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https://www.kotaksecurities.com/demat-account/how-to-open-a-demat-account/

How to Open a Demat Account?

Key Highlights:A Demat account holds your securities in an electronic formatVisit a broker’s official website, click on the open demat account tab, provide the relevant details and documents, and e-sign to open an accountCheck the broker’s reputation, fee, platform’s UI, and security before opening your demat accountOpening a demat account is integral to stock market investing. A demat account holds your securities in a dematerialised format and keeps them secure. The question, however, is how to open this all-important account. This blog lists the step-by-step procedure for opening a demat account. Let's begin.Steps to open a demat accountThanks to digitalisation, opening a demat account online has become very easy. The process is simple and convenient. While the specifics may differ across brokers, here are the common steps to open a demat account online:Choose a reliable brokerThis is the first step to open a demat account. Look for a broker with a robust track record.Visit the broker's official websiteAfter you choose your broker, visit the official portal. Today, all brokers have official websites. Visit your broker's portal and look for the open demat account option.Fill out the demat account opening formFill out the account opening form. You need to provide your name, phone number, email ID, address, PAN card details, etc. You will receive a one-time password on your registered mobile ID. Input the OTP to move forward.Add bank details and upload the relevant documentsIt's important to enter your bank details correctly and upload the right KYC documents. These documents, which include identity and address proof along with bank details and PAN card, are a mandatory requirement. You can use your Aadhaar Card, voter card, passport, driving license, etc, as your identity and address proof.E-sign and submitAfter filling out the form, you'll need to electronically sign your application. This is a secure way to submit your application. Once you've done this, submit it to create your demat account. Your broker will then validate your application, and upon successful validation, you'll receive your demat account number and login credentials.Documents required to open a demat accountThe documents required to open a demat account are minimal and easy to provide. You need to provide the following documents:PAN cardIdentity proof, which could be your PAN card, Aadhaar card, voter card, driving licence, etcAddress proof, which could be Aadhaar card, passport, voter ID card, driving licence, etcCancelled chequePassport size photoBank statement or copy of passbookIT return or pay slip if you are interested in the derivative or currency marketCharges associated with opening a demat accountThe various charges associated with opening a demat account are as follows:Account opening feeYou need to pay a certain fee to your stockbroker when opening your demat account.Annual maintenance chargesIt's a recurring fee you need to pay your broker to maintain your demat account.Dematerialisation chargesYou need to pay this charge if you convert a physical share certificate into a digital form.Transaction chargesWhen you purchase or sell shares, your broker will deduct a small amount from the total transaction value. Some brokers may charge a flat fee, irrespective of the total transaction value.Along with these, various other charges come into play at different times, such as pledging charges and unpledging charges. You need to pay the former while pledging securities to avail yourself of trading limits, while you need to pay the latter when unpledging securities.Need for opening a demat accountWhile a Demat account is mandatory to invest in stock markets, several other reasons make it important. These are:Safety of securitiesIn their earlier physical avatar, shares were vulnerable to theft or misplacement. As a demat account holds them in an electronic format, they are much safer.Anytime accessAs all your securities are in one place, you can access them whenever needed from anywhere.Can hold multiple securitiesWith a demat account, you can hold several securities in one place, which facilitates tracking. You can also access them anywhere and anytime.Auto credit of dividendsIf you are eligible to receive dividends, they are automatically credited to your demat account.Important things to keep in mind while opening a demat accountNow that you know how to open a demat account, you need to keep certain important things in mind while opening it. These include:Safety and easy-to-use interfaceCheck the safety measures implemented by your broker. Ensure your chosen broker offers the highest levels of safety so that you don't fall victim to online fraud. Also, ensure your chosen broking platform has an easy-to-use interface for quick navigation.Fees and chargesFind out about the relevant brokerage charges. Opt for a broker offering the most cost-effective charges. That said, it shouldn't be the only guiding factor. Analyse the service quality and read online reviews to understand the standard of services offered.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in the securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit. FAQs on how to open a demat accountHow much money is required to open a Demat account?You do not need to pay anything to open a Demat account. However, you need to pay account maintenance charges to your broker to maintain the account.Can I have two demat accounts?Yes, you can have two or more Demat accounts.

https://www.kotaksecurities.com/share-market/difference-between-fundamental-technical-analysis/

Difference Between Fundamental and Technical Analysis

Key Highlights:Fundamental analysis involves analysing a company’s fundamentals Technical analysis entails analysis of technical charts and tools to find out a stock’s future price movement While fundamental analysis considers present and past data, technical analysis considers only historical data Fundamental analysis factors in various macroeconomic factors, while technical analysis involves volume trend analysisAs an investor, it's essential to thoroughly analyse stocks before investing. Prudent analysis helps you make the right choice, which goes a long way toward wealth creation. Fundamental and technical analysis are two methods of analysing stocks.What is fundamental analysis?Fundamental analysis entails analysing a company's key fundamentals, such as assets, liabilities, revenues, management quality, etc. It helps you determine a stock's intrinsic value by understanding its growth and future earning potential. Fundamental analysis lets you determine if a stock is overvalued or undervalued. Here's how it works:Identifying the company's business model Analysing the firm's key financial statements like balance sheet, cash flow statement, income statement, etc. Evaluating the company's management and its position with respect to competitors Calculating the company's intrinsic value through price-to-earnings (P/E) ratio, discounted cash flow analysis (DCF), etc.What is technical analysis?Technical analysis involves analysing technical charts and tools to determine a stock's future price movement. You can find out potential entry and exit points through technical analysis. Here's how it works:Plotting historical data to create chart patternsIdentifying different chart patternsUsing technical indicators to gain insights into price movementsImplementing volume analysis to confirm the validity of price movements Fundamental vs technical analysis: The differencesThe table captures the key differences between fundamental and technical analysis across various parameters:ParameterPrimary objectiveFundamental analysisThe primary objective is to gauge if a stock is overvalued or undervalued.Technical analysisThe main aim is to use various tools and charts to find out a stock’s future price movements.ParameterInvestment time frameFundamental analysisIt’s typically used with a long-term investment horizon.Technical analysisIt’s typically used with a short-term investment horizon to find out short-term price movement.ParameterConsiderationsFundamental analysisTakes into account present and past data for analysis.Technical analysisConsiders only historical data.ParameterTools and techniques usedFundamental analysisIncorporates various metrics like financial ratios, discounted cash flows, etc.Technical analysisIncorporates various chart patterns and technical indicators such as moving averages, etc.ParameterFactors taken into accountFundamental analysisConsiders various macroeconomic factors (inflation, GDP, etc.) industry benchmark, and company’s performance, among others.Technical analysisFactors in transactional volume, trend analysis, moving averages, etc.ParameterFundamental analysisTechnical analysisPrimary objectiveThe primary objective is to gauge if a stock is overvalued or undervalued.The main aim is to use various tools and charts to find out a stock’s future price movements.Investment time frameIt’s typically used with a long-term investment horizon.It’s typically used with a short-term investment horizon to find out short-term price movement.ConsiderationsTakes into account present and past data for analysis.Considers only historical data.Tools and techniques usedIncorporates various metrics like financial ratios, discounted cash flows, etc.Incorporates various chart patterns and technical indicators such as moving averages, etc.Factors taken into accountConsiders various macroeconomic factors (inflation, GDP, etc.) industry benchmark, and company’s performance, among others.Factors in transactional volume, trend analysis, moving averages, etc. Fundamental and technical analysis - What should you choose?Fundamental and technical analysis both have their respective benefits and drawbacks. While the former helps you identify stocks that could be multi-baggers in the future, the latter helps you gauge a stock's future price movement and the right time to buy or sell a stock. Through fundamental analysis, you can find out about companies with high growth potential while technical analysis tells you when you should invest in them.In conclusionBoth fundamental and technical analysis are essential in their own way in stock investment. Combine both to achieve the best results and get going. Happy investing!Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit. FAQs about difference between fundamental and technical analysisHow to do fundamental and technical analysis of stocks?Fundamental analysis involves analysing a company's fundamentals while technical analysis involves examining technical indicators like oscillators, overlays, and moving average convergence/divergence.How accurate is technical analysis?Technical analysis differs across different technical indicators. To achieve optimum results, complement one indicator with another.

https://www.kotaksecurities.com/articles/difference-between-direct-and-indirect-taxes/

Difference Between Direct and Indirect Taxes

Key Highlights:Direct taxes are taxes levied on income and profits Income tax, capital gains tax, etc., are examples of direct taxes Indirect taxes are imposed on goods and services GST and customs duty are examples of indirect taxesTaxes are a crucial revenue source for the government. The government levies several types of taxes, which fall into two broad categories: direct and indirect.What are direct taxes?Direct taxes are taxes levied by the government directly on individuals and businesses based on their income and profits. These are collected by the Central Board of Direct Taxes (CBDT). The different types of direct taxes are:Income taxIt is the most common type of direct tax that you pay directly to the government. You need to pay this tax according to the rate for each tax slab specified by the government every year. For salaried employees, the employer deducts this amount from the salary directly. This is called tax deducted at source (TDS), and it is subject to your investment declaration at the start of the financial year.Corporate taxCorporate tax is levied on domestic and foreign companies operating in India. The rates vary depending on the company type and size.Capital gains taxThis tax is levied on the profits you earn from selling capital assets such as stocks, mutual funds, real estate, etc. The rate depends on the asset type and its ownership duration (long term or short term). Advantages and disadvantages of direct taxesThe table below captures the advantages and disadvantages of direct taxes:AdvantagesHelps in revenue generationDisadvantagesSusceptible to tax evasionAdvantagesHelps reduce income inequalities by redistributing wealth from higher-income groups to lower-income sectionsDisadvantagesCumbersome documentationAdvantagesEnsures a steady flow of funds for public expenditureDisadvantagesCan put a greater tax burden on individuals in the higher income bracketAdvantagesDisadvantagesHelps in revenue generationSusceptible to tax evasionHelps reduce income inequalities by redistributing wealth from higher-income groups to lower-income sectionsCumbersome documentationEnsures a steady flow of funds for public expenditureCan put a greater tax burden on individuals in the higher income bracket What are indirect taxes?Indirect taxes are taxes you pay on goods and services. You pay these taxes through an intermediary, and they are collected by the Central Board of Indirect Taxes and Customs (CBIC). The different types of indirect taxes are as follows:Goods and Services Tax (GST)GST is the most common indirect tax and has replaced several others, including excise duty, service tax, VAT, etc. GST rates vary according to different categories of goods and services.Customs dutyCustoms duty is imposed on the import and export of goods. The rates depend on the type of goods and the country of origin. Advantages and disadvantages of indirect taxesThe table below captures the merits and drawbacks of indirect taxes:AdvantagesSame for everyoneDisadvantagesRegressive in natureAdvantagesConvenient payment optionsDisadvantagesMakes goods and services expensiveAdvantagesCollection is quite easyDisadvantagesLess transparentAdvantagesDisadvantagesSame for everyoneRegressive in natureConvenient payment optionsMakes goods and services expensiveCollection is quite easyLess transparent Difference between direct and indirect taxesThe following table captures the major differences between direct and indirect taxes across various aspects:AspectsPayment typeDirect TaxDirectly to governmentIndirect TaxIntermediaryAspectsLevied onDirect TaxIncome and profitsIndirect TaxGoods and servicesAspectsTax rateDirect TaxDepends on income and profitsIndirect TaxSame for everybodyAspectsTax typeDirect TaxProgressive in nature. Higher the income, higher the taxIndirect TaxRegressive as tax rates are flatAspectsTax liabilityDirect TaxNot transferableIndirect TaxCan be transferredAspectsDirect TaxIndirect TaxPayment typeDirectly to governmentIntermediaryLevied onIncome and profitsGoods and servicesTax rateDepends on income and profitsSame for everybodyTax typeProgressive in nature. Higher the income, higher the taxRegressive as tax rates are flatTax liabilityNot transferableCan be transferred Summing it upIrrespective of the type of tax liability, you should pay your dues on time. Failure to do so can attract stiff penalties and land you in trouble. Paying taxes on time not only helps you keep your record clear but also helps you participate in the country’s economic growth.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit. FAQs on direct and indirect taxesWhat is the difference between GST and income tax?GST is a type of indirect tax on goods and services, to be paid as and when they are availed. On the other hand, income tax is a direct tax on an individual’s income as per the income tax slab levied every financial year.What are direct and indirect taxes?Direct taxes are applied on income and profit acquired during the financial year, and indirect taxes are levied on goods and services that you avail from time to time.

https://www.kotaksecurities.com/articles/go-digit-ipo-talk-of-the-town/

Talk of the town - Go Digit IPO - here's a quick snapshot

Go Digit General Insurance Limited is one of the leading digital full stack insurance companies that believes in delivering a seamless customer experience through innovation and transparency.Their upcoming IPO has gained a lot of attention and encouraged potential investors to know more. So, here’s a snapshot of all the important information about Go Digit as a potential investment opportunity.Company overviewGo Digit, which was established in 2016, is one of the leading digital insurance companies in the country with a goal to simplify non-life insurance products for consumers. Their insurance products include motor insurance, health insurance, travel insurance, property insurance, marine insurance, liability insurance and other insurance products, which the customers can customise according to their needs. As a digital full stack insurance company, they offer a combination of insurance and technology solutions to assist in enrolment, insurance claims processing, underwriting, policy administration, data insights and fraud detection. Go Digit is one of the leading digital full-stack Non-Life insurers in India as per the commissioned RedSeer report by the volume of premiums received (GWP). They held an 82.5% market share among digital full-stack insurers for the first nine months of 2023.Source:RHPWhat's included in the IPO?Go Digit's IPO is a mixture of fresh issuance of shares (to raise new capital) and an offer for sale (existing shareholders selling shares). The new-issue net proceeds will be used to keep up with their solvency ratio as required by the regulations.Price & allocation:The price band of the public offer is in the range: ₹258 - ₹272 per share and the company is expected to raise ₹ 2,537.97 crore at the lower end of the price band and ₹ 2,614.65 crore at the upper end with a lot size of 55 shares at ₹ 14,960.Shares will be divided among institutional buyers (QIBs), non-institutional buyers, and retail investors. Offer for sale details:Existing shareholders sell a portion of their shareholding as part of the offer for sale. The information below includes information about the selling shareholders, the quantity of shares offered, and their weighted average cost of acquisition per share.Selling ShareholderGo Digit Infoworks Services Private LimitedTypePromoter Selling ShareholderNumber of Shares OfferedUp to 54,755,614Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)13.57Selling ShareholderNikita Mihir Vakharia & Mihir Atul VakhariaTypeOther Selling ShareholderNumber of Shares OfferedUp to 4,000Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)172Selling ShareholderNikunj Hirendra Shah & Sohag Hirendra ShahTypeOther Selling ShareholderNumber of Shares OfferedUp to 3,778Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)250.57Selling ShareholderSubramaniam Vasudevan & Shanti SubramaniamTypeOther Selling ShareholderNumber of Shares OfferedUp to 3,000Aggregated Amount (? million)Not DeterminedWeighted Average Cost per Share (?)221.2Selling ShareholderTypeNumber of Shares OfferedAggregated Amount (? million)Weighted Average Cost per Share (?)Go Digit Infoworks Services Private LimitedPromoter Selling ShareholderUp to 54,755,614Not Determined13.57Nikita Mihir Vakharia & Mihir Atul VakhariaOther Selling ShareholderUp to 4,000Not Determined172Nikunj Hirendra Shah & Sohag Hirendra ShahOther Selling ShareholderUp to 3,778Not Determined250.57Subramaniam Vasudevan & Shanti SubramaniamOther Selling ShareholderUp to 3,000Not Determined221.2Source:RHP Key dates:Bid/Offer Opens: Wednesday, May 15, 2024Bid/Offer Closes: Friday, May 17, 2024Anchor Investor Bid/Offer Period: One Working Day before Bid/Offer Opening Date (May 14, 2024)UPI Mandate End Time: 5.00 p.m. on Bid/Offer Closing Date (May 17, 2024)Source:RHPTentative Timeline:Finalisation of Basis of Allotment: On or about Tuesday, May 21, 2024Refunds Initiation/Fund Unblocking: On or about Wednesday, May 22, 2024Shares Credited to Allottees: On or about Wednesday, May 22, 2024Trading Commencement: On or about Thursday, May 23, 2024Source:RHPKey takeaways:Go Digit is present in a large and fast-growing market with its primary addressable market being the non-life insurance market in India (the world’s fifth largest economy as of 2023).The insurance market is still unpenetrated and therefore has a lot of room for improvement and growth.Owing to the rapidly growing middle class, rising awareness about insurance protection, innovative products, growth in associated industries, and a favorable regulatory landscape, India’s non-life insurance market is expected to continue to grow.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP

https://www.kotaksecurities.com/articles/everything-about-go-digit-general-insurance-limited-ipo/

