You are not alone if you have ever looked at stock charts and wondered how traders determine whether a stock is “expensive” or “cheap” during the day. VWAP, or volume weighted average price, is one of the technical indicators that helps give an answer. Consider it the “true average price,” not just a simple average, where the majority of trading has actually occurred.
VWAP is widely used by day traders, swing traders, and institutional investors to evaluate price levels, identify entry and exit points, and benchmark trade execution quality. In this blog, we will discuss what VWAP is, how it is calculated, and how traders use it as part of their trading strategy.
Understanding VWAP
The Volume Weighted Average Price (VWAP) is a trading indicator that calculates the average price of a stock (or any security) throughout the day, while giving greater importance to price levels where higher trading volumes occurred.
Consider it this way – the VWAP will be closer to ₹100 because that is where the majority of the day’s buying and selling took place, despite the stock also touching ₹98 or ₹102.
How is VWAP Calculated?
It is calculated using this formula
VWAP = ∑(Price * Volume) / ∑ Volume
where,
Price = (High+Low+Close) / 3
Example
Suppose a stock trades in the first 3 hours in the following manner
Time
Price (₹)
Volume (shares)
Price × Volume
10:00
100
200
20,000
11:00
102
300
30,600
12:00
98
500
49,000
1. First, add the price * volume, which equals ₹99,600 (20,000 + 30,600, 49,000)
2. Now, add up the volume, which sums up to 1,000 shares (200 + 300 + 500)
3. Finally, apply the VWAP formula mentioned above,
= ₹99,600 / 1,000
= 99.6 (VWAP)
Inference
If the stock’s current price is ₹102, it is above VWAP and will be considered a bit expensive. But if the price of the stock is 98, it is below VWAP, which implies the stock is cheap and affordable.
Things to Consider
Every morning, when the market opens, the VWAP is reset.
It acts as a benchmark for traders to determine whether the current price is “expensive” (above VWAP) or “cheap” (below VWAP) for the day.
When VWAP is above, buyers tend to be in control (bullish), and when VWAP is below, sellers are in control (bearish).
How the VWAP Strategy Works?
The VWAP line acts like the day’s “fair price” guide. To determine whether to buy, sell, or wait, traders keep an eye on the current price in contrast to the VWAP.
1. Buying Below VWAP
The stock can often be bought at a discount to the day’s average if it is trading below VWAP.
If the trend appears to be strong, traders view this as a buying opportunity.
2. Selling Over VWAP
It indicates that the stock is becoming more expensive than its average when the price rises above VWAP.
A lot of traders use this as an opportunity to book profits or even think about shorting.
3. Role of Support and Resistance
VWAP may act as an invisible resistance or support line.
Traders use the VWAP level for entries and exits because the price frequently bounces off it.
Advantages of VWAP
1. Offers a Benchmark for fair prices
VWAP is more accurate than a simple moving average because it provides the average price weighted by volume.
2. Helps in Identifying Trend Direction
Price above VWAP suggests that buyers are in charge (bullish). Sellers are stronger (bearish) when the price is below VWAP.
3. Excellent for Intraday Trading
Intraday traders use VWAP as a reference for entries and exits because it resets daily.
4. Institutions Also Use VWAP
Small traders can “follow the big money” because big funds execute trades around VWAP to prevent excessive market movement.
Limitations of VWAP
1. Only Works Well During the Day
VWAP is not very helpful for swing trading or long-term investing because it resets every day.
2. Lagging Indicator
VWAP responds slowly in quick-moving, volatile markets because it is based on averages. A little bit of the move may have already vanished by the time it validates a trend.
3. Not a Standalone Tool
Using VWAP alone can be risky. For confirmation, traders usually combine it with price action, MACD, or RSI.
4. Less effective for stocks with low volume
VWAP may not accurately reflect a “fair price” if trading volume is low.
Conclusion
VWAP is more than just a line on your chart. If you use it wisely, it can help you find entry and exit points, figure out how strong a trend is, and even trade like institutions do. But keep in mind that no single indicator can guarantee profits. When used alongside other tools and good risk management, VWAP works best. If you trade during the day, adding VWAP to your indicators kit could be a simple but effective way to help you make better market decisions.
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Imagine two traders sitting side by side. One is glued to the screen, making quick decisions and jumping in and out of trades within seconds to lock in small profits. The other is calm and patient, holding positions for weeks or even months, waiting for a bigger move to play out. Both are traders, yet their approaches are completely different. One thrives on the fast paced world of intraday trading, while the other relies on the steady patience of positional trading.
Which of these styles feels closer to your personality? Are you the quick decision maker who enjoys fast action, or the patient strategist who prefers to wait for the long term payoff?
In this blog, we will explain both intraday and positional trading in detail, explore their pros and cons, and help you figure out which approach might be the right fit for you.
Intraday Trading
When it comes to intraday trading, it is all about buying and selling stocks or financial instruments on the same day. It is a quick buy-and-sell style of trading where you enter a position when you spot a good opportunity and close it before the market shuts. The main aim is to take advantage of small price changes during the day and turn them into profit.
Intraday traders do not hold positions overnight, in contrast to long-term investors who do so for years. In this approach, they must stay vigilant of any risks that could arise from news or events happening during market hours.
Example
Say you buy 100 shares of ABC at ₹2,500 each in the morning. By noon, the price jumped to ₹2,540. You sell and lock in a ₹40 gain per share, which is ₹4,000 in profit.
Features of Intraday Trading
1. Short time frame – All trading positions are created and squared off within the same day.
2. Charts & signals – Decisions are based more on technical analysis and involve evaluation of price charts, indicators, and patterns.
3. Only liquid stocks – To make buying and selling easier, traders prefer stocks with a high trading volume.
4. Margin Trading – Leverage is a feature of many brokers that lets you trade larger quantities with a lesser amount of money, but it also increases the risks.
Positional Trading
Positional traders hold their trading positions for a longer period of time, sometimes a few days, sometimes a few weeks, or even months. The idea is to sit back and catch larger price movements that take time to happen. Positional trading is considered a more conservative alternative to intraday trading.
Positional traders usually look at the broader picture. To determine when to buy or sell, they consider factors like a company’s performance, market trends, or economic news and combine them with technical analysis of price charts over a long term timeframe. The key weapon here is patience.
Example
Suppose you buy 100 shares of XYZ at ₹1,400 because you believe the IT sector will grow strongly over the next few months. Six weeks later, if the stock rises to ₹1,600, you pocket ₹200 per share or ₹20,000 in profits.
Features of Positional Trading
1. Holding Period- The duration of trades ranges from days to months.
2. Broader Perspective – Fundamentals like news, earnings, and overall market trends carry more weight than technicals.
3. Reduced screen time – You can skip spending your entire day watching the screens and scanning the technical charts.
4. Riding the trend – The goal is to maximize profits, but there is always the risk of overnight losses if unexpected news causes sudden price movements.
Intraday Trading vs Positional Trading
Aspect
Intraday Trading
Positional Trading
Time Horizon
Buy and sell within the same trading day.
Hold positions for days, weeks, or even months.
Objective
Capture small price moves and generate quick profits.
Capture larger price moves over a longer period.
Analysis Approach
Relies mainly on technical analysis (charts, indicators, patterns).
Focuses more on fundamental analysis (company performance, economic trends), with some use of longer-term charts.
Risk Level
High, because of leverage, quick decisions, and market volatility.
Moderate, when compared to intraday, but overnight news/events can affect stock prices adversely.
Stress & Time Commitment
Stressful, you need to monitor markets constantly during trading hours.
Less exhaustive, you don’t need to watch the screen all day.
Suitable For
Active traders with quick decision-making skills and a high risk appetite.
Part-time traders or working professionals who prefer patience and a bigger-picture approach.
There is no single “right” way to trade; rather, it ultimately depends on your risk tolerance, personality, and available time.
You might want to consider intraday trading if
You like to act and make decisions quickly.
During the day, you can watch markets while sitting in front of the screen.
Higher risk is suitable for you as a reward for higher returns.
You are comfortable with indicators, price patterns, and charts.
You might benefit from positional trading if,
You are a working professional or a student, and you are unable to watch the market all day.
You don’t mind waiting weeks or months for results.
