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10 Best Consumption Stocks in India

With a population exceeding 140 crores and a steadily rising middle class, India is one of the fastest-growing consumer markets in the world. Higher disposable incomes, urbanization, and changing lifestyles are fueling demand across sectors like FMCG, retail, and consumer durables. As a result, companies in the consumption space are becoming key drivers of the country’s economic growth.

In this blog, we will give you an overview of the top consumption companies in India along with the benefits of investing in them and the factors which one should consider before investing in any consumption stocks.

What are Consumption Stocks?

Consumption stocks refer to those companies that primarily engage in the manufacturing and distribution of goods and services that households consume on a daily basis. Some companies focus on producing everyday essentials, while others specialize in crafting luxury items. These companies are directly linked to the country’s growth.

Top 10 Consumption Stocks in India

Top 10 consumption stocks in India based on market capitalization are mentioned below:

Titan Limited
Polycab India Limited
Hindustan Unilever Limited
ITC Limited
Nestle India Limited
Britannia Industries Limited
Dabur India Limited
Marico Limited
Godrej Consumer Products Limited
Colgate Palmolive India Limited

Read Also: Top 10 Best Summer Stocks in India

Market Information of Top 10 Consumption Stocks

Company	Current Market Price (in ₹)	Market Capitalisation (in ₹ crores)	52-Week High (in ₹)	52-Week Low (in ₹)
Hindustan Unilever Limited	2,301	5,40,559	3,035	2,136
ITC Limited	417	5,21,839	495	390
Titan Company Limited	3,508	3,11,431	3,867	2,925
Nestle India Limited	2,329	2,24,572	2,778	2,110
Britannia Industries Limited	5,546	1,33,586	6,473	4,506
Godrej Consumer Products Limited	1,198	1,22,556	1,542	980
Marico Limited	689	89,235	740	578
Polycab India Limited	5,845	87,942	7,607	4,555
Dabur India Limited	469	83,186	672	420
Colgate Palmolive (India) Limited	2,399	65,257	3,893	2,312

(As of 19 June 2025)

Best Consumption Stocks in India – An Overview

A brief overview of the best consumption stocks in India is given below:

1. Hindustan Unilever Limited

The company was founded in the late 1980s by the Lever Brothers. They launched their first product in India as a sunlight soap. The first company launched by Unilever in India was Hindustan Vanaspati Manufacturing Company in 1931. Later in 2007, the company changed its name to Hindustan Unilever Limited to match the name of its parent company. The company’s headquarters are in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-8.14%	8.57%	10.25%

(As of 19 June 2025)

Read Also: Hindustan Unilever Case Study

2. ITC Limited

ITC was originally known as Imperial Tobacco Company of India. It was founded in 1910. The company changed its name to Indian Tobacco Company in 1970, and later in 1974, it changed it to ITC Limited. The company is operating in various sectors, including FMCG, hospitality, packaging, etc. The company’s headquarters are located in Kolkata.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-3.34%	57.86%	122.15%

(As of 19 June 2025)

Read Also: ITC Case Study

3. Titan Company Limited

Titan Limited was founded in 1984 as a part of the Tata Group. It was incorporated as a result of a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO). The company offers various products like jewellery, watches, eyewear, fragrance, etc. The company has performed exceptionally well in the past and is carrying the legacy of the Tata Group. The company’s headquarters are situated in Bengaluru.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-2.64%	80.60%	257.14%

(As of 19 June 2025)

Read Also: Titan Case Study

4. Nestle India Limited

Nestle India Ltd, the world’s biggest food and beverage company, has a long and illustrious history that began in the 1860s. The narrative begins with the formation of the Anglo-Swiss Condensed Milk Company in 1866, which produced ground-breaking milk products. Simultaneously, a German pharmacist, Henri Nestle, invented “Farine Lactee” to lower the newborn death rates. These businesses were successful because of their creative milk products, which catered to urban consumers with shifting lifestyles. The two businesses merged in 1905 to form Nestle. The headquarters of the company are situated in Gurgaon.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-9.28%	38.52%	42.01%

(As of 19 June 2025)

Read Also: Nestle India Case Study

5. Britannia Industries Limited

Britannia Industries LtdThe company was founded in 1892 by British entrepreneurs and was initially known as Britannia Biscuit Company Limited. Later in 1979, its name was changed to Britannia Industries Limited. Bombay Burmah Trading Corporation, which is a part of the Wadia Group, owns a majority stake in this company. In 1986, the company launched the Good Day biscuit brand and became a household name. It was the first company to introduce sliced, wrapped breads in India. The company has its headquarters situated in Kolkata.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
2.14%	67.64%	61.85%

(As of 19 June 2025)