Want to Subscribe to Go Digit General Insurance Ltd’s IPO? Read This First

Key Highlights:Go Digit General Insurance Ltd’s IPO issue size is Rs 2614.65 crores at the higher price bandThe minimum investment is Rs 14,960The listing date on exchanges is 23rd MayGo Digit General Insurance Ltd has joined the long list of companies looking to launch its initial public offering (IPO) this month. If you want to know the key details of this IPO and whether you should subscribe to it or not, read this blog.About Go Digit General Insurance LtdGo Digit General Insurance Ltd is a leading digital full stack insurance company. It offers non-life insurance products, such as motor insurance, health insurance, travel insurance, property insurance, marine insurance, and liability insurance, among others. IPO details and objectivesThe table captures other details of the IPO that comprise a fresh issue and offer for sale:ParticularsIPO Open DateKey Information15th MayParticularsIPO Close DateKey Information17th MayParticularsIssue Price RangeKey InformationRs 258-Rs 272ParticularsIssue SizeKey InformationRs 2614.65 crore at the higher price bandParticularsLot SizeKey Information55ParticularsMinimum InvestmentKey InformationRs 14,960ParticularsFace ValueKey InformationRs 10ParticularsListing DateKey Information23rd MayParticularsKey InformationIPO Open Date15th MayIPO Close Date17th MayIssue Price RangeRs 258-Rs 272Issue SizeRs 2614.65 crore at the higher price bandLot Size55Minimum InvestmentRs 14,960Face ValueRs 10Listing Date23rd May The company plans to use the proceeds received to:Maintain its solvency ratioBridge financing facilitiesSource:RHP,MoneycontrolandKotak Securities Financial snapshotIt’s essential to be aware of the financials of a company before investing in its IPO. The table reflects some of the key financials of Go Digit General Insurance Ltd:ParticularsNet cash flow from operating activities (in crores)FY 23Rs 2249.752FY 22Rs 2478.997FY 211563.369ParticularsProfit after tax (in crores)FY 23Rs 35.547FY 22-295.851FY 21-122.764ParticularsGross written premium (in crores)FY 23Rs 7242.985FY 22Rs 5267.633FY 21Rs 3243.388ParticularsReturn on equityFY 231.5FY 22-15.9FY 21-10.8ParticularsDiluted earnings per sharesFY 230.4FY 22-3.55FY 21-1.5ParticularsFY 23FY 22FY 21Net cash flow from operating activities (in crores)Rs 2249.752Rs 2478.9971563.369Profit after tax (in crores)Rs 35.547-295.851-122.764Gross written premium (in crores)Rs 7242.985Rs 5267.633Rs 3243.388Return on equity1.5-15.9-10.8Diluted earnings per shares0.4-3.55-1.5 Source:RHPBasis of offer price, management and BRLMIn its RHP, the company has listed some qualitative business strengths that allow it to compete in the industry and form the basis for its offer price. These are:Simple and tailored customer experienceFocus on empowering its distribution partnersPredictive underwriting modelsAdvanced technology platformA nimble organisation with a skilled and experienced management teamThe company’s management includes the following people:Kamlesh Goyal (Non-executive Chairman)Jasleen Kohli (MD and CEO)Chandran Ratnaswami (Non-executive Director)Rajendra Beri (Independent Director)Vandana Gupta (Independent Director)Christof Mascher (Independent Director)The book-running lead managers (BRLM) of the company’s IPO are:ICICI Securities LimitedMorgan Stanley India Company Private LimitedAxis Capital LimitedHDFC Bank LimitedIIFL Securities LimitedNuvama Wealth Management LimitedFor a complete overview of the risks involved, refer to the company’s red herring prospectushere.Wrapping it upBefore subscribing, consider your financial goals and risk appetite. Seek help from a professional, if needed.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQs on Go Digit Insurance Ltd’s IPOIs Go Digit a listed company?Not yet. However, it will soon be a listed company after its IPO. The company will be listed on 23rd May.What is the issue price range of Go Digit Insurance Ltd’s IPO?The issue price range is Rs 258-Rs 272.

https://www.kotaksecurities.com/articles/overview-of-go-digit-general-insurance-ltd-strengths/

Go Digit General Insurance Ltd IPO - An Overview of the Company’s Competitive Strengths

Key Highlights:Go Digit General Insurance Ltd aims to provide a simple and tailored customer experienceThe company boasts of predictive underwriting models to accurately assess risksIt has an advanced technology platform along with an experienced management teamThe much-awaited initial public offering (IPO) of Go Digit General Insurance is finally here. As a potential investor, it’s crucial for you to be aware of the company’s competitive strengths.Competitive strengths of Go Digit Insurance LtdGiven below are the key strengths of the company:Simple and tailored customer experienceThe company is dedicated to establishing trust and promoting transparency in its relationships with its customers by simplifying insurance and offering easy-to-understand, customisable products that enhance customers’ experience. The company promotes a tailored customer experience by offering:Relevant, transparent and customisable coverageSimple and understandable documentationStraightforward, efficient and paperless processesPredictive underwriting modelsThe company has combined its expertise in the motor insurance market with its data bank to build extensive underwriting models to accurately assess risk and predict losses for its motor insurance products at a granular level. This has allowed the company to manage its costs better and tailor its products to serve more customers. Key attributes of its underwriting models include:Decoding a vast set of variablesAbility to automate underwritingGreater ability to identify and acquire profitable businessAn advanced technology platformThe company has an advanced technology platform, which enables it to achieve efficient underwriting. It has employed a hybrid model of AI-enabled analytics and human assessment to streamline the value chain, aid its customers, partners, and employees, and drive efficiency.It has developed in-house microsystems that allow it to facilitate a range of routine tasks, from policy design, underwriting, pricing, and issuance to servicing and claims management. Its platform is entirely cloud-based, making its system agile, connected, and scalable.Skilled and experienced management teamThe company's experienced management team promotes agile decision-making and execution. It includes experienced professionals from the banking, financial services, and insurance industries. Driven by their leadership, it has built an employee base aligned with its corporate culture and works cohesively to deliver on its vision.Source:RHPIn conclusionThe company’s IPO issue size is Rs 2614.65 crores at the upper price band. Read thered herring prospectusfor a complete overview before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsWhat’s the lot size of Go Digit General Insurance Ltd’s IPO?The lot size of the IPO is 55.What is the minimum investment in Go Digit General Insurance Ltd’s IPO?The minimum investment is Rs 14,960.What is the closing date of Go Digit’s IPO?Go Digit’s IPO will close on 17th May.

https://www.kotaksecurities.com/articles/everything-about-tbo-tek-ipo/

Everything You Wanted to Know About TBO Tek's IPO

Key Highlights:The IPO size of TBO Tek is Rs 1550.81 crores at the upper price bandThe IPO’s price range is Rs 875-Rs 920The company’s listing date is 15th MayAs temperatures across India soar, the initial public offering (IPO) market seems to heat up, too. Several mainboard IPOs are in the pipeline, waiting for launch.TBO Tekis one of the mainboard IPOs opened for subscription on 8th May. If you wish to subscribe to it, you should know some essential aspects.About TBO TekTBO Tek operates a B2B travel distribution platform that simplifies travel by centralising transactions. Through its platform, several sellers in travel, such as airlines, hotels, rails, car rentals, etc., can connect with a host of buyers, including travel agencies, tour operators, online travel companies, independent travel advisors, etc. Buyers and sellers can use TBO Tek's platform to conduct transactions seamlessly.IPO Details of TBO TekThrough the book-building IPO, the company plans to raise Rs 1550.81 crores at the upper price band. In other words, the issue size of the IPO is Rs 1550.81 crores at the upper price band. Given below are some other essential aspects of this IPO: ParticularsIPO open dateKey Information8th MayParticularsIPO close dateKey Information10th MayParticularsPrice rangeKey InformationRs 875 - Rs 920ParticularsTotal shares offeredKey Information16,856,623 at upper price of Rs 920ParticularsFace valueKey InformationRs 1ParticularsListing dateKey Information15th MayParticularsListing onKey InformationBSE and NSEParticularsKey InformationIPO open date8th MayIPO close date10th MayPrice rangeRs 875 - Rs 920Total shares offered16,856,623 at upper price of Rs 920Face valueRs 1Listing date15th MayListing onBSE and NSE The company aims to utilise the funds raised for:Investment in technology and data solutions by the companyInvestment in its material subsidiary, Tek Travels DMCC, for onboarding platform users through marketing and promotional activities; and hiring sales and contracting personnel for augmenting its supplier and buyer base outside IndiaInvestment in sales, marketing and infrastructure to support organisation’s growth plans in IndiaUnidentified inorganic acquisitionsFinancial overview of TBO TekThe company's financial overview is a testament to its strong growth over the years. It has consistently achieved impressive results, as evidenced by the following snapshot: ParticularsTotal income (in crores)FY 23Rs 1,085.77FY 22Rs 551.93FY 21Rs 176.55ParticularsTotal assets (in crores)FY 23Rs 2,557.93FY 22Rs 1271.42FY 21Rs 576.16ParticularsReturn on net worthFY 2344.04%FY 2214.54%FY 21-16.73%ParticularsDiluted earnings per shareFY 2314.07FY 223.32FY 21-3.28ParticularsFY 23FY 22FY 21Total income (in crores)Rs 1,085.77Rs 551.93Rs 176.55Total assets (in crores)Rs 2,557.93Rs 1271.42Rs 576.16Return on net worth44.04%14.54%-16.73%Diluted earnings per share14.073.32-3.28 The financials of the company show:The company’s total income nearly doubled in FY 23 compared to FY 22.The return on net worth in FY 23 has tripled compared to FY 22. Also, it has gone from negative in FY21 to positive in FY 22 and FY 23.Diluted earnings per share has been positive in FY22 and FY23 as compared with negative diluted earnings per share in FY21.Industry snapshotThe travel and tourism industry grew 18.2% year-on-year in 2023 from 2022 and is expected to grow at a CAGR of 8.2% to reach US$ 2.6 trillion in 2027.Source:RHPIn conclusionIt’s imperative that you read the company’sdraft red herring prospectusto be aware of the potential risks involved. This will help you make an informed choice and ensure your investment meets your needs.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsWhen is the public issue of TBO Tek?The public issue of TBO Tek IPO has opened on 8 May and will close on 10 May. The issue size of the IPO is Rs 1550.81 crores.What is an IPO issue date?The IPO issue date is the date on which the IPO opens for investors.

https://www.kotaksecurities.com/articles/aadhar-housing-finance-is-live/

Aadhar Housing Finance Limited: The much talked about IPO is now live

Aadhar Housing Finance Limited’s initial public offering has opened for bid/ offer on May 8, 2024. Through the issuance of new shares at a price of ₹10000 million and an offer for sale of ₹20000 million, by the promoter selling shareholder (BCP Topco VII Pte. Ltd.).A closer look at Aadhar Housing Finance LimitedAadhar Housing Finance Limited is an HFC focused on the low income housing segment (ticket size less than ₹1.5 million), targeting primarily first-time home buyers in economically weaker and low to middle income segments. The company has shown an increase in the number of customers year on year.Key dates and application processBid/ Offer opens on:8th MayBid/ Offer closes on:10th MayFinalisation on the basis of allotment with the designated stock exchange:On or about 13th MayInitiation of refunds if any for Anchor investors:On or about 14th MayCredit of Equity Shares to demat accounts of the allottees:On or about 14th MayCommencement of trading of the Equity Shares on the Stock Exchanges:On or about 15th MayAbout Aadhar Housing Finance LimitedEstablished in 2010, Aadhar Housing Finance has been consistent in its efforts aimed at reaching out to the low income housing segment. Through its network of 487 branches (not including regional offices and corporate offices) and 109 sales offices in 20 states and union territories, the company has attained remarkable growth in terms of its reach and scale. The company operates as a financially inclusive, customer centric lending business and believes that their business model contributes significantly to the economic uplift of the target customers by contributing to an improvement in their standard of living. The loan product suite offered by Aadhar Housing Finance Limited includes loans for residential property purchase and construction, home improvement and extension loans, and loans for commercial property construction and acquisition.Before you investThink about your investment aims and risk tolerance.Research Aadhar Housing Finance Limited's financials and future perspectives.Acquire an understanding of IPO fundamentals and their associated risks.Last wordsAn engagement in Aadhar Housing Finance's IPO gives the investor a chance to buy shares in the fast-growing affordable real estate segment. Take your time to analyse the company profile as well as the IPO parameters before choosing to invest.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP

https://www.kotaksecurities.com/articles/aadhar-housing-finance-key-details-you-must-know/

Aadhar Housing Finance Limited IPO: Get a download of all the important info before investing

