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  • Brokerage Charges in India: Explained

    Brokerage Charges in India: Explained

    Whenever you buy or sell stock, you don’t only pay for the stock itself it also includes brokerage and other charges. It may look like a small brokerage charge, but it can significantly impact the return. Understanding these charges can help you significantly reduce your brokerage.

    In today’s blog post, we will give you an overview of brokerage charges, their components, and how to choose the right broker.

    What are brokerage charges?

    Brokerage is a fee charged by a broker or brokerage firm for the services they offer, including the execution of transactions. Whenever you execute a trade, like buying a share or selling a share, you have to pay your broker a transaction fee called “Brokerage”. 

    Features of Brokerage Charges

    The key features of brokerage charges are as follows:

    1. Per Transaction: Brokerage is charged by the broker on every transaction you make.
    2. Different Pricing Models: A broker offers two types of pricing models: fixed percentage-based or flat fee per order.
    3. Regulated: The maximum brokerage that a broker can charge is regulated by SEBI. However, the broker has the flexibility to change it within the limit.
    4. Reducing Net Return: Brokerage will reduce the net return or profit earned from a transaction.
    5. Additional Charges: In addition to brokerage, there are several other charges, a few of which are levied by the government, such as SEBI Turnover Fees, GST, etc.

    Component of Brokerage Charges

    The various components of brokerage charges include:

    1. Brokerage: This is the primary charge levied by a broker for providing you with trading facilities. These fees can be of two types: fixed or percentage-based.
    2. Securities Transaction Tax: STT is a tax charged by the government levy applicable mainly on equities and equity derivatives. The rate varies by trade type — for example, 0.1% on delivery trades (both sides) and 0.025% on intraday (sell side).
    3. GST: Goods and Services Tax at a rate of 18% is applied on every buy and sell transaction. It is also applicable to exchange transaction fees and SEBI charges.
    4. Exchange Transaction Charges: These fees are levied by the stock exchange, such as NSE, BSE, MCX, etc. 
    5. Stamp Duty: The stamp duty is levied by the state government and is charged only on the buy side of the trade. The rate of stamp duty varies by the resident’s state.
    6. SEBI Turnover Charges: This is a very nominal fee charged by the Securities and Exchange Board of India on the total volume.
    7. DP Charges: Applicable when you sell shares from your demat account; usually ₹10–₹25 per ISIN, charged by your broker on behalf of the depository.

    Read Also: Lowest Brokerage Charges Apps for Online Trading in India

    Calculation of Brokerage Fee

    Let’s understand the brokerage fee calculation using an example.

    Suppose you purchased a share of XYZ Limited, and the share was trading around 500 INR. You purchased 1000 shares, and your broker will charge 0.10% as brokerage on the total traded volume. 

    So in this case, the trade volume will be calculated as follows:

    Share Price * Quantity

    = 500 * 1000

    = 5,00,000 INR.

    Now, the brokerage will be calculated using the formula mentioned below:

    Brokerage Fee = Trade Volume * Brokerage Rate(%)

    = 5,00,000 * 0.10%

    = 500 INR.

    In this case, the brokerage charged by your broker will be 500 INR.

    However, many popular discount brokers in India now charge a flat fee per order (for example, ₹20), which means even for a ₹5 lakh order, your brokerage could be capped at ₹20. Understanding how your broker calculates this fee is crucial, as frequent trades can significantly affect your returns.

    Factors Affecting Brokerage Charges

    The key factors affecting the brokerage charges are as follows:

    1. Trade Volume: The brokerage charges are directly proportional to the trade volume. The higher the trade volume, the higher the brokerage.
    2. Types of Securities: The brokerage charged by the broker depends on the type of security in which a person trades. The different types of security include equity, derivatives, commodities, and currencies.
    3. Type of Broker: There are two types of brokers available in the industry. Full-time brokers and discount brokers both offer different kinds of brokerage models.

    Different Types of Brokerage Firms

    In India, there are generally two types of brokerage firms:

    1. Full-Time Broker: A full-time broker offers end-to-end service to their user. Their services include broking services, investment advice, portfolio management services, etc. They charge higher brokerage or transaction charges than other types of brokers.
    2. Discount Brokerage: These types of brokers primarily focus on providing low-cost trading. They charge flat fees per order. They provide only a trading platform, but they do not offer advisory services.

    Read Also: Demat Account Charges Comparison 

    What are Minimum Brokerage Charges?

    Minimum brokerage charges refer to the lowest fee a broker imposes on any trade, regardless of its size. The exact amount varies across brokers and can depend on factors such as the type of trade, trading segment, and overall trade value. Since these charges directly impact profitability, traders should carefully review and compare brokerage structures before selecting a broker.

    What are the Maximum Brokerage Charges that a Broker Can Charge?

    The maximum brokerage that a broker can charge is regulated by SEBI, and it has set detailed guidelines for it. A broker cannot charge more than 2.5% for delivery and 0.25% for intraday trade volume.

    How do you choose the right broker in terms of brokerage charges?

    Choosing the right broker can help an investor save money; therefore, one must consider the factors mentioned below to choose the right broker in terms of brokerage charges.

    1. Trade Type: Firstly, one must understand their need or type of trade that they wish to execute. If you are an intraday trader and trade by yourself, then you must go for a discount broker. However, if you are a long-term investor and depend on the research calls of the broking firm, then you must opt for a full-time broker.
    2. Brokerage Charges: Then, one is required to compare the brokerage charges offered by different brokers and select the broker offering the lowest brokerage charges.
    3. Customer Service: Customer service is an important factor that one should consider before choosing a broker. Choose a broker that offers a higher level of customer satisfaction and resolves the query promptly.

    Read Also: Demat Account: Fees & Charges

    Conclusion

    On a concluding note, brokers are an unavoidable part of trading; having a demat account is mandatory to buy and sell stock. And each broker charges different transaction fees. One should keep a check on the brokerage they charge. Brokerage does not include only transaction costs; it also includes various statutory government taxes. Higher brokerage can significantly reduce the returns. Therefore, it is advisable to compare different brokers and choose one based on your needs and brokerage costs.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1Different Types of Charges in Online Trading
    2What are Account Maintenance Charges (AMC) for a Demat Account?
    3Top Brokers Offering Lifetime Free Demat Accounts (AMC Free)
    4Mutual Fund Fees & Charges in India
    5How to Invest in ETFs in India – A Beginner’s Guide
    6What is Intraday Trading?
    7How to Use a Demat Account?
    8How to Open a Demat Account Online?
    9NSDL Demat Account: Open, Manage & Understand Charges
    10Features and Benefits of Demat Account
    11Top AMCs in India
    12How to Cancel an IPO Application?
    13Best Brokers Offering Free Trading APIs in India

    Frequently Asked Questions (FAQs)

    1. What is the full form of STT?

      STT refers to securities transaction tax, which is levied by the government on the buying and selling of securities.

    2. Can we change brokerage charges?

      Yes, brokerage charges can be negotiated with the full-time broker. Discount brokers have a fixed brokerage, and it is non-negotiable. 

    3. Who are discount brokers?

      Discount brokers are brokers that offer low-cost broking services. They usually charge flat brokerage fees per trade. They usually do not provide research reports, investment advice, dedicated relationship managers, etc.

    4. Can I have a demat account with both a full-time broker and a discount broker?

      Yes, you can have multiple demat accounts with both a full-time and a discount broker.

    5. What are DP charges?

      DP charges are known as depository participant charges, levied when you sell shares from your demat account.

  • What is Bullet Bond? 

    What is Bullet Bond? 

    Imagine your friend needs money and promises you to pay back after a few years, you lend him Rs.10,000 but after some time he gives you two options to pay you back.

    First, he says the money can be paid back in small bits every month with some extra interest attached to it. In this you can recover your money month by month in bits, behaving just like a small loan where principal plus interest are returned month by month. But he gives you one more option where you can get a fixed interest every year and the principal amount i.e Rs.10,000 can be returned all at once after a few years.

    Bullet Bonds have the same characteristics as option 2 given by your friend, where you get interest every single year and the principal amount is settled after the end of bond tenure. A Bullet Bond is just a special kind of loan where the main amount you lent out comes back to you in one big “bullet” payment right at the end.   

    What is a Bullet Bond? 

    A Bullet Bond is an investment where you lend your money for a set amount of time. In return for your cash, the borrower pays you regular interest, which in the finance world is called a “coupon.” Here the investor’s principal amount gets returned in one single accumulated payment on the final day called the maturity date.   

    For Example: A big Indian company, let’s call it “Pace Infra Ltd.,” requires funds to build a new highway and decides to issue a 5 year bullet bond to get the funds.

    You decide to grab this opportunity and invest Rs.10,000. This is your principal, or the face value of the bond. The bond promises to pay you an 8% interest rate every year, this rate is known as the coupon rate. For the next five years, Pace Infra Ltd. will send you Rs.800 each year (that’s 8% of your Rs.10,000) as your interest payment. Then, at the end of the fifth year, the maturity date, the company pays you your final interest of Rs.800 plus your entire Rs.10,000 principal back in one go.   

    Investors earn a steady income from the interest, and at the end, they get their whole investment back at once.

    Read Also: Detailed Guide on Bond Investing

    Key Characteristics of a Bullet Bond

    • Investment Back at Once: This is the main feature associated with a bullet bond. The entire principal amount is paid back to you in a single lump sum on the maturity date.  
    • Steady Interest Payments: You get fixed interest payments (coupons) till the bond maturity. These usually come once or twice a year, giving you a predictable income you can count on.   
    • Predefined Maturity date: When you buy the bond, you know the exact end date of the future when you’ll get your principal back. This makes it incredibly easy for investors to plan their financial goals.   
    • Non-Callable: This is a fantastic feature for you, the investor. “Non-callable” means the company can’t return the initial investment back before the maturity date, even if interest rates in the market drop. This gives you security to the investors.   

    Types of Bullet Bonds 

    1. Corporate Bullet Bonds

    These bonds are issued by companies, both private and public, across India. These bonds are a little riskier as the bonds return are dependent upon companies performance, this is why companies usually offer a higher interest rate. The term corporate bond also includes Public Sector Undertakings (PSUs) ; this means the risk of investing in a bond from a top PSU is generally much lower than investing in a bond from a purely private company. It’s a crucial difference to understand when you’re weighing your options.   

    2. Government Bullet Bonds (G-Secs)

    These bonds are issued by the Reserve Bank of India (RBI) on behalf of the Government of India also known as Government Securities or G-Secs widely.

