News about Middle East tensions comes on TV, and most of us in India just move on. It feels like a distant problem. But a few days later, petrol costs more, your vegetable vendor adjusts his prices, and the LPG bill looks different. That is not a coincidence. What happens in the Middle East has a direct effect on what you spend in India every single month.
In today’s blog, we will find out to what extent a war can impact our daily lives.
Why Iran Matters for Oil Prices
Iran is among the largest oil producers globally. Iran borders the Strait of Hormuz, a narrow strip of water in the Persian Gulf through which about 20% of the global oil is shipped daily. When that path is threatened, the oil-importing nations globally begin to panic.
Picture it as the only gate to a massive oil warehouse. If that gate gets closed, every country dependent on oil imports starts to suffer.
As soon as Iran gets involved in any conflict, oil traders worldwide begin panic-buying. They fear the supply will get cut off, so they rush to stock up early. That panic alone drives crude oil prices up sharply, sometimes within the very same day the news breaks. India has to import nearly 85% of the crude oil it uses. So when global oil prices shoot up, India’s costs go up along with it.
What Happens to Petrol and Diesel Prices in India
All crude oil India buys is paid for in US dollars. So when global crude prices rise, the rupee usually weakens against the dollar, which usually happens during global uncertainty.
When Iran-Israel tensions peaked in April 2024, Brent crude touched $90 per barrel, and India’s oil import bill rose sharply that month.
Petrol and diesel prices in India are deregulated, meaning they should move in line with global crude prices and currency changes. But in reality, oil marketing companies like Indian Oil, BPCL, and HPCL do not always pass on the full increase right away.
During volatile periods, they often absorb part of the cost to avoid sudden price shocks for consumers; eventually, prices have to be adjusted.
Once revision happens, petrol goes up ₹2-5 per litre, and diesel also follows. Since trucks run on diesel and trucks carry most of India’s goods, grocery prices go up, vegetable prices increase, and courier charges rise. You end up paying more for things that have nothing to do with fuel.
LPG Cylinder Prices and the Iran Connection
That gas cylinder in your kitchen is linked to Gulf politics more than most people realise. India imports a large share of its LPG from Gulf countries.
So when shipping and supply get disrupted, or energy costs rise because of Middle East tensions, bringing LPG into India costs more, and that extra cost eventually reaches your cylinder bill.
In 2022, global energy prices went through the roof due to geopolitical tensions, and LPG cylinder prices crossed ₹1,000 in many cities across India.
The government had to keep stepping in with subsidies just so common households could afford it. A 14.2 kg cylinder that cost around ₹500 in 2015 now sits above ₹800 in most cities.
Restaurants and small food businesses run on commercial LPG, which gets little subsidy protection. When their gas bills go up, they pass it on through food prices. So your plate of rice and lentil at a local food shop gets costlier too.
How Long Does the Impact Last?
Usually, short conflicts that do not involve open oil routes end in a few weeks. Prices drop, traders relax, and crude prices stabilise.
However, when a fight lasts or the Strait of Hormuz is closed, the consequences can be severe and prolonged.
Crude is already above 110 per barrel and has been exerting intense financial strain on the economy of India, the rupee and all household budgets. India has stocked emergency oil reserves and has purchased oil in numerous countries such as Russia, Saudi Arabia, and Iraq to minimise risk. Still, a full-fledged Iran war would shake things up.
Conclusion
What happens in Iran finds its way to your tank and your kitchen in a few days. Being heavily dependent on oil imports, any disruption in the Middle East results in the prices of petrol, diesel and LPG in India. As soon as you realize that connection, you will read the news in a different way and will be able to plan your budget a bit better when the situation in the world is tense. Start your investing journey with Pocketful – zero brokerage on delivery, no AMC, and advanced F&O tools. Stay ahead with finance concepts and market insights.
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Does every Middle East conflict affect petrol prices in India?
Whenever there is a real threat to oil supply routes, crude prices go up globally, and India’s prices follow sooner or later.
How quickly do petrol prices change after a global event?
Global crude reacts within hours. But petrol and diesel prices in India get revised periodically by oil companies, so the effect usually shows up within a few days to a couple of weeks.
Why cannot India just keep fuel prices fixed?
India buys 85% of its crude from abroad and pays in dollars. When global prices rise, actual costs go up regardless. Subsidies can hold prices for a while, but doing it for too long puts serious strain on government finances.
Is LPG more or less affected than petrol?
Both get hit. Household LPG has some subsidy protection, so it feels slightly less. Commercial LPG and petrol take the impact more directly and faster.
Can Iran actually block oil supply to India?
Yes, if it shuts the Strait of Hormuz, every oil-importing country, including India, gets badly affected, since a huge share of global oil moves through that route daily.
In today’s environment, Nifty weekly options trading is rapidly gaining popularity, primarily because it features weekly expirations and allows for trading with relatively low capital. However, the reality is that many beginners incur losses despite employing the right strategies simply because they lack a clear plan and discipline. In this blog post, we will explore a simple and practical Nifty weekly options strategy that beginners can easily follow to manage risk more effectively.
What is Nifty Weekly Options?
Nifty Weekly Options are a type of derivative contract based on the Nifty 50 index. They are primarily used to trade on short-term price movements. Since these options expire every week, the movement of premiums is rapid, and they offer frequent trading opportunities. It is crucial for beginners to understand that in Weekly Options, profitability does not depend solely on the direction of the market; rather, factors such as the erosion of premium over time (time decay) and market volatility also play a significant role. Consequently, trading in these options carries a higher level of risk in the absence of a sound strategy.
What is included in Nifty Weekly Options?
Component
Explanation
Underlying Index
The Nifty 50 Index, upon which the entire option is based.
Call Option (CE)
Buying takes place when the market is expected to rise.
Put Option (PE)
Buying takes place when the market is expected to go down.
Strike Price
The level at which you buy or sell options.
Premium
The price paid to purchase an option.
Expiry
Weekly Expiry Date
Lot Size
Fixed units in a contract (determined by NSE)
Intrinsic Value
Intrinsic Value of an Option (When In-the-Money)
Time Value
Additional Premium Value Based on Time
Volatility (IV)
The market’s fluctuating pace, which influences premiums.
How Nifty Weekly Options Trading Works
It is essential to understand the mechanics of Nifty Weekly Options trading, as this is where the process of making the right decisions begins. In this approach, you do not directly purchase the index; instead, you place a bet on its future price movements.
Basic Working Structure :
Component
Role in Trading
Call Option (CE)
If the market goes up, there will be a profit.
Put Option (PE)
If the market goes down, it’s profitable.
Strike Price
The level at which you are taking a trade
Premium
Option Purchase Price
Weekly Expiry System :
Weekly options expire every week; therefore, they have a very short time horizon.
As the expiration date approaches, the premium declines rapidly.
If the market does not move in the expected direction, losses occur quickly.
Price Movement Logic :
Factor
Impact on Option Price
Market Direction
Greatest Impact (Up/Down Move)
Time Decay
The premium decreases over time.
Volatility
The premium can rise or fall rapidly.
Role of Timing :
In Nifty Weekly Options, simply getting the direction right is not enough.
If you do not enter at the right time, the premium may drop, and the trade could result in a loss.
In Nifty Weekly Options, simply buying or selling is not enough. To understand the right strategy, it is essential to have a clear grasp of certain core concepts, as the entire trading process depends on them.
Trend vs Sideways Market
First of all, it is essential to understand how the market is moving.
Market Type
Meaning
Strategy Approach
Trending Market
Continuous movement in one direction
Option buying is a good strategy.
Sideways Market
up and down without direction
It is better to avoid trading.
Role of Time Decay (Theta)
Weekly options have a very short time horizon; therefore, time decay (Theta) becomes the most significant factor.
As the expiration date approaches, the premium naturally declines.
Even if the market remains stable, the option’s price can still fall.
Importance of Volatility (IV)
Volatility indicates how rapidly the market can move.
Volatility Level
Impact
High Volatility
Premium grows rapidly.
Low Volatility
Premium remains slow.
When volatility is high, option premiums rise rapidly, but they can also fall just as quickly.
Why Direction Alone is Not Enough
Many beginners assume that if they correctly predict the market’s direction, they will make a profit; however, this is not the case with weekly options.
Factor
Why Important
Direction
It gives an indication of the movement.
Time
Losses can occur due to poor timing.
Volatility
Changes the Premium
Best Time to Trade Weekly Options
Time Slot
Market Behavior
What to Do
Market Open (9:15 – 10:00)
Very rapid movement and frequent false breakouts.
Beginners should avoid this.
Mid Session (10:00 – 1:30)
The direction of the market starts becoming clear.
The Best Time for Trading
Last Hours (1:30 – 3:30)
The premium erodes rapidly, and movements are unpredictable.
Trade only if you have experience.
Nifty Weekly Options Trading Strategy
When selecting a strategy for Nifty weekly options, the most crucial factors are simplicity and risk control. Beginners should avoid complex setups and utilize only those strategies that are practical and clearly understood. Furthermore, since every strategy carries inherent risk, it is essential to maintain a balanced approach.