You prefer studying long-term market trends and business fundamentals.
You would rather take a more relaxed approach, free from the stress of making decisions all the time.
Conclusion
In the end, intraday and positional trading are simply two different approaches to the market. Intraday is fast paced, potentially rewarding, but also carries higher risk. It suits people who enjoy making quick decisions and capturing small price movements throughout the day. Positional trading, on the other hand, is better for those who prefer to wait patiently and follow larger market trends. Neither style is better than the other because it depends on what matches your personality and comfort level. The best approach is to start small, try both styles, and choose the one that feels right for you.
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Yes, you can do both intraday as well as positional trading.
Which is more profitable?
Returns are not guaranteed and depend on your skills, discipline and market conditions.
Do I need a Demat Account for positional trading?
Yes, you will need a trading and a demat account to buy, hold and sell stocks.
Is intraday trading riskier than positional trading?
Both intraday and positional trading involve risk, but in different ways. Intraday trading is risky because prices move quickly within the day, while positional trading carries the risk of overnight events or unexpected news that can impact prices.
Which is better for beginners: Positional or Intraday Trading?
Positional trading is usually considered better and safer for beginners as compared to intraday trading. However, it is advised to consult a financial advisor before trading.
Whenever you log in to your trading and demat account, you will see numerous figures displaying your balances, including ledger balance, available balance, and margins. Among all these, the ledger balance holds the key position. But do you know what exactly a ledger balance means?
In today’s blog post, we will give you an overview of what a ledger balance is, its importance, and the difference between a ledger balance and an available balance.
What is Ledger Balance in a Demat Account?
The ledger balance in a demat account is a balance which reflects the total settled funds in your trading account, which is linked to your demat account. This balance is the final figure reflecting all the purchasing, selling, and settlement processes of a day. However, it excludes all unsettled trades and any pending withdrawal.
A trader can track the net movement of funds resulting from the purchase and sale of shares, including brokerage fees and other charges.
Features of Ledger Balance
The important key features of a ledger balance are as follows:
Net Fund: The ledger balance reflects the net fund after adjusting all debit and credits.
Charges: All kinds of charges, including brokerage, STT, GST, etc., are factored into this ledger balance.
Updation: The ledger balance updates regularly. Whenever any financial transaction takes place in your demat account, the ledger balance updates immediately.
Unsettled Transactions: The ledger balance may sometimes display the amount from recent trades.
Verification: Ledger can be useful for an investor while reconciling the brokerage and other charges paid by a trader.
Difference Between Ledger Balance and Available Balance
The key difference between the ledger balance and available balance is as follows:
Particular
Ledger Balance
Available Balance
Settlement
Ledger balance may include the amount of unsettled trades.
Available does not include any amount of unsettled trades.
Frequency
Updates once per business day, typically overnight, after all transactions have been Processed.
This only updates whenever there is any kind of debit or credit of funds in your account.
Importance
It helps in tracking all the financial transactions of your trading and demat account.
The available balance only helps you in identifying the amount available for trade and withdrawal.
Settlement
Ledger balance includes the amount of unsettled trades.
Available balance does not include the amount from any unsettled trades; it only includes the amount which is available for use.
Objective
The objective of the ledger balance is to show you the overall fund position.
The objective of the available balance is to reflect the investable and withdrawal amount.
The key importance of the ledger balance in demat account is as follows:
Tracking Expenses: The ledger balance of a trader reflects all the charges, such as brokerage fees, taxes, etc. Hence, one can easily track all such expenses.
Reduce Overtrading: Once you know the ledger balance, you can avoid overtrading by evaluating the trading limit of the ledger account.
Transparency: Ledger balance account is an official record maintained by your stockbroker. This provides transparency on what kind of charges are deducted from your trading and demat account.
Planning: It helps in planning your future trade based on the available balance in your ledger account.
Mismatch in Balance: Ledger balance helps resolve the disputes related to any unnecessary expenses deducted from your demat account.
How ledger balance affects your trading decision
The key factors which can affect your trading decision are as follows:
Identifying True Purchasing Power: Ledger balance shows a complete picture of your account, hence it can give you an estimation of the amount which you can utilise for trading.
No Rejection of Orders: If you trade based on your available balance instead of your ledger balance, your order might get rejected due to insufficient settled funds.
Reinvestment: If you sold any shares, then the proceeds of such trade start reflecting in your available balance account immediately, but you can only invest based on the ledger balance.
Margin Eligibility: Brokers generally calculate the margins based on the ledger balance. Hence, if you plan to trade on margin, then the ledger balance can help you in calculating the margin availability.
Tips to Monitor Your Ledger Balance
The important tips that one should remember while monitoring their ledger balance are as follows:
Checking Balance: One should check their ledger balance before executing any trade, and should not rely on the available balance.
Pending Dues: Always keep a track of your ledger balance in order to avoid any penalties due to an unsettled amount.
Detail View: A trader is required to check the detailed ledger balance in order to check if there are any penalties or additional charges deducted by their broker.
Corporate Cycle: Equity trades follow a T+1 settlement cycle, which can help in evaluating the available ledger balance.
On a concluding note, a ledger balance in your demat account is a key figure which you need to check before placing any buy order. It includes the complete record of your trades, including credit, debit, charges, and any unsettled trades. Understanding your ledger balance can help you make informed decisions and avoid any penalties due to an insufficient balance. Therefore, it is advisable to check your ledger balance before executing any trade.
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What is the difference between a ledger balance and an available balance?
The ledger balance will reflect total funds available in your demat account, including unsettled balances of a trade, while the available balance will reflect only the funds which can be used for trading or withdrawal.
Can a ledger balance show negative figures?
Yes, a ledger balance can be negative if your account has any pending charges or penalties that exceed your available funds.
What is the frequency of updating the ledger balance?
The ledger balance is generally updated by your broker on a real-time basis.
Can I withdraw my full ledger balance?
If your ledger balance has any unsettled trade, then you cannot withdraw it. You can withdraw only the available balance from your trading and demat account.
What happens if my trading account balance shows a negative figure?
Whenever your ledger balance shows a negative figure, it indicates that there might be some unpaid dues, such as pending margins, unpaid charges, annual maintenance charges, etc.
Over the past few years, when stock market volatility and inflation have plagued investors, one option has slowly become the most popular Gold ETF. The number of accounts investing in gold ETFs in India has grown 13 times in the last 5 years, which shows that people are now moving more towards digital gold than physical gold, till March 2025. Amidst this change, the two most popular options are SBI Gold ETF and HDFC Gold ETF. In this article, we will do an in-depth comparison between the two so that you can know which is the better option for your investment goals, SBI Gold ETF vs HDFC Gold ETF.
What is Gold ETF and why is its popularity increasing?
Gold ETF (Gold Exchange Traded Fund) is an investment option in which you invest in gold, but without buying physical gold. These funds run according to the price of real gold and are listed in the stock market. That is, you can buy and sell them from your demat account like stocks.
How does it work?
Each unit of Gold ETF is usually equal to 1 gram of gold. When you buy an ETF, you are actually buying digital gold of the value that the fund house invests in physical gold. You do not get the gold, but its value appears in your demat account and you can trade it anytime.
Why is Gold ETF becoming so popular?
There is no storage or locker charge
There is no making charge like in case of physical gold
The purity of gold is guaranteed usually 99.5% or more
Liquidity means it can be easily bought and sold
Investment can be started even with a small amount (like ₹100 or ₹500)
How has been the performance in the last few years?
Gold ETFs have given an average annual return of 10%-11% in the last 5 years. Especially when the market fell or inflation increased, gold ETFs helped in handling the portfolio. This is the reason why the number of gold ETF investors has increased by 13 times by March 2025 and this boom is still continuing.
SBI Gold ETF is an exchange traded fund launched by SBI Mutual Fund in 2009. The fund tracks the price of 99.5% pure gold in India, giving investors an opportunity to invest in gold without buying physical gold. The ETF trades on the stock exchange under the name SEFTGOLD.