    G-Secs are the safest investment that investors can make in India, because they are fully backed by the government of India, and it’s rare that the government will fail to pay back its loans. These bonds come with a low interest rate as they have a solid safety from the government itself. Most of the government bonds are bullet bonds by nature, as you get the full principal returned back at maturity.   

    3. Zero-Coupon Bullet Bonds

    Zero-coupon bonds are different because they don’t pay regular interest to investors. In this the investors buy bonds at much less than their actual face value (at discounted rate), when the bond matures, you get the full face value back. Your profit is the difference between the low price you paid and the full price you get at the end.

    Read Also: What are Bond Valuation?

    Bullet Bond Strategies

    1. The Bullet Strategy

    This is the most direct strategy where investors buy several different bonds, but they make sure they all mature around the same time.The goal is to gather a large sum of money on a specific date in future.

    2. The Ladder Strategy

    With this strategy, you invest in bonds that have different, staggered maturity dates. For example, you could buy bonds that mature in 1 year, 2 years, 3 years, 4 years, and 5 years. As each bond matures, you can reinvest that money into a new 5-year bond, keeping the “ladder” going.   

    3. The Barbell Strategy

    This is a slightly more advanced strategy where you invest only in very short-term bonds (e.g., maturing in 1-2 years) and very long-term bonds (e.g., maturing in 10+ years), while completely avoiding the middle ground.The idea is to balance the safety and flexibility of short-term bonds with the higher potential returns of long-term bonds. 

    Advantages of Investing in Bullet Bonds

    • Simple and Predictable: Bullet bonds are simple in nature, investors exactly know the interest they’ll get and precisely when the bond will mature giving back investors their original invested amount.   
    • Goal Centric: That big lump sum payment on the expiry date makes bullet bonds an easy goal centric option for investors as they can plan their future according to the expiry date of the bond.   
    • Risk Protection: Bullet bonds are “non-callable” making them risk free as it locks in your interest income for the entire term and protects you from the issuer sudden return of investment. 

    Disadvantages of Investing in Bullet Bond

    • Interest Rate Risk: This is the risk that interest rates in the market could go up after you’ve bought your bond. If new bonds are being issued with higher rates, the fixed rate on your bond suddenly looks less appealing.   
    • Reinvestment Risk: This risk pops up when your bond matures and you get your principal back. If interest rates have fallen over the years, you now have a big pile of cash to reinvest, but all the new investment options are offering lower returns than what you were getting before.   
    • Credit Risk: This is the straightforward risk that the company you lent your money to might face downturns due to overall market, internal company issues etc and be unable to pay your interest or return your principal. The level of this risk depends entirely on the financial health of the issuer.   
    • Liquidity Risk: It would be a challenge if you require funds urgently even before the bond matures as you might not be able to sell your bond easily. Especially from smaller companies, where they might not have a lot of buyers waiting, meaning you have to sell at a discount if you’re in a rush.   

    Read Also: Benefits of Investing in Bonds

    Conclusion

    So, there you have it. You’ve just demystified one more piece of the financial puzzle. Bullet bonds are a simple and powerful tool, especially for those of us who appreciate clarity and predictability. Their straightforward structure with regular interest, and your money back in one go at the end makes them incredibly easy to understand and perfect for planning towards your biggest life goals.   

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1What are War Bonds?
    2What is Sovereign Gold Bonds?
    3What is Coupon Bond?
    4What is Insurance Bond?
    5What are Social Bonds?
    6Straight Bond: Key Features, Benefits & Risks
    7What Is a Callable Bond?
    8Government Bonds India
    9Types of Bonds in India
    10Tax-Free Bonds
    11What are Bond Yields?
    12Stocks vs Bonds
    13What is Indemnity Bond?
    14Secured and Unsecured Bonds
    15CAT Bonds: An Easy Explainer
    16What Are Corporate Bonds?
    17What are Contingent Convertible(CoCo Bonds)?

    Frequently Asked Questions (FAQs)

    1. Are all G-Secs categorised as bullet bonds? 

      While the government issues various types of bonds, the most common fixed-rate government bonds (G-Secs) that you’ll come across act as bullet bonds. They pay you regular interest and give you the full principal back when they mature.   

    2. If a bullet bond is non-callable, does that mean investors’ money is stuck until maturity? 

      Here “Non-callable” means the bond issuing entity cannot pay you back early. You, as the investor, still have the freedom to sell your bond to another investor in the market if you need the cash before the maturity date.   

    3. Why do companies issue a bullet bond instead of one that pays back principal over time? 

      Companies issue these bonds for multiple uses such as factory building, bridge construction and such projects take a long time and might not make much money in the early years. A bullet bond lets them use the full loan amount for the entire project duration and plan for one big repayment in the future. 

    4. All zero-coupon bonds are bullet bonds?

      Yes, zero-coupon bond is defined by the fact that it makes one single payment to the investor at maturity. Since that’s the very definition of a “bullet” payment, a zero-coupon bond is just a special type of bullet bond.

  • Difference Between Gold ETF and Silver ETF

    Difference Between Gold ETF and Silver ETF

    Investing in gold and silver used to be a task in the earlier days, you would have to go to a trusted jeweller, look into the purity, pay making charges, and then look for a safe locker to place them. But now, there’s an easier way for buying called an Exchange Traded Fund, or ETF.

    ETFs are investment products where you can buy and sell these metals in the stock market, just like company shares. For precious metals, knowing how to invest in gold and silver ETF products is a game-changer. Both gold and silver ETFs let you invest in these metals easily, without any hassle. But there is a difference between Gold and Silver ETF and in this blog we will break down the gold and silver ETF options to help you see which is right for you.

    What are Gold ETFs? 

    It’s an investment that simply follows the market price of pure gold. A fund company buys big bars of pure gold and stores them safely in their vaults. For every gram of gold they own, they create one ‘unit’ of the Gold ETF. When you buy one unit on the stock market, you’re buying one gram of gold in electronic form. Investors just need a Demat and trading account, the same one that is used for stocks.

    Advantages of a Gold ETF

    • Cheap and Easy: Forget about the making charges and locker fees as in Gold ETFs, you only pay a tiny annual fee and a small brokerage charge when you trade online.
    • Pure and Transparent: You get 99.5% pure gold, guaranteed and the price is the same for everyone across India, unlike at jewellery shops where prices may vary.
    • Buy and Sell Anytime: You can trade Gold ETFs anytime during the stock market hours. You can start with just one gram and sell easily without hunting for a buyer.

    Disadvantages of a Gold ETF

    • No Regular Payouts: Unlike a Fixed Deposit, a Gold ETF doesn’t pay you interest on your investment. You only make money if the price of gold goes up.
    • Market Risk: The value of your ETF goes up and down if the price of gold fluctuates and value goes down if  gold’s price falls.
    • No Physical Possession: With an ETF, investors own just a paper (in your Demat account), but you can’t touch it physically or wear it to a wedding.

    Read Also: List of Best Gold ETFs in India

    What are Silver ETFs?

    A Silver ETF is just like a Gold ETF, but for silver. A fund company in the similar way buys pure silver bars, stores them in vaults, and issues units that can be traded on the stock market. They are newer as compared to Gold ETFs options in India but they work completely the same.

    Advantages of a Silver ETF

    • Affordable: Silver is much cheaper than gold, making it easy for new investors who want to put their money in metals.
    • Industries Need: Silver is used in everything from smartphones, solar panels and even electric cars. It has a huge industrial demand that can really push its price up.
    • Grow Faster: Because its price is tied to industrial growth, silver can grow rapidly. In a booming economy silver prices can shoot up, potentially giving you higher returns.

    Disadvantages of a Silver ETF

    • Price Swings: That industrial demand is a double-edged sword. If the economy slows down, silver’s price can fall rapidly, they are much more volatile than gold, which means it’s a riskier investment.
    • Not Popular: In India, most of the people trade in Gold ETFs, meaning Silver ETFs are less “liquid” and it might be a bit harder to sell your units at the exact price and time you want.
    • Tracking Error: Like any ETF, there can be a small difference between the ETF’s return and the actual price of silver. Though SEBI keeps this error low, it’s good to know it exists.

    Similarities Between Gold and Silver ETF Funds.

    • Traded Like Stocks: You can easily invest in these ETFs on the stock exchange (NSE/BSE) using your Demat account and Trading account.
    • No Physical Possession: Both are safe from physical problems of storage, purity checks, and theft.
    • Clear Pricing: You can see the live prices for both ETFs anytime during the market hours.
    • Low Costs: They are passively managed by funds, so their annual fees (expense ratios) are usually very low.
    • Portfolio Enhancement: Both gold and silver can help in balancing your investments. Their prices often move differently from the stock market, which helps lower your overall risk.

    Read Also: Best Silver Mutual Funds to invest in India

    Differences Between Gold ETFs vs. Silver ETFs

    The real choice comes down to what you want from your investment. One is about safety, the other is about growth.

    FeatureGold ETFSilver ETF
    Main JobPeople buy it to protect their money during bad economic times and fight inflation.People buy it when they think the economy and industries will grow fast.
    Price DriverDepending upon demand, central bank policies and global uncertainty. Depending upon industrial demand and investors actions.
    Price SwingsThe price moves up and down, but usually remains stable.Very volatile. The price can shoot up or crash down sharply, making it volatile.  
    Trading PopularityVery popular and highly liquid. Less popular than gold and comparatively less liquid.  
    Cost to BuyMore expensive per gram.Much cheaper per gram, so it’s easier to get started.
    Best Suitable ForCautious investors who want stability and are thinking of long-term investments.Investors who are comfortable with risk and are hoping for faster growth.

    Gold ETF vs. Silver ETF: Where Should You Invest?

    You should consider the following before making the right decision:

    1. How much risk can I handle as an investor and are you ready for the market fluctuations? If you are looking for steady investment that grows with time then  Gold ETFs can be a beneficial option for your investment as they are less volatile compared to shares or stocks. On the other hand if you are looking for a good growth as well as higher risk as compared to gold then Silver ETF could be exciting, but you need to be ready for the ups and downs of this metal.
    2. Gold ETFs are preferred if you don’t minimise the risk and looking for a stable investment option in the market, however looking for a high potential gain and risk attached, silver can be the right investment as it is directly linked to the economy, if the economy rises silver will automatically rise but if there is a slowdown then you can even expect less return on your investment. 

