix these terms up all the time. A penny stock is just a share that trades for a very low price (usually under $5 in the US or under Rs 10 in India). Some penny stocks actually trade on major exchanges. Pink sheet stocks specifically refer to shares trading on the OTC network, regardless of their actual price.

How To Buy Pink Sheet Stocks From India

If you have weighed the risks and still want to know how to buy them, you need a proper plan. Indian residents can buy foreign stocks, but you have to follow strict local laws.

Your account should be fully verified and your PAN as well as Aadhaar details must be added to your account.
Select an Indian broker or platform that is registered and provides direct access to the US or OTC markets.
Sending Rs.250,000 in a Financial Year Under the Liberalised Remittance Scheme (LRS) by the RBI, one can send abroad Rs.250,000 in a financial year.
If you are sending Rs 7 lakh or more outside India in a financial year for investment purposes, TCS (Tax Collected at Source) is 20%. Though you can claim this back when you file your income tax returns, your cash is parked for some time.
Always check the company disclosure level. Do not buy if they hide their numbers.
Place a Limit Order never place a market order for these types of shares. A limit order lets you lock in the exact price you want to pay so you don’t get a nasty surprise.
You must report all your foreign assets and holdings in Schedule FA of your Indian Income Tax Return every year.

Key Things To Check Before You Buy

Do not just jump in blindly. Always verify these details first.

Company public disclosure and filings: Discover whether they really publish legitimate, audited financial statements.
Market Tier: Learn if they trade on OTCQX, OTCQB, or Pink. Pink is the riskiest.
Liquidity/Volume: Look at the daily trading volume of the shares. If it is a low number, you shouldn’t get involved.
Bid and Ask Spread: Find a small range between the buy and sell price.
Company info: Attempt to determine who is in charge and how does the business actually generate income.
Your Own Risk Comfort: Can you really sleep at night for sure knowing that tomorrow your money can go down a massive 50%.

Common Mistakes People Make

Many new investors lose cash simply because they make basic errors.

Because the price is cheap, a stock at five cents could go to zero. Cheap does not equal good.
Always remember you should not consider it to be taken as sure unless it was any ordinary stock market suggestion which no body in all honesty can desire.
Choosing to buy a stock of a company that conceal(s) their information is no better than playing the lottery.
Do not take a loan or use your daily living money to purchase very volatile stocks.
If the volume is thin on a particular stock a Market order could fill at a very poor price.
Forex rates, broker fees and taxes can easily eat up small profits.
Stop emotions from taking over: Panic buying as share price rallies or panic selling at the slightest dip are recipes for disaster.

Conclusion

At the end of the day, looking into global over the counter markets is a personal financial choice. We are not saying that pink sheet stocks are entirely bad, nor are we saying that only large listed stocks are the right way to go.These tools have levels of danger. Choose what to do by checking your life goals, the time period you are in and your comfort, with risk. Take your time, do your homework and stay safe there.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	What is Commodity Valuation?
2	What is Auction Market?
3	What is MIS in Share Market?
4	What is Right Issue of Shares: Meaning, Examples, Features
5	What is Earnings Per Share (EPS)?

Frequently Asked Questions (FAQs)

What are pink sheet stocks?
They are shares of companies that trade over the counter (OTC) instead of on major stock exchanges like the NSE or NYSE. They generally have much fewer rules and reporting requirements.
What does the pink sheet stocks mean exactly?
The meaning goes back to when OTC stock prices were printed on pink paper. Today, it refers to unlisted shares trading on the digital OTC Markets Group platform under the Pink tier.
What are the main benefits and risks of pink sheet stocks?
The benefits include very low share prices and early access to small or foreign companies. The risks include low liquidity, a high chance of fraud, massive price swings, and the real possibility of losing all your money.
How to buy pink sheet stocks safely for a beginner?
You need to open an account with a regulated broker that offers US market access. You must complete your KYC, follow the RBI LRS limits for sending funds abroad, and report your holdings in your Indian income tax return.
Are penny stocks and pink sheet stocks exactly the same?
No, they are different. A penny stock is simply a share with a very low price, and some even trade on major exchanges. Pink sheets refer specifically to where the stock trades (the OTC market), no matter what the actual share price is.

November 6, 2026

Gold vs Silver on Dhanteras 2026: Which Is Better to Buy?

Should you buy gold or silver this Dhanteras? If you are planning to make a purchase this year, this question has likely crossed your mind. Given the price fluctuations of both metals, making the right choice is not easy. In such a situation, consider not just the price, but also your budget, the purpose of your purchase, and your future needs. Let’s explore which option might be the better choice for you.

Gold and Silver Prices in India Ahead of Dhanteras 2026

Before purchasing gold or silver on Dhanteras, it is important to compare their current prices. In recent times, the prices of both metals have declined, with the drop in the price of silver being more pronounced. Given this, the decision to make a purchase should not be based solely on the lower price; rather, it should take into account your personal budget and requirements.

Latest gold and silver prices in India

Metal	Price	Unit
24-karat gold	₹1,39,790	Per 10 grams
22-carat gold	₹1,27,683	Per 10 grams
Silver with 999 purity	₹1,78,570	Per kilogram

These are reference rates. The actual price may vary depending on the city and the jeweler. When purchasing jewelry, making charges and GST are also added to the total bill.

Recent changes in gold and silver prices

Changes in the market	Gold
Price changes in October	Approximately -7%	Approximately -20%
Recent business downturn	0.07%	1.06%

Gold vs Silver Investment – What Makes Them Different?

Determining whether gold or silver has yielded higher returns depends on your investment horizon. In recent years, silver has outperformed gold over several periods, but its price has also experienced sharper declines. Therefore, looking solely at returns is not enough; it is also essential to consider the level of risk taken to achieve those returns.

Basis of comparison	Gold	Silver
Main demand	Jewelry, investment, and central bank reserves	Industrial use, jewellery, and investment
Price fluctuations	Generally low	More generally
Industrial demand	Relatively limited	Important in solar panel, electronics, and other industries
Market liquidity	The global market is larger and more liquid.	The market is relatively small.
Storage	Requires less space for the same value	More space is needed for the same value.
Role in investment	To preserve wealth over the long term and diversify one’s portfolio	To capitalize on price surges, with higher risk involved

Gold vs Silver Returns What the Latest Numbers Tell Us

Gold and silver are both precious metals, but they play very different roles when you invest in them. People usually turn to gold as a safe option when the economy is uncertain, while silver’s price depends a lot on industrial demand too.

Returns on gold and silver in India

Investment duration	Gold returns	Returns on silver
1 year	13.2%	17.7%
3-year (CAGR)	30.0%	34.3%
5-year (CAGR)	22.8%	–
10-year (CAGR)	15.0%	–

Comparison of year-on-year returns

It is also useful to examine the performance of individual years alongside the long-term average. This reveals that the returns for both metals do not remain the same from year to year.

Calendar year	Gold	Silver
2026 (up to November 3)	+3.7%	-23.3%
2025	+71.5%	+161.7%
2024	+19.6%	+16.7%
2023	+13.5%	+2.0%

When Gold May Be the Better Choice

If you are considering buying gold this Dhanteras, first assess your specific needs. For some, gold serves as a means of saving, while others purchase it for personal wear or for their family.

When you intend to invest for the long term: If you plan to buy gold and hold it for several years, it can form a part of your savings. However, since its value can also decline, avoid investing money that you might need in the near future.
When you seek balance in your investment portfolio: If the majority of your savings is in the stock market, adding gold can provide diversification. While gold sometimes performs differently during market downturns, this is not guaranteed to happen every time.
When you want to avoid the high volatility associated with silver: Although the price of gold fluctuates, it generally experiences less volatility compared to silver. Therefore, if sharp price swings cause you concern, gold may be a more comfortable option for you.
When you might need to sell the gold later: In India, it is easy to find buyers and a ready market for gold. However, there is no guarantee that you will recover the full purchase price when selling; factors such as purity, making charges, and the jeweler’s buyback policy will influence the outcome.
When the purpose is to wear the gold or give it as a gift: Getting gold jewellery on Dhanteras is a big tradition. Whether you want to wear it, gift it, or invest, it is a solid pick. Just make sure to check the making charges and everything else on the bill first.

When Silver May Be the Better Choice

Silver is great if you don’t want to spend too much. Just figure out why you are buying, and keep in mind that silver prices change fast.

Investment on a Small budget: Silver is way cheaper than gold, so you can start small. If you want to put in a little money this Dhanteras, go for silver coins or bars.
Ability to withstand price volatility: Silver prices can change rapidly. If you are capable of maintaining your investment over the long term rather than panicking and selling when prices drop then silver may be worth considering.
Interest in industrial demand: Silver is used in industries such as solar panel manufacturing and electronics. Demand from these sectors can influence its price, though this does not guarantee an increase in value.
Portfolio diversification: If you already have gold, adding silver can help balance your portfolio. Just keep in mind that both metals can still drop in price at the same time, so there is always some risk.
For personal use or gifting: Buying silver coins, utensils, or jewellery is a big trend on Dhanteras. Before you pay, just talk to the shopkeeper and clear out the purity, making charges, and resale price.

Physical Gold, Silver or ETFs – Which Buying Method Makes Sense?

When buying gold or silver on Dhanteras, choosing the metal alone is not enough. You also need to decide whether to purchase it in the form of jewellery or coins, or to invest through an ETF. Each option comes with its own set of costs and conveniences.

How to purchase	Who is it right for?	A point to note
Gold jewelry	Wearing yourself, gifting, or family use	Watch out for making charges and what they pay you back when selling.
Gold coins or bars	Keeping physical gold and saving for the long run	Always check purity, grab the bill, and see how easy it is to sell.
Silver coins or vessels	Tight budget buying or giving gifts	Check purity and making charges, plus figure out where you’ll store it.
Gold ETF	Invest in gold prices directly, without holding physical gold at home.	You need a demat account; keep an eye on fees and live market prices.
Silver ETF	Tracking silver price swings through your investment	Silver jumps around a lot, so check the fund fees and tracking gap.

GST and Other Costs of Buying Gold and Silver in India

Cost	GST / Charges	What to Know
Gold and silver coins or bars	3% GST	GST is charged on the value of the metal.
Gold and silver jewellery	3% GST on the total transaction value	GST applies to the total jewellery value, even if making charges are shown separately.
Jewellery job-work services	5% GST	This applies to the service provided by a job worker or artisan, not as an additional 5% GST on finished jewellery purchased by a customer.
Making charges	Varies by jeweller	This is a jewellery-making fee, not a GST rate.
Coin or bar premium	Varies by seller	Brand, packaging, and availability may make the price higher than the market rate.
Gold or Silver ETFs	Expense ratio and applicable brokerage	Physical-metal GST does not apply to ETF purchases; investment-related charges may apply.