Fund Manager
Vandna Soni
Launch Year
2009
ETF Trade Symbol
SETFGOLD
Key features:
Less expensive option than physical gold
1 unit = approximately equal to 1 gram of gold
Changes in NAV based on market value of gold
Easy purchase and sale possible through demat account
Indexation benefit is available in long term capital gain tax
Who is this ETF for: SBI Gold ETF is a good option for those investors who want to invest in gold but want to avoid hassles like security, storage or making charges. It is an excellent tool for retail investors as well as for portfolio diversification.
SBI Gold ETF – Key Metrics Table
ETF Name
Current Price (₹)
AUM (₹ Crores)
52-Week High (₹)
52-Week Low (₹)
Expense Ratio (%)
Tracking Error (%)
SBI Gold ETF
84.30
9,505.83
97.00
62.85
0.70
0.22
What is HDFC Gold ETF?
HDFC Gold ETF is an open-ended exchange traded fund that allows investors to invest in gold digitally, without the need to hold physical gold. The objective of this ETF is to track the price of 24 carat gold, and investors can benefit from changes in gold prices.
Fund Manager
Bhagyesh Kagalkar
Launch Year
2010
ETF Trade Symbol
HDFCGOLD
HDFC Gold ETF – Key Metrics
ETF Name
Current Price (₹)
AUM (₹ Crores)
52-Week High (₹)
52-Week Low (₹)
Expense Ratio (%)
Tracking Error (%)
HDFC Gold ETF
94.18
11,378.56
96.96
63.31
0.59
0.0
SBI Gold ETF vs HDFC Gold ETF: Key Differences
Feature
SBI Gold ETF
HDFC Gold ETF
Launch Year
May 2009
August 2010
AUM (2025)
9,505.83
11,378.56
Expense Ratio
0.70
0.59
Tracking Error
0.2
0.0
Liquidity
Moderate
Generally better liquidity
3-Year CAGR Returns
27.70%
29.50%
Benchmark Index
Domestic prices of 99.9% purity gold
Domestic prices of 99.9% purity gold
Available Trading Platforms
BSE, NSE
BSE, NSE
Trust Factor
Backed by government-owned bank
Trusted private sector institution
Key Risk Factors Before Investing in Gold ETFs
Gold ETFs are a convenient and transparent investment option, but they also have some hidden risks that every investor should be aware of. If you invest without full understanding and just thinking “gold is safe”, then sometimes it can prove to be harmful. Let us know what things should be kept in mind before investing in Gold ETFs:
Volatility in Gold Prices : The international prices of gold depend on many global factors such as dollar index, interest rates, geo-political tensions and central bank policies. These have a direct impact on the returns of your ETF.
Currency Risk : Since gold is purchased in India in INR against the dollar, changes in the USD-INR rate can affect the returns of gold ETFs even if international gold prices are stable.
Tracking Error : Gold ETFs track the price of gold, but their returns may differ slightly from physical gold due to reasons such as management fees, expense ratio and liquidity.
Liquidity Risk : The trading volume of some gold ETFs is very low, which may make it difficult to sell the ETF in the market at the time of need or may not get the right price.
Regulatory Changes : Any new guidelines of the government or SEBI regarding taxation or ETFs may affect the investment, such as changing the rates of long term capital gains tax.
What to keep in mind while choosing between SBI and HDFC Gold ETF?
AUM (Assets Under Management) : The total AUM of an ETF indicates how many investors have invested in that scheme. Generally, funds with higher AUM are considered more trusted and liquid.
Tracking error : Tracking error shows how much the return of an ETF differs from its benchmark (such as gold price). A low tracking error means that the ETF is tracking its benchmark correctly.
Expense ratio : This is the fee that the AMC charges you every year. Funds with a low expense ratio keep more of your money invested.
Liquidity and trading volume : You buy ETFs on the exchange like stocks. If the trading volume in the ETF is high, you will find it easy to buy/sell.
History and performance of the fund : It is important to see how many years the fund has been running and how it has performed in the past years. ETFs with a long and stable track record are more reliable.
Expertise of the fund manager : The skill and experience of the professional managing the fund is also an important factor. Under an experienced manager, the fund operates in a more professional manner.
Platform access and buying facility : It is important whether your brokerage platform supports that ETF or not. Also, check features like SIP facility, login process and mobile access.
Age and stability of investment : If you are young and can invest for a long time, then high-risk options may be right. On the other hand, if you are close to retirement, then stable and low-risk ETFs may be better.
Benchmark Index : It is important to know which benchmark the ETF is tracking such as domestic gold price or international gold price. This helps in understanding the direction of the ETF’s performance.
Taxation Rules : Gold ETFs are considered non-equity for taxation purposes. If sold before 3 years, it attracts short-term capital gains and thereafter long-term capital gains, which is 20% with indexation.
How to Invest in Gold ETFs? Easy Step-by-Step Guide
After logging into the Pocketful app or website, type in the search box – “SBI Gold ETF” or “HDFC Gold ETF”. Here you get important data like price, NAV, past returns.
Step 3: Buy ETF as per stock
You can buy or sell Gold ETF in real-time just like stocks. Just enter the quantity, check the price and place the order.
Step 4: SIP is also an option
If you want to invest a little every month, then Pocketful also has the facility of SIP. With this you can average the price fluctuations.
Step 5: Track Your Portfolio
Pocketful lets you track your ETF holdings in real-time. You can also sell it when needed.
Today, the way of investing in gold has completely changed. Gold ETF is a smart, digital and secure option that allows you to invest without worrying about lockers, jewellery or physical gold. These can be bought and sold just like stocks and can also be cashed immediately when needed. If you are looking for easy, transparent and low-cost gold investment, then Gold ETF can prove to be an excellent option.
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India has witnessed many scams over the years, but the 2003 Stamp Paper Scam remains one of the most infamous. At its centre was Abdul Karim Telgi, who rose from selling peanuts on trains to building a vast counterfeit empire. His story is not just one of fraud, but also a reflection of how sharp ingenuity combined with systemic corruption enabled one of the country’s largest financial scandals.
In this blog, we will trace the rise of Telgi, walk through the chronology of the stamp paper scam, examine its massive impact, and highlight the key lessons it left behind for India’s financial system.
About Abdul Karim Telgi
Abdul Karim Telgi was born in 1961 in Khanapur, Karnataka. After his father, a railway employee, passed away, the family struggled. As a boy, Telgi sold peanuts and fruit on trains to survive. He went to Saudi Arabia seeking better opportunities. There, he picked up odd jobs and also learned the tricks of shady businesses.
When he returned to India, he started a company, namely ‘Arabian Metro Travels’ and began forging passports to help people travel illegally.
Stamp Paper Scam – An Overview
The Telgi Scam, also known as the Stamp Paper Scam, is one of those true stories that sounds like it was taken from a crime thriller. In the early 2000s, Abdul Karim Telgi pulled off a scam so big that it shook India’s economy and showed that there was corruption at almost every level.
It was all about stamp papers, which one needed for loans, property deals, insurance, and legal work. Telgi realized that since there was such a high demand for them, making counterfeits could be quite lucrative. And he was right. He began to flood the market with fake stamp papers after getting access to printing presses and support from corrupt officials.
His fake papers became so popular that banks, insurance companies, and even government offices started using them. The scam was worth more than ₹30,000 crore by the time the truth was found. It wasn’t just about the money either; countless legal documents suddenly became questionable, creating chaos everywhere.
Telgi was finally caught and sentenced to a 30-year prison term, but the destruction was already done. The only good thing that happened because of the scandal was that it prompted the system change, and now e-stamping is used to ensure that this never happens again.
Chronology of the Stamp Paper Scam
The chronology of the stamp paper scam is given below:
1. Learning about stamp papers
The government gives stamp papers for legal and financial transactions, such as selling property, making loan agreements, getting insurance, and going to court. They are only supposed to be printed and sold by the government through authorised vendors because they have legal value.
This meant that there was a lot of demand, but not enough supply. This was a perfect situation for Telgi to take advantage of.
2. Getting to Printing Presses
Telgi did not just make bad counterfeits. Instead, he paid people to let him into government security presses, places that printed real stamp papers. He was able to get printing machines, special ink, and security paper with the help of corrupt officials. That is why his fake stamp papers looked so real that banks couldn’t tell the difference.