Key highlightsAadhar Housing Finance Limited has launched its initial public offering (IPO) on 8th May. The IPO will close on 10th May. A fresh issue of 31,746,032 equity shares at the upper price band, seeking up to ₹10,000 million is floated via the equity market. The OFS segment includes selling 63,492,063 shares with the plan to raise ₹20,000 million at the upper price band by the promoter shareholder, BCP Topco VII Pte Ltd.IPO details:Dates: May 8–10, 2024, with May 8th being included as well.Issue Size: ₹30000 million at the upper price band price.Price Band: ₹300 - ₹315Minimum Investment: ₹14,805 (the lot size is 47 shares).Listing Date: May 15, 2024 (on BSE and NSE)Face Value: ₹10 per shareAadhar Housing Finance Limited IPO: Strengths & WeaknessesIPO StrengthsAadhar Housing Finance Limited had the highest asset under management and net worth among its analyzed peers (in FY2021, FY2022, FY2023 and nine months ended December 31, 2022 and December 31, 2023.It has a well established network of 487 branches (not including regional offices and corporate offices) and 109 sales offices in 20 states and union territories.The loan product offerings include loans for residential property purchase and construction, home improvement and extension loans, and loans for commercial property construction and acquisition.The company has a strong, experienced and dedicated management team, with their senior management carrying an average of 25 years' experience in the financial services industry in India.They have a seasoned business model with strong resilience through business cycles.Robust, comprehensive systems and processes for underwriting, collections and monitoring asset quality are carried out.Access to diversified and cost effective long term financing with a disciplined approach to asset liability and liquidity management is seenSocial objectives are one of the core components of the company’s business model.IPO WeaknessesThe major types of risks that the company faces are liquidity risk, credit risk, operation risk, interest rate risk, cash management risk, collateral risk and information security risk.Qualitative advantagesThe strategic focus of Aadhar Housing Finance Limited is on the low-income housing segment along with diverse and dependable financing instruments that offer a sustainable value proposition. Its proven business model, ability to adapt with the economy, and strict approach to asset liability and liquidity management are additional strengths that secure its place in the market.ConclusionThe IPO of Aadhar Housing Finance Limited presents an opportunity for those wanting a share in India's developmental projects in affordable housing. By virtue of the sound financial results, the scope of the industry, and compelling market position, the company presents the opportunity for growth in the long run. Nevertheless, investors should do proper due diligence to find a balance between the risks and benefits that come with investing long-term.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP

https://www.kotaksecurities.com/articles/review-of-aadhar-housing-finance-ltd/

A quick review of Aadhar Housing Finance Limited

Aadhar Housing Finance Limited has launched its IPO on 8th May, with a 3-day window (8th to 10th May). As investors get ready to bid for the Aadhar Housing Finance IPO, let's first go through a quick summary of the company's strengths, risks, financial performance, and IPO terms.Company OverviewAadhar Housing Financehandles the low-income segment in the Indian housing sector, serving the economically weaker and medium-income groups. Established in 2010, this company provides a wide assortment of mortgage loan products, such as residential property purchase and construction, home improvement, and extension. On the other hand, it provides loan services for the acquisition and development of commercial properties.IPO DetailsThe IPO of Aadhar Housing Finance Limited, worth ₹30000 million at the upper price band, will feature a fresh issue of ₹10,000 million and an offer for sale by the promoters, BCP Topco VII Pte Ltd, of ₹20000 million. The stock size of the IPO is 47 shares, and the minimum investment is ₹14,805. Trading of the equity shares on the Stock Exchanges will start on or about May 15th.Business model and financial healthAadhar Housing Finance focuses its activities of financing for affordable housing towards the economically weaker section (EWS) and the low-income group (LIG). The company has strategies to expand their distribution network to achieve deeper penetration in key states.Financially, the firm’s assets under management (AUM) has grown to 198,651.6 million , while the net interest margins (NIMs) increased and have gone up to 9% as on H1FY24. Additionally, it keeps gross non-performing assets (GNPAs) within a reasonable range, which is indicative of a healthy asset quality.Source:RHPKey IPO details:Dates: May 8–10, 2024, with May 8th being included as well.Issue Size: ₹30000 million at the upper price band price.Price Band: ₹300 to ₹315 per shareMinimum Investment: ₹14,805 (the lot size is 47 shares).Listing Date: May 15, 2024 (on BSE and NSE)Face Value: ₹10 per shareUnderstanding the IPO StructureAadhar Housing Finance’s IPO will be an amalgamation of fresh issuance of shares and an offer for sale (OFS) by the promoter.Fresh Issue:The company gets access to new capital here, but the earnings per share (EPS) gets dilated, and also the equity ownership gets lowered. Aadhar Housing Finance will float a fresh issue of 31,746,032 equity shares at the upper price band, seeking up to ₹10,000 million via the equity market.Offer for Sale (OFS):This means offloading the existing shares owned by BCP Topco VII Pte Ltd (promoters). They will sell their 63,492,063 shares with the plan to raise ₹20,000 million at the upper price band.Source:RHPFinal wordsTo conclude, the IPO of Aadhar Housing Finance Limited offers a valuable chance to invest in the firm, which is aimed at satisfying the housing requirements of the low-income groups in India. Seasoned business model, extensive branch and sales office network and access to diversified and cost-effective long-term financing makes Aadhar Housing Finance stand out in the affordable housing finance sector. By conducting proper due diligence and assessing their respective investment goals, buyers can take advantage of the possible expansion of Aadhar Housing Finance in the housing finance sector.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP

https://www.kotaksecurities.com/articles/deep-dive-into-aadhar-housing-finance-ipo/

Unlocking Potential: A Deep Dive into Aadhar Housing Finance Ltd's IPO

Key Highlights:Aadhar Housing Finance Ltd’s IPO size is Rs 3000 croresThe IPO’s lot size is 47, with the price range between Rs 300 to Rs 315The company will get listed on stock exchanges on 15th MayIt’s raining initial public offerings (IPOs) for investors. The IPO juggernaut that started last year continues unabated. With the benchmark indices touching new highs, companies across industry verticals are looking to get listed on bourses.Aadhar Housing Financing Ltdis one of several companies all set to launch its IPO. Read on to find out essential details of this IPO.About Aadhar Housing Finance LtdAadhar Housing Finance Company is into housing finance catering to the low-income housing segment. It serves economically weaker and low-to-middle-income customers who need small-ticket mortgage loans. The company offers a range of mortgage-related loan products and has 487 branches, including 109 sales offices as of 31st December 2023.Source:RHP IPO Details and ObjectivesAadhar Housing Finance Ltd has launched its IPO on 8th May. The IPO will close on 10th May. The table below highlights other key details of the IPO:ParticularsIPO sizeKey InformationRs 3,000 croresParticularsIPO lot sizeKey Information47ParticularsPrice rangeKey InformationRs 300 - Rs 315ParticularsMinimum investmentKey InformationRs 14,805ParticularsFace valueKey InformationRs 10ParticularsIPO issue typeKey InformationBook buildingParticularsListing dateKey Information15th MayParticularsListing onKey InformationBSE and NSEParticularsKey InformationIPO sizeRs 3,000 croresIPO lot size47Price rangeRs 300 - Rs 315Minimum investmentRs 14,805Face valueRs 10IPO issue typeBook buildingListing date15th MayListing onBSE and NSE The company plans to utilise the funds obtained to meet:Future capital requirements towards onward lendingGeneral corporate purposesFurther, a portion of the proceeds from the fresh issue will be used towards meeting offer expenses.Financial SnapshotThe financials of Aadhar Housing Finance Ltd are impressive. Below are some of its key financials across different financial years:ParticularsTotal income (in crores)FY 23Rs 2043.52FY 22Rs 1728.56FY 21Rs 1575.55ParticularsProfit after tax (in crores)FY 23Rs 544.76FY 22Rs 444.85FY 21Rs 340.13ParticularsTotal assets (in crores)FY 23Rs 16,617.87FY 22Rs 14,375.81FY 21Rs 13,630.33ParticularsReturn on equityFY 2316.5%FY 2215.2%FY 2113.5%ParticularsDiluted earnings per shareFY 2313.4FY 2210.9FY 218.4ParticularsFY 23FY 22FY 21Total income (in crores)Rs 2043.52Rs 1728.56Rs 1575.55Profit after tax (in crores)Rs 544.76Rs 444.85Rs 340.13Total assets (in crores)Rs 16,617.87Rs 14,375.81Rs 13,630.33Return on equity16.5%15.2%13.5%Diluted earnings per share13.410.98.4 Industry OverviewThe housing finance market, focusing on low-income housing loans in was around Rs 4.4 trillion as of December 2023. As per CRISIL MI&A, the loans outstanding in housing finance focused on low income housing segment is expected to touch Rs 5.4-5.7 trillion by March 2026, translating into an 8-10% CAGR between fiscals 2023 and 2026.Source:RHPWrapping it upBefore investing in any company’s IPO, you should read its red herring prospectus (RHP), and Aadhar Housing Finance Ltd is no different. Read theprospectusto get an overview of its strengths and risks before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsIs Aadhar Housing Finance a listed company?Aadhar Housing Finance will soon become a listed company after its IPO on 8th May. The company will get listed on the stock exchanges on 15th May.What is the old name of Aadhar Housing Finance?Aadhar Housing Finance was earlier known as Vysya Bank Housing Finance Limited.

https://www.kotaksecurities.com/articles/indegene-ipo-gets-bumper-response/

Indegene’s IPO Gets Bumper Response From Investors

Key Highlights:IPO of Indegene Ltd has been subscribed 1.67 times at the end of day oneStrong financials, robust client relationships, and domain expertise have contributed to investors' confidenceThe company's IPO consists of fresh issue and offer for saleThe much-awaited initial public offering ofIndegene Ltdhas opened for investors to subscribe. On expected lines, the IPO is already a run-away hit among investors as it has been subscribed 1.67 times at the end of day one. Offering digital-led commercial services for the life sciences industry, the IPO consists of a fresh issue of 1,68,14,159 shares with an offer for sale constituting 2,39,32,732 shares.What does the subscription number of the IPO reflect?The subscription number Indegene IPO reflects investors' interest in the company's prospects. The subscription shows that investors believe in the company's business model and ability to generate returns. It shows the company's value proposition and its potential for future success.Possible reasons for investors’ enthusiasmGiven below are some possible reasons behind investors’ enthusiasm leading to this subscription:A dominant player in its domainThe company is a dominant player in the healthcare domain. It has won several awards for its services.Strong financialsThe company boasts strong financials, with key financial metrics like profit after tax, net revenues, return on equity, and profit after tax, recording growth over the years.Robust client relationshipsThe company enjoys robust client relationships with attractive retention rates. This has had a positive impact on its revenues and operations.Global delivery modelThe company's global delivery model, which spans Asia, North America, and Europe, has helped it expand and strengthen its clientele.Wrapping it upIndegene Ltd’s IPO will close on 8th May. If you want to subscribe to the company's IPO, apply for the shares on or before it. With the life sciences industry poised to grow significantly in the coming years, adding shares of Indegene Ltd in your portfolio can help bolster your portfolio's returns. Happy investing!Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHPMoney ControlZee BusinessMany new IPOs are performing well these days, presenting good opportunities for investors. Some IPOs that have created a buzz among investors are about to launch between May 8th - May 10th.Click the below link to know more aboutupcoming IPOs:Aadhar Housing Finance IPOTBO Tek IPO FAQsWhat is the issue price band of Indegene Ltd's IPO?The issue price band of Indegene Ltd's IPO is Rs 430 - Rs 452What is the lot size of Indegene Ltd's IPO?The lot size of the IPO is 33 shares.What is the listing date of Indegene Ltd?13th May is the listing date of Indegene Ltd.

https://www.kotaksecurities.com/articles/risks-you-must-know-before-investing-in-indegene-ipo/

Navigating Uncertainties: Key Considerations for Indegene Ltd's IPO

Key Highlights:Challenges within the life sciences industry can affect Indegene Ltd’s businessHigh dependence on revenues from clients in North America and EuropeThe company is exposed to counterparty credit risks with inadequate disaster recovery and business continuity plansIndegene Ltd operates in a highly competitive life sciences industryIndegene Ltd, offering digital services to the life sciences industry, has launched itsinitial public offering(IPO) on 6th May. An essential aspect of investing in a company’s IPO is being aware of the risks involved. Knowing them will help you make informed decisions. If you are looking to subscribe toIndegene Ltd’s IPO, here are the risks you must note.Risks Related to Indegene LtdSome of the associated risks with Indegene Ltd are as follows:1. Adverse impact in the life sciences industry can affect the company's businessAs Indegene Ltd caters to the needs of the life sciences industry, any adverse impact within the sector can affect its operations and hamper its growth. Be it regulatory hurdles related to product approvals, supply chain disruptions, or reputational damage arising from safety concerns, the hurdles can have a profound impact on the company.Economic factors and industry trends affecting life sciences companies can affect Indegene's business. The company can also be impacted by the trends affecting the life sciences industry, including healthcare reforms and outsourcing trends, among others.2. A significant portion of revenues comes from clients in North America and EuropeA significant portion of the company’s revenue comes from clients in North America and Europe. For FY 23, the company’s revenue from operations in North America and Europe stood at 68.28% and 27.36% respectively. If there’s any disruption in these markets, the same can affect Indegene Ltd’s business. Changes in regulatory framework and political situations accompanied with downsizing of economies in these markets can have an adverse impact on Indegene’s bottomline.3. Inadequate disaster recovery and business continuity plansThough the company has undertaken steps to augment its disaster recovery and business continuity plans, more needs to be done in this regard. Any disruption that the company has not factored in such plans, if it happens, can negatively impact the company’s financial conditions. If the company fails to start its key services within the said timelines, the same can negatively affect its financial positioning.4. Exposed to counterparty credit risksThe company has counterparty credit risks, and if it fails to receive payments on time, the company may be negatively impacted. For FY 22, the company's bad debts amounted to Rs 0.507 crores. The company can't ensure that it will receive all its outstanding dues on time, and it may fail to assess the creditworthiness of its clients accurately. Delayed payments from clients can negatively impact its growth.5. Highly competitive life sciences industryThe company operates in a highly competitive life sciences industry. With rivals eyeing market share and striving to outgrow each other, the company faces the pressure to stay ahead in the competition. Its future growth hinges on how well it can successfully compete with other companies providing similar solutions. If it fails to differentiate its solutions, it can potentially lose out clients and its market share.Some of the other risks are as follows:Unfamiliar business and revenue models to prospective investorsSubsidiaries contribute the majority of revenues, and any disruption can affect the company's financial conditionsDelay in the timing of revenue recognitionSubject to data protection and other lawsSubject to non-compete provisions limiting its ability to lap up business opportunitiesInadequate insurance coverageOutstanding legal proceedings against the companyIn conclusionGo through the company’sdraft red herring prospectus(DRHP) for a detailed overview of the risks. Make sure you are comfortable with the risks before subscribing to the IPO. At the same time, factor in your goals and risk tolerance before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsWhat are the risks of an IPO?An IPO may fail to live up to its mark post-listing. Additionally, dissatisfied shareholders, insider trading, trade secret concerns, etc., are some of the other risks.Is it safe to invest in an IPO?If done with diligence, investing in an IPO can help you add high-quality stocks to your portfolio.