Investing in Gold ETFs and Gold Mutual Funds via Pocketful

Planning to buy gold this Dhanteras, but don’t want the hassle of storing physical jewelry or coins? You can invest in gold through Gold ETFs or Gold Mutual Funds instead. You can explore these options by opening an account on Pocketful.

How to open an account on Pocketful?

Opening an account on Pocketful is completely free, with no charges for account creation or annual maintenance. You just need to visit their website or app, type in your mobile number, finish your KYC process using your PAN and Aadhaar, and connect your bank account. As soon as your account is up and running, you are ready to start investing right away.”

How to buy Gold ETFs?

Log in to Pocketful and search for Gold ETFs. Before purchasing, check the ETF’s price and associated costs. Select the ETF of your choice, enter the quantity, and place your order.

How to invest in Gold Mutual Funds?

To invest in Gold Mutual Funds, go to the ‘Mutual Funds’ section and look for Gold Mutual Funds. Check the fund’s fees and risk level, then pick either an SIP (Systematic Investment Plan) or a lump-sum payment.

Do your research before investing

Make sure to do your research first. You can use tools like Pocketful GPT and the Funds Screener to get market details and compare funds. Always read the fund’s scheme document carefully before you put in your money.

Mistakes to Avoid When Buying Precious Metals

Buying gold or silver on Dhanteras? Don’t ignore small things, or you will lose money later.

Buying without checking for a hallmark: Always look for the BIS hallmark and the HUID (Hallmark Unique Identification) number when purchasing gold jewellery. You can verify the HUID using the ‘BIS Care’ app; this helps confirm the purity of the jewellery.
Asking only for the price of gold: The final cost of jewellery includes making charges and GST. Before making a purchase, ask for a complete bill to see the total amount you will be required to pay.
Not asking about weight and purity: If the jewellery has stones or other materials in it, check their weight separately. The bill needs to show the net weight of the gold along with its purity (carat).
Buying without a bill: Always keep your bill safe. It should list the price, weight, purity, and every charge you paid. This paper is going to save you trouble if you ever want to sell or exchange the item later.
Not asking about resale terms: Before buying, ask the jeweller how much money they will deduct if you sell the item back later. Making charges are usually not refunded, so it is best to get this clear up front.
Making hasty decisions: Don’t jump into buying just because of festive discounts or crowded shops. Take a moment to compare prices and the final bill at a couple of different places so you get the best deal possible.

Conclusion

Buying gold on every Dhanteras isn’t mandatory. Pick silver if that fits your wallet better right now. You can even skip buying altogether if the timing feels off. Celebrate the festival and stay smart with your money.

Frequently Asked Questions (FAQs)

Is gold or silver a better investment for Dhanteras 2026?
It just depends on your budget and what risk you can take. Gold is safer and stays steady, but silver prices jump up and down a lot more.
Can I invest in gold without buying physical gold?
Yes, you can easily invest in digital options like Gold ETFs or Gold Mutual Funds.
What is the GST on gold and silver in India?
There is a flat 3% GST on buying both gold and silver.
Is silver more volatile than gold?
Yes, silver prices jump around way more than gold.
What should I check before buying gold jewellery?
Check the BIS hallmark, HUID number, exact gold weight, and making charges. And always get a bill.

November 6, 2026

Difference Between Investment And Speculation

Welcome! Let us talk about your money. When you start earning, you naturally want your savings to grow. But how do you actually do that? This is exactly where understanding the difference between investment and speculation comes in.

Whether you are just starting out as a person, with a regular job or someone who wants to grow wealth in India this topic is very important. It helps you decide the way to manage your hard earned money. Keep reading to learn how you can make choices for your financial future.

Investment vs Speculation: Meaning

Let us clear up the meaning of investment vs speculation.

Investment means you put your money into an asset after checking its value. You do this to get growth or regular income over a longer time. Think of investment, like planting a tree and patiently waiting for the fruits. I have seen many people confuse investment with speculation.

Speculating is very different. It means taking a high risk on a quick price move. You mostly do this for a fast gain. It is like guessing which way the wind will blow today.

Knowing this difference is incredibly helpful before you put your money anywhere. It stops you from taking wild risks when you actually just wanted to keep your savings safe.

Feature		Speculation
Meaning	Buying assets for steady long term growth	Taking high risk for quick profits
Time Focus	Months or years	Minutes, days, or weeks
Risk Level	Low to medium	Very high

What Is the Difference Between Investment and Speculation?

So what really makes them different? Let’s take a look at investing versus speculative trading. There are a few points that clearly separate the two.

The first thing to consider is the purpose. Investors want to build wealth safely. Speculators want to make a profit from daily price jumps. The second thing to consider is the time period. Investments are held for years. Speculative trades are finished in days or even hours.

Then we have the level of risk. Investing has a lower risk because it is based on deep research and real company value. Speculation depends a lot on guesses, news flashes and daily price moves. This makes it very risky.

Return expectations also differ. Investors expect a reasonable and steady return over the years. Speculators chase massive and fast returns. Finally, think about how much of your money is at stake. Good investors only risk what they plan to grow safely. Speculators often risk a large chunk of their capital on a single, fast bet.

Point of Difference	Investment	Speculation
Purpose	Steady wealth building	Quick, short term profit
Time Period	Long term (Years)	Short term (Days or hours)
Level of Risk	Low to moderate	Very high
Basis of Decision	Proper research and true value	Market news, guesses, and price moves
Expected Return	Realistic and steady	Very high and fast
Money at Stake	Spread out safely over time	High amount placed on a single bet

Examples of Investment and Speculation in Simple Rupees

Let us look at some examples of investment and speculation using simple Indian numbers. This will make the picture totally clear for you.

Example one is a clear investment. Imagine you put Rs 10,000 in a bank Fixed Deposit at a 7% yearly interest rate. If you leave it there for 5 years, it becomes around Rs 14,025. Or, you start an equity mutual fund SIP of Rs 10,000 every month. You hold it for ten years. You get a return based on how those companies grow. This process is slow, steady, and boring in a good way.

Example two is pure speculation. Suppose you use Rs 10,000 for intraday trading. You buy shares in the morning and you must sell them by 3:15 PM. If the stock price jumps by 2%, you make Rs 200 in a few hours. But if it falls by 5%, you lose Rs 500 on the exact same day.

Action	Amount Used	Expected Outcome	Type
5 Year Bank FD	Rs 10,000	Grows to Rs 14,025 at 7% yearly interest	Investment
Intraday Trade	Rs 10,000	Gain Rs 200 or lose Rs 500 in a single day	Speculation
Options Trading	Rs 10,000	Can double the money or lose it all by evening	Speculation

Investing vs Speculative Trading: Where Is the Line?

Trading is not always speculation, but the line can get a bit blurry. It all depends on your time, purpose, research, and risk level. Long term investing is clearly not speculation. You buy a good stock and you hold it for five years.

What about swing trading? Here, you hold a stock for a few weeks based on price charts. It has more risk than investing, but it is less risky than daily trading. Intraday trading, futures and options (F&O), and buying penny stocks fall squarely under speculation.

The risks here are very real. A recent study by SEBI found that 91% of individual traders in the F&O segment lost money in the financial year 2025. That is a massive number of people losing their savings.

The Income Tax Department of India also treats them differently. Income from intraday trading is classified as speculative business income. It is taxed as per your normal income tax slab. Also, you can only set off speculative losses against speculative profits. You are allowed to carry these unabsorbed losses forward for a maximum of four years.

Key Factors That Separate Investing From Speculation

Let us break down the key factors that separate investing from speculation. These points will help you check your own money habits.

Purpose: Ask yourself why you are buying. Are you buying a part of a business, or just a piece of paper you hope to sell to someone else at a higher price today?
Time Horizon: Time is your best friend in investing. If your plan is to wait for years, you are investing. If you are watching the clock, you are speculating.
Risk: Speculation always carries some danger of losing your money. Investing mostly handles this risk by using the time and by being patient.
Research: Investors study balance sheets, examine company debts and focus on long-term growth. Speculators watch price charts, follow breaking news and react to social media rumors.
Return Expectation: Expecting a 10% to 12% return each year, from stocks is investing. Wanting your money to double in one week is pure speculation.
Discipline: Investors stay calm when the market falls. Speculators often lose control, let fear take over and make choices like trying to recover losses fast no matter the cost.

Where Do You See Investment and Speculation in India?

In India, you can see both investment and speculation happening every day. Let us look at the common options available.

For investments, you have Fixed Deposits, the Public Provident Fund (PPF), and the Employees Provident Fund (EPF). Currently, PPF offers a 7.1% interest rate and EPF gives 8.25%. You also have the National Pension System (NPS) and long term Mutual Fund SIPs. These are regulated by bodies like RBI, EPFO, NPS Trust, AMFI, and SEBI.

On the speculative side, you see people doing intraday trading and options trading on the NSE and BSE. The purpose is to gain Profit from a small price movement, Buying penny stocks or trading based on random Telegram tips are also highly speculative activities.

Remember, market linked returns are never fixed or guaranteed. You must always check the rules, from the Ministry of Finance SEBI or AMFI before putting your money anywhere. Do your checks and do not blindly trust any product or bank.

How To Decide Between Investing and Speculating

How do you choose between the two? Just follow these steps before you open your wallet.

Know Your Goal: I want you to think about what you’re saving for. Are you saving for a house in ten years?. Do you want extra pocket money for the weekend? Think carefully about your goal.
Check Your Time Period: If you want the money back, in a month keep it in a bank account. Do not put it in the stock market.
Understand How Risk You Can Take: Can you sleep peacefully if your investment drops by 20 percent? If not, stick to investments.
Do Your Research: Never buy a financial product just because a friend told you to. Read up on it first.
How much money are you willing to risk? If you are going to take a chance only use money that you can afford to lose without it affecting you.
Look at your investments once or twice each year: Review your long term investments every six months. There is no need to check them every day.

A simple thumb rule is this. Keep the money you use for speculation to a very small part of your total savings, like 5 percent. Keep the rest of your money strictly for long term investing.

Common Mistakes People Make

People often lose money because of a few common mistakes. Try to avoid these at all costs.