3. Setting up a distribution network
Once he had the supply, Telgi needed reach. He created a network of agents, middlemen, and vendors that could ship things all over the country. These were not just random petty criminals; a lot of them were licensed stamp paper sellers. They mixed fake stamp papers with real ones to get his stock across the country without anyone noticing.
4. Paying people to be quiet
No scam of this magnitude could last without strong protections. Telgi paid police officers, politicians, and bureaucrats to make sure things ran smoothly. In many instances, the people who were supposed to look into him ended up working for him. This network of corruption kept the scam going for years.
5. Getting into every area
The fake stamp papers were not simply floating around in local stores. They made it to:
Banks (used in loan and mortgage papers)
Insurance companies (policies written on fake papers)
Government offices (contracts and legal papers)
Courts (filing cases and making deals)
This meant that the scam wasn’t just about money; when it was revealed, it caused legal and administrative chaos.
6. Scale of the Scam
Telgi’s business was worth more than ₹30,000 crore. To put that into perspective, his fake papers were so common that they were used for multiple financial transactions by big companies. It was not just a scam; it was a system that worked beside the real one.
7. The Beginning of the End
The scam fell apart when whistleblowers and journalists started looking into it more closely. Eventually, the police had to pay attention to it. When he was caught, Telgi admitted how big his operation was.
How was he caught?
Catching Abdul Karim Telgi wasn’t easy. Fake stamp papers had surfaced as early as 1991 and 1995, but weak investigations allowed him to escape.
Unlike most fraudsters, Telgi did not hide in the shadows; instead, he lived lavishly, which helped him build powerful connections.
The turning point came when R. Sri Kumar, head of the Stamp Paper Investigation Team, arrested Telgi’s colleague Soni. Around the same time in 2002, a tip to Pune Police uncovered a racket that eventually traced back to Telgi.
With rising public anger, the Maharashtra government formed a Special Investigation Team (SIT). Karnataka followed with its own SIT, STAMPIT, which exposed how deeply Telgi’s network had spread, from government staff to police officers and even politicians.
By 2004, the scam had grown too large for state agencies, and the CBI stepped in. That August, it filed a detailed chargesheet. Telgi shocked many by pleading guilty, openly admitting his crimes
End
Telgi’s story ended sadly, even though he was smart. He was diagnosed with AIDS while he was in jail. His health worsened over the years, and in 2017, he died in a Mumbai hospital from multiple organ failure.
This is the end of the story of a man who went from selling peanuts on trains to being involved in one of the biggest financial scams in India’s history.
Impact of the Scam
The Telgi Stamp Paper Scam was not just about fake papers; it shook up the entire system.
1. Huge Financial Loss – A lot of money was lost by the government, money that could have been used for public welfare and development.
2. Trust was broken – People started to doubt the validity of their insurance policies, loans, and property papers.
3. Banking and Legal Mess – Courts, banks, and insurance companies were stuck with papers that may or may not be valid, which led to arguments and delays.
4. Changes Made – The scam led to e-stamping in 2005, which made the system more open and safe from fraud.
Conclusion
The Telgi scam exposed how corruption thrives when those in power look the other way. Though Telgi died in 2017, the damage he caused left a lasting mark on India’s economy and politics. At the same time, it pushed the government to introduce much-needed reforms like e-stamping, making the system more secure. His story is not just about one man’s crime, but a reminder that scams succeed only when the system allows them to.\
S.NO.
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Earlier investment in Gold is a dream for many individuals because of its high prices. But with time, Gold ETFs were introduced, which can be an economical option for an investor to invest in Gold and get the benefit of appreciation in physical Gold Price.
In today’s blog post, we will give you an overview of the Gold ETF, along with the key factors to consider before investing in it.
Meaning of Gold ETFs
A Gold exchange-traded fund, or Gold ETF, is a kind of investment vehicle that tracks the price of actual Gold and can be bought and sold on a stock exchange like any other stock. The fund manager of the ETF purchases the physical Gold on your behalf, and by purchasing the units of the Gold ETF, you actually become the owner of one unit of physical Gold it represents. The value of a Gold ETF fluctuates with the price of Gold. Generally, each unit of a Gold ETF usually represents 1 gram of Gold, Also an ETF is a basket of Securities that includes Stocks, bonds & Commodities.
Key Features of Gold ETF
The key features of Gold ETF are as follows:
Physical Gold: Each unit of Gold ETF represents the ownership equal to one gram of 99.5% pure Gold.
Convenience: Gold ETFs can be purchased or sold on the stock exchange using your demat account, just like shares.
Transparency: A Gold ETF’s price fluctuates in accordance with the Gold market price.
No Storage Cost: You don’t require a locker or have to worry about theft because units of Gold ETFs are electronically stored.
Best Gold ETFs in India 2025
The best Gold ETFs in India 2025 are mentioned in the table below based on the past one-year returns:
Scheme Name
AUM (Crore)
Expense Ratio (%)
6 Months
1 Year
3 Years
5 Years
UTI Gold ETF
2,156.36
0.48
26.39
48.64
30.00
15.03
LIC MF Gold Exchange Traded Fund
526.96
0.41
23.98
47.39
30.14
15.48
ICICI Pru Gold ETF
8770.32
0.5
25.14
49.15
29.70
15.16
ABSL Gold ETF
1253.31
0.47
24.59
49.10
29.62
15.14
Axis Gold ETF
2083.89
0.56
24.96
49.01
29.64
15.20
Mirae Asset Gold ETF
952.37
0.31
25.09
48.86
–
–
Kotak Gold ETF
8315.38
0.55
23.20
48.90
29.61
15.10
SBI Gold ETF
9505.83
0.70
22.50
48.84
29.47
14.28
Nippon India ETF Gold BeES
23832.47
0.80
22.56
48.72
29.48
14.90
Baroda BNP Paribas Gold ETF
199.87
0.59
24.35
48.60
–
–
Edelweiss Gold ETF
293.98
0.66
22.82
48.45
–
–
Invesco India Gold ETF
315.71
0.55
25.29
48.31
29.75
15.21
HDFC Gold ETF
11378.56
0.59
23.41
48.45
29.60
15.08
(As of 15-Sep-2025)
How do Gold ETFs work
When you purchase the Gold ETF on the stock exchange, you are actually purchasing the unit of physical Gold it represents. The fund manager appointed by the Asset Management Company on your behalf purchases the physical Gold having 99.5% purity. And the performance of an ETF depends on the price of physical Gold. If the price of Gold moves upside then the value of your ETF investment also goes up, and vice-versa.
The key benefits of investing in Gold ETF are as follows:
Safe: When you purchase a Gold ETF, you don’t have to worry about keeping physical Gold safe in lockers or paying any storage fees.
Liquidity: You can easily sell the units of the Gold ETF on the stock exchange during trading hours and liquidate your investment.
Purity: Investors need not worry about the purity of Gold, as the fund manager invests the amount in 99.5% pure physical Gold.
Transparent Pricing: The prices of Gold ETFs change according to the price of physical Gold in the market.
Diversification: One can easily diversify their investment portfolio in Gold through a Gold ETF.
Factors to Consider Before Investing in Gold Investing
The key factors to consider before investing in Gold are as follows:
Risk Tolerance: One must consider their risk appetite before investing in a Gold ETF, as the price of a Gold ETF depends on the price of physical Gold.
Gold Price Trend: The Gold price fluctuates based on various national and international factors. Hence, one should keep an eye on the Gold price trend.
Investment Objective: One should consider its investment objective, such as whether they are investing in a Gold ETF for long-term wealth creation or short-term trading, before investing in a Gold ETF.
Fund House: The fund house’s reputation needs to be checked before investing in Gold ETFs.
Expense Ratio: An investor should opt for investing in a Gold ETF of an AMC which has a lower expense ratio.
Tracking Error: Tracking error plays a vital role in analysing the performance of passively managed funds such as Gold ETFs. Therefore, one should invest in a Gold ETF which has the least tracking error.
Who Should Invest in Gold ETFs
Gold ETFs can be considered as an investment option by the following investors:
Portfolio Diversification: One who is looking to diversify their investment portfolio can opt for investment in a Gold ETF.
Risk-Averse Investor: Investors who do not wish to take risks in their portfolio can consider investing in a Gold ETF. Gold is considered a haven during economic downturns.