https://www.kotaksecurities.com/articles/indegene-ipo-evaluating-strengths-and-allotment-status/

Indegene IPO - Evaluating Strengths and Checking Allotment Status

Key Highlights:Indegene Ltd has domain expertise in its field with strong digital capabilitiesIt enjoys a long-standing relationship with its clientsThe company has strong financials and a global delivery modelThe issue size ofIndegene Ltd, known to offer high-end digital services to the life sciences industry, is pegged at Rs 1841.76 crores at a price band of Rs 430 - Rs 452. The competitive strengths of Indegene Ltd have further generated a buzz surrounding its IPO.Competitive Strengths of Indegene LtdHere are the company's strengths:Domain expertIndegene Ltd has a deep understanding of the healthcare domain. Due to its domain expertise, it can efficiently modernise and digitise key functions of the life sciences industry. The firm's expertise helps it optimise sales and marketing along with the time taken to make regulatory submissions. Over the years, the company has won several awards for the rich expertise it brings to the table.Robust digital capabilitiesIndegene Ltd boasts of robust digital capabilities and has developed several proprietary tools and platforms automating AI-based efficiencies. These tools have accelerated transformation across the company's solutions, driving efficiency and effectiveness. The tools have helped the firm drive outcomes across content management, regulatory intelligence, customer data management, and clinical trials.Long-standing client relationshipsIndegene Ltd enjoys a long-standing relationship with prominent biopharma companies, including the 20 largest firms in the world by revenue for FY 23. Apart from serving high-end clients, it also caters to the needs of mid-sized pharma firms. Its retention rates stood at an impressive 122.83%, 159.89%, and 129.90% for FY 23, 22, and 21, respectively.Global delivery modelThe company has a global delivery model from 6 operation hubs and 17 offices across Asia, Europe, and North America. Thanks to its streamlined global processes, the company can offer end-to-end scalable solutions to multiple regions and different clients. Also, the company's local presence in several countries has helped it forge better client engagement.Strong financialsIndegene Ltd boasts of strong financials. While net revenues have grown to Rs 2,306.13 crores in FY 23 from Rs 1,664.61 crores in FY 22, its return on equity has grown to 25.02% in FY 23 from 21.57% in FY 22. The firm's profit after tax has also grown to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22.Along with these, the company boasts an experienced management team, the backing of marquee investors, and a track record of nurturing value via acquisitions.Checking Allotment StatusThese competitive strengths present a strong case for investors to subscribe to its IPO. If you subscribe to the company's IPO and want to know the allotment status of its shares, here's how you can do it:Visit thislinkof the registrar.Select Indegene IPO from the dropdown. You can find the name once the allocation process is complete.Choose among these available options to check the status - DP/Client ID or PAN or Application Number or Account Number.Provide the necessary details as per the chosenoption.Click on the 'Submit' button to complete the process.If you have received the allocation, you will get the shares directly in yourDemat account.In ConclusionBefore subscribing to a company’s IPO, it’s crucial for you to be well aware of the company’s strengths and risks. Read thedraft red herring prospectusfor a complete overview and ensure you have holistic knowledge about your financial goals and risk appetite before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsIs Indegene a Listed Company?Indegene will soon be a listed company after its IPO. The listing date is 13th May 2024.Who is the CEO of Indegene?Manish Gupta is Indegene’s CEO and co-founder.

https://www.kotaksecurities.com/articles/financial-insights-of-indegene-ipo/

Insightful Analysis: Unveiling the Indegene IPO

Key Highlights:Indegene Ltd, a life sciences commercialisation company, has come out with its IPO with an issue size of Rs 1841.76 croresThe book-building IPO consists of fresh issues and offer for saleOver the years, the company has recorded impressive returns on equity, total assets and net revenuesAs Indian stock exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (BSE), touch new highs, investors’ confidence in the Indian growth story is evident. Several companies are looking to cash in on this optimism by going public, and Indegene Ltd is one of them.About Indegene LtdFounded in 1998, Indegene Ltd is a life sciences commercialisation company. It offers digital-led commercialisation services for the life sciences industry, including medical device companies and biopharma. With its healthcare domain expertise and technological prowess, the company assists life science companies in clinical trials, aids in launching their products in the market and supports their safety and regulatory operations. Enabling life science and healthcare institutions to be future-ready, the company has a global presence with 17 offices and 5000+ worldwide team members.IPO Details and ObjectivesIndegene Ltd has come out with its IPO. The table below captures other key details of the IPO: Issue sizeFace valueRs 1841.76 croresRs 2Issue sizeMinimum investmentRs 1841.76 croresRs 14,916Issue sizeTotal shares offeredRs 1841.76 crores40,746,891Issue sizeFresh issueRs 1841.76 crores1,68,14,159Issue sizeOffer for saleRs 1841.76 crores23, 932,732Issue sizeIssue priceRs 1841.76 croresRs 430 - Rs 452Issue sizeLot sizeRs 1841.76 crores33Issue sizeIPO typeRs 1841.76 croresBook buildingIssue sizeListing onRs 1841.76 croresBSE and NSEIssue sizeListing dateRs 1841.76 crores13th MayIssue sizeRs 1841.76 croresFace valueRs 2Minimum investmentRs 14,916Total shares offered40,746,891Fresh issue1,68,14,159Offer for sale23, 932,732Issue priceRs 430 - Rs 452Lot size33IPO typeBook buildingListing onBSE and NSEListing date13th May The company plans to use the funds obtained from fresh issues to:Fund its capex requirementsRepay and prepay debt of its subsidiary, ILSL HoldingsMeet general corporate needs Financial SnapshotIndegene boasts of impressive financials. The table below captures some of the key financials of the company that show its impressive performance across different financial years:ParticularsNet revenues (in crores)FY 232,306.13FY 221,664.61FY 21966.27ParticularsProfit after tax (in crores)FY 23266.10FY 22164.76FY 21149.41ParticularsPAT marginsFY 2311.54%FY 229.90%FY 2115.46%ParticularsTotal assets (in crores)FY 232,203.87FY 221,353.47FY 21596.04ParticularsReturn on equityFY 2325.02%FY 2221.57%FY 2146.04%ParticularsEarnings per shareFY 2311.97FY 227.46FY 218.74ParticularsFY 23FY 22FY 21Net revenues (in crores)2,306.131,664.61966.27Profit after tax (in crores)266.10164.76149.41PAT margins11.54%9.90%15.46%Total assets (in crores)2,203.871,353.47596.04Return on equity25.02%21.57%46.04%Earnings per share11.977.468.74 The financials of the company reflect certain key things. These include:A significant jump in net profits along with an impressive return on equity. A high return on equity shows that the company has been able to successfully convert its equity financing into profits.The company's total assets and net revenues have considerably jumped. This reflects the company's acquisition of more resources with time and its effective management of expenses.Industry OverviewThe life sciences industry, which includes biopharma and medical device companies, is a thriving sector. Its combined sales stood at USD 1.8 trillion in 2023 and are projected to reach USD 2.1 trillion by 2026. A growing population coupled with the increasing prevalence of chronic is a strong indicator of the sector's potential for growth in the coming days, offering a promising outlook for investors.The company's unique business model and virtual monopoly position it for bright prospects in the future. Along with its strong domain expertise, its global delivery model can help it sustain its growth momentum in the future.Summing it upBefore subscribing to a company's IPO, it's crucial for you to be well aware of the company's strengths and risks.Read the draft red herring prospectusfor a complete overview and ensure you have holistic knowledge about your financial goals and risk appetite before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsWhat is the size of the Indegene IPO?The issue size of Indegene IPO is Rs 1841.76 crores.Is Indegene profitable?Yes, Indegene is a profitable company. Its profit after tax stood at Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22, registering a growth of approximately 61.5%.

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Looking to Invest in Indegene Ltd’s IPO? Evaluate These Financial Metrics

Key Highlights:Indegene Ltd's total income has grown from Rs 1,664.61 crores in FY 22 to Rs 2,306.13 crores in FY 23 in FY 23The company's PAT has risen to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22Its ROE has grown to 25.02% in FY 23 from 21.57% in FY 22The company's diluted EPS has grown to 11.97 in FY 23 from 7.46 in FY 22Indegene Ltd, has launched an issue size of Rs 1841.76 crores within the price range of Rs 430-452, and generated considerable buzz among investors. Essential financial metrics are among the several aspects to evaluate before investing in a company's initial public offerng (IPO). If you plan to subscribe to an IPO, here are some financial metrices that deserve your attention.Vital Financial Metrics to EvaluateTotal incomeTotal income refers to the company's aggregate money from all sources within a certain period. An increasing total income shows that a company generates more profit over time, which is a healthy sign. It shows a strong demand for the company's products and services with enhanced operational efficiency. Indegene Ltd's total income has steadily increased over the years. It grew from Rs 966.27 crores in FY 21 to Rs 1,664.61 crores in FY 22 and then rose to Rs 2,306.13 crores in FY 23.Profit after taxProfit after tax or PAT is a company's net profit after deducting all expenses, including taxes, from its total revenues. A rising PAT suggests that a company's revenue is growing at a healthy rate. It also reflects a company's strong competitive positioning within the industry and shows that the company's management is efficiently allocating resources to boost profits. Like total income, Indegene Ltd's PAT has witnessed a considerable rise over the years. It grew to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22.Return on EquityReturn on Equity (ROE) shows how efficiently a company generates profits from its shareholders' equity. A high ROE shows that a company is prudent in using its shareholders' equity and is effectively using its resources to generate returns. A rising ROE also indicates that the company has the potential for future growth. This boosts investors' confidence and can enhance a company's stock value. Indegene Ltd has recorded a high ROE over the years. It stood at 25.02% in FY 23, rising from 21.57% in FY 22.Diluted Earnings Per ShareA dilutedearnings per share(EPS) shows a detailed view of a company's profitability. Employing numerous criteria in the calculation, a rising diluted EPS shows that a firm's earnings are on the rise on a per-share basis. It is a positive sign for investors as it suggests that a company generates higher returns relative to the number of outstanding shares. Indegene Ltd's diluted EPS has been on a growth trajectory, rising to 11.97 in FY 23 from 7.46 in FY 22 and 8.74 in FY 21.Summing it upThese key financial indicators show Indegene Ltd’s solid financial position. They show that the company is financially well poised for growth and to capture market opportunities. That said, you must thoroughly evaluate the risks and consider your goals before subscribing to its IPO.Disclaimer:This article is for informational purposes only and does not constitute financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The information presented is compiled from several secondary sources available on the internet and may change over time. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.Investments in securities market are subject to market risks, read all the related documents carefully before investing. Please read the SEBI prescribed Combined Risk Disclosure Document prior to investing. Brokerage will not exceed SEBI prescribed limit.Source:RHP FAQsWhat is the profit of Indegene?Indegene Ltd's profit after tax has grown to Rs 266.10 crores in FY 23 from Rs 164.76 crores in FY 22.How big is Indegene?Indegene is a large company with 17 offices across the globe and 5000+ team members worldwide.

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India's EV Revolution and Is It Here to Stay?

Kotak Insights | Date 03/05/2024Remember the movie scene where the hero jumps in a sleek car and zooms off into the sunset?Well, swap that traditional gas guzzler with an electric vehicle (EV), and that’s what’s happening in India right now.In FY24, the electric vehicle market in India saw a staggering surge in sales, marking a 91% increase in electric passenger vehicles from the previous year. According to the Federation of Automobile Dealers Associations (FADA), sales reached a new high of 90,996 units.That's a booming shift towards electric mobility in India.So, what is fuelling this growth?Let us understand this and learn about the sector’s challenges to answer if the EV revolution will continue its momentum.What's Fuelling the EV Boom in India?Let's break it down:Government Incentives Drive AdoptionThe government's been offering sweet deals on EVs through schemes like FAME-II, making them way more affordable than their gasoline-powered counterparts. This reduces the cost barrier significantly compared to traditional fuel vehicles. Launched in 2019, FAME II has so far subsidised sales of nearly 1.3 million two-wheelers, 150,613 three-wheelers, and 18,794 four-wheelers.So, these incentives drive consumers to choose more sustainable and environmentally friendly transportation options. Think of it as a green light for eco-friendly rides.Enhanced Policy SupportBeyond subsidies, the government has introduced several additional measures to accelerate EV adoption. These include substantial tax breaks and streamlined registration processes for electric vehicles, effectively rolling out the red carpet for them.The government recently also announced a new scheme called theElectric Mobility Promotion Scheme (EMPS), 2024. This scheme aims to promote sale of electric two and three wheelers in India and the government has allocated Rs 500 crore towards this.This scheme will offer a subsidy on EVs of up to Rs 10,000 per two-wheeler, Rs 25,000 per light three-wheeler (like e-rickshaws), and Rs 50,000 per heavy three-wheeler (like autos and commercial units).That’s a sweet deal, isn’t it?Expanding Vehicle ChoicesIndian automakers are capitalising on this shift by broadening their portfolios to include a wider variety of electric models.This diversity allows consumers to choose an EV that fits their needs and budget, making electric cars a more accessible option for a broader audience.Economic AdvantagesWith petrol and diesel prices going through the roof, EVs look mighty attractive to customers in the long run.So, EVs' lower operational and maintenance costs present a financially attractive alternative for long-term savings, adding to their allure.Environmental AwarenessIncreasing environmental awareness among consumers is also crucial. As the public becomes more conscious of the need to reduce pollution and greenhouse gas emissions, EVs are gaining traction as a preferable, cleaner mode of transportation.The Rise of Electric Two-WheelersThe good news doesn't stop with cars; the two-wheeler EV segment is also seeing impressive growth.Sales of electric motorcycles and scooters climbed by 33% in 2023-24 from the previous year, with over 9,10,000 units sold.Companies like Ola Electric and TVS Motor Company are leading this segment and are at the forefront of this transformative shift.The Road AheadDespite the positive trends, the journey towards a fully electrified transport sector is not without its hurdles.Concerns such as "range anxiety"—the fear of running out of battery without access to a charging station—and the scarcity of charging infrastructure, especially in rural and suburban areas, remain significant obstacles to EV adoption.However, these are already being worked on and companies are investing big time in EV infrastructure.Moreover, to overcome these challenges, a collaborative approach is essential. A few of these could be…Advancements in Battery Technology:Developing more efficient batteries that charge faster and last longer could drastically reduce range anxiety.Expanding Charging Infrastructure:The government and private sectors working together to build a wider network of charging stations across the country. This includes installing stations in various locations, from urban centers to remote areas, to ensure that EVs are a viable option for masses.Continued Incentives and Support:Sustaining and enhancing governmental incentives such as the EMPS scheme will be crucial in maintaining the momentum and making EVs accessible to a wider demographic.Conclusion: India Charges ForwardThe electric vehicle revolution in India is gaining momentum, with FY24 being a testament to its success.By addressing the challenges and fostering cooperative efforts, India is well-positioned to gain its position in the global EV market.The Indian government has set a target to achieve30% electrificationof the vehicle fleet by 2030 and has introduced several incentives and policies to support the growth of the EV industry.With continued progress, the vision of a cleaner, greener future dominated by electric vehicles is not just a possibility but also an impending reality.India, indeed, is taking the driver’s seat in this exciting transition!We will see you next week with another exciting story.Happy Learning!Sources and References:Economic TimesET Energy WorldMinistry of Heavy IndustriesDisclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here.