1. Breakout Strategy (Simple & Effective)
This is the most common and workable strategy for beginners.
How it works:
Mark the high and low points of the first 15 minutes.
Enter only when a breakout or breakdown occurs.
Condition
Action
Breakout above the high
Call (CE) Buy
Breakdown below the low
Put (PE) Buy
Risk:
A false breakout can often occur.
Entering a trade without confirmation may result in a loss.
Therefore, always wait for a clear candle breakout.
2. VWAP + Trend Confirmation Strategy
This strategy is used to enhance accuracy.
How to Use:
Apply the VWAP indicator.
Take trades only in the direction relative to which the price is positioned with respect to the VWAP.
Condition
Action
Price above VWAP
Call (CE) Buy
The price is below VWAP.
Put (PE) Buy
Risk :
VWAP signals do not work in a sideways market.
There is a risk of making a late entry.
3. Support & Resistance Strategy
This strategy is considered somewhat safer, but it requires patience.
How it works :
Identify strong support and resistance levels.
Wait for the price reaction at the level.
Level
Action
Bounce from support
Call (CE) Buy
Rejection stemming from resistance
Put (PE) Buy
Risk :
A significant loss may occur if the level breaks.
Entering too early could result in getting trapped.
4. Trend Following Strategy
This strategy is simple and minimizes overtrading.
How to Use :
First, identify the overall trend.
Enter on a small pullback in the same direction.
Trend
Action
Uptrend
Call (CE) Buy
Rejection stemming from resistance
Put (PE) Buy
Risk :
Losses may occur if the trend reverses.
A late entry may result in lower rewards.
5. Expiry Day Strategy
Movement is rapid on expiry days, but the associated risk is also at its highest.
How to Approach :
Execute trades only when there is a clear trend.
Set small targets and aim for a quick exit.
Condition
Action
Strong trend
Momentum trade
Sideways
Avoid
Risk :
Premiums can fall rapidly.
Sudden reversals are common.
Stop Loss, Target & Risk-Reward
This section is the most crucial part of Nifty Weekly Options, as it determines whether or not you will be able to sustain yourself in the long run. Controlling risk is even more important than making the right entry.
Basic Rule Structure
Parameter
Practical Rule
Stop Loss
Keep it small and fixed (based on premium or points).
Target
Always keep it larger than the stop loss.
Risk:Reward
It should be at least 1:2.
How to Set a Stop Loss?
Decide on a stop loss in advance for every trade.
Based on the premium, a stop loss of 15–20 points is practical for beginners.
Exit immediately if the stop loss is hit; do not hold the position.
Trading weekly options without a stop loss is high-risk.
How to Set a Target?
Always set a realistic target.
If your Stop Loss (SL) is 20 points, set your target at a minimum of 40 points.
You may also opt for partial profit booking as soon as you see a profit.
It is essential to avoid greed; otherwise, your profit could turn into a loss.
Why is Risk-Reward important?
Situation
Result
1:1 Risk-Reward
Profit is difficult in the long run.
1:2 Risk-Reward
Covering losses is easy.
1:3 Risk-Reward
Profit is possible even with fewer trades.
Option Selection (Important for Beginners)
Selecting the right option in Nifty Weekly Options is crucial, as an incorrect choice can prevent you from generating a profit even if your directional prediction turns out to be correct. For beginners, it is best to adopt a simple and clear approach.
Type
Use
ATM (At-The-Money)
Ideal for beginners balancing risk and movement.
ITM (In-The-Money)
It’s a bit safer, but the premium is higher.
OTM (Out-of-The-Money)
It is inexpensive, but the risk is very high.
Why is an ATM Option a better choice?
Price movement remains clear and stable.
Liquidity is good (making entry and exit easy).
It is neither too expensive nor overly risky.
This is the most practical choice for beginners.
When should you consider an ITM Option?
When a strong trend is visible in the market.
When you wish to keep the risk relatively low.
However, due to the higher premium, it requires a larger capital outlay.
Why should you avoid OTM Options?
Beginners are often attracted to them because they are inexpensive.
However, the premium on these options can quickly plummet toward zero.
Even if the market moves in the right direction, the potential profit remains limited.
These are significantly riskier, especially for beginners.
Trading Without a Clear Plan : Taking a trade without a strategy is the most common mistake. This leaves both entry and exit points unclear, resulting in random decision-making. The correct approach is to define the setup, entry point, and stop loss before executing every trade.
Ignoring Stop Loss : Ignoring a stop loss leads directly to significant financial losses. In weekly options, premiums decay rapidly; consequently, trading without a stop loss becomes extremely risky. It is essential to always maintain a predefined stop loss.
Overtrading : The habit of taking a trade on every minor market fluctuation exacerbates losses. Excessive trading compromises both focus and discipline. It is far better to limit yourself to taking only a few high-quality trades per day.
Buying Cheap Options (OTM) : Cheap options can be tempting, but they carry an exceptionally high level of risk. Often, the premium plummets rapidly, approaching zero. For beginners, adopting this approach can prove to be financially detrimental.
Emotional Trading : Attempting to recover losses too quickly or succumbing to greed when in profit inevitably leads to poor decision-making. Trading should always be conducted in strict adherence to established rules and discipline, rather than being driven by emotions.
Conclusion
While Nifty Weekly Options certainly appear to offer an opportunity to make quick money, it is difficult to sustain oneself in this arena without proper understanding. If you adhere to a simple trading setup, wait for the right timing, and maintain risk control in every trade, you can gradually achieve consistency. In the beginning, rather than chasing high profits, controlling losses is far more important for this is where true improvement begins. Stay ahead with real-time market insights & latest news. Download Pocketful – Zero brokerage on delivery, no AMC, and a seamless, easy-to-use platform.
S.NO.
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If you regularly track the stock market in India, you might have noticed something interesting. Sometimes when you open your trading app at 9:05 AM, you can already see stock prices moving, even though the market officially opens at 9:15 AM. So what happens during the 10-15 minutes before the market opens?
That short window is called the pre-open market session. It plays an important role in deciding the opening price of stocks for the day.
In today’s blog, we will break down this important mechanism used by the stock exchanges, NSE and BSE.
What is a Pre-Open Market Session?
This session is a 15-minute period before the regular trading session, during which investors can place buy and sell orders.
In India, this session is usually from 9:00 AM to 9:15 AM. After that, the normal trading session starts at 9:15 AM and continues until 3:30 PM.
During this time, traders can place, modify, or cancel orders, but trades are not executed immediately.
Need of Pre-open Session?
The pre-open session was introduced in the Indian stock market in 2010. The main goal was to make the market opening less volatile and more organised.
Why did that happen?
Because overnight news often changes investor sentiment. For example:
A company may announce strong earnings after market hours
Global markets might rally overnight
Government policies or economic data may be released
When the market opened the next morning, everyone rushed to buy or sell at the same time. This created sharp and chaotic price movements.
The pre-open session helps absorb all this information before the market officially starts trading.
Objectives of Pre-Open Sessions
Reduce volatility: Overnight developments can significantly affect stock prices. The pre-open session allows the market to adjust to new information gradually, and instead of sharp swings at the time of the opening bell, prices settle down.
Improve Market Efficiency: By collecting orders beforehand, exchanges can match demand and supply efficiently. This leads to a more stable start to the trading day.
Fair Price Discovery: The opening price of a stock is not based on the first trade anymore. It is calculated using multiple buy and sell orders placed by different investors.
This helps in updating a more balanced opening price.
This period lasts 8 minutes and is the most active part of the pre-open session.
During this time, investors can place buy and sell orders, modify existing orders or cancel orders.
The exchange simply collects all these orders and calculates an Indicative Equilibrium Price, which is the potential opening price based on the orders currently in the system.
2. Order Matching
This period starts immediately after the order collection period, and orders are matched at a single price that will eventually become the open price.
A pre-decided sequence is followed to match the orders, wherein limit orders are matched with limit orders. Leftover limit orders are then matched with market orders, and finally, market orders are matched with market orders.
What is Equilibrium Price?
The equilibrium price is the price at which the maximum volume is executable.
Now, suppose NSE gets bids for a specific stock, ABC, at different prices between 9:00 AM and 9:15 AM.
Depending on the demand and supply, the exchange will decide the equilibrium price.
Furthermore, when no equilibrium price is discovered in the pre-open session, all the market orders are shifted to the close price of the previous day, which becomes the open price.
Determination of Equilibrium Price
Instead of executing trades instantly, the exchange first collects all buy and sell orders and then calculates the best possible price where most trades can happen.
Let us see how it works,
To decide the equilibrium price, the exchange looks for a price to fulfill 3 conditions,
The maximum number of shares can be traded
Minimum difference between buy orders and sell orders
If multiple prices satisfy the above, the price closest to the previous closing price is chosen.
Suppose a stock closed yesterday at ₹100 and during the pre-open market session, traders placed the orders given below
Buy Orders (Demand)
Price
Quantity Buyers Want
₹105
1,000
₹104
2,000
₹103
3,000
₹102
4,000
Sell Orders (Supply)
Price
Quantity Sellers Want
₹102
1,500
₹103
2,000
₹104
3,000
₹105
2,500
Now the exchange will follow the given steps.