Cost-Effective Option: Investors who are looking for a cost-effective investment option for investment in Gold can consider investing in a Gold ETF. As it has the lowest management charges.
Investor Looking for Liquidity: Investors who are looking for liquidity in their Gold investment can invest in a Gold ETF, as it can be easily sold on the stock exchange during trading hours.
On a concluding note, Gold ETFs provide an opportunity to diversify your investment portfolio and get the benefit of Gold price appreciation. Gold ETF also provides liquidity, and it can be easily traded on the stock exchange. However, tracking error can impact the performance of Gold ETFs, also their prices fluctuate based on the physical Gold, hence can show volatility in the portfolio. Therefore, it is advisable to consult your investment advisor before making any investment decision in a Gold ETF.
S.NO.
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A Gold ETF is an investment product offered by an asset management company which is traded on the stock exchange. The performance of the Gold ETF depends on the physical price of Gold. Each unit purchased by an investor represents the ownership of 1 gram of Gold.
Does the Gold ETF provide dividends to its investors?
No, Gold ETF do not provide dividends to their investors. The returns from investment in Gold ETFs come only in the form of capital appreciation.
Is it mandatory to have a demat account for investing in ETFs?
Yes, one should have a demat and trading account for investing in ETFs.
What are the factors that impact the performance of Gold ETFs?
Various factors impact the performance of the Gold ETF are International price of Gold, inflation, Geopolitical uncertainties, etc.
Is there any possibility of tracking error in the Gold ETF?
Yes, as a Gold ETF is a passive fund, therefore, like any other index fund it can also have a tracking error.
Before the stock market opens, the biggest question in every investor and trader’s mind is which direction will the market go today? The activity during the opening hour often sets the tone for the rest of the session. In such a situation, “things to know before market opens” i.e. important information before the market opens acts as a guide for you.
In this blog, we will understand 20 important things that will help you make better decisions, identify the right opportunities and avoid unwanted risks.
The 20 Things to Know Before Market Opens
Global & Domestic Cues (Macro Factors)
1. Overnight US Market Performance
The movement of US indices such as Dow Jones, Nasdaq and S&P 500 has a direct impact on the Indian market. If the US markets have closed higher at night, the possibility of a positive opening in the Indian market increases. At the same time, the trend of tech-heavy Nasdaq has a greater impact on IT and technology stocks. Therefore, it is important to look at the charts and closing levels of these indices first thing in the morning.
2. Asian & European Market Trends
Before the Indian market opens, Asian indices (Nikkei, Hang Seng, Kospi) and GIFT Nifty give early indications. GIFT Nifty is often used to guess the direction of Nifty. European markets usually have an impact in the afternoon, but if there is any big news (such as ECB policy) in the morning, its effect can also be seen in the early hours.
3. Currency Movements (USD-INR)
The movement of dollar and rupee directly affects IT, pharma and import-export companies. Importing companies benefit when rupee strengthens, while weak rupee supports exporting IT and pharma sectors. By looking at the opening of USD-INR in the morning, you can guess which sectors would be better to take interest in.
4. Crude Oil Prices
Crude oil is important for the Indian economy because we import most of the oil. The increase in the price of crude oil increases the cost of transport and aviation companies and puts pressure on inflation. At the same time, a decrease in price provides relief to these sectors. Be sure to check the price of Brent crude and WTI every morning.
5. Bond Yields & Interest Rates
The US 10-year Treasury yield and Indian government bond yield reflect the mood of foreign investors. If the yields are going too high, then money may flow out of the equity market. At the same time, RBI or Fed rate signals are also worth paying attention to before the market opens.
6. Government & RBI Announcements
It is important to take a look at government policies, tax changes, budget updates or any fresh notifications from RBI in the morning. These announcements can have a big impact on sectors (such as banking, infrastructure, auto).
Market-Specific Indicators (Technical and Data Points)
7. GIFT Nifty & Pre-Open Indicators
GIFT Nifty is a mirror of the opening mood of the Indian Nifty. Also, the pre-open session of NSE between 9:00-9:15 indicates the initial direction of the market. If a stock shows unusual moves in the pre-open, then there is a possibility of volume throughout the day.
8. FIIs vs. DIIs Data
It is important to look at the previous day’s buying and selling data of foreign institutional investors (FIIs) and domestic institutional investors (DIIs) in the morning. If FIIs have made heavy purchases, then the trend is considered positive. On the other hand, their selling often brings pressure in the market.
9. Corporate Earnings Announcements
In the result season, the quarterly results of companies can change the direction of the day. If the result of a company is better than expected, then that stock can see a rise. On the contrary, there is a decline in disappointing results.
10. Bulk & Block Deals
If an unusual block deal or bulk deal has taken place in a stock on the previous day, then it indicates the interest of institutional investors in it. Such stocks can remain active even the next morning.
11. Insider Activity / Promoter Pledging
If the promoters are selling or pledging shares, then it can be a warning for investors. On the other hand, insider buying indicates trust in a company. Therefore, it is important to see NSE/BSE updates.
12. Keep an eye on technical levels
Before the market opens, write down the support and resistance levels of Nifty, Bank Nifty and the stocks you are keeping an eye on. This will give you a clear idea of where it would be right to buy and where to exit. Entry without knowing the level often leads to mistakes based on emotions.
News & Events That Can Move Markets
13. Big news and geopolitical events
Sometimes a big international event like election results, war or a new decision by oil producing countries changes the mood of the entire market. It is important to catch such news early in the morning, as it can suddenly shake both sectors and indices.
14. New updates related to the sector
New policies or rules of the government, such as subsidies on electric vehicles or approval from abroad to pharma companies, directly affect the stocks of the same sector. If you are trading in that sector, then these updates should not be ignored.
15. Company announcements
News of a company’s merger, acquisition, dividend or new investment can bring a big move at market opening. Therefore, keep the companies from which such announcements are expected in your watchlist.
16. Impact of economic data
Reports like inflation (CPI), industrial production (IIP), GDP or US job data can change the trend of the entire market. Especially on the days when the data is released, they have a direct impact on the opening and volatility of that day.
17. Analyst reports
In the morning, reports of brokerage houses or big funds come in which a stock is given a rating of “Buy” or “Sell”. Many times, a rise or fall is seen in small stocks on the basis of these reports. Therefore, it is beneficial to look at them before the beginning of the day.
Personal Preparation & Trading Psychology
18. Finalize your watchlist
Every morning, decide which 4–5 stocks you will focus on. Trying to track too many stocks often distracts you and you miss out on opportunities. A focused watchlist will help you trade smartly.
19. Check Risk Management Rules
Decide stop-loss, position size and capital allocation for every trade in advance. This prevents big losses.
20. Mental preparation and discipline
The most important thing is to calm your mind before the market starts. If you trade in panic, greed or haste, the chances of loss increase. It is better to decide your strategy in advance and stick to it. In the hustle and bustle of the day, only the trader succeeds who is patient, follows the rules and takes every decision thoughtfully.
Why is pre-market preparation important?
Controlling emotions : When you trade without preparation in the morning, decisions are often taken in haste or out of fear and greed. A pre-market checklist keeps you calm and disciplined.
Understanding global cues : The trend of the US and Asian markets often influences the mood of the Indian market. Therefore, it is important to keep an eye on GIFT Nifty and foreign indices.
Important data and news : Crude oil, dollar-rupee rate, bond yields and fresh economic announcements play an important role in deciding the direction of the day.
Identifying technical levels : Knowing the support-resistance of nifty, bank nifty or stocks in advance can help you avoid wrong entries.
Right order strategy : There is less liquidity in the pre-market, so it is safe to use limit orders instead of market orders.
The most reliable and reliable way to view pre-market data is through the official websites of NSE and BSE. Here you get important details like index levels, pre-open session information, corporate announcements and block/bulk deals. Since these updates come directly from the exchange, it is considered safe and important to trust them.
2. Pocketful App and Web
Pocketful is an all-in-one tool for pre-market analysis. Here you can easily:
Check the fundamentals of any company
See top gainer and top loser stocks
Analyze sector-wise performance
Follow live charts and trends
Also get important financial news
This gives you a clear understanding of which sector is strong and which stocks are under pressure. Pocketful proves to be useful for everyone, from new investors to professional traders.