    The investment done in these ETFs are taxed on the profit you make by selling these ETFs, also the rules have changed and now there is a higher tax levied on your long term profits. 

    Read Also: Top Gold Mutual Funds in India

    Conclusion

    Gold and Silver ETFs have made it easier for Indian investors to put their money directly in these precious metals. These investments have removed all the primitive old ways like possessing these metals physically, checking the purity of the product and paying for the locker to keep your gold or silver safe.

    Gold offers you stability, a safe place for your money when things get rough. Silver offers you a shot at higher growth, tied to the world’s industries, but with more risk. Neither one is better than the other, the best one is simply the one that is suitable as per your financial planning.

    S.NO.Check Out These Interesting Posts You Might Enjoy!
    1A Guide To Investing In Gold In India
    2How to Invest in Gold ETF
    3Best Gold Stocks in India
    4Top 10 Reasons to Invest in Gold
    5Gold ETF vs Gold Mutual Fund: Differences and Similarities
    6Digital Gold vs Gold ETF: Which is Better?
    7Mutual Fund vs ETF. Are They Same Or Different?
    8Sovereign Gold Bonds vs. Gold ETF: Which is a Better Investment?
    9Gold BeES vs Gold ETF: Meaning, How It Works, Taxation
    10Best ETFs in India to Invest
    11List of Best Commodity ETFs in India
    12Gold Investment: How to Invest in Gold in India?
    13Best Silver Mutual Funds to invest in India

    Frequently Asked Questions (FAQs)

    1. Can ETFs be bought with my regular trading account?

      Yes, you can easily buy and sell these ETFs using your regular trading account and Demant account. 

    2. From how much can I start with ETF investments?

      Investment can just start from just buying one unit which means one gram of the metal, it can just start from a few hundred rupees. 

    3. Are these ETFs safe to invest?

      They are regulated by the Securities and Exchange Board of India (SEBI) which makes them safe for investing. Fund companies are required to keep real, pure gold or silver in secure vaults which are regularly checked.

    4. How are they taxed?

      Capital Gains tax is levied on the selling of the ETFs and profits earned from it. It is advised that you should keep a good idea about the taxes and the changing policy.

    5. Can Investors get actual gold or silver instead of cash?

      When investors sell their ETF units, they only get cash out of it and physical gold or silver is not given. Sometimes big investors who have invested a large amount can get physical metal (but it is subjective).

  • What is a BTST Trade?

    What is a BTST Trade?

    There are different types of trading methods in the financial market, some focus on making money within a day where you buy and sell the shares within the same day to get profits out of it and some are for long term investment where you invest for a long term period, hoping the value will grow over time.

    But there is one more strategy in between these two strategies, where you invest or buy today and sell it tomorrow to catch quick price movements. This is exactly where a BTST trade comes in, it is a popular strategy for traders who want to hold a position for more than a day but less than a few weeks.

    In this blog, we’ll dive into the concept of BTST Trade. You’ll learn what BTST means, how it works, and the different ways you can use it in your trading journey. Since understanding the basics is the first step to using this strategy effectively, let’s break it down in detail.

    What is a BTST Trade?

    The full form of BTST is “buy today, sell tomorrow”, identical to its name BTST trade means you are buying the shares today and selling them in a few time gaps. The main game lies in the stock market settlement process as whenever you buy new shares they do not directly appear in your Demat account rather it takes one working day for the shares to be delivered, this process is known as T+1 settlement cycle i.e Trade day + 1 day. 

    In BTST trades investors sell their shares even before they get officially delivered to their demat account, these shares are already bought by you but not yet delivered, they are still in transit. The main idea behind the BTST trading is to gain profits from short-term price changes that happen overnight. For example: Suppose you are tracking the stock of a company and by looking at the company’s performance you think it is going to announce good results tomorrow, with a share price of Rs.200/share you buy 100 shares worth Rs.20,000. You place a ‘buy’ order using the CNC (Cash and Carry) or Delivery option in your trading app. The next day, the company announces excellent results, as you predicted. The stock market opens, and the share price jumps to Rs.210 and you sell your 100 shares at Rs.210 immediately, giving you a profit of Rs.1,000 (100 share X Rs.210) in just one day. 

    How to Execute a BTST Trade? 

    1. Select the Right Stock: Investors shall look for stocks that have high liquidity meaning these stocks have high trading volume. In short it means that people are buying and selling it in high volume, so they are easy to buy and sell whenever you want.  
    2. Buy Order: Investors shall buy the decided share on the trading day (let’s call it T-Day), as you will place the order you would have to select Delivery or CNC (Cash and Carry) option. Avoid clicking on intraday or MIS options as this would force you to sell the shares within the same day. 
    3. Hold Overnight: Once you have placed the order and it is executed, you need to wait for the market to close and hold this position overnight. 
    4. Sell Order: As the market opens on the next day (T+1 Day), you should sell the shares you have bought just by going to your portfolio, selecting the stock and placing the sell order.

    The BTST transaction is completed as you will execute the sell order and the profits and loss related to this will be reflected in your trading account. 

    Things to Keep in Mind 

    1. Short Delivery

    One of the common risks in BTST trading is short delivery. Normally, when you buy shares on T day, they get credited to your demat account on T+1 day. Sometimes due to seller default or settlement issues, the shares may not be delivered on time and this situation is called Short Delivery. Due to this you will not be able to sell the shares as planned as you haven’t received the stocks yet, when this default comes in the eyes of the stock exchange they hold an auction to buy the shares from the open market which are then delivered to your buyer. Here the price difference between your selling price and auction price is to be paid by you also called the auction penalty, this penalty can be up to 20% of the share value, which could result in wiping out your profits or can even lead to significant losses. 

    Although it is not common in large liquid stocks, it is something that you should keep in mind before executing BTST trades.  

    2. Broker’s Permission

    Not all the stocks are eligible for BTST trades, if not permitted by the broker. Some brokers provide a list of stocks that are eligible for BTST trades, so one should always check this before executing a BTST trade.

    3. Full Capital Required

    Compared to Intraday trades where investors get the benefits of leverage (margin), in BTST investors need to have a full amount of money to buy the shares. 

    4. Volatility Risk

    The financial markets are very unpredictable, sometimes the market does not change due to positive news. Also, a global event overnight can cause the entire market to fall, leading you towards losses. 

    BTST Trade Strategies for Beginners

    Let’s look at some trade strategies that can be used while executing BTST trades:

    1. News and Events-Based Strategy

    This strategy is widely used by BTST traders, they buy the stock a day before a major company event like result announcement, merger, new product launch or policy changes. If these events turn out positive then there is a possibility that the prices will rise the next day, allowing you to sell the stock for a quick profit. 

    2. Breakout Strategy

    This strategy mainly revolves around technical analysis as investors need to look at the stock’s price chart as sometimes a stock might trade within a certain price range but when it finally breaks above that range (a ‘breakout’), it often continues to move up with strong momentum. Here investors purchase the stock on the day of breakout expecting the positive price momentum to continue for the next day.

    3. Capturing Market Sentiment

    In this strategy you need to have a look on the overall mood of the market, if the market is moving in an upward trend then the general market sentiments are very positive meaning the stocks tend to rise. You can have a look and invest in the leading sectors of the market and sell it next morning to ride the positive wave.

    BTST Trade vs. Intraday Trading

    Many beginners get confused between BTST and Intraday trading, here is a quick comparison for you to know the right difference. 

    FeatureIntraday TradingBTST Trading
    Time FrameBuy and sell on the same day.Buy today, sell on the next trading day.
    Position HoldingPositions are closed before the market closes.Positions are held overnight.
    Main GoalProfit from price movements within a single day.Profit from overnight price changes and opening gaps.
    Risk of Short DeliveryNo risk, as you don’t need delivery of shares.Yes, there is a risk of an auction penalty on short delivery.
    Leverage/MarginHigh leverage is usually provided by brokers.Generally, no leverage. You need 100% of the money.
    Order Type‘MIS’ (Margin Intraday Square off) or ‘Intraday’.‘CNC’ (Cash and Carry) or ‘Delivery’.

    Advantages of BTST

    1. Quick Profits Potential: BTST allows traders to earn profit from short-term price movements without holding their stocks for a long period. Also the invested capital gets back to the investors as they sell, giving them possibilities to trade further.  
    2. Overnight News Benefits: Global market news generally comes after the closure of the Indian stock market, giving you an edge to benefit from these overnight turns.
    3. Avoids Same-Day Volatility: Intraday trading can be very stressful, as there is a price fluctuation every minute, but with BTST you can make a decision and avoid the pressure of having to close your position before the market closes.  
    4. Good for Swing Trading: If the stock seems to continue with its positive momentum then you can keep it on hold for a few more days instead of selling it immediately, BTST can be the first step in a swing trade. 

    Disadvantages of BTST

    1. Short Delivery Penalty: An auction penalty can turn your profitable trade into a loss hampering your expectations and funds.
    2. Overnight Market Risk: Overnight news and events can be fatal as well because you don’t have any control over what happens in the world when you are asleep. One negative event can change your profits into a loss.
    3. No Ownership Rights: As the shares are sold even before you get them in your Demat account, any company benefits like bonuses or dividends are not eligible for you as you are not the legal owner.  
    4. Brokers Restrictions: If there is a high volatility in the financial market, brokers might restrict BTST trades of certain stocks in order to protect their clients from high settlement risk. 

    Conclusion

    This is a trading strategy that is neither as fast as Intraday trading nor as patient as long term investing, it is a middle-ground strategy. It is something that fits perfectly in between offering traders a unique opportunity to earn profit from short term events, news or changing market sentiments. 

    However, it does not end in the desirable way as it comes with risk associated with it which can impact you in a negative way. Investors shall understand the proper mechanism, start with a small amount of capital and look for opportunities in highly liquid stocks before starting BTST as this can minimize your losses.  

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    Frequently Asked Questions (FAQs)

    1. Is BTST trading legal in India?

      Yes, BTST trading is completely legal in India, as it is just a facility offered by stockbrokers, though every broker might have some terms and conditions so one should always check before investing. 

    2. Do I have to pay any penalty if I don’t sell the BTST trade the next day? 

      No there is no penalty levied, if the shares are not sold the next day and they start to reflect in your Demat account then it simply becomes a normal delivery and now you can sell these shares anytime you want in the future. 

    3. Which stocks are best for BTST trading? 

      Stocks that have high trading volumes are best suitable for BTST trades as due to high liquidity there is a less chance of default. Also look for stocks that are part of major indices like Nifty 50 or Sensex. 

