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Types of ETFs in India: Find the Best for Your Investment

In the world of financial markets, ETFs have gained popularity rapidly among investors, who prefer passive investment options with a diversified basket of assets at a low cost. Seasoned investors are aware of the types of ETFs, but there are various new investors who are unaware of the different types of ETFs.

In this blog, we will explain the types of ETFs in India and tell you which ETF is best for you.

What is an ETF?

An ETF or Exchange Traded Fund is an investment tool that primarily trades on the stock exchange and invests in a particular index or a mix of securities such as stocks, bonds, or commodities. They are traded like any other stock on the exchange; therefore, to invest in them, one is required to have a demat and trading account. They are passively managed; hence their returns closely resemble the performance of a specific index that it follows.

Features of ETF

The key features of ETFs are as follows:

Passive Fund: ETFs passively track the index and try to replicate its performance.
Pool of Securities: ETFs invest in a basket of securities, which helps an investor diversify their portfolio and reduce market risk.
Transparency: ETFs generally disclose their holdings daily, therefore, investors get a clear picture of what they hold in their portfolios.
Demat Account: ETFs are generally traded on the stock exchange. Therefore, it is mandatory to have a demat and trading account to invest in them.
Low Cost: As ETFs are passively managed funds; therefore they have lower fees when compared to actively managed funds, making them a cost-effective investment option.
Liquidity: ETFs are traded on the stock exchange and have higher volume, making it easy for buyers and sellers to execute their trades.

How does an ETF work?

Understanding the workings of an ETF is very easy. ETFs are managed by Asset Management Companies, which pool money from various investors who have similar investment objectives and invest the pooled money into a basket of assets. They try to replicate the performance of an underlying asset, such as an index etc. In return, they charge a small fee from the investors. As they are passively managed, therefore, their returns are similar to an index in which it has invested its capital. They are listed on the exchange and provide liquidity to investors. The market price of ETFs changes during trading hours, and one can easily buy and sell them at the current market price.

Different Types of ETFs

There are six types of ETFs available in India, details of which are mentioned below:

1. Equity ETFs

These ETFs invest primarily in stocks and track the movement of particular equity indices, such as the Nifty 50, Bank Nifty, etc. It particularly invests in the basket of stocks in the same proportion as the particular index consists.

Example: Kotak Nifty ETF invests in the top 50 companies based on market capitalisation that are part of the Nifty.

2. Fixed Income ETF

Fixed Income ETFs are also known as bond ETFs; they invest your money in fixed income securities, and provide you a steady return. They are comparatively less volatile and risky than equity-oriented ETFs.

Example: Bharat Bond ETF, which primarily invests in AAA-rated bonds and government securities.

3. Commodity ETF

The ETFs which invest in commodities such as gold, silver, etc. are known as commodity ETFs. The returns of these ETFs are based on the fluctuations in the underlying commodity prices. Therefore, an investor can easily trade or invest in any commodity with the help of these ETFs. They are highly volatile as the prices of commodities are affected by global factors.

Example: Kotak Silver ETF has physical silver as underlying asset; therefore, any change in the price of silver will affect the returns of this ETF.

4. International ETF

The ETFs which invest their funds in financial markets of foreign countries are known as International ETFs. They provide investors an opportunity to earn profit from the growing economies around the world.

Example: Motilal Oswal NASDAQ 100 ETF primarily invests in the companies listed on the NASDAQ exchange of the US, and provides an opportunity for an investor to gain exposure in the US market.

5. Thematic or Sectoral ETF

The ETFs which invest in a particular sector, such as the IT , financial, etc. or follow a particular theme, such as infrastructure, etc., are known as Sectoral or Thematic ETFs. These ETFs carry high risk and therefore, are suitable for investors seeking high returns.

Example: ICICI Prudential NIFTY IT ETF, as the name suggests, primarily invests in India’s IT companies.

6. Smart Beta ETFs

These ETFs follow certain strategies and invest in a particular market index, which carries low volatility, high momentum, etc. This ETF is ideal for investors who wish to invest in a particular strategy.

Example: ICICI Prudential Nifty 100 Low Vol 30 ETF, which invests in the top stocks of Nifty having low volatility.

Read Also: Best ETFs in India to Invest

Advantages of Investing in ETFs

The significant advantages of investing in ETFs are as follows:

Low Cost: The expense ratios of ETFs are comparatively lower than actively managed funds, providing a cost-efficient investment option for investors.
Portfolio Diversification: One can diversify their portfolios by investing in ETFs, as they invest in a basket of stocks.
Transparency: ETFs generally disclose their holding daily, hence it provides clarity to investors about what they are holding in their portfolio.

Disadvantages of Investing in ETFs

The significant disadvantages of investing in ETFs are as follows:

Tracking Error: There are various reasons, such as fund expenses, timing of rebalancing the portfolio, etc., due to which an ETF may not be able to match the returns of the index in which it is investing accurately. This deviation in returns is known as tracking error.
Alpha: As ETFs are passively managed funds, they are not able to outperform the benchmark, which we can generally see in the case of an actively managed fund.
Market Risk: ETFs generally invest in a particular index, and their performance depends on how the underlying index has performed. Therefore, any downside movement in the underlying assets causes the losses.

Which ETF is Best for You?

Before choosing an ETF for investment, one should consider the following factors:

Investment objective: The investor’s investment objective plays an important role in deciding which ETF suits them.
Risk Appetite: An investor should choose an ETF based on their risk profile. If an investor is conservative, they can opt for fixed income ETFs, whereas an aggressive investor can invest in Equity or Sectoral ETFs.
Tracking Error: It is one of the key factors which one should consider before choosing an ETF for investment. Lower the tracking error higher will be the returns.
Cost: Expense ratio plays an important role in choosing an ETF. An investor should choose the ETF with the lowest expense ratio in that particular category.

Cofnclusion

On a concluding note, there are various types of ETFs available for investment, which can help an investor diversify their portfolio. An ETF offers high liquidity and allows an investor to invest in a variety of assets with limited capital. However, there are certain ETFs that carry high risk. Therefore, one must consider their risk profile and consult an investment advisor before making any investment decision.

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5	ETF vs Index Fund: Key Differences You Must Know

Frequently Asked Questions (FAQs)

What are the different types of ETFs available in India?
The ETFs can be broadly categorised into six types, such as equity, commodity, fixed income, smart beta, international, thematic or sectoral.
Can I invest in an ETF without a demat account?
No, you cannot invest in an ETF without a demat account.
Can I invest in international stocks through ETFs?
Yes, there is a category of ETF known as an international ETF, through which one can take exposure in the international market.
Are ETFs suitable for conservative investors?
Yes, conservative investors can consider investing in Fixed Income ETFs, such as Bharat Bond ETF, which are less volatile and offer more stable returns compared to equity or sectoral ETFs.
How can I buy or sell an ETF in India?
To buy or sell an ETF in India, you need to have a demat and trading account with a registered stockbroker. ETFs are traded on stock exchanges like regular stocks, so you can place buy or sell orders during market hours through your broker’s trading platform.

June 19, 2025

SAIL Vs Tata Steel: Which is Better?

India’s steel industry is growing rapidly and the total steel production capacity of the country has reached about 205 million tonnes. The biggest reason for this is the increasing focus on the country’s infrastructure, including development of new cities, new expressways, etc. Experts believe that in the coming times, the demand for steel can grow at a rate of about 8–9% every year.

In this case study, we will discuss the business models, financial performance, and future plans of both the companies, i.e. SAIL and Tata Steel to help investors make informed decisions.

Steel Authority of India (SAIL) : An Overview

SAIL Steel Authority of India Limited was started on 24 January 1973. It is a Maharatna public sector company, which works under the Ministry of Steel, Government of India. For the last several decades, SAIL has remained the backbone of the country’s infrastructure projects and industrial development. Today it is counted among the largest steel manufacturing companies in India.

Steel Plants and Production Capacity : SAIL’s operational network is spread across the country. It has five main steel plants located in Bhilai in Chhattisgarh, Rourkela in Odisha, Bokaro in Jharkhand, and Durgapur in West Bengal. Apart from this, there are also three specialized steel plants: Salem (Tamil Nadu), Bhadravati (Karnataka) and another in Chandarpur. SAIL has a total crude steel production capacity of 20.3 million tonnes per annum, which the company aims to take to 35 million tonnes by 2031.

Business Model

The business model of SAIL can be described as follows:

Earnings Structure: SAIL earns a major part of its revenue from the sale of flat and long steel products. About 50% of the revenue comes from flat steel and about 40% from long steel.

Raw Material Arrangement: One of its biggest strengths is that SAIL sources most of its iron ore requirement from its own mines. This keeps the cost of raw materials low and reduces risk of supply disruption.

Delivery and Distribution: SAIL’s distribution network is spread across India, helping the company deliver high-quality products to its customers on time.

Environment and Innovation : SAIL’s focus is not limited to just making steel, but is also serious about environmental conservation. The company has adopted a 4R (Reduce, Reuse, Recycle, Recover) policy and is working towards making fertilizers from steel slag.

So far, the company has commissioned solar projects of 12.58 MW and plans to add up to 135 MW of solar capacity in the coming time. This clearly shows SAIL’s focus – towards sustainable development and green energy.