3. Popular Financial Portals
Portals like Moneycontrol, Investing.com and TradingView are quite popular among traders and investors. On these platforms, you get features like charting tools, technical analysis, data from international markets and live price movements. You can also easily track different stocks and sectors by creating your watchlist.
Before the market opens, traders often make mistakes that have a big impact on the day’s performance. If these things are not taken care of, then despite the right analysis, there can be losses. Let’s know some common mistakes that are often seen:
Blindly trusting news headlines : Taking trades by just reading the morning headlines sometimes proves to be risky. News often shows short-term sentiments, while the real trend is understood through technical and fundamental analysis.
Over-depending on GIFT Nifty and global signals : Asian markets or GIFT Nifty can help in indicating the trend, but domestic factors like RBI policies, FII-DII flow and local news have a greater impact on the Indian market. It is wrong to create positions based only on global signals.
Taking entries without risk management : The most common mistake is to trade without setting a stop-loss or paying attention to position sizing. Without risk management, one wrong move can wipe out your entire capital.
Ignoring trading psychology : Decisions made in haste, overconfidence or fear are often detrimental. A calm mind and discipline are the most important weapons in the market.
Giving more importance to discipline than prediction : No one can predict the exact market move. Successful traders are those who constantly focus on discipline, proper planning and risk control not just prediction.
Conclusion
To be successful in the stock market, preparation is equally important not just during trading but also before the market opens. If you keep an eye on global trends, sector movements, top gainers-losers and the latest financial news, your decisions become even stronger. Correct information and preparation is the real strength of a good investor. So start every day before the market opens by keeping these points in mind and choose the path of smart investment.
S.NO.
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Swing trading is one of the most Best trading strategies in the stock market, particularly among retail traders and part-time investors. Contrasting with day trading, where you pay attention to the markets continuously, swing trading allows traders to hold positions for several days to a few weeks. This timeframe provides enough flexibility to conduct research, analyze setups, make informed decisions, and capture price movements as they unfold in short- to medium-term swings.
However, luck is not enough to succeed in swing trading. You require a toolkit of good technical tools that can assist you in the determination of the right entry and exit points. That is where the swing trading indicators are needed. These technical tools help traders interpret market behavior, identify trends, and manage risk effectively.
In this post, we’ll break down the 10 best technical indicators for swing trading that can help you improve your strategy and increase your chances of success.
Top 10 Swing Trading Indicators Every Smart Trader Should Know
In swing trading timing is everything and accuracy is what sets profitable traders apart. Whether you are just starting out or already an experienced trader the right indicators can help you gauge market momentum, identify potential trend reversals, and execute buy and sell decisions with confidence.
Here are the 10 most effective swing trading indicators that every trader should master to improve consistency and precision in their trades.
1. Moving Averages (SMA & EMA)
The moving averages are the trend-following indicators that smooth the price movement by eliminating the short-term fluctuations.
Simple Moving Average (SMA) embodies the average price over a particular period of time.
The Exponential Moving average (EMA) places more importance on recent price levels and thus it is more sensitive to new trends.
Swing traders often identify short-term and medium-term trends using the 20-day and 50-day Exponential Moving Averages (EMA). One of the common buy signals identified with this indicator is a crossover, such as when the 20-day EMA rises above the 50-day EMA.
Why it matters: Moving averages help confirm the direction of the trend. It serves as dynamic support or resistance levels.
2. Relative Strength Index (RSI)
The Relative Strength Index (RSI) is a momentum oscillator that measures the speed and magnitude of recent price movements on a scale from 0 to 100.
If the RSI is over 70, it could mean that a stock is overbought.
If the RSI is below 30, it could be oversold.
As one of the most widely used swing trading indicators, the RSI is particularly useful for spotting potential reversals in price action.
Pro tip: Watch for divergence between RSI and price. For example, if the price makes a new high but RSI does not, it can be a strong signal of an upcoming reversal.
3. MACD (Moving Average Convergence Divergence)
MACD helps traders spot changes in the strength, direction, and momentum of a trend.
A bullish crossover occurs when the MACD line crosses above the signal line.
A bearish crossover happens when the MACD line drops below the signal line.
MACD is particularly effective in trending markets, making it a must-have in your swing trading toolkit.
4. Bollinger Bands
Bollinger Bands are built in using the form of two outer bands that are formed at a level of one or more standard deviations above and below a central line, which usually averages 20-day simple moving average.
When the price touches the upper band, it may be overbought.
If it hits the lower band, it might be oversold.
In swing trading, Bollinger Bands are used to anticipate price reversals and periods of volatility contraction or expansion.
Bonus: A “squeeze” in the bands often precedes a breakout—watch for it!
5. Stochastic Oscillator
This momentum indicator compares a stock’s closing price to its price range over a specific period.
Readings above 80 = overbought.
Readings below 20 = oversold.
When used together with support/resistance levels, swing traders time their trade with it. The indicator works best in the market conditions of sideways moving or range-bound.
6. Volume
While not a standalone indicator, volume is essential in confirming the strength of a price move.
Increasing volume on a breakout = strong signal.
Decreasing volume = weak or false breakout.
Volume surges often come before big price movements; it is a powerful tool for searching for swing trade opportunities.
Tip: Pair volume with MACD or RSI for better trade confirmation.
7. Fibonacci Retracement
According to the Fibonacci sequence, this instrument will be used to determine possible retracement levels prior to a stock resuming its initial direction.
Common Fibonacci levels:
38.2%
50%
61.8%
These levels are support or resistance. They are used by swing traders to strategize entry after a reversal of a trending market.
8. Average True Range (ATR)
ATR measures market volatility by averaging the range between the high and low of a stock over a set period.
High ATR = high volatility.
Low ATR = low volatility.
Swing traders also use ATR to determine where to put stop-loss and whether that stock has sufficient price movement to make it worth taking.
9. Parabolic SAR (Stop and Reverse)
The Parabolic SAR appears as dots above or below the price chart.
Dots below the price indicate a bullish trend.
Dots above the price show a bearish trend.
This indicator helps swing traders lock in profits and set trailing stops.
Pro tip: Combine it with EMA or MACD for clearer signals.
10. Pivot Points
Pivot points can be a support level or a resistance level, which is computed using the previous day’s high, low, and close.
The pivot point (P) is the average of high, low, and close.
Support (S1, S2) and resistance (R1, R2) levels are calculated from it.
Traders use these levels to predict price movement and potential reversal zones during the next session or week.
There is no single perfect indicator for swing trading. The most successful traders often combine two or three indicators to filter out market noise, confirm signals, and improve risk management. By using the right mix of tools you can make more informed decisions and reduce risk whether you are new to swing trading or refining your current strategy.
With Pocketful you gain access to live market data, advanced technical analysis, and proven trading strategies tested by experienced traders. Whether you are a beginner building confidence or an experienced trader seeking an edge, PocketFul is your trusted partner for smarter investing.
Start trading smarter—sign up today.
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What is the most accurate indicator for swing trading?
No particular indicator may be called the most exact one, yet RSI, MACD, and moving averages may be taken as the most accurate together. By using a combination, there is increased accuracy in the overall accuracy.
How many indicators should I use in swing trading?
The best would be 2 to 3 complementary indicators; one to capture the trend (such as EMA), another one to capture momentum (such as RSI), and a last one capturing volatility or confirmation (such as ATR or volume).
Can I swing trade using just RSI?
RSI can be applied separately, but when other indicators, such as the moving averages or Bollinger Bands, are applied, it works better. When it is used independently, it increases the chances of false signals.
Are technical indicators better than fundamental analysis in swing trading?
In swing trading, it usually works better to use technical indicators because it is the short-term price action that matters. Nevertheless, earnings reports and news are also part of the strategies of some traders.
What’s the best timeframe for swing trading indicators?
Swing traders primarily utilize 4-hour and daily charts. These intervals are chosen to combine signal clarity with a reduction in market noise.