Step 1: Check trades possible at each price
If the price is ₹105, only buyers willing to pay ₹105 will buy, and buyers who are available at this price are 1,000.
On the other hand, sellers willing to sell at ₹105 or lower are 9,000. (₹1,500 + 2,000 + 3,000 + 2,500).
So the actual trades possible are of 1000 shares only.
What if the price is ₹104 or more?
In this scenario,
Buyers willing to pay ₹104 or more are 3,000, and sellers willing to sell at ₹104 or lower are 6,500. (₹ 1,500 + 2,000 + 3,000).
So the actual trades possible are of 3000 shares only.
In a similar manner, the exchange will check for other prices also.
Step 2: Choose the price with the maximum trades
Price
Possible Trades
₹105
1,000
₹104
3,000
₹103
3,500
₹102
1,500
After checking the number of trades possible at each price, the exchange will finally choose the price at which the maximum shares are traded.
In the example above, the maximum shares are traded at ₹103. So the equilibrium price will be ₹103, which will become the opening price at 9:15 AM.
A simple Analogy to understand the above example:
In a fruit market where buyers and sellers are negotiating the price of apples. The market will decide a price at which most apples can be bought and sold.
Anyone with a trading account can participate, including:
Retail investors
Institutional investors
Mutual funds
Algorithmic traders
Conclusion
The pre-open market session might last only 15 minutes, but it plays an important role in how the stock market functions. The exchange ensures that the opening price reflects real demand and supply rather than the actions of a few early traders through the collection of buy and sell orders before trading begins.
But understanding how it works can help you interpret the opening price and other overnight developments. For more market news and insights, download Pocketful – offering users zero brokerage on delivery trades and an easy to use platform designed for both beginners and experienced investors.
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Can investors trade during the pre-open market session?
Investors can place, modify or cancel orders during the order entry period, but actual trades happen only after the opening price is decided.
What is the call auction mechanism in the pre-open session?
It is a system where orders are collected first and executed later at a single price, instead of continuous trading.
What happens to unmatched orders in the pre-open session?
Unmatched orders carry forward to the regular trading session starting at 9:15 AM, depending on the order type.
Is the pre-open session applicable to all stocks?
The pre-open session generally applies to all equity stocks in the cash market segment on NSE and BSE.
What is NEAT+ Terminal used in the pre-market session?
This terminal is the trading system provided by the NSE. Brokers and trading members use to place and manage orders on the exchange. This terminal acts as an interface through which orders are sent to the exchange. NEAT stands for National Exchange for Automated Trading.
Have you ever wondered how massive companies manage so many different businesses at once? Sometimes, they decide it is better to split things up to grow faster. This brings us to a very common question, what is demerger? In simple terms a demerger happens when a large parent company separates one of its business units into a brand new, independent company.
For you to understand the demerger meaning, imagine a large family business splitting so siblings can focus on their own strengths and help in growing the business. The meaning of demerger is essentially the exact opposite of a merger. It is breaking apart instead of joining together. For Indian readers looking for the demerger meaning in hindi, think of it as a corporate division or “vibhajana”. Let us explore why companies do this and what it means for your money.
What Is a Stock Demerger?
A stock demerger is a corporate restructuring process where a parent company or the main entity transfers a business division into a separate entity. The original company keeps running as usual. Meanwhile, the new company starts its own independent journey with its own team and money.
The main goal here is very simple to unlock the value for you, the shareholder. Often, when a company is diversified in doing too many things, the stock market does not value it accordingly but by dividing a fast growing business, the stock market values these businesses fairly. If you are a shareholder in the parent company you usually get the shares of a newly formed entity free of cost, this keeps investors ownership safe.
Types of Stock Demergers
Demerger in the companies take place differently which is based on their requirements. Following are the main types of demergers that are actively seen in the market:
Spin-Off: It is one of the prominent demerger in the market, in this the parent company creates a new subsidiary and the existing investors are awarded with free shares of the new subsidiary.
Split-Off: In this the investors get a choice where they can swap some of their holding from the parent company with the shares of the newly formed entity.
Equity Carve-Out: Here the main company sells a small part of the newly formed entity to the general public via IPO but the main control still remains with the parent company.
Divestiture: This is simply an outright sale where the company sells a part of its business for cash, and shareholders do not have possession of the new shares.
Reasons Why Companies Undertake Stock Demergers
Better Focus: Splitting helps in diversifying the role and dividing it into different teams for a better output. For example, Tata Motors separated its commercial vehicles segment from its passenger cars to have better focus on each of the segments individually.
Unlocking Hidden Value: A manufacturing business that has transformed itself with high growth due to new tech business addition might not get a good share price in the market. Splitting them, separating tech and manufacturing will help both businesses to have the right value in the market.
Smarter Money Use: In one entity different departments have to grow and fight using the same budget, but once splitted each company can now raise and use the money as per the companies needs.
Attracting the Right Investors: Some investors look for companies with safe dividends while others look for fast growing companies. A demerger creates focused companies that attract the right investors.
Splitting a huge company takes time and strict rules to protect everyday investors like you and me.
In India, the Companies Act of 2013 (specifically Sections 230 to 232) tells us the whole procedure of these demergers. The parent companies shall take their plan and get it approved by a legal body called the National Company Law Tribunal (NCLT). Also these companies are required to have a green signal from SEBI (regulatory authority) and the stock exchanges.
In stock demergers if the split has been done using Section 2(19AA) of the Income tax act then it is considered as tax neutral. This means investors are not taxed immediately on the capital gains received from the new shares put in thier demat account.
In countries like the US, the SEC (securities and exchange commission) keeps a close watch and as per rules both companies should be active to stay tax free. The UK follows the Companies Act 2006 to ensure smooth transitions that protect shareholders.
How Demerger Works
Here are the steps that are followed for companies to demerger and usually it is a time taking procedure which takes months to get completed.
Board Approval: The company’s board of directors need to give a green signal to the demerger plan.
Shareholder Approval: You and other investors vote on the company’s decision to split.
Regulatory Approval: Authorities like NCLT and SEBI check everything to ensure it is fair.
Transfer: Assets, debts, and staff are officially moved to the new company.
Share Allotment: You get new shares automatically based on the ratio, without paying any extra amount.
Listing: The new company hits the stock market, and you can buy or sell its shares freely.
Demerger vs Merger vs Spin-off vs Divestiture
Feature
Demerger
Merger
Spin-off
Divestiture
Meaning
A company splits into multiple entities
Two companies combine to form one large entity
A specific demerger creating a new subsidiary
A company sells a part of it to someone else
What Investors get
Investors automatically get shares of the new entity
Shares of the newly combined company are awarded
Shares are given as a special free dividend
Investors receive nothing directly, the company gets cash for its sale.
Main Goal
To focus better and unblock hidden value
To grow bigger and capture more market share
To separate a business while rewarding investors
To get rid of extra parts or raise quick cash
Impact of Demerger on Shareholders
Free New Shares: Investors get new company’s shares free of coast that are directly credited to their demat account.
More Value: Over time, the combined price of main companies shares and newly formed entities shares might grow higher than the original single stock.
Your Choice: Investors have the choice to keep or sell shares of these companies and by using a platform like Pocketful, you can easily track these new shares, analyze your portfolio, and make fast decisions.
Tax Benefits: In India, getting these shares will not levy immediate taxes and investors only have to pay capital gains tax while selling them.
Dividend Changes: Both the companies will have separate dividend payouts. One might pay you cash regularly, while the other reinvests it to grow.
Whenever a company announces a split, the stock prices tend to move up as the market and people are excited about the hidden value. But as the split takes place and new shares are distributed, the parent company’s stock price naturally falls.
This fall takes place as the company is divided and a part is taken out. Big mutual funds even sell their new shares for a temporary period to push the price down a little bit. But these newly divided companies usually show good performance in the long run and even create great wealth for investors.
Key Investor Takeaways
Investors shall always try to protect and focus on their wealth growth when they come to know about these corporate splits.
You should know that these demergers are done to create new independent entities so that the focus can be narrowed down to independently grow these companies and focus on core operations to unlock their massive growth over time. As a shareholder, you usually receive shares in the newly formed company without any extra cost, allowing you to maintain your ownership stakes across the entire business empire.
Investors shall always be ready for small turbulence in their portfolio, as after the demerger stock prices show high volatility during announcement and even after the process is completed and new shares are there in the market. But investors shall not panic in these times as in the long term demergers give out good benefits and wealth creation, but patience is required as these things take time.
But investors can rely on this process as it is closely watched and passed by strict regulatory approvals and compliance rules in India ensuring that the entire process is fair and protects the interest of the investors.
A stock demerger is just a smart way where a big company divides into parts for better focus and increased value. Although the legal steps take time, it turns out to be a positive for the company and the investors. And investors like you can have shares of two growing companies of the same value.
