Classic Electrodes (India) Ltd.’s IPO is a fresh issue of ₹41.51 crore, with a price band of ₹82–₹87 per share. Bidding opens on August 22, 2025, and closes on August 26, 2025. The shares will be listed on NSE SME on September 1, 2025.
Classic Electrodes IPO – Day 3 Subscription Status
On Day 3 of the Classic Electrodes IPO, the issue received a total subscription of 179.97×. Among investor categories, Qualified Institutional Buyers (QIBs) were subscribed 84.88×, Non-Institutional Investors (NII) received 356.75×, and Retail Individual Investors (RII) recorded a subscription of 158.44×.
Investors Category
Subscription (×)
Qualified Institutional Buyers (QIB)
84.88
Non-Institutional Investors (NII)
356.75
bNII (above ₹10 lakh)
421.54
sNII (less than ₹10 lakh)
227.62
Retail Individual Investors (RII)
158.44
Total Subscriptions
179.97
Total Applications: 1,01,973 Total Bid Amount: ₹4,927 Cr.
How to Check Classic Electrodes IPO Allotment Status
Classic Electrodes IPO allotment can be easily checked online in two ways: from the Registrar’s website and from the NSE website. This IPO will be listed on NSE SME.
Method 1: Registrar’s website (MUFG Intime India Pvt. Ltd.)
The most reliable way is to check allotment from MUFG Intime India Private Limited’s website.
The primary objectives of the IPO are to fund capital expenditures, repay outstanding borrowings, meet working capital requirements, and support general corporate purposes.
Objects of the Issue
Expected Amount (in Millions)
Funding capital expenditure of our company to purchase Plant and Machinery
100
Repayment of a portion of certain outstanding borrowing availed by the company
100
Funding the working capital requirements of the company
166
General Corporate Purposes
–
Classic Electrodes IPO GMP – Day 3 Update
On August 26, 2025, the IPO showed a Grey Market Premium (GMP) of ₹17, translating to an estimated listing price of ₹104. This resulted in a healthy listing gain of 19.54% for investors, signaling strong market enthusiasm for the IPO.
Date
GMP
Est. Listing Price
Gain
August 26, 2025 (Day 3)
₹17
₹104
19.54%
Disclaimer: The above GMP (Grey Market Premium) is just unofficial market information, which is not officially confirmed. These figures are shared for informational purposes only and investment decisions based on these should be based on the investor’s own research and discretion. We do not conduct, recommend or support any kind of transaction in the grey market.
Classic Electrodes (India) Ltd. IPO – Key Details
Particulars
Details
IPO Opening Date
August 22, 2025
IPO Closing Date
August 26, 2025
Price Band
₹82–₹87 per share
Total Issue Size
₹41.51 crore (Fresh Issue)
Lot Size
1,600 shares
Listing Platform
NSE SME
Registrar
MUFG Intime India Pvt. Ltd.
Important Dates for Classic Electrodes IPO Allotment
Event
Date
Tentative Allotment
Thu, Aug 28, 2025
Initiation of Refunds
Thu, Aug 28, 2025
Credit of Shares to Demat
Fri, Aug 29, 2025
Listing Date on NSE SME
September 1, 2025
Classic Electrodes (India) Ltd. Overview
Established in 1997 and headquartered in Kolkata, West Bengal, Classic Electrodes (India) Limited is a leading manufacturer of welding consumables, including electrodes and MIG wires, catering to both domestic and international markets. The company offers a wide range of products such as mild steel, stainless steel, cast iron, deep penetration electrodes, and MIG wires for varied industrial applications. With two manufacturing units located in Dhulagarh, West Bengal, and Jhajjar, Haryana, it ensures strong regional coverage and efficient logistics, while the earlier Bahadurgarh unit was closed in FY 2023–24 as part of restructuring.
Frequently Asked Questions (FAQs)
What are the opening and closing dates of Classic Electrodes IPO?
The IPO opened on August 22, 2025, and closed on August 26, 2025.
What is the price band for the IPO?
The price band is set between ₹82 and ₹87 per share.
What is the issue size of the IPO?
The IPO size is ₹41.51 crore (fresh issue only).
When will the shares be listed?
Shares are expected to be listed on NSE SME on September 1, 2025.
What is the GMP of Classic Electrodes IPO on Day 3?
The GMP at the close of Classic Electrodes IPO on Day 3 was ₹17.
Rapido is a leading Indian two-wheeler ride-hailing service that launched in 2015 and is now active in over 100 cities. The platform offers services like bike-taxi, auto-rickshaw, parcel delivery and operates on an asset-light model.
In this Rapido case study, we will try to understand the Rapido Business Model, marketing strategy of Rapido, financial analysis of Rapido and SWOT analysis of Rapido in detail.
Rapido: An Overview
Rapido was launched in October 2015 when three youngsters Aravind Sanka, Pavan Guntupalli, and SR Rishikesh previously ran a logistics platform, the Karrier. While this option was stable, scaling was difficult. They realised that two-wheelers (motorcycles) account for nearly 75% of vehicles in India, and could make for a much faster, cheaper option. This insight led them to launch ‘Rapido’ a bike‑taxi platform.
Market Context : At the time, India was dominated by big players like Ola and Uber, but these were focused on four-wheelers. The country had traffic jams, expensive travel, and insufficient public transport. Rapido has introduced an asset‑light, two-wheeler-based, last‑mile solution to provide affordable and faster travel, especially in Tier‑2, Tier‑3 cities.
Rapido has achieved several key milestones:
Expansion across cities: Rolls out to 100+ cities by 2022
Unicorn status: Becomes a Unicorn with a $200 million Series E funding round in September 2024; valuation recorded at $1.1 billion
Financial progress: Revenues rise to ₹648 crore in FY24 (₹443 crore in FY23), and losses narrow to ₹370 crore (₹675 crore in FY23)
Some of the key metrics of Rapido are shown in the table below:
Metric
Data
Revenue (FY24)
₹648 crore (increased from ₹443 crore FY23)
Losses (FY24)
₹370 crore (decreased from ₹675 crore)
Gross Order Value (GOV) FY24
₹4,257 crore (from ₹2,419 crore FY23)
Ride Orders (FY24)
Around 44.50 crores rides (increased from 30.7 crores FY23)
Cities of Operation
100+ cities
Rapido Business Model
Rapido is a bike taxi aggregator that is rapidly transforming local transportation in India’s urban and semi-urban areas. Its model is based on a tech-enabled, asset-light, two-sided marketplace – where there are customers (riders) on one side and bike drivers (Captains) on the other. Rapido connects the two through a seamless mobile app.
Aggregator Platform – No vehicle, just technology : Rapido does not own any bike. It is a platform-based aggregator that provides services through other people’s bikes. Captains register on the app with their documents and bikes and then accept on-demand rides. The entire system is managed by the app and GPS tracking.
Asset-Light Model Low Cost, High Scale : Rapido’s business model is based on an asset-light structure, i.e. the company does not buy any bikes itself. This keeps its fixed cost very low and it can start its operations in new cities very quickly.
Hyperlocal Market Focus Small cities, big scope : Rapido’s strategy is not limited to metro cities only. It has also launched its service in small and medium cities, where there is a demand for local transport but there is a lack of organized solutions. With this hyperlocal penetration, Rapido has gained early-mover advantage in markets with less competition.
Rapido Earns – How does revenue come about?
Rapido makes money from multiple sources:
Per Ride Commission : Rapido takes a commission of around 15% to 20% on every ride. The rest of the money goes to the driver’s account.
Surge Pricing : When demand is high (peak hours, festivals), the price of the ride increases, which gives more revenue to the company.
Rapido Local & Delivery : Rapido has now added delivery services to its platform, such as sending parcels, groceries or office documents. This has added a new revenue stream.
Subscription Plans : Monthly subscription plans have also been introduced for frequent users in some metro cities, which gives discounts to the users and assured income to the company.
Brand Collaborations & Ads : Rapido also earns through in-app advertising and promotional campaigns in collaboration with other brands on its app.
Rapido has positioned itself as “India’s Bike-Taxi Disruptor” with a focus on affordability, faster service, and local connect. Their tagline “Bike Wali Taxi, Sabse Asaan” with simple messaging assures users that getting a ride is now easy and affordable.
2. Digital & Social Media Marketing
Social Campaigns: Rapido ran campaigns like #GoRapido and #NoStressSawari that presented real-life problems of daily commute in a relatable way.
Influencer Marketing: Collaborated with regional content creators to increase reach to local audiences.
App Optimization: App store optimization, push notifications, and personalized deals were used to drive user engagement and retention.