Indians have always had a special place in their hearts for gold, whether it’s for weddings, festivals, or to have a safety net when things are uncertain. You do not need to keep heavy jewellery or gold coins in a vault to invest these days. You can enjoy the benefits of gold without having to store it in real life with contemporary options like Sovereign Gold Bonds (SGBs) and Gold Exchange-Traded Funds (ETFs). The two options are both tied to gold prices, but they work in very different ways. For example, the way you make money, how they are taxed, and how easy it is to buy and sell them are all different.
In today’s blog, we will learn about the pros and cons of each option, as well as the taxation, so you can choose the one that works best for your investment style.
What are Sovereign Gold Bonds?
Sovereign Gold Bonds, or SGBs, are an effective and simple way to invest in gold without having to buy it. You can trust SGBs completely because the government gives them out through the Reserve Bank of India.
You don’t have to keep gold at home or in a safe; instead, you buy these bonds that keep track of the price of gold. So, when the price of gold goes up, the value of your investment goes up too.
Gold Exchange-Traded Funds, or ETFs for simple terms, are an easy way to invest in gold without having to buy and hold the precious metal.
Consider it this way: you buy “units” of gold from the stock market rather than storing gold coins or jewellery at home. Its price fluctuates in line with the market price of gold, and each unit usually corresponds to one gram of gold.
Gold ETFs are appealing for the following reasons;
They are supported by real gold, which is stored in vaults and is extremely pure (often 99.5% or more).
bought and sold like shares; all you need is a trading account and a demat account.
Unlike jewellery, you get exactly what you see, so there are no manufacturing fees or purity concerns.
Like stocks, prices fluctuate continuously.
Transparent and regulated; managed by mutual fund firms under SEBI’s supervision.
Table of Differences between Sovereign Gold Bonds & Gold ETFs
Feature
Sovereign Gold Bonds (SGBs)
Gold ETFs
About
SGBs are government-issued bonds that are linked to the price of gold, so you get the benefit of gold price movements without holding physical gold.
Gold ETFs are exchange-traded funds that aim to match the market price of gold and can be bought or sold just like shares.
Backed by
They are backed by the Government of India and the prevailing market price of gold.
They are backed by physical gold of high purity, safely stored in secure vaults.
Form
You receive a digital certificate; there’s no physical gold involved.
You hold them in your demat account in the form of ETF units.
Minimum Investment
You can start with as little as 1 gram of gold.
You can start with 1 unit, which is usually equal to 1 gram of gold.
Liquidity
You can sell them on the stock exchange, but trading volumes are often lower, so selling instantly at the best price might not always be possible. They work best if you hold till maturity.
You can buy or sell anytime during market hours, and liquidity is generally better than SGBs.
Returns
Your returns come from any increase in the gold price, plus an extra 2.5% interest each year (which is taxable).
Your returns come purely from changes in the gold price; there’s no extra interest.
Tax on Maturity
If you hold till maturity (8 years), any profit you make is completely tax-free.
There is no tax exemption at maturity; gains are taxed under capital gains rules.
Interest
You earn 2.5% interest per year, paid every six months. This interest is taxable.
No interest is paid — your only gain is from the gold price.
Best For
Great for long-term investors who can hold till maturity and enjoy tax-free gains plus interest along the way.
Ideal for those who want flexibility and the ability to enter or exit anytime without a long lock-in.
Advantages of Investing in Sovereign Gold Bonds
Some of the advantages of investing in SBGs is given below:
Gains on maturity that are tax-free – Any profit you make from the redemption of your SGBs is fully exempt from capital gains tax if you hold them until they mature, which is 8 years.
Additional income each year – You receive 2.5% interest on your investment each year, which is paid every six months. In addition, the price of gold has increased.
Do not be concerned about storage – Since your holdings are digitally stored and supported by the Indian government, there is no need for lockers or safes.
High purity by default – You do not need to worry about verifying purity or quality because you are not holding actual gold.
Government-backed – The Government of India guarantees the principal and interest payments, which makes them extremely safe.
Advantages of Investing in Gold ETFs
Advantages of investing in gold ETFs is given below:
No problems with storage – You do not need to be concerned about home safety, insurance, or lockers. The investment account keeps your gold safe.
High purity is assured – You know exactly what you’re getting because it’s typically 24 carat or 99.5% gold.
Simple to buy and sell – You can enter or exit at any time during market hours because they are traded on the stock exchange just like shares.
No manufacturing or waste fees – Unlike jewellery, you only pay for the actual value of the gold, not additional expenses.
Transparent pricing – There are no unexpected costs because the price is determined in accordance with the gold market rate.
Diversification – Gold helps balance your portfolio because it frequently moves differently from stocks and bonds.
Risks & Limitations of Sovereign Gold Bonds & Gold ETFs
GOLD ETFs
Volatility of Gold Prices – Short-term fluctuations in gold prices can cause losses if you sell during a drop in prices.
No Interest Income – Gold ETFs, in contrast to SGBs, do not pay interest; instead, your returns are centred on changes in the price of gold.
Tax on Sale – There is no unique tax-free maturity benefit; gains are always taxed when sold.
Changes in Liquidity – Extreme market conditions can increase bid-ask spreads, which could marginally lower your selling price, even though ETFs usually are liquid.
Annual Costs – ETFs’ small annual expense ratio gradually reduces returns.
No option for physical gold – Real gold cannot be delivered; it is only an investment in paper.
Timing Trap in the Market – Some investors attempt to time their buys and sells because ETFs trade like shares, which, if done incorrectly, can reduce returns.
Sovereign Gold Bonds
Dependency of Gold Prices – Even with the 2.5% annual interest, a decline in gold can lower your returns because SGB values fluctuate along with gold prices.
Loss of Tax Benefit if Sold Early – If you sell before maturity, you lose the special tax-free benefit, and your gains will be subject to taxes.
Low Liquidity in the Secondary Market – Finding buyers may not always be simple, and you might need to sell in the secondary market for less.
High-Risk Secondary Market Buys – Although there isn’t an expense ratio, purchasing SGBs at a premium on the secondary market may result in overspending.
No Delivery of Gold in Physical Form – Instead of actual gold, you get cash at maturity that is equal to the gold’s value.
Extended Maturity Time – SGBs have an 8-year maturity, and the only ways to exit early are through an RBI buyback or an exchange sale after 5 years.
Price Differences in Market Transactions – The RBI sets the issue price, but secondary market prices are subject to supply and demand in addition to the market value of gold.
Taxation – Sovereign Gold Bonds & Gold ETFs
Gold ETFs
The profit is considered short-term and subject to your standard income tax slab rate if you sell within a year.
Holding for more than a year is considered long-term and is subject to a flat 12.5% tax rate; indexation benefits are no longer available.
Gold ETFs are without interest; the only source of your return is changes in the price of gold.
SGBs, or Sovereign Gold Bonds
The main benefit is that any profit you make upon redemption is completely tax-free if you hold until maturity, that is, eight years.
Additionally, you receive 2.5% interest annually, which is paid every six months. However, this interest is subject to slab rate taxation as “Income from Other Sources.”
If you sell your SGB on the secondary market before it matures:
Short-term gains are taxed at the slab rate if they are held for less than a year.
Long-term gains are taxed at a rate of 12.5% (without indexation) after being held for more than 12 months.
Conclusion
SGBs are a great choice if you want to invest for a long time because they pay you interest regularly and tax-free gains when they mature. Gold exchange-traded funds (ETFs) are the best choice if you want to buy or sell at any time during market hours while enjoying flexibility. Which option is ideal for you will depend on your investment objectives. Either way, both are much better than leaving gold jewellery in a locker, since here, your gold is working for you.
S.NO.
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In the stock market, price and volume tell you what is happening around. Where price tells you how a company is performing, the volume suggests how many people are interested in the company. But there is one more term that holds an equal importance and should be known to you. This is called open interest.
It tells you who’s still in the game. If you trade in futures or options, open interest is a key metric you can’t afford to ignore. It tracks how many contracts are still active. This allows you to explore the actual situation or picture of the market.
But there is more to it. So, let us explore the concept of open interest in the guide over here and see how it helps.
What is Open Interest?
Open Interest is the total number of outstanding derivative contracts, such as futures or options, that are currently active in the market. These contracts have not been closed, settled, or expired. It represents the number of ongoing positions that traders are holding.