For more market news and insights, download Pocketful offering users zero brokerage on delivery trades and an easy to use platform designed for both beginners and experienced investors.
S.NO.
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Leveraged ETF India products are catching the attention of Indian traders. Among them, a 3x bull ETF stands out. It aims to deliver about three times the daily return of the index it tracks. If the index goes up 1%, the ETF targets roughly 3%. If it falls 1%, the ETF may fall by about 3% that day.
On the other side, bear-style products like 3x bear ETFs are designed to profit when the market drops. In India, 3x style funds are still emerging under the broader leveraged ETF India umbrella. For many, pairing 3x power trading with a rising trend makes sense, but only if you understand the rules of the game.
You can track 3x Indian‑style ideas, indices, and related trades live on the Pocketful platform, which also offers zero brokerage on delivery trades and easy charts for beginners and experienced investors.
What Is a 3x Bull ETF?
A 3x bull ETF is a leveraged exchange‑traded fund that uses derivatives and borrowing to amplify the daily move of an index. It does not simply buy more stocks of the index; rather, it uses futures, swaps, and options to create 3x exposure daily.
Because of this structure, the fund resets its leverage at the end of each trading day. The ETF rebalances so that the next day it still aims for 3x the index’s move. This is great in a clear uptrend, but can hurt you in choppy, sideways markets.
In India, true 3x bull ETF products are limited. The closest things are 2x leveraged index options and NSE’s Nifty 50 TR 2x Leverage Index, which sits under the leveraged ETF India conversation. True India 3x or 3x Indian ETFs for retail investors are still rare or only available via overseas brokers under LRS schemes.
How Does a 3x Bull ETF Work?
At its core, a 3x bull ETF works in the following ways:
The fund holds the underlying index (100% exposure).
Then it adds 200% more exposure via derivatives like index futures, swaps, or structured notes.
To boost the leverage further, it may borrow capital.
This 3x structure is maintained on a daily basis. At the close of each trading day, the fund adjusts its holdings so that the next day it still targets 3x the index move. This daily reset is what creates the “compounding” effect.
Volatility and Decay of 3x Bull ETF
Due to the daily reset, 3x bull ETFs suffer from “volatility decay.” In a choppy, side‑to‑side market, the ETF can lose value even if the index ends up roughly flat.
For example:
Day 1: If the Index rises up by 2%, then a 3x ETF gains about 6%.
Day 2: If the Index goes down by 2%, then a 3x ETF loses about 6% on the new, higher value.
Here, the index is back near its start, but the ETF’s value is slightly lower after the two days. Over longer periods, this effect can erode returns significantly. For traders, this means 3x power trading must be short‑term, tactical, and well‑timed.
Amplified Gains in Bull Markets: During a strong market uptrend, a 3x bull ETF lets you get 3x the daily return. For instance, if an index gains 1% per day for five days, the 3x ETF can rack up much larger percentage gains in a short period.
No Margin or Futures Account Needed: For trading in a 3x bull ETF there is no special margin account required. You can buy and sell it like a normal stock through a regular demat account. For retail investors, this simplifies leveraged ETF India‑style exposure. You get leverage without the complexity of margin, expiry, and rollover. However, you still face higher costs and volatility.
Short‑Term and Tactical Trading: 3× bull ETFs are built for short-term trading, offering three times the daily movement of an index or sector. Traders typically use them for intraday or short swing opportunities during strong momentum. Because volatility is high, positions require active monitoring. As soon as the trend weakens, exiting quickly helps manage risk and protect capital.
Sector and Theme-based Leverage: Most of the 3x bull ETFs track different sectors like technology, semiconductors, financial sector or certain small cap companies. Here investors can get leveraged exposure to specific sectors instead of just putting money on single stock.
Risks of 3x Bull ETFs
Magnified Losses Downside: The same 3x multiplier that increases profits can also increase losses. If the index falls by 2%, a 3x ETF may drop about 6%. A few bad market days can quickly reduce capital. Because of this, beginners and long term investors must be careful. Trading these funds requires strict risk management, proper position sizing, and disciplined stop loss strategies.
Volatility Decay Can Erode Capital: These ETFs reset their leverage every day. In a market that moves sideways without a clear trend, the ETF may lose value even if the index stays flat or rises slightly. This effect is called volatility decay. Because of this structure, 3x bull ETFs are better for short term trading rather than long term investing.
Higher Costs: Leveraged ETFs yield higher expense ratios than normal ETFs. Most of the 3x funds charge an expense ratio of 0.8 – 1.0% per year, plus swap and borrowing costs are also added. These fees feed into your returns, especially if you hold for weeks or months.
Regulatory and Liquidity Limits in India: Indian regulators are cautious about highly leveraged ETFs for retail investors. True 3x bull ETFs are rare in India, with most products offering only 2x leverage or normal index exposure. Investors seeking 3x exposure often use overseas ETFs, which introduces currency risk and additional complexity.
What Is 3x Bear ETF
A 3x bear ETF works almost like the opposite of a 3x bull ETF. It aims to gain 3x the daily decline of the index. If the index falls 1%, the ETF targets about 3% gain. If the index rises 1%, the ETF may fall around 3%.
Bear ETFs are useful for short‑term defensive trading or hedging. For example, if you are long on Nifty but expect a short‑term pull‑back, a 3x bear ETF can hedge your exposure without selling your core holdings.
However, like bull‑style leveraged ETFs, bear products suffer from volatility and decay. They are best used for short‑term, well‑planned trades.
3x ETF Examples
ETF Name
Index/Sector
Suitable for
TQQQ
3x daily leveraged NASDAQ-100 ETF
Traders believing in strong tech driven uptrends
SPXL
3x leveraged S&P 500 Bull ETF
For broad market bullish exposure
SOXL
3x leveraged semiconductor sector
For traders believing in strong semiconductor demand
INDL
3x leveraged MSCI India ETF
Traders looking for 3x daily exposure to Indian equities
How to Use 3x Bull ETFs Safely
Trade It Short‑Term, Not Long‑Term: Investors shall use 3x power trading rules like, hold these ETFs for intraday to a few days and avoid using 3x bull ETFs as part of your retirement portfolio or future planning.
Use Stop‑Losses: Investors shall always use a stop-loss and decide how much you are willing to lose per trade and if the trade moves against you, exit.
Keep Position Size Small: A 3x bull ETF magnifies both your profit and your
loss. Investors shall limit their position size to a small portion of their portfolio (for example, 1-5%).
Avoid Observing “Buy and Hold”: These ETFs are not built for “set and forget”, they need to constantly monitor your position, watch index levels, and have a clear exit plan.
A 3x bull ETF is a powerful tool used by the traders for short‑term,
momentum‑based trading. It can multiply your profits during an upward moving market. But it also magnifies your losses and can erode capital through volatility decay.
In India, leveraged ETF India products are still evolving and still there are very few products, but true 3x bull ETF India options are limited, but 2x products and overseas 3x ETFs (like 3x India‑theme ETFs) give traders room to experiment.
If you choose to use a 3x bull ETF, approach it with a clear plan, small position size, and strong risk management. Use 3x power trading as a short‑term, high‑conviction strategy; not a permanent way to allocate your savings.
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It is a leveraged exchange-traded fund that uses derivatives and borrowing to deliver three times the daily return of the index or asset it tracks. If the index rises 1%, the ETF aims for 3%; if it falls 1%, the ETF targets a 3% loss.
Are 3x bull ETFs safe for beginners?
These ETFs carry a very high risk due to 3x leverage and daily resets. Losses are bigger, and volatility decay can reduce value over time. These are best suitable for traders who can closely monitor their positions and use stop losses.
Can I hold a 3x bull ETF for the long term?
It is not recommended as daily resets and compounding mean returns over weeks or months rarely match 3x the index over that period. Volatility decay and high expenses make long-term holding inefficient. Use them for short-term trades only.
Are 3x bull ETFs available in India in 2026?
As of March 2026, these ETFs are limited in India and most options available are 2x or unleveraged. Indian investors can access US-listed 3x ETFs like TQQQ or SPXL through international trading accounts under LRS.
How is a 3x bull ETF better than trading futures?
There is easy access without the need of margin accounts or dealing with contract expirations. They trade like stocks during market hours, have no rollover issues, and provide exposure to diverse sectors or indices. Although the expense ratio is high as compared to futures.
Most of the funds you invest in require active monitoring. Missing any crucial trend or news can impact your returns greatly. But the problem is that many investors look for options that require low monitoring; they aim for safer choices with stable and good returns. This is where passive funds play an important role.
This makes them a good choice for long-term savings and investing. But before you plan to invest, the question is which are the best passive funds that you should also look for. Also, you need to know what is passive investing along with the difference between active and passive funds. So, let us explore all the details you need here in this guide.
What Are Passive Funds?
Passive funds are mutual funds designed to replicate the performance of a specific market index. They are not here with the aim of beating the index performance. These funds copy the benchmark that they follow. It can be the Nifty 50, some sectoral index, or any other. The ratio of the assets will be similar to the index, which helps with tracking.
