The tiny chips in electronic devices that often go unnoticed are an important part of the contemporary world. Semiconductors are the powerful brains that drive everything from the smartphones in our pockets to the ground-breaking artificial intelligence revolutionizing several industries. With India’s increasing prominence in the global semiconductor industry, it is important to know the steps taken by the Government of India to make India a global hub of the semiconductor industry.
In today’s blog, we will explore the semiconductor industry in India, the India Semiconductor mission, factors that favor the semiconductor industry, and its future outlook.
Overview of the Semiconductor Industry in India
The Indian semiconductor market is experiencing strong growth and is expected to grow at 17.10% CAGR between 2024 and 2028 due to its growing population, rising disposable incomes, etc. India aims to become a global leader in the semiconductor industry, with its domestic semiconductor consumption projected to exceed $80 billion by 2028. This industry is fiercely competitive, with major players from countries like the United States, China, South Korea, and Taiwan dominating the market.
The Indian Government wants to boost the semiconductor industry with the ‘Make in India’ campaign and has also announced plans to establish semiconductor fabrication plants in the country.
India Semiconductor Mission (ISM)
Indian Semiconductor Mission is a specialized and independent business division of Digital India Corporation (DIC). The aim of the mission is to make India self-reliant in terms of semiconductors.
The mission received an allocation of INR 76,000 crore for the establishment of three semiconductor units. The approved three semiconductor units are:
Semiconductor Fabrication plant: Tata Electronics Private Limited (“TEPL”) will collaborate with Powerchip Semiconductor Manufacturing Corp (PSMC), Taiwan, to set up a semiconductor fabrication unit in Gujarat. PSMC is well known for its logic and memory foundry segments and has six semiconductor foundries in Taiwan. The fabrication plant will have a capacity of 50,000 wafer starts per month (WSPM).
Semiconductor ATMP unit in Assam: Tata Semiconductor Assembly and Test Pvt Ltd. (“TSAT”) will set up a semiconductor ATMP (Assembly, Test, Marking and Packaging) unit in Assam. The unit is developing indigenous advanced semiconductor packaging technologies and will have a capacity of 48 million semiconductor chips per day.
Semiconductor ATMP unit for specialized chips: CG Power will partner with Renesas Electronics Corporation, Japan, and Stars Microelectronics, Thailand, to set up a semiconductor unit in Gujarat. Renesas is a market leader in developing specialized chips and operates 12 semiconductor facilities. The unit will have a capacity of 15 million semiconductor chips per day.
The chips developed in the above three units will have applications in various industries, such as electric vehicles, consumer electronics, mobile phones, etc. Moreover, these units will generate 20,000 direct jobs and about 60,000 indirect jobs.
Favorable Factors for the Semiconductor Industry in India
There are numerous factors that will help India to become a global leader in the semiconductor industry. Some of these factors are:
Skilled Workforce: India has a large workforce in the fields of Science, Technology, Engineering, and Mathematics (STEM), which is required for semiconductor design, manufacturing, etc.
Cost Advantage: Companies are investing in India due to the lower cost of production. Moreover, the location of India is also a benefit as it is close to major semiconductor markets in Asia, which reduces transportation costs.
Global supply chain diversification: Until now, the semiconductor industry has been concentrated in a few countries, which makes the industry prone to concentration risk and can result in supply shocks. The development of the semiconductor industry in India will reduce the concentration risk.
Government support: The government of India has launched ISM and has introduced favorable policies.
Future Outlook of Semiconductor Industry
The future of the semiconductor industry looks bright due to the following reasons:
The demand for semiconductors in AI and ML applications is projected to experience substantial growth.
IoT (Internet of Things) devices, including smartphones, industrial automation, and healthcare, will boost demand for semiconductors.
The rollout of 5G networks is fuelling the need for advanced semiconductors in mobile devices, base stations, and IoT applications.
The growth of renewable energy sources, such as solar and wind power, will drive the demand for semiconductors used in energy conversion and storage systems.
To summarize, the semiconductor industry has a lot of growth potential and is an exciting and dynamic space. The Government of India has identified this opportunity and launched the India Semiconductor Mission to make India a semiconductor hub in the future. Many foreign companies have partnered with Indian firms to set up facilities in India. Moreover, factors such as lower cost of production, skilled workforce, strategic location, and favorable government policies will help the semiconductor industry grow in India.
Frequently Asked Questions (FAQs)
What are Semiconductors?
A semiconductor is a material with electrical conductivity ranging between that of an insulator and a conductor and has unique electronic properties.
What are the favorable factors for the semiconductor industry in India?
Lower cost of production, skilled workforce, and government support are a few factors that support the growth of the semiconductor industry in India.
What is ISM?
ISM refers to the India Semiconductor Mission, which was launched by the Government of India.
What is the expected growth rate of the semiconductor industry in India?
The Indian semiconductor industry is expected to grow at a CAGR of 17.10% between 2024 and 2028.
Which foreign companies are collaborating with Indian firms to establish semiconductor units in India?
Powerchip Semiconductor Manufacturing Corp (PSMC), Renesas Electronics Corporation, and Stars Microelectronics are a few prominent companies collaborating with Indian firms to establish semiconductor manufacturing facilities.
When there is a dispute between two people, they appear in court and lay out their case. The judge passes a judgment based on the law. However, have you ever considered what a corporation would do if there were a dispute with another corporation? The National Company Law Tribunal (NCLT) has been established to settle disputes between companies.
In this blog, we will explore NCLT in detail and understand its functions.
What is NCLT?
The Companies Act of 2013 established the National Company Law Tribunal, or NCLT, as a special court to handle business-related disputes. NCLT doesn’t handle criminal cases for violations of the Companies Act. The NCLT has several benches around the nation and, thus, provides a simpler way for corporations to resolve their problems.
The Justice Eradi Committee recommended the creation of the National Corporate Law Tribunal as a quasi-judicial entity to handle insolvencies and malpractices of Indian companies. The tribunal was established on 1 June 2016 under Section 408 of the Companies Act, 2013.
Objective of NCLT
NCLT plays an important role in protecting the rights of all stakeholders and aims to achieve the following objectives:
Its primary goal is to resolve disputes involving companies through its numerous benches across India.
NCLT assists businesses in streamlining their insolvency procedures.
NCLT protects the rights of all stakeholders and promotes a business-friendly environment.
It ensures restructuring processes follow the regulations and are in the interest of stakeholders.
Functions of NCLT
The major tasks performed by NCLT are as follows:
Registration of Companies: The NCLT is authorized to settle disputes about company registration. It has the authority to cancel a company’s registration at any moment and hold members accountable for not meeting legal requirements.
Class action: It prevents companies from engaging in activities outside the Memorandum of Association (MOA) and Article of Association (AOA). A class action can be filed against both private and public companies.
Transfer of Shares: The NCLT handles complaints about company shares and securities transfers. NCLT intervenes if a company refuses to transfer securities.
Deposits: Since the NCLT was established, they have handled all deposit-related matters. Disgruntled depositors now have the option to sue the corporation and seek compensation for any acts that affect their rights as depositors.
Investigation: Based on the application of 100 members, the NCLT has the complete authority to look into any matter about the corporation. An individual can also convince NCLT to look into the matter even if they have no connection to the business. An investigation can be launched in India or around the globe.
Asset Freezing: According to section 221 of the Companies Act of 2013, the NCLT is authorized to freeze the company’s assets and can initiate investigations.
Conversion of Company’s Status: Sections 13 to 18 of the Indian Companies Act 2013 state that a company may only change from a public limited company to a private limited company after the NCLT’s approval. In addition, section 459 of the Companies Act 2013 permits the NCLT to impose further requirements.