6. Godrej Consumer Products Limited

Godrej Consumer Products Ltd The company was established in 2001 as a result of a demerger from Godrej Soaps Limited. Being a part of the renowned Godrej Group and due to their popular products like Godrej Soap, hair colours like Godrej Expert, etc., it soon became a household name in India. The company has aggressively expanded globally and has a strong presence in Asian and African countries. The company’s headquarters are situated in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-15.67%	64.23%	84.84%

(As of 19 June 2025)

7. Marico Limited

The company was founded in 1988 and started manufacturing hair oil and edible oil named Parachute and Saffola. Initially, the company was named Marico Foods Limited, and later in 1989, it changed its name to Marico Industries Limited. It has established a manufacturing plant in Kerala to produce coconut oil. To expand its operations, the company raised capital through an IPO in 1996 and became a publicly listed company. The company’s headquarters are situated in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
10.05%	45.34%	105.97%

(As of 19 June 2025)

8. Polycab India Limited

Polycab India Ltd was founded in 1964 as Sind Electric Store, a dealer of electrical products. Later, in 1996, it was incorporated as Polycab Wires Private Limited. Today, the company has a market share of around 25% in the Indian electrical market and offers products like fans, LED lighting, switches, switchgear, solar products, etc. It has its headquarters in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-18.59%	175.64%	660.96%

(As of 19 June 2025)

Read Also: Polycab Case Study

9. Dabur India Limited

Dabur India Limited was founded in 1884 by Dr. S.K. Burman. The company established its first production unit in Garhia. The company launched the digestive tablet Hajmola, which became very popular among Indian households. Later in 1997, the company entered into the fruit juice business and in 2003, the company demerged its pharma business into a separate entity. The product portfolio consists of health supplements, digestives, oral hygiene, skin care products, etc. The company’s headquarters are situated in Ghaziabad.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-22.85%	-4.53%	4.87%

(As of 19 June 2025)

Read Also: Dabur Case Study

10.Colgate Palmolive (India) Limited

Colgate Palmolive Limited was founded as a unit of the international FMCG brand. In 1954, the company opened its first manufacturing unit in Mumbai and launched its first product called Colgate. Later in 1970, the company expanded its product portfolio and launched various other products such as oral care and home care items. It has expanded its distribution network over time. The headquarters of the company is situated in Mumbai.

Know the Returns:

1Y Return (%)	3Y Return (%)	5Y Return (%)
-19.05%	62.00%	76.96%

(As of 19 June 2025)

Read Also: Colgate Palmolive India Case Study

Key Performance Indicators (KPIs)

Company	Operating Profit Margin (%)	Net Profit Margin (%)	ROE (%)	ROCE (%)	Debt to Equity
Hindustan Unilever Limited	22.99	16.91	21.55	22.91	0
ITC Limited	35.66	46.38	49.61	36.41	0
Titan Company Limited	9.07	5.51	28.70	36.93	0.88
Nestle India Limited	21.24	15.99	79.98	57.17	0.19
Britannia Industries Limited	17.28	12.19	50.01	59.40	0.28
Godrej Consumer Products Limited	21.47	12.89	15.43	24.21	0.32
Marico Limited	20.02	15.30	40.99	36.90	0.10
Polycab India Limited	12.80	9.12	20.55	27.96	0.01
Dabur India Limited	19.26	13.84	16.36	20.31	0.07
Colgate Palmolive (India) Limited	32.02	23.78	86.32	111.06	0

(Data as of March 2025)

Benefits of Investing in Consumption Stocks

There are significant benefits of investing in consumption stocks, a few of which are as follows:

Stable Demand: The products manufactured by consumption companies generally have a stable demand even during economic slowdowns.
Growth Potential: The company, which primarily operates in the consumption sector, tends to have a strong growth potential due to rising income levels.
Diversification: One can easily diversify their portfolio and reduce the risk in it.
Low Debts: Consumer companies generally have a strong balance sheet and low debt. They also tend to have stable cash flows.

Factors to be Considered before Investing in Consumption Stocks

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

Market Share: One should need to consider the market share of the company; companies which have higher market capitalisation tend to have stable growth.
Financial Performance: The companies with higher profit margins and net profit, and low debt, are preferred by the investors.
Corporate Governance: The company with strong corporate governance policies and capable management team are preferred by investors.
Dividends: Consumption stocks generally declare dividends regularly, which are suitable for investors who want passive income.

Read Also: 10 Best Copper Stocks in India

Future of Consumption Stocks

The Indian consumption sector has a very bright future, which is primarily driven by demographic diversification, urbanisation, etc. With the rise of disposable income, the demand for consumer goods will increase. Also, with the rise of e-commerce platforms and digital transformation, the demand for consumption sector products will increase. However, with the increase in competition, the profit margins of the company will be affected. It is also expected that India’s consumer market will grow by 46% by 2030.