Tata Steel : An Overview

Tata Steel was founded in 1907 and is India’s oldest and largest private sector steel company. Headquartered in Mumbai, the company has a long history in the Indian steel industry. The business provided steel to the defense sector during the Second World War. To expand its business operations globally, the company bought Singapore-based NatSteel Holdings in 2004. The company has since completed several domestic and foreign acquisitions. The most recent occurred when it bought Bhushan Steel Limited in 2018. The headquarters of the company are located in Mumbai.

Steel Plants and Production capacity : Tata Steel’s major plants are located in Jamshedpur (Jharkhand) and Rourkela (Odisha). The company has a production capacity of around 35 million tonnes per annum in India. Tata Steel also has international plants, which reflect its plans to expand globally.

Business Model

The business model of Tata Steel can be described as follows:

Key Products and Revenue Sources : The biggest chunk of Tata Steel’s revenue comes from the sale of flat steel products, which are mainly used in automobiles, construction and heavy industries.
Raw Material Management : The company sources most of its raw material requirement from its own mines. Apart from this, the global supply chain is also effectively used to maintain consistent quality.
Marketing and Distribution Network : Tata Steel’s distribution network is spread across the country as well as internationally. This ensures that customers receive steel products on time and of the best quality.
Sustainable development and innovation : Tata Steel has given priority to environmental protection and has set a target to be net zero by 2045 across its operations. The company’s initiative aligns with the Tata Group’s ‘Project Aalingana’, an ambitious initiative towards achieving sustainability. Also, Tata Steel has increased investment in solar and wind power and implemented energy efficiency measures. The company is also active in recycling and green technology.

Tata Steel remains a leading player in the steel industry due to its long operating history, strong technological base and commitment to green energy. Its global client base and distribution network along with an approach to grow their business sustainably make it a preferred investment choice.

Comparative Analysis: SAIL Vs Tata Steel

Particulars	SAIL	Tata Steel
Current Price (₹)	127	152
Market Cap (₹ Crores)	52,462	1,89,812
52-W High (₹)	159	183
52-W Low (₹)	99.2	123
FII Holdings as of March 2025	3.20%	18.78%
DII Holdings (as of March 2025)	15.75%	24.68%
Book Value (₹)	143	73.0
PE Ratio	20.2	57.2

(Data as of 18 June 2025)

Financial Statements Analysis

Income Statement Comparison

Particulars	SAIL	Tata Steel
Total Income	1,03,354	2,20,083
Total Expenses	97,796	2,04,520
EBIT	5,557	15,563
Net Profit	1,885	2,982

(All values are in INR crores and the data is as of March 2025)

Balance Sheet Comparison

Particulars	SAIL	Tata Steel
Reserves & Surplus	54,775	89,922
Current Liabilities	46,190	86,093
Fixed Assets	80,532	1,86,577
Current Assets	46,480	68,391

(All values are in INR crores and the data is as of March 2025)

Cash Flow Statement Comparison

Particulars	SAIL	Tata Steel
Cash Flow from Operating Activities	9,914	23,511
Cash Flow from Investing Activities	-5,268	-14,172
Cash Flow from Financing Activities	-4,423	-7,002

(All values are in INR crores and the data is as of March 2025)

Key Performance Ratios (KPIs)

Particulars	SAIL	Tata Steel
Operating Profit Margin (%)	5.72	7.51
Net Profit Margin (%)	1.83	1.36
ROE (%)	4.02	3.75
ROCE (%)	6.50	8.49
Debt to Equity (x)	0.51	0.98

(Sail Data as of March 2024 & Tata Steel Data as of March 2025)

Future Plans of SAIL

The future business plans of SAIL are listed below:

Major expansion in production capacity : SAIL has set a clear target to increase its production capacity to 35 million tonnes per annum by 2031. For this, the company is carrying out large-scale modernization of its major plants like Bhilai, Rourkela, Bokaro, Durgapur and Ispat Nagar. SAIL is increasing the capacity of old plants through installing new machinery, energy-efficient technology and automation, so that both domestic demand and exports can be better met.
Investment in green energy : Keeping in mind environmental protection, SAIL has also taken steps towards green energy. The company has set a target of solar energy production up to 135 MW, out of which work has already begun on several projects. Along with this, investing in wind energy and energy production from waste are also being considered in the future. This step will not only reduce carbon emissions but will also reduce the energy costs of the company.
Sustainable development and recycling : SAIL is now moving its business model towards manufacturing of ‘sustainable steel’. The company has planned to reduce the consumption of raw materials and water by adopting the 4R strategy (Reduce, Reuse, Recycle, Recover). New initiatives are also being taken regarding the reuse of scrap steel, water purification plants and efficient consumption of energy, so that production increases but the environmental impact is reduced.

Future Plans of Tata Steel

The future business plans of Tata Steel are listed below:

International restructuring and expansion : Tata Steel has started a major restructuring to make its business operations more competitive and profitable in Europe. Technological changes and cost reductions are being made in the plants located in Britain and the Netherlands. At the same time, the construction of the second phase of the Kalinganagar plant has started in India, which will significantly increase the domestic production capacity of the company. This will enable Tata Steel to further strengthen its market share in India.
Long-term goal of net-zero : The company has committed to achieve net-zero carbon emissions by 2045. Under this initiative, Tata Steel has already invested in projects focused on developing alternative energy sources like green hydrogen, solar and wind energy. Apart from this, work is also being done on the use of eco-friendly fuel like biochar in place of coking coal.
Digital transformation and smart manufacturing : Tata Steel is making its manufacturing process more efficient through the use of advanced technologies. This is not only reducing the manufacturing costs but also helping in manufacturing steel of superior quality.

Who is Better: SAIL or Tata Steel?

Both SAIL and Tata Steel are among India’s oldest and largest steel companies, with their own strengths and business plans. SAIL, being a PSU company, plays a crucial role in the country’s major infrastructure projects and has a strong production capacity. The company’s plans to increase its production capacity will help it cater to its customer base on a timely basis.

On the other hand, Tata Steel has a good presence at the global level and is far ahead in terms of sustainability and technology. Both companies are strengthening the Indian steel industry in their own way. SAIL has many big plants in the country, while Tata Steel is known for its innovation and strong hold in the international market. So it is difficult to say who is better as the strengths of both depend on their future business plans and how well they execute them. It is advised to consult a financial advisor before investing in any of them.

Conclusion

Both SAIL and Tata Steel are pillars of the Indian steel industry, contributing to its growth in different ways. SAIL has been largely focussing on increasing its production capacity to cater to the demand of steel required to accomplish national infrastructure projects, while Tata Steel has taken key steps towards technological innovation and environmental protection. It would be wise to consult a financial advisor before making any investment investment.

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FAQs

Which company leads in production capacity?
Tata Steel’s production capacity in India is slightly more than that of SAIL.
Do both companies prioritize eco-friendly practices?
Yes, both companies focus on sustainability and have invested in various initiatives.
Is Tata Steel government-owned?
No, Tata Steel is a private company, SAIL is a government company.
Who has better international reach?
Tata Steel has a strong presence overseas.
Is investing in both companies advisable?
Investing in both companies depends on through analysis of the company’s fundamentals, knowledge of your risk profile and financial goals.

June 19, 2025

Iran–Israel War Impact on Indian Stock Market

In the last few days, the relations between Israel and Iran have taken a new turn. On June 13, 2025, Israel carried out airstrikes on Iran’s oil and energy infrastructure, which created an atmosphere of concern around the world. Brent crude prices suddenly rose above $78 per barrel and the Indian rupee fell to ₹86 per USD.

The direct impact of this growing uncertainty is visible on the Indian stock market. At such a time, it is very important for investors to understand which sectors may be affected the most to make informed investment decisions.

How This War Affects Indian Markets?

The impact of the Iran-Israel war on the Indian markets can be summarized in the following points:

Rise in crude oil prices : The growing tension between Israel and Iran has threatened global oil supply. As a result, Brent crude prices instantly crossed the $78 per barrel, more than 10% rise between 12 June and 13 June 2025. It has increased by more than 20% since the beginning of June from $63 to $78 per barrel, which is sure to affect the various economic sectors and crude-importing nations as India.

Pressure increased on rupee : The rupee weakened as oil became expensive, and recently fell to the level of around ₹86 against the dollar. RBI had to intervene to handle the situation, but the weakness of the rupee can make imports expensive even further.

FII selling, DII buying : Amid global uncertainty, foreign investors i.e. FII has withdrawn more than ₹5,869 crores by 18 June. However, domestic institutional investors (DII) have tried to maintain stability in the market and bought ₹58,138 crores worth of securities.

What does this mean for investors?

Expensive oil = More inflation as Increased costs for companies
Weak rupee = IT and export sectors benefit, but adverse impact on FMCG and Auto
FIIs withdrawal = more volatility in the market

Sector-Wise Impact

Let’s look at the sector wise impact of the Iran-Israel war in more detail:

Oil & Gas Sector: Brent crude prices have reached around $78 per barrel, which has directly affected crude oil importing countries like India. Rising crude oil prices are increasing the cost of importing, while oil producing companies benefit from it.

Defense & Aerospace: Global tensions are expected to increase defense spending in many countries, including India. Due to this, the market is keeping an eye on domestic companies in the defense sector.

IT & Exporters: Rupee has weakened to around ₹86.4 against the dollar, due to which the profit margins of export companies are improving.