Benches of NCLT
The NCLT operates across India through its various benches –
National Company Law Tribunal (NCLT) Benches
Jurisdiction
NCLT Ahmedabad Bench
State of GujaratUnion Territory of Daman and DiuUnion Territory of Dadra and Nagar Haveli
NCLT Allahabad Bench
State of Uttar PradeshState of Uttarakhand
NCLT Amaravati Bench
State of Andhra Pradesh
NCLT Bengaluru Bench
State of Karnataka
NCLT Chandigarh Bench
State of HaryanaState of PunjabState of Jammu and KashmirState of Himachal PradeshUnion Territory of Chandigarh
NCLT Chennai Bench
State of Tamil NaduUnion Territory of Puducherry
NCLT Cuttack Bench
State of OdishaState of Chhattisgarh
NCLT Delhi Bench
Union Territory of Delhi
NCLT Principal Bench
NCLT Guwahati Bench
State of Arunachal PradeshState of AssamState of ManipurState of MizoramState of MeghalayaState of NagalandState of SikkimState of Tripura
NCLT Hyderabad Bench
State of Telangana
NCLT Indore Bench
State of Madhya Pradesh
NCLT Jaipur Branch
State of Rajasthan
NCLT Kochi Bench
State of KeralaUnion Territory of Lakshadweep
NCLT Kolkata Branch
State of West BengalState of BiharState of JharkhandUnion Territory of Andaman and Nicobar Islands
NCLT Mumbai Bench
State of GoaState of Maharashtra
Advantages of NCLT
The advantages of NCLT are as follows:
It serves as a specialized court for corporate disputes, which results in quick resolution of the disputes.
NCLT consists of judicial and technical members to give a fair judgment on the dispute.
It has multiple branches and helps reduce the time to resolve disputes.
NCLT encourages better corporate governance and protects stakeholder’s interests.
In conclusion, the National Company Law Tribunal was established on 1 June 2016 to settle business-related conflicts like insolvency and other corporate concerns. It has various branches across the country, resulting in quick dispute resolution. It helps businesses by giving them a better working environment and also safeguards the interests of the stakeholders. However, the decisions of NCLT can be challenged in the National Company Law Appellate Tribunal, which can be further appealed in the Supreme Court of India.
Frequently Asked Questions (FAQs)
What is NCLT?
National Company Law Tribunal, or NCLT, is a specialized court that handles various company-related disputes.
What does NCLT stand for in financial terms?
NCLT refers to the “National Company Law Tribunal”.
Where is the headquarters of NCLT?
Although the NCLT’s main office is in New Delhi, it has other benches all over India.
What is the difference between a court and a tribunal?
A court is a part of the conventional Indian judicial system and resolves criminal and civil cases. In contrast, a tribunal is regarded as an organization with the authority to function as a court on cases of special matters, such as issues linked to companies.
Can I file an appeal against the NCLT decision?
A challenge to any NCLT ruling may be made through the National Company Law Appellate Tribunal.
Who is the president of the National Company Law Tribunal?
Shri Ramalingam Sudhakar is the current president of the National Company Law Tribunal.
In 2025, with rapid technological advancement, one trending industry that you may want to have in your portfolio is the drone industry. These stocks are becoming popular because of their diversified applications across agriculture, defense, and logistics, among others, and strong government support is being given through initiatives like the Production-Linked Incentive (PLI) Scheme.
In this blog, let’s look at the best drone stocks in India and the reasons to invest in them.
Overview of the Drone Industry
Drone stocks in India have showcased a new emerging sector at the juncture of technology, aviation, and industrial applications. Unmanned Aerial Vehicles (UAV) are pioneering ways to move forward in industries like agriculture, infrastructure, logistics, and defense. People who intend to invest in this sector get lured by the disruptive innovative capabilities and the potential of transformation across sectors that are labor-driven or dependent on conventional methods.
Top 8 Best Drone Stocks in India
The best drone stocks based on market capitalization in 2025 are:
S.No.
Top Drone Company Stocks in India (as per Market Capitalization)
Market Capitalisation Table of Best Drone Stocks in India
The drone stocks have been listed in descending order based on their market capitalization in the table below:
Company
Market Capitalization (In crores)
Share Prices (In INR)
52 Week High Price (In INR)
52-Week Low Price(In INR)
Hindustan Aeronautics Ltd (HAL)
3,56,417
5,329
5,675
1,768
Bharat Forge Ltd
76,978
1,653
1,826
840
Zen Technologies Ltd
11,373
1,353
1,487
575
RattanIndia Enterprises
10,844
78.4
94.8
39.1
Paras Defence & Space Technologies Ltd
5,442
1,395
1,593
604
Ideaforge Technology Ltd
3,601
840
1,249
618
DCM Shriram Industries Ltd
1,957
225
242
100
Droneacharya Aerial Innovations
340
142
221
125
(As of 15 July 2024)
Best Drone Stocks in India 2025 – An Overview
The best drone stocks in India are given below, along with a brief overview of the services they provide:
1. Hindustan Aeronautics Ltd (HAL)
Hindustan Aeronautics Limited is one of the pillars of India’s aerospace industry, with experience in aircraft and helicopter design, manufacturing, repair, upgrade, and related component designing and manufacturing. TAPAS (Tactical Airborne Platform for Aerial Surveillance) is being developed to perform intelligence, surveillance, and reconnaissance roles. Traditionally a partner to major aerospace companies worldwide, HAL has significantly enhanced India’s defense capability.
2. Bharat Forge Ltd
Bharat Forge Limited is an Indian MNC that operates in the forging, automotive, energy, and defense industries. It was founded in 1961 by Nilkantharao A. Kalyani. Kalyani Strategic Systems Limited (KSSL) is a subsidiary of Bharat Forge that recently launched “BHARAT 150” with a maximum take-off weight of 150 kg and a range of up to 200 km. Having its headquarters in Pune, India, the group has managed to build a brand synonymous with engineering excellence and innovation in manufacturing critical components for both automotive and aerospace industries alike.
3. Zen Technologies Ltd
Zen Technologies Ltd. was incorporated in 1993 and is one of the leading companies dealing with drones. The company offers counter-drone systems to detect and disrupt the communication system of the enemy drone. Another key offering is combat training solutions for the defense and security forces. It identifies itself as a major contributor in the field of defense and has over 40 products being used all over the globe. Zen Technologies has built strong R&D capabilities and has over 150 patents.
4. RattanIndia Enterprises
RattanIndia Enterprises is contributing to the drone industry via its subsidiary NeoSky. The company plans to offer drones as a service and product to its target audience. NeoSky works on tapping drone technology for various diverse applications, starting from agriculture, infrastructure monitoring, and logistics. With a strong focus on innovation and efficiency, the company aims to use UAVs to solve most modern-day problems across different sectors. It visualizes itself as playing a definitive role in the country’s evolving drone ecosystem.
5. Paras Defence & Space Technologies Ltd
Paras Defence & Space Technologies Ltd is amongst the most prominent companies in the defense and space sectors, and it has a basket of hi-tech solutions. Business offerings range from defense electronics, aerospace and space systems, communication systems, electro-optic devices, and defense and space components. Paras Aerospace Pvt. Ltd. is its subsidiary, which is involved in drones, drone services, and associated technologies. It also has a subsidiary named Paras Anti-Drone Technologies Pvt. Ltd., which develops RF & microwave systems and subsystems to counter UAVs and more. With a strong focus on innovation and quality, Paras Defense builds up India’s defense capabilities and makes vital contributions to India’s growing space exploration ventures.