3. Celebrity Branding
In 2023, Ranveer Singh was made the brand ambassador. Catchy ads like “Smart ho toh Rapido” were launched with him which especially appeal to the youth. In 2024-25, campaigns were made more relatable by adding local actors and influencers from small cities.
4. On-ground Strategy
Focus on small cities : Rapido initially chose those cities where bike usage was already high. The youth and delivery agents there were made “Captains”.
Referral Bonus : People who had already joined were given a bonus for bringing their friends this increased both trust and network rapidly.
Local Branding : On-ground branding at places like railway stations, petrol pumps and local markets made the brand familiar in the eyes of the people.
5. Go-To-Market Plan for Food Delivery
One App, Two Jobs : Rapido integrated ride as well as food delivery in the same app so that users do not have to open separate apps.
Low Commission Strategy : While Zomato/Swiggy charge a hefty commission, Rapido charged only half the amount from restaurants. This helped more vendors to join.
Tier-2/3 Cities Onboarding : In small cities, local dhabas and restaurants were onboarded as quickly as possible by offering zero commission or ₹25 fixed delivery charge.
6. Multi-Modal Mobility & Partnerships
Rapido did not limit itself to just one bike-taxi app. They collaborated with big entities like DMRC and ONDC to create pickup/drop zones at metro stations and also introduced features like metro ticket booking.
Financials Analysis of Rapido
Financial Metrics
Financial Metrics
FY 2024
Q2 FY25
Revenue (₹ in crores)
₹648 crore (46% YoY growth)
—
Net Loss (₹ in crores)
₹370 crore (down by around 45%)
₹17 crore (drop from ₹74 crore)
GOV (Gross Order Value)
₹4,257 crore
₹2,461 crore (2.5x of Q2 FY24)
Rapido has shown rapid growth in the past years. The company’s total revenue in FY24 was ₹ 648 crores, which is about 46% more than last year (₹ 443 crores). During the same period, the company has also reduced its losses, the loss was ₹ 675 crores in FY23 which reduced to ₹ 370 crores in FY24.
Rapido’s Gross Order Value (GOV) also doubled to ₹ 4,257 crores in FY24. The main reason for this GOV growth was the increasing demand for the company’s services and expansion in tier-2/tier-3 cities.
Low-cost mobility solution: Rapido offers an affordable option for two-wheeler riding, which is a better option for users troubled by traffic in metros and big cities. Its rides are much cheaper than taxis or autos.
Strong network in big cities: Rapido has made its presence felt in 100+ cities in India, including metro cities like Delhi, Bangalore, Hyderabad and Chennai. Its driver network is also constantly growing.
Ideal for quick pickups and short distance rides: Rapido is a fast, convenient and reliable medium for short distance trips. The bike easily passes through the traffic, which saves time.
Partner-centric model: Rapido offers flexible timings, good incentives and an easy joining process to its captains (drivers), which helps it attract more riders to the platform.
Weaknesses
Safety concerns: Bike rides have less safety than taxis, especially for women or in bad weather. This makes many users reluctant to book a ride.
Regulatory challenges: Many states do not have clear rules regarding bike taxis or they are banned. This affects the company’s growth.
Limited earnings for drivers: Due to excessive competition and cheap rates, the earnings of drivers are limited, which can make it difficult for them to remain associated with the platform.
Opportunities
Opportunity to expand in smaller cities: Rapido can now enter tier 2 and tier 3 cities where there is a lack of public transport and there is a demand for cheap rides.
Last mile delivery service: Rapido can also quickly enter the last mile delivery market through its logistics service “Rapido Local”.
Technology upgrades and AI-based features: Using AI and data analytics, Rapido can perform route optimization, user personalization and safety enhancement.
Threats
Increasing competition: Increasing competition from Ola, Uber and new local startups can affect Rapido’s market share.
Changes in government policies: If state governments ban bike taxis, Rapido’s operation capacity may decrease.
Lack of customer trust: Many users consider bike taxis to be less safe, which makes it difficult to build brand trust.
Conclusion
Rapido has changed the way of commuting in cities with less cost, less time and less hassle. This has become a big relief especially for the middle class and students. However, obstacles like legal policy and regulation still stand in its way. But the way the company has grown rapidly, focused on technology and won the trust of the people shows that it has the strength to run for the long haul. If it gets policy support, Rapido can become a big name in India’s mobility sector.
S.NO.
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The CEO of Rapido is Aravind Sanka, who is also the co-founder of the company.
Who owns Rapido?
Rapido is owned by its three founders Aravind Sanka, Rishikesh SR and Pavan Guntupalli and some investors.
Who invested in Rapido?
Rapido has investments from several major investors, such as WestBridge Capital, Nexus Venture Partners, and Swiggy has also made strategic investments.
Can anyone become a Rapido rider?
Yes, if you have a bike, valid license and required documents then you can register.
What makes Rapido different from Ola or Uber?
Rapido primarily provides bike riding service, which is fast, affordable and convenient in traffic.
A new crisis has erupted in India–US relations after the Trump administration imposed tariffs on Indian exports linked to India’s purchases of Russian crude. Meanwhile, India is set to meet about 36-40% of its total crude oil imports from Russian oil in 2024-25, leading to huge energy savings and keeping domestic prices in check.
Now the question is: Will India give up its cheap energy and prioritize the US market, or will it maintain energy security by losing trade benefits?
Why India Relies on Russian Oil
After the Western sanctions on Ukraine, India increased its imports of Russian oil. Now, by January-June 2025, India is meeting about 34% of its total crude oil consumption from Russia, which was less than 2% earlier. In the entire financial year 2024–25, the share of Russian oil in India’s total oil imports reached about 36%, while the share of the Middle East (OPEC) declined to 48.5%.
Heavy dependence on oil: India imports more than 85% of its total crude oil needs, making the country dependent on global markets for energy security.
Discount is a big reason for the shift towards Russian crude: After the Ukraine crisis in 2022, Russia sold oil at a huge discount amid Western sanctions. On this occasion, India increased its inclination towards Russian oil. Earlier this share was only less than 2%, but now it has reached about 40%.
Year-on-year savings :
Year
Part of Russia
Savings (estimated)
FY22–23
23%
$5.1 billion
FY23–24
35%
$7.9 billion
Resorting to long-term contracts and diversification strategies: Many refiners are ensuring supplies, especially from government term deals (barter annual/long-term contracts) to mitigate any volatility or sudden cuts from Russia. It is not easy to stop such contracts suddenly, so private companies like Reliance, Nayara Energy are continuing to buy.
Direction of change: Looking for alternative sources: Government refiners like BPCL are now increasing supplies from the Middle East (such as Omani oil), especially in January to make up for the shortage of Russian oil. In addition, the country has started buying oil from 39 countries, earlier this number was 27, ensuring energy security and diversity of options.
Chronology of the Tariff Escalation
The recent tariff dispute between the US and India is not just a trade dispute, but an issue deeply intertwined with geopolitical tensions and energy policy. In July–August 2025, the Trump administration put direct pressure on many of India’s export sectors by raising tariffs in two phases.
1. First blow – 25% “reciprocal” tariff (July 30, 2025) : In an executive order issued from the White House on July 30, 2025, the US administration announced the imposition of a 25% reciprocal tariff. Its rationale was that this duty is being imposed in response to the tariffs imposed by India on some products coming from the US.
Affected sectors: Categories such as textiles, gems and jewellery, chemicals, pharmaceuticals and shrimp.
Effective date: From August 1, 2025.
2. Second blow – Additional 25% “penalty” (August 6, 2025) : Another order was issued on August 6, 2025, adding an additional 25% penalty tariff. This was directly linked to India’s continued imports of Russian crude oil, which the Trump administration viewed as “financial support to Russia’s war machine.” The total tariff after this penalty became 50%.
Effective date : 21 days after the August 6 order, i.e. from August 27, 2025.
3. Exemption for goods in transit : The US made a provision that if the shipment was in transit before the order was issued and arrived on time, it would be exempt from the new tariff.
Date
Action
Outcome
July 30, 2025
25%
First set of punitive duties imposed on India
6 August 2025
Additional 25% penalty (on Russian oil)
Total tariff rate increased to 50%
27 August 2025 (Estimated)
Inclusion of shipments already in transit
Full-scale implementation of tariffs
Comparative Impact: Oil Savings vs Trade Losses
India currently faces a balancing challenge on the one hand, the savings from cheap oil from Russia, and on the other, the threat of nearly 50% tariffs from the US that could hit its key export sectors.
What do the facts and figures say?