Precious Metals & Gold : In times of instability, investors turn to traditionally safe instruments due to which there is a surge in prices of gold and silver.

Auto & Consumer: Rising fuel prices have led to an increase in transportation costs, which has put pressure on profit margins of the automobile and FMCG sectors.

Stock Market Sentiment & FII Activity

Let’s analyze the stock market sentiment and the FII activity:

Foreign and domestic investment trends : The surge in crude oil prices due to rising tensions in the Middle East are making foreign investors cautious. Foreign investors (FIIs) have started withdrawing from equities since early June, while domestic institutional investors (DIIs) have been actively buying, providing stability to the market.

Currency and RBI’s role : The rupee has been showing continuous weakness, reaching around two-month lows, and the RBI has tried to stop the slide by infusing rupee liquidity through open market operations. This indicates the crucial role of RBI in controlling Indian currency when a geopolitical event causes volatility.

Volatility scenario : India VIX remains around 14–15 levels, which indicates that the market is trying to hold ground, but uncertainty persists.

Global Economic Impact of the War

The economic impact of the war on the global level can be understood as follows:

Crude oil prices : The war between Iran and Israel has shocked the global energy market. Iran is one of the world’s largest oil producers, and 20% of global oil is transported through the Strait of Hormuz. As tensions in the region increased, concerns about disruption in crude oil supply rose and prices rose sharply. This has caused oil importing countries, such as India, to pay for expensive fuel.

Impact on global inflation and commodity markets : Oil inflation directly increases the cost of transport, production and other commodities. At present, global inflation is already at a high level, and the war has made the scenario more severe. Volatility can be seen in the prices of other commodities as well such as metals.

Fear among investors : Investors around the world shy away from risk in volatile times, especially if it is due to war. Global equity markets are under pressure due to cautious sentiment shifting of investor capital to safer investment options like gold, bonds, etc.

Tips for Investors

During such times, the investors should avoid taking investment decisions emotionally and always remember the following points:

Avoid panic, keep a clear stance : Even though volatility has increased in the market, it is not wise to exit a particular sector in a hurry or sell everything without analysing. Sometimes decisions taken out of fear can be harmful in the long term. At such times, it is important to stay calm and understand the bigger trends.

Keep an eye on oil and dollar : Crude oil prices and the movement of the US dollar are the two biggest factors determining the direction of the Indian market at this time. Sharp price changes in these can have a direct impact on sector-wise performance – especially in industries like auto, IT, and manufacturing.

Focus on strong companies : In such a situation, the focus should be on those companies whose fundamentals are strong and business model is stable. Such stocks are relatively less affected by market decline.

Look at short-term volatility as a long-term opportunity : At a time when the market is under pressure, it can be an opportunity for long-term investors to buy some quality stocks at discounted prices due to panic selling.

Conclusion

The impact of the Iran–Israel war is not just confined to political boundaries; its direct impact was felt on the global economy and the Indian stock market as well. At such a time, it is not enough to just look at the index movement. Sector-wise analysis, understanding the fundamental position of individual companies and keeping an eye on global developments is important. Investors should remain alert and keep assessing their portfolios from time to time. It is advised to consult a financial advisor before making any investment decision.

FAQs

What is the impact of the Iran-Israel war on the Indian stock market?
The war has increased market volatility, particularly putting pressure on crude oil, currencies and global investment flows.
Which sectors are most affected in India due to this conflict?
Oil companies, aviation, automobile and FMCG sectors have been affected the most.
Will crude oil prices continue to rise due to the war?
If the tension continues, further increase in crude oil prices is possible.
Should retail investors worry about market volatility?
Long-term investors need not panic, but it is important to remain cautious and review your portfolio at regular intervals.
How should investors respond to this geopolitical crisis?
Investors should adopt a balanced investment approach by doing sector-wise research before taking any investment decision.

June 18, 2025

Iron Butterfly Strategy Explained – How it Works & Example

Sometimes, while trading, you must have observed that a particular stock gets stuck in a range. Not going up, not crashing down, just hovering in range, making it nearly impossible for traders with either bullish or bearish positions to generate meaningful profits. However, there is a strategy that can be used in such a scenario to make profits, i.e., Iron Butterfly strategy. This options strategy is useful when you expect the asset price to move sideways.

In this blog, we will break down the Iron Butterfly strategy in simple language, how it works, when to use it, how much you can gain (or lose), and whether it makes sense for your trading style. Whether you are new to options or looking to sharpen your trading edge, after understanding the Iron Butterfly strategy, you’ll walk away with a clear understanding of what to do in a range-bound market.

Iron Butterfly Strategy: An Overview

The Iron Butterfly is a type of options strategy that traders use when they believe that a stock (or any other asset) is not going to show much movement in the near future. It is what you’d use if you think the price is going to stay right around where it is now, neither moving up nor crashing down significantly.

You visualize a zone, a price range, and hope the stock ends up near the middle of it. If it does, you realise profits. If it moves too far outside the zone, you lose money. However, both the maximum profits and maximum loss are limited.

To set this up, you use four options contracts, which are as follows;

You sell one at-the-money call
You sell one at-the-money put
You buy a call with a higher strike than the call sold to protect the upside
You buy a put with a lower strike than the put sold to protect the downside

When to Use the Iron Butterfly Strategy?

So, when should you use the Iron Butterfly? When you think the stock or index is going to stay range bound. No big moves, only moving slightly above or slightly below the current price. If you spot a stock that is expected to stay close to its current price until the options expire, the Iron Butterfly can be a good option. It is perfect for range-bound situations where the price seems stuck. The strategy also works well when volatility is high as most of the time volatility is mean-reverting and as the volatility cools off, the option premiums decline yielding profits.

Profit, Loss & Breakeven Analysis

Let us break down the most important part – how much you can make, how much you could lose, and where your break-even points are in case you plan to execute an Iron Butterfly strategy.

Maximum Profit

Your maximum profit is when the stock ends up exactly at the middle strike price, i.e., the strike price of at-the-money options you sold because, both the call and put you sold expire worthless (you keep the premium), and the two options you bought (the wings) also expire worthless, which means you keep the entire premium collected upfront.

Max Profit = Premium Collected

Maximum Loss

But what if the stock moves a lot, either up or down, and goes beyond the wings, i.e., the strike prices of the options you bought)?

That’s when one of the bought options comes into play as either the call with higher strike price gains in value or put with lower strike price rises, when you start losing money on one of the ATM option positions. In simple terms, your loss is capped because of the protective wings.

Max Loss = Distance Between Strike Prices – Net Premium Collected

Breakeven Points

There are two breakeven points, one on the upside and one on the downside. These are the prices at which you neither make nor lose money.

Upper Breakeven Point = ATM strike + Net Premium Collected

Lower Breakeven Point = ATM strike – Net Premium Collected

Example

Let’s say Stock ABC is currently trading at ₹100. You believe the stock is going to stay close to ₹100 for the next few weeks, not much movement up or down. We are considering the lot size of options contracts to be 100.

Sell 1 ATM Call with strike price 100 – Premium received is 6 Points or ₹600
Sell 1 ATM Put with strike price 100 – Premium received is 6 Points or ₹600
Buy 1 OTM Call with strike price 110 – Premium paid is 3 Points or ₹300
Buy 1 OTM Put with strike price 90 – Premium paid is 3 Points or ₹300

Net Premium Collected is (6 + 6) – (3 + 3) = 6 Points or ₹600

Now, at the expiry

Case 1: If Stock Ends at ₹100, then all options expire worthless, you keep the ₹600 premium and this is your maximum profit.

Net Profit = ₹600

Case 2: If Stock Falls to ₹97; ATM call, OTM call and OTM put are worth zero. However, ATM put has some value and the net P&L is calculated as:

P&L = ATM call value + ATM put value + OTM call value + OTM put value

=(6 – 0) + (6 – 3) + (0 – 3) + (0 – 3) = 3 points = ₹300

Case 3: If Stock Rises to ₹108; ATM put, OTM call and OTM put are worth zero. However, ATM call has some value and the net P&L is calculated as:

P&L = ATM call value + ATM put value + OTM call value + OTM put value

= (6 – 8) + (6 – 0) + (0 – 3) + (0 – 3)= – 2 points = -₹200

Case 4. Breakeven Points will be as follows;

Lower Breakeven = 100 – 6 = 94

Upper Breakeven = 100 + 6 = 106

At 94: P&L = (6 – 0) + (6 – 6) + (0 – 3) + (0 – 3) = 0

At 106: P&L = (6 – 6) + (6 – 0) + (0 – 3) + (0 – 3) = 0

Advantages & Risks of Using Iron Butterfly Strategy

Advantages

1. Limited Risk: Your maximum loss is capped and you know exactly how much you could lose before you even execute the trade. That makes it a safer bet than other strategies.

2. Defined Profit Range: You also know your max profit in advance, which helps you plan your risk-to-reward clearly.

3. Good for Range-Bound Markets: If you think the market will stay in a range, this strategy is a great way to make money.

4. Take Advantage of Time Decay: Because you are selling options at the money, you benefit from time decay, which means your position becomes profitable even if the stock does not move much.

Risks

1. Limited Reward: The potential profit is limited and the position must be held for a long time to take advantage of time decay.

2. High Risk if Stock Moves Sharply: If the stock makes a considerable move in either direction, it can result in maximum loss, especially in a volatile market.