6. Ideaforge Technology Ltd
Ideaforge Technology Ltd. is one of the apex companies in the domain of unmanned aerial systems, commonly known as drones in India. This company is known for its rugged and versatile UAV products currently being used in the domains of defense & homeland security and industrial applications.
It has been able to build a credible name based on innovation, picking up complex challenges in surveillance and reconnaissance and maintaining a clear lead over others in India’s drone industry.
7. DCM Shriram Industries Ltd
DCM Shriram Industries Ltd. was founded in 1990 and has operations in sugar, alcohol, industrial fibers, etc. Recently, the company acquired a 30% stake in Zyrone Dynamics, a Turkish drone company. The company aims to manufacture drones in India. DCM Trishul and DCM Kailash are the two prototypes developed by the company for surveillance and heavy-lifting requirements.
8. Droneacharya Aerial Innovations Ltd
Droneacharya Aerial Innovation Ltd is one of the firms known for bringing drone solutions to India’s fast-emerging UAV Sector. The company provides services with applications in a wide range of industries, from agriculture and infrastructure to surveillance and disaster management. With a strong core philosophy of bringing in innovation and exceptionally strong technological expertise, Droneacharya envisions improving operational efficiencies and safety standards across industries.
Comparative Study of Drone Stocks
Performance of Drone Stocks
The table below shows the Best Drone Stocks based on 6-month and 1-year returns.
Company
6 Month Return
1 Year Return
Hindustan Aeronautics Ltd (HAL)
69.33%
161.02%
Bharat Forge Ltd
32.73%
86.48%
Zen Technologies Ltd
83.70%
129.90%
RattanIndia Enterprises
-4.64%
88.24%
Paras Defence & Space Technologies Ltd
83.05%
101.53%
Ideaforge Technology Ltd
6.35%
-30.71%
DCM Shriram Industries Ltd
31.13%
120.66%
Droneacharya Aerial Innovations Ltd
-27.66%
-7.10%
(As of 15 July 2024)
Key Performance Indicators
Company
Net Profit Margin (%)
ROCE (%)
TTM EPS
TTM P/E (x)
P/B (x)
Hindustan Aeronautics Ltd (HAL)
25
24.49
113.96
46.77
9.23
Bharat Forge Ltd
5.76
13.3
20.43
79.25
10.51
Zen Technologies Ltd
29.5
46.3
15.22
88.91
25.36
RattanIndia Enterprises
7.56
36
3.08
25.47
15.5
Paras Defence & Space Technologies Ltd
11.86
9.8
8.77
159.1
12.19
Ideaforge Technology Ltd
14.41
9.6
11.07
75.84
5.43
DCM Shriram Industries Ltd
5.52
20.6
13.26
16.96
2.4
Droneacharya Aerial Innovations Ltd
17.56
11.65
2.58
55.79
4.7
*(all the above data is of year ended March 2024)
Benefits of Investing in Drone Stocks
The benefits of investing in drone stocks are:
High Growth Potential: The commercial drone market is expected to experience multifold growth in the next few years.
Multiple sources of revenue: With applications in various industries, including defense and agriculture, a boost in logistics and enterprise will mean diversified revenue for companies.
Government Support: The Indian government, through a 20-crore PLI incentive, is supporting the drone industry; hence, there is a need to include the factor of Make in India in business initiatives.
Factors to Consider Before Investing in Drone Stocks
An investor must consider the following factors before investing in drone stocks:
Regulatory Environment: An investor must know the regulatory frameworks that govern the drone industry in India. This might have a big impact on access to markets and profitability.
Market Potential: Growth prospects of sectors that are increasingly adopting the use of drones, such as agriculture, logistics, and surveillance.
Competitive Landscape: An investor must understand the competitive environment for drone manufacturers and service providers to understand a company’s relative placement in the markets.
Financial Health: Look at the revenue growth, profitability, and leverage levels of drone companies to check the viability of investment decisions.
Future of Drone Stocks
With the support of the government, like the Drone Shakti scheme and performance-linked incentives, the future of India’s drone market remains bright. The INR 80 crore market will likely touch INR 12,000-15,000 crore by 2026. The sectors that are seeing the entry of drones range from agriculture and defense to healthcare and e-commerce. Heavy investments by Reliance and Adani Enterprises convey the potential of the drone industry in India. Based on these factors, India will become a global drone hub by 2030.
Conclusion
The Indian drone industry holds huge potential across various industries because of the rapidly advancing capabilities of UAVs and the expansion of regulatory frameworks. Companies are working on stretching the efficiency of drones in agriculture, infrastructure, surveillance, and many other areas.
As the investment and adoption take off together, it is predicted that with the further evolution of drone technology, there will be a creation of jobs, modernization of industries, and sustainable development. India’s drone sector does seem promising for investors; however, one should consult a financial advisor before investing.
Artificial Intelligence (AI) is now a reality and is no longer confined to the realms of science fiction. It is rapidly transforming industries and shaping our daily lives. A good investor always identifies opportunities before others, and artificial intelligence is one industry that can deliver exceptional returns in the future.
Many Indian companies are driving the AI revolution, and the best part is that the general public can also invest in them through stock markets. In today’s blog, we will explore the best Artificial Intelligence stocks in India based on their market capitalization and their recent returns. We will also discuss the services offered by these companies and the future of the AI industry.
Overview of AI industry in India
India’s AI market is expected to reach $17 billion by 2027, with a CAGR of 25% to 35%. India is a major contributor of AI talent worldwide, with 16% of the world’s AI talent coming from India. This ranks India as one of the top three talent markets. The demand for customization and integration of business processes creates a prime opportunity for companies to deliver professional services tailored to integrate them with existing systems and data. AI could greatly contribute to India’s economy. Estimates show it can add $1 trillion by 2035.
Additionally, data privacy and security are of utmost importance when adopting AI, and India should have strong regulations to ensure the responsible development of AI.
The AI stocks have been listed in descending order based on their market capitalization in the table below:
Company
Current Market Price (INR)
Market Capitalisation (in INR crore)
52-Week High
52-Week Low
TCS
4,178
15,11,800
4,255
3,311
Infosys
1,726
7,16,661
1,738
1,305
HCL Tech
1,570
4,25,923
1,697
1,095
Wipro
560
2,92,750
567
375
Tech Mahindra
1,516
1,48,267
1,528
1,082
(As of 17 July 2024)
Best AI Stocks in India Based on Market Capitalization – An Overview
The best AI stocks in India are given below, along with a brief overview of the services they provide:
1. Tata Consultancy Services (TCS)
Tata Consultancy Services is an Indian multinational IT services and consulting company. TCS is headquartered in Mumbai, India. TCS has over 603,305 trained consultants in 55 countries.
TCS was founded in 1968 when Mr Fakir Chand Kohli brought together a young team of IT professionals. TCS offers a range of IT services in the following domains:
Artificial Intelligence
Cloud services
Consulting
Cybersecurity
2. Infosys
Infosys is a global IT services and consulting company that offers digital services and consulting. The company was established in 1981 in Pune by seven engineers with a capital of $250. It currently operates with 317,240 employees and has a presence in over 56 countries. It is headquartered in Bangalore, India.
Initially, the company focused on providing software consulting and development services to US clients. With time, the company pioneered the Global Delivery Model (GDM), which allowed remote execution with cost advantage. The tech giant went public in 1993. Infosys offers a range of IT services in the following domains:
Next-Generation Integrated AI Platform
Infosys Consulting
Cloud-based services
Blockchain
3. HCL Technologies
Earlier known as Hindustan Computers Limited, it is another key player in the Indian technology industry. The company is headquartered in Noida, India and has an employee strength of over 227,481.