The scale of oil savings : According to an ICRA report, India saved about $5.1 billion by buying discounted crude from Russia in FY23. Another projection suggests that the discounts have enabled annual savings of $7.9 billion in 11 months of FY24.
The chilling effect of the 50% tariff :Recent reports suggest that the tariffs imposed by Trump could threaten India’s US exports worth about $87 billion. Textiles, jewellery, pharma and petrochemicals critical exports are constantly at risk.
Oil Import Reduction and 25% tariff hit : Even if India reduces Russian oil imports and only the 25% tariff stays in place, trade losses of up to $8–15 billion are expected.
Impact on US-India trade relations
In early 2025, PM Modi and President Trump set a trade goal called “Mission 500”, seeking to take bilateral trade to $500 billion by 2030. But the Trump administration’s displeasure over India’s oil purchases from Russia brought a wave of tariffs instead a dampener on India-US trade.
1. Tariff policy benefits domestic industry
Tariffs have another side: adding to domestic industries.
The PHD Chamber report shows that 25% tariffs would impact exports worth about $8.1 billion, but the impact on overall GDP would be just 0.19% and on global exports 1.87%, as India’s economy is diversified. In response, the chamber has laid out four-fold strategies:
Bundle pricing agreements with global retailers (e.g. Walmart, Amazon)
Development of premium product options
Expanding trade to new markets (EU, Canada, Latin America)
Increasing production in the US through on-shore partnerships.
2. India’s strategic positioning in the global market
The tariff dispute has brought about several changes in India’s foreign policy.According to the Financial Times, while the two countries have started off on a positive note in 2025, the trade dispute has dented the Indo-Pacific strategy Quad meetings are in jeopardy, and India’s ties with China-Russia appear to be strengthening. At the same time, a July report by NITI Aayog shows that the tariff structure in the US has given India an advantage over American competitors in 22 key export categories such as electronics and automobiles. Furthermore, while taking over the Chairmanship of BRICS, Prime Minister Modi has proposed to redefine the organization as “Resilience and Innovation”, which brings out India’s multi-pronged strategic strength.
Impact of cheap Russian crude on India and investors
India has imported record-low crude oil from Russia, which has reduced the country’s oil import bill. This is giving the government the benefit of revenue savings and helping in controlling fuel inflation. Its indirect effect for investors is that if petrol and diesel prices remain stable, the operating costs of transport, FMCG and manufacturing companies may reduce. This may lead to margin improvement in the stocks of these sectors and potential growth in stock prices. Brokerage houses are also monitoring this trend so that correct sector-based investment advice can be given to clients.
Conclusion
Buying cheap crude from Russia has been a profitable deal for India. This has kept fuel prices under control and the government’s import bill has also come down. This has reflected in the stock market, especially on oil, gas and shipping companies. But the way forward is not completely clear. International conditions, sanctions and price fluctuations can change the situation. It is wise for investors to think long-term and assess the current global conditions before taking a decision.
Frequently Asked Questions (FAQs)
What are the “Trump Tariffs on India”?
The Trump administration imposed tariffs in two phases: a 25% reciprocal duty and an additional 25% penalty tied to Russian oil, raising total tariffs to 50%.
How much of India’s crude now comes from Russia?
As of 2025, Russia supplies roughly 34 percent of India’s crude oil imports.
Will India cut Russian oil now?
The government has indicated that Russian oil imports will continue in the near term, supported by existing term contracts and diversification through alternative suppliers for energy security.
What should Indian exporters do right now?
Look at alternative markets, tune pricing/FX-hedging, and keep supply-chain/finishing flexible.
What’s the potential GDP impact for India?
Analysts estimate that if tariffs continue for a long time, GDP growth could be reduced by 0.3-0.4%.
Why does the futures price of a stock or commodity often differ from the spot price? Is this just the effect of demand-supply or is there some mathematical logic behind it? Actually, futures pricing is based on a specific calculation, which is called the futures pricing formula.
In this blog, we will understand in simple language how futures contracts are priced, what are the factors behind it, and how this formula can help you understand the market better.
What Are Futures Contracts?
Futures contracts are an agreement in which two parties (buyer and seller) agree to buy or sell an asset at a fixed price on a fixed date in the future. This asset can be anything such as gold, crude oil, stocks, index or currency.
Example: Suppose a coffee importer needs a large quantity of coffee after 3 months. He wants to fix the price of coffee today itself so that even if the price increases in the future, his expenses do not increase. For this he makes a futures contract.
Who uses futures contracts?
Mainly two types of people are involved in it:
Hedgers: Those who want to protect themselves from price risk.
Speculators: Those who want to earn profit from price movement.
Types of Futures:
Commodities Futures (like gold, silver, coffee)
Stock Index Futures (like Nifty, Bank Nifty)
Currency Futures (USD/INR, EUR/INR)
Interest Rate Futures (based on government bonds)
All of these use the futures pricing formula, which decides what the future price of an asset should be.
The Basics of Futures Pricing
Futures contract prices often differ from spot prices, and the main reason for this is the Cost of Carry Model. This model shows that the cost (or benefit) of buying an asset today and holding it in the future affects futures pricing. It consists of three key elements:
Risk-Free Interest Rate (r): The interest that would be earned on the amount of money if it were invested in a safe investment.
Storage and Insurance Cost: These have a big impact, especially in commodities (e.g. gold, crude oil).
Income Yield (d): Some assets, such as stocks or indices, provide dividends or yields over the holding period, which pull the price down.
All of these factors combine to determine whether the futures price will be at a premium (above) or a discount (below) the spot price.
No-Arbitrage Pricing Principle : The most important principle governing futures pricing in modern financial markets is the No Arbitrage Principle. Accordingly, if the difference between the futures price and the spot price is so great that a trader can make a profit without any risk, they immediately adopt an arbitrage strategy. The result is that the imbalance in pricing is quickly eliminated and the futures come closer to its theoretical value.
For example, if the futures price is too high, traders will buy the asset today and sell it in futures — which will increase demand and balance the price.
Futures Pricing Formula
In the Indian markets, futures contracts are priced using a discrete compounding formula, not the exponential version often used in global finance.
F = S * [1 + (rf * (x/365)) − d]
Where:
F = Futures Price
S = Spot Price
rf = Risk-Free Interest Rate (e.g., RBI Treasury Bill rates)
d = Dividend Yield (if any)
x = Number of days till expiry
This formula applies specifically to index futures and stock futures. In commodity futures, storage and logistics costs are also added to it. This futures pricing formula helps to keep the prices in the market fair, logical and prediction-based.
Real-World Examples of Futures Pricing
Now we will understand how to apply the futures pricing formula practically with data.
Suppose in July 2025:
Spot price of XYZ Corp = ₹2,380.5
Risk-free rate (r_f) = 8.3528% per annum
Days to expiry = 7
Dividend (d) = 0
F = 2380.5 * [1 + (0.083528 * (7/365)) − 0]
F = 2380.5 * [1+0.0016] ≈ ₹2,384.06
So, the fair value of the futures contract after 7 days is ₹2,384.06.
When the Futures Pricing Formula Breaks Down?
Market inefficiency : The futures pricing formula does not work well when there is low liquidity or sudden news-driven volatility in the market. In such a situation, prices may look different from the formula due to demand–supply mismatch.
Expectation-based pricing : Many times traders price futures contracts based on what they think the future spot price will be rather than the pure cost of carry. This also leads to deviation from the formula.
Margin requirements and Sentiment : Market sentiment and changes in margins by brokers also affect the pricing of futures. Panic selling or bullish speculation can cause prices to deviate significantly from the theoretical value.
Example: During the 2020 crash, Nifty futures prices were often trading 150-200 points below the actual spot. During extreme events, like the 2020 crash, Nifty futures often traded 150–200 points below spot. In such times, liquidity stress and sentiment temporarily overpower the cost-of-carry logic. This makes it clear that sometimes emotions and market conditions prove to be more effective than formula.
Applications of the Futures Pricing Formula
Used in Hedging : Large corporates and exporters use this formula to determine how expensive or cheap it will be for them to hedge an asset in the future. This reduces their risk and makes budgeting easier.
Arbitrage Trading : When the futures price is above or below its theoretical value, professional traders immediately catch the arbitrage opportunity. Even a small difference between the spot and futures price can become an opportunity to profit in lakhs.
Valuation and Estimation : Analysts use this formula to estimate how the market is looking at interest rates, currency rates or stock movements in the next few months. Futures price in a way shows a forward-looking perspective of the market.
Unique Insight : Professional traders compare the theoretical futures price and the actual traded price all the time. As the difference increases, they either hedge or create an arbitrage position — this edge sets them apart from the rest.