Conclusion

On a concluding note, the Indian consumption industry has performed exceptionally well in the recent past because of increasing consumer income, and the consumption is expected to rise further in future. However, there are certain factors that one should keep in mind before investing in consumption stocks. The factors include financial performance, market share, profit ratio, etc. Therefore, it is advisable to consider your risk profile and consult your investment advisor before making any investment decision.

Read Also: 7 Top Food Stocks in India

Frequently Asked Questions (FAQs)

How can I invest in consumption stocks?
To invest in consumption stocks, one needs to have a demat and a trading account. Now with Pocketful, you can easily open a demat account online without paying any fees.
Which stocks are the top consumption stocks in India?
The top consumption stocks in India are Titan Limited, Polycab India Limited, Dabur India Limited, Marico Limited, Britannia Industries Limited, Hindustan Unilever Limited, etc.
What are the major factors which can affect the performance of consumption stocks?
The major factors that can affect the performance of consumption stocks are economic conditions, demand, financial performance, etc.
Are consumption stocks considered a defensive investing option?
Yes, consumption stocks are considered defensive stocks because the demand for such products is not affected by economic downturns.
Do consumption stocks pay dividends?
Yes, consumption stocks tend to declare high dividends regularly, which can be a suitable option for investors seeking passive income.

June 20, 2025

Types of Futures and Futures Traders

With the rise in intraday trading, the volumes of derivative instruments such as futures and options have increased considerably. You also must have heard about futures trading and may also want to start trading it. But if you are not aware of the technical terms associated with futures contracts, then it can cause huge losses.

In this blog, we will explain futures contracts, along with the types of contracts and types of traders.

Meaning of Future Contracts

A futures derivative contract is a financial instrument traded on the stock market whose price is derived from an underlying asset such as commodities, stocks, indices, interest rates, or currencies. In simple terms, it is a standardized contract between two parties to buy or sell a specified quantity of an underlying asset at a predetermined price on a specific date. It is traded on an exchange and thus is often used by traders to speculate on the future price fluctuations.

Features of a Future Contract

The key features of a futures contract are as follows:

Exchange Traded: Future contracts are traded on stock exchanges. One can only buy or sell a futures contract only through a regulated stock exchange.
Standard Contract: Futures contracts are standardised in terms of quantity, quality and settlement dates.
Obligations: In futures contracts, both parties, as buyers and sellers, are required to fulfil their obligations on expiry.

Types of Futures

There are four types of futures contracts available in India, details of which are mentioned below:

1. Commodity Futures

This type of futures contract has different types of commodities as its underlying assets such as agri commodities like cotton, soybeans, etc., energy commodities like crude oil, natural gas, etc. and metals such as gold, silver, etc.

Example of Commodity Futures: Let’s say an investor is bullish on the prices of gold and is expecting them to rise in the next month. Therefore, to earn profit from this price movement, he purchases a gold futures contract price which will increase in value if the value of the physical gold increases

2. Currency Futures

In currency futures, the parties agree to exchange a fixed quantity of two currencies on a futures date. Therefore, these contracts are based on currency exchange rates. These contracts help an individual eliminate the exchange rate risk arising from international trades. The parties involved in these contracts are usually hedgers and don’t close their contracts before the expiration date.

Example: Mr. A is an importer. He imports goods from the US and has to make payments in USD after a few days and the current USDINR rate is 83. He is expecting that the USDINR will rise shortly, which will increase expenses for Mr. A due to depreciation of INR. He decides to buy a futures contract and purchase the USDINR futures contract at 83. At the end of one month, the price of USDINR rises to 84; in this case, he made a profit of 1 INR, and if the market lot of USDINR futures contract is 1000, he made a total profit of INR 1000.

3. Interest Rate Futures

It is a type of future contract which is used by a trader to hedge their position against the risk of a change in interest rate. These contracts are generally used by bond market traders. The underlying assets of these futures contracts are bonds, treasury bills, government bonds, money market securities, etc. The prices of interest rate futures contracts move inversely to the direction of interest rates.

Example of Interest Rate Future Contract: Mr. A has entered into a long futures contract of a bond for 102 INR per contract, having a lot size of 2000. He is expecting that the interest rates will fall shortly, and with this fall, the price of the contract rises to 104 per contract. This allows him to earn a profit of 2 INR per contract, and therefore the total profit is 4000 INR.

4. Equity Futures:

The underlying asset of an equity futures contract can be a stock or an index. Investors try to determine the future rise and fall in price of the underlying asset. Based on this, they take a long or short position in the futures contract of the same underlying. These contracts are also traded by market participants who have a significant stake in the underlying asset, and wish to protect downside risks.