3. Requires Precise Prediction: You need to be very accurate about where the stock price will be at expiry. Even small unexpected moves can turn profitable trades into losses.

4. Higher Brokerage Costs with 4 Legs: Since the Iron Butterfly strategy involves 4 option contracts, transaction costs can add up, especially for frequent traders.

Conclusion

The Iron Butterfly strategy is a steady, risk-defined approach for traders who believe a stock or index will remain in a zone for a while. With limited risk and limited reward, it is more about precision and patience. If you are someone who enjoys planning your trades carefully, managing risk, and profiting from sideways markets, the Iron Butterfly can be a great addition to your options strategies list.

That said, this strategy is not for every market condition. Significant events accompanied with sudden volatility can cause the prices to move considerably causing losses. Therefore, timing is everything. In the end, like any other strategy, success with the Iron Butterfly comes down to knowing when to use it and how to manage it.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
1	What is Options Trading?
2	What is Algo Trading?
3	What is Intraday Trading?
4	What Is an Option Contract?
5	Best Trading Apps in India

Frequently Asked Questions (FAQs)

What is the Iron Butterfly strategy?
It is an options trading strategy consisting of 4 options contracts that yields profits when the stock stays near its current price and losses if it moves considerably.
Is the Iron Butterfly bullish or bearish strategy?
Neither, it is a neutral strategy. You use it when you expect little to no movement in the stock price.
How many options are used in an Iron Butterfly?
Four, you sell one call, sell one put (both of the same strike), and buy one OTM call and one OTM put.
How much can I lose if I use the Iron Butterfly Strategy?
The Iron Butterfly strategy is a risk-defined strategy, so your maximum loss is limited to the difference between the strike prices of the wings minus the net premium collected.
Is this strategy good for beginners?
It is not a simple strategy to manage, but once you understand how it works, it can be a smart and structured way to trade range-bound markets.

June 18, 2025

Difference Between Trading and Investing

The stock market is a place where you can invest and trade to achieve your financial goals. However, many of us tend to believe that investing in the stock market is the same as trading. Although both investing and trading involve buying and selling stocks, they are quite different in their approach.

In this blog, we will explain the difference between investing and trading in detail, along with their features and types.

What is Investing?

Investing refers to buying stocks of listed companies for a long period to create wealth through capital appreciation and dividends. Investing is basically buying shares of a company that is supposed to do well in the future; therefore, investors prefer to buy stocks at lower prices and sell them at higher prices. In order to judge the future potential of the company, it is necessary to do the necessary due diligence on the company’s financial statements and other required analysis.

Features of Investing

The key features of investing are as follows:

Growth Potential: Through investing, an investor can grow their capital over time.
Diversification: One can reduce the risk of one’s portfolio by diversifying across different sectors.
Tax Benefit: Long-term capital gains are subject to lower tax rate than short-term trading.
Compounding: Investing allows an investor to compound their returns, which can lead to a significant increase in wealth over time.

Types of Investing

Investing can be categorised into the following types:

Value Investing: In this type of investing, an investor selects undervalued stocks which are fundamentally strong. Value investors buy such stocks as these stocks are undervalued and significant growth can be expected in future.
Growth Investing: In this, the investor identifies which stocks have a good potential for long-term growth and earnings.
Dividend Investing: There are some companies which regularly pay dividends so investing in such companies provides a regular cash flow in the form of dividends.
Index Investing: This involves creating a diversified portfolio that replicates a market index or investing in index ETFs and mutual funds.

What is Trading?

Trading in the stock market involves actively buying and selling stocks within a short term to earn profits from frequent price fluctuations. Basically, the traders use market volatility to their advantage to earn profits. Short-term trading is the art of finding the trend in stock prices, and capitalize on them.

Features of Trading

The key features of trading are as follows:

Short Term: Trading generally involves buying and selling stocks over a short period of time typically ranging from a few minutes to a few weeks.
Actively Managed: A trader is required to actively track the price movement of stocks, based on various factors such as news, geopolitical events, economic conditions, etc.
Only High Liquid Assets: Traders generally prefer to trade in only those assets that have high liquidity.
Leveraged Positions: Various traders use leverage to increase their returns by borrowing funds from brokers.

Types of Trading

Trading is highly risky as it is dependent on market volatility that can be impacted by factors such as news, economic conditions, inflation, interest rates, etc. Trading in the stock market can be majorly categorised into four types:

Scalping: This involves generating quick profits based on small price movements.
Day Trading: Day Trading In this type of trading, a trader opens a trading position and closes it within the same day. They make decisions based on technical analysis to earn profits from intraday price movements.
Swing Trading: The traders hold the stocks for a few days or weeks in swing trading.
Momentum Trading: In momentum trading, the traders spot the significant price momentum and take a bet in accordance with that scenario to earn profits. The holding period can be up to a few months.

Difference Between Investing and Trading

There are significant differences between investing and trading, a few of which are as follows:

Particulars	Trading	Investing
Time	Trading is done on a short-timeframe, i.e. minutes, hours, or days	Investing is done for years and decades.
Objective	The primary objective is to earn profit from price fluctuations.	The objective of investing is to accumulate wealth through capital appreciation as the company’s revenues and profits grow.
Monitoring	It requires active monitoring.	It only requires periodic reviews.
Analysis	Trading is based on technical analysis.	It generally involves fundamental analysis.
Leverage	Trading is highly leveraged.	Investing is usually not leveraged.
Taxability	Short-term profits are subject to higher tax rates.	Profits earned from investing are subject to lower tax rates.
Risk	Trading generally carries high risk due to market volatility.	It generally has a lower risk level.
Investor Psychology	It requires quick decision-making and emotional control.	Investing requires patience and discipline.

Who should Invest and Who should Trade?

Trading is suitable for investors who wish to take high risks for high returns. Consistent traders have a well-defined strategy and good risk-reward ratio that helps them consistently outperform the benchmarks. However, it is hard to master trading and it is not suitable for conservative market participants who can’t monitor their portfolios regularly and can’t handle market volatility. It is true that high returns can be earned through trading but there is also a high probability of losing significant capital.

While on the other hand, if you wish to create wealth in the long run and are a risk-averse investor then investing is for you. You must be an expert in conducting fundamental analysis of companies and focus on identifying future growth drivers. Long term investing is best for those who wish to have regular income through dividends as well as capital appreciation.

Conclusion

On a concluding note, trading and investing are two opposite approaches to wealth creation. Trading could provide quick returns, but risk is also much higher compared to investing. On the other hand, investing follows the principle of “slow and steady wins the race”. For retail investors it is always suggested to consult your financial advisor before making any decision.

Pocketful provides you with an opportunity to earn profits from both investing and trading, through its mobile application equipped with advanced trading tools. One can open a lifetime free demat account that does not require paying any brokerage on equity delivery-based trades.

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2	Value Investing Vs Intraday Trading: Which Is More Profitable?
3	Mutual Funds vs Direct Investing: Differences, Pros, Cons, and Suitability
4	Swing Trading vs Day Trading: Which Strategy Is Right For You?
5	5 Must-Read Best Swing Trading Books for Trader

Frequently Asked Questions (FAQs)

What carries higher risk among investing and trading?
There is a higher risk in trading because of short-term market volatility and quick decision-making. On the other hand, investing is less risky as it focuses on future growth prospects of the company.
Which is better for a long-term investor?
Investing is better for long-term goals as it comes with the benefit of compounding, lower risk, and tax efficiency.
What are the tax rates for short-term traders and long-term investors?
Traders are required to pay taxes on short-term capital gains at a rate of 20%, while long-term investors pay according to a tax rate of 12.5% with no tax on gains up to ₹1.25 lakh.
What are the goals of trading and investing?
Trading aims for short-term profits from market price fluctuations. Investing seeks long-term wealth creation and financial security.
Can I do both trading and investing at the same time?
Yes, you can be a long-term investor while doing short-term trading. However, both require a separate skill set to be done profitably.

June 18, 2025

What is Coupon Bond?

Have you ever thought how investors earn steady income from bonds, even before the bond maturity date? Let’s introduce you to the world of coupon bonds where you can invest and grow your wealth for decades. Coupon bonds are a type of debt instrument where the bondholders get regular periodic interest payments known as coupon payments, representing consistent income at regular intervals.

In this blog, we will discuss coupon bonds, its working, advantages, disadvantages and factors to consider before investing in these bonds.

Brief Introduction to Bonds

Bonds are fixed income instruments through which you can lend money to an organisation, like a company or government. In return, they promise to pay you regular interest payments for a specific period (say annually or semi-annually) and at maturity, you get your original investment amount back.

In India, there are many institutions that issue bonds, such as PSUs, corporates, RBI on behalf of Govt., etc. to raise money. Bonds can be bought through banks, brokers, or online platforms. They are a safe way to earn passive income but one should always keep in mind that income earned from these bonds are usually taxable, so one should keep all the factors in mind before investing. Now let’s understand Bond coupons in more detail.

What is Coupon Bond?

A coupon bond is a subtype of bond that pays fixed coupon payments at regular intervals over the lifetime of the bond. The bond’s face value or the principal amount is returned at the time of maturity (pre decided maturity date). The term “coupon” is a term that was used back in times when physical bond certificates had detachable coupons, and payments were made after presenting these bonds physically to the issuer. However, today the interest payments or coupon payments related to the bond are made electronically.