Common Myths Around Futures
Futures prices predict the future : People often believe that futures prices indicate the future value of an asset. In reality, the futures pricing formula simply adds the cost of carry to the spot price to give a logical price—it is not a prediction.
A premium in futures means the market is bullish : If the futures price is higher than the spot, it is not considered a bullish signal. This difference is often just due to interest rates, dividends, or holding costs.
Expensive futures mean you should avoid : If the futures price is high, it does not necessarily mean that it is overvalued. This may include things like hedge demand, liquidity, or supply constraints.
Futures should always be equal to or cheaper than the spot : There is often the belief that futures should trade around the spot, but it is normal for them to vary due to cost of carry, volatility, and demand/supply in different assets.
Futures are only for speculative traders : Although speculation does occur, futures are primarily used for hedging and price discovery. Institutions and businesses use them to actively manage risk.
Conclusion
Futures pricing can be understood clearly through the cost of carry model. The fair value of a futures contract is determined by the spot price adjusted for interest rates, dividends or yields, and the time remaining to expiry. By applying this formula, traders and investors can evaluate whether a futures contract is trading at fair value, a premium, or a discount. This understanding is critical for making informed decisions in hedging, arbitrage, and speculation. It is advised to consult a financial advisor before trading in futures contracts.
Frequently Asked Questions (FAQs)
What is the formula for futures pricing?
The basic formula for calculating futures price is: F = S * [1 + (rf * (x/365)) − d], where, S = Spot Price , r = Risk-Free Interest Rate , x = Number of days till expiry and d = Dividend Yield .
Why does the futures price differ from the spot price?
Futures price is different from spot price because of factors like interest cost, storage, and time left to expiry.
Does futures pricing apply to all asset classes?
Yes, this formula applies to commodities, indices, currencies and other instruments — only the cost of carry may vary.
Can futures prices be lower than spot prices?
Yes, if the market is in backwardation, then futures prices can be lower than spot prices.
Is futures pricing important for retail traders?
Absolutely, this helps you identify overvalued or undervalued contracts and make better decisions.
Every month, as futures contracts near expiry, a unique buzz builds in the stock market. Instead of closing their positions, many traders carry them forward into the next month’s series. This process is called a rollover. Still, a lot of people wonder what rollover really means in the stock market, how it works, and why it matters.
In this blog, we will explain rollover in simple words and show why carrying futures positions forward is an important part of trading.
What is Rollover in the Stock Market?
Rollover in the stock market means transferring your futures position from the current month’s series to the next month’s series that too before expiry. When a trader moves his position to the next month, it is called rollover in the stock market.
This process happens on both sides :
If you are holding a long position (buy) in the current month’s futures contract, you can roll it over by closing that position and simultaneously creating a new long position in the next month’s contract. This allows you to continue your bullish view without interruption.
On the other hand, if you are holding a short position (sell), you can also maintain it through rollover. To do this, you square off your existing short position in the current series and open a fresh short position in the next month’s futures. This way, your bearish view remains intact even after the current contract expires.
In India, the monthly expiry of futures contracts usually takes place on the last working Thursday of every month. Before that, traders roll over their positions and shift them to the next month.
The purpose of a rollover is to extend an open futures position into the next month’s contract without letting it expire. This process helps gauge overall market sentiment and reveals whether traders are maintaining or shifting their confidence in the prevailing trend.
Why Rollovers Matter: Purpose and Significance
In futures trading, rollover in the stock market is not just a position transfer, but it also gives many big signals and benefits. Know below what is the importance of rollover and why this data is so important for market analysts and traders.
Avoiding settlement : Every futures contract has a fixed expiry date. If the trader holds it till expiry, he has to face settlement or delivery. But when the trader wants to continue his view further, he closes the position of the current series and takes the same position again in the next series. This is called rollover, which can avoid settlement.
Correct use of leverage : For traders trading on margin, rollover is an effective way to maintain their position in less funds. If a trade is profitable and the trader wants to hold it till the next month, he can rollover without investing additional capital. This makes better use of capital possible.
Change in volume and liquidity : As the expiry approaches, traders start building positions in the new month’s contract by exiting the old futures contract. Due to this, trading volume and liquidity gradually shift to the next series. Keeping this change in mind, experienced traders take timely entry in the new series so that better prices and volume can be obtained.
Indication of Market Sentiment : Rollover data helps in understanding the mood of the market. If most traders are increasing their positions in the same direction till the next month, then it shows that confidence remains in the market. On the other hand, if the rollover is decreasing or is happening in the opposite direction, then it may be a sign of uncertainty or change in trend. This is why analysts and traders take this data very seriously.
How to Roll Over Futures Positions
How to roll over futures in the stock market is a question that comes to the mind of every new trader. The process of rollover is technically easy, but timing, cost and correct entry are very important in it.
Square off the existing position : The first step to rollover is to close your existing futures position before expiry. If you have bought, then sell it, and if you have sold, then buy it. This closes the position of your old series.
Create the same position in the next series : Now open a new position in the same direction in the next month’s futures series of the same stock or index. This keeps your trading view continuous without a break. For example, if you bought Nifty in July, then now buy Nifty of August series.
Keep costs in mind : There are some important costs involved in rollovers such as brokerage charges, Securities Transaction Tax (STT), and bid-ask spread. Sometimes, when liquidity is low in the new series, there is a slight difference in the prices, which can increase the trading cost. Therefore, it is better to do price trend, volume and chart analysis while rolling over.
Rollover is not just a technical move, it is a way to keep your trading strategy on track. A rollover done at the right time not only manages risk, but also helps in understanding market sentiment.
Rollover vs Fresh Positions: What’s the Difference?
Parameter
Rollover Position
Fresh Position
Definition
Carrying forward an existing futures position to the next month’s contract
Initiating a brand-new position in the next month’s contract without any prior link
Purpose
To continue an existing market view by shifting position before expiry
To enter a new trading opportunity based on current market trends
Where It Reflects
Visible in rollover data and open interest shift between series
Reflected through a rise in open interest due to new participants
Market Sentiment
Indicates that traders are maintaining confidence in their earlier view
Suggests new traders are entering with a fresh outlook or expectation
Risk Factor
Can lead to losses if the previous trend reverses unexpectedly
Based on current data and trend, so risk may be more manageable
Trading Cost
Slightly higher due to exit and re-entry (two transactions)
Lower cost as it’s a single entry transaction
Who Uses Rollovers: Retail vs Institutional Perspective
Rollover in the stock market is used strategically not only by retail traders but also by large institutional players.
Retail traders usually rollover to maintain their speculative positions till the next month. Their aim is to keep following the trend in low margin and capture short term profits.
On the other hand, institutional investors, such as hedge funds, mutual funds or prop trading firms, use rollover for long term strategy or hedging. These institutions trade in large volumes and their activities affect the direction of the market.
The rollover data of FII and DII is of special importance, because rolling their large positions indicates whether they are positive or negative about the market.
Risks & Mistakes to Avoid While Rolling Over
While doing rollovers in futures trading, traders often face huge losses due to small mistakes. The 5 important points given below will help you to be cautious.
Lack of liquidity : The volume in the next series of futures contracts is low in the beginning. Due to low liquidity, execution can be slow or at a high price.
Risk of price slippage : At the time of rollover, prices can change rapidly, making it difficult to get entry or exit at the desired rate.
Wrong calculation of spread : Not estimating the bid-ask spread and rollover cost correctly can reduce trading profits.
Not re-assessing the view : Many traders rollover with the old view, without seeing whether the market direction is still the same or not.
Wrong selection of time : Waiting till the last day for rollover can be risky. It is better to plan the timing and roll in advance.
Rollover Process: An Example
The budget week of February 2025 saw a unique activity in Bank Nifty futures. Bank Nifty saw a huge rollover with high open interest a few days before expiry and premiums on new contracts rising. This indicated that traders wanted to hold their bullish positions for the next month. It was not just numbers it reflected positive budget expectations across the banking sector.
A smart trader could have read this data and understood that there was bullish carry forward and not short covering in the market. This meant that the big players were expecting a rally in banking stocks.
This teaches us that it is important to look at rollover data not just in percentage terms but also in the context of market conditions and news. Rollover, seen in the right context, can become a strong trading signal.
Conclusion
Every trade in the market is not only about profit or loss; it also reflects the sentiment and expectations of participants. Rollover is one such signal. When a position is carried forward to the next month’s contract, it reflects the trader’s confidence in continuing a particular view on future price movement. As each expiry approaches, monitoring rollover activity can provide valuable insight into market sentiment and may serve as an important input for developing future trading strategies.
S.NO.