Calling Speculation “Investing”: Buying a risky penny stock and calling it a long term investment is a huge mistake. Be honest with yourself about what you are doing.
Following Tips and Social Media Advice: Do not risk your hard earned salary on a random YouTube video or a WhatsApp forward.
Using Borrowed Money or Needed Money: Never take a loan to trade in the stock market. Never use your rent or grocery money either.
Chasing Quick or Very High Returns: If someone promises you guaranteed double returns in a month, it is usually a scam or a very bad speculative bet.
Ignoring Taxes, Fees and Inflation: Frequent trading means paying lots of brokerage, STT, and taxes. These eat up your profits very fast over time.
Not Having a Stop‑Loss or Exit Plan: Speculators often cling to a losing trade thinking it will magically recover. Always have a plan to exit when things go wrong.
Letting emotions decide is a mistake: Fear and greed are the enemies of money management. Always stick to your plan.

Conclusion

To wrap it up both investing and speculating have a place in the world. One is not completely evil. The other is not the only right way. They are simply tools for different goals.

Your job is to choose the one based on your own life goals and your comfort with taking risks. For most of us, steady long term investing is the route to building real wealth.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	Difference Between Intraday Trading and Delivery Trading
2	Value Investing Vs Intraday Trading: Which Is More Profitable?
3	Mutual Funds vs Direct Investing: Differences, Pros, Cons, and Suitability
4	Swing Trading vs Day Trading: Which Strategy Is Right For You?
5	Difference Between Trading and Investing

Frequently Asked Questions (FAQs)

What is the main difference between investment and speculation?
The main difference is the risk and the time involved. Investing is low risk and done for years to build wealth. Speculation is high risk and done for a very short time to make a quick profit.
Is intraday trading considered investing?
No, intraday trading is not investing. You buy and sell shares on the exact same day. It falls purely under speculation because you are guessing short term price moves.
Are mutual funds safe for beginners?
Mutual funds are generally a very good starting point for beginners. They carry market risk, but holding them for a long time reduces that risk significantly.
Can I set off my speculative losses against my salary income?
No. According to the Income Tax Department, you can only set off speculative losses against speculative profits. You cannot adjust them against your salary or normal business income.
How much of my money should I use for speculation?
A good rule is to never use more than 5 percent of your total savings for speculation. Only use money that you can completely afford to lose without affecting your life.

November 5, 2026

When Should You Stop or Pause a Mutual Fund SIP?

Systematic Investment Plan, which is generally termed as SIP, is one type of investment strategy where a particular amount of money is systematically invested at different intervals, for instance, weekly, monthly, or quarterly, in a mutual fund scheme.

However, an SIP should never be stopped as it can obstruct your financial goals, break the compound interest process, causing you to miss out on potential market rebounds. Thus, fully stopping an SIP would really depend on your future financial plans.

Financial distress, lack of income, changing financial priorities, or the inability to pay monthly expenses may be some of the factors that make one stop an SIP. Yet, the cancellation of an SIP cannot be based on market uncertainties alone.

To understand how to invest in mutual funds, thoroughly evaluate your financial goals, risk tolerance and investment timeframe, which can help you make informed decisions about whether to continue, pause or adjust your SIP contributions.

How SIPs Work

Rupee cost averaging: Since the Net Asset Value fluctuates, your fixed amount will be able to buy more units if the market falls and less if the market is rising. This will help in lowering the average cost of purchase of units.
Long-term impact of compounding: Returns start earning returns themselves after some period of time, and that results in wealth creation.
Eliminate the dependence on market timing: It prevents you from making any impulsive investments, thus allowing you to stay disciplined through all kinds of market movements. Investing in mutual funds not only requires understanding of SIPs but also of market volatility and the importance of investing for the long term.

Valid Reasons To Stop Or Pause A SIP

Unexpected financial setbacks: A serious financial crunch, income decline or sudden unemployment and lack of an emergency fund can lead to a temporary pause or complete stop on installments, preventing debt or default.
Fund underperformance: It is prudent for you to analyze and re-strategize how you invest in those mutual fund investments which are underperforming when compared to their benchmarks and other mutual funds within three years.
Changes to fund’s fundamentals: A fundamental change in the investment objective, risk profile, or even a change in the primary fund manager can alter the way the fund functions.
Goal accomplished or goal horizon nearing: You can stop SIP if you have already achieved your desired financial goal, such as accumulation of funds for a child’s education, upfront cost or buying a car.
Asset allocation shift: If there is an imbalance in your portfolio, like having additional equity investments than your risk level permits, you may need to rebalance your investments, redeem units, or shift funds.
High-interest debt: Repaying high-interest debt such as credit card bills and personal loans may turn out to be more useful than pursuing the SIP scheme. You may consider suspending or reducing such activities for some time.
Duplication/overlap: If you have too many mutual funds with similar stocks in your portfolio, it may lead to duplication of investment in the same kind of stocks. Hence, you need to examine your investments and think of ways to consolidate funds to make your portfolio more diverse

Bad Reasons To Stop An SIP

Market crashes – Stopping your SIP during a market downturn may cause you to miss the opportunity to buy more mutual fund units at lower prices. Continuing your SIP enables you to benefit from rupee cost averaging, as your fixed investment amount buys more units when prices drop and fewer when prices rise. Eventually, this can help build your holdings, although it does not fully assure profits or protect you from market losses.
Short-term underperformance – It would be a mistake to stop a fund only because it fell short behind by a few months or a single year. You should only consider ending a fund if it has been performing consistently below its benchmark along with other funds for 3 years and beyond, rather than responding to periodic market declines.
Fear driven by news or social media – If you instantly react and tend to stop your investment plan due to overhyped media reports or predicting market movements, it almost fails all the time. Missing the initial days of a strong market recovery can significantly reduce your long-term investment returns.
Chasing last year’s top-performing fund – Keeping an expectation for linear, uninterrupted positive returns every single time can lead to extreme disappointment. Equities normally move in stages, and wealth creation through mutual fund SIPs needs long-term commitment (usually 5-10 years or more) to leverage the benefits of compounding.

Read Also: What Is Stock SIP?

Pause Vs Stop: What’s The Difference?

Pause

There can be various reasons why a person might need to pause their SIPs. This includes cash flow problems, changes in income, revised financial objectives or an evaluation of the portfolio. However, pausing is a better choice in cases where the financial problem is only temporary, the expense has created a shock to the monthly cash flow and the investor will resume investing soon after.

For investors who intend to pause MF SIPs, it is vital to see whether the mutual fund house or the investing portal allows them to do so and to understand the conditions for doing this. Once an SIP has been paused, the existing holdings continue to be invested. The period during which an SIP can be paused varies from AMC to AMC and scheme to scheme.

Stop

When an investor no longer wants to make any future investments in that scheme, when the financial goal or asset allocation has changed noticeably or when the investor chooses to realign the portfolio, then learning how to stop SIP can be considered.

When an SIP is stopped, the units still remain invested until separately redeemed. But the processing time for stopping SIPs is longer, normally up to 21 days. Therefore, ensure you send a timely request.

Canceling an SIP only stops future investments; your existing mutual fund units remain invested and continue to be affected by market fluctuations. You can redeem them separately whenever required, based on the fund’s terms and relevant exit charges.

What To Do Instead Of Stopping

Before making any decision on how to stop SIP, try to check whether the investment can be adjusted to meet your financial needs.

Additionally, before canceling an SIP permanently, you can even try to pause MF investments, decrease the SIP amount, transition to a better-performing fund within the same category after assessing its compatibility, or use an adjustable SIP amount to increase or decrease your contributions according to your income and a change in your financial goals.

Tax And Exit Load Considerations

Each SIP installment is treated as an independent investment, with its own holding period for tax purposes. If you redeem your mutual fund units, you may have to pay an exit load, depending on the fund’s terms and how long you have possessed the units.

Common Mistakes

Stopping at market lows: If you withdraw or pause when the market declines, you may lose out on rupee cost averaging, resulting in purchasing more fund units at a lower cost. Market corrections can offer good prospects to build wealth instead of causes to panic.
Neglecting the cost of lost compounding: Even a short break can substantially lower your target corpus because of lost contributions and missed compounding growth over a period of time. For instance, stopping or halting in between can result in the loss of millions from your wealth over time.
Waiting for the right time to invest: Based on short-term stock market forecasts, trying to pause, stop or restart contributions almost always leads to below-average returns. SIPs help investors avoid emotional decisions by promoting consistent investing.

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Frequently Asked Questions (FAQs)

The market is crashing, and my SIP is in the red. Should I stop it?
Not necessarily. Market declines are a regular part of investing, and stopping your SIP due to fear may impact your long-term goals. Examine your fund’s performance, risk level and financial needs before making a decision.
I lost my job. Should I pause or stop my SIPs?
If your income source has been lost, it would be wise to stop SIP payments temporarily to regulate your expenditures and also keep your emergency funds intact. Your mutual fund units continue to stay invested until redeemed.
How long can I pause a SIP, and what happens to my existing investment?
The pause duration is subject to your mutual fund provider’s rules and may span from one to six months. Your existing units remain invested during the pause and continue to be dependent on market volatility. Check your fund house’s guidelines for the permitted duration and restart process.
My fund has underperformed for a year. Is it time to stop the SIP?
Not compulsorily. Just a year of poor performance might not be enough for judging a fund. Compare the performance of the fund with that of its benchmark as well as other similar funds over a long period of time. Also, make sure whether the fund still serves your investment objectives.
Will a stopped or failed SIP affect my credit score?
No, a stopped or failed SIP usually does not impact your credit score because it is an investment instruction, not a loan repayment. However, a failed payment may attract bank charges, and constant failures can lead to automatic SIP cancellation under the applicable rules.

November 5, 2026

How To Compare Two Stocks In The Same Industry?

Let’s consider two companies in a sector that sell the same product, serve the same audience base and face the same regulators. You decide to invest in both, thinking that they will offer the same returns in 10 years of time. But once 10 years pass, you notice that one company multiplies your investment 10x, while the other barely beats a fixed deposit investment you made 15 years back. Looking at this, one thought that will definitely cross your mind is: why does the same sector produce such wild outcomes in the same duration? Is it because of luck?

The answer here lies not in luck but in business quality, growth durability, profitability, valuation and management integrity of the particular business. Moving ahead, if you find yourself, along your investment journey, standing between two stocks in the same industry, then this blog will provide you with the perfect 7-step framework to complete the comparison process thoroughly.

Why Comparing Two Stocks In The Same Industry Works Best?

Same-industry comparison allows you to compare stocks in terms of similar factors. For example, when two pharmaceutical companies face the same pricing controls, the differences in their numbers will reflect execution style, not the market noise. The absence of excessive market noise makes the ratios genuinely and easily comparable.