HCL Technologies offers a range of tech services, which include:
Helping clients incorporate AI in their business processes.
Digital solutions to increase the efficiency of the client’s business.
R&D services to accelerate product development and increase returns.
Cloud Services
4. Wipro
Wipro is a leading technology services and consulting company that builds innovative solutions that address clients’ most complex digital transformation needs. It has over 225,000 employees.
The company was founded in 1945 by M.H. Hasham Premji. It initially emphasized selling consumer goods and vegetable oils. In 1981, Wipro diversified its operations into the IT business under the leadership of Azim Premji, who is still a respected figure in the Indian IT industry.
Wipro offers a range of IT services which includes:
Helping businesses migrate to the cloud and leverage its benefits for scalability and efficiency.
Providing consulting and implementation services to help companies adapt to the digital age.
Creating and maintaining custom software applications for several needs.
Developing and implementing AI-powered solutions and integrating robotic automation for advanced functions.
Managing and optimizing non-core business processes for cost savings and improved efficiency.
5. Tech Mahindra
Tech Mahindra is a part of the Mahindra Group and was founded in 1986. The company employs 138,000 employees and is present in over 90 countries. The company offers innovative and customized information and technology services that help enterprises, associates, etc.
The company offers a range of services in the following domains:
Best AI Stocks in India Based on 1 Year Return – An Overview
The best AI stocks according to 1 year return are given below, along with a brief overview of the services they provide:
1. Oracle Financial Services Software Ltd.
Oracle Financial Services Software Ltd. (OFSS) is a subsidiary of Oracle Corporation and has its headquarters in Mumbai. It helps financial institutions such as banks launch new products and build customer-centric digital solutions with the help of Oracle’s AI-driven applications and cloud services. It has been using machine learning to improve detection, deep learning to find patterns and natural language processing (NLP) to extract data. It offers a range of services listed below:
Bosch is a German multinational company headquartered in Gerlingen, Germany. It was established in 1886 and has offices worldwide. It has the largest development center in India outside Germany for the development of engineering and technology solutions. Bosch Center of Artificial Intelligence is an important part of Bosch Research and specializes in deploying AI technologies into products & services. Bosch also offers services in the following areas:
Neuro – Symbolic AI
Deep Learning
Natural Language Processing
Probabilistic Modeling
Reinforcement Learning
Know the Returns:
1Y Return (%)
3Y Return (%)
5Y Return (%)
-5.22%
68.77%
81.02%
(As of 18th Fenruary 2025)
3. Kellton Tech Solutions Ltd.
Kellton Tech Solutions Ltd. ((KTSL) is an Indian multinational company with its headquarters in Hyderabad, India. It provides AI and ML solutions, which can be used to process data and extract insights at a great pace. It offers Utilitarian AI, which can be used to convert computer vision to text. Other services offered include:
Predictive analytics
Generative AI
Machine Learning
NextGen Services
Know the Returns:
1Y Return (%)
3Y Return (%)
5Y Return (%)
16.51%
32.86%
626.48%
(As of 18th Fenruary 2025)
4. Zensar Technologies Ltd.
Zensar Technologies is a major player in the Indian AI industry and is a subsidiary of the RPG group. It is headquartered in Pune, India and has offices in 33 global locations. Zensar’s AI/ML-driven Smart Advisor enables users to navigate market data with exceptional speed and accuracy. It analyzes market news, interprets positive and negative sentiments and provides a future outlook. It provides great value in incorporating ESG risk scores into decision-making processes. The company also offers services in the following domains:
AI engineering buddy
Accelerated generative AI
Cloud strategy
Automation
Know the Returns:
1Y Return (%)
3Y Return (%)
5Y Return (%)
49.49%
116.84%
466.15%
(As of 18th Fenruary 2025)
5. Cyient Ltd.
Cyient Ltd. is an Indian multinational technology company with its headquarters in Hyderabad, India. It was founded in 1991 as Infotech Enterprises Ltd and was later renamed Cyient in 2014. In 2023, Cyient collaborated with Microsoft to make a product named “EnGeneer”, which will help in automating engineering processes. Cyient aims to use the Microsoft Azure OpenAI Service to deliver products in the future. It also provides services in the following domains:
AI stocks can be a valuable addition to the portfolio due to the following benefits:
Future Growth: The artificial intelligence industry is expected to grow multifold in the coming years, which will cause a rise in the prices of AI stocks.
Diversification: AI stocks provide diversification benefits and protect investor portfolios from market fluctuations.
Multiple revenue sources: Artificial intelligence has applications in many industries that provide numerous revenue sources for AI companies.
Factors to Consider Before Investing in AI Stocks
Artificial intelligence is a fairly new industry, and there is a lot of uncertainty surrounding it. Investors must be cautious and consider the following factors before investing in AI stocks:
Competition: Investors should identify the industry leader as they will benefit from competitive advantage in the future.
Financial Health: Investors should analyze financial statements and look for companies with strong fundamentals.
Ethical Considerations: AI can also be used for unethical practices, which can damage a company’s reputation. Investors should avoid such companies.
Regulations: Investors should stay informed about the new regulations applicable to the AI industry and judge their impact on the stock price of AI companies.
Future of the AI Industry
The future of the AI industry looks bright due to the following factors:
The development of more powerful and affordable computer chips, especially those designed for AI applications, is helping create more effective AI models.
The exponential growth of data is driving the rapid advancement of AI technology. AI algorithms need large amounts of data to learn and enhance their capabilities.
Investments in AI are increasing from both private and public sectors, which helps fund research and development and create new AI applications.
Nowadays, businesses are looking for methods to automate tasks, and AI is considered an important technology for achieving this.
The AI industry in India is growing rapidly because of a large talent pool, consistent government support, and expanding digital infrastructure. However, the road ahead has hurdles. The industry needs more skilled workers and stronger regulations because of data privacy concerns. Even though there are certain challenges, the benefits of AI are undeniable, and as far as AI stocks are concerned, they offer a great avenue for investment. It is important to consider several factors, such as market volatility, competition, etc. and consult a financial advisor before making any investment decision.
Frequently Asked Questions (FAQs)
What is AI?
Artificial intelligence is a field that uses technology to perform advanced tasks like learning and problem-solving.
Why would AI stocks be a good investment?
AI stocks are good investment options because of the high demand for AI solutions, the potential for technological breakthroughs and increased government support.
How can we ensure responsible AI development?
Open discussions, addressing ethical concerns, and strong regulations are important for responsible AI development.
Will AI take away all our jobs?
While some jobs might be automated, AI is also expected to create new opportunities in different work areas.
Financial markets today offer a wide variety of financial products to investors. There is a lot of information about financial products, and you may see something new daily. If you’ve ever looked through a mutual fund’s portfolio, you’ve probably noticed that some of your money is invested in “TREPS.” Are you certain about what it is and why practically every mutual fund has a portion allocated to it?
In this blog, we will explore TREPS, its features, advantages, disadvantages, and the reasons behind mutual funds investing in TREPS.
What is TREPS?
TREPS stands for “Tri-Party Repo Dealing System”, which facilitates the borrowing and lending of funds in a Tri-Party Repo arrangement. Tri-party repo is a type of repo contract where a third entity (other than the borrower and lender) acts as an intermediary between the two parties to facilitate services like collateral selection, payment, settlement, custody, and management during the life of the transaction. It serves as a mechanism for managing liquidity, allowing mutual funds to park their excess capital.
Why Mutual Fund Invest in TREPS?
Mutual funds invest in TREPS for various reasons listed below:
Liquidity: It provides mutual fund flexibility to manage the liquidity for daily needs, as it easily converts securities into cash to meet daily redemptions. Quick conversion into cash also allows mutual funds to take advantage of investment opportunities.