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Swaps are one of the most powerful yet lesser-known instruments in the world of derivatives. Unlike futures, options or forwards that most people are familiar with, swaps are agreements between two parties to exchange financial obligations. They are widely used to manage risks such as interest rate fluctuations and currency movements, making them an essential part of today’s global financial markets.
In this blog we will explain what swap derivatives are, how they work and the different types you should know about. Whether you are a finance student, trader or investor, this guide will help you build a clear understanding of swaps.
What is Swap in Derivatives?
Swaps derivatives are a type of financial contract in which two parties agree to exchange future cash flows. The exchanged cash flows are typically linked to financial variables such as interest rates, currencies, commodity prices, or credit risk, and the primary purpose of swaps is to hedge risk, manage exposure, or speculate on market movements. This exchange takes place on the basis of predefined rules and a notional amount, but the actual amount is not exchanged. Swaps often take place in the OTC (Over-the-Counter) market, that is, they are not listed on a bank or exchange, but are directly negotiated between two parties. This is why they are completely customized; the parties can set the terms as per their convenience. Not being standardized like futures and options, swaps in derivatives are more flexible, but they also have counterparty risk associated with them. The biggest advantage of swaps derivatives is that with their help companies can protect themselves from interest rate risk, currency fluctuation or commodity price volatility. Sometimes they are also used for arbitrage or speculative purposes.
History & Evolution of Swaps Derivatives
1. Early 1980s
Interest rate swaps were conceptualized in the late 1970s, and were used in the interbank market in the early 1980s. The British Bankers’ Association standardized them, making them increasingly popular in financial markets.
2. 1981: The First Currency Swap between IBM and World Bank
The first documented and high-profile deal involving swap derivatives occurred in 1981, when IBM and the World Bank signed the first currency swap agreement. The deal proved to be a major turning point in international financial strategy.
3. 1990s: The Rise of Credit Default Swaps (CDS)
Bankers Trust in 1991 and J.P. Morgan in 1994 used CDS as a form of credit risk management. It was a type of contract that provided financial protection in case of default.
4. 2008: Global Financial Crisis and the role of CDS
Excessive use of CDS without proper controls worsened the financial crisis of 2008. Large institutions like AIG came close to collapse due to CDS exposure, after which global regulators tightened regulation of the swap market.
5. 2025 Statistics
According to the ISDA report, the notional outstanding of global OTC derivatives was $699.5 trillion by the second half of 2024, of which interest rate derivatives alone accounted for $579 trillion. This segment makes up the largest part of the OTC derivatives market and has recorded a growth of around 4.9% year-on-year.
How Do Swaps Derivatives Work?
Nature of the contract : A swap derivative is a bilateral contract in which two parties agree to exchange future payments on pre-determined terms for a fixed period of time. These payments are based on an underlying financial factor, such as interest rates or currency rates.
Calculation of payments : In this contract, payments are fixed based on a fixed notional amount. This amount is only for calculation, and there is no actual transaction. For example, one party pays at a fixed interest rate, while the other pays at a floating rate .
Interval and settlement : Both parties calculate their respective payment amounts at a fixed interval (such as every 6 months). In the end, only the difference between the two payments is transacted. This is called net settlement. This prevents either party from making a full payment unnecessarily.
Change in value : The value of a swap contract keeps changing over time. As the underlying rate (e.g. interest rate) fluctuates, the present value of the contract fluctuates. This is called the mark-to-market valuation.
Purpose and utility : The purpose of this process is not just to exchange payments but to strategically manage risk. Corporates and financial institutions use it to manage interest rate risk or control costs without changing their existing loan or investment structure.
Types of Swaps in Derivatives
1. Interest Rate Swap
In this swap, two parties transact interest rates – one at a fixed rate and the other at a floating rate. Its purpose is to avoid the risk arising from fluctuations in interest rates.
Example: Suppose an Indian company has taken a loan of ₹ 100 crore from a bank on which it has to pay 9% fixed interest every year. But the company feels that floating rates will remain low in the future, so it does a swap deal with a bank in which it starts paying at a floating rate (eg MIBOR + 1%) instead of a fixed rate. This allows the company to take advantage of a possible fall in interest rates.
2. Currency Swap
In this, two parties exchange the principal and interest of loans taken in different currencies. These swaps are especially done when a company has to borrow in foreign currency but wants to avoid risk.
Example: An Indian company has taken a loan from the US in USD but it is easier to pay in rupees in the future. So it does a currency swap with an American company – the Indian company pays in dollars, and the American company in INR. This saves both parties from risk by paying in their respective country’s currency.
3. Commodity Swap
In this swap, two parties make payments based on mutually agreed price and market price of a commodity such as oil, gas, or metal. This is done to protect against price uncertainty.
Example: Suppose an Indian airline company needs 1 lakh liters of jet fuel every month. It fears that oil prices may rise in the future. It does such a swap with an oil supplier in which a fixed price (eg ₹ 85 per liter) is fixed every month, whether the market price is ₹ 90 or ₹ 75. This gives it stability in the budget.
4. Credit Default Swap (CDS)
This is a contract in which one party promises to compensate the other party in case of default of a loan or bond. This is a kind of “credit insurance”.
Example: Suppose an Indian bank has given a big loan to a real estate company. It fears that the company may go bankrupt. The bank takes CDS from an insurance company. Now if that real estate company does not repay the loan, the insurance company will compensate for the loss.
5. Equity Swap
In this, two parties make payment based on the return of the stock market and a fixed interest rate. In this, actual shares are not purchased, only the return is transacted.
Example: Suppose an Indian mutual fund wants a return of Nifty 50 but does not want to buy shares directly. It does an equity swap with a bank in which the bank gives it a return of Nifty 50, and in return the fund gives fixed interest (eg 7%).
Benefits of Using Swap Derivatives
Protection from interest rate risk : Swaps allow switching between fixed and floating rates, allowing companies to hedge their expenses against interest rate fluctuations.
Control of currency risk : Currency swaps help manage the exchange rate risk associated with foreign currency loans or liabilities.
Cost reduction : Swaps with more favourable terms can help organizations reduce their financing costs and improve cash flow.
Customised financial strategy : Swaps can be customised, allowing companies to control their balance sheet risk in a customised way.
Risks Involved in Swap Derivatives
Counterparty Risk : Swap derivatives are often over-the-counter (OTC), that is, they are traded directly between two parties rather than through an exchange. In such a situation, if one party does not fulfill the terms of the contract (defaults), then the other party can suffer huge losses. This risk increases further, especially in long-term swaps.
Liquidity Risk : Swap contracts are highly customized, which makes it difficult to sell them in the secondary market or exit them prematurely. This is why the investor or institution has to remain in it for the entire period, even if the market conditions change.
Valuation Risk : Since swaps do not have a uniform market price, valuing them is challenging. Complex financial models and assumptions are required to mark them to market. Valuation based on incorrect estimates can lead to huge losses.
Regulatory Risk : After the 2008 financial crisis, derivatives regulations have been tightened around the world. In India, there has been increased oversight of OTC derivatives by RBI and SEBI. Many swaps now need to be settled through a clearing house, increasing the regulatory burden and reporting.
Market Risk : Swap contracts depend on market-linked factors such as interest rates, currency rates, or commodity prices. If these change suddenly or unfavorably, it can expose the parties to huge losses. Without the right hedging strategy, this risk can be huge.
Why Do Investors and Institutions Use Swaps?
Risk Management : The most common use of swaps is to protect against fluctuations in interest rates, currency rates or commodity prices. This helps companies stabilize their future payments.
Speculative Use : Some professional traders use swaps to bet on the direction of the market, such as whether interest rates will rise or fall. In this, a position can be taken without buying the actual asset.
Arbitrage Opportunities : When there is a price difference in two financial markets, investors can take advantage of low cost and high returns through swaps.
Balance Sheet Management : Banks and corporate entities use swaps to improve their asset-liability matching and cash flow structure.
Customised Financial Structure : Swaps are completely customisable, allowing companies to design them to suit their needs and precisely control risk.
Conclusion
Swap derivatives have become an essential tool in today’s complex financial environment for managing interest rate risks, foreign exchange volatility, etc. They are different from traditional derivatives because they are completely customizable. Although they come with risks, but with the right strategy and understanding, they can be very beneficial for institutions and experienced investors. It is important to examine them closely and seek professional advice before using them.
S.NO.
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Everyone wants to make a profit in the stock market but did you know that some smart traders make money without risk even when the market is stable? This is called Arbitrage Strategy.
In this blog, we will understand in simple language what is Reverse Cash and Carry Arbitrage, how it works, and how to make a profit from it too without knowing the direction of the market. If you want to know what is cash and carry arbitrage and its reverse form, then this guide is for you.