Comparing across industries that are quite different often misleads you. A bank with a P/E (Price-to-Earnings ratio) of 12 and an IT company with a P/E of 28 tells you almost nothing. This is because a bank and an IT company approach profit-making very differently. For a bank, its product, by default, is ‘money’ itself. But for an IT company, they just need a bunch of laptops and smart people. They don’t operate on borrowed money. Comparing a bank with an IT company is like comparing a fish and a bird on the basis of how fast they run. In simple terms, it makes absolutely no sense. Hence, always remember to compare apples with apples, banks with banks and IT firms with IT firms.

Step 1: Understand The Business

If you want to buy stocks and are presented with two distinct options from the same sector, always start by understanding what the companies actually do.

Business model: Understand whether it manufactures, distributes or provides services. Is the revenue recurring or just one-off?
Product mix: A company that offers premium products has a tendency to earn higher margins as compared to one that sells commodities.
Geographic exposure: Heavy dependency on exports increases exposure to global demand risks and currency fluctuations. Whereas, increased domestic focus increases exposure to policy changes and local demand risk. Neither is risk-free, so evaluate the dependency of the company.
Customer concentration: If one customer accounts for 30% of the entire revenue, then losing that customer will pose a serious threat.
Market share & moat: Look for a rising market share. This should always be considered a competitive advantage. Also keep an eye out for brand strength, switching costs, scale advantages and other moats that you can think of.

Step 2: Compare Growth

If you want to compare stocks and compare companies, always keep in mind that you’ll want to compare their growth. Growth is a measure of the rate at which a business is growing. The 3-, 5-, and 10-year CAGRs (Compound Annual Growth Rates) are always handy to use when comparing revenues and growth. The 10-year time frame can be used to see a full cycle, while the 3-year time frame can be used to see current momentum.

Furthermore, when you compare stocks in the same industry, consistency matters just as much. A company raising a profit of 15% every year is more consistent than the one that jumped to 80% in a single year and then dropped just as drastically. Also check whether profit growth is outpacing revenue growth (margin expansion) or lagging it (margin pressure).

Step 3: Compare Profitability

Profitability is the indicator of how efficiently a company can turn sales and capital into definite earnings.

Operating margin: Core business profitability before tax and interest.
Net margin: What remains for shareholders after cutting all costs.
ROE (Return on Equity): Profit generated on shareholders’ funds. Watch out for ROE inflated by high debt.
ROCE (Return on Capital Employed): Returns on all capital, including debt. This is especially useful for capital-intensive sectors.

Which margin you need to compare depends on the sector you are choosing to invest in. Suppose you want to do stock analysis in the manufacturing sector, then the EBITDA margin and operating margin are key here. But if you want to compare companies in the FMCG sector, then you should focus on comparing the gross margin.

Step 4: Compare Valuation

Investing in a great business can instantly turn into a poor investment decision if you end up overpaying. Key metrics to consider while you compare stocks are:

P/E (Price-to-Earnings): Price paid per rupee of profit.
P/B (Price-to-Book): Essential for banks and financials.
EV/EBITDA: Accounts for debt, so it is fairer between companies with different capital structures.
PEG (P/E divided by growth rate): Adjusts P/E for expected growth.
Dividend yield: Cash returned relative to price.

Also, whenever you are doing a stock comparison in the same industry, never judge valuation in isolation. Always compare stock against its own 5 or 10-year average multiple and against the sector median.

Step 5: Compare Financial Health

Strong financial health lets a company survive downfalls and keeps investors invested.

Debt-to-equity: Lower is generally equivalent to lesser risk. Acceptable levels may still vary by sector.
Interest coverage ratio: EBIT divided by interest expense. Below 3 deserves caution from the investor.
Current ratio: Current assets versus current liabilities, indicating short-term liquidity.

Then, move on to evaluating test earnings quality by comparing cash flow from operations (CFO) to reported net profit. If profit keeps rising but CFO lags persistently, this might be an indicator of the company booking revenue they cannot collect. Also, look for the receivable days and inventory days. These reveal working capital stress.

Step 6: Compare Management & Governance

All the numbers that you will look at are all produced by people. Hence, take a minute to evaluate:

Promoter holdings & pledged shares: High and stable promoter holdings are equivalent to confidence. Increased pledged shares are a negative sign.
Management & people: Has management fulfilled previous guidance? Check for any past regulatory action or auditor resignations.
Large transactions with promoter-related parties: Value can be lost from minority shareholders in related transactions.
Capital allocation: Does the company reinvest at higher returns, make sensible acquisitions and avoid vanity projects?
Dividend history: Steady or increasing dividend payments indicate cash discipline and shareholder orientation.

Step 7: Compare Price Performance & Technicals (Optional)

This is an optional step for long-term investors but is very useful for timing and risk awareness. Use a decent stock screener to compare the returns of stocks over 1, 3 & 5 years against the benchmark index and also against other stocks. A good stock screener will also give you the option to view volatility and beta at the same time. Make sure that you use the same stock screener to compare both stocks to avoid an uneven comparison and inconsistent data.

Common Mistakes To Avoid

The following are some common pitfalls to avoid when comparing stocks of the same industry:

A single ratio (P/E or ROE) can lead to a false impression: Compare using a set of measures.
Failure to account for differences: Depreciation methods, revenue recognition & exceptional items may confuse comparisons. Read notes to accounts.
Comparing companies of different sizes: A small company that has just started to grow is not directly comparable to a company that has grown large, even if the metrics used to evaluate the companies are the same.
Only take the latest data: A strong year can easily outperform a poor decade.
Confusing cheap with good: Often, low valuation can be a sign of genuine issues.

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Frequently Asked Questions (FAQs)

Which single ratio should I use to compare two stocks?
No single ratio is sufficient. If forced to pick one, ROCE (or ROE for financials) tells you about business quality. But it should always be paired with valuation and balance check sheets.
Stock A has a lower P/E than Stock B. Does that make it the better buy?
Not necessarily. A lower P/E can reflect slower growth, higher risk, or weaker governance. Compare growth, returns and quality before concluding that it is genuinely undervalued.
Can I compare a large-cap and a small-cap stock from the same sector?
Yes, it is possible. However, take precautions at all times. Smaller caps have higher risk and lower liquidity, but faster growth and less predictable earnings.
Can I use a stock screener to compare two stocks?
Yes, you can. But ensure that you run the stocks through the same screener for consistent and reliable comparison data.
How do I fairly compare IT companies, banks or FMCG companies?
Always compare only within the same sector and use sector-specific metrics like, NIM and GNPA for banks, attrition and deal wins for IT, and volume growth and distribution reach for FMCG.

November 5, 2026

Muhurat Trading History: Nifty & Sensex 10-Year Returns

The activity in the stock market during Diwali draws the attention of investors every year. Sometimes the market sees a strong rally, while at other times, the sentiment remains somewhat subdued. Looking at the data for ‘Muhurat Trading’ over the past 10 years reveals several interesting insights. In this blog, we will examine these figures and market trends to understand how the market has behaved on this special day.

What Is Muhurat Trading and Why Does It Matter?

As people embark on new ventures during Diwali, the stock market also witnesses something unique. Many investors purchase shares during ‘Muhurat Trading,’ as they wish to begin the new Samvat (financial year) with an investment. But what exactly happens in the market on this day, how is trading conducted, and what has the market trend been like in previous years? It is important to understand these aspects, especially if you are considering participating in Muhurat Trading for the first time.

The Tradition of Muhurat Trading

On Diwali, traders traditionally open new account books following the worship of Goddess Lakshmi (Lakshmi Pujan) and commence their business activities. This tradition extends to the stock market as well. Some people purchase shares on this day alongside their families, while others view it as an opportune moment to begin their investment journey.

How is Muhurat Trading conducted in India?

Every year, the NSE and BSE announce a specific time for Muhurat Trading during Diwali. This session is shorter than a regular trading session. In 2026, Muhurat Trading will take place on Sunday, November 8.

Session	Time
Pre-open session	From 2:05 PM to 2:20 PM
General trading in equities	From 2:20 PM to 3:30 PM
Futures and Options (F&O)	From 2:20 PM to 3:40 PM
Currency and Commodity Trading	From 2:20 PM to 3:30 PM

How to place an order during Muhurat Trading?

Check the timing: Just before Diwali, log into your broker app or Pocketful app or check the NSE/BSE website to see the exact timings.
Select the shares: Do a quick check on the company’s business model and make sure their financial condition actually looks stable.
Place an order: Head to your trading app, enter how many shares you want, and set your price. If you use a ‘limit order,’ you get to lock in the highest price you’re okay paying.
Verify if the order is executed: Keep in mind that placing an order isn’t the same as actually buying the stock; it only counts once the exchange matches your order.

Muhurat Trading History – Nifty 50 and Sensex Returns

Looking at the data from the past ten years, the market trend during Muhurat Trading has largely been positive. However, the market did not see gains every Diwali; in 2016 and 2017, both major indices closed with a decline.

Performance of Nifty 50 and Sensex over the last 10 years

Year	Date of Muhurat Trading	Nifty 50 Closing	Nifty 50 Returns	Sensex Closing	Sensex returns
2016	October 30	8,625.70	-0.14%	27,930.21	-0.04%
2017	October 19	10,146.55	-0.63%	32,389.96	-0.59%
2018	November 7	10,598.40	+0.65%	35,237.68	+0.70%
2019	October 27	11,627.15	+0.37%	39,250.20	+0.49%
2020	November 14	12,780.25	+0.47%	43,637.98	+0.45%
2021	November 4	17,916.80	+0.49%	60,067.62	+0.49%
2022	October 24	17,730.75	+0.87%	59,831.66	+0.87%
2023	November 12	19,525.55	+0.51%	65,259.45	+0.54%
2024	November 1st	24,304.35	+0.40%	79,724.12	+0.42%
2025	October 21	25,868.60	+0.10%	84,426.34	+0.07%

How Did Mid-Cap and Small-Cap Stocks Perform?

Investors are also interested in mid-cap and small-cap stocks during Muhurat trading.

Performance of the broader market over the last 10 years

Year	Nifty 50	Nifty Midcap	Nifty Smallcap
2016	-0.1%	+0.5%	+0.9%
2017	-0.6%	-0.4%	-0.1%
2018	+0.7%	+0.8%	+0.8%
2019	+0.4%	+0.7%	+1.1%
2020	+0.5%	+0.5%	+0.8%
2021	+0.5%	+0.8%	+1.3%
2022	+0.9%	+0.5%	+0.9%
2023	+0.5%	+0.7%	+1.1%
2024	+0.4%	+0.7%	+1.0%
2025	+0.1%	+0.1%	+0.5%

Three Important Trends in Muhurat Trading

Data from ‘Muhurat Trading’ sessions reveal more than just market gains or losses; they also highlight how investors participate during this unique session.