    4. Can BTST trading be done in the Futures & Options (F&O) segment? 

      No. The concept of BTST is specific to the cash/equity segment of the market because it is linked to the T+1 share settlement process. F&O contracts have their own monthly expiry and settlement rules and do not involve the delivery of shares in the same way.

    5. Can I calculate the penalty for short delivery in a BTST trade? 

      The penalty is the difference between the price at which the share are bought in the auction and the price at which you sell them, also the auction price can be up to 20% higher than the previous day’s closing price, making the penalty potentially very large.

  • Top 10 Smart Beta ETFs in India 2026: Smart Investing Guide

    Top 10 Smart Beta ETFs in India 2026: Smart Investing Guide

    You must have heard about ETFs in the financial market, but have you heard the Smart approach of these ETFs? Here comes the ETF that is smart in nature, you being a smart investor shall know about these Smart Beta ETFs. 

    An ETF is like a basket containing many different stocks that you can buy or sell as a single unit on a stock exchange. This provides a simple, low-cost way to diversify your investments. 

    In this blog we will learn about what a Smart Beta ETF is and also look at the Best Smart Beta ETFs that you as an investor can use for your future investment.

    What is a Smart Beta ETF?

    A Smart Beta ETF is a type of Exchange Traded Fund (ETF) that offers a middle path between traditional index investing and active fund management.

    Unlike a standard index fund (like a Nifty 50 fund) which invests in companies based on their market size, a Smart Beta ETF uses a rules-based strategy to select stocks based on specific characteristics or “factors.” The goal is to achieve better returns or reduce risk compared to a market-size-weighted index.

    In Smart Beta ETF Funds some common strategies are used like value of these ETFs, recent momentum seen in the ETFs, quality of the ETFs by focusing on the company’s financial health and even things like low volatility of these ETFs. 

    Top 10 Smart Beta ETFs in India 

    This ETF provides investors with an exposure to fundamentally strong companies beyond just the top 100 large caps. Though this ETF might have lower trading volumes (liquidity) compared to its larger peers, which could slightly increase trading costs.

    Investors that are looking for a mix of both large cap and mid cap companies can opt for this ETF. 

    ETF Name/FundFactorPrice (₹)Market Cap / AUM (₹ Cr.)Expense Ratio (%)
    UTI Nifty 200 Momentum 30Momentum21.2982040.45
    ICICI Pru Nifty 100 Low Vol 30 ETFLow Volatility22.393,7570.41
    ICICI Pru Nifty Alpha Low-Vol 30 ETFAlpha & Low Volatility27.1817700.41
    Nippon India Nifty 50 Value 20Value149.991680.26
    DSP Nifty 50 Equal Weight ETFEqual Weight3365950.20
    Kotak Nifty Alpha 50 ETFAlpha / Momentum48.866890.30
    HDFC NIFTY 100 Equal WeightEqual Weight16.873960.40
    Mirae Asset Nifty 200 Alpha 30 ETFAlpha / Momentum25.204250.47
    Edelweiss Nifty 100 Quality 30Quality14.721550.32
    SBI ETF QualityQuality225.53800.30
    (as on 10 October, 2025)

    Here is a list of the top 10 smart beta ETFs and index funds in India.

    1. UTI Nifty 200 Momentum 30 Index Fund

    In this fund Momentum strategy is used as it tracks the Nifty 200 Momentum 30 Index and picks 30 stocks from the top 200 companies which tracks the strongest performance for the last 6 to 12 months.    

    This smart beta ETF has potential to give very high returns during the strong market uptrend, as the fastest moving stocks are included in this.  Though this could be termed as a high risk strategy as the market trend can change as the high momentum stocks can even fall quickly as they can rise.   

    This smart beta ETF is best suitable for Aggressive investors who can take high risk as this strategy is cyclical to understand. 

    You can add this high octane strategy to your portfolio through Pocketful. Simply search for the UTI Momentum 30 Index Fund and start investing with just a few taps.

    2. ICICI Prudential Nifty 100 Low Volatility 30 ETF

    In this ETF a low volatility strategy is used as it tracks Nifty 100 Low Volatility 30 Index. In this ETF 30 stocks from the top 100 companies are selected that have witnessed least price fluctuation over the past year, you can expect a less fluctuation in this ETF.

    This smart beta ETF provides stability to your financial portfolio which may fall less than the others during the market corrections. But during the bullish market scenario this fund might give you a lower return than the main index.   

    Conservative investors, retirees, or anyone who wants to avoid high market swings or minimize their overall portfolio risk can opt for this smart beta ETF. 

    You can Invest in this smart beta ETF using the Pocketful platform as it gives you a friendly interface to make your financial investments. 

    3. ICICI Prudential Nifty Alpha Low-Volatility 30 ETF

    This ETF is a multi strategy ETF that combines two different strategies combining ‘Alpha’ (high momentum) and ‘Low Volatility’ at one place. This smart beta ETF tracks the well performing companies that are relatively stable. You can expect good returns with minimal risk attached to it.   

    This smart beta ETF offers diversification to the investors compared to single factor ETF as low volatility can reduce the risk of the aggressive alpha strategy. Though this fund cannot fully protect like a low volatility fund.

    It is best suitable for moderate risk taking investors who like to do factor investing but do not want to bet on just one factor. 

    With Rs.0 brokerage on delivery, you can build a diversified factor portfolio efficiently by investing in ICICI Pru Alpha Low-Vol 30 ETF that is available on Pocketful.

    4. Nippon India Nifty 50 Value 20 Index Fund

    A ‘Value’ investing strategy is used in this smart beta ETF as it tracks the Nifty 50 Value 20 Index, which selects 20 companies from the Nifty 50 that appear to be undervalued based on metrics like low P/E ratio, low P/B ratio, and high dividend yield.   

    In this a “buy low, sell high” strategy is used as there is a high potential for great returns when these undervalued stocks are discovered by the market and their prices rise.

    But these stocks can stay at low prices for a long time (also known as ‘value trap’) as the market gets affected by the expensive, high growth stocks.   

    Investors that are looking for long term Patient investors with a long term horizon who believe in the value investing philosophy shall invest in this smart beta ETF.

    5. DSP Nifty 50 Equal Weight ETF

    Here a strategy known as ‘Equity Weight’ strategy is used where instead of giving more weight to the bigger companies it divides the investment and only invests 2% of the whole amount equally in all 50 companies of the Nifty 50 index.  

    It reduces the risk of having too much money in just a few top companies. It gives more exposure to smaller companies in the Nifty 50, which could have higher growth potential. But you should be aware that it can underperform the regular Nifty 50 when a few giant companies are driving the entire market rally and this frequent rebalancing can lead to slightly higher costs.   

    It is best suitable for investors who want to invest in the top 50 companies but are worried about the heavy concentration in the standard Nifty 50 index.

    The DSP Equal Weight ETF on Pocketful offers a truly diversified way to invest in the Nifty 50.

    6. Kotak Nifty Alpha 50 ETF

    This smart beta ETF follows the Nifty Alpha 50 Index that is a pure ‘Alpha’ or high momentum strategy. Here 50 stocks from the top 300 companies are selected according to their previous years performance. 

    This smart beta ETF selects the top performing stocks of the market offering very high returns during strong market trends. But this can be very risky as well as the stocks that rise rapidly can even fall very fast.

    If you are an aggressive investor who has complete understanding of the market cycle and is aware about the sharp falls then this smart beta ETF is suitable for you. 

    For those with a high risk appetite seeking high returns, the Kotak Alpha 50 ETF can be found on the Pocketful app. Remember to research thoroughly before investing in such aggressive strategies.

    7. HDFC NIFTY 100 Equal Weight Index Fund

    This smart beta ETF tracks the Nifty 100 Equal weight index and gives equal 1% weight to each of the 100, this is also an Equal Weight fund but is more diverse than DSP one.   

    The best part is that it has diversification across 100 large cap stocks, which greatly reduces concentration risk but remember, it may lag when a few mega cap stocks are driving the market.

    If you want your portfolio to represent the broad Indian large cap market without just some of these being dominated, you can opt for this ETF. 

    8. Mirae Asset Nifty 200 Alpha 30 ETF

    A high momentum or ‘Alpha’ strategy is used in this ETF, where it tracks the top 30 stocks from the top 200 companies using Nifty 200 Alpha 30 Index.   

    This ETF captures the fast growing mid cap stocks as the focus is on 30 high momentum stocks. Though it comes with all the risks of a momentum strategy, including high volatility and the risk of sharp reversals. It is also a relatively new ETF with a limited track record.   

    This is best suitable for aggressive investors who are comfortable with high risk and want to bet on current market trends continuing. 

    You can invest in this smart beta etf using the Pocketful platform where you can even compare it with other momentum ETFs to make a balanced strategy. 

    9. Edelweiss Nifty 100 Quality 30 Index Fund

    In this ETF Nifty 100 Quality 30 Index is tracked where 30 companies from the Nifty 100 based on their quality score like high return on equity, low debt, and stable earnings growth are selected. This fund follows the ‘Quality’ strategy as it relies on qualities of the tracked companies. 

    This fund provides steady long term growth as you invest in fundamentally strong, well managed companies which can be resilient during bad economic times. But the quality of the stocks can sometimes be expensive, as it might give lower returns during market rallies led by riskier, lower quality stocks.

    This fund is ideal for long term investors who prefer to own stable, profitable businesses.

    10. SBI ETF Quality

    Quality factor is followed in this ETF, where it tracks the Nifty 200 Quality 30 Index. It is similar to the Edelweiss fund but selects stocks from a broader list of the top 200 companies, which means it can include some high quality mid cap stocks.   

    Read Also: Best ETFs in India to Invest

    Risks & Limitations of Smart Beta ETFs

    Before you invest, it is very important to understand the risks because “Smart” does not mean “risk free.”

    • Market Cycle Dependency: Performance of these ETFs may differ according to the market cycles, as different sectors have their good and bad years and different factors also have their own cycles. Some of these can perform poorly for a few years and then suddenly become the top performer.   
    • Limited liquidity in India: Although ETFs trade like stocks but not all of them are traded with the same intensity, some of the small beta ETFs might have few buyers or sellers which can lead to a wider “bid ask spread” (the difference between the buying and selling price), this can act as a small hidden cost every time you trade.   
    • Factor concentration risk: When you invest in a single factor ETF, you are concentrating your money in one particular style of investing. If that style goes out of favour with the market, your portfolio could underperform the broader market for a long time.   