What is Cash and Carry Arbitrage?
Cash and Carry Arbitrage is a trading strategy in which traders buy an asset (such as a stock or index) at the current price (spot price) and sell the same asset at a fixed price (futures price) in the futures market. It is profitable when the futures price is higher than the spot price, that is, when the market is in contango.
Let us understand with an example : Suppose the spot price of Stock A is ₹5,100 now, and the futures price after one month is ₹5,350.The trader buys Stock A at ₹5,100 and sells the futures at ₹5,350. Here the difference is ₹250. If the total expenses (like brokerage, funding cost etc.) are ₹100, then a net profit of ₹150 is left without any directional risk.
Step
Description
Spot Buy
Buying Stock A at ₹5,100
Futures Sell
Sell futures at ₹5,350 at the same time
Net Profit
₹250 – ₹100 = ₹150 (almost assured profit)
Cash carry arbitrage is used extensively by large investors, professional traders and arbitrage mutual funds, especially when such price gaps are present in the market and execution can be fast.
The Opposite Side: What is Reverse Cash and Carry Arbitrage?
Reverse Cash and Carry Arbitrage is a trading strategy in which the trader sells an asset in the spot market (short sell) and buys the same asset in the futures market (buy futures). This strategy is exactly the opposite of cash and carry arbitrage where first you buy and then sell.
It is beneficial when the market is in backwardation, that is, when the price of futures is lower than the spot. In such a situation, the trader sells at a higher price today and takes a contract to buy the same asset in the future at a lower price.
Let us understand with an example:
Suppose the current (spot) price of Stock B is ₹7,252, and the futures price is ₹6,800.
The trader shorts (borrows and sells) Stock B at ₹7,252 and buys its futures at ₹6,800. If the total expenses are ₹300 (loan cost, brokerage etc.), his potential profit will be: ₹7,252 – ₹6,800 – ₹300 = ₹152 per share.
Step
Description
Spot Sell
Short (Sell) Stock B at ₹7,252
Futures Buy
Buying Stock B Futures at ₹6,800
Net Profit
₹152 (after deducting all expenses)
There is profit in this (riskless arbitrage), provided the asset can be shorted and all transactions are completed on time and at a low cost. This strategy is mostly used by institutional investors and proprietary trading desks, as it requires a good understanding of both cash flow and borrowing.
Cash and Carry vs. Reverse Cash and Carry Arbitrage
Factor
Cash and Carry
Reverse Cash and Carry
What to do in Spot Market
Buy
Short Sell
What to do in Futures Market
Sell
Buy
When is it used
When futures price is higher than spot
When futures price is lower than spot
Objective
Lock in the premium
Benefit from the discount
Risk Level
Very Low
Low, but requires short selling facility
Who typically uses it
Mutual Funds, HNIs, Professional Traders
Proprietary Traders, Institutional Investors
Key Conditions for Profitable Reverse Arbitrage
The market should be in backwardation : Reverse cash and carry arbitrage works only when the futures price is lower than the spot, i.e. the market is in backwardation. This situation usually arises when short-term demand is low or there is negative sentiment in the market. If the futures are not at a discount, then this strategy will not be profitable.
Sufficient price gap between spot and futures price : A difference of just ₹5-₹10 will give negligible profit in real-time, especially when brokerage and taxes are also deducted. Trade only when there is a clear discount in both the prices – i.e. the gap is enough to leave a net profit even after deducting all expenses.
Permission and access for short selling : The first requirement of reverse arbitrage is the facility of short selling. In India, this is possible only in the stocks of F&O segment. Apart from this, you should have experience and margin to trade in NSE F&O. This access is often limited for retail traders.
Control of funding cost or interest rate : If you have borrowed capital for short selling or buying futures, the interest charged on it will affect your earnings. Low interest rate or 0% brokerage funding schemes can make this strategy even better.
Calculate transaction costs in advance : Broker charges, STT, GST, transaction fees, and exchange charges can sometimes increase the cost by ₹100–₹200. If you do not add these in advance, your expected arbitrage profit will remain only on paper.
Impact of cash flow and interest on free funds : Some traders partially free their funds by buying futures. If they receive interest on these free funds (like liquid funds or overnight lending), it adds an extra edge to the profit — especially in high volume trades.
Liquidity and Execution Speed : The profit margins in reverse arbitrage are small, but the execution must be extremely fast and accurate. Low liquidity or delay can lead to a close spread. So focus on liquid stocks/indices like Nifty, Bank Nifty, Reliance or HDFC for this strategy.
Benefits and Risks of Reverse Cash and Carry Arbitrage
Benefits of Reverse Cash and Carry Arbitrage
Almost risk-free earnings : If all the conditions such as price gap, execution and cost control are met, this strategy is capable of delivering low-risk and assured returns.
Protection from short-term volatility : This strategy is not based on directional trading, so even if the market goes up or down, the pre-locked profit is not affected.
Capital Efficiency : Professional and HNI traders can open both the positions with limited capital which can improve their ROI. Sometimes this strategy proves to be more efficient than long-term investment.
Predictable results : If the trade is held till expiry, the profit is almost fixed due to the convergence of futures and spot prices which reduces uncertainty to a great extent.
Risks of Reverse Cash and Carry Arbitrage
Execution Risk : Both spot and futures trades need to be executed simultaneously and at the right price. A little slippage or delay can wipe out the entire profit margin.
Margin Call and Position Risk : If the market suddenly becomes very volatile, a margin call may occur, especially if the position is large. This may lead to premature closure of the trade.
Regulatory and Tax Complications : In India, STT (Securities Transaction Tax), tax on futures and limits on short selling can sometimes make this strategy less profitable.
Limited access to short selling : Retail traders are often not allowed or facilitated to short sell in the spot market, making this strategy unviable for them.
Who Can Actually Use This Strategy?
Institutional Investors : Large fund houses, insurance companies and FIIs use this strategy in large volumes as they have the capital, execution team and access to short-selling.
Proprietary Trading Firms : These are professional traders who trade with their company’s money. They have real-time systems, arbitrage models and risk management that enables such a strategy to be put into practice.
High Net Worth Individuals (HNIs) : Investors who have large trading capital and are active in the F&O segment can also take advantage of this strategy, provided they have access to short-selling.
SEBI-registered arbitrage funds : Many arbitrage mutual funds in India monetize this strategy. If you cannot implement this strategy directly, you can get indirect benefit by investing in these funds.
While professional and institutional players can easily make profits from this strategy, there are many obstacles for retail investors. The biggest challenge is the limited facility of short selling, which is not usually available in the cash market. Apart from this, a relatively higher margin is required for futures trading. Also, if there is even a slight delay or slippage in trading, the profits of investors with limited capital can easily be wiped out. This is the reason why this strategy is not as simple in practice for retail traders as it seems.
Conclusion
Reverse Cash and Carry Arbitrage is a strategy that offers the opportunity to generate stable returns at low risk. While the profit potential is fixed, it requires precise execution, short selling flexibility, and cost control. This strategy is usually more useful for professional and institutional traders, but retail investors can also profit indirectly especially through arbitrage mutual funds. With the right information and planning, it can be an effective trading strategy. It is advised to consult a financial advisor before trading.
Frequently Asked Questions (FAQs)
What is Reverse Cash and Carry Arbitrage?
It is a trading strategy in which an asset is sold in the spot market and bought in the futures market when the futures price is low.
When is Reverse Arbitrage profitable?
When the futures price is lower than the spot price and there is still profit after deducting all transaction costs.
Can retail investors do reverse arbitrage?
In theory yes, but in practice it is a bit difficult due to the convenience of short selling and margins.
What are the major risks involved?
Risks like execution delay, high transaction costs and restrictions on short selling are involved.
Is this strategy used by mutual funds?
Yes, many arbitrage mutual funds use this kind of strategy to get stable returns at low risk.
If you have ever faced difficulty in selling or pledging shares while trading in the stock market, then the old POA system has been a big reason behind it. Now SEBI has implemented a new system to make it better and safer – DDPI (Demat Debit and Pledge Instruction). This method makes the process of debiting and pledging shares in your demat account easy and transparent.
In this blog we will understand in simple language the meaning of DDPI, the role of DDPI in the stock market, its advantages, disadvantages and how to activate it.
What is DDPI?
DDPI i.e. Demat Debit and Pledge Instruction, is a document that you sign and give to your broker so that he can debit (sell) or pledge shares from your demat account only after your approval. This is a more secure and limited authority method than the old Power of Attorney (POA), in which the broker gets permission to only sell and pledge that too when you do the transaction yourself.