Read Also: What are Bond Yields?

Before investing in a coupon bond, it is important to understand its structure. The following terms related to bonds are explained in detail:

1. Face Value (Par Value or Principal)

The amount of money the bondholder will receive back at the time of bond maturity.

Let’s look at the bond with ₹1,000 par value and a coupon rate of 7%. The bondholder will receive ₹70 annually until maturity and then receive the principal amount.

Importance: The face value of a bond is fixed while the market price of the bond tends to change due to interest rate fluctuations as well as credit reassessment.

2. Coupon Rate

The coupon rate is the annual interest rate stated on a bond, expressed as a percentage of the bond’s face value.

If the coupon rate is set at 6% per year and the face value of the bond is ₹10,000, then the annual coupon payment will be ₹600, these payments are usually made semi-annually, annually, or even quarterly.

3. Coupon Payment

This represents the bond’s interest payment and is the actual amount that is paid to the holder of the bond at pre designated intervals (annual, semiannual or quarterly) based on the coupon rate and the bond’s face value.

Coupon Payment = Face Value x Coupon Rate ÷ Number of Payments per Year

A ₹1,000 bond with a coupon 6% paid out semi annually will yield ₹30 every 6 months. Payments are usually made directly into the investor’s registered bank account.

4. Maturity Date

The particular point in time when the bond will mature and the issuer pays the bond holder the face value of the bond.

Maturity Range: This could be short-term, medium term or long-term. In general, short term is less than 1 year, medium term is 1-10 years and long term is 10-30 years or longer.

The time to maturity of a particular bond determines its exposure to interest rate risk, i.e., when bonds with longer maturity experience greater fluctuation due to changes in interest rates. Knowledge about the maturity dates also facilitates financial planning as certain bonds maturing 5, 10, or 20 years down the line can assist in planning for education or retirement funding.

5. Fixed vs Floating Coupon Bonds

In a fixed-rate bond, the interest rate is pre-determined and it remains the same due to its fixed nature till the maturity of the bond.

A floating-rate bond’s coupon payment changes according to some benchmark, such as RBI repo rate.

Read Also: What Are Corporate Bonds?

How Coupon Bonds Work?

When you purchase a coupon bond:

You’re giving your investment amount to the issuer, which can be a government, municipality, or corporation.
The issuer pays you interest or coupon payments at a specified rate and frequency, usually semi-annually or annually.
You receive the principal amount after the bond maturity.

Advantages of Coupon Bonds

Advantages of investing in coupon bonds are:

1. Stable & Predictable Income : Interest payments on coupon bonds are made during specified periods making them perfect for pensioners or people dependent on passive income streams. Compared to stocks, bonds are less volatile.

2. Lower Risk than Equities : Though subject to price volatility, regular interest payments and principal value is received at maturity (unless there’s a default). This statement is most applicable to sovereign or AAA-rated bonds.

3. Capital Preservation : Bonds that are held to maturity pay back the full principal amount. It enables capital preservation while maintaining a regular income stream.

4. Portfolio Diversification : Bonds are crucial in compensating for unpredictable equity markets. They have a low correlation to stocks, which mitigates overall portfolio risk.

5. Secondary Market Options : Bonds are also available for buying or selling on the secondary market, i.e. brokers, banks and digital platforms. The liquidity, however, is subject to change based on the availability of buyers and sellers in the market.

Disadvantages of Coupon Bonds

It is important to know the associated risks and limitations of coupon bonds as well:

1. Change in Interest Rate Risk : If interest rates go up, the bond prices will fall. This may lead to loss if the bond is sold before maturity. Bonds with longer durations are more sensitive to these interest rate changes.

2. Inflation Risk : Inflation may diminish the real value of the fixed coupon payments, reducing the purchasing power over time. With rising inflation the interest income may be less valuable as the general price level of goods and services across the economy rises.

3. Default Risk : Investors could incur losses if the issuer refuses to pay interest or principal amount owed. Credit default risk in government bonds is very low as they are backed by sovereign guarantee while corporate bonds carry higher default risk.

4. Liquidity Risk : Certain bonds are not actively traded on secondary markets. Hence, selling them at a fair price within a short period becomes difficult. So, sudden exit can lead to potential losses in illiquid markets.

5. Call Risk : An issuer tends to call a bond before its maturity date when interest rates decrease. They do this to issue further bonds at a reduced coupon rate.

Factors to Consider Before Investing in Coupon Bonds

Various factors to consider before investing in coupon bonds are:

Interest Rate Environment : Bonds values are negatively affected by an increase in interest rates, so check analyze economic conditions and RBI guidelines.
Issuer’s Creditworthiness : Check CRISIL, ICRA, Moody’s or S&P rating of the bond issued and evaluate the issuer’s financial position.
Time Horizon : Align your financial objectives with the bond maturity date. Long-dated bonds have greater price volatility due to changes in interest rates.

Yield to Maturity (YTM) : An indicator which estimates the total return on investment if the bond is held till maturity.
Inflation Outlook : Real returns = Nominal returns – Inflation. Invest in bonds that have an inflation protection clause attached.
Callability : Verify if the bond is callable, if yes determine what call provisions may be attached. Early redemption of a callable bond adversely impacts returns.
Liquidity : Ponder on the considerations of how simply the bond can be sold before the maturity date if the need arises.
Reinvestment Options : Contemplate the possibilities where you intend to allocate the periodic coupon payments ahead of time.
Bond Ratings : Bonds that are rated investment grade (BBB or above) are less risky, while those graded junk (BB or below) carry higher risk, but yield higher returns.

Read Also: Benefits of Investing in Bonds

Conclusion

Coupon Bonds are integral to the fixed income market as they provide a reliable income stream, preservation of capital, and diversification benefits. Though they are deemed safer than equities, one must appreciate the many factors and risks associated with these types of investments, such as, coupon rate, inflation, and credit risk of the issuer.

Assessing your financial objectives, income tax bracket, risk appetite, and the prevailing market conditions determine if coupon bonds are suitable for your investment portfolio or not. It is also important to consult a financial advisor before investing.

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3	Stocks vs Bonds: Difference Between Bonds and Stocks
4	CAT Bonds: An Easy Explainer
5	What is Debt Mutual Funds: Invest in the Best Debt Funds in India

Frequently Asked Questions (FAQs)

How are coupon payments made?
Payments are transferred directly into the bank account of the investor on predetermined days.
Do coupon bonds give guaranteed returns?
If kept till maturity, coupon bonds offer regular interest payments and issuers also return principal back at maturity, given that the issuer doesn’t default.
Can coupon bonds be sold prior to maturity?
Sure, they can be sold in the secondary market, but their prices depend on prevailing economic conditions.
Are coupon bonds better than FDs?
Usually they provide better returns than FDs; however, they entail more risk than conventional fixed deposits.

June 17, 2025

JK Tyre Vs CEAT: Which is Better?

When we talk about the tyre industry, the names of JK Tyre and CEAT come first. Both the companies are not only well known in India but also have a strong hold in the international market. Did you know that JK Tyre has recently made a big investment to increase its manufacturing capacity, while CEAT has further expanded its reach by acquiring a global brand?

In this blog, we will discuss the business models of these two companies, along with their future growth plan and financial performance – so that you can better understand who is ahead in terms of an investment opportunity.

Company Overview – JK Tyre

JK Tyre was founded in 1951 as a managing agency business and later began manufacturing tyres. Over the years, it has established itself among the top tyre companies in India. In 1977, the company was the first to introduce radial tyres in the country, which are today considered the mainstay of tyre technology. Over the last four decades, JK Tyre has established a strong hold in the market through its products and innovations.

Key Business Verticals

JK Tyre’s business is mainly divided into three segments:

Commercial Vehicle Tyres: The company is the market leader in radial tyres for trucks and buses.
Passenger Vehicle Tyres: The company has also built a strong presence in the car and SUV segments.
Off-Road and Farm Tyres: Its product portfolio also includes tyres used by vehicles in the construction sector and tractors.

Market Presence : The company’s distribution network is spread across India, which includes more than 6,000 dealers and 600+ branded retail outlets. Internationally, JK Tyre also exports tyres to more than 100 countries. Apart from this, the company also has three manufacturing plants in Mexico, which further strengthens its global presence.

Brands and Target Customers : JK Tyre sells tyres under brand names such as ‘JK Tyre’, ‘Vikrant’, and ‘Challenger’. Their focus is on meeting tyre needs of various industries – be it commercial vehicles or passenger vehicles. The company focuses on targeting all types of customer segments: construction vehicles, trucks, and personal vehicles.

JK Tyre Business Model

JK Tyres business model has been explained below:

Sources of Income : JK Tyre’s income comes primarily from two sources – one, original equipment manufacturers (OEMs), and the other is the aftermarket. About 60% of the company’s revenue comes from the aftermarket, i.e. retail and replacement customers, while the rest is generated from OEM deals and exports.
Manufacturing and Global Footprint : The company has 9 plants in India and 3 in Mexico with a combined production capacity of 35 million tyres per annum. This facility helps the company to meet domestic demand as well as international orders on time.
Partnerships and Technology : JK Tyre has long-standing partnerships with several leading auto companies. The company has also been at the forefront of technology — for example, innovations like TPMS (Tyre Pressure Monitoring System) have been introduced in smart tyres, which increase both safety and efficiency of vehicles.