When a new buyer and seller enter a contract, open interest increases. If either party exits by closing their position, open interest decreases. By checking this number, traders can understand the value of participation in the specific contract.
Where traders’ volume only focuses on the number of transactions in a day, the open interest goes a step ahead. It shows you the number of the contracts that are actually open at the end of the day. This does not change with every trade. But when you create a new contract or close an existing one, there will be a change.
To understand this, here is a simple example to follow.
Say, the open interest is rising, and prices are also rising. This means that the traders are entering long positions. This now supports the trend. Now, if the prices rise but the open interest falls, then traders are closing some of the older positions. They are not creating new ones here, which means the trend is now weak.
Features of Open Interest
Reflects active market positions: Open interest shows how many contracts are still live and held by traders.
Changes only with creation or closure: It increases with new contracts and decreases when positions are closed.
Used to confirm trends: A rising open interest alongside price movement indicates strength in the trend.
Helps track market participation: Higher open interest suggests more engagement from traders and investors.
Applies to derivatives only: This metric is relevant to futures and options contracts. This is not regular stock trading.
How Does Open Interest Work?
To understand the working of the open interest, here is a simple working mechanism. It is clear that the open interest changes only when some new positions are added and old ones are closed.
To break this down, here is a clear and simple situation.
Say, there are two trades Mr. X and Mr. Y.
Now, Mr. X is willing to buy one Nifty futures contract. Mr. Y is willing to sell the same. Now, one contract option is open. The open interest is now 1.
Further, Mr. X sells this contract to Mr. Z. Still, the open interest stays at 1. Why? Well, this is because one trader is moving out of the trade and a new one is entering. So, the number of active people in trade is still the same.
However, if Mr. X and Mr. Y both close their positions completely and there is no third person in trade, then the open interest will fall to 0.
This shows that open interest reflects the number of existing contracts, not the number of trades.
The value is updated at the end of each trading day. You can see this data on the exchange website or your trading platform. For options, open interest at specific strike prices can also hint at support and resistance zones based on where the most contracts are active.
Open interest allows the traders to understand market sentiment, confirm trends, and detect possible reversals. Here are some of the key interpretations that you can get from the same.
1. Rising Open Interest with Rising Prices
This is typically viewed as a strong bullish signal. It shows that there is an inflow of money and people are looking for long positions. This is a good time, and price and open interest will both rise. This shows that there is an upward trend, which is great.
2. Rising Open Interest with Falling Prices
This combination is often interpreted as bearish sentiment. Traders are opening new short positions, betting that prices will continue to decline. The increase in open interest shows fresh participation supporting the downtrend.
3. Falling Open Interest with Rising Prices
Here, the rise in price is not supported by new positions. This can indicate short covering, where traders who had short positions are now exiting. While prices are going up, the falling open interest warns that the trend may lack sustainability.
4. Falling Open Interest with Falling Prices
This setup usually means traders are closing existing short positions. This is most likely a sign of a down trend in the market. It may point to market exhaustion. Here, the sellers are stepping aside, and a bottom could be near.
An important point to note here is that these are not fixed. These are just indications, and so solely acting based on them is not right.
Strategies Using Open Interest for Trading
Open interest can enhance decision-making across different trading styles. It helps to understand the market and risk position better. Some strategies that can help in the process are as follows:
1. Swing Trading
Swing traders look to earn from short-term price movements. So, when the open interest is rising, it means that the current trend is working out. This supports the decision to ride the trend for a few days or weeks.
Tip: Always confirm with volume. High volume and rising open interest make the trend more reliable.
2. Position Trading
Position traders hold trades for longer durations. If there is a steady increase in the open interest for a long time, then this means that the positions are developing. This is a sign of mainly institutional investors entering the trade. This adds strength to the trend and helps position traders commit confidently.
Tip: Combine with moving averages or trend indicators. This will help you time your entry during pullbacks.
3. Scalping
Scalpers look for quick trades with small price movements. Their target is to earn quickly and exit. So, if there is a high open interest, then there is more liquidity. This means the bid-ask spreads are very tight. This allows scalpers to enter and exit positions quickly without significant price impact.
Tip: Monitor intraday open interest changes in liquid contracts only.
4. Hedging
Investors use open interest data to hedge large positions using derivatives. In case of a high open interest in the future and options, you will find more liquidity. This makes it easier to set up effective hedging strategies. All this will assist with minimal slippage.
Tip: For hedging, try to prioritize instruments with the highest open interest to reduce risk.
Open interest is used quite prominently. But still, there are a few misconceptions that are around it. Clearing them is very important to make the right calls. So, here are the common misconceptions to know:
1. Open Interest and Volume Are the Same
This is incorrect. Volume shows how many contracts changed hands during a trading day, regardless of whether they were new or existing. Open interest reflects the number of contracts that are still active. A contract can have high volume but unchanged open interest if traders are simply exchanging existing contracts.
2. Rising Open Interest Always Signals Bullishness
Not necessarily. Rising open interest indicates fresh participation, but the sentiment depends on price movement. If prices are rising along with open interest, it is bullish. If prices are falling, it suggests bearishness due to new short positions.
3. Declining Open Interest Means the Trend Is Reversing
Not always. A fall in open interest simply shows that traders are exiting positions. It can be a sign of the trend losing its strength. But it is not a sure sign of reversal. Prices can still continue in the same direction. This is possible even with reduced momentum.
4. Open Interest Is a Leading Indicator
Open interest is best used as a confirming indicator. This is not a predictive one. It works most effectively when combined with other signs. These include the price action, volume, and technical analysis. All these help to validate trends or spot potential exhaustion.
Open Interest vs Volume: Key Differences
Understanding the distinction between open interest and volume is essential. The key differences that you must understand are as follows:
Feature
Open Interest
Volume
Definition
Total number of contracts still active
Total number of contracts traded during the day
Change Criteria
Increases or decreases when contracts are opened or closed
Increases with every buy-sell transaction
Reset Frequency
Carried forward until position is closed
Resets to zero at the beginning of each trading day
Indicates
Market participation and existing commitments
Daily trading activity and interest
Used For
Assessing trend strength and liquidity
Gauging intraday interest and momentum
Dependency on New Trades
Reflects net additions or closures of positions
Counts all trades, regardless of position change
Benefits and Limitations of Open Interest
Open interest is a valuable metric and helps gauge the strength of a trend. However, like any market indicator, it has its strengths and weaknesses. The pros and cons to know are as follows.
Benefits of Open Interest
Confirms the strength of a price trend when used with volume and price data
Indicates active participation and rising liquidity in the contract
Helps traders identify potential reversals or continuation of trends
Useful in options trading to spot support and resistance zones
Assists in risk management and planning hedge positions
Limitations of Open Interest
Cannot be used in isolation, as will give incomplete results
Offers limited insights during sideways or low-volatility markets
The real-time effectiveness is reduced
Not applicable to cash equity markets; only used for futures and options
Does not clearly show bullish or bearish positions without context
Conclusion
Open interest offers valuable clues. These are linked to the market sentiment, trend strength, and trader activity. But these should be used with price and volume. Then it becomes a powerful tool for smarter trading decisions.
Using this can help you build better strategies, irrespective of your position. This will offer profitable outcomes and will help limit the losses.
So, are you ready to put your market knowledge to work? Start trading with confidence on Pocketful, a platform built for smart, informed investors like you.
S.NO.
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Can open interest help identify market manipulation?
Yes, unusual spikes in open interest without major price movement can sometimes indicate speculative activity or attempts to trap retail traders. Always confirm with volume and broader market trends.
How does open interest affect option premiums?
High open interest can increase liquidity. This often results in tighter bid-ask spreads and fairer premiums. However, premiums are more directly affected by implied volatility and time to expiry.
Is open interest relevant for intraday traders?
While open interest updates at the end of the day, some platforms provide live estimates. For intraday traders, it’s more useful to track trends over a few days than for real-time entries.
What does negative change in open interest mean?
A negative change means contracts are being closed. This could be due to profit booking, reduced interest, or traders waiting for a clearer direction. It is neither bullish nor bearish on its own.
Should retail traders follow open interest data of FIIs and DIIs?
Yes, tracking how institutional investors are building or reducing positions using open interest can offer useful clues. Their activity often sets the tone for broader market movements.
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