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Sensex Crosses 75,000 Mark: The Rally and What’s Next

Kotak Insights | 19/04/2024The Sensex soared past the 75,000 mark for the first time in April 2024.This marks a significant moment for investors and traders who have been tracking the market’s progress lately.For market participants, this brings up a question: "Is this the right time to dive into the market, or should we brace for a potential correction after such highs?"Let’s take a look into the factors driving the market rally to answer this question and understand what future trends we could expect.The 75,000 RallyFirst, let us understand what this rally is about.For the first time, theBSE Sensexbroke through the75,000barrier on 9th April, 2024.TheNifty 50also soared above the 22,700 level during the same week. The rally was also seen in broader markets and the combinedmarket capitalisationof BSE-listed companies hit theRs 400 lakh croremilestone first time ever.Strong domestic macroeconomic indicators and positive market sentiment supported this.Here are a few factors potentially pumping this rally…Key Factors Pushing the RallyEconomic Stability and Inflation ControlIn the quarter ending December 2023,India's GDP growthrate reached 8.4%, surpassing the RBI's projections. This reaffirms India's position as the fastest-growing major economy globally.Moreover, the recent moderation in March consumer price index (CPI) inflation to a 10-month lowe at4.85%and the stabilization of core inflation have played key roles in maintaining the market cheer. The inflation is not near, but slowly moving to RBI’s comfort level of 4%.Investment and Industrial Growth:India’s factory output growth, as measured by the Index of Industrial Production (IIP) rose5.7%in February, up from 3.8% in January. In February, mining production rose 8%, and power output increased 7.5%, while manufacturing output grew 5%. Furthermore, the ongoing resilience in the investment and services sectors underline the economic vibrancy that is translating into market confidence.Monetary Policy and Growth Projections:The RBI’s steady stance on keeping the repo rate at 6.5% while focusing on monitoring inflation to achieve a medium-term target of 4% inflation has reassured investors about the market's stability.FPI’s Return to the Arena:Lastly, we have the foreign portfolio investors (FPIs) betting on India.As per NSDL data, overseas inflows into Indian equities rose to a three-month high ofRs 350.9 billion in March. In the 12 months ending March, foreign portfolio investors bought Rs 2.08 trillion worth of Indian shares, the second highest on record.What to Watch For: The Road AheadAs the market celebrates this milestone, investors should remain vigilant and consider several key aspects that could shape market dynamics in the near future:Global Economic Uncertainties:With increasing geopolitical tensions and unpredictable global markets, one should stay informed and agile to navigate potential volatility.Elections, Policies, and Fiscal Health:The outcome of general elections, changing government policies, especially those related to fiscal consolidation and public expenditure in key sectors like infrastructure, could potentially influence market movements.Q4 Earnings and Sector Performance:The ongoing fourth quarter results (Q4FY24) announcements could provide deeper insights into the market's sustainability and sector performance.Interest Rates and Inflation:Global central bank’s decision to keep interest rates higher, rising inflation across major economies, and soaring crude oil prices could also potentially influence the market sentiment.So, as traders and investors, it's crucial to keep these expectations in check.Invest or Wait?As the Sensex charts unknown territories, the dilemma is whether to invest now, hold off, or exit the market.Market participants should consider whether they are prepared for possible fluctuations and assess their investment strategies in light of current market environment.In this dynamic market environment, patience and strategic planning are key.So, as one goes about approaching the market, the emphasis should be on informed decision-making, adaptability, and a focus onmarket fundamentals.Here's a wise thought from Benjamin Graham to keep in mind:"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."It's like a little reminder that the quick ups and downs in the market are a bit like voting – things can change in a short time. But what really matters, the big value, comes from looking at the underlying market fundamentals that shape how investments and markets succeed.We’ll be back with another exciting story next week!Until then - Happy learning!Sources and References:Economic TimesBSENSEPIBNSDLDisclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here.

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Differences Between FPO and IPO

Key Highlights:IPO occurs when a company goes public for the first timeFPO occurs when an already-listed company issues fresh sharesCompanies across industry verticals look to raise funds from time to time to sustain operations, fund expansion, invest in new technologies, and encash market opportunities, among other things. Aninitial public offering(IPO) and a follow-on public offer (FPO) are two ways through which companies can raise capital. Though they may look the same at first glance, they aren’t. This blog captures the key differences between an IPO and an FPO.What is an IPO?When a company offers its shares to the public for the first time, it is known as an IPO. Post IPO, a company gets listed on stock exchanges, either the Bombay Stock Exchange (BSE) or theNational Stock Exchange(NSE) or both.The company offering the shares is known as the issuer. Once the IPO is done, the company's shares are traded in thesecondary market. IPO is a complex process that warrants a high level of expertise. A company going for an IPO seeks help from external parties such as investment banks, underwriters, promoters, etc. There are two types of IPO, namely:Fixed price issue: In this type of IPO, the company's shares have a fixed price, as mentioned in the offer document. Here, you know the share's price beforehand, and the company fixes it with the help of a merchant banker or underwriter.Book-building issue: In this type of IPO, a company doesn't fix the price of shares but has price bands. The price is discovered during the IPO process as per the demand.What is an FPO?In an FPO, a company already listed on the exchange offers new shares to investors, just like Vodafone Idea. The telecom major has come out with its FPO with an issue size of ₹18,000 crores.To know more about the Vodafone FPO, watch this video:https://www.youtube.com/watch?v=ihLh5rLn2JgFPOs are of two types, namely:Dilutive: A company offers more shares to raise equity or to reduce debt in a dilutive FPO.Non-dilutive: In a non-dilutive FPO, the company's promoters and other large shareholders sell their existing shares. In this type of FPO, no new shares are created, and the proceeds received go to the shareholders placing it, and not the company.IPO and FPO: The DifferencesNow that you know the meaning of an IPO and FPO, let’s look at their differences. The table captures the key differences between them on various parameters: ParameterStageIPOIPO happens when a company is going public for the first time.FPOFPO occurs when a company has already completed its IPO and is listed on the exchange.ParameterTimingIPOAn IPO is the initial step in a company's journey to becoming public.FPOA company goes for FPO when it needs more capital after an IPO to fund various corporate needs.ParameterPrice DeterminationIPOThe price is generally determined through an underwriting process involving market conditions, valuation, and negotiation.FPOPricing of FPO shares is determined based on investors' demand, the company's financial performance, and market conditions.ParameterOffer SizeIPOOffer size is usually large in an IPO as the company aims to raise substantial capital for growth and expansion.FPOAn FPO's offer size is generally less as it intends to meet specific funding needs.ParameterRegulatory RequirementIPOCompanies going for an IPO need to meet stringent regulatory requirements such as financial reporting, corporate governance standards, and disclosure obligations, among others.FPOFPOs are subject to fewer regulatory requirements compared to IPOs. However, they are still required to comply with certain regulatory laws.ParameterRisks InvolvedIPOAs the company doesn't have any past record of share performance, IPOs are a high-risk investment option.FPOFPOs are relatively less risky as you can analyse the performance of a company's shares in the past.ParameterComplexity in Investment DecisionIPOIPO investments are generally more complex as you need to evaluate a company in detail and go through its red herring prospectus.FPOIn FPOs, you have information on how a company has performed after its IPO. This makes investment decisions less complicated.ParameterIPOFPOStageIPO happens when a company is going public for the first time.FPO occurs when a company has already completed its IPO and is listed on the exchange.TimingAn IPO is the initial step in a company's journey to becoming public.A company goes for FPO when it needs more capital after an IPO to fund various corporate needs.Price DeterminationThe price is generally determined through an underwriting process involving market conditions, valuation, and negotiation.Pricing of FPO shares is determined based on investors' demand, the company's financial performance, and market conditions.Offer SizeOffer size is usually large in an IPO as the company aims to raise substantial capital for growth and expansion.An FPO's offer size is generally less as it intends to meet specific funding needs.Regulatory RequirementCompanies going for an IPO need to meet stringent regulatory requirements such as financial reporting, corporate governance standards, and disclosure obligations, among others.FPOs are subject to fewer regulatory requirements compared to IPOs. However, they are still required to comply with certain regulatory laws.Risks InvolvedAs the company doesn't have any past record of share performance, IPOs are a high-risk investment option.FPOs are relatively less risky as you can analyse the performance of a company's shares in the past.Complexity in Investment DecisionIPO investments are generally more complex as you need to evaluate a company in detail and go through its red herring prospectus.In FPOs, you have information on how a company has performed after its IPO. This makes investment decisions less complicated. IPO or FPO: What Should You Opt For?Choosing between an IPO and an FPO depends primarily on your risk tolerance. You can subscribe to a company's IPO if you have a high-risk appetite. On the other hand, if you don't want to take too much risk on your investment, you can opt for an FPO. That said, with both, you must never take a blind call. Evaluate a company's fundamentals well before subscribing.Disclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. FAQs on the difference between FPO and IPOHow is FPO Different From IPO?In an FPO, a company already listed on the exchange offers shares to the public. On the other hand, in an IPO, a company going public for the first time offers its shares to the public. Also, FPOs are relatively less risky than IPOs.Is FPO Good or Bad for a Company?FPOs have pros and cons. While they help a company raise additional capital, the announcement of a FPO can sometimes lead to negative market reactions.

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Key HighlightsA joint stock company is a business owned by several individuals.All the shareholders of a joint stock company have voting rights. They can influence the appointment decision for the board of directors.There is a lack of confidentiality as companies must release financial reports regularly.What is a Joint Stock Company?A joint stock company is an organisation where people pool their capital to form a business with a common goal. This type of company is suitable for large-scale projects where one person cannot afford the entire cost.The shares represent the ownership of every member. They are usually traded on stock exchanges. However, share transfers in private limited joint stock companies may be governed by an agreement and restricted to family members only.Features of Joint Stock CompanyAfter looking at the definition of a joint stock company, let’s now understand its features. Here are the important ones.Independent Legal Entity:A joint stock company is an independent legal entity just like its shareholders. It may own property and also file or defend lawsuits. Hence, the joint stock company's members are not accountable to the company.Perpetual Existence:The company continues to exist even if the members change. It can only be dissolved by following due process as per the established laws.Limited Liability:The stockholders' responsibility is restricted in this kind of company. However, members cannot sell their assets to settle a company's debt.Transferable Ownership:Generally, a shareholder may sell his shares without the approval of other shareholders. However, there may be some exceptions due to pre-emptive rights or lock-in periods.Registration:A company must be established to get the status of an independent legal entity. Thus, it is mandatory to register a business as a joint stock company.Types of Joint Stock CompanyThere are three types of joint stock companies. They include the following.Chartered Company:A company established by the head of state.Statutory Company:Statutory companies are established by specific parliamentary acts. In this case, the act defines the powers, objectives, rights, and duties.Registered Company:A registered company is established by registering under the business's laws.Advantages of a Joint Stock CompanyThe advantages of a joint-stock company are as follows:Large Capital Base:Joint stock companies can issue shares and debentures, raising a large amount of cash. A company can utilise the funds for business expansion.Limited Liability of Members:Shareholders in a limited liability joint stock company are quite safe. The shareholders' personal assets don’t have any impact due to business losses.Share Transferability:Shareholders have no restrictions on selling their shares.Shareholders’ Rights:The shareholders can elect the board of directors.Transparency:A joint stock company must release its financial reports and other critical data.Disadvantages of Joint Stock CompanyThe following are the drawbacks of a joint stock company :Legal Formalities:Establishing and managing a joint-stock company involves complex legal requirements.Higher Costs:The incorporation and management of the firm require large expenses.Conflict of Interest:There can be disagreements and conflicts of interest among the stakeholders, which include lenders, workers, owners, and the Board of Directors.No Confidentiality:Disclosure of financial reports to the public is mandatory. Hence, there is not enough confidentiality.Double Taxation:Declaring a company's income and dividends makes shareholders liable to double taxation.Joint-Stock Company vs Public CompanyHere are the differences between a joint stock company and a public company. FeatureOwnership TransferJoint Stock CompanyIt may have restrictions, as ownership can be limited to specific groupsPublic CompanyEasy transfer of ownership as shares are traded on stock marketsFeatureDisclosureJoint Stock CompanyFewer reporting requirementsPublic CompanyStrict reporting requirementsFeatureRegulationJoint Stock CompanySubject to company law but has fewer regulatory obligationsPublic CompanyMust follow all the rules of regulators and stock exchangesFeatureJoint Stock CompanyPublic CompanyOwnership TransferIt may have restrictions, as ownership can be limited to specific groupsEasy transfer of ownership as shares are traded on stock marketsDisclosureFewer reporting requirementsStrict reporting requirementsRegulationSubject to company law but has fewer regulatory obligationsMust follow all the rules of regulators and stock exchanges ConclusionShareholders have a collective ownership in a joint stock company. Over time, joint stock firms have become a good way of business organisation. They can quickly obtain funds and attract new investments. This leads to the growth and innovation of the company. Hence, joint stock firms may continue to influence the business environment in the future. Understand how these companies work and the rules governing them if you’re looking to invest in their stocks. FAQs on Joint Stock CompanyWhich legal documents must a joint stock company have?Joint stock companies must have legal documents like articles of association and memorandum of association. These documents are necessary to obtain the status of a legal entity and manage the firm properly.Why do joint stock companies need a board of directors?Joint stock companies need a board of directors to ensure efficient governance and management. The shareholders elect them.How is a joint stock company different from a partnership or sole proprietorship firm?Joint stock companies allow several shareholders to pool their funds. However, there is only one or a small number of people in partnerships or sole proprietorships.How are dividends distributed in a joint stock company?Dividends are paid from the profits in a joint stock company. The amount of dividends paid to shareholders depends on the number of shares they own.Are joint stock companies privately held or publicly traded?Joint stock companies can be both privately held and publicly traded on stock exchanges. The members have the right to decide whether to list the company on a stock exchange.

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What is Hammer Candlestick Pattern?