    Read Also: Small-Cap ETFs to Invest in India

    Conclusion

    Smart beta ETFs offer an exciting and intelligent way to invest and also are a great middle path between simple, passive index funds and expensive, actively managed funds.

    However, they are not a magic wand for higher returns. The right smart beta ETF for you depends completely on your own financial goals, how long you want to invest for, and how much risk you are comfortable taking. Investors that are looking for conservative investments can opt for a low volatile ETF or Quality ETF and for aggressive investors a Momentum or Alpha ETF can be best suited.  

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    Frequently Asked Questions (FAQs)

    1. Difference between a Nifty 50 ETF and a smart beta ETF? 

      A Nifty 50 ETF simply buys the 50 stocks in the index according to their market capitalization; on the other hand smart beta ETF uses a set of rules to pick stocks based on factors like value, quality, or momentum.

    2. Active mutual funds or smart beta ETF, which one should I choose? 

      Smart beta ETFs are rules based, transparent, and usually have lower fees and active funds depend on a fund manager’s skill, which can be great but often costs more. For new investors smart beta is a good middle ground for their financial investments.

    3. How much of my portfolio should I put in smart beta ETFs?

      There is no fixed rule, many investors start by putting a small part, maybe 10% to 20%, of their equity investment into smart beta funds. It is always a good idea to consult a financial advisor.

    4. From how much investment can I start investing in Smart Beta ETFs?

      New investors can start by only buying one unit of the ETF (similarly like a stock), whereas the price of one unit can start from just Rs.100. Platforms like Pocketful that have an easy interface for the users makes investing easier for everyone.

    5. Can smart beta ETFs give guaranteed returns? 

      No, there is no guarantee because different factors perform well at different times. A smart beta ETF can underperform the main market for long periods, so it is important to understand the risks.

  • Stock Market vs Real Estate: Which Is Better?

    Stock Market vs Real Estate: Which Is Better?

    A good investing decision is incomplete until you do a deep analysis and comparison of the options before you. With that being said, it is important to consider all the options available to you to ensure you do not omit a golden opportunity.

    Among these, the stock market vs real estate investment stands out. While both offer great returns to the investors, the risk of losses is equally high as well due to market uncertainty. But that is not it. Many investors are still looking for an answer to know which of these two is.

    So, if you are planning your investments for this financial year, then read this guide. Understand the key aspects and get an answer to the most searched question of the stock market or real estate: which is better. So, let us get started here. 

    What is Stock Market Investment?

    Stock market investment refers to buying shares of companies. These are the ones that are listed on exchanges like NSE and BSE in India. By this investment, you own a small portion of the company.

    Your wealth grows when the company performs well. This is because a positive performance will raise the share prices and will help you earn profits on them. At the same time, a few companies also offer dividends. This all helps you earn better. 

    Compared to real estate, stocks offer higher liquidity and easier diversification. This is why it is more appreciated by investors of all sorts.

    Features of Stock Market Investment

    • Ownership in Companies: You own a part of the company when you buy shares. 
    • High Liquidity: These can be easily bought and sold on the exchanges during working hours. 
    • Volatility: Prices fluctuate daily. These are influenced by company performance, the economy, and global events.
    • Diversification: Investors can select from various companies to invest in. It can be spread across sectors. This helps with better risk-return balance.
    • Regulation: The transactions in the stock market are regulated by SEBI. This is mainly to safeguard investors.

    Pros of Stock Market Investment

    • Potential for High Returns: The stocks are known to offer good returns when kept for a longer run.
    • Liquidity Advantage: The stocks are easy to trade. This means when the prices are high, you can sell them. This will help you earn a profit and exit the trade. 
    • Dividend Income: Investors earn passive income as well. This is mainly through dividends from profitable companies.
    • Lower Entry Cost: There is no limit to trade. You can start trading with as low as INR100. 
    • Portfolio Diversification: There is no limit to the number and type of stocks you can invest in. It is all based on your plan and profile.

    Cons of Stock Market Investment

    • Market Volatility: The prices tend to move up and down quite frequently. So, there is a risk of loss as well. 
    • Risk of Capital Loss: If the company performs below standard, then you might be in a position to book the losses.
    • Requires Knowledge & Discipline: Knowing the market and trends is important. If you fail to analyze, you might incur losses. 
    • Short-Term Uncertainty: Longer run is usually good in the stock market. But those looking for short-term returns can face uncertainties. 
    • Dependence on Economic Cycles: Stocks are impacted by various factors. Any change in one of these will directly impact the stock prices. 

    Read Also: Bull vs Bear Market: Meaning, Differences and Indicators

    What is Real Estate Investment?

    Real estate investment involves purchasing physical property. This can be a land, house, apartment, or even a commercial space.  The main aim of such investments is to generate rental income and have capital appreciation. 

    These are tangible in nature, which is a primary reason why people prefer them.  For profits, you need to stay invested for the long run. In India, property has traditionally been one of the most preferred ways to build wealth due to cultural trust and potential price appreciation.

    Features of Real Estate Investment

    • Tangible Asset: It is a physical asset.. You can use, rent, or sell it. 
    • Capital Intensive: The amount that you need to invest in property is quite high. It usually starts from lakhs. 
    • Illiquidity: It is not easy to sell property. You might need months to find a good buyer and a preferred rate. 
    • Appreciation Over Time: If your property is located in a developmental area, the price will rise. But if it is not, the growth will be very slow. 
    • Dual Returns: Investors can earn from rental income. There is capital appreciation as well. 

    Pros of Real Estate Investment

    • Stable and Secure Asset: It is tangible in nature. Hence, the chances of sudden losses are less. 
    • Regular Rental Income: You get a regular passive income in the form of rent. Capital appreciation is inherent. 
    • Hedge Against Inflation: The property can offer you a cushion against inflation. This is why it is considered a good passive income. 
    • Emotional and Social Value: This is why people prefer to have their own house and property in India. 
    • Leverage Opportunity: You can get loans to buy the property and pay gradually over the years. 

    Cons of Real Estate Investment

    • High Entry Cost: Requires substantial capital compared to starting with stocks.
    • Low Liquidity: Selling property takes time. If the market conditions are bad, the time will be longer. 
    • Maintenance and Taxes: There are various additional costs that you would need to pay when you own a property. 
    • Location Risk: The returns from your property will be based on where it is located, so there is uncertainty. 
    • Less Diversification: There will be huge capital locked up when you buy a property. This can be used somewhere else for faster growth.

    Read Also: Stock Market vs Commodity Market

    Stock Market vs Real Estate: A Comparison

    When it comes to stock market vs real estate in India, both are great choices. But they differ in their features, which makes it important for you to compare them. 

    FactorStock Market InvestmentReal Estate Investment
    ReturnsHistorically higher in long-term. The average returns around 10–15% annually.Moderate returns. The property values rise 6–10% yearly plus rental income.
    LiquidityHighly liquid; shares can be sold instantly on exchanges.Low liquidity; selling property may take months or years.
    Entry CostVery low; can start with as little as ₹100.Very high; usually requires lakhs to crores in capital.
    DiversificationEasy; investors can spread across sectors and companies.Difficult as most of the capital is invested in one property.
    RiskHigh short-term volatility. It is influenced by markets and the economy.Lower volatility. All the risks depend on location, demand, and legal issues.
    Tax BenefitsCapital gains tax on profits; tax-saving options through ELSS.Deductions on home loans and tax benefits on rental income.
    ManagementRequires research and monitoring but no physical upkeep.Requires maintenance, property management, and legal checks.

    Stock vs Real Estate Returns

    When it comes to stock vs real estate returns, the difference lies in growth speed and stability. If you see, the stocks have seen a good growth of 12-15% annually for the past years. But the properties grew by around 2-4% on average. 

    Over the long term, stocks tend to outperform real estate, but real estate remains attractive for those seeking security and tangible assets.

    Investor Profile for Stock Market vs Property Investment

    Stock Market Investment Suits:

    • Young professionals with a long investment horizon.
    • Investors with high risk tolerance and appetite for volatility.
    • Those seeking liquidity and flexibility in their portfolio.
    • Individuals looking for diversification across multiple sectors.
    • People are happy with regular monitoring and research.

    Real Estate Investment Suits:

    • Families seeking stability and tangible ownership.
    • Conservative investors who like lower volatility.
    • Those looking for steady rental income and social value.
    • Investors are comfortable locking large sums for long-term growth.
    • Individuals who want a physical asset as security.

    Read Also: Market Order Vs Limit Order: What’s the Difference?

    Conclusion

    The choice between stock market vs real estate depends on your goals. While both are great choices, the ultimate decision would be based on what you need. 

    Stocks are good for long-term returns and flexibility. But you need consistent and safe returns, property investment might be your choice. But yes, you can use both for wealth creation over time. 

    A balanced mix works best, but starting with stocks ensures faster growth. With Pocketful, you can begin investing in stocks easily and build wealth for the future.

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    Frequently Asked Questions (FAQs)

    1. Which is safer: stock market or real estate?

      Real estate is generally considered safer because it is a tangible asset and less volatile. However, stocks can also be safe if invested in quality companies for the long term.

    2. Can stocks give better returns than property in India?

      Yes, equities have historically outperformed real estate in India, especially over 10–15 years.

    3. Is real estate a good investment for regular income?

      Yes, rental income provides steady cash flow along with gradual appreciation.

    4. Can small investors enter real estate like they do in stocks?

      No, real estate requires large capital outlay. Stocks require as low as ₹100, making them more accessible for beginners.

    5. How do I start investing in the stock market easily?

      You can start by opening a demat account and exploring beginner-friendly platforms. Pocketful makes this simple by offering easy access to stocks and tools for building wealth.

  • How to Do Algo Trading in India?

    How to Do Algo Trading in India?

    The stock market no longer operates solely on human decisions, but also with the help of fast computer systems and smart algorithms. This is why a large number of trades are being executed automatically everyday. Several reports indicate that the use of automated trading is steadily increasing in both the equity and derivatives segments. This blog is for you if you’re curious about how this all works and where a novice investor can begin. Here, we’ll go over how to approach this kind of trading step-by-step, what needs to be ready, and which platforms work best for it.

    What is Algorithmic Trading?

    Algorithmic trading, commonly referred to as algo trading, is the process of buying and selling stocks or derivatives using computer programs and mathematical models. This trading is based entirely on pre-established rules, and human emotion has no role to play.