Since these funds follow the index, there is no need for highly active management. This also reduces the cost of the fund, which directly helps you with better returns. For a balanced portfolio that helps with wealth, portfolio, and outcomes, these are a good addition.
Key Features of Passive Funds
Track a specific market index such as Nifty 50, Sensex, or sectoral indices.
Lower expense ratios due to minimal active management.
Transparent portfolio as holdings replicate the index composition.
Diversification across multiple companies within the index.
Lower portfolio turnover compared to actively managed funds.
Pros of Passive Funds
Lower management costs compared to actively managed funds.
Reduced dependence on fund manager decisions.
Diversified exposure to multiple companies through the index.
Straightforward investment structure that is easy to understand.
Suitable for long-term investors seeking market-linked growth.
Cons of Passive Funds
Cannot outperform the index they track.
Returns depend entirely on overall market performance.
Limited flexibility during market downturns.
Tracking error may cause slight variation from index returns.
No opportunity to benefit from active stock selection.
But before we explore the top choices for you, let us explore the active and passive fund differences.
When you talk about the active and passive funds, you would see that the basic aspects are the same. The difference mainly lies in how these are managed. So, here are the key points that you must know:
Basis
Active Funds
Passive Funds
Investment Approach
Fund managers actively select and manage stocks to outperform the market.
The fund replicates a market index and follows its composition.
Objective
Aim to generate higher returns than the benchmark index.
Aim to match the performance of the index being tracked.
Management Style
Requires continuous research, analysis, and portfolio adjustments.
Minimal intervention as the portfolio mirrors the index.
Expense Ratio
Usually higher due to active management and research costs.
Generally lower because there is limited active management.
Risk Level
Performance depends on fund manager decisions and strategy.
Performance closely follows the overall market movement.
Return Potential
Possibility to outperform the market if the manager performs well.
Returns are usually similar to the index performance.
Top Passive Funds to Invest in 2026
As a passive investor, you will come across hundreds of options that are worthy of investing in. But only a few of these actually stand out. These are as follows:
Fund Name
AUM (₹ Cr)
NAV (₹)
Expense Ratio (%)
Sharpe Ratio
UTI Nifty 50 Index Fund
26,681.34
161.87
0.2
0.04
HDFC Nifty 50 Index Fund
22324.27
225.11
0.2
0.25
ICICI Pru Nifty 50 Index Fund
15,390.61
243.36
0.19
0.03
SBI Nifty Index Fund
11879.12
215.16
0.19
0.02
HDFC BSE Sensex Index Fund
8869.18
709.22
0.2
0.04
UTI Nifty200 Momentum 30 Index Fund
8711.89
19.65
0.43
0.18
ICICI Pru Nifty Next 50 Index Fund
8396.38
60.03
0.31
0.4
UTI Nifty Next 50 Index Fund
6245.96
23.93
0.35
0.41
Navi Nifty 50 Index Fund
3872.53
15.18
0.06
0.04
Nippon India Index Fund Nifty 50 Plan
3160.460
42.450
0.07
0.26
(Data as of 15 Mar 2026)
Overview of Best Passive Mutual Funds
1. UTI Nifty 50 Index Fund
This fund tracks the Nifty 50 index. It does so by investing in the same companies with similar weightage. The structure allows investors to invest ina fund that follows the top index. This helps with better returns and management as well.
It is often used as a core holding in long-term portfolios. Since the strategy simply mirrors the index, costs remain relatively low while investors gain diversified exposure to leading large-cap businesses.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
4.32
11.55
10.1
(Data as of 15 Mar 2026)
2. HDFC Nifty 50 Index Fund
This fund aims to replicate the Nifty 50. The fund follows this by holding all its constituent stocks in proportions similar to the index. The objective is to deliver returns that remain closely aligned with the benchmark.
It offers a simple way to access India’s large-cap equity market. The rule-based approach also makes it suitable for investors who prefer a stable and low-maintenance investment strategy.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
4.27
11.51
10
(Data as of 15 Mar 2026)
3. ICICI Pru Nifty 50 Index Fund
This fund follows a passive strategy. It is designed to closely track the Nifty 50 index. By holding the same basket of companies it attempts to match the index performance.
The approach provides broad exposure to India’s large-cap segment. Many investors use it as a foundational component in their equity portfolios. This aims to capture overall market growth over time.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
4.27
11.51
13.99
(Data as of 15 Mar 2026)
4. SBI Nifty Index Fund
This fund seeks to replicate the performance of the Nifty 50. This fund aims at keeping management costs relatively low. The portfolio includes the same companies that form part of the index.
It is commonly selected by investors who want straightforward exposure to India’s top companies. Many use it through systematic investment plans or long-term allocations to participate in market growth.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
4.24
11.52
10
(Data as of 15 Mar 2026)
5. HDFC BSE Sensex Index Fund
This fund tracks the S&P BSE Sensex. This means it consists of 30 well-established companies across key sectors of the Indian economy. These businesses are widely regarded as leading blue-chip companies.
The structure provides focused exposure to large-cap stocks. This makes it a stable and even more efficient fund for your investment.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
1.9
9.63
9
(Data as of 15 Mar 2026)
6. UTI Nifty200 Momentum 30 Index Fund
This fund follows the Nifty200 Momentum 30 index. It selects stocks from the Nifty 200 universe based on strong recent price performance.
The strategy focuses on companies showing momentum in their price trends. This approach offers a good potential but it can also involve greater volatility compared to traditional index funds.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
6.65
16.54
14.6
(Data as of 15 Mar 2026)
7. ICICI Pru Nifty Next 50 Index Fund
This fund replicates the Nifty Next 50 index. It includes companies ranked just below the Nifty 50 in terms of market capitalisation.
These businesses are often viewed as potential future large caps. As a result, the fund may appeal to investors seeking higher growth opportunities, though it may involve relatively higher risk.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
10.2
20.15
14.9
(Data as of 15 Mar 2026)
8. UTI Nifty Next 50 Index Fund
This fund invests in the companies that form the Nifty Next 50 index. It focuses on keeping the same composition and weightage as the benchmark.
It is often used alongside a Nifty 50 allocation. This is to broaden market exposure. Since many of these companies are still expanding, the portfolio may experience stronger growth but also higher market fluctuations.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
10.31
20.31
13.57
(Data as of 15 Mar 2026)
9. Navi Nifty 50 Index Fund
This fund aims to closely track the Nifty 50. It also focuses on maintaining a very low expense ratio. The portfolio mirrors the benchmark index quite close.
It is known for its cost efficiency. This appeals to investors who prioritize low fees and long-term index investing. It provides diversified exposure to India’s major large-cap companies.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
4.39
11.6
9.4
(Data as of 15 Mar 2026)
10. Nippon India Index Fund Nifty 50 Plan
This fund follows the Nifty 50 index. It manages the same allocation and weightage as well which is the best aspect.
The strategy offers exposure to a diversified basket of leading Indian companies. It is commonly used by investors seeking market-linked returns through a disciplined passive investment approach.
1 Year Return (%)
3 Year Return (%)
5 Year Return (%)
4.39
11.57
10
(Data as of 15 Mar 2026)
How to Select the Right Passive Fund
Choosing a passive fund may look straightforward. But there are still some points that you should consider:
Check the expense ratio. Since passive funds aim to match the index, lower costs help you keep a larger share of the returns.
Look at the tracking error. Funds with lower tracking error usually follow the benchmark index more closely.
Understand the index being tracked. Some funds track the Nifty 50 or Sensex, while others follow indices like Nifty Next 50, which may carry different risk levels.
Review the fund’s assets under management (AUM). Funds with larger AUM often have better liquidity and operational efficiency.
Decide between an index fund and an ETF. Index funds allow SIP investments, while ETFs trade on the stock exchange like regular shares.
Check the exit load and other conditions. Some funds may charge a fee if you redeem within a certain period.
Passive funds have become an important part of modern investment portfolios. These funds provide stability and a base for your portfolio. But to ensure this, you need to make a choice that is correct. This is where you need the right platform with you. Pocketful allows you to explore the options well and make the investment calls to stay in sync with your needs.
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Passive investing is a strategy where a mutual fund tracks a specific market index. The fund aims to replicate the performance and overpass it. This makes them safer.
Are passive funds better than active funds?
Passive funds and active funds serve different purposes. Passive funds offer lower costs and market-matching returns. So, if you are an investor looking for a fund with stability, passive funds are better.
Who should invest in passive funds?
Passive funds are suitable for long-term investors who prefer a simple investment strategy, lower expense ratios, and returns that closely follow overall market performance.
How are passive funds different from index funds?
Passive funds are investment funds that aim to replicate the performance of a market index. Index funds are a type of passive funds that track indices. Overall, passive funds are safer.
Are passive funds safe for beginners?
Yes. Passive funds are often considered suitable for beginners. They do not need a regular following which makes these are great choice.
Trading in the financial markets is typically done with clients’ money but some firms also trade with their own capital to generate profits. This model is called proprietary trading (prop trading). This trading model is becoming increasingly popular today, as many prop trading firms offer skilled traders the opportunity to trade with their own capital. The increasing use of technology, data analytics, and algorithmic trading has also significantly developed this field. In this article, we will understand what prop trading is and how it works.