Company Overview – Ceat Ltd.

CEAT Ltd(Cavi Elettrici e Affini Torino) was first founded in Italy in 1924, but its operations in India began in 1958 and today it is part of the RPG Group. CEAT is now counted among the top tyre companies in India and has a large share especially in the two-wheeler and passenger car tyre segment. The company is known for its strong product portfolio and quality.

Segments and Product Range

CEAT’s business covers various vehicle segments:

Two-wheeler tyres: This segment represents CEAT’s largest revenue share in India.
Passenger car tyres: The company is continuously increasing its hold in the car and SUV segments.
Commercial and off-highway tyres: The company also manufactures tyres for truck, tractor and industrial vehicles.

Production and Network : CEAT has 6 manufacturing plants in India, out of which a new state-of-the-art plant has been built in Chennai recently. The company’s annual production capacity is around 3 crore tyres. Additionally, the company’s export network spans across 100+ countries, further strengthening its global presence.

Focus on customers and brand value : CEAT’s marketing strategy is highly customer-centric. The company has promoted safe driving through campaigns and has proven its tyres to be reliable and durable. CEAT’s focus is more on quality and retail experience, which strengthens both consumer base and brand value.

CEAT’s Business Model

CEAT’s business model has been explained below:

Revenue structure : A large part of CEAT’s revenue comes from the aftermarket, especially from two-wheeler and passenger tyres. About 65% of the revenue comes from the retail and replacement market, while the remaining comes from OEMs and exports. This reflects the company’s brand loyalty and distribution strength.
Innovation and technology : CEAT has worked rapidly on technology innovation in recent years. The company has developed special tyres for EV (Electric Vehicles) and recently entered the off-road tyre segment by acquiring the Camso brand from Michelin for $225 million, which is considered a major strategic move.
Partnership and Branding : CEAT has partnered with many big auto brands like Hero MotoCorp, Maruti Suzuki and Tata Motors. Apart from this, the company has increased the brand’s visibility through cricket sponsorships and a widespread dealer network.

Comparative Analysis: JK Tyre vs Ceat Ltd

Particulars	JK Tyre	CEAT Ltd
Current Price (₹)	369	3,644
Market Cap (₹ Crores)	10,106	14,740
52-W High (₹)	511	4,044
52-W Low (₹)	232	2,322
FII Holdings as of March 2025	15.94%	15.27%
DII Holdings (as of March 2025)	6.15%	21.52%
Book Value (₹)	177	1,080
PE Ratio	19.5	29.9

(Data as of 16 June 2025)

Financial Statements Analysis

Income Statement Comparison

Particulars	JK Tyre	CEAT Ltd
Total Income	14,772	13,235
Total Expenses	13,582	12,336
EBIT	1,189	899
Net Profit	515	449

(All values are in INR crores and the data is as of March 2025)

Balance Sheet Comparison

Particulars	JK Tyre	CEAT Ltd
Current Liabilities	5,799	5,164
Current Assets	6,953 6,953	3,432
Fixed Assets	7,152	7,498
Reserves & Surplus	4,795	4,328

(All values are in INR crores and the data is as of March 2025)

Cash Flow Statement Comparison

Particulars	JK Tyre	CEAT Ltd
Cash Flow from Operating Activities	715	1,091
Cash Flow from Investing Activities	-454	-922
Cash Flow from Financing Activities	-237	-176

(All values are in INR crores and the data is as of March 2025)

Key Performance Indicators (KPIs)

Particulars	JK Tyre	CEAT Ltd
Operating Profit Margin (%)	8.31	7.02
Net Profit Margin (%)	3.51	3.40
ROE (%)	10.20	10.81
ROCE (%)	14.00	15.36
Debt to Equity (x)	0.99	0.44

(Data as of March 2025)

Future Plans – JK Tyre

Future business plans of JK Tyre are mentioned below:

Expansion of production capacity : JK Tyre plans to rapidly expand its production capacity in the coming years. The company has announced an investment of ₹1,400 crore to meet the growing demand for PCR (Passenger Car Radial) and TBR (Truck & Bus Radial) tires.
Preparations for EV space : In view of the increasing demand for electric vehicles, JK Tyre is developing EV-friendly tires. These tires are being designed to give better mileage and durability with low rolling resistance.
Smart Tyre technology : JK Tyre is also working on a technology called “Smart Tyre”, in which the temperature, pressure and condition of the tyre can be tracked in real time through sensors. This will reduce maintenance costs and increase safety.
Sustainability and Green tyres : The company is also focusing on environmentally friendly production by making green tyres made from recycled material, integrating water-conservation and energy efficient measures as a part of its manufacturing process.

Future Plans – CEAT

Future business plans of CEAT are mentioned below:

Focus on premium tyre segment : CEAT is targeting the SUV and premium car market. The company aims to capture a major market share in the sales of high-end tyres by 2026, which are suitable for high-speed tracks, rough terrain and sporty performance.
Expansion in the international market : CEAT recently acquired the Camso brand of French company Michelin, which will strengthen its hold in the off-highway, agricultural and industrial tyre category. This will increase the company’s international presence and brand value.
Automation and technology innovation : The company is equipping its manufacturing units with automation. Both quality and efficiency are being enhanced with the help of advanced robotic technology and data analytics.
Responsibility towards the climate : CEAT has started several green initiatives including energy saving manufacturing plants, low-waste production, etc.

Read Also: Top Tyre Stocks in India

Who is better: JK Tyre or CEAT Ltd.?

Both JK Tyre and CEAT are playing a key role in the Indian tyre industry, but their strategies and growth patterns are quite different from each other. JK Tyre is focused on domestic expansion and technological upgrades, while CEAT has increased its focus on international branding and premium segments.

CEAT is strengthening its product range and export network, while JK Tyre has been working on several new technologies such as Smart Tyre technology and EV-friendly tires. Talking about financial performance, both companies have shown stable performance in the last few years, but their future business plans are different.

If one prioritizes branding and premium image, CEAT emerges as a strong choice. On the other hand, JK Tyre has an advantage in technological innovation and value segment. Both companies are working on their respective areas of strength and calling one ‘better’ than the other is tough. It is necessary to conduct through analysis before investing in any of them.

Conclusion

Both JK Tyre and CEAT are moving ahead in the tyre industry with different business strategies. One is focusing on eco-friendly production and new technology, while the other is strengthening brand visibility and looking to expand by acquisition. Looking at the changing auto sector and consumer needs, both have adapted in their own way. Who will come ahead will depend on the times to come and the direction of the market. But it is clear that both companies are players for the long haul. It is advised to consult a financial advisor before investing.

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Frequently Asked Questions (FAQs)

When was JK Tyre established?
JK Tyre was established in 1951 as a managing agency business and later on started manufacturing tyres.
Who has a stronger presence in exports – JK Tyre or CEAT?
CEAT has expanded its presence in the international market in the last few years. Its hold is getting stronger especially in Europe and Africa.
Is JK Tyre investing in electric vehicle (EV) tyre technology?
Yes, JK Tyre has focused on developing special tyres for EV vehicles and is also working on Smart Tyre technology.
Which tyre company is better for long-term investment?
Both companies have strong growth prospects for the long term, but who is better depends entirely on the company’s future business performance, which requires a thorough fundamental analysis.
Are both JK Tyre and CEAT listed in the stock market?
Yes, both the companies are listed on the Indian stock exchanges and their shares are actively traded.

June 17, 2025

What Happens If a Stockbroker Shuts Down?

Imagine if one morning you come to know that your stockbroker has shut down, then the first thought that comes to mind is: What will happen to money and shares? Will all of them be lost? Something similar happened in the Karvy Stock Broking case in 2019, where shares of thousands of investors were wrongly pledged. In such a situation, fear is bound to arise in the minds of every investor. Is our money really safe?

In this blog, we will know what happens when a stockbroker shuts down, how safe is your money and shares and what you should do.

Why Stockbrokers Might Shut Down?

Stockbrokers in India are fully regulated by SEBI (Securities and Exchange Board of India). Despite this, the past years have seen many brokerage firms shut down, usually due to the following reasons:

Regulatory violations (SEBI Rules Violation) : If a broker violates the rules set by SEBI such as client fund segregation, reporting or audit rules, etc. then it can be banned or restricted.
Financial insolvency : Sometimes brokers misuse clients’ funds or securities to cover their own losses. When the dues mount and they fail to settle, the exchanges and SEBI take action.
Fraud/Misappropriation : For example, in 2019, Karvy Stock Broking pledged the shares of clients without their permission, leading to a scam worth crores.

Key examples (as per SEBI Action) :

Brokerage Firm	Reason for closure	SEBI / Exchange Action	Year
Karvy Stock Broking	Misuse of client securities	Banned by NSE & BSE, SEBI action	2019
BMA Wealth Creators	Non-compliance with the regulatory provisions	Suspended	2020
Anugrah Stock Broking	Shortfall of client funds and securities, improper records, etc.	Suspended	2020

In these cases, it has been observed that brokers misuse the shares or cash present in the accounts of investors for their own benefit. When SEBI comes to know of such irregularities, it takes immediate action and tries to protect the investors.

So always trade with a registered and trusted broker and keep an eye on your account.

What Happens When a Broker Shuts Down?