    Example : 

    • If the price of a stock goes above ₹200, buy it immediately.
    • And if the same stock price falls below ₹195, sell it.

    Now, whenever this market situation arises, the computer program will automatically execute the order. This eliminates the need for you to watch the screen or make decisions based on emotions.

    How does this work ?

    1. Strategy Design : First, the trader or firm develops a trading strategy. These rules can be based on technical indicators (such as moving averages, RSI), price patterns, volume, or quantitative models.
    2. Coding and Platform Integration : The strategy is coded in a language like Python, R, or C++, or set up on a low-code/no-code platform. This code is then integrated with the broker’s API (Application Programming Interface).
    3. Market Data Feed : The system continuously receives live market data (price, volume, order book updates)- retail feeds often update in milliseconds, high-frequency trading systems feeds can offer microsecond or microsecond latency. Always confirm the data tier and latency you’re using.
    4. Signal Generation : When the market data matches the rules entered into the algorithm, the system generates a buy/sell signal. This decision is completely automatic.
    5. Order Routing and Execution : Generated orders are transmitted directly to the exchange (NSE/BSE) via the broker’s API. This latency is limited to microseconds to milliseconds on high-frequency trading systems.
    6. Post-Trade Management : After execution, the system performs risk management checks, such as stop-loss, position sizing, and exposure limits. Performance logs and trade history are also saved for later review and optimization.

    Read Also: Best Algo Trading Platform in India

    Why Should You Learn Algo Trading?

    • Fast and Accurate Execution : Fraction of a second delay in execution can make a difference in the market. The distinctive feature of Algo Trading is that orders are sent out automatically when a predefined condition is satisfied. This reduces human-caused problems like delays and slippage.
    • Emotion-Free Decision Making : Fear, greed, or impatience often lead to losses in trading. Algorithms are not influenced by emotions; they operate solely on data and established rules. This makes their decisions more disciplined and consistent.
    • Backtesting of Strategies : It’s not wise to implement any new strategy directly with real money. Algo Trading allows you to test the same strategy on historical data first to see how it will perform under different conditions.
    • Diversification across multiple markets simultaneously : Humans can monitor a limited number of stocks at a time, but algorithms can monitor hundreds of investable instruments and markets. This means greater diversification and the ability to scale trading strategies on a larger scale.
    • Opportunities for small investors too : Automated trading used to be a game exclusively for large institutions. But now thanks to APIs and easy platforms, retail traders can also get in on the act. With a little preparation and the right platform, any investor can run automated strategies.

    Pre-Requisites Before You Start Algo Trading

    Even though algo trading might seem easy, there are a few things you should know before you begin. Later issues may occur if this fundamental preparation is not made.

    • Market Understanding : First, you need to have basic knowledge of the stock market, such as how stocks, futures, and options operate, what liquidity means, and the differences between different trading styles (intraday, swing, and positional). With this foundation firmly established, understanding and using algorithms will be easier.
    • Technical Skills : Algo Trading is purely based on technology. That implies you need to have at least a basic understanding of one programming language (e.g., Python, R). It’s also important to understand broker APIs, as these are the gateways between your system and the exchange.
    • Data and Tools : Any strategy relies on its data. Accurate historical data is essential for backtesting, and real-time data is essential for live trading. You can get basic data from NSE and BSE, but for advanced strategies, you may need to rely on good data providers or premium tools. Poor or delayed data can lead to wrong trades, traders should always verify data sources.
    • Regulatory Framework : Algo trading in India is strictly governed by SEBI regulations. Retail traders must use broker-approved APIs and avoid unregulated or unauthorized software. SEBI has mandated risk controls to ensure automated trading systems do not introduce unnecessary risks into the market.

    How to Start Algorithmic Trading (Step-by-Step Guide)

    Algorithmic trading is no longer limited to large institutions. Today, any individual trader can automate their strategy. But before you get started, it’s important to have a thorough understanding of every step from broker selection to live deployment.

    Step 1: Choose the right broker and API provider

    The first and most important step in algorithmic trading is choosing a reliable broker and API partner. Your API platform acts as a bridge between your code and the stock exchange. Therefore, it must be fast, secure, and have low-latency.

    Pocketful API is a modern API trading platform in India that provides ready-to-use infrastructure for algo traders. It provides real-time market data, smooth order execution, and easy integration, allowing you to get your algo setup up and running in just minutes.

    Points to consider while choosing an API Provider:

    CriteriaDescription
    Speed & LatencyNo execution delays so orders are executed immediately
    Data AccessBoth live and historical data are available
    SecurityHave encrypted API keys and authorized access
    SEBI ComplianceEnsure the API and broker follow all regulatory norms.
    Support & DocumentationHave developer-friendly guides and a responsive support team

    Step 2: Develop your trading strategy

    Now it’s time to create your trading strategy. The success of algorithmic trading depends on your strategy when to buy, when to sell, and how much capital to invest. You can use coding languages ​​like Python, R, or Node.js, or you can design your strategy in a no-code environment by plugging in the Pocketful API.

    Keep these things in mind while creating a strategy:

    • Clearly define market signals and indicators.
    • Entry and exit rules should be clear.
    • Define risk management controls like Stop Loss, Target Profit, etc.
    • Choose a realistic backtesting period (avoid cherry-picking the time frame)

    Step 3: Backtesting – Test the Strategy

    Backtesting means running your strategy on historical data to see how it performed in the past.

    This will give you an idea of ​​how consistent and profitable your strategy is.

    Analyze in Backtesting:

    ParameterWhy is it important
    Win RatioTells the success rate of strategy
    DrawdownMaximum percentage of capital loss
    Profit FactorTotal profit / total loss
    Slippage & Transaction CostHelps measure the gap between expected and actual results

    Step 4: Paper Trading (Simulation Mode)

    The next logical step after backtesting is paper trading, which means testing your strategy in live market conditions without real money. This provides a real-world test of your algorithm’s execution, timing, and stability.

    Advantages of Paper Trading:

    • Zero financial risk
    • Execution accuracy is demonstrated
    • Strategy debugging is made easier
    • Performance is understood under market volatility

    Step 5: Start Live Trading

    Once your strategy shows consistent performance in testing, you can deploy it for real trades.

    To do this, you’ll need to connect your broker account and generate API keys.

    Notes during live deployment:

    • Start with small capital
    • Review trade logs regularly
    • Enable auto-error handling
    • Use real-time monitoring dashboards

    Step 6: Performance Monitoring and Optimization

    Algo trading isn’t “set and forget.” Market conditions constantly change, so it’s important to monitor and optimize your strategy’s performance.

    Step 7: Risk Management and Compliance

    The biggest risk associated with automation in algo trading is uncontrolled losses. Therefore, it’s important to set up risk controls from the outset.

    Required Risk Control Parameters:

    ControlObjective
    Stop Loss LimitStop losses within a predefined limit
    Max Capital AllocationDon’t tie too much money into one strategy
    Auto Cut-Off RuleStop trading when the drawdown exceeds
    Manual OverrideHuman control in any emergency
    Circuit Breaker AlertHalts trading in extreme volatile environment

    Step 8: Scaling and Diversification

    Once your strategy starts generating stable returns, you can gradually increase capital or add multiple strategies. You can diversify across different instruments (Equity, Options, Commodities) or different timeframes (Intraday, Positional). 

    Remember, diversification reduces dependency on a single market factor but doesn’t eliminate risk completely.

    Read Also: How to Start Algorithmic Trading?

    Algorithmic Trading: Risks and Challenges 

    Algorithmic trading offers speed and efficiency, but it also comes with some practical challenges. It’s important to understand these to avoid unexpected losses or mistakes.

    • Technical Issues : Algo trading relies heavily on technology. Internet slowdowns, server crashes, or API glitches can delay or fail orders. Therefore, it’s important to always have a backup setup and a stable connection.
    • Over-Optimized Strategy : Many traders tweak their strategies based on historical data to the point where they rely solely on past performance. This can lead to failure in the live market. To avoid this, realistic backtesting and paper trading testing are essential.
    • Market Volatility : The market is unpredictable. Any unexpected news or economic event can cause prices to change suddenly. Therefore, it’s crucial to include stop-losses and volatility filters in your strategy.
    • Security Risks : API keys and account credentials are sensitive in trading. Keeping them secure is crucial. Use SSL, token authentication, and two-factor verification, do not share keys with third-party platforms. The Pocketful API complies with these standards.
    • Regulatory Compliance : SEBI regulations in India require that algorithmic trading be conducted only with authorized brokers and approved APIs. The Pocketful API is SEBI-compliant, ensuring safe and legal trades.

    Read Also: Best Algorithmic Trading Books

    Conclusion

    Algorithmic trading is a resourceful and smart way to enter the markets but is not something you want to rush into. Start with smaller positions — test, learn, and familiarize yourself with how your method operates in real-time. Markets are fluid, so patience and flexibility will be essential. Monitor your system, learn from each trade, and adjust accordingly. If you stay patient and consistent, algo trading can be a reliable way to work toward your financial ambitions.

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    Frequently Asked Questions (FAQs)

    1. What is algorithmic trading?

      It’s a trading method in which orders and strategies are executed through automated software.

    2. How can I start algo trading in India?

      To get started, first gain basic knowledge, develop a strategy, paper trade, and then start live trading.

    3. Do I need programming skills for algo trading?

      Not necessary, but knowing Python or basic coding is helpful.

    4. Is algo trading risky?

      Yes, market volatility and technical issues pose risks. Therefore, risk management is important.

    5. How much capital do I need to start algo trading?

      A large amount of capital is not necessary to begin with; even a small amount can be used for practice and learning.

  • Difference Between Large Cap vs Mid Cap Mutual Fund

    Difference Between Large Cap vs Mid Cap Mutual Fund

    When it comes to investing in mutual funds, you will find multiple options at once. Each of these options offers you a different risk and return ratio. At the same time, the asset allocation for these funds differs as well. While some focus on equity or debt, there are a few funds that invest in both assets to offer a better balance. 

    But there are two types of funds that are usually considered more if you are looking for stable returns. These are the mid-cap and large-cap funds. Though both these invest in the equity, there are certain differences between them that you must know.

    So, if you are new to investing and looking to know the details, then read this guide. Explore the mid-cap vs large-cap details and understand which of these is a better choice of investment for you. 

    What Is a Large-Cap Fund?

    A large-cap fund is a type of equity mutual fund. It is the one that invests primarily in companies with a large market capitalization. These are the top 100 companies that are listed on the stock exchange. The main reason for the selection of these companies is their history and strong performance.