Key TakeawaysThe Hammer Candlestick Pattern occurs after a downtrend and signals a potential bullish reversal or a pause in the bearish momentum.The long lower shadow indicates that sellers initially pushed prices lower, but buyers eventually regained control.There are two main types: Classic Hammer, which has a small body and long lower shadow, and Inverted Hammer, which has a small body and long upper shadow.You have to look for a long lower wick, a small real body, and formation during a downtrend to recognize a Hammer Pattern.Setting a stop-loss below the Hammer's low and identifying potential resistance levels for taking profits is crucial.The higher trading volume during the Hammer formation adds credibility to the reversal signal.What is Hammer Candlestick Pattern?The Hammer Candlestick Pattern appears after a period of falling prices. This type of candlestick has a small body and a long shadow at the bottom. To understand it well, let’s consider an example.Suppose that the Indian stock market has been experiencing a bearish phase, with prices consistently declining. The price opens lower on a particular day which reflects the downtrend. However, as the session progresses, buyers step in and push the price back up, eventually closing near the opening level. This results in a candlestick with a small real body and a long lower shadow, resembling a hammer shape.The long shadow at the bottom shows that sellers initially pushed the price down, but then buyers took control and pushed it back up. This suggests that the bearish momentum might be decreasing. This pattern is seen as a potential signal for a bullish reversal, as it implies that the selling pressure has been absorbed and buyers are regaining control.Types of Hammer Candlestick PatternsThere are generally two types of hammer candlestick patterns. This includes the following:1. Classic HammerThe Classic Hammer is the standard form of the pattern. It has a small real body at the upper end of the trading range and a long lower shadow. This shadow is generally twice the size of the real body or more. This pattern signifies a strong rejection of lower prices by buyers which sets an opportunity for a potential bullish reversal.2. Inverted HammerThe Inverted Hammer candlestick pattern is a different type of Hammer pattern. While it shares similarities with the Classic Hammer, it has a long upper shadow instead of a lower shadow. This pattern occurs during a downtrend and can also signal a potential bullish reversal, but with slightly less strength compared to the Classic Hammer.How to Recognise Hammer Candlestick Pattern?A hammer candlestick suggests that the selling pressure is losing momentum, and buyers are starting to regain control. This pattern can be an early sign of a potential trend reversal or a pause in the existing downtrend. You should look for the following characteristics to recognize a hammer candlestick pattern.Long Lower Wick:The lower wick/shadow should be at least twice the length of the actual candlestick body. This indicates significant selling pressure during the trading session.Small Real Body:The real body should be relatively small compared to the lower wick as it represents the open and close prices.Formation in a Downtrend:The hammer pattern should be made during a downtrend, as it shows a potential reversal or pause in the existing bearish momentumDifference between Hammer Candlestick Pattern and Doji PatternBoth the Hammer and Doji patterns can show that a trend might change, but they have important differences. A Hammer looks like a candlestick with a small body and a long lower shadow. It suggests that after a drop, buyers are stepping in. On the other hand, a Doji has a small body with upper and lower shadows. It means that buyers and sellers are in balance, indicating uncertainty in the market. Let’s explore some key differences between these patterns. FeatureShapeHammer CandlestickIt has a small real body with a long lower shadow.Doji PatternIt has a small or no real body with equal upper and lower shadows.FeatureImplicationHammer CandlestickPotential bullish reversal.Doji PatternIndecision or potential reversal (bullish or bearish).FeatureOccurrenceHammer CandlestickIt can occurs after a downtrend.Doji PatternIt can occur in any market condition.FeatureHammer CandlestickDoji PatternShapeIt has a small real body with a long lower shadow.It has a small or no real body with equal upper and lower shadows.ImplicationPotential bullish reversal.Indecision or potential reversal (bullish or bearish).OccurrenceIt can occurs after a downtrend.It can occur in any market condition. How to Use Hammer Candlestick Pattern Effectively?The Hammer Candlestick Pattern is a popular technical analysis tool used by traders to identify potential price reversals in a downtrend. However, it's important to follow certain steps to use this pattern effectively and increase your chances of success.1. Identify the Pattern CorrectlyThe first step is to ensure that you have correctly identified the Hammer Candlestick Pattern on the price chart. A Hammer Pattern is characterized by a small real body with a long lower shadow, which should be at least twice the length of the real body. Additionally, the Hammer Pattern should appear during a downtrend, which is identified by a series of lower highs and lower lows.2. Look for ConfirmationAfter identifying the hammer pattern, you should wait for confirmation of the potential reversal. This confirmation comes in the form of the next candlestick, which should close above the closing price of the Hammer Pattern. Many traders choose to enter a long position during the formation of this confirmation candle, as it signals the potential start of an uptrend.3. Set Stop-Loss and Take-Profit LevelsIt is important to manage your risk by setting a stop-loss order while trading. A good way to limit losses is by setting a stop-loss just below the lowest point of the Hammer Pattern. If this level is breached, it suggests the downtrend might continue. However, deciding when to take profits is more personal. Since the Hammer Pattern doesn't give clues on where prices might go next, you might need to look at other indicators or resistance levels to figure out good times to take profits.4. Monitor and AdjustIt is also important to monitor the price action closely after entering the trade. If the price moves in your favour, be prepared to exit the position at your predetermined stop-loss level to minimize losses.Remember, the Hammer Candlestick Pattern is just one tool that helps traders. It is suggested to use the pattern with other technical indicators and risk management strategies.Benefits and Limitations of Hammer Candlestick PatternThe hammer candlestick pattern has its advantages and drawbacks, which traders should be aware of before making any trading decisions. The following is the breakdown in table format explaining the benefits and limitations of the hammer candlestick pattern. BenefitsIt helps to recognise the potential trend reversal from bearish to bullish.LimitationsThis pattern may generate false signals which leads to incorrect trading decisions.BenefitsThe hammer candlestick pattern provides entry points for long positions.LimitationsIt requires confirmation from subsequent candlesticks or additional technical indicators.BenefitsIt can be used in combination with other technical indicators for added confidence.LimitationsThe pattern's significance may vary depending on the market context and trading timeframe.BenefitsThe pattern highlights the presence of buying pressure, even in a downtrend.LimitationsThe interpretation of this pattern can be subjective, as the pattern's appearance can differ slightly.BenefitsLonger shadows indicate stronger reversal potential.LimitationsHammer patterns with small bodies and short shadows may be less reliable.BenefitsHigher trading volume during the hammer formation adds credibility to the signal.LimitationsThe low trading volume during the hammer formation may weaken the reversal signal.BenefitsLimitationsIt helps to recognise the potential trend reversal from bearish to bullish.This pattern may generate false signals which leads to incorrect trading decisions.The hammer candlestick pattern provides entry points for long positions.It requires confirmation from subsequent candlesticks or additional technical indicators.It can be used in combination with other technical indicators for added confidence.The pattern's significance may vary depending on the market context and trading timeframe.The pattern highlights the presence of buying pressure, even in a downtrend.The interpretation of this pattern can be subjective, as the pattern's appearance can differ slightly.Longer shadows indicate stronger reversal potential.Hammer patterns with small bodies and short shadows may be less reliable.Higher trading volume during the hammer formation adds credibility to the signal.The low trading volume during the hammer formation may weaken the reversal signal. ConclusionThe Hammer Candlestick Pattern provides valuable insights into potential bullish reversals after a downtrend. However, it is important to remember that no single pattern is foolproof, and traders should always consider the broader market context and use additional technical indicators to confirm the signal. Traders can potentially enhance their trading strategies and improve their chances of success BY understanding the aspects of the Hammer Candlestick Pattern and using it effectively. FAQs on Hammer Candlestick Pattern1. Is a Hammer Candlestick Pattern always bullish?Yes, the Hammer Candlestick Pattern is considered a bullish reversal signal, which indicates a potential change in trend from bearish to bullish.2. What is the difference between a Classic Hammer and an Inverted Hammer?The key difference between a Classic Hammer and an Inverted Hammer is that the classic hammer has a long lower shadow, while the inverted hammer has a long upper shadow.3. How can I confirm a Hammer Candlestick Pattern?The next candle closing above the Hammer's closing price confirms this candlestick pattern, which indicates that the bullish momentum is continuing.4. Can a Hammer Candlestick Pattern occur on any time frame?Yes, the Hammer Candlestick Pattern can be observed on various time frames, including intraday, daily, weekly, and even monthly charts.5. Can a Hammer Candlestick Pattern provide a specific price target?No, the Hammer Candlestick Pattern itself does not provide a specific price target. Traders may need to use additional technical indicators or analysis to determine potential resistance levels.

https://www.kotaksecurities.com/share-market/what-is-share-market/

What Is Share Market?

The share market, or stock market, is a place where companies sell shares to the public to raise capital. When you buy shares, You become a part owner of the company and receive perks such as voting on important company decisions and receiving a portion of profits in the form of dividends.Types of Share MarketNow that we know what the stock market is, let's explore the different types of share markets in India. There exist primarily two categories within the share market:1. Primary MarketThe primary market is the initial platform where fresh securities like stocks or bonds are introduced and sold to the public for the first time. It facilitates companies in gathering capital to support their activities by issuing new securities directly to investors.2. Secondary MarketThe secondary market is where securities already issued in the primary market are exchanged among investors without the company's involvement in the trading process. It offers liquidity to investors and helps in establishing the value of securities by facilitating the purchase and sale of already existing securities.Participants In Share MarketThe key participants in the share market includes:Investors:These are individuals or entities who engage in buying stocks, investing a minimum amount in share market, with the anticipation of reaping profits through either capital appreciation or dividends.Traders:Individuals or entities involved in the frequent buying and selling of shares and stocks, often in the short term, aiming to capitalise on market fluctuations and generate profits.Stockbrokers:These are professionals who serve as intermediaries between buyers and sellers, executing transactions on behalf of their clients in the share market.Stock Exchange:A platform where securities are exchanged between buyers and sellers. Two well known stock exchanges in India are NSE (National Stock Exchange) and BSE (Bombay Stock Exchange).Regulators:Government bodies regulate and supervise the share market, ensuring its fair and transparent operation, and safeguarding investors from fraudulent practices.Issuers:Companies that issue stocks and shares to procure capital and support their operational needs.Why Invest In the Share Market?Investing in the share market offers a path to potential financial progress through acquiring shares in publicly traded companies. Acting as a marketplace for the exchange of these shares, the stock market attracts individuals and institutions for various reasons:Ownership Stake in Profitable Companies:Shareholders own a stake in the company's assets and profits, enabling them to participate in its growth and expansion.Potential for Capital Growth:Share prices have the potential to increase over time, offering investors the opportunity to sell their shares at a higher price than their initial investment.Income from Dividends:Certain companies distribute a portion of their profits to shareholders as dividends, providing a reliable source of income.Portfolio Diversification:Investing in a range of stocks allows for the spreading of risk across different sectors and industries, enhancing portfolio stability.Enhanced Liquidity:The share market provides liquidity, facilitating the buying and selling of shares with relative ease compared to other investment platforms.How to Invest In the Share Market?Investing in the share market can be an exciting and rewarding journey. Let's explore how to invest in the share market effectively to maximise your chances of success.1. Educate YourselfGain a solid understanding of essential terms like stocks, dividends, and market indices. Expand your knowledge across various industries to develop a comprehensive understanding.2. Establish Financial ObjectivesDefine clear investment goals and evaluate your risk tolerance based on factors such as age, financial commitments, and investment horizon.3. Select a Brokerage AccountResearch and opt for a reputable brokerage platform that suits your investment objectives. Compare fees and features to make an informed decision.4. Conduct Thorough ResearchBefore making investment decisions, analyse company financials, industry trends, and overall market conditions. Stay informed by following reliable financial news sources.5. Implement Your PlanOpen a brokerage account and start executing your investment strategy based on thorough research and a well-defined plan.6. Stay InformedStay updated on market developments and news that may impact your investments. Consistent learning is vital for achieving success in the stock market.7.Seek Professional GuidanceIf necessary, seek advice from a financial advisor to refine your strategy and ensure it aligns with your overall financial goals.ConclusionThe share market stands as a cornerstone of modern economies, offering individuals and institutions a platform to participate in the ownership and growth of publicly traded companies. Through the purchase of shares, investors gain access to potential financial growth, dividends, and a voice in corporate decision-making. The share market serves as a dynamic marketplace where supply and demand interact to determine share prices, reflecting the collective sentiment and outlook on companies and industries. FAQs on What Is Share Market?Is investing in the share market risky?Yes, investing in the share market carries inherent risks, including market volatility, company-specific risks, and regulatory changes. However, with careful research and diversification, investors can manage and mitigate these risks.How do I choose which shares to invest in?Selecting shares for investment requires thorough research into company fundamentals, industry trends, financial performance, and growth prospects.What are stock exchanges?Stock exchanges serve as platforms where shares are traded.They facilitate trading by matching buy and sell orders from investors and provide transparency through price discovery mechanisms.Can anyone invest in the share market?Yes, anyone with sufficient capital and access to a brokerage account can invest in the share market.What factors influence share prices?Share prices are influenced by a number of factors, including company performance, economic indicators, geopolitical events, investor sentiment, and changes in interest rates.How long should I hold onto my shares?The ideal holding period for shares depends on individual investment goals and risk tolerance.

https://www.kotaksecurities.com/articles/pe-ratio-explained-lessons-from-the-mango-season/

P/E Ratio Explained: Lessons from the Mango Season

Kotak Insights | Date 12/04/2024The anticipation of the mango season is palpable in India. It's a time when the air is filled with the sweet aroma of ripe mangoes, and every fruit stall turns into a treasure trove.And as we indulge in the joy of selecting the perfect mango, little do we realize that there are valuable lessons to be learned, not just about fruit selection, but also about the intricacies of investing.Well, ask our Indian mothers who know how to pick perfect mangoes!If we were to draw parallels from their mango picking skills, we could learn a few investing lessons.Let’s look at one such lesson on P/E ratio – A powerful stock picking tool.A Trip to the Mango StandImagine you're strolling through a bustling market, surrounded by the enticing smells of fresh mangoes. As you stand beside your mother, observing her meticulous mango selection process, you couldn’t help but draw parallels between her method and the world of finance. "So, Mom, how do you always manage to pick the best mangoes?" you inquire with curiosity."It's all about finding the right balance, beta," she replies with a knowing smile. "You want mangoes that are ripe and flavorful, but you also don't want to overpay for them."Understanding P/E Ratio and EPSIn the realm of investing, this balance is reflected in the concept of thePrice-to-Earnings (P/E) ratio.Just as you would not want to overpay for a mushy, overripe mango, investors don't want to overpay for a stock that's not delivering earnings.TheP/E ratiois one method that helps investor assess whether they are getting a good deal on a stock by comparing itspriceto itsearnings.To delve deeper into the analogy, let us consider the components of the P/E ratio. Think of it as dissecting the anatomy of a mango to understand its sweetness and flavor. Similarly, understanding the P/E ratio requires examining two key components: the Price and the EPS.Here's where the concept ofEPSalso comes into play. EPS, orEarnings Per Share, tells you how much profit a company is generating per share of its stock. This metric serves as the core essence of a company's profitability, much like the sweetness of a mango defines its quality. Just as we seek mangoes bursting with flavor, investors look for companies with robust earnings.For example, if a company makes Rs 100 in profit and has 10 shares outstanding, its EPS would be Rs 10 (Rs 100 profit divided by 10 shares). If the market price of each share is Rs 200, the P/E Ratio would be 20 (Rs 200 market price divided by Rs 10 EPS).So, in a nutshell:Price-to-Earnings (P/E) Ratio:The P/E ratio is a measure of how much investors are willing to pay for each unit of a company's earnings. It indicates the relationship between the stock price and the company's earnings per share.Formula:P/E Ratio= Market Price per Share / Earnings Per Share (EPS)Earnings Per Share (EPS):EPS is a key financial metric that represents the portion of a company's profit allocated to each outstanding share of common stock. It provides insights into a company's profitability on a per-share basis.Formula:EPS= Net Income / Number of Outstanding SharesPaying the Right Price: Using P/E Ratio and EPS WiselyIt's all about finding that perfect balance between price and quality, whether you're shopping for mangoes or investing in the stock market.Let's bring this home to the Indian stock market.Imagine two companies in the mango industry:Company Ahas a P/E Ratio of 10, whileCompany Bhas a P/E Ratio of 20. At first glance, it seems like investors are more willing to shell out for Company B’s earnings. But wait, there's more to the story.AlowerP/E Ratio like Company A’s might indicate that it'sundervaluedcompared to its earnings potential. It could be a hidden gem waiting to shine. On the other hand, Company B’s higher P/E Ratio suggests that investors are paying a premium for its earnings. It might be riding high on market hype.Why P/E Ratio MattersA savvy investor looks for stocks with a low P/E Ratio relative to their peers. This doesn't mean blindly picking the cheapest stocks, just how you wouldn’t just pick mangoes with the cheapest tag. It’s about finding those stocks with strong fundamentals and growth potential.Also, remember that P/E Ratio isn't a crystal ball. Always do your homework, consider the company's performance, industry trends, and broader economic conditions before investing.So, next time you are picking mangoes at the market or eyeing stocks in the market, remember to think about the P/E ratio and EPS and make the juiciest choice possible.Happy learning!Sources and References:InvestopediaForbesDisclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions.Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/nhais-historic-invit-monetization-a-new-era-for-indias-road-infrastructure/

NHAI's Historic InvIT Monetization: A New Era for India's Road Infrastructure?