When a stockbroker suddenly shuts down or faces legal proceedings by SEBI and the exchange, the entire process is as per the rules and in a phased manner. It does impact investors, but there are various investor protection rules in place. The process is mentioned below:

Trading gets suspended : First of all, NSE or BSE shuts down the trading facilities of that broker so that no further transactions can take place.
SEBI and the exchange freeze the operations : All transactions, fund transfers and back-office work are stopped. The purpose of this is to prevent any more misappropriation.
Client funds may be temporarily blocked : Your money with the broker may be stuck for some time until the situation becomes clear.
Demat holdings are safe : If your shares are held in demat form with CDSL or NSDL, they are held in your name and are not impacted by the closure of the broker (we will discuss this in detail in the next section).

Are Your Shares & Mutual Funds Safe?

When a stockbroker suddenly shuts down, the first question that comes to mind is “What will happen to my shares and funds?”

The truth is that if you have regularly cross-verified your transactions with the email received from the depository stating transactions in your demat account, then your shares are safe with CDSL or NSDL and there is no need to panic. These shares are registered with the depository in your name, not the broker’s. The broker just facilitates transactions and doesn’t keep custody of your shares meaning, even if any prominent broker shuts down, your shares are still safe.

Mutual funds are also safe : The record of mutual funds units held by you is available to both the AMC i.e. Asset Management Company and their RTA like CAMS or KFintech. The broker just offers you the facility of buying and selling assets. So even if the broker shuts down, there is no effect on your mutual funds units.

How to track?

CDSL’s ‘Easi’ and ‘eDIS’ portals give you complete information about your shares, which shares you have, how many you have, and transaction history.
NSDL’s IDeAS platform also gives you the same data if you have a demat account under NSDL.

Keeping yourself updated about your Demat account holdings is the easiest way to track and keep your investments safe. SEBI has created a system that puts investor safety at the forefront. Even if the broker fails, your investments will not be affected.

Investor Protection Fund (IPF): Your Safety Net

If, for some reason, your stockbroker closes down and you have some funds in the trading account or your shareholdings are stuck, then you have another option – Investor Protection Fund (IPF).

This fund has been created by NSE and BSE to protect investors. If an investor suffers financial loss due to the broker and the broker is unable to compensate for that loss, then IPF compensates your loss to some extent.

How much can I claim?

Exchange	IPF Limit / Investor / Broker	Claim Time Limit
NSE	Up to ₹35 lakh	Within 3 years from the date of occurrence of default
BSE	Up to ₹15 lakh	Within 3 years from the date of occurrence of default

How to claim IPF?

File a complaint : On SEBI’s SCORES portal or directly on the NSE/BSE website.
Investigation process begins : The exchange or SEBI checks whether the defaulting broker has caused a loss and other details.
Claim processing : If found correct, you are awarded compensation under IPF up to ₹35 lakh in NSE and ₹15 lakh in BSE.
Documentation is important : Documents like contract notes, demat account statements and proof of loss must be with you.
Time limit to keep in mind : Claim deadline is within 3 years of the default event.

Why is it important for you

NSE’s IPF is backed by a massive corpus of ₹2,534 crore as of May 2025, which shows its commitment to protect investors.
This fund is exclusively for retail investors, so even if the broker commits fraud, you do not have to suffer huge losses.
The audit and utilization of IPF is done in a transparent manner as per SEBI and exchange regulations.

Tips to Stay Protected as an Investor

As an investor, it is important to keep the following points in mind:

Always choose SEBI registered brokers : Before opening an account with any broker, check if it is SEBI-registered or not.
Prefer well-known or regulated brokers : Reputed brokers like Pocketful , Zerodha, Angel One, etc. are trustworthy.
Do not leave large amounts of money in the trading account : Keeping a large amount of funds idle in your trading account increases risk. If not needed, transfer funds back to your bank account.
Check Demat account holdings regularly : Check shareholdings and transaction reports from your depository login once a month.
TPIN based transactions: The transactions are authorized by TPIN (like CDSL TPIN), which further increases security, so that no one can transfer your shares without your permission.

Conclusion

If your stockbroker suddenly shuts down, there is no need to panic but rather act sensibly. In India, institutions like SEBI, NSE and BSE have come up with stringent regulations and provisions like Investor Protection Fund to protect investors. Your shares and other assets are safe with the depository (CDSL/NSDL) and there is no need to panic. It is just important that you take the right steps at the right time and be cautious about your investments.

Frequently Asked Questions (FAQS)

What happens to my shares if my broker shuts down?
Your investments remain safe even if the broker shuts down as your shares are held by depositories such as CDSL or NSDL
Can I transfer my shares to another broker?
Yes, you can easily transfer shares to a demat account opened with a new broker.
What is an Investor Protection Fund (IPF)?
This is a protection fund which compensates for the losses incurred by investors due to the defaulting of the broker.
How much compensation can I get from IPF?
Compensation up to ₹35 lakh can be received in NSE and up to ₹15 lakh in BSE.
Where can I file a complaint against the broker?
You can lodge an official complaint online on SEBI’s SCORES portal.

June 16, 2025

How to Change/Update your Mobile Number in Aadhaar Card?

Nowadays, it is very important to have the correct mobile number linked to the Aadhaar card as it may be required for every other important task. Banking, government services, PAN card or OTP related facilities; everything requires your mobile number linked with your Aadhaar card. However, if your old mobile number has not been in use and you have switched to a new mobile number, then it becomes necessary to update it in the Aadhaar card database.

This blog explains in simple language how to change the mobile number linked to your Aadhaar card.

How to Change Mobile Number in Aadhaar Card Online?

In case you have a mobile number already registered with Aadhaar card and want to update it, you can follow the below steps:

Visit the SSUP portal.
Enter your Aadhaar number and the OTP sent to your registered mobile number.
Select ‘Mobile Number’ for update.
Enter the new mobile number and submit the request.
An Update Request Number (URN) will be generated for tracking the status.

Note: This online service is available only if your current mobile number is registered with Aadhaar.

If your mobile number is not linked with your Aadhaar, you must visit an Aadhaar Seva Kendra (Service Center) for the update. Online updates are not available for first-time linking. But an appointment can be taken in advance by visiting the UIDAI website, which can help you save time at the service center.

If you want to link a new mobile number to Aadhaar, then first you can follow these steps to book an appointment:

Step 1: Open the official website of UIDAI .
Step 2: Click on “My Aadhaar ” in the menu, then select the “Book an Appointment” option
Step 3: Enter the city or location and click on “Proceed”
Step 4: Enter the mobile number and captcha, then generate OTP
Step 5: After entering the OTP, click “Verify”
Step 6: Fill in the requested details – like name, Aadhaar number, date of birth, city and service center
Step 7: Select the option “Mobile Number Update”
Step 8: Choose the date and time as per your convenience and finalize the appointment

On the day of the appointment, you have to reach the service center at the scheduled time, where the mobile number will be updated after biometric verification. A fee of ₹50 is charged for this and a receipt is received in which the URN number is written. With the help of this URN, the status of the update can be tracked later on the UIDAI website.

Important thing: It is not necessary to get an OTP on the old number to update the mobile number. That is, even if the old number is not in access, the new number can still be updated.

How to Change Mobile Number in Aadhaar Card Offline?

If you want to update your mobile number and do not want to take an online appointment, then you can also change your number offline by going directly to the nearest Aadhaar Seva Kendra. The offline update process involves biometric verification, ensuring the identity of the person requesting the update.

Here, understand step-by-step how to update mobile number in offline Aadhaar :

1. Visit the nearest Aadhaar Seva Kendra : The address of the nearest center can be easily obtained from the UIDAI website.

2. Keep the original copy of the Aadhaar card with you : No other document is required, only Aadhaar is sufficient.

3. Fill the Aadhaar Update/Correction Form : Enter the new mobile number correctly in the form.

4. Complete biometric verification : After the fingerprint scan, the data is submitted to the UIDAI server.

5. Deposit a fee of ₹ 50 : This fee is fixed and a receipt for update is given.

6. The receipt has the Update Request Number (URN) : With this URN, the status of the update can be checked later on the UIDAI website.

The mobile number update typically takes around 30 days to complete, but it can take up to 90 days in some cases. Once processed, the new number will be linked to your Aadhaar and you will be notified.

How to Check Aadhaar Mobile Update Status Online?

After changing the mobile number, it is important to know whether the update has been done or not. It is very easy to check this, you just need to follow the steps given below:

First of all, open the UIDAI website .
Go to the “My Aadhaar ” section there.
Then click on “Check Aadhaar Update Status”.
Enter the URN number that you got when you updated your mobile number.
Enter the captcha and submit.
In a few seconds, you will know on your screen whether the update is still in process, has been completed or has been rejected.

This makes it easy to understand when your number will be updated.

Why Is It Necessary to Link Mobile Number with Aadhaar?

Linking a mobile number to an Aadhaar card has become very important in today’s time as mentioned in the points below.

Necessary for receiving OTP : Important OTP (One Time Password) comes on the mobile number linked to Aadhaar , which is necessary for many government and banking services. Without a linked mobile number, it becomes difficult to use these services.

Get updates and security notifications immediately : When the mobile number is linked to Aadhaar , notifications of updates or changes are received immediately, which maintains identity security. If any fraud occurs, it is detected quickly.

Helpful in government and financial work : Aadhaar linked mobile number is also required in processes like opening bank accounts, taking subsidies, getting a PAN card.