    These companies have a proven record of performance, which makes them a better choice. But at the same time, these are the ones that have reached the top, hence at times you will find less potential for growth.

    Key Features of Large Cap Funds

    • Stable Returns: The fund mainly focuses on the financially sound companies. This ensures that the investors get a steady long-term growth potential.
    • Lower Volatility: Most of the companies in the large-cap segment are not affected by market fluctuations. This makes them a safer choice when compared to mid and small-cap funds.
    • High Liquidity: Shares of large-cap companies are actively traded. This ensures that the trader can enter or exit the market easily at any time with no hassle.
    • Consistent Dividends: Many large-cap companies offer regular dividends. This is an additional income to the profits that the investors make.
    • Suitable for Long-Term Investors: These funds are better for those who invest for a long time. These funds offer stability and have comparatively low risk. Hence, if you invest with the aim of wealth creation, these are better.
    • SEBI Guideline: The large-cap funds must invest at least 80% of their assets in the top 100 companies by market capitalization.

    What Is a Mid-Cap Fund?

    A mid-cap fund is another type of equity mutual fund. This is the fund that invests in medium-sized companies. Now, if you see, these are the next best set of companies. As per market capitalization, they rank between 101 and 250 on the stock exchange.

    These companies are still growing. They might be with the plans of expansion or with some innovative ideas. Hence, the potential is more. But at the same time, the risk is high as well. Any change in the market conditions can impact these companies greatly. This can lead to losses.

    Key Features of Mid-Cap Funds

    • High Growth Potential: This is the fund that mainly invests in companies that are in their growing stage. This is why the fund can deliver higher returns over time.
    • Moderate to High Risk: Mid-cap stocks can fluctuate more. This can be due to market sentiment and business performance. This increases the overall risk associated with the investment.
    • Diversified Portfolio: Investing in these funds helps the investors benefit from exposure. This is mainly across emerging industries and sectors, which can be great.
    • Ideal for Long-Term Goals: These funds work best for investors with a longer investment horizon. The risk is high and so it is not good for conservative investors. 
    • SEBI Mandate: Mid-cap funds are required to invest at least 65% of their assets in companies ranked from 101 to 250 by market capitalization.

    Read Also: Difference Between Large Cap, Mid Cap, And Small Cap Funds?

    Pros and Cons of Large Cap Funds

    When investing in the large-cap funds, you focus on long-term growth and low risk. But there are other pros and cons to know. These are as follows:

    Pros of Large Cap Funds

    • Companies with a proven record and performance are included.
    • Good for offering steady and reliable returns.
    • Considered to be the funds with low risk involved.
    • They are very liquid, which makes entry and exit simpler.
    • Better for conservative and long-term investors.

    Cons of Large Cap Funds

    • Moderate returns as compared to other funds.
    • Growth potential is limited and low.
    • Performance may slow down during market rallies led by smaller stocks.

    Pros and Cons of Mid-Cap Funds

    Just like any other fund, investing in mid-cap funds also comes with certain risks and challenges. Knowing them can help you make the right investment call and ensure that you make good profits. So, here are the top ones to know.

    Pros of Mid-Cap Funds

    • High growth potential based on future plans.
    • Allows for earning a higher rate of returns in a bullish market.
    • Provides for better diversification.
    • Chance to invest in innovative schemes and ideas.
    • Good option for investors seeking capital appreciation over time.

    Cons for Mid Cap Funds

    • Quite volatile and risky in nature.
    • Recovery in case of a downturn is long.
    • Liquidity can be lower as mid-cap stocks are less frequently traded.

    Read Also: Equity Mutual Funds: Meaning, Types & Features

    Large Cap vs Mid Cap Funds: Key Differences

    Now that you know what the large-cap and mid-cap funds are, the next step is to find the difference. Knowing the difference will ensure that your investment calls are based on proper understanding and analysis.

    So, here is the large-cap vs mid-cap difference that you should know.

    BasisLarge Cap FundsMid Cap Funds
    Market CapitalizationInvest in the top 100 companies with large market capitalizationInvest in companies ranked 101 to 250 by market capitalization
    Risk LevelLower risk due to stable and established businessesModerate to high risk as companies are still in the growth phase
    Return PotentialOffer steady but moderate returnsCan deliver higher returns during favorable market conditions
    VolatilityLess volatile and more stable during any  downturnsMore volatile and sensitive to market movements
    LiquidityHigh liquidity, as large-cap stocks are actively tradedModerate liquidity since mid-cap stocks are less traded
    Investment HorizonIdeal for long-term investors seeking stabilitySuitable for long term investors with a higher risk appetite
    Suitable ForConservative investors looking for steady growthAggressive investors aiming for higher capital appreciation

    Which Is Better – Large Cap or Mid Cap Fund?

    When it comes to selecting between the large-cap and mid-cap funds, there are various factors that you need to consider. Of these, the key ones include:

    • Profit potential
    • Patience of the investor
    • Risk taking capacity

    So, if the investor prefers stability and low risk, then the large-cap is a better choice. The growth would be slow, but there will be stability. But if you prefer faster growth with moderate high risk, then you can go for the mid-cap funds as well. There will be fluctuations, and so it will require better monitoring as well.

    In short:

    • Choose large-cap funds for safety and stability.
    • Choose mid-cap funds for growth and higher return potential.

    Read Also: NFO Alert: PGIM India Large & Mid Cap Fund

    Conclusion

    Both large-cap and mid-cap funds are a great choice for investment. Where one offers you stability, the other gives you speedy growth. But when it comes to selecting anyone, it will be based on the choice of the investor themselves. 

    But if you are new to investing and are looking to develop a balanced portfolio, then ensure to include both. You must be wondering why? Well, combining both will offer you moderate risk and moderate returns. Where one will help you with wealth creation, the other will guide you to faster results.

    But yes, as said before, it is important that you start right and with expert guidance. This is where you can opt for Pocketful. Open your account today. Get expert support as you need. Ensure you make the right investments through your journey. 

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    Frequently Asked Questions (FAQs)

    1. What is a large-cap fund in simple terms?

      A large-cap fund invests mainly in the top 100 companies with high market capitalization. It offers low risk and stable returns. 

    2. Which is safer, large cap or a mid-cap fund?

      When you compare the two, the risk associated with large-caps is less. Hence, these are safer during all market conditions. 

    3. Can I invest in both large-cap and mid-cap funds?

      Yes, combining both can balance risk and reward. You can benefit from the stability of large-cap funds and the growth of mid-cap funds at the same time. 

    4. Who should invest in mid-cap funds?

      Mid-cap is good for growth-seeking investors. They are ready to take moderate risks. Also, they are the ones looking for high returns. 

    5. How long should I stay invested in large-cap funds?

      If you are looking for a good return, then you must stay invested for 3-5 years minimum in large-cap funds.

  • What Is CMP in Stock Market?

    What Is CMP in Stock Market?

    When you visit the market, you will find different prices for the product. There is the retail price, and then there is the discounted price as well. But is this applicable in the market only or elsewhere as well? Well, when it comes to pricing, there is a term CMP in the stock market. 

    In the simplest terms, CMP full form is the current market price. It is actually the price at which the stocks are trading in the market. You usually find this price on the NSE or BSE listing while you are trading. 

    But to ensure that you use it properly, you need to understand the concept of CMP well. So, let us explore all the details linked to the CMP here in this guide. 

    What Is CMP in Stock Market

    In the stock market, CMP or Current Market Price refers to the latest price at which a stock is being traded on an exchange such as NSE or BSE. It keeps changing throughout the trading session, depending on the demand and supply of that stock. 

    In simple words, CMP shows you the real-time value of a company’s share in the market.

    For example, if Tata Motors is trading at ₹360, that ₹360 is its CMP. The moment investors buy or sell shares, the CMP adjusts automatically to reflect the new market value.

    Key Importance of CMP in Stock Market

    Understanding the CMP in the stock market is vital for anyone involved in trading or investing. It not only reflects the real-time price of a stock but also acts as a guide for decision-making. Here’s why it matters:

    1. Shows Real-Time Value

    The CMP reflects the latest price at which a stock is traded. It keeps updating as buyers and sellers place orders, helping you see the live market activity.

    2. Guides Investment Decisions

    CMP helps you plan your entry and exit points. A lower CMP might indicate a good buying opportunity, while a higher CMP can help you lock in profits.

    3. Indicates Market Sentiment

    If CMP continues to rise, it shows growing investor confidence. A decline often reflects caution or a bearish trend among traders.

    4. Supports Market Analysis

    CMP is a key data point used in both technical and fundamental analysis. It helps compare stock performance and identify price trends over time.

    5. Helps Evaluate Portfolio Performance

    Tracking the CMP of all your holdings gives you a clear picture of your portfolio’s current market value and potential gains or losses.

    Read Also: Top 20 Basic Stock Market Terminology for Beginners

    How CMP Differs from Market Price or Intraday Price

    While many people assume CMP in trading is the same as market price or intraday price, there are subtle differences you should know. CMP is the current value of a stock, but the market price or intraday prices represent broader price movements during the trading session.

    • CMP shows the latest traded price at a given moment.
    • Market Price often refers to the general price trend or range within which a stock trades.
    • Intraday Price tracks price fluctuations throughout the day, showing highs and lows within that period.

    In short, CMP is a snapshot, while market or intraday prices give you the bigger picture of a stock’s movement and volatility during the session.

    How to Find CMP of a Stock

    Finding the CMP in the share market is simple and can be done through several reliable platforms. Knowing where to check it helps investors make informed trading decisions.

    1. Stock Exchange Websites

    Visit the official websites of NSE or BSE. Search for the company’s name or stock symbol to view its CMP along with details like day’s high, low, and trading volume.

    2. Brokerage Platforms

    Most online trading apps and websites display CMP beside every stock you own or track. These prices update in real time as trades are executed.

    3. Financial News Portals

    Websites such as Moneycontrol, Economic Times, and Bloomberg provide live CMP updates along with charts and market insights.

    4. Market Widgets and Apps

    Various financial widgets and mobile apps send live CMP alerts, making it easier to track stock prices without constant manual checks.

    5. Trading Terminals

    For active traders, trading terminals show CMP instantly along with bid-ask spreads and order book details, ensuring faster and more accurate decision-making.

    Read Also: What is a good rule for investing in stocks?

    How to Use Current Market Price in Trading

    When you understand what CMP is in the share market, it becomes easier to make timely trading decisions. CMP helps you know the exact value at which a stock is trading, allowing you to plan your buy or sell actions more effectively.