Safety: TREPS are backed by the government and are considered highly safe.
Earnings: It allows the mutual funds to earn a return on the idle cash and helps increase the overall return.
Regulatory Requirement: According to regulations, mutual funds must invest a small portion of their assets in liquid securities such as TREPS.
Portfolio Diversification: Investment in TREPS provides diversification benefits and reduces exposure to market fluctuations.
Impact of TREPS on Mutual Fund NAV
The impact of investing in TREPS on the mutual fund’s NAV depends on various factors, such as current market conditions, current portfolio mix, and the size and duration of investments in TREPS.
Investing in TREPS offers higher returns than cash, which increases net asset value (NAV).
On the other hand, a sizable investment in TREPS can result in lower returns in the long run, and thus, NAV reduces.
Key Players in Mutual Fund TREPS transaction
The key players involved in mutual fund TREPS transactions are as follows-
Sellers: These entities initiate the transaction by selling the securities and agreeing to buy them back later.
Buyers: The buyer is a counterparty that purchases securities and earns interest.
Tri-Party Agent: These agents provide services such as collateral selection, payment, settlement, custody, and transaction management. They are critical in reducing counterparty risk.
Custodian: The custodian stores the securities, ensures their safety, and makes them available at the time of settlement. Its role is usually combined with that of a tri-party agent.
Clearing Corporation: CCIL (Clearing Corporation of India Limited) serves as a clearing house, ensuring that all the executed trades are settled properly and maintaining accounts for all members.
Regulatory Bodies: The regulatory bodies such as SEBI (Securities and Exchange Board of India) set guidelines to protect the investor’s interest.
In conclusion, investing in TREPS offers mutual funds a safe, flexible approach to managing capital and boosting portfolio return while preserving adequate liquidity. They also have a positive impact on the mutual fund NAV in the short term, but a longer investment horizon can result in lower returns and negatively impact the NAV.
TREPS are affected by interest rate changes and often offer lower returns than other asset classes. Speak with your investment advisor if you intend to invest in mutual funds.
S.NO.
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Mutual funds must place their assets in liquid securities like TREPS to comply with SEBI regulations requiring them to have a certain amount of cash on hand to fulfill investor redemption requests.
What does TREPS stand for?
TREPS stands for Tri-Party Repo Dealing System.
Who can participate in TREPS?
Any institutional investor, including banks, mutual funds, etc., is eligible to invest in TREPS if they meet the regulatory compliance guidelines provided by SEBI and have the required infrastructure.
Is it safe to invest in TREPS?
Yes, it is safe to invest in TREPS as the government backs the underlying assets.
Does TREPS generate higher returns than traditional savings accounts?
TREPS investments have the potential to yield larger returns than traditional savings accounts, which is why mutual funds find them attractive.
Financial markets have become increasingly complex due to the availability of huge quantities of financial data. In order to process financial data, finance professionals have adopted various statistical tools. Statistical tools can be used to analyze market trends and the relationships between two variables and, most importantly, gain an edge over competitors. Two key tools in this regard are correlation and regression.
In today’s blog, we will learn about correlation and regression, their uses, types, and the differences between them.
What is Correlation?
It measures the strength and direction of a linear relationship between two variables and shows how two things change together but does not always mean one causes the other. Correlation can be used in stock markets to explain how stock prices and any other variable move relative to each other. It also finds applications in portfolio management.
A strong correlation means that variables change together consistently. A weak correlation means the changes are less consistent. Furthermore, correlation does not mean causation. The fact that two things change simultaneously does not mean that one is the cause of the other. There could be a third factor affecting both variables. Correlation is computed as correlation coefficient, denoted as r, with values between -1 and +1.
Types of Correlation
Different types of correlation are:
Linear correlation: Two variables have a straight-line relationship between them. A scatter plot of the data would show a clear linear trend. The Karl Pearson correlation coefficient is used to measure linear correlations.
Nonlinear Correlations: The relationship between two variables is not a straight line. The data might show a curve. Spearman’s rank correlation coefficient is used to measure nonlinear correlation.
Interpretation of correlation values is listed below:
Positive Correlation: In this case, two variables change together in the same direction. The value of both variables increases or decreases simultaneously. The value of r ranges between 0 and +1.
Negative Correlation: In this case, two variables change together but in opposite directions. An increase in one variable will cause a decrease in the other variable and vice-versa. The value of r ranges between 0 and -1.
Zero Correlation: In this case, the two variables move independently, i.e., a change in one variable doesn’t predict any change in the other. The value of r is approximately equal to 0.
The most widely used methods for calculating the coefficient of correlation are Karl Pearson’s Coefficient of Correlation and Spearman’s Rank Correlation Coefficient.
Karl Pearson’s correlation coefficient (r) is calculated as:
where,
Spearman Rank correlation coefficient (r) is calculated as:
Where,
d = Difference between two ranks
n = Number of observations
Uses of Correlation
Correlation has a wide range of applications across various fields. Some of the key uses are stated below:
In science, correlation analysis helps researchers examine possible connections between variables.
Businesses can use correlation to make better decisions. For example, analyzing the correlation between marketing campaigns and sales figures to improve advertising strategies
Psychologists also use correlation to analyze the behavioral patterns and personality traits of individuals.
What is Regression?
Regression Analysis is a statistical technique that helps you understand the relationship between one dependent variable (the one you want to predict) and one or more independent variables (the ones you think can affect the predicted variable).
With the help of regression analysis, you create a mathematical model that analyzes the relationship between the variables. Once the model is developed, it can be used to predict the value of the dependent variable based on the value of an independent variable.
Linear Regression: It creates a model that fits a straight line through the data points to estimate the relationship between a dependent variable and one or more independent variables. It best fits situations where the relationship between variables is linear. It is further divided into two types, i.e., simple linear regression and multiple linear regression.
Polynomial Regression: It is used when the relationship between variables is nonlinear and can be represented with the help of a curve.
Logistic Regression: It is used to solve classification problems with two possible outcomes. Logistic regression estimates event probability using independent variables.
Each type of regression can be represented using the equations given below:
Simple Linear Regression
Y = a + b X,
where,
Y = dependant variable
X = independent variable
a = y-intercept
b = slope
Multiple Linear Regression
Polynomial Regression
Uses of Regression
Businesses use regression to forecast future sales using past data and variables such as advertising budget, seasonal effects, and economic trends. This helps manage inventory and allocate resources.
Medical professionals use regression analysis to identify risk factors for diseases and determine the probability of diseases.
Banks and other financial institutions rely on regression analysis for several purposes, such as predicting stock prices, estimating investment risks, and creating models for loan defaults.
Difference Between Correlation and Regression
Basis
Correlation
Regression
Feature
Calculate the strength and direction of the relationship between two variables.
Predicts the value of a dependent variable using one or more independent variables.
Relationship
Symmetric (correlation between X and Y is the same as between Y and X).
Asymmetric (relationship is directional, independent variable explains dependent variable).
Types
Linear, Nonlinear
Linear, Polynomial, Logistic
Causation
Correlation does not imply causation
Regression can imply causation if the model is correctly specified.
Output
Correlation coefficient
Mathematical equation that shows the relationship between variables.
To summarize, choosing the right statistical tool depends on the research task. If you want to understand the relationship between two variables, correlation can be a good starting point, and if you want to build a prediction model, then regression is the way to go. They have different objectives and characteristics.
In relation to stock markets, correlation can be used to find relationships between stock prices and other market variables. On the other hand, regression analysis can be performed to predict stock prices based on the set of independent variables. However, it is advised to consult a financial advisor before making any investment decision.
Frequently Asked Questions (FAQs)
What is the difference between correlation and regression?
Correlation measures the strength and direction of a linear relationship between two variables. In comparison, regression creates a model to forecast the value of a dependent variable depending on one or more independent variables.
What does the correlation coefficient tell us?
These coefficients range from -1 to +1.1. Closer to -1 shows a strong negative correlation.2. Closer to 0 shows no linear correlation3. Closer to +1 shows a strong positive correlation
What are residuals in regression analysis?
Residuals are the differences between the observed values and the predicted values of the dependent variable. They depict how well the model fits the data.
What are the limitations of correlation and regression?
Correlation can’t be used to imply causation, which means it doesn’t explain which variable causes the other variable to change. Regression models are based on the past data and may not be able to forecast the future outcomes properly.
When should I use Spearman’s Rank Correlation instead of Karl Pearson’s Coefficient?
Spearman correlation coefficient is used when the data under consideration doesn’t have a normal distribution and uses nonlinear data, whereas Karl Pearson correlation coefficient is used for measuring linear correlation.
The Mutual Fund industry has been growing rapidly for the last 5 years. According to the Association of Mutual Funds in India (AMFI), the assets under management (AUM) have increased by 35% from 39.42 lakh crore in 2023 to 53.4 lakh crore in 2024. This trend can be attributed to the younger generation of India, which wishes to achieve its financial goals through investments in mutual funds.
But the popularity mutual funds enjoy today wasn’t the case a few decades back. Therefore, in today’s blog, we will discuss the history of mutual funds in India, the future prospects of the mutual fund industry, and their advantages and disadvantages.
What are Mutual Funds in India?
Mutual funds are pooled investments of many investors that are professionally managed. A professional fund manager uses his/ her expertise to invest those funds in a particular proportion into different asset classes such as equity, debt, commodities, etc. The investment strategy must be consistent with the strategy mentioned in the prospectus.
Mutual funds are best for those investors who lack the knowledge and time to analyze market trends. However, a particular fee is charged to manage these funds, known as the expense ratio.
History of Mutual Fund
The first mutual fund in India was introduced in 1963, with the formation of the Unit Trust of India due to the combined efforts of the Government of India and the Reserve Bank of India. The primary objective of introducing mutual funds in India was to encourage savings and investing habits in the general public to improve economic growth and increase the participation of investors in the economy. UTI is the oldest mutual fund in India and was the only mutual fund until 1993.
This history of mutual funds could be broadly classified into five major phases:
First Phase (1964-1987)
Unit Trust of India was the first mutual fund of India incorporated by an Act of Parliament in 1963 and was under the control of the Reserve Bank of India. UTI launched the first mutual fund scheme called “Unit Scheme 1964” in 1964. In 1978, the Industrial Development Bank of India (IDBI) took over the responsibility of regulating the UTI. Near the end of the first phase, UTI had Rs. 6,700 crores of assets under management (AUM).
Second phase (1987-1993)
In this phase, the Government of India permitted the public sector banks, Life Insurance Corporation of India (LIC), and General Insurance Corporation of India (GIC) to launch mutual fund schemes. Some of the prominent mutual funds established in this phase were:
SBI Mutual Fund
Canbank Mutual Fund
Punjab National Bank Mutual Fund
LIC and GIC established their first mutual funds in June 1989 and December 1990, respectively. Assets under management for the mutual fund industry were Rs. 47,004 crores near the end of this phase.
Third phase (1993-2003)
Before 1993, all the mutual fund corporations were introduced by public sector entities. The scenario changed in 1992 when SEBI wasincorporated. After its incorporation, SEBI introduced the first set of SEBI Mutual Fund Regulations that were applicable to all mutual funds except UTI. Kothari Pioneer was the first private-sector mutual fund scheme and was registered in July 1993. Initial regulations were revised and replaced with a more comprehensive set of regulations known as SEBI (Mutual Fund) Regulation in 1996, which is currently applicable. Till 2003, there were 33 MFs with around 1,22,000 crores of assets under management.
Fourth Phase (February 2003 – April 2014)
In February 2003, UTI was split into two parts:
Specified Undertaking of the UTI Trust of India (SUUTI)
UTI Mutual Fund
This phase witnessed consolidation in the mutual fund history and numerous mergers among different private-sector funds. After the financial crisis in 2009, investors lost confidence in the mutual fund industry as most of them entered the markets at their peak. The abolition of the entry load by SEBI and the effects of the global financial crisis resulted in a period of slow growth in the AUM of the mutual fund industry in this phase.
Fifth Phase (Since May 2014)
In September 2012, SEBI introduced several measures to boost the penetration of mutual funds (MFs) in India, particularly in tier II and III cities, and align the interests of various stakeholders. These measures helped reverse the negative trends from the global financial crisis. The industry saw significant improvements post-2014, with steady inflows, a rise in assets under management (AUM), and investor folios.
The AUM crossed ₹10 trillion in May 2014, doubled to ₹20 trillion by August 2017, and reached ₹30 trillion in November 2020. By June 30, 2024, the AUM grew to ₹61.16 trillion. The impressive growth can be attributed to two factors:
The future of mutual funds in India looks promising due to continued regulatory support and increasing retail participation, especially in smaller cities. The number of investor folios is expected to rise, achieving financial inclusion and investment awareness across the country.
Let’s also look at some pros and cons of investing in Mutual Funds.
Advantages of Investing in Mutual Fund
Various advantages of investing in mutual funds are:
Mutual funds offer diversification benefits as they invest in multiple securities.
The dividend earned from investing in mutual funds can be used for reinvesting.
Mutual funds have proved to be a good investment opportunity for investors. They have consistently contributed to the nation’s growth and have also increased the number of participants in the financial markets. Mutual funds have made professional expertise accessible to the general public.
Affordability is one of the major criteria behind the success of mutual funds as SIP provides investors with advantages such as Rupee cost averaging, power of compounding, flexibility, etc. However, it is always advised to consult a financial advisor before investing.
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When did private-sector mutual funds begin operations in India?
Private sector mutual funds began operations in India in 1993.
How did the introduction of Systematic Investment Plans (SIPs) influence the mutual fund industry in India?
The introduction of Systematic Investment Plans (SIPs) made it easier for individuals to invest small amounts regularly. It increases retail participation and promotes disciplined investing.
What role did technological advancements play in the growth of mutual funds in India?
Technological advancements, such as online trading platforms and mobile apps, have made it more convenient for investors to access and manage their mutual fund investments, contributing to the industry’s growth.
When did foreign mutual fund companies enter the Indian market?
Foreign mutual fund companies started entering the Indian market in 1993, following economic reforms and liberalization policies.
Why are index funds popular in India?
Index funds are popular in India as they offer investors a low-cost option to earn returns comparable to the returns of a market index.
Moving average may sound like a strange word, but it has a rather simple underlying concept. It is one of the most popular technical indicators to gauge market trends. Many seasoned investors follow the 200-day SMA and base their trading decisions on it.
In today’s blog, we will explore moving averages, their types, uses, and limitations with a real-world example.
What is Moving Averages?
Moving averages is a technical indicator that predicts the direction of trends by using time series data to create a series of averages. Moving averages smooth out short-term fluctuations and indicate long-term trends or cycles. Traders often use the 50-day or 200-day moving average to analyze stocks.
The term “moving” conveys that the moving average is calculated repeatedly using the latest data point. It appears as a line on the price chart, which continuously shifts once new price data becomes available. The moving average usually uses the closing prices of the asset and is a type of lagging indicator.
Types of Moving Averages
Moving averages can be calculated in a variety of ways, as listed below:
1. Simple Moving Average (SMA):
A Simple Moving Average is the arithmetic mean of a given set of closing prices of the asset over a specified period.
Simple Moving Average = ( P1 + P2 + P3 +⋯+ Pn )/ n
Where:
P1, P2,…, Pn are the closing prices for each time period.
N is the number of periods.
Example: For example, a 5-day SMA is calculated by adding the closing prices of a security for the last 5 days and then dividing by 5.
If the prices for 5 days are 10, 12, 14, 16, and 18, then SMA is:
SMA = (10 + 12 + 14 + 16 + 18) / 5 = 70 / 5 = 14
2. Exponential Moving Average (EMA):
This type of moving average gives more weight to recent prices, making it more sensitive to new information. The formula involves a smoothing factor, which usually depends on the length of the moving average.
EMA is calculated using the following formula:
EMA = Value today * Multiplier + EMA (previous day) * (1 – Multiplier)
where, Multiplier = Smoothing Factor / ( 1 + number of observations )
Example: For a 5-day EMA and a smoothing factor of 2,
Multiplier = 2 / (1 + 5) = 2 / 6 = 0.333
If the previous day’s EMA value is 13 and the current price is 18:
In stock trading, a seasoned trader generally uses a 50-day and 200-day moving average to implement a trading strategy. When the 50-day SMA crosses above the 200-day SMA, it generates a “golden cross,” which indicates a buy signal. Conversely, when the 50-day SMA crosses below the 200-day SMA, it generates a “death cross,” indicating a potential sell signal.
Let’s understand this with an example. Here, we have used 10-day SMA and 20-day SMA in the weekly chart of “Rail Vikas Nigam Ltd” or “RVNL”. On 29th August 2022, the 10-day SMA (Orange line) crossed above the 20-day SMA (Green line) when the stock price was INR 36. A buy signal was generated, and today, in July 2024, the price is around INR 600. Traders can exit once the 10-day SMA crosses below the 20-day SMA. In this case, a sell signal has not been generated in the past two years.
Uses of Moving Averages
Moving averages can be used for various purposes, as mentioned below:
Average Price: Moving averages can be used to calculate average prices over a period, which helps traders identify the average price of a security over a given timeframe.
Trend Identification: Moving averages help identify the direction of the trend. If the price is above the moving average, it suggests an uptrend; if it is below, it indicates a downtrend.
Support and Resistance Levels: Moving averages can act as dynamic support and resistance levels. Prices often find support at the moving average during an uptrend and resistance during a downtrend.
Convergence and Divergence: By comparing exponential moving averages with different time frames, traders can identify potential changes in trend strength. Convergence indicates that the trend is weakening, while divergence suggests a strengthening of the trend.
Crossovers: A common trading strategy is the crossover technique to buy and sell. For example, a bullish signal is generated when a short-term moving average crosses above a long-term moving average, and a bearish signal is generated when it crosses below.
Smoothing Data: Moving averages smooth out price data to create a single average line, which makes it easier to spot the direction of the trend.
Risk Management: Moving averages can be used to set stop-loss levels. For example, a trader might place a stop-loss order near a moving average to protect against significant losses.
Limitation of Moving Averages
Limitations of moving averages are:
Lagging Indicator: Moving averages are lagging indicators, meaning they are based on past prices and trends that may not reflect immediate current market conditions. This can lead to late entry or exit signals.
Sensitivity to sudden price change: Moving averages can be overly sensitive to price shocks, which can lead to false signals and losses.
Periodselection: The effectiveness of moving averages depends on the selected time period. If the wrong period is selected, it could result in wrong signals and missed opportunities.
Ignores other information: Moving averages don’t consider other important market factors such as volume, market sentiment, economic factors, news, etc., which can lead to inaccurate analysis.
Less Predictive Power: As moving averages are based on historical data, they don’t have much predictive power.
Over Dependence: Traders who solely rely on moving averages may miss out on other important aspects of technical analysis and risk management.
False signal: In sideways or flat markets, moving averages can generate multiple false signals, leading to potential losses.
In summary, moving averages are a powerful tool for trend identification and smoothing out price data, making them popular among traders and analysts. However, it is a lagging indicator and sensitive to false signals in volatile or flat markets, which means it should be used in conjunction with other technical analysis tools and market indicators to improve decision-making and reduce risks. Trading can be risky, so it is advised to consult a financial advisor before making any financial decision.
Frequently Asked Questions (FAQs)
What is the Moving Average?
It’s a statistical calculation used to analyze time series data by creating a series of averages.
How do moving averages help in trading?
It helps to identify trends and acts as support and resistance.
What is a moving average crossover?
Moving average crossover occurs when a short-term moving average line crosses a long-term moving average line from above or below.
Is there any right period for the moving average?
There is no right period to choose for a moving average; it depends on the time frame and trading strategy you are using.
Can moving average be used in any market?
Yes, it can be used in any type of market, such as equity, debt, commodity, or currency.
Mutual fund investors often face strategic decisions, such as whether one should stop SIP temporarily or permanently. While much is said about initiating SIP investment and its benefits, the halting of SIP is rarely discussed.
In this blog, we will discuss the process of cancellation of SIP using online and offline modes, as well as the temporary vs. permanent cancellation of SIP, and understand the reasons behind cancelling SIP.
How to Cancel SIPs Online?
To cancel your mutual fund SIP (Systematic Investment Plan) online, you can follow several methods depending on how you initially set up the SIP:
1. Through the AMC (Asset Management Company) Website
Step 1: Visit the official website of the AMC managing your mutual fund.
Step 2: Log in using your credentials, such as your folio number and bank account details.
Step 3: Navigate to the section where your ongoing SIPs are listed and select the SIP you wish to cancel.
Step 4: Click on the “Cancel SIP” option and confirm your request. The cancellation process usually takes about 21 days to complete.
2. Using Online Distributor Platforms
Step 1: Log into the respective platform.
Step 2: Locate the SIP you want to cancel under the mutual funds section.
Step 3: Select the “Cancel SIP” option and confirm the cancellation.
3. Through an Agent: If an agent facilitated your SIP, contact them to request the cancellation. The agent will process the request with the AMC on your behalf.
How to Cancel SIPs Offline?
The below steps show how to cancel a mutual fund SIP offline, according to many popular websites.
Step 1. Reach out to AMC or RTA:
Go to the nearest Asset Management Company branch office managing your mutual fund or the Registrar and Transfer Agent office.
Ask for a SIP cancellation form from the office.
Step 2. Fill Out the SIP Cancellation Form:
Fill in the form with the requisite information, viz., folio number, mutual fund scheme name, bank account used for the said mutual fund, SIP amount, and the date you wish to end the SIP payments. Kindly ensure that all details are correct.
Step 3.Submit the Form:
Submit the form to the AMC branch or RTA office. The cancellation process takes approximately 14 to 21 days, though some fund houses fast-track it.
Step 4.Verify with Your Bank:
It’s also important to inform the bank to stop the automatic debit instructions relating to the SIP.
Step 5.Get Confirmation:
Once the cancellation request is processed, AMC or RTA will send a confirmation regarding the SIP cancellation.
Investors can make a decision regarding temporary vs permanent cancellation of SIP using the following table:
Temporary Cancellation
Permanent Cancellation
A temporary cancellation of a SIP would offer the investor the facility to pause contributions towards a scheme. Most of the AMCs or mutual fund platforms have the facility to pause the SIPs for 1 to 6 months. No deductions will be made from the investor’s account during this period. The SIP automatically starts again at the end of the pause period without any additional instructions from the investor’s end.
A temporary cancellation of an SIP would offer the investor the facility to pause contributions towards a scheme. Most of the AMCs or mutual fund platforms have the facility to pause the SIPs for 1 to 6 months. No deductions will be made from the investor’s account during this period. The SIP automatically starts again at the end of the pause period without any additional instructions from the investor’s end.
Pause SIP vs Stop SIP
An investor can choose to pause vs stop SIP based on the information given in the following table:
Pause SIP
Stop SIP
The decision to pause SIP is appropriate for short-term financial disturbances. It keeps the investments consistent and saves one from the hassle of restarting the SIPs later. This is ideal if the investor expects his or her financial condition to stabilize soon.
The decision to stop SIP is ideal if the fund’s underperformance continues, the investor’s goals are met, or there are significant changes in the fund’s management or strategy. It is a permanent solution, often accompanied by switching to another investment or fund.
Reasons for Canceling SIP
There could be various reasons to cancel an initiated Systematic Investment Plan:
Achievement of financial goals: An investor may be near his financial goals, such as buying a house or funding education. Now, the investor wants to realize the profits and move to safer investments so that accumulated wealth is not affected by market volatility.
Changes in mutual fund’s fundamental attributes: There could be a situation where the mutual fund changes its investment strategy, asset allocation, or management. If such changes do not align with your risk tolerance or investment goals, you should cancel your SIP and look for alternatives.
Consistent underperformance: If a mutual fund is underperforming its benchmark and peers for a considerably long period, say three years, then there must be something wrong with the management or investment strategy of the fund. Under such circumstances, cancellation of the SIP and funding better performers may be appropriate.
Mutual fund portfolio rebalancing: Investors try to build a diversified portfolio of mutual funds that invest in different asset classes. Over time, some mutual funds outperform others and exceed their target allocation. The rebalancing process could involve reducing exposure to some mutual funds to go back to the target allocation, possibly leading to the cancellation of the SIPs.
Financial emergency: Unforeseen financial disasters, such as the loss of a job or a medical emergency, may cause one to stop SIPs as money is required elsewhere. In such cases, liquidity for immediate needs may be prioritized over long-term investments.
Whether to pause or stop an SIP fully depends on the financial status and investment objectives of an individual. Pausing can be done in case of short-term disruption to finances, and it also has the added advantage that the investor will not have to re-activate it afresh. Permanent cancellation may have to be done in cases of prolonged underperformance or if the goal is met. Cancelling of SIP can be done conveniently online through the AMC portals/distributor platforms or offline through the offices of AMCs/RTAs. However, you must consult a financial advisor before making any investment decision.
S.NO.
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Missing a SIP installment may not significantly impact long-term returns. However, regular investing is recommended to benefit from rupee cost averaging.
Are there any charges for cancelling a SIP?
Most AMCs do not charge for cancelling a SIP. However, check with your specific AMC or distributor for any applicable fees or conditions.
Can I restart my SIP after pausing it?
Yes, when you pause a SIP, it automatically restarts after the pause period ends without requiring additional steps from your end.
What could be the ideal tenure to continue a SIP?
It is always advisable to invest in SIPs for the long term, for at least five years or more, to ride through market cycles for potentially higher returns.
Can I switch SIP from one mutual fund to another?
Yes, one can switch from one mutual fund scheme to another within the same AMC or even across AMCs, subject to conditions and charges.
Mutual Funds are witnessing a record inflow of capital in India in 2024. Many individuals want to invest in them after seeing someone else use mutual funds to realize their financial goals. However, an individual must know the procedures, paperwork, and documentation needed to invest in mutual funds.
Don’t worry; we’ve got you covered. In this blog post, we will review the process of investing in mutual funds via offline and offline modes and factors to consider before investing.
Why Invest in Mutual Funds?
Mutual funds have become one of the most popular investment choices for investors for the reasons listed below:
It helps investors to diversify their investments.
Through mutual funds, investors can get access to professional expertise.
An individual can start his investing journey with a small amount of money.
Mutual funds provide the flexibility of lumpsum and SIP investments.
They are highly liquid.
How to Invest in Mutual Funds?
Investors follow the following 5 steps to invest in mutual funds:
Investors must understand their risk tolerance according to the expected returns and the financial objectives.
Investors should decide on asset allocation according to risk tolerance and financial objectives.
Identify mutual funds that invest in those specific asset classes and gather information about their past performance, etc.
Invest in selected mutual funds using online or offline mode.
Keep a check on mutual fund performance to ensure fulfillment of investment goals.
There are two modes of investment in Mutual Funds:
Online Mode
Offline Mode
Let’s dive deep into the details of both modes.
Online Mutual Fund Investment
Due to its convenience, online investing, sometimes called digital investing in mutual funds, is becoming increasingly popular. An individual must follow the steps mentioned below to start investing in mutual funds:
Visit the website of an asset management company, registered investment advisor, or mutual fund distributor and download the e-KYC form.
The next step is to finish the Know Your Customer (KYC) process. Fill out the e-KYC form and submit self-attested copies of identity proof, PAN card, address proof, and a passport-sized photograph.
In-person verification (IPV) is performed via video conferencing using a webcam at a prearranged time.
After completing the procedures mentioned above, you can choose a mutual fund scheme according to your risk tolerance and investing goal.
Submit the mutual fund application form. Next, you need to decide on the investment method. Lump sum payments can be made directly from your bank account using UPI apps or internet banking. If you use a SIP mode instead, you will need to set up an e-mandate, essentially a standing order instructing your bank account to take a certain amount of money each month and invest it in a specific fund.
Offline Mutual Fund Investment
The investment process will differ from the online mode if you invest in mutual funds and have chosen to go offline. The offline process to invest in mutual funds is mentioned below:
Visit the office of an asset management company, a bank, a mutual fund agent or distributor, or a Karvy/CAMS office and ask for a KYC form.
Fill out a KYC form and submit self-attested copies of identity proof, PAN card, address proof, and a passport-sized photograph.
In-person verification (IPV) is done by submitting the original copies of the documents mentioned above.
Following your fund selection, you must complete an application form that asks for basic information about the investor, the fund, the amount to be invested, the mode of investment (SIP or lump payment), nominee information, etc.
Submit the application form at the asset management company’s, RTA’s, or distributor’s office with the needed money by check or demand draft.
After submitting the application form, you will receive an acknowledgment slip, which will be treated as proof of your investment.
Points to Consider Before Investing in Mutual Funds
Before you start your investment in a mutual fund, there are several points one should keep in mind, a few of which are mentioned below:
Risk Appetite: When selecting a mutual fund for investment, one should consider their risk tolerance. For a conservative investor, a debt fund would be appropriate, while for an aggressive investor, an equity-oriented fund would be appropriate.
Investment Horizon: The next crucial consideration is time horizon; if you have a longer time horizon, you should consider investing in equity-oriented funds, yielding returns that will beat inflation. On the other hand, if you have a short-term investment horizon, you should consider investing in hybrid funds.
Past Performance: The fund’s historical performance is the next crucial factor an investor should consider. While it is not ideal to base an investment decision on past performance, a fund with a strong track record over several market cycles may perform better.
Expense Ratio: A mutual fund with a lower expense ratio is preferred by investors because less money is deducted as fees, which enhances returns.
Liquidity: Investors seeking liquidity in their portfolio or with short-term investment goals should consider an open-ended fund with a minimum exit load.
In conclusion, you have the chance to invest in mutual funds and reach your financial objectives using both online and offline modes. Before selecting a mutual fund, an individual must learn everything about the scheme and ensure it aligns with his financial goals.
However, it is always advised to seek the help of a financial advisor to select the best mutual fund according to your investment objective and risk tolerance.
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