What Is Proprietary Trading?
Proprietary trading, or prop trading, is the process by which a financial institution such as a brokerage firm, bank, or specialized trading firm trades in the financial markets using its own capital. The purpose of trading is not to execute orders for clients but to earn profit from changes in market prices. Prop trading typically involves trading in instruments such as stocks, futures, options, currencies (Forex), and commodities.
Key Concept of Proprietary trading
In the typical brokerage model, firms earn brokerage or commissions by trading for clients. In contrast, in prop trading, the firm takes positions in the market and relies solely on profits from market movements. Therefore, both risk and return are relatively higher.
Example : Suppose a brokerage firm believes that a company’s stock may rise in the future. She can then buy that stock with her own funds and sell it when the price rises, earning a profit. Any profit from such a trade goes directly to the firm, as it doesn’t use client money.
How Proprietary Trading Works
The Firm Uses Its Own Capital: The most important aspect of proprietary trading is that the firm trades with its own funds. The firm sets aside a certain amount of capital for trading, and positions are taken in the market from that. Client funds are not used here, so any profit or loss from a trade directly affects the firm.
Market Analysis and Strategy: Before placing a trade, the trading team understands the market situation. This involves analyzing price movement, volume, market trends, and data. Based on this, it is decided which stock, index, or other instrument would be best to trade.
Executing the Trade: Once the strategy is finalized, traders place buy or sell orders through the trading platform. Prop trading typically involves trading in markets such as stocks, futures, options, and currencies. Larger trading firms often use advanced trading software for faster execution.
Risk Management: Controlling risk is crucial in prop trading, as the firm’s money is involved. Therefore, companies typically set daily loss limits, position limits, and stop-loss rules to prevent significant losses.
Profit Sharing Model: If a trade results in a profit, many prop trading firms share it under a profit-sharing model. Typically, the trader receives a portion of the profit, while the firm retains the rest.
Arbitrage Trading: In arbitrage, traders exploit small price differences in different markets. If a stock or asset is priced low in one market and high in another, they buy at a lower price and sell at a higher price. Large prop trading firms consistently profit from such small price differences.
Market Making: Market making aims to provide liquidity on both the buying and selling sides of the market. In this, the firm places buy and sell orders simultaneously. Profits typically come from the difference between the bid price and the ask price.
Statistical Arbitrage: In this strategy, trading decisions are made using data and quantitative models. Traders identify stocks or assets whose prices are generally correlated. When unusual differences are observed, trades are entered based on that.
High-Frequency Trading (HFT): High-frequency trading uses very fast computer systems and algorithms. It involves making a large number of trades in a fraction of a second, attempting to profit from small price movements.
Momentum Trading: Momentum trading focuses on market trends. If a stock is consistently rising, buying is done in line with that trend. Similarly, selling opportunities are sought during a falling trend.
Proprietary Trading vs Traditional Trading
Basis of comparison
Proprietary Trading
Traditional Brokerage Trading
Capital
In this the firm trades with its own money.
In this, trading is done with the client’s money.
Main Objective
Earning profits directly by trading in the market.
Investors can trade and earn brokerage.
Risk
In case of loss, the entire risk lies with the firm.
The risk lies with the investor or client.
Trade decision
The decision to trade is made by the firm’s traders or algorithms.
The decision to trade is usually made by the clients themselves.
Method of earning
Earnings are made from profits generated from market movements.
Earnings are made from brokerage fees or commissions.
Profit Sharing
In many prop firms, the trader is given a profit share.
Here the trader does not get any profit share, only brokerage is charged.
Example
Prop desks of prop trading firms or brokerages.
Trading done through normal demat and trading accounts.
Advantages of Proprietary Trading
Potential for Higher Profits: In prop trading, firms trade by taking positions directly in the market. Therefore, earnings are not limited to brokerage, but rather, profits are earned directly from changes in market prices.
Advanced Trading Tools: Most prop trading firms provide traders with advanced trading platforms, real-time market data, and analytics tools, allowing for more accurate trading decisions.
Systematic Risk Management: Prop trading typically has a pre-established risk management system. This includes loss limits, position sizes, and other rules to reduce the potential for large losses.
No Requirement of Large Capital: In many prop trading models, traders trade using the firm’s capital. This eliminates the need for traders to use large personal funds.
Professional Trading Environment: Trading at prop trading firms is typically based on research, data analysis, and a clear strategy, making the trading process more professional and systematic.
Market Risk: In proprietary trading, a firm trades with its own funds, so if the market suddenly moves in the opposite direction, the firm suffers a direct loss. Due to the large capital involved, losses can be significant.
Strict Risk Management Rules: To control risk in prop trading, firms typically impose rules such as daily loss limits, maximum drawdowns, and position size limits. Adherence to these rules is mandatory for traders.
Pressure for Consistent Performance: Prop traders are expected to consistently perform well and maintain profits. Consistent losses can lead to a reduction in trading capital or even a suspension from trading.
Regulations: Strict regulations and oversight apply to prop trading in many countries. For example, following the 2008 financial crisis, the Volcker Rule was implemented in the United States, placing limits on the proprietary trading activities of certain banks.
Dependence on Technology and Systems: Proprietary trading heavily relies on advanced trading platforms, algorithms, and real-time data feeds. Any technical failure, system outage, or latency issue can disrupt trades, lead to missed opportunities, or cause significant financial losses in fast-moving markets.
Can Individual Traders Join Proprietary Trading Firms?
Today, many prop trading firms also offer retail traders the opportunity to join. This typically requires the trader to first pass an evaluation challenge, which requires adherence to a set profit target and risk rules. If the trader successfully completes this stage, they are granted a funded trading account. This account holds the trading firm’s capital, and the trader trades in the market using that capital.
Most firms adopt a profit-sharing model, where the trader receives a fixed percentage of profits. However, adherence to daily loss limits, maximum drawdowns, and other risk rules is mandatory when trading.
Is Proprietary Trading Legal in India?
Yes, proprietary trading is permitted in India, but it can only be done under regulations. Typically, this activity is performed by SEBI-registered brokerage firms and financial institutions. These firms trade in the market using the company’s own capital through their trading desks. Complying with such trading requires adherence to exchange regulations, capital standards, and all necessary reporting rules. On the other hand, typical retail investors do not engage in prop trading directly; they typically invest or trade individually through their demat and trading accounts.
Conclusion
Proprietary trading is a model in which financial firms attempt to profit by trading in the market using their own capital. This requires a sound strategy, market understanding, and strong risk management. Today, the increasing use of technology and data analysis has further developed prop trading. If understood correctly, it is a vital part of the financial markets.
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The key to success in investing is diversification. An investor shouldn’t invest their capital in a single asset or fund. While it comes to diversification, there are two options available, which include ETF and FOF.
In today’s blog post, we will give you an overview of ETFs and FOFs along with their key differences.
What are ETFs?
ETFs are commonly known as Exchange Traded Funds and are a passive investment option offered by Asset Management Companies. ETFs predominantly invest in a basket of stocks or other assets. ETF tries to mirror the performance of the underlying index in which it invests. They are traded like any other stock on the exchange. To purchase and sell an ETF one is required to have a demat and trading account.
Features of ETFs
The key features of ETFs are as follows:
Exchange Traded: The ETFs are traded on the stock exchange like any other stock. Hence, one can trade in it during the trading hours only.
Demat Account: It is mandatory to have a demat and trading account if you wish to invest in ETFs.
Cost-Effective Investment: Exchange Traded Funds or ETFs generally have lower management fees because of a passive investment approach. Hence, they are suitable for investors seeking cost-effective diversified investment options.
Diversification: The amount invested in ETFs is diversified into several securities. Hence, it provides portfolio diversification through a single investment and reduces risk.
What are FOFs?
A Fund of Funds is a type of fund offered by asset management companies that invests in units of other mutual funds or ETFs and does not directly invest in securities. In FOF, a fund manager selects a mutual fund or ETF based on their investment objective and invests in it. Unlike ETFs, it does not require a demat and trading account.
Features of FOF
The key features of FOF are as follows:
Investment in Other Funds: FOFs invest in the units of other mutual funds or ETFs instead of directly investing in stocks and other securities.
No Requirement of a Demat Account: As in the case of investment in stocks and ETFs, having a demat account is mandatory. But it is not essential to have a demat account while investing in FOF.
Higher Expense Ratio: FOF generally has a higher expense ratio as investors have to pay the expense ratio of FOF along with the underlying fund.
Global Market Access: Many FOFs invest their money in various international funds, which allows an investor to diversify their portfolio globally.
The key difference between ETFs and FOFs is as follows:
Particular
ETFs
FOFs
Investment
ETFs invest their money in a basket of index-tracking the performance of the underlying security.
FOF invests their money in the units of other mutual funds or ETFs.
Purchase Option
ETFs can be purchased on the stock exchange during the trading hours.
Investment in FOFs can be made anytime, like mutual funds.