    1. Market Order

    A market order executes instantly at the current market price (CMP). It’s preferred by traders who want their order completed immediately without waiting for a specific price. This helps you experience how CMP in the stock market works in real time.

    2. Stop Loss Order

    A stop loss order protects you from sudden price drops. For a buy trade, it’s set below the CMP, and for a sell trade, above it. Knowing what CMP is in stock helps you place these levels correctly to control losses.

    3. Limit Order

    A limit order allows you to set the exact price at which you want to buy or sell. The trade happens only when that price matches the CMP. Hence, this is one of the most practical uses when learning what CMP is in trading.

    These orders show how CMP guides traders to manage risk, plan trades, and act with precision in the stock market.

    LTP vs CMP

    When trading or checking stock prices, you’ll often see both LTP and CMP listed side by side. Many beginners think they mean the same thing, but there’s a small difference that can affect how you read market data. The table below makes it simple to understand.

    Basis of DifferenceLTP (Last Traded Price)CMP (Current Market Price)
    MeaningThe price at which the last transaction took place.The latest available price at which the stock is currently trading.
    Time ReferenceRefers to the most recent trade completed.Refers to the current live market value.
    Price MovementMay remain static until a new trade happens.Keeps changing every second with market activity.
    Market RelevanceIndicates the past price of execution.Represents the most actionable price right now.
    UsageUsed for understanding the last trade details.Used for placing new trades or tracking live price updates.

    In short, LTP records the last executed price, while CMP tells you what the market is currently offering. Traders rely on CMP for real-time action and on LTP for analysing recent trades.

    Read Also: How Does the Stock Market Work in India?

    Conclusion

    Understanding CMP in the stock market helps you make smarter investment choices. It shows the real-time price of a stock. Hence, it forms the base for analysing trends, placing orders, and evaluating portfolio performance. Once you know the CMP, you can trade better.

    Si, if you’re ready to start analysing live prices and exploring smarter trading opportunities, learn and invest with Pocketful. It is your trusted partner in building better market knowledge.

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    Frequently Asked Questions (FAQs)

    1. Can CMP be the same for all exchanges?

      Not always. A stock listed on both NSE and BSE may show slightly different CMPs due to variations in trading volume and demand.

    2. Does dividend announcement affect CMP?

      Yes. When a company declares dividends, its CMP may rise before the record date and slightly drop after, as the dividend value gets adjusted.

    3. Is CMP the same as closing price?

      No. CMP reflects the live trading price, while the closing price is the final price recorded at the end of the trading session.

    4. How often does CMP change?

      CMP changes every time a trade is executed. During high-volume trading hours, it can fluctuate within seconds.

    5. Can beginners rely on CMP alone for investment decisions?

      No. CMP should be combined with other indicators like company fundamentals, volume trends, and moving averages. This helps with accurate analysis.

  • Top 10 High-Return Mutual Funds in India

    Top 10 High-Return Mutual Funds in India

    We all want our money to grow faster, don’t we? That is exactly why high-return mutual funds get so much attraction. They kind of give long-term growth that can move the needle for your financial goals, whether it is building wealth, saving for a house, or planning an early retirement.

    Mutual funds, especially equity-based ones, have become one of the most popular ways for Indians to invest and grow their money over time. But here is the truth: not every fund performs equally well. Some manage to consistently outperform the market, while others fall short. In this blog, we will look at some of the best high-return mutual funds in India for 2025, understand what makes them move, and talk about how to pick the right ones for your goals. 

    What are High Return Mutual Funds?

    High-return mutual funds are funds that have performed better than the market or have given higher-than-average returns over the years. But before getting an adrenaline rush from those big numbers, it is worth taking a closer look at what is really driving them. Most high-return mutual funds invest mainly in equities; in simple terms, they put your money into stocks of different companies. Stocks have the potential to grow much faster than traditional options like fixed deposits or bonds, especially if you stay invested for the long term. That is what makes them attractive for wealth creation.

    But those higher returns do not come for free. Equity markets can be unpredictable, and prices move up and down all the time. So, while these funds can help your money grow faster, you also have to be comfortable with a bit of short-term volatility.

    Let us have a glimpse at the types of mutual funds that often offer higher returns:

    • Large Cap Funds – Invest in big, well-known companies. They are relatively stable and great for long-term investors who want stable growth.
    • Mid Cap Funds – Invest money into mid-sized companies with strong growth potential. They create a good balance between risk and reward.
    • Small Cap Funds – Focus on smaller, emerging businesses. These can give you impressive returns,  but only if you are comfortable with short-term ups and downs.
    • Sectoral or Thematic Funds – These target specific industries like technology, manufacturing, or infrastructure. When a sector does well, these funds can rise, but they can also fall quickly if trends change.
    • Flexi Cap or Multi Cap Funds – These invest across large, mid, and small-cap stocks, giving fund managers the freedom to chase opportunities during different market dynamics.

    List of the Top 10 High-Return Mutual Funds in India 

    S. NoFunds5 Yr Returns (%)Expense Ratio (%)LaunchNet Assets (Cr)
    1ICICI Prudential Infrastructure Fund36.191.142005-08-318,231
    2HDFC Infrastructure Fund – Regular Plan34.021.132008-03-102,585
    3Aditya Birla Sun Life PSU Equity Fund – Regular Plan33.820.562019-12-305,532
    4Quant Small Cap Fund35.290.711996-11-2430,504
    5Franklin Build India Fund – Regular Plan31.760.982009-09-042,947
    6SBI PSU Fund330.852010-07-075,714
    7DSP India T.I.G.E.R. Fund – Regular Plan320.662004-06-115,506
    8Motilal Oswal Midcap Fund – Regular Plan330.72014-02-2437,500
    9ICICI Prudential India Opportunities Fund330.662014-02-2432,669
    10Nippon India Power & Infra Fund3212004-05-087,325

    Read Also: Best Money Market Mutual Funds in India

    Factors to Evaluate Before Investing

    Every time you invest, it is important to pause and take a closer look because you will be putting in your hard-earned money. Below are a few simple points to keep in mind;

    1. Risk and Return Go Hand in Hand

    The promise of high returns is undoubtedly tempting, but remember, there is no free lunch in investing. Funds that can give big returns also tend to fluctuate more. Small-cap or sector funds, for example, can perform well in a bull market but may drop sharply when markets fall. 

    2. Look for Consistency

    Anyone can have a lucky streak. Instead of getting carried away by one or two strong years, check how the fund has performed over 3, 5, or even 10 years. A good fund stays strong across different market conditions

    3. The Fund Manager Matters

    Think of the fund manager as the loco-pilot of your financial train. Their experience, strategy, and discipline play a big role in how well you are driven to your destination. Look for managers with a stable track record and a long-term approach.

    4. Watch the Expense Ratio

    Every mutual fund charges a small fee to manage your money, which is called the expense ratio. A slightly higher fee might not seem like a concern now, but over the years, it can quietly eat into your returns. 

    5. Time Is Your Best Friend

    Equity mutual funds need time to show their growth. If you can stay invested for at least 5-7 years, you will give your money a chance to grow and recover from short-term market swings.

    Read Also: Best Thematic Mutual Funds in India

    How to Choose the Right Fund 

    1. Decide Your Goal First

    Ask yourself why you are investing in the first place. Are you saving for long-term wealth, retirement, or a down payment on a house? Once you know that, it becomes easier to pick a fund type that aligns with your purpose.

    2. Know How Much Risk You Can Handle

    Be honest here. If market swings make you anxious, large-cap or flexi-cap funds are safer bets. But if you do not mind some short-term ups and downs, mid- and small-cap funds can work well for you.

    3. Look at the Fund’s Track Record

    Don’t fall for last year’s best performers. Check how the fund has done over 3, 5, and 10 years. A good fund gives steady results across different market phases.

    4. SIPs Are a Great Place to Start

    If you are unsure about timing the market, go with a Systematic Investment Plan (SIP). It is one of the easiest ways to invest regularly, reduce volatility, and slowly build wealth over time.

    Read Also: Top 10 Mutual Fund Distributors in India

    Common Mistakes to Avoid 

    1. Chasing Past Performance

    Just because a fund did great last year does not mean it will repeat that performance. Markets change, and so do trends. Your focus should be on consistency

    2. Ignoring Risk

    Do not choose a fund just because it gives big returns. If you are not comfortable with volatility, you might panic during market dips and sell at the wrong time

    3. Switching Too Often

    Jumping from one fund to another hurts your returns and stops compounding from doing its magic. Stick with your plan unless there is a reason to switch.

    4. Not Reviewing Your Investments

    You do not need to track your funds daily, but reviewing them once or twice a year helps. Make sure they are still aligned with your goals and performing close to their benchmarks, since your goals can also change with time. 

    5. Lack of Diversification

    Putting all your money in one type of fund, say, all small-caps or all thematic funds, can backfire. Mix it up with a blend of large, mid, and small-cap funds to balance growth and stability.

    Conclusion 

    High-return mutual funds can be a good option for building long-term wealth, but they are not magic. The truth is, the higher the possible returns, the more patience and discipline they demand. It is alluring to run after the top-performing fund of the moment, but the concept is to find one that fits your goals, risk level, and time frame. Start small, stay consistent, and let compounding play the game while you sit back and relax. SIPs are a great way to get started since they give you the benefit of rupee cost averaging. And most importantly, give your investments time; that is where the real growth happens.

    Remember, investing is not about getting lucky. It is about being calm and steady. If you stay the course, the markets will surely reward you with returns. 

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    Frequently Asked Questions (FAQs)

    1. Which mutual fund gives the highest return in India?

      There is no single “best” fund for everyone. Small-cap and mid-cap funds often deliver higher returns, but as we know, high returns come with high risk. The right choice depends on your goals and time horizon, 

    2. Are high-return mutual funds risky?

      A little, yes, most of them invest in stocks, so market ups and downs will affect them. 

    3. How long should I stay invested in a mutual fund?

      It is suggested to invest for at least 5 to 7 years. That gives your money enough time to grow and recover from market dips while enjoying the benefit of compounding 

    4. Can I invest in high-return funds through SIPs?

      Yes, SIPs are one of the smartest ways to invest. They help you stay disciplined and reduce the stress of timing the market.

    5. How many mutual funds should I have?

      You do not need a dozen of them. A mix of good funds across categories like large-cap, mid-cap, and flexi-cap is usually enough. 

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