Kotak Insights | Date 05/04/2024India is on the move!With a rise in capital expenditure, there's a push to enhance everything from railways and telecommunications to electric vehicle charging infrastructure.This surge is powered by a combination of government spending, a revival in private investment, and strategic initiatives like the Production Linked Incentive (PLI) Schemes.But as you know, these big plans need big money.Traditionally, the government might sell off some assets or seek public funding to gather the necessary capital. But imagine a scenario where it could retain ownership of these assets and still offer investors a sweet deal.This is whereInfrastructure Investment Trusts (InvITs)come into play, offering a novel solution for both the government and the investors.But why are we talking about InvITs today?It’s because of a recent monumental InvIT monetization, which marks one of the largest transactions in the history ofIndian road sector.This comes as during the last month, theNational Highways Authority of India (NHAI)successfully concluded its third round of fundraising through its InvIT known asNHIT, raising a record sum of overRs 16,000 crorefor889 kilometers of national highway.So, let us understand what InvITs are, the significance of NHAI’s fundraising, and how it could impact the economy and related sectors.So, What’s an InvIT?AnInfrastructure Investment Trust (InvIT)is an investment trust created for investors to buy into infrastructure projects without direct ownership.Imagine you could invest in big infrastructure projects without actually buying them outright. That's what InvITs offer.So, investors in an InvIT effectively become part owners of operating assets ranging from tolled highways to any other infrastructure asset that generates an annuity return.Companies or the government can monetize their assets by transferring them to these trusts. And the trust then package and offer them to market participants for a unit basis ownership.In essence, InvITs resemble mutual funds but are distinct in that they are traded on stock exchanges.The Purpose and Advantages of InvITsInvITs function as a mechanism to raise capital forinfrastructure developers, thereby facilitating the development and maintenance of critical assets like roads, bridges, power plants, and communication networks.By investing in InvITs, investors become beneficiaries of the cash flows generated by the underlying infrastructure assets. This is in the form of income throughdividendsandinterest payouts.One of the key advantages of InvITs is the potential for steady income streams. Infrastructure assets often generate predictable cash flows due to long-term contracts or toll collection mechanisms, providing investors with a stable source of income.Additionally, InvITs typically invest in multiple projects across various sectors, reducing the risk associated with individual projects.NHAI’s Largest InvIT MonetizationHere’s what’s happening in a nutshell…NHAI’s infrastructure Investment Trust - theNational Highways Infra Trust (NHIT)- recently concluded its fund-raising through‘InvIT Round-3’.The above round secured financing for national highway stretches totalling 889 kilometers, with an Enterprise Value surpassing Rs 16,000 crore.Investors subscribed to theInvIT unitsthrough a book build process at a cutoff price ofRs 124.14per unit.With the investments, NHIT secured approximately Rs 7,272 crore in unit capital from marquee domestic and international investors. Additionally, it obtained debt totaling around Rs 9,000 crore from Indian lenders.This third monetization round has elevated the total realized value of all InvIT rounds toRs 26,125 crore,with NHIT now managing a diversified portfolio of15 operational toll roadsacross nine states, covering a combined length of approximately1,525 kilometres.InvIT as an Investment?Real estate investment trusts (REITs)have been rocking for years, and it’s time for InvITs to gain the same popularity in India.Potential investors should understand how InvITs typically generatereturnsfrom the asset they own.This can come from direct asset ownership with earnings flowing from toll collections, power transmission fees, etc.InvITs can also earn by owning assets in special purpose vehicles (SPVs) which may pay them dividends. Moreover, an InvIT can also generate returns by lending money to an SPV, which will, in turn, own assets, and pay the InvIT interest on the loan.So, just as any other financial instrument, one needs to evaluate InvITs as per their fundamentals and assess their risk profile before considering investing in them.With over 20 InvITs currently in India, mostly private, and more expected to emerge, investor interest in this space could see potential growth.As awareness of InvITs increases, so too does the potential for these instruments to contribute significantly to India's economic growth.See you with another interesting market story next week.Stay tuned!Sources and References:Press Information BureauSEBIEconomic TimesDisclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/will-indian-economy-continue-growth-momentum-in-fy25/

Will Indian Economy Continue Growth Momentum in FY25?

Kotak Insights | Date 28/03/2024The Indian economy has captured global attention for its resilience and growth potential.As we step into the fiscal year 2025 (FY25), the question on everyone's mind is whether India will sustain its growth momentum?Let's explore this query through insights from the recently publishedMonthly Economic Review Reportby the Department of Economic Affairs.From key indicators, global investor sentiment to trade dynamics – here’s how some key factors have shaped the Indian economy in FY24 and how are they expected to move in FY25.The Monthly Economic Review ReportLooking at the review from the last month, India's economic performance in February 2024 remained robust, bolstered by sustained growth momentum and stable macroeconomic fundamentals.The key highlights include:Growth Trajectory:India surpassed expectations with a six-quarter high growth rate in Q3FY24, continuing its upward trajectory.Capital Market:Despite geopolitical challenges, India's capital markets remained resilient.Inflation Management:Retail inflation remained stable within the target range for six consecutive months, supported by strong domestic growth and favorable commodity prices.Employment Trends:Positive trends emerged in employment, with a decline in the unemployment rate and increased labor force participation in 2023.Let us have a closer look at some of these…India’s Growth TrajectoryIndia's gross domestic product (GDP) growth estimate for FY24 has been revised upwards to7.6%, showcasing the enduring strength of the economy.This growth trend, above8%for three consecutive quarters, positions India as a standout performer globally.And it’s not just the data, but various agencies who also echo a similar sentiment.In line with the official statistics and the upward revision of various growth estimates, SBI Research and Moody’s expect India’s GDP growth for FY24 to be 8%. Fitch and Barclays raised their growth forecast for FY24 to 7.8%.Which factors drove this growth?Effective Capex:The government’s focus on capital expenditure (capex) has spurred private investments, with effective capex expected to reach4.6% of GDP in FY25,as per the Interim Budget. This is a substantial 200 basis point increase from 2.6% of GDP in FY20.Steady Private Consumption:There is a steady consumption demand which is backed by resilient urban demand and anticipated rural consumption growth due to a normal monsoon forecast in FY25.Strong Manufacturing Growth:Manufacturing sector sawdouble-digit growthin Q3 of FY24 driven by an investment surge, improved investor confidence, and strong domestic demand. The volume indicators like the Index of Industrial Production have also observed growth of 5.8% during Q3 of FY24.Rising Construction and Housing Growth:India is witnessing a robust increase in cement and steel production, which bodes well for a sustained rise in construction activity. Aided by government interventions and increased demand for residential properties in tier-2 and tier-3 cities, the construction sector is capturing new markets.Service Sector Growth:Continued expansion in non-contact-intensive service sectors also contributed to the overall economic growth momentum. The sector supported growth by registering a7%YoY growth in Q3FY24. Let us now have a look how Indian capital markets fared in FY24.Capital Markets Stand Out TallDespite geopolitical risks and volatile commodity prices, Indian capital markets remained one of the best performing among emerging markets in FY24.In the first eleven months of FY24, capital worthRs 98,112 crore(equity + debt) was raised by the corporates from the primary market through public and rights issuances.During April 2023 to February 2024,345 companieswere listed on stock exchanges.India’s equity market also witnessed a rise in the number of demat accounts. As per the NSDL and CDSL data, the number of demat accounts in India opened in February 2024 soared to over 43.5 lakh, 38.6% higher compared to the corresponding period last year. This reflects growing investor participation and confidence.And according to a Bloomberg report, India became thefourth biggest equity marketin January 2024, surpassing the stock market capitalisation of Hong Kong.Global Trade Remains SubduedThere are hiccups on the global trade front for India.This is because global trade growth is still subdued. As per the report, export orders are generally modest, particularly in manufacturing, and new supply disruptions are appearing.Moreover, attacks on shipping in the Red Sea have also resulted in trade flows being re-routed so that the shipping costs have risen sharply, and delivery times have lengthened, especially for trade from Asia to Europe.Nevertheless, there could be good news as the Organisation of Economic Cooperation and Development (OECD), in its February 2024 Interim Economic Outlook, forecasts an improvement in global trade in the near future. And Asia's reviving production of semiconductors and electronics, coupled with a rise in car sales, is providing a much-needed lift to its merchandise trade.Inflation Under Control?Retail inflation has remained within the Reserve Bank of India’s (RBI) tolerance range of 2% to 6% for six consecutive months, with headline inflation at 5.1% in February.Core inflation has also moderated, reflecting stability in inflationary pressures.Inflation in February moderated mildly in all groups in the core CPI basket – clothing, footwear, housing, household goods & services, health, transport and communication, recreation and amusement, education, personal care and effects.Overall, inflation averaged5.4%in FY24, lower than the 6.8% recorded in the corresponding period of FY23.In Conclusion…India's strong economic performance, as reflected in the recent data releases and announcements, stands out amidst the sluggish global growth.While robust investment activity is underway, strengthening private consumption demand is evident from indicators like rising air passenger traffic and sale of passenger vehicles, digital payments, improved consumer confidence and expectations of a normal monsoon.Additionally, the increased demand for residential properties in tier-2 and tier-3 cities augers well for furthering construction activity.The announcement by Bloomberg that India would be included in its bond index from January 2025 should bolster further capital inflows.In FY25, however, the current account deficit will bear watching.So, on the whole, India looks positively towards the dawn of FY25, driven by resilient domestic demand, robust investment activity, and supportive government policies.Nevertheless, we will have to wait and watch how FY25 pans out for the economy as well as the capital markets.We will be back with another exciting story next week!Until then…Stay Tuned!Sources and References:Department of Economic AffairsMonthly Economy Review – February 2024Disclaimer:The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/india-to-emerge-as-a-global-semiconductor-hub/

India to Emerge as a Global Semiconductor Hub?

Kotak Insights | Date 22/03/2024Rs 1.25 lakh crore.That’s the monumental investment the Cabinet approved last week for three semiconductor plants in India.This comes as the Prime Minister of India addressed ‘India’s Techade: Chips for Viksit Bharat’ program on 13th March, 2024, and laid the foundation stone for these pivotal projects.The facilities launched under this program are –Semiconductor Fabrication Facility in GujaratOutsourced Semiconductor Assembly and Test (OSAT) facility in GujaratOSAT facility in AssamLet us understand more about this development, India’s vision of becoming a semiconductor hub, and how it could impact the economy.India’s Vision of a Global Semiconductor HubYou see, it has been the Prime Minister’s vision to position India as a global hub for semiconductor design, manufacturing and technology development.Talking of the recent past, the launch of theIndia Semiconductor Mission(ISM) in 2022 is a strategic move to build a robust semiconductor ecosystem, essential for powering all electronic devices in India.But firstly, it’s essential to grasp the fundamental importance of semiconductors, commonly referred to aschips, in today’s world. These components are the lifeblood of most electronic devices, from smartphones and laptops to automobiles.The Covid-19 pandemic highlighted the fragility of the global semiconductor supply chain, heavily dependent on a few countries, leading to a worldwide reassessment of semiconductor strategies.Against this backdrop, theISMwas launched on December 15, 2022 with the aim of establishing a robust semiconductor ecosystem within the country.This initiative, housed under the Digital India Corporation, is tasked with catalysing semiconductor manufacturing, packaging, and design capabilities in India.The initiative also gained financial support in December 2022, with the announcement of aRs.76,000-croreincentive package to encourage the establishment of semiconductor and display fabrication plants. This financial boost aimed to attract significant industry players and stimulate investment in India's semiconductor infrastructure.Since then, there have been many developments in the semiconductor space. And the recent approval of the above three facilities, with a huge investment and manufacturing capabilities, signifies a big stride forward for India.A Look at the Three FacilitiesThe Dholera Special Investment Region (DSIR) inGujaratwill host a semiconductor fabrication facility established byTata Electronics Private Limited(TEPL) under a Modified Scheme for Semiconductor Fabrication in India. With a staggering investment of overRs.91,000 crore, it marks the country's first commercial semiconductor fabrication facility.In Morigaon,Assam, another OSAT facility will be set up byTEPLunder a Modified Scheme for Semiconductor Assembly, Testing, Marking, and Packaging (ATMP), with an investment of approximatelyRs.27,000 crore.Similarly, the OSAT facility in Sanand,Gujarat, will be established byCG Power and Industrial Solutions Limitedunder the same scheme for ATMP, with an investment of aboutRs.7,500 crore.These facilities are expected not only to strengthen India's semiconductor ecosystem but also to generate employment and stimulate growth in related sectors such as electronics, telecom, and much more.The Broader Implications for IndiaAccording to a report by Deloitte, the semiconductor industry in India is expected to play an important role in enhancing the global value chain, expanding to a market size ofUS$ 85 billionand generating employability for 600,000 people by2030.Note that only a handful of nations manufacture semiconductors today. So, there’s a need for a reliable supply chain after the disruptions caused by the coronavirus pandemic.India's entry into semiconductor manufacturing positions it among a select group of nations capable of producing these critical components.The strategic move to establish three big projects, amplified by the Prime Minister's vision of 'Made in India' and 'Designed in India' chips, aims to propel the country towards self-reliance and modernization.The initiative is further supported byProduction Linked Incentive(PLI) schemes and the creation of electronic clusters, fostering the growth of the electronic ecosystem.These developments are expected to establish India as a semiconductor hub.Conclusion: A New Chapter in Chip ManufacturingWhile India had capabilities in chip design, it would be opening a new chapter of chip fabrication now.Chips find applications in critical industries like defence, aerospace, drones, communication networks, and much more.With the government's proactive involvement in the semiconductor industry, India aims to reduce its dependence on imports.Moreover, the above strategic move not only positions India as a key player in the global semiconductor supply chain but also opens up opportunities in associated industries.In all, by fostering a robust semiconductor ecosystem, India is set to enhance its standing in the global tech landscape, driving job creation, technology diffusion, and economic growth.We will be back with another exciting story next week!Until then…Stay Tuned!Sources and References:PIBISMIndBizBusiness TodayDisclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read the full disclaimer here.