Example: Mr A expects that the price of Reliance Industries will rise shortly, and based on this assumption, he decided to buy a futures contract of Reliance Industries. At the time of entering the contract, the price of Reliance was around ₹1700 per share, and on the date of expiry, the price rose to ₹1750 per share. Therefore, he made a profit of ₹50 per share and its lot size is 500; hence the total profit is 500 * 50 = ₹25,000.

Types of Futures Traders

The two types of futures traders are:

1. Hedgers

A hedger is a trader who uses derivatives instruments to reduce or eliminate the risk of unfavourable price movement in an existing portfolio of assets. It is like buying portfolio insurance to reduce the financial risks.

Example: Suppose you hold 500 shares of Reliance Industries Limited, and you are concerned about the decline in Reliance Industries’ share price. To protect your portfolio from such risk, you can sell the futures contract of Reliance and hedge your position. In this case, if the spot price of Reliance Industries falls, your futures contract will gain and offset the losses incurred in the equity portfolio.

2. Speculators:

Generally, short-term traders fall under this category as they often predict the prices of the underlying securities, based on which they take long and short positions in futures contracts. Unlike hedgers, they do not have direct exposure to the underlying asset and their primary objective is to profit from short-term price fluctuations.

Example: A trader may not have shares of Reliance Industries shares but believes that the price will rise shortly. Based on this assumption, he buys a futures contract and realizes a profit as the share price rises.

What Should You Do: Hedging or Speculating?

Whether to hedge or speculate using a futures contract depends on the investor’s preference and objective. If you own an asset or are planning to invest in an asset, then your primary objective should be to protect your portfolio against unexpected price movement, i.e. you should hedge.

On the other hand, if you want to take advantage of frequent price movement of the underlying asset, then you can speculate using a future contract. However, trading in futures contracts can be risky and result in considerable losses; therefore it is suggested only for those willing to take high risks.

Conclusion

On a concluding note, one can earn profit by trading in futures through speculation, but it carries high risk. Futures can also be used to minimise or eliminate the risk of adverse price movements through hedging. As it is a leveraged product, it needs to be used only after considering your risk profile. It is always advisable to consult a financial advisor before making any decision.

S.NO.	Check Out These Interesting Posts You Might Enjoy!
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2	What is Spread Trading?
3	What is Quantitative Trading?
4	Arbitrage Trading in India – How Does it Work and Strategies
5	What is Options Trading?

Frequently Asked Questions (FAQs)

In which asset classes can we trade in futures contracts?
We can execute futures trades in commodities, currency, equity and interest rate as an asset class.
Who are the market participants of Future Market?
The futures market generally involves two types of traders: hedgers and speculators.
Do I need to hold the futures contract till expiry?
No, you are not required to hold futures contact till expiry as you can exit your position any time before expiry.
Why is futures trading risky?
Future trading is a leveraged instrument, i.e. it generally requires a small margin to start trading, which makes futures trading very risky.
How are futures contracts settled in India?
In India, futures contracts are settled either in cash or physical settlement.

June 19, 2025

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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3	ETF vs Stock – Which One is the Better Investment Option?
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5	ETF vs Index Fund: Key Differences You Must Know
6	List of Best Commodity ETFs in India

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.

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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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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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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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5	TCS vs Wipro

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

Blog

What are Consumption Stocks?

Top 10 Consumption Stocks in India

Market Information of Top 10 Consumption Stocks

Best Consumption Stocks in India – An Overview

1. Hindustan Unilever Limited

2. ITC Limited

3. Titan Company Limited

4. Nestle India Limited

5. Britannia Industries Limited

6. Godrej Consumer Products Limited

7. Marico Limited

8. Polycab India Limited

9. Dabur India Limited

10.Colgate Palmolive (India) Limited

Key Performance Indicators (KPIs)

Benefits of Investing in Consumption Stocks

Factors to be Considered before Investing in Consumption Stocks

Future of Consumption Stocks

Conclusion

Frequently Asked Questions (FAQs)

How can I invest in consumption stocks?

Which stocks are the top consumption stocks in India?

What are the major factors which can affect the performance of consumption stocks?

Are consumption stocks considered a defensive investing option?

Do consumption stocks pay dividends?

Meaning of Future Contracts

Features of a Future Contract

Types of Futures

1. Commodity Futures

2. Currency Futures

3. Interest Rate Futures

4. Equity Futures:

Types of Futures Traders

1. Hedgers

What Should You Do: Hedging or Speculating?

Conclusion

Frequently Asked Questions (FAQs)

In which asset classes can we trade in futures contracts?

Who are the market participants of Future Market?

Do I need to hold the futures contract till expiry?

Why is futures trading risky?

How are futures contracts settled in India?

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?