Why was DDPI introduced?
There was more risk in the old POA system : Earlier investors had to give POA to the broker, which gave them full authority to sell or transfer shares from your demat account. In many cases, some brokers misused this right, causing loss to investors.
It was necessary to provide a safe and controlled method to investors : SEBI realized that the POA system was becoming unsafe for investors. Therefore, in 2022, SEBI issued a new rule, making DDPI an alternative to POA. Through this, investors now allow only those transactions that they initiate themselves.
Changes necessary for transparency and trust : DDPI has promoted transparency and investor protection in the stock market. Now the broker cannot touch your shares unless you yourself give a sell or pledge instruction. This gives complete control to the investor.
POA vs DDPI: What’s the Real Difference?
Feature
POA (Old Method)
DDPI (New Method)
Scope
Broad: complete freedom to sell, transfer and pledge shares
Limited: only allowed to sell and pledge
Security Risks
Higher risk of misuse
Low as action only takes place with your approval
Revocation
The process is complex and time consuming
Easy as DDPI can be deactivated in just a few steps
Control
Broker had quite broad rights
The investor retains full control
Is DDPI Mandatory for Stock Market Investors?
It is not mandatory for all investors to implement DDPI i.e. Demat Debit and Pledge Instruction. SEBI has introduced it as an optional facility, which aims to provide more security and convenience to investors. That is, if you want, you can sign DDPI, and even if you do not, you can continue trading.
1. For which investors is DDPI more useful?
If you are an active trader and regularly buy and sell shares, or want to take margin by pledging your shares, then DDPI can prove to be very useful for you. This eliminates the need to enter OTP every time, which makes transactions quick and seamless.
2. What if DDPI is not there?
If you have not activated DDPI, then every time you sell shares, you will have to go through the eDIS (Electronic Delivery Instruction Slip) process. In this, an OTP comes on your registered mobile or email, which is entered only after which the shares are debited. This method can be a little time consuming, especially when orders need to be executed quickly in the market.
3. Where does DDPI not apply?
DDPI is required only in cases of selling shares or making a pledge. If you make investments like IPO, mutual fund, or SIP, then DDPI has no role in it. A different process is adopted for such investments in which DDPI is not required.
Activating Demat Debit and Pledge Instruction (DDPI) has become very easy these days. Whether you are opening a new demat account or using an existing one, you can activate DDPI either online or offline.
1. How to activate DDPI while opening a new account?
When you open a new demat account with a broker like Pocketful, the option to sign DDPI is given during the account opening process itself. This process is completely digital and you can easily complete it through Aadhaar-based eSign. Once signed, the broker registers the DDPI with your depository (NSDL or CDSL).
2. How to add DDPI to an already opened account?
If you have already opened an account and did not sign DDPI at that time, you can easily activate it later. For this, most brokers provide DDPI activation facility through online platforms or mobile apps.
3. How do Pocketful users activate DDPI?
If you have opened your account on the Pocketful App, the DDPI option is available at the time of account opening. If you did not sign up for DDPI at that time, you can activate it later.
4. How to activate DDPI on Pocketful App
Open the App > Go to Menu > Select Account Settings > Click on “DDPI” section > eSign using Aadhaar. The same facility is available on the web portal as well, where you can activate DDPI by filling the DDPI form or digitally.
5. How long does activation take?
In most cases, DDPI activation happens within 24 to 48 hours. Once it is activated, you can trade faster without the hassle of eDIS or OTP.
6. Using POA? Switch to DDPI now
If you have signed a POA earlier, you can switch to DDPI by requesting your broker. Most brokers now complete this process online, so you do not need additional documentation.
Benefits of DDPI for Retail Investors
DDPI is Safer than POA : DDPI i.e. Demat Debit and Pledge Instruction, is much safer than the traditional Power of Attorney (POA). POA gives brokers a lot of rights, whereas DDPI only allows limited and necessary tasks, which keeps your share account safe.
Get rid of OTP-based selling : If you have activated DDPI, you do not need to enter OTP every time you sell shares (as is the case with eDIS). This makes the trading experience smoother and faster, especially when you want to react immediately to market fluctuations.
Fast and Hassle-Free Execution : The trading process is much faster with DDPI because there is no need for manual steps like OTP or confirmation. This allows your deals to be executed immediately, which is especially beneficial for intraday traders.
Necessary for Margin Trading : If you want to trade through margin by pledging shares, then DDPI is necessary. It allows you to pledge your shares, which is not possible through POA or eDIS.
Control remains in your hands : DDPI gives you complete transparency and control. You decide for yourself what the brokerage firm can and cannot do. This gives peace of mind and you can invest without worry.
Completely Optional and Flexible : The best thing is that filling DDPI is not mandatory. If you do not want to activate it, you can opt for eDIS or POA. This gives you complete freedom to choose the option as per your convenience.
Limitations of DDPI
Not every brokerage is completely paperless : There is a perception that DDPI makes the entire process digital, but in reality, some brokers still ask for a signed physical copy for DDPI activation. This means you have to print the form, sign it and send it back which can be time-consuming and hassle in today’s digital age.
Not useful for all types of transactions : DDPI is used only for limited purposes, such as selling or pledging stocks. But if you want to transfer mutual funds, government bonds or other demat holdings, DDPI does not work there. Hence, you have to resort to different methods.
It is not easy to remove DDPI : If you want to cancel DDPI in the future, many brokers ask for an offline physical request for the same. This means you may have to fill and post a form to cancel DDPI, which makes the whole process a bit sluggish and inconvenient.
Not very important for those who trade less : If you trade only once or twice a month, you may not feel the need for DDPI. For such investors, eDIS (Electronic Delivery Instruction Slip) or OTP verification also works. DDPI is more useful for those who trade frequently or regularly.
Conclusion
DDPI i.e. Demat Debit and Pledge Instruction has made trading in the stock market a little easier. Now there is no need to enter OTP or give extra permission every time you sell shares – once DDPI is activated, the work is done quickly and securely. Yes, this is not necessary for all investors, but if you trade regularly and want to avoid frequent hassles, then DDPI can prove to be a good option. This is a small but important step towards smart trading.
S.NO.
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In the field of options trading, a Bermuda Option represents a hybrid structure between American and European options. Under this contract, the holder is permitted to exercise the option only on specific predetermined dates. This feature provides a balance of flexibility and strategic control. In recent years, Bermuda options have gained increasing popularity, particularly among institutional investors, due to their customizable nature and ability to support more sophisticated risk management strategies.
This article will provide a clear and structured overview of the Bermuda option, explaining its key characteristics, advantages, and practical applications.
Bermuda Option : An Overview
A Bermuda Option is a derivative contract that allows the investor to exercise the option on certain pre-defined dates. It is neither exercised only on the expiry day like a European Option nor anytime like an American Option.
Interesting Fact: The name “Bermuda Option” comes from the island of Bermuda, which lies geographically between the United States and Europe. Just like its name, the Bermuda option sits in between the American and European styles, offering a balanced level of flexibility.
Difference between Bermuda, American and European Options
Type of Option
Exercise Timing
Flexibility
Premium Cost
American Option
Anytime before expiry
Highest
Most expensive
European Option
Only on the expiry date
Lowest
Least expensive
Bermuda Option
On specific pre-determined dates
Medium
Moderately priced
Today, many institutional investors use this option for customized risk management. This option is usually available in the OTC (Over-the-Counter) market, allowing its terms and exercise dates to be customized.
Thus, the Bermuda option provides investors with greater control, lower premiums, and limited but flexible exercise options.
How Bermuda Options Work: Real-World Example
The most special thing about Bermuda Option is that it can be exercised only on some selected dates. These dates are already fixed in the contract like the first trading date of every month or the beginning of every quarter. This means that the investor gets the opportunity to exercise even before expiry, but not on any day, but only on some fixed days.
Understand with a simple example : Suppose you have a Bermuda Call Option which gives the right to buy a stock at a strike price of ₹2,000. This option is valid for the next 6 months and it can be exercised only on the first trading date of every month. If the price of the stock becomes ₹2,300 on the first trading day of the third month, then you can buy it for ₹2,000 and earn a profit of ₹300.
What is the importance of strategy in Bermuda Trading?
Bermuda Options are useful for traders and investors who plan transactions based on a specific event or time-based movement. For example:
Just before corporate earnings
After RBI monetary policy meeting
Around the company’s dividend announcement
In such situations, Bermuda Option proves to be more effective because you can take the position on that specific date without waiting for expiry.
Why is the exercise structure of Bermuda Option special?