Trading and Demat Account
It is mandatory to have a demat and trading account if one wishes to invest in an ETF.
A trading and demat account is not required to invest in FOF.
Expenses
ETFs generally have a lower expense ratio, offering a cost-effective investment option.
The expense ratio is generally higher in FOF due to layers of fund management.
Change in Price
The prices of ETFs change throughout the trading session.
The NAV of funds are disclosed at the end of the trading day.
Transparency
The portfolio of ETFs is disclosed daily.
The transparency of the FOF depends on the underlying funds.
Flexibility of Investment
Investors can place different types of orders, such as limit orders, market orders, etc.
Such trading features are not available in FOF.
Brokerage
Brokerage and other charges are applicable while investing in ETFs.
Investors are not required to pay any brokerage charges.
ETF or FOF, which one should you choose?
Both ETFs and FOFs offer different types of investment avenues for investors. If you have a demat and trading account and prefer a low-cost investment option, then you can consider investing in an ETF. On the other hand, if you want to have a simple mutual fund-type investment, then you can invest in FOF. They both offer diversification in a portfolio. However, the ultimate choice depends on the investor’s investment option and risk profile.
On a concluding note, both ETFs and FOFs offer an investor an opportunity to diversify their portfolio through a single investment option. ETFs are traded on a stock exchange similar to any other stock. Whereas FOFs are like a mutual fund which has different mutual fund holdings as its underlying assets. FOF does not require regular monitoring, unlike ETF. However, both ETFs and FOFs carry certain risks related to market volatility. Therefore, it is advisable to consult your investment advisor before making any investment in these two.
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ETFs are a passive investment option which tracks the performance of different indices. However, FOF invests their money in various mutual fund units, which can either be an index or an active fund.
Which is a more cost-effective investment option between ETF and FOF?
ETF is a more cost-effective investment option because it has a lower expense ratio and is passively managed. FOFs have a slightly higher cost as it also involves the expense ratio of the underlying fund.
Is a Demat account required to invest in both ETF and FOF?
No, a Demat account is only required for investment in ETF, not for FOF. ETFs are traded on the stock exchange, and FOFs can be bought and sold similarly to a mutual fund.
Can I invest in an ETF anytime?
No, as ETFs are traded on the stock exchange, they can be bought and sold during market hours.
Do FOF invest in international funds?
Yes, various FOFs invest their money in international mutual funds and ETFs. Through which an investor can diversify their portfolio globally.
Most Indians only think about two things when it comes to savings, first is to beat the rising prices and other is to save the direct taxes. The Indian government helps the citizens to save on taxes through 80C of the Income tax Act. But in the financial year 2025 – 2026 if you pick the right choice you can save more of your income. There are two most popular ways in which you can do this, Voluntary Provident Fund (VPF) and the Public Provident Fund (PPF).
These are two safe options as they are backed by the government, but they both work differently. One is specifically for the salaried person, the other one can be opted by anyone.By comparing them, you can decide which fits your goals. At Pocketful, we want to make this choice easy and clear for you.
What is VPF (Voluntary Provident Fund)?
VPF is designed for salaried employees to save some extra money. From your salary a part of your salary goes to the Employees’ Provident Fund (EPF) account. Generally this is 12% of the basic pay. Here VPF allows the employees to put more than this and you can even choose to save your whole basic salary if you want. This extra money goes into your existing EPF account.
To put your money is very easy, employees just need to contact the HR to deduct more from your monthly salary. Here you get the salary in your account after all these deductions which helps in saving more automatically. The interest rate you get is the same as EPF, which is 8.25% for the year 2025-26. It is a safer option as it is managed by a government body called EPFO.
VPF can only be used by salaried employees as every employee is given a Universal Account Number (UAN) at work. If you have your own business or work as a freelancer, you cannot use VPF. For employees, it helps build a huge fund for the future because of the high interest rate. But remember, if you save more than Rs.2.5 lakh in a year, the interest on the extra amount will be taxed.
What is PPF (Public Provident Fund)?
PPF is a famous long-term savings plan which started in 1968 to help people save small amounts over many years. Here you don’t need to have a company to open a PPF account. It is a 15-year plan, which makes it perfect for long-term goals like a child’s education or your retirement. This is a central government scheme making it a safe savings option.
You can open a PPF account at a bank or a post office with as little as Rs.500. The maximum amount you can put is Rs.1.5 Lakhs per year and you get an interest rate of 7.1%. The government reviews this rate every three months. A great thing about PPF is its “EEE” tax status. This means you get a tax break when you invest, you pay no tax on the interest, and no tax when you take the money out.
Anyone who lives in India can open a PPF account. You can be a salaried worker, a shop owner, or someone who stays at home. You can also open an account for your children. You can only have one PPF account in your name. If you need money for an emergency, you can take a loan after 3 years or a partial withdrawal after 5 years.
If you are looking for the highest return then VPF is the option as here the interest rate is 8.25% for 2025-26 ( it is the same for the last two years). You get a very high interest rate in this as there is no risk attached.
PPF on the other hand offers an interest rate of 7.1%. The government checks this rate every three months. Although this is lower than VPF, the interest you earn in PPF is 100% tax-free. In VPF, if you are a high earner and put in more than Rs.2.5 lakh a year, you will have to pay tax on your interest. This makes both options quite similar for many people.
If you save less than Rs.2.5 lakh a year, VPF gives you more money because 8.25% is better than 7.1%. But if you don’t have a corporate job, PPF is the best way to save. At Pocketful, we think a mix of both can be a great way to balance high returns with tax-free benefits.
Eligibility Criteria
VPF is only for people who are employed in a company that offers EPF. You need a Universal Account Number (UAN) to start. If you work in a large office, you likely already have this. If you are a doctor with your own clinic or a freelancer, you cannot use VPF.
PPF is open to everyone and every Indian citizen can open a PPF account. You can be a worker, a business owner, or a student. You can open an account at your post office or banks like SBI. You can even have a PPF account if you already have a VPF account. This makes PPF very flexible for all families.
Contribution Limits and Tenure
For VPF, there is no fixed limit like Rs.1.5 lakh in PPF and you can save up to 100% of your basic pay. This is great if you want to build a large fund quickly. Just remember, your employer only matches the mandatory 12% part, not the extra VPF part.
For PPF, you must save at least Rs.500 every year. The most you can put in is Rs.1.5 lakh per year. If you put in more, you won’t get interest on the extra money.
VPF is directly tied to your job and you can stay locked until you retire. If you change jobs, you can move your balance to the new company. PPF has a fixed 15 years lock-in and after this you can take the money or extend it for 5 years at a time.
Withdrawal Rules & Liquidity
For VPF:
Money can be taken out if you have no job for more than 2 months.
You can withdraw for requirements like a child’s wedding or for medical bills.
You can take out money to buy or build a house.
If you take it out after 5 years of working, it is tax-free.
For PPF:
There is a lock-in period and you can take all the money after 15 years.
You can make a small withdrawal after 5 years.
50% of your balance can be taken out four years ago.
Any money you take out from PPF is always 100% tax-free.
Both VPF and PPF are safe options to keep your savings safe and growing simultaneously. The government promises that your money is safe and the interest will be paid. Unlike stocks, the value of these funds never goes down. They are ideal for people who want to be sure their money is safe for the future. VPF is managed by the EPFO, and PPF is a direct government scheme.
Advantages and Disadvantages of Voluntary Provident Fund (VPF)
Advantages
Offers a very high interest rate of 8.25% right now.
Savings are deducted automatically from your salary, making it effortless.
There is no fixed upper limit like Rs.1.5 lakh for your savings.
It is a safe, government-backed fund for your retirement.
Compounding helps your money grow significantly over long periods.
You get tax deductions under Section 80C if you use the old tax regime.
Disadvantages
Only available to salaried employees with an EPF account.
Money is usually locked until you leave your job or retire.
Interest becomes taxable if you save more than Rs.2.5 lakh in a year.
Your employer does not contribute extra money to the VPF portion.
Withdrawals are taxable if you take the money out before 5 years of service.
No 80C tax benefits are available if you choose the New Tax Regime.
Advantages and Disadvantages of Public Provident Fund (PPF)
Advantages
Offers “EEE” tax status where investment, interest, and maturity are all tax-free.
Open to every Indian resident, including self-employed people.
Your balance is safe from legal claims or debt recovery.
Very low entry cost as you can start with just Rs.500 a year.
You can extend the account in 5-year blocks after it matures.
You can take a loan against your balance at a low interest rate.
Disadvantages
The total investment is capped at a maximum of Rs 1.5 lakh per year.
There is a long mandatory lock-in period of 15 years.
The interest rate (7.1%) is usually lower than the VPF rate.
Interest rates are reviewed and can change every three months.
You are strictly allowed only one PPF account in your name.
No tax deduction benefits if you decide to use the New Tax Regime.
Which One is better for you?
Employment Status: If you are a salaried employee with an EPF account, VPF is a preferred and easy choice for good returns. But if you are self-employed or a business owner then PPF is the only choice that you have.