1. Significant participation from retail investors

As per NSE’s ‘Market Pulse’ report from November 2024, around 24.5 lakh (2.45 million) individual investors traded during the 2024 Muhurat Trading session. That’s a sharp 22.5% jump compared to the year before proving that this special session isn’t just played by big institutional investors anymore.

2. Substantial trading activity within a short timeframe

Although the Muhurat Trading session is much shorter than a standard trading day, it sees significant activity in the cash market. According to the NSE, the cash market turnover in 2024 reached ₹18,225 crore. This accounted for approximately 17% of the average daily turnover for the month of October, even though the session lasts for only about 16% of the duration of a regular trading day.

3. Investors often start with smaller amounts

Many investors prefer to begin their investments with smaller sums during the Muhurat Trading session rather than executing large trades. The NSE report indicates that the average trade size is smaller compared to regular trading days, which aligns with the high level of retail investor participation. Consequently, it is more practical to view this session as an opportunity to begin one’s investment journey, rather than as a chance to make quick profits.

Does Muhurat Trading Predict the Next Samvat Year’s Returns?

Investors are pleased when the Nifty closes higher on the day of ‘Muhurat Trading’. But does this momentum persist throughout the following year? Looking at historical data, this has not always been the case.

In 2020, the market showed a strong surge following a positive start. The Nifty rose by 0.47% during the ‘Muhurat’ session, and went on to gain nearly 40% over the subsequent ‘Samvat’ year.
The scenario was different in 2021. That year, the Nifty climbed 0.49% during ‘Muhurat Trading’, but fell by approximately 1% over the following ‘Samvat’ year.
In 2017, despite a decline during the ‘Muhurat’ session where the Nifty closed 0.63% lower—the subsequent ‘Samvat’ year recorded a gain of about 4.5%.
Following the gains in 2024, returns for the subsequent year were more modest. The Nifty rose by about 0.40% during the ‘Muhurat’ session, while it delivered a return of approximately 6% over the following ‘Samvat’ year.
These examples do not point to a definitive pattern. Market movement during ‘Muhurat Trading’ reflects only a single day’s performance. Returns for the year ahead can be influenced by various factors, such as corporate earnings, interest rates, and broader economic conditions.

Practical Lessons for Investors During Muhurat Trading

Diwali gets everyone hyped about starting their stock portfolio, but jumping in blindly is a bad move. Keeping a few basic ground rules in mind during the session will save you from making hasty calls.

Pick your stocks way before the market opens: Don’t wait for the bell to ring to figure out what to buy. Sit down earlier, look at a company’s actual business model, check their latest quarterly numbers, and put together a clear watchlist.
Watch the buy-sell gap closely: In low-volume stocks, the gap between what sellers want and what buyers offer can be massive. Check this price spread first. If the rate looks inflated or weird, walk away—there’s no need to force a trade.
Fix your amount first: If you just want to mark the festival by putting in a small sum, lock in that exact budget today. Whatever you do, don’t tap into your emergency fund or money meant for monthly family expenses.
Have an actual reason to buy: Just because a stock is jumping during the 1-hour session doesn’t mean you should jump on board. Ask yourself why you want this specific business and how many years you’re actually holding it for.
Write down why you took the trade: Log the stock name, the price you paid, and your core reason for buying. Months later, reading this back will tell you if you made a smart choice or just got swept up in the Diwali excitement.

Conclusion

Along with Diwali, ‘Muhurat Trading’ offers investors an opportunity for a fresh start in the market. Trends from previous years show that market movements on this day are not always the same. Therefore, base your investment decisions not just on the auspicious timing (Muhurat), but also on your own understanding and preparation. To sustain your presence in the market, making the right decisions, exercising patience, and maintaining discipline are far more important than any single day’s surge.

Frequently Asked Questions (FAQs)

What is Muhurat Trading?
Muhurat Trading is a special stock market trading session held on the day of Diwali, which investors view as an auspicious beginning.
Is Muhurat Trading open to all investors?
Yes, investors with an active trading account can participate in this session through their broker.
Can I buy stocks during Muhurat Trading?
Yes, you can buy and sell stocks during this session. Be sure to check the price and availability before placing an order.
Does Muhurat Trading guarantee profits?
No; stock prices can still fluctuate on this day. There is no guarantee of profit.
How long does Muhurat Trading last?
This session is shorter than a regular trading day. The specific date and time are announced by the exchange each year.

November 4, 2026

How to Hedge With Commodity Futures

I know that price changes can hurt businesses. Whether you are a farmer, jeweller, importer or small trader, sudden price drops or spikes can wipe out profits. This is why commodity price risk management matters so much in India. Knowing how to hedge with commodity futures gives you a safety net against these sudden swings. A good commodity futures hedging strategy acts like an insurance policy for your materials. By learning hedging with futures contracts, you protect your hard earned money. Let us see how this works in simple terms.

What Is Hedging With Futures Contracts?

Let us start with the very basics of the market. A commodity futures contract is a legal agreement to buy or sell a specific item at a set price on a future date.

Hedging simply means reducing your risk. You do not hedge to make a profit. You hedge to lock in a price and protect yourself from bad surprises. It brings certainty to your business costs.

People often confuse a hedger with a speculator. A hedger already has a physical risk in the real world. For instance, a jeweller holding gold is a hedger. A speculator takes on risk purely to try and make money from price changes. They do not want the physical metal or grain at all.

You can take two main positions in the market. Going long means you agree to buy the item later. Going short means you agree to sell it later.

Here is a quick look at how they differ:

Feature	Hedging	Speculation
Main Goal	Protect against price risk	Make profit from price changes
Physical Interest	Yes, owns or needs the item	No physical interest at all
Risk Level	Lowers overall business risk	Takes on high market risk

It helps a lot to understand this difference before you place your first hedge. You want protection, not a gamble.

How To Hedge With Commodity Futures

A few key pieces drive your hedge. The first is the underlying commodity. This is the actual item like gold, silver, crude oil, or cotton tied to the contract.

Next, you have the contract size and lot size. Exchanges do not let you buy any random amount. You must trade in fixed batches called lots. For example, one standard gold lot on the MCX is 1 kilogram.

Every contract also has an expiry date. This is the exact day the agreement ends. You must settle your position on or before this day.

To trade, you do not pay the full amount upfront. You pay a small deposit called margin. This is usually a percentage of the total trade value.

The main idea is matching your exposure with the future position. If you have 5 kilograms of physical silver, you should cover roughly 5 kilograms in the market.

You should also know about basis risk. Sometimes, the futures prices and spot prices do not move exactly the same way. The spot price is the cash price in your local market today. A slight difference between the two is called the basis. This difference means your hedge might not match your physical risk down to the last rupee.

Commodity Futures Hedging Strategy: Simple Examples in Rupees

Let us look at a few basic examples. These use assumed Indian numbers to make things clear. They are just examples and not promised outcomes.

Example 1: A Short Hedge for a Farmer

Imagine a farmer who grows cotton. He expects to harvest twenty‑five bales next month. The current price is Rs thirty thousand per bale. He fears the price might fall before he can sell his crop. To protect himself he sells one cotton futures contract of bales at Rs thirty thousand. He is going short. If the market price falls to Rs twenty‑eight thousand he loses Rs two thousand per bale in the market. He makes a profit of Rs two thousand per bale on his futures contract. His final effective price stays at Rs thirty thousand.

Example 2: A Long Hedge for a Manufacturer

A factory needs copper for wiring. They plan to buy two thousand five hundred kilograms a month. The current price is Rs eight hundred per kilogram. They fear the price will rise soon. They buy one copper futures contract of two thousand five hundred kilograms at Rs eight hundred. They are going long. If the price goes up to Rs eight hundred fifty they pay Rs fifty in the physical market. However their futures contract makes a profit of Rs fifty per kilogram. This balances out the material cost.

Example 3: A Jeweller Hedging Gold

A jeweller holds one kilogram of gold in stock. It is currently priced at Rs seventy thousand, per ten grams. He worries the price might drop before the wedding season starts. He takes a position by selling one one‑kilogram gold contract. This locks his inventory value safely.

Here is a simple summary table for the farmer:

Market	Action Taken	Price per Bale
Spot Market	Will sell 25 bales later	Rs 30,000
Futures Market	Sells 1 contract (25 bales)	Rs 30,000
Result if price falls	Physical loss covered	Futures profit balances it

Remember to double check the maths and verify all lot sizes before you trade in real life.

Key Factors To Check Before You Hedge

You must check a few crucial things before entering any trade.

Quantity and Lot Size You can’t trade any amount You have to trade in lots. MCX gold is one kg and gold mini is one hundred grams. Select the one that best fits your life stock situation.
Choose a contract month that matches when you plan to buy or sell the item. The expiry month selection is important because it needs to line up with your plans.
You need money in your trading account to hold the position. The margin requirement is something you must understand. Exchanges have rules about margins to keep everything secure. It is a way to protect the system and the traders.
Basis risk is something to keep in mind. The spot prices and the futures prices do not always match exactly. The difference between them can get bigger or smaller during your trade. This is a risk you have to be aware of.
Trading is not free. I have seen that you pay for brokerage, exchange fees and taxes. Costs and charges are part of the process. Make sure to include trading costs and charges in your plan. Costs and charges can add up. Affect your profits. Beware of costs.
The hedge ratio is the portion of your stock that you really want to protect. I find that you do not always have to protect all of it. The hedge ratio is a way to control risk properly. Choose what you want to guard with the hedge ratio and what you’re okay, with leaving open.

Where Can You Hedge Commodity Price Risk in India?

India has specific platforms for these trades. Everything is strictly regulated by the Securities and Exchange Board of India (SEBI).

For -agricultural items you should check out MCX, which stands for Multi Commodity Exchange. They deal with bullion, like gold and silver. They also list energy products such as oil and natural gas. On top of that they include base metals, like copper, zinc and aluminium. In 2026 MCX introduced a Silver 100 gram contract. This was done to make it easier for smaller investors to take part. The smaller contract size helps those who don’t have money to trade silver. It’s a step for more people to join the market.

For goods NCDEX (National Commodity and Derivatives Exchange) is the hub. They list items such as spices, pulses and oilseeds.