https://www.kotaksecurities.com/mutual-funds/registrar-and-transfer-agents-learn-the-meaning-and-role-of-rtas/

Registrar and Transfer Agents: Learn The Meaning and Role of RTAs

Registrar and transfer agents (RTAs) are among the key players in India’s mutual fund ecosystem. RTAs help mutual fund companies and investors in equal measures and are pivotal in the smooth operations of the industry. So, who exactly are RTAs, and what’s their role? Let’s find out.Who are RTAs?RTAs act as mediators between mutual fund houses and investors. They are SEBI-registered organisations offering vital record-keeping and administrative services to mutual fund companies. They maintain all records of mutual fund investors and provide single-point access to information related to your mutual fund investments.Role of RTAsRTAs provide a variety of essential services to mutual fund investors and fund houses.1. Services offered to mutual fund investorsStatement generation: An RTA generates various types of statements related to your mutual fund investment. These include a consolidated account statement (CAS),capital gainsstatement, portfolio valuation statement, etc. You can study these statements and review your mutual fund portfolio. They are also required while filing income tax. Axe the income tax!Avail tax benefit of up to ?1.5 lakh under section 80 C by investing in ELSS.Invest Now Ad-hoc services: RTAs also provide various other ad-hoc services to investors. With the help of an RTA, you can:Place a cancellation or stop request for your mutual fund SIP,SWPor STPMake changes in the bank mandatePlace a redemption request for your mutual fund unitsUpdate nominee details2. Services offered to mutual fund housesRTAs work with AMCs, taking care of various responsibilities, investor services and distribution. They help AMCs maintain accurate records of all mutual fund investors and their transactions. Thanks to their PAN-India presence, they help mutual fund companies reduce operational costs. They have offices across locations in India, meaning fund houses aren’t required to open their offices in these places.Apart from mutual fund companies, RTAs also help mutual fund distributors by buying and selling funds on investors’ behalf.In conclusionRTAs are like the unsung heroes of the mutual fund industry, working diligently behind the scenes to ensure the smooth functioning of the industry. By balancing the needs of investors and fund houses, they help maintain trust and transparency among investors and fund houses. FAQs on registrar and transfer agentsWhat is the role of a registrar and transfer agent?The role of a registrar and transfer agent is to maintain investors’ records and their transactions in mutual funds. They also work in tandem with fund houses, taking care of investor services and distribution responsibilities.How are RTAs compensated for their services?Different RTAs may charge differently for their services, the cost of which is passed on to investors.

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What are mutual funds? Meaning, definition and benefits

By this time, you must be familiar with mutual funds. Skim through newspapers, watch television, or browse the internet; in all likelihood, you would have encountered several ads related to mutual funds. But what exactly are mutual funds, and why is there so much talk surrounding them? Let’s find out.Meaning and definition of mutual fundsA mutual fund is a financial instrument. Its underlying portfolio may consist of stocks, bonds, commodities, etc., and it pools money from various investors to build this portfolio. In other words, mutual funds consist of a large sum of money pooled by several investors and invested in the fund’s underlying portfolio. Professional fund managers oversee investments in mutual funds and take calls aligning with the fund’s objective.When investing in a mutual fund, you are allocated a fixed number of units as per the fund’s net asset value or NAV. A fund’s NAV may increase or decrease depending on market valuations.Benefits of mutual fund investmentsNow that you know what mutual funds are, let’s see the advantages they bring to the table.Professional managementIt’s one of the most significant advantages of mutual fund investments, particularly active funds. A fund manager manages your investment in a fund. The manager, with a team of research analysts, studies market movements, tracks the movement of securities, and invests money accordingly. Each fund has a particular objective, and the fund manager tries to achieve it while helping you boost your wealth.When it comes to investing your hard-earned money, professional management can make a significant difference in the final outcome. As an investor, it gives you much-needed peace of mind as you know experts are handling your money.Pocket-friendly investmentTo invest in a mutual fund, you don’t need a large sum of money. You can start with as little as ₹100 or ₹500 per month throughsystematic investment plans(SIPs). SIPs are a way of investing a fixed amount at chosen intervals into mutual funds.The flexibility to start small makes mutual funds suitable for everyone. Even a modest SIP of ₹1000 in a month in a fund offering annualised returns of 10% for 10 years can help you amass a corpus of over Rs. ₹2 lakhs, subject to the fund’s performance. That’s not all.Mutual funds also allow you to increase your investment with time. Through a top-up SIP, you can enhance your investment by a certain percentage or a fixed amount every year. With this, you can accumulate even a bigger corpus for your goals. SIP by SIP, get closer to your financial goalBegin with a pocket-friendly amount every month and top it up when you can.Start an SIP Different types of mutual fundsMutual funds give you an array of investment choices. You can put money in different types of mutual funds as per your life goals and risk tolerance. For instance, you can invest in large-cap equity funds for long-term goals. On the other hand, if you have a low-risk tolerance, you can invest in debt funds. If you are new to mutual fund investing, you can start with index funds or hybrid funds. The table below shows the varioustypes of mutual fundsbased on different aspects.AspectsAsset classTypes of mutual fundsEquity, Debt, Hybrid and CommoditiesAspectsInvestment goalsTypes of mutual fundsWealth Creation, Income Generation, Tax Savings, Pension, Children’s EducationAspectsStructureTypes of mutual fundsOpen-ended, Close-endedAspectsTypes of mutual fundsAsset classEquity, Debt, Hybrid and CommoditiesInvestment goalsWealth Creation, Income Generation, Tax Savings, Pension, Children’s EducationStructureOpen-ended, Close-ended DiversificationThere’s a common saying in personal finance: don’t put all eggs in one basket. Doing so can backfire and bring down your portfolio in case of non-performance of the asset class. Mutual funds help mitigate the risk by spreading your investments across asset classes. As they invest in a wide range of securities, they help you diversify your investments.In many equity funds, the money is distributed across various companies from different industry verticals. It diversifies the risk within the portfolio. With mutual funds, you can invest across asset classes - equity and debt - to diversify out your investment risk.LiquidityImagine a situation when you need money on short notice. With mutual funds, you can access your money on the go. Upon placing a redemption request, the money is credited into your bank account within a working day or two. With digitalisation, you don’t need to visit the asset management company’s (AMC) office for redemption. You can request a redemption online indicating the money you need or the number of units. The money will be credited to your account accordingly.Low costMutual funds are low-cost investment options. While you need to pay a fee in the form of an expense ratio to the fund house, it’s pretty competitive. If you invest in a direct plan, the expenses are further reduced. In a direct plan, the fund house doesn’t pay any commission to the intermediary and passes on the benefits to you.In conclusionWith mutual funds, you can build a corpus for essential life goals like children’s higher education, retirement, etc. Before investing, study the fund well and check if its objective aligns with your goals. Evaluate its past performance across market cycles and seek professional advice if needed. FAQs on mutual fundsWhat is the main objective of a mutual fund?A mutual fund’s main objective is to invest in securities whose value appreciates with time. This leads to wealth building for investors.How many mutual funds should I invest in?The number of funds you invest in depends on your individual financial goals, risk appetite, budget and tenure. Consult a financial advisor for a detailed recommendation.How do I choose a mutual fund?Choose a fund based on your investment goals and risk tolerance. Read the scheme objective and check if it is in line with your own financial goal. Look at the fund’s long-term track record and see how consistent the returns have been.

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Is the India-EFTA Trade Deal a Win-Win Situation?

Kotak Insights | Date 15/03/202416 years of negotiation and 21 formal rounds.That’s what went into gettingIndiaand theEFTAcountries shake hands on a free-trade agreement (FTA).This development is getting the limelight for all the right reasons. It’s because the trade agreement may be instrumental in India receiving a whopping$100 billionas foreign direct investment (FDI) in 15 years with1 million jobs!Let us understand this trade agreement in detail and know how it could influence various Indian sectors.The EFTAEFTA stands for theEuropean Free Trade Association.It is the intergovernmental organisation ofIceland, Liechtenstein, Norway and Switzerlandand it promotes free trade and economic integration between its members.How big is EFTA?The four EFTA States are open, developed economies with trade figures substantially higher than might be expected from a total of less than 14 million people.In 2021, EFTA was the10th largest traderin the world in merchandise trade and the 8th largest in trade in services. And EFTA is among the most important trading partner in goods and services for the European Union (EU). So, that says that any trade agreements with the EFTA could be a potential win-win for Indian trade as well unlocking economic benefits and improving bilateral trade relations.The FTAMoving on to the FTA – which stands forFree Trade Agreement. A FTA is a pact between two or more nations aimed at reducing barriers to imports and exports among them. So, under a free trade policy, goods and services can be bought and sold across international borders with little or no government tariffs, quotas, subsidies, or prohibitions to inhibit their exchange. And countries get into these FTAs to spur up the trade between them.For instance, India has signed a couple of free trade agreements (FTAs), and six preferential pacts with its trading partners to promote exports and ensure greater market access for domestic goods and services.But are all FTAs good for the countries in it?The answer is a no because there may be instances where these trade agreements don’t do as much good for an economy as desired.The upside is that a FTA could offer Indian manufacturers free access to certain foreign markets without having to pay needless custom duty. And foreign manufacturers can get the same privilege in return.The downside is that Indian manufacturers could potentially have a lot to lose if cheap goods from foreign countries begin to flood our markets.So far, so good.Let’s now bring up the topic of the hour – the FTA agreement between India and EFTA.India-EFTA Trade Agreement a RealityOnMarch 10, 2024, India and the EFTA signed a big deal called the Trade and Economic Partnership Agreement (TEPA). The Indian government, led by the Prime Minister, approved of this.Here are some of the key highlights of this TEPA:EFTA will help bring in $100 billion investment to India and create 1 million jobs in the next 15 years. (The investments do not cover foreign portfolio investments)EFTA is offering 92.2% of its tariff lines which covers 99.6% of India’s exports. The EFTA’s market access offer covers 100% of non-agri products and tariff concession on Processed Agricultural Products (PAP).In return, India is offering 82.7% of its tariff lines which covers 95.3% of EFTA exports, of which more than 80% import is Gold. The effective duty on Gold remains untouched. Sensitivity related to PLI in sectors such as pharma, medical devices & processed food etc. have been taken while extending offers and sectors such as dairy, soya, coal and sensitive agricultural products are kept in exclusion list.India has offered 105 sub-sectors to the EFTA and secured commitments in 128 sub-sectors from Switzerland, 114 from Norway, 107 from Liechtenstein, and 110 from Iceland.A Win-Win Deal?The agreement between India and the EFTA could bring benefits to both parties.This is because EFTA is a key group in Europe, offering opportunities to grow trade in goods and services. It's one of the top three economic block in Europe, along with the EU and the UK.The trade agreement provides an opportunity for India to integrate into EU markets. Note that over40%of Switzerland’s global services exports are to the EU. So, with the trade agreement, Indian companies can look to Switzerland as a base for extendingmarket reach to EU.The agreement will also give impetus to "Make in India" and "Atmanirbhar Bharat" campaigns.It encouragesmanufacturingin sectors such as Infrastructure and Connectivity, Manufacturing, Machinery, Pharmaceuticals, Chemicals, Food Processing, Transport and Logistics, Banking and Financial Services and Insurance.The India-EFTA deal is also expected to spurtrade investments. India could see investment flow into the pharma, chemical sectors, food processing and engineering sectors. In fact, government officials have said that EFTA is also looking atjoint ventures(JVs) in the above-mentioned sectors that will help India diversify imports away from China.Lastly, TEPA would stimulate India’sservices exportsin sectors of key strength and interest such as IT services, business services, personal, cultural, sporting and recreational services, other education services, etc.However, one must also note that Switzerland, which is India’s biggest trade partner among EFTA countries, has decided to eliminate import duties on all industrial goods forall countriesstarting from January 1, 2024.So, the abolition of tariffs on all industrial products, including chemicals, consumer goods, vehicles and clothing is a concern for India as industrial goods accounts for98%of India’s $1.3 billion merchandise exports to Switzerland (in FY2023). And due to this development, India’s goods could face stiffer competition despite any tariff elimination that would be part of the above deal.In Conclusion…As the Minister of Commerce and Industry, Food and Consumer Affairs and Textiles - Piyush Goyal said that TEPA is a modern and ambitious Trade Agreement.This is the first time that India is signing a free trade agreement with four developed nations - an important economic bloc in Europe.Moreover, for the first time in history of FTAs, a binding commitment of $100 billion investment and 1 million direct jobs in the next 15 years has been given.In all, the agreement can give a boost to Make in India, provide opportunities to young & talented workforce and will provide a window to Indian exporters to access large European and global markets.However, ensuring the deal's benefits trickle down to most sectors of the economy, mitigating the risks of increased competition, and navigating the global trade dynamics will be essential.As India continues to assert its position on the world stage, this agreement could be a testament to its influence and the collaborative spirit of international trade partnerships.We will be back with another exciting story next week!Until then…Stay Tuned!Sources and References:PIBEFTAIndian ExpressBusiness StandardDisclaimer: The content of this blog is intended solely for educational purposes and should not be regarded as financial advice. It is not produced by the desk of the Kotak Securities Research Team, nor is it a report published by the Kotak Securities Research Team. The securities and assets mentioned serve purely as illustrations only and should not be taken as recommendations for investment. Please note that the information presented is compiled from several secondary sources available on the internet and may change over time. We strongly advise consulting with a qualified financial advisor prior to making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/the-indian-housing-dilemma-to-buy-or-rent/

The Indian Housing Dilemma: To Buy or Rent?

Kotak Insights | Date 07/03/2024Should we buy or rent our home?In India, owning a house is just a dream.Today we'll dive into this age-old debate of Indian real estate. More than being right or wrong, it is a matter of choice and affordability.Owninga home provides security, but also comes with high costs and debt.Rentingmay be cheaper