Investment Goals: If you are saving for your future needs like retirement then PPF is the best option as the money gets locked in and if you are looking to save money and use it after sometime then VPF is the option.
Risk Appetite: Both the saving plans are risk free so you can put money according to your needs.
Liquidity: VPF is a flexible savings plan on the other hand PPF is a rigid savings plan due to fixed lock-in.
Picking between VPF and PPF depends on your job and your future plans. VPF is great for employees who want high returns and easy, automatic savings. PPF is a flexible and tax-free plan that works for everyone in the family.
You don’t have to pick just one. If you have a salary, you can use VPF for high returns and PPF for its tax-free benefits. Both are safe and will help your wealth grow. The most important thing is to start today so your money has more time to grow.
For more market news and insights, download Pocketful – offering users zero brokerage on delivery trades and an easy to use platform designed for both beginners and experienced investors Pocketful.
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To make your investments and trade in the stock market you require a Demat account. This account acts like a digital locker for your shares. While setting this account up you must have heard about the POA full form which stands for Power of Attorney.
Most of the new investors are curious about what is POA and why POA is needed. It is a type of a document that allows the broker the right to move shares out of your account when you sell your shares.
When an investor signs this document they get a unique record on your account. The POA number depicts the specific code which tracks this legal agreement between the investor and the broker. Using a POA in share market trades makes life much easier for you as an investor.
What Is Power of Attorney (POA) in a Demat Account?
POA acts as a permission slip where it gives the right to the broker that they can take shares from your account only when you decide to sell them. Here you are still the owner of your shares. The broker is just the person who helps move them from your locker to the buyer.
Let us understand this with an example, let’s say that being the owner of the car you have put your car in a safe locked space. And if you are looking to sell your car you must have to go to that space, take out your car and drive it to deliver it to the buyer. But this will take a lot of time and effort.
But what if you have given a “Specific Power of Attorney” to the owner of the garage and you have given them a spare key, but they can only use it if you send them a message saying, “I have sold the car, please deliver it to the buyer.” The manager cannot use your car for personal trips or sell it to anyone else without your order. In the stock market, your broker is the garage manager and the POA is that spare key.
The role of a POA is to handle the “debit” or the outgoing side of your trades. When you buy shares, you don’t need a POA because the shares are coming into your account automatically. This is only required when you sell, transfer or pledge your securities. The main task that it looks for is moving up shares to the stock exchange or use them as a guarantee to get extra money for trading.
How Does POA Work in a Demat Account?
The process begins when the investor signs the POA form when you open your account. Your broker then records this permission in their system. This is how you get connected with your digital signature to the actual share holdings.
Wherever you open the app and want to sell your shares you just click on the “sell” button and the broker acts on your behalf. Here the broker looks at the sell order and as per rights given under POA the broker asks the depository (like NSDL or CDSL) to move the shares from sellers account to the buyers account. The depository checks if the POA is valid and then transfers the shares to the exchange so the buyer can get them.
The broker or Depository Participant (DP) behaves like a helping hand. Their job is to follow your orders as it is. They are guided by strict rules from SEBI. The POA is only triggered when you take an action, like selling a stock or pledging shares to get more trading margin. Without your sell order, the broker cannot move anything.
Types of Power of Attorney in Demat Accounts
There are mainly two types of POA that every investor should know about. One is very common, and the other is something you should usually avoid for basic investing.
1. Specific (Limited) POA
This is the standard version used by almost everyone. It gives the broker permission to do only 4 or 5 specific things. These include selling your shares, pledging them for margin, or helping with mutual fund transfers. It is valid as long as your account is open, it is a safe option as there are limitations on what the broker can act upon.
2. General POA
A General POA is very broad in nature as it gives the person holding it the power to do almost anything on your behalf. They could open new accounts or move your money around. This is rarely used in the stock market unless you are using a high-end service where a professional manages everything for you. For a normal investor, this is not recommended.
Brokers ask for a POA to make sure your trades don’t get stuck by some minor mistake. In the Indian market, everything moves very fast. When you sell a share today, it must reach the exchange very quickly.
Quick and Easy Settlement: The POA allows the broker to send your shares to the buyer immediately, which helps in avoiding penalties for the late delivery.
Ease of Trading: Without a POA, you would have to give a physical or digital slip for every single sale. If you trade ten times a day, doing this manually would be very annoying and could lead to some mistake.
Margin Trading: If you want to trade with more money than you have in cash, you can “pledge” your shares as a guarantee. The POA makes this process instant and hassle free.
No Repeated Approvals: It is a one time procedure where once you sign it, you don’t have to worry about the paperwork every time you book a profit.
Is POA Mandatory for a Demat Account?
Many people think they must sign a POA to open an account, but that is not true. According to SEBI guidelines, a POA is completely optional and investors can open a Demat account and start investing even without it.
If you choose not to give a POA, you can still sell your shares. However, you will have to use a system called “e-DIS.” In this system whenever you would like to sell your share you have to manually enter a 6 digit TPIN and for final verification an OTP will be shared to your registered mobile number.
Recently we have seen that brokers have opted for a new safe option known as DDPI (Demat Debit and Pledge Instruction) which works like the limited POA (limitations on broker) but this option has tighter restrictions and is more secure for the investors. You can either opt for POA, DDPI or can sell the shares manually using the TPIN method.
Benefits of Giving POA
Here are multiple perks if you give a POA to a trusted broker like Pocketful.
Fast Execution: The shares that you have sold reach the buyers account within time and you avoid the short delivery fines (if not shared within time).
Zero Paperwork: No physical slips or couriers are required to be shared with your broker, just sign the POA one time and you can stay care free.
Better Opportunities: As there is a rapid fluctuation in the market by giving a POA you can sell your shares instantly the moment you get the right price.
Simple Pledging: The extra shares in your demat account can give you extra limits for intraday or F&O trading.
Risks and Concerns of POA
Trust Factor: Here the biggest concern is that you are giving powers directly to your broker to move your shares on your behalf but if the broker is not honest at any moment then there is a risk of misuse.
Old Formats: Earlier POA forms had a broad spectrum to cover but modern versions like DDPI are much more reliable and safe for the investors.
Monitoring: One shall always check their account statement and SMS alerts to monitor if the movements are correctly done or not. As here you would have to give a penalty if something goes wrong.
To activate POA for your trading account you would need to follow the given steps:
Registration Form: The first step is to download the POA or DDPI form, from the broker’s website.
Fill the Details: Here you need to put your name and provide your 16-digit Demat account number.
Check the Limits: One should always cross check that you are only giving rights for tasks like “settlement” and “pledging”.
Sign Online or Offline: You can opt if you want to e-sign via mobile number (aadhar linked) or go for the offline method.
Get Confirmation: You will receive an email of confirmation as soon as the depository registers your POA.
Safety Tips Before Granting POA
Before you sign any document, keep these tips in mind to stay safe:
Reputation Matters: One should only rely on brokers that are registered with SEBI and also have a decent track record.
Read the Clauses: Always cross check before signing the final document and be cautious about any clause that states or gives the broker the power to handle your bank account or give total control over the account.
Track Alerts: Always pay attention to the SMS and emails you get from NSDL or CDSL.
Nominee is a Must: Nominee is a must add for your account as this keeps your family protected.
You have the power to cancel your POA at any time you feel so. It does not bind you for a fixed period of time.
How to Revoke: A formal written request needs to be shared with your broker for revoking the signed document although some brokers even let you do this process online by e-signing the revocation letter/form.
How to Modify: If any changes required the old POA needs to be cancelled and a fresh POA needs to be signed as per the new conditions.
Processing Time: The revocation request can be usually processed within 3 to 5 working days, once done you have to only use your TPIN and OTP for selling your shares.
Conclusion
Power Of Attorney is a tool that is designed to help the investor to ease down their trading faster and easier. It acts as a helping assistant for moving your sold shares to the buyers account, so that investors like you can focus on planning your next move rather than focusing on the timely movements of shares. Although this is optional, most of the traders prefer this as it relieves the investors from risk of penalties due to delayed procedure or any technical fault. By staying alert and choosing a transparent platform like Pocketful, you can trade with peace of mind and keep your costs low.
For more market news and insights, download Pocketful – offering users zero brokerage on delivery trades and an easy to use platform designed for both beginners and experienced investors Pocketful.
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No, accounts can be opened without it. You will just have to manually enter your TPIN and OTP every time you make a sell trade.
Can the broker sell my shares without my order?
No the brokers are bound with only certain things in which they can act, legally the POA only works when you place a sell order yourself. The broker cannot just decide to sell your holdings on their own.
What is a POA number?
This is a unique reference number that is linked to your agreement that has been signed between you with the broker. It is stored with the depository to show that the broker has permission to move your shares.
Is the new DDPI system better than POA?
Yes, DDPI is considered safer as there are more limitations to the broker’s task and it can easily be digitally signed. This is a modern version of a POA which is recommended by SEBI.
Can I cancel my POA later?
Yes, you can easily revoke or cancel your POA at any time by simply informing your broker through a written or digital request.
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