SEBI acts as the watchdog. They set the rules for position limits and margins. For example in 2026 SEBI revised position limits for commodities to protect market stability. They put caps on how much one person can hold.

Always check the latest contract specifications directly with MCX and NCDEX. Futures prices are market linked. Outcomes are not fixed or guaranteed. We do not favour any specific exchange, product, broker, or platform here.

How To Use Commodity Futures To Hedge

Setting up your protection requires a few simple steps.

Identify Your Price Risk: I want to figure out whether a price rise or a price fall will hurt my business the most. This is about my price risk.
Pick the Right Commodity Contract: I need to find the item on the exchange. I also need to check the lot size so it is not too big for my needs. This is about the commodity contract.
Decide Whether to Go Short: If I need to buy the physical item later I go long. If I need to sell the item later I go short. This is about going or going short.
Work Out How Many Lots You Need: Divide your total physical quantity by the exchange lot size. A good hedge ratio helps you decide how much of your exposure to cover.
Place the Hedge Through a Registered Broker: You cannot go directly to the exchange. You must use a SEBI registered broker.
Track, Positions. Watch your trading account carefully. If the price moves in a direction that hurts your futures position your broker may require you to add margin money.
Close or Roll Over the Position at the Right Time: Exit your futures contract when you are buying or selling, in the market. This helps you manage risk and keeps you from having overlapping exposure.

Common Mistakes People Make While Hedging

Even smart business owners make errors. Try to avoid these traps.

Over-Hedging or Under-Hedging: If you buy many lots your hedge ends up in pure speculation risk. If you buy a few , your real business faces risk.
Treating a Hedge Like a Trade: Remember, a hedge is for protecting your core business. It is not, for making you rich
Ignoring Basis Risk: If you assume spot and futures prices will match exactly you might face accounting surprises.
Not Keeping Margin Money: When your account runs low on funds the broker will close your position automatically. Your protection disappears instantly.
Forgetting Expiry and Rollover Dates: If you let a contract expire without a plan you might be forced into delivery you did not want.
Ignoring Costs and Taxes: High transaction costs can eat up the benefits of a hedge.
Hedging Without a Clear Plan: You need a documented strategy. Do not guess when to enter and exit.

Simple Tips For Better Commodity Price Risk Management

Good management is the product of self-control. Good management is the product of self-control. Here are some safety tips.

Set a hedging goal: Know which price you want to lock in and why that price matters, to the business.
Start small: If you are just starting out use a very small contract to learn how the system works.
Note Taking Your Positions Down: Note down the prices at which you have entered the amount of inventory you have and the exact sizes of your lots.
Regularly review the hedge: Review your positions weekly. Markets can change on a dime.
Not Hedging 100 Percent Unless It Is Necessary: Sometimes leaving a part of your stock without a hedge gives you more options.
Using Only Trusted and Regulated Platforms: Make sure your broker is verified and properly connected to MCX or NCDEX.

Read Also: What is Hedging?

Conclusion

Protecting your business from wild price swings gives you great peace of mind. Hedging is not gambling. It is a calculated step to keep your operations stable. Start slow, do your homework, and protect your margins. Download Pocketful and take your trading experience to the next level with advanced charts, real-time market data, and powerful tools to make smarter trading decisions.

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4	5 Tips for Successful Commodity Trading
5	Stock Market vs Commodity Market

Frequently Asked Questions (FAQs)

Hedging is mainly about reducing or even removing?
The risk that prices will shift in the market. Hedging shields your inventory or future purchases from price shocks.
Can a regular retail investor hedge with commodity futures?
Yes, any person who has a trading account can trade commodity futures. However you must understand the risks. Keep enough margin money in your account to hold the position.
Do you have to take delivery of the commodity?
Not necessarily. Most people close their futures position, for cash before the expiry date. A few contracts lead to actual physical delivery.
What happens if you do not maintain your margin?
Your broker will issue a margin call. If you do not add funds the broker will automatically. Close your position to prevent further losses to the exchange.
Are spot prices and futures prices the same?
No, they often differ because of storage costs, interest rates and local demand. This difference is called the basis.

November 4, 2026

Satellite Internet Stocks in India: Top Space Stocks

What keeps a spacecraft connected to Earth, millions of kilometres away? The answer lies in space communication technology. It is a growing business. Today, we are seeing a lot of interest in satellite internet stocks in India. This theme is catching the attention of young earners, salaried professionals, and anyone curious about new sectors.

People want to know about space stocks in India because better internet connectivity is a big need. This blog will help you understand the basics before you think of putting your money into this exciting new area. We will keep things simple and clear.

What Are Satellite Internet Stocks in India?

When we talk about satellite internet stocks, in India it means shares of companies that help send the internet from space to your home. Regular fiber uses cables to provide connection. Mobile broadband uses cell towers. Satellite internet does not use any of that. It uses a dish antenna to catch signals from satellites floating in space.

There are different kinds of satellites. GEO (Geostationary Earth Orbit) satellites are positioned very high up. They cover a very large area but lag behind in signal transmission. LEO (Low Earth Orbit) satellites are nearer to the earth. They give faster speeds and the signal quality is very good. Many new satellite communication stocks in India focus on LEO technology to give better speeds.

Understanding this difference is important. It helps you see where satellite internet companies in India can actually make money. They will serve places where cables cannot reach, like deep forests or high mountains.

Here is a quick comparison:

Feature	Satellite Internet	Fibre or Mobile Broadband
How it connects	Wireless signal from space	Cables or local mobile towers
Speed	Getting faster with new LEO tech	Generally very high and stable
Best used for	Remote areas, mountains, villages	Cities and crowded towns
Setup Cost	Usually higher	Low to medium

How Does the Satellite Internet Industry Work in India?

The space business works like a big chain. First, you have the satellite makers who build the actual machines. Next are launch services that send them into space using rockets. Then comes the ground segment. These are earth stations that track the satellites.

Finally, there is user equipment like the small dish antenna you put on your roof. Service providers bring all this together. They are the ones who sell the internet plans directly to customers.

In India the government watches this sector carefully. The Department of Telecommunications and the Telecom Regulatory Authority of India create the rules. They decide how companies get the spectrum or radio waves to send signals.

We also have IN-SPACe and ISRO. IN-SPACe is the single window agency for private space companies. ISRO handles the core national space missions and research. Having clear rules and proper licences from these bodies is a must for any company to operate legally.

Satellite Communication Stocks in India

You might be wondering which companies are part of this ecosystem. We can group them into three main buckets. These are telecom operators, defence and electronics suppliers, and equipment makers.

Please note that the table below is purely for educational purposes. These are not buy or sell recommendations. They are just examples of companies listed on the NSE and BSE.

Company Name	What It Does in This Space	Category
Bharti Airtel	Backs Eutelsat OneWeb for satellite services	Telecom & Services
Nelco Ltd	Provides VSAT and satellite communication solutions	Services & Equipment
Avantel Ltd	Makes satellite communication equipment	Equipment Maker
MTAR Tech	Supplies parts for rockets and space missions	Defence & Space
Data Patterns	Builds electronics systems for aerospace	Defence & Space

Satellite Internet Companies in India: Who Is Entering the Market?

The race to provide satellite internet is heating up. Several big names are trying to start services here. Eutelsat OneWeb has the backing of Bharti Enterprises. They already have the necessary GMPCS licence from the DoT.

Jio Space Technology is a joint effort between Reliance Jio and SES. They also have their licence ready. On the global front, Elon Musk’s Starlink and Amazon’s Project Kuiper are working to get approvals. They are currently in talks with the government regarding security rules and spectrum allocation.

Here is a quick look at where things stand right now:

Company	Current Status in India
Eutelsat OneWeb	Has licence, waiting for spectrum allocation
Jio-SES	Has licence, waiting for spectrum allocation
Starlink	Applying for security approvals
Amazon Kuiper	In the early stages of approval

Starlink, Amazon, and OneWeb are companies that are not directly listed on the NSE or BSE. You cannot buy their direct shares on Indian exchanges. But their entry will affect the listed Indian companies they work with.

Read Also: Top Aerospace Stocks in India

Key Factors To Check Before Investing in Space Stocks in India

Buying shares in space companies is different from buying shares in a biscuit company. The risks are unique. Here are the main things you should check.

Regulatory Approvals and Spectrum: A company can’t run without approval from the government. Always check that they have the licenses and access to the spectrum. Regulatory Approvals and Spectrum are very important. A company can’t work well without Regulatory Approvals and Spectrum. Always check if they have the licenses and the correct spectrum access.
Order Book and Revenue Growth: Look at how confirmed orders the company has. A strong order book means money coming in over the next few years.
Profit and Debt Levels: Space is a business where building it and launching things takes a lot of capital. Make sure the company is actually making a profit and not drowning in debt.
Government Policy and Support: Rules can change at any moment. A company that fits well with manufacturing policies usually has a better shot at winning government contracts.
Technology and Competition: This sector moves fast. A company using old tech will quickly lose to someone using newer LEO satellites.
Valuation: Just because a company is in the space sector does not mean you should pay any price for it. Make sure the share price makes financial sense.

How Can You Get Exposure to the Space and Satellite Theme in India?

There are a few direct and indirect ways. You can look at direct stocks of telecom companies that are setting up satellite networks. You can also study defence and electronics companies that supply the tiny parts. If you do not want to pick single stocks, mutual funds are an option. Currently, India has a few defence mutual funds that hold shares of aerospace and space related companies.

However, a pure satellite ETF does not exist in India yet. Remember that facts and rules from DoT, SEBI, and AMFI change often. Stick to verified information. Stock prices are never guaranteed. This theme is quite new in India and can be very volatile.

If you want to track companies and manage your money easily a good platform can help. With Pocketful you can explore stocks, read data and keep an eye on your portfolio.

How To Research and Invest in Satellite Stocks

Follow these simple steps to make better choices.

Understand the Sector First: Read articles and watch simple videos on how satellite communication works. It’s good to know what the company does before investing. This helps you see if the business makes sense.
Download the Annual Report: Search the company on the BSE or NSE website. Hear what management has to say about their plans. The reports are the company’s own account of its growth.
Check the financials: Look at their sales, net profit and debt over three to five years. See if the numbers are increasing or decreasing. This shows whether the company is getting stronger or weaker.
Look for Official News: Only trust news regarding order books and licences if it comes from the stock exchange or the company directly. Many websites share rumors. Stick to sources.
Start Small: Never put all your money in at. Start with an amount to see how the stock behaves. You can learn a lot from watching it over time.
Check Your Investments: once or twice a year to see if the business is still doing well. Sometimes you need to decide whether you want to stay.

Also learn to use the Price-to-Earnings (P/E) ratio. It is a tool that tells you how much you are paying for one rupee of the company’s profit. Compare stock’s P/E ratio, with companies to see if it is costly or cheap. This helps you pick stocks that are fairly priced.

Common Mistakes People Make With Space Stocks

Even the most intelligent people tend to make mistakes when it comes to money. You should keep the following things in mind.

Purchase due to hype: Avoid buying a stock simply because it is mentioned in the news on a daily basis.
Ignoring Valuations: Paying a price for a company that barely makes a profit is risky.
Putting Money in One Theme: Never put all your savings into space stocks.
Expect Quick Profits: Building a satellite takes years. This is a long-haul industry. Don’t expect your money to double overnight.
Avoiding Delays: Launches and licence approvals are always delayed. Be prepared for setbacks.

Simple Tips for Investing in the Satellite and Space Theme

When you’ve set your goals, just keep in mind these tips. They’ll help you build up your base.

Set clear targets: Decide why you are investing. Are you planning on investing five years or 10 years?
In the event of an emergency: Always build an Emergency Fund. If you don’t need the money to pay out your expenses or for medical expenses on an unexpected date, this is the best way to build an Emergency fund.
Diversify Your Portfolio: Add some banking IT or consumer stocks along with space stocks as diversification lowers your risk.
Keep It Small: Allocate a small percentage of your total portfolio to new themes like satellite internet.
Stay Patient: The real winners in this sector will emerge over the decade.
Track Official News: Do not react to every headline. Wait for facts, from the government or companies.

Read Also: Best Material Stocks in India

Conclusion

The rise of satellite internet has the ability to bring internet access to villages and make a big difference in people’s lives all over the country. As someone who wants to invest, spending some time to understand this area can be very helpful. Just keep in mind to be careful when doing your research. Follow your money plan. Make sure to read all the papers thoroughly before making any investments.

To explore and track your investments in one place, download Pocketful offering users zero brokerage on delivery trades and an easy-to-use platform designed for both beginners and experienced investors.

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Frequently Asked Questions (FAQs)

What are space stocks in India?
Space stocks are shares of companies that build parts for satellites or rockets or offer services connected to space communication. These companies support the space industry and satellite internet in India. They play a role in making space technology work.
Can I buy shares of Starlink directly in India?
No. Starlink is a private company based in the US. It is not listed on Indian stock exchanges like the NSE or BSE.
How is satellite internet different from normal WiFi?
Normal WiFi gets its main internet supply from cables placed underground. Satellite internet gets its supply directly from a satellite moving in space, using a dish antenna on your roof.
Are space stocks risky?
Yes. Space projects are very expensive and take a long time to finish. Government rules and launch delays can affect stock prices, making them quite volatile.
Which regulator handles spectrum for satellite internet in India?
I think that the Department of Telecommunications DoT is the regulator that manages spectrum and licences for telecom and satellite internet services, in India.

November 4, 2026

What Is The Grandfathering Rule In Income Tax?

Tax rules keep changing, and these changes can sometimes impact your tax liabilities. But what will happen if you have made any investment before the change in rules? Then how will you manage your tax liabilities? To manage such tax liabilities, the government has introduced the Grandfathering Rule.

In today’s blog post, we will give you an overview of the grandfathering rule, why it is applied and how it works through an example.

Grandfathering Meaning

Grandfathering in Income Tax is a provision specified by income tax authorities to protect certain gains made before a change in tax law from being taxed unfavourably under the new laws. Simply put, it allows taxpayers to retain a tax benefit on investments made before a specified date.

In India, it is particularly related to long-term capital gains on the purchase of equity and equity-related mutual funds. This was introduced when the government brought in LTCG on such investments in the Union Budget 2018.

Why is the grandfathering rule applied?

This rule is applied to protect against the adverse impact of changes in tax laws. The key reasons why it was introduced are as follows:

Protecting Existing Investors: Investors who have accumulated significant gains on the purchases of equity and equity-related mutual funds before 1st Feb 2018; such gains were exempted till 31st Jan 2018.
Fairness: Tax rules are changed over time. And the provision of grandfathering helps in ensuring that only eligible investments are considered for tax purposes.
Smooth Transition: Once the new tax rules are implemented, the government tries to introduce such changes while reducing the impact on investors who already held such investments.

Rule Under Section 112A

Section 112A of the Income Tax Act 1961 defines the taxation of long-term capital gains arising from the sale of equity shares and equity-related mutual funds.

Investments Covered Under Section 112A: The key investments covered under Section 112A are equity shares of a company that is listed on a stock exchange, units of an equity-oriented mutual fund, and units of a business trust.
Tax Rules: The tax rate is 12.5% on eligible long-term capital gains exceeding 1.25 Lakh INR in a financial year.
The Rule of Grandfathering: It is important for eligible investments acquired before 1st February 2018. Under Section 55(2)(ac).

How Grandfathering Works

The steps for how grandfathering works are as follows:

Identification of Purchase Cost: The first step is to identify the original cost of acquisition of the investment. This is usually the amount an investor actually paid to purchase the shares or mutual fund units.
Calculating the Fair Value: The next step is to identify the market value of the investment as on 31st January 2018. This date was introduced by the government to provide for the LTCG changes.
Comparing the Fair Market Value: Once you identify the fair market value as of 31st Jan 2018, then you need to compare it with the actual sale price of the investment.
Cost of Acquisition: Once the lower amount is identified, compare it with the initial cost. Then the cost of the acquisition formula needs to be implemented.
Calculating Gain: The last step will be calculating the capital gain by deducting the cost of acquisition from the sale proceeds.

Formula of the Grandfathering Rule

The formula to calculate Capital Gain using the grandfathering rule is as follows:

Capital Gain = Sale Value – Indexed Cost of Acquisition

And the formula to calculate the cost of acquisition is as follows:

Indexed Cost of Acquisition = Cost of Acquisition * (CII of Year of Sale/CII of Year of Purchase)

Example of the Grandfathering Rule

Let’s understand the grandfathering rule through an example.

Mr A purchased shares of ABC Limited in 2016 for INR 1,00,000. By 31st January 2018, the value of such investment had increased to INR 3,00,000. The investor sold the shares in January 2026 for INR 5,00,000.

Read Also: Silver Taxation in India

Difference Between Grandfathering and Regular Capital Gain Calculation

The key differences between grandfathering and regular capital gain are as follows:

Particulars	Grandfathering	Regular Capital Gain
Use	It is used only when the eligible investments were acquired before 1st February 2018.	Investments are calculated according to the applicable capital gains provisions.
Cost of Acquisition	The cost of acquisition is determined using the grandfathering formula.	It is generally based on the actual cost of acquisition.
Market Value	The fair market value is considered based on 31st January 2018.	Fair market value is not generally used to determine cost under regular capital gains.
Objective	The grandfathering clause is defined to protect eligible gains accumulated before the tax changes.	Calculates taxable capital gains according to applicable tax rules.

Benefits of the Grandfathering Rule

The key benefit of the grandfathering rule is as follows:

Protect Gains: The key benefit of the grandfathering rule is that it protects eligible gains accumulated up to 31st January 2018. As the government reintroduced LTCG tax on eligible equity investments in 2018, it helped prevent investors from being taxed on entire gains.
Reduce Tax: The grandfathering rule can help investors reduce capital gains tax by lowering the cost of acquisition based on the prescribed formula.
Fairness During Tax Changes: The laws related to tax over time can affect investments made under earlier rules. Grandfathering ensures that only eligible capital gains are considered for taxation.

Conclusion

On a concluding note, grandfathering is a key provision implemented by Income Tax authorities to protect the interests of investors from the impact of changes in capital gains provisions. The long-term capital gains tax was reintroduced by the government in 2018, and after that it became difficult for the investors who purchased equity shares and equity-oriented mutual funds before 1st February 2018 to calculate their cost of acquisition. This can reduce the tax liability of the investor arising because of changes in regulations. However, to understand its formula and the provisions defined under section 112A is important when making any calculation of capital gain; therefore, it is advisable to consult your investment and tax advisor.

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Frequently Asked Questions (FAQs)

What is grandfathering?
The grandfathering rule in mutual funds is a provision introduced by income tax authorities to protect the interests of investors after long-term capital gains tax was reintroduced by the Government of India. It protects eligible capital gains accumulated before a specific date when tax law changes.
What is the cutoff date for the grandfathering rule in mutual funds?
The cutoff date for the mutual fund grandfathering rule is 31st January 2018. The rule is applicable to the eligible investments made on or before this specific date.
Name the investments that are eligible for the grandfathering rule?
The eligible investments that are eligible for the grandfathering rules include listed equity shares, units of equity-oriented mutual funds, units of trusts, etc.
Can we still use the grandfathering rule in mutual funds?
Yes, one can use the grandfathering rule in equity-oriented mutual funds, as it remains relevant when calculating capital gains on eligible investments acquired before 1st Feb 2018 and sold later.
How will the value be calculated if the sale price is lower than the fair market value on 31st January 2018?
According to the formula, it uses the lower of the sale consideration and the fair market value, and compares the amount with the original acquisition cost. This means the deemed cost can never exceed the sale price under the formula, and the calculation results in no capital gain.

November 3, 2026

Inherited Stocks in India: Transfer Process & Tax Rules

When investing in the stock market, we often purchase shares ourselves; however, at times, we may also inherit shares from our family. Such shares often raise several questions for instance, how their value is determined, whether they are subject to tax upon sale, and how they can be transferred into one’s own Demat account. Understanding these aspects makes it easier to manage inherited stocks.

What Is Inherited Stock?

‘Inherited stock’ refers to shares that an individual receives as an inheritance. These shares may be acquired from a family member or another shareholder. Upon receiving them, the new owner must complete the process of transferring the shares into their own demat account.

Example: Suppose Rohit inherits 100 shares from his uncle. His uncle had purchased these shares at a price of ₹200 per share. Now, if the market price of these shares is ₹350 per share, their current value would be ₹35,000, whereas their total cost at the time of purchase was ₹20,000.

How Does Inherited Stock Work in India?

To understand the process of handling inherited stocks in India, follow these steps:

Step 1: Figuring out entitlement to the shares

Looking at a will, a nominee, or succession laws, we see who should receive the shares

Step 2: Identify the shareholdings

This involves determining which company’s shares the deceased investor held, the quantity of such shares, and where they were maintained.

Step 3: Transfer ownership

Once the prescribed procedure is completed and the claim is accepted, the shares are transferred to the eligible person’s Demat account.

Step 4: Exercise rights as the new owner

Following the transfer, the new owner becomes entitled to receive dividends and may benefit from or incur losses due to fluctuations in the share price.

Step 5: Decide whether to retain or sell the shares

The new owner may choose to hold or sell the shares, depending on the company’s performance and their own financial needs. If the shares are sold, capital gains tax is calculated in accordance with the applicable regulations.

How to Transfer Inherited Shares to a Demat Account

To transfer inherited shares into your Demat account, you must contact the broker or bank where the shares are currently held. You will then need to complete the following steps

Step 1: Contact the relevant broker

First, identify which broker or Depository Participant (DP) holds the shares and inquire about their specific share transfer process.

Step 2: Fill out the Transmission Form

Obtain a ‘Transmission Request Form’ from the broker and provide the details of the person who is to receive the shares.

Step 3: Submitting the required documents

You need to submit the death certificate, PAN card, and KYC details. If no nominee was named, you might also have to show a will or other legal paperwork.”

Step 4: Provide your Demat account details

Submit the details of the Demat account into which the shares are to be transferred, along with any necessary account-related documents.

Step 5: Document verification process

The broker goes through all your submitted paperwork. If they find any missing or incomplete information, they’ll get in touch so you can send over the required details.

Step 6: Checking the shares in your account

Once approved, the broker credits the shares directly to your Demat account. Simply log in to verify that the share count and account details line up correctly.

What Is the Cost Basis of Inherited Stock in India?

When you inherit shares, it is essential to determine the price at which the previous owner originally purchased them. This purchase cost is used to calculate the profit or loss realized when the shares are sold. This is known as the “cost basis” of inherited stock. In India, the original purchase cost incurred by the previous owner generally serves as the basis for inherited shares.

Example of the Cost Basis of Inherited Stock

Suppose you inherit 100 shares of a company. The previous owner had purchased them at a price of ₹200 per share. At the time you received the shares, the market price was ₹300.

Description	Amount
Original purchase cost of shares	₹20,000
Market value at the time of inheritance	₹30,000
Amount on selling the shares later at ₹350 per share	₹35,000
Profit, before other adjustments	₹15,000

Here, the profit has been calculated by subtracting ₹20,000 from ₹35,000, rather than by subtracting the ₹30,000 market value that existed at the time the inheritance was received.

What if the purchase price of old shares is unknown?

In such a situation, refer to old broker statements, purchase contract notes, and demat records. If the shares are very old, or if there have been bonus issues or stock splits in the interim, additional information may be required to calculate the cost. Instead of estimating the cost, verify it based on available records.

How Are Inherited Stocks Taxed When Sold?

In India, receiving inherited shares generally does not attract capital gains tax. However, when you sell these shares, you may be liable to pay tax on the profit earned from the sale, in accordance with the applicable rules. When calculating the tax, factors such as the original owner’s acquisition cost and the total duration for which the shares were held are taken into account.

Short-Term and Long-Term Capital Gains Tax

If the inherited shares are equity shares listed on an Indian stock exchange and the relevant conditions regarding the Securities Transaction Tax (STT) are met, the applicable tax rates are as follows:

Type of capital gain	Applicable tax rate
Short-Term Capital Gains (STCG)	20%
Long-Term Capital Gains (LTCG)	12.5% on eligible gains exceeding ₹1.25 lakh

These rates apply to eligible share sale transactions that take place on or after July 23, 2024. The final tax amount may also include applicable surcharges and cesses. Different rules may apply to other types of shares.

Provide sales details in your tax return

After selling shares, keep the relevant contract notes, old purchase records, and capital gains calculations safe. You can use these records to provide accurate information when filing your tax return.

Can shares be sold immediately after being inherited?

Generally, shares can be sold once they have been transferred to your Demat account and are available for sale. However, before selling, check the records regarding their acquisition cost and the holding period of the previous owner, so that capital gains can be calculated accurately.

Should You Hold or Sell Inherited Stocks?

Deciding whether to hold or sell inherited shares depends on the company’s performance and your own need for funds. Do not hold onto shares simply because they were inherited from family.

When Should You Hold Inherited Stocks?

If the company’s earnings are sound, it is not burdened by excessive debt, and there is potential for future business growth, you might consider holding the shares. However, strong company performance does not guarantee an increase in the share price.

When Should You Sell Inherited Stocks?

If the company’s business is consistently weakening, its financial health is deteriorating, or you require funds for essential expenses, you might consider selling the shares. Before making a decision, be sure to review the company’s recent financial reports and the current share price.

What Should You Check Before Making a Decision?

Before deciding to hold or sell, examine the company’s earnings, debt levels, current valuation, and its weightage within your overall portfolio. For instance, if a large portion of your investments is already concentrated in a single company, holding additional shares of that same company could increase your risk.

Common Mistakes to Avoid With Inherited Stocks

In the case of inherited shares, minor oversights can lead to complications later on. Keep the following points in mind:

Failure to locate records of original share purchases: Retain the original purchase records. Without these, determining the actual acquisition cost of the shares especially when calculating taxes can become difficult.
Assuming the nominee is the ultimate owner: Just having a nominee listed on a Demat account doesn’t automatically settle every inheritance dispute. When there is a will involved or questions arise among legal heirs, you really need to check what the legal rules actually say.
Overlooking bonus shares and stock splits: If the original owner received bonus shares or if the company underwent a stock split, the total number of shares and the cost per share will be affected. Therefore, review the company’s corporate action records.
Applying the same tax rules to all shares: Tax rules aren’t the same for listed equity shares, unlisted shares, and other asset types. Before you sell anything, double-check which category your shares fall into and what specific tax rules apply to them.
Not verifying records after the share transfer: When the transmission process finishes, check your Demat account to make sure the share count and company names are accurate. If you spot any mismatch, reach out to your broker or Depository Participant straight away.
Filing tax returns without proper historical records: Once you sell your shares, hold onto the sale contract notes, proof of the original purchase cost, and your capital gains math. Don’t rely on guesses, always verify your numbers against proper records before filing.

Conclusion

If you have inherited stocks, do not be in a hurry to sell them. First, check how the company’s business is performing and ensure that you have the relevant historical documents for the shares. If you decide to sell the shares, be sure to calculate the tax implications so that you do not face any issues later.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	Long-Term Capital Gain (LTCG) Tax on Mutual Funds
2	Tax on Gold Investment in India: Physical, Digital & SGB Explained
3	LTCG Tax on Mutual Funds – Rates & Taxation Explained
4	Tax-Free Bonds: Their Features, Benefits, and How to Invest
5	Why Do We Pay Taxes to the Government?

Frequently Asked Questions (FAQs)

Can stocks be inherited in India?
Yes, stocks can be inherited, subject to applicable succession laws and the required procedures.
How do I transfer inherited stocks to my Demat Account?
To do this, you must submit a transmission application and the necessary documents to the relevant broker or Depository Participant (DP).
What is the cost basis of inherited stock?
Generally, the original owner’s purchase cost is considered the basis, subject to applicable tax regulations.
How are inherited stocks taxed when sold?
Capital gains arising from the sale of these stocks may be subject to tax in accordance with the applicable rules.
Can I sell inherited stocks immediately?
Generally, you can sell the stocks once they have been transferred to your Demat account and are available for sale.

November 3, 2026

Blog

What Are Pink Sheet Stocks?

Pink Sheet Stocks vs Main Exchange Stocks

How Do Pink Sheet Stocks Work?

OTC Market Tiers Explained

Examples of Pink Sheet Stocks in Simple Rupees

Benefits of Pink Sheet Stocks

Risks of Pink Sheet Stocks

Pink Sheet Stocks vs Stocks on NSE and BSE

How To Buy Pink Sheet Stocks From India

Key Things To Check Before You Buy

Common Mistakes People Make

Conclusion

Frequently Asked Questions (FAQs)

What are pink sheet stocks?

What does the pink sheet stocks mean exactly?

What are the main benefits and risks of pink sheet stocks?

How to buy pink sheet stocks safely for a beginner?

Are penny stocks and pink sheet stocks exactly the same?

Gold and Silver Prices in India Ahead of Dhanteras 2026

Latest gold and silver prices in India

Recent changes in gold and silver prices

Gold vs Silver Investment – What Makes Them Different?

Gold vs Silver Returns What the Latest Numbers Tell Us

Returns on gold and silver in India

Comparison of year-on-year returns

When Gold May Be the Better Choice

When Silver May Be the Better Choice

Physical Gold, Silver or ETFs – Which Buying Method Makes Sense?

GST and Other Costs of Buying Gold and Silver in India

Investing in Gold ETFs and Gold Mutual Funds via Pocketful

How to open an account on Pocketful?

How to buy Gold ETFs?

How to invest in Gold Mutual Funds?

Do your research before investing

Mistakes to Avoid When Buying Precious Metals

Conclusion

Frequently Asked Questions (FAQs)

Is gold or silver a better investment for Dhanteras 2026?

Can I invest in gold without buying physical gold?

What is the GST on gold and silver in India?

Is silver more volatile than gold?

What should I check before buying gold jewellery?

Investment vs Speculation: Meaning

What Is the Difference Between Investment and Speculation?

Examples of Investment and Speculation in Simple Rupees

Investing vs Speculative Trading: Where Is the Line?

Key Factors That Separate Investing From Speculation

Where Do You See Investment and Speculation in India?

How To Decide Between Investing and Speculating

Common Mistakes People Make

Conclusion

Frequently Asked Questions (FAQs)

What is the main difference between investment and speculation?

Is intraday trading considered investing?

Are mutual funds safe for beginners?

Can I set off my speculative losses against my salary income?

How much of my money should I use for speculation?

How SIPs Work

Valid Reasons To Stop Or Pause A SIP

Bad Reasons To Stop An SIP

Pause Vs Stop: What’s The Difference?

Pause

Stop

What To Do Instead Of Stopping

Tax And Exit Load Considerations

Common Mistakes

Frequently Asked Questions (FAQs)

The market is crashing, and my SIP is in the red. Should I stop it?

I lost my job. Should I pause or stop my SIPs?

How long can I pause a SIP, and what happens to my existing investment?

My fund has underperformed for a year. Is it time to stop the SIP?

Will a stopped or failed SIP affect my credit score?

Why Comparing Two Stocks In The Same Industry Works Best?

Step 1: Understand The Business

Step 2: Compare Growth

Step 3: Compare Profitability

Step 4: Compare Valuation

Step 5: Compare Financial Health

Step 6: Compare Management & Governance