Linking a mobile number to Aadhaar is not only convenient but is also very important from the security point of view. This makes both government services and digital transactions simple and reliable.

Read Also: GST on Gold Purchase in India

Conclusion

Linking or updating your mobile number in the Aadhaar card makes access to digital services easy and secure. Many important tasks are completed without any hassle when the mobile number is linked with your Aadhaar card. It is important to update if you have changed your mobile number so that full benefits of the digital facilities can be availed.

Frequently Asked Questions (FAQS)

How can I change my mobile number in Aadhaar?
To change the mobile number, one has to go to the nearest Aadhaar service centre and it is updated after biometric verification.
Can I update my Aadhaar mobile number online?
The mobile number can be updated online, but it is necessary to have access to your old mobile number as OTP is required.
Is OTP required to change mobile numbers in Aadhaar?
No, OTP is not required to change the mobile number as you can easily visit the nearest Aadhaar Seva Kendra to get your mobile number updated.
Can I link multiple phone numbers with a single Aadhaar card?
No, only one mobile number can be linked to one Aadhaar card.
How to check the status of mobile number update in Aadhaar?
You can check the status of your update application by entering the URN number on the UIDAI website.

June 16, 2025

5+ Best VFX Stocks in India 2025

In the changing world of visual content, VFX plays an important role. Earlier, the quality of content was not up to the mark and was less immersive due to lack of technology. However, over time, the VFX industry has emerged as a key component in bringing creative visualizations to reality. The demand for VFX in OTT content, games, movies, etc., acts as a catalyst for this industry.

In this blog, we will give you an overview of the VFX industry along with an overview of top stocks related to this sector. Moreover, we will discuss the benefits of investing in these stocks and factors that can directly impact their performance.

What are VFX Stocks?

VFX, short for visual effects, is used to create and enhance the visuals used in TV shows, video games, commercials, and movies. Companies that are primarily engaged in providing and enhancing these visual effects are called VFX companies. The global VFx market is expected to grow at a CAGR of 10.7% from $15 billion in 2023 to $30 billion in 2030. Various listed companies in India are engaged in making animations and visual effects for television shows, video games, movies, etc. However, there are a few companies that are listed on the stock market, which are discussed below.

Top VFX Stocks Based on Market Capitalisation

Company	Current Market Price (in ₹)	Market Capitalisation (in ₹ crores)	52-Week High (in ₹)	52-Week Low (in ₹)
Prime Focus Limited	123	3,703	165	85
Basilic Fly Studio Limited	460	1,069	658	223
Phantom Digital Effects Limited	266	361	490	165
Digikore Studios Limited	163	103	560	157
Picturepost Studios Limited	23.9	70	45.6	23.2
Identical Brains Studios Limited	44	61.7	99.8	38

Company	Net Profit Margin (%)	ROE (%)	ROCE (%)	Debt to Equity
Prime Focus Limited	-12.73	-49.68	14.43	5.39
Basilic Fly Studio Limited	35.58	29.65	40.21	0.02
Phantom Digital Effects Limited	19.77	12.24	17.99	0.25
Digikore Studios Limited	20.18	22.70	27.72	0.21
Picture Post Studios Limited	13.52	17.76	23.96	0.11
Identical Brains Studios Limited	15.50	11.59	15.89	0.00

(The data mentioned above is as of March 2025, except Basilic Fly Studio and Digikore Studios)

Benefits of Investing in VFX Stocks

The significant benefits of investing in VFX stocks are as follows:

Growth Potential: The rise in OTT platforms in the past few years has provided VFX companies an opportunity to expand their business operations as the demand for online content increased.
Global Player: In recent times, India has become a hub for the global VFX industry. The companies discussed above have played a key role in prominent Hollywood projects.
High Profit Margins: Various VFX studios in India lease the equipment rather than purchasing it, resulting in lower spending on acquiring assets, resulting in higher profit margins.
Innovative Technology: The Indian VFX industry has some innovative companies, which continuously adopt new technologies, which helps them in providing better quality content.
Skilled Workforce: India has a skilled workforce, helping companies execute difficult and innovative projects.

Risks of Investing in VFX Stocks

Key risks associated with investing in VFX stocks are:

Financial Performance Volatility: The financial performance of VFX companies can fluctuate, impacting their profitability and stock value. Poor financial performance can result from project delays, new competitors, or unexpected costs.
Dependence on Technology and Innovation: The VFX industry relies heavily on adopting new technologies. Companies that fail to keep up with technological advancements may lose their competitive edge, affecting their market position and growth potential.
Project Delay Risks: Delays in completing major projects or unforeseen challenges in delivering high-quality content can impact a VFX company’s revenue and reputation, which could, in turn, affect stock performance.

Factors to be Considered before Investing in VFX stocks

The key factors which one should consider before investing in VFX stocks are as follows:

Financial Performance: The company’s past financial performance plays an important role in its future growth. Hence, it is advised to consider the financial performance as a key parameter before making any investment in VFX stocks.
Market Positioning: The company’s market share indicates its strength among the competitors; therefore, one should invest in the company with higher market share.
Global Exposure: The companies having higher global exposure must be considered for investment because they do not rely on the domestic market for all their revenues.

Future of VFX Stocks

The VFX stocks seem to have a bright future because the use of visual effects has increased significantly over the past few years. In 2023, the market size of the Indian VFX industry was around $1.38 billion and with a projected growth rate of 17.7% CAGR, it is assumed to reach around $2.2 billion by 2026. The Indian VFX industry plays an important role in gaming, movie, and OTT industry as the demand for immersive experiences is increasing.

Conclusion

On a concluding note, with the increasing demand of high quality content, OTT platforms, and gaming the VFX industry is expected to grow at a significant rate. The growth of such companies depends upon the technology they use, clients, and their projects. However, there are certain risks associated while investing in VFX companies such as their volatile financial performance, high competition, project delays, etc. Therefore, it is advised to consult your investment advisor before making any investment decision.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
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3	5 Top Artificial Intelligence Penny Stocks in India
4	Best 5G Stocks in India to Invest
5	5 Top EV Penny Stocks in India

Frequently Asked Questions (FAQS)

What are the top VFX stocks in India?
The top VFX stocks in India are Prime Focus Limited, Basilic Fly Studio Limited, Phantom Digital Effects Limited, Digikore Studios Limited, Picture Post Studios Limited and Identical Brains Studios Limited.
What are the major factors which can affect the performance of VFX stocks?
The major factors which can affect the performance of VFX stocks are financial performance, market share, technological capabilities and clients of the company.
How to purchase VFX stock in India?
To purchase a VFX stock, one is required to have a demat and trading account. Now, one can easily open a lifetime free demat account with Pocketful and purchase the VFX stocks easily.
What is the future of the VFX industry?
The future of the VFX industry is very promising because of the increasing popularity of OTT content, games, movies, etc.

June 13, 2025

Blog

What is an ETF?

Features of ETF

How does an ETF work?

Different Types of ETFs

1. Equity ETFs

2. Fixed Income ETF

3. Commodity ETF

4. International ETF

5. Thematic or Sectoral ETF

6. Smart Beta ETFs

Advantages of Investing in ETFs

Disadvantages of Investing in ETFs

Which ETF is Best for You?

Cofnclusion

Frequently Asked Questions (FAQs)

What are the different types of ETFs available in India?

Can I invest in an ETF without a demat account?

Can I invest in international stocks through ETFs?

Are ETFs suitable for conservative investors?

How can I buy or sell an ETF in India?

Steel Authority of India (SAIL) : An Overview

Business Model

Tata Steel : An Overview

Business Model

Comparative Analysis: SAIL Vs Tata Steel

Financial Statements Analysis

Income Statement Comparison

Balance Sheet Comparison

Cash Flow Statement Comparison

Key Performance Ratios (KPIs)

Future Plans of SAIL

Future Plans of Tata Steel

Who is Better: SAIL or Tata Steel?

Conclusion

FAQs

Which company leads in production capacity?

Do both companies prioritize eco-friendly practices?

Is Tata Steel government-owned?

Who has better international reach?

Is investing in both companies advisable?

How This War Affects Indian Markets?

Sector-Wise Impact

Stock Market Sentiment & FII Activity

Global Economic Impact of the War

Tips for Investors

Conclusion

FAQs

What is the impact of the Iran-Israel war on the Indian stock market?

Which sectors are most affected in India due to this conflict?

Will crude oil prices continue to rise due to the war?

Should retail investors worry about market volatility?

How should investors respond to this geopolitical crisis?

Iron Butterfly Strategy: An Overview

When to Use the Iron Butterfly Strategy?

Profit, Loss & Breakeven Analysis

Maximum Profit

Maximum Loss

Breakeven Points

Example

Advantages & Risks of Using Iron Butterfly Strategy

Advantages

Risks

Conclusion

Frequently Asked Questions (FAQs)

What is the Iron Butterfly strategy?

Is the Iron Butterfly bullish or bearish strategy?

How many options are used in an Iron Butterfly?

How much can I lose if I use the Iron Butterfly Strategy?

Is this strategy good for beginners?

What is Investing?

Features of Investing

Types of Investing

What is Trading?

Features of Trading

Types of Trading

Difference Between Investing and Trading

Who should Invest and Who should Trade?

Conclusion

Frequently Asked Questions (FAQs)