It offers a good balance of not too much freedom (like American) and not too restricted (like European).
It is also priced accordingly. The premium is usually higher than European and lower than American.
It is especially popular in OTC markets where institutions can customize it.
Key Features of Bermuda Options
Key feature of Bermuda options are listed below:
Pre-defined exercise dates : Bermuda options can only be exercised on certain pre-defined dates. These dates are already fixed in the option contract such as the first trading date of every month or the beginning of a quarter. This gives traders the opportunity to make strategic decisions without waiting for expiry.
Available in both Call and Put options : Bermuda options are not limited to just call options. You can buy them as both Bermuda Call Option or Bermuda Put Option, making them suitable for both bullish and bearish strategies.
Customization in the OTC market : These options are usually traded in the Over-the-Counter (OTC) market, allowing investors and institutions to customize them to their needs such as exercise dates, contract period, and asset class.
Volatility and Time Effect on Pricing : Bermuda Option prices usually depend on volatility, strike price and time left till expiry. Since they can be exercised in between, their valuation model is a little more complex than European options.
Premium Cost Balance : The premium of these options is lower than American options and higher than European options. This is attractive for traders who want flexibility and do not want to pay a high premium.
Bermuda Call Option vs Bermuda Put Option
Keeping in mind the fluctuations in the market, investors choose different types of options. Let us understand what its two main forms Call and Put Options are and how they work.
Bermuda Call Option : Bermuda Call Option is an option that gives the investor the right to buy an underlying asset (such as a stock, index or currency) at a fixed strike price on certain pre-defined dates. This option is useful when the investor expects a bullish move in the market, but does not know when the price will rise. Through this, he can get a chance to buy at the right time, without waiting for the entire expiry.
Bermuda Put Option : Bermuda Put Option gives the investor the right to sell the underlying asset at a fixed price on certain pre-defined dates. This option is better in situations when the investor fears a market fall in the future and wants to secure his portfolio in time. It is a limited but effective hedging tool.
Difference between Call and Put Option : While the Bermuda Call Option is used to profit from a potential price rise, the purpose of the Bermuda Put Option is to protect against potential losses. Both options are considered excellent for strategic trading and risk management, especially when the right timing is known but complete freedom is not required.
Why Choose Bermuda Options?
Bermuda options can be preferred for trading due to the following reasons:
Perfect flexibility : Bermuda options offer you the freedom to exercise, but it is not completely unlimited. The option to exercise on certain dates gives you both better timing and more control.
Strategic play at a lower cost : It has a lower premium than American options, which allows the trader to control his costs. It is great for those who want to take risks in a calculated manner.
Ideal for time-sensitive trading : If you think the market will move on a particular date like a result announcement or budget—then Bermuda options give you the opportunity to take a position at that time.
A reliable way of professional hedging : Many large institutional investors use this option to protect their portfolio from losses, especially when there is long-term planning.
Full customization : Bermuda Options available in the OTC market can be designed to suit your needs such as exercise dates, strike prices, or duration all on your terms
Where are Bermuda Options Traded?
Bermuda Options are primarily traded in the OTC (Over-the-Counter) market, where their terms can be customized. These options are particularly popular among large institutional investors who use them for hedging or special strategies.
Globally, these options are available as structured derivative products in financial centers such as Singapore, Hong Kong and London. In India, Bermuda trading is currently not available to ordinary retail investors, but some foreign institutions use them to indirectly hedge their exposure to the Indian markets.
Risks and Limitations of Bermuda Options
Some of the risks associated with trading Bermuda options are listed below:
Limited liquidity : Bermuda Options are mostly traded in the OTC market, where there are limited buyers and sellers. This makes them less liquid, meaning it is not easy to sell them immediately when needed.
Complexity in pricing : Simple models are not suitable for determining the value of these options. Complex models such as binomial or trinomial trees have to be used to take into account different exercise dates and volatility.
Limited availability for retail investors : Bermuda Options are primarily for institutional investors. In markets like India, they are not generally available to retail traders.
Need for accurate timing : Since they can be exercised only on certain dates, you need to have an accurate estimate of the movement of the underlying asset. A slight mistake in timing can render the option worthless.
Conclusion
The Bermuda Option provides a balanced structure through its time-based exercise feature. Unlike traditional European options, which can only be exercised at expiry, Bermuda options allow exercise on specified dates, offering flexibility while maintaining discipline. This characteristic distinguishes them as a hybrid between American and European styles. Trading in Bermuda options is most common among institutional investors and in customized derivative markets. Within the broader complexity of options trading, they represent a practical compromise between timing flexibility and pricing efficiency. It is advised to consult a financial advisor before trading in Bermuda options.
S.NO.
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Anondita Medicare Ltd. is launching its IPO as a fresh issue of approximately ₹69.50 crore, offering up to 47.93 lakh equity shares at a price band of ₹137–₹145 per share. The IPO opened on August 22, 2025, and will close on August 26, 2025. The shares are slated to list on the NSE SME platform on September 1, 2025.
Anondita Medicare IPO – Day 1 Subscription Status
The IPO saw overall subscriptions of 3.39×, driven primarily by Retail Individual Investors (RII) at 5.89×. Non-Institutional Investors (NII) contributed 1.93×, while Qualified Institutional Buyers (QIB) showed moderate participation at 0.11×.
Investors Category
Subscription (×)
Qualified Institutional Buyers (QIB)
0.11
Non-Institutional Investors (NII)
1.93
bNII (above ₹10 lakh)
1.43
sNII (less than ₹10 lakh)
2.93
Retail Individual Investors (RII)
5.89
Total Subscriptions
3.39
Total Applications: 4,956 Total Bid Amount: ₹156 Cr.
Objective of the Anondita Medicare IPO
The primary objectives include funding capital expenditure for new equipment and machinery, meeting working capital requirements to ensure smooth business operations, and allocating funds for potential acquisitions and other general corporate purposes.
Objects of the Issue
Expected Amount (in Millions)
Funding capital expenditure requirements for the purchase of equipment/machineries
60
Funding the Working Capital requirement
350
Unidentified Acquisition and General Corporate Purposes
–
Anondita Medicare IPO GMP – Day 1 Update
On August 22, 2025, the IPO recorded a Grey Market Premium (GMP) of ₹65, leading to an estimated listing price of ₹210. This indicators a strong listing gain of 44.83%, reflecting high investor enthusiasm.
Date
GMP
Estimated Listing Price
Gain
August 22, 2025 (Day 1)
₹65
₹210
44.83%
Disclaimer: The above GMP (Grey Market Premium) is just unofficial market information, which is not officially confirmed. These figures are shared for informational purposes only and investment decisions based on these should be based on the investor’s own research and discretion. We do not conduct, recommend or support any kind of transaction in the grey market.
Important Dates for Anondita Medicare IPO Allotment
Event
Date
Tentative Allotment
August 28, 2025
Initiation of Refunds
August 29, 2025
Credit of Shares to Demat
August 29, 2025
Listing Date on NSE SME
September 1, 2025
Anondita Medicare IPO – Key Details
Particulars
Details
IPO Opening Date
August 22, 2025
IPO Closing Date
August 26, 2025
Price Band
₹137–₹145 per share
Total Issue Size
₹69.50 crore (Fresh Issue)
Lot Size
1,000 shares
Listing Platform
NSE SME
Anondita Medicare Ltd. Overview
Anondita Medicare Ltd., incorporated in March 2024, is a Noida-based manufacturer of flavored male condoms under the brand “COBRA”, with a production capacity of 562 million pieces annually. Serving domestic and export markets (Southeast Asia, Africa, Middle East), the company demonstrated robust growth with revenue rising from ₹46.56 crore in FY24 to ₹77.13 crore in FY25, and PAT surging from ₹3.84 crore to ₹16.42 crore.
Easy Steps to Apply for Anondita Medicare IPO via Pocketful
Step 1: Install the Pocketful Trading App from Play Store or App Store. Step 2: Sign up and complete your KYC Step 3: Open the IPO section on the app Step 4: Search for “Anondita Medicare” Step 5: Tap Apply and enter your bid details
Frequently Asked Questions (FAQs)
What are the opening and closing dates of the Anondita Medicare IPO?
The IPO opened on August 22, 2025, and closes on August 26, 2025.
What is the price band of the IPO?
The price range is ₹137–₹145 per share.
What is the total size of the IPO?
The issue comprises a fresh issue of ₹69.50 crore.
When will Anondita Medicare shares be listed?
Listing is expected on September 1, 2025, on NSE SME.
What is the Day 1 subscription status?
The IPO has seen 3.39× overall subscription, led by 5.89 times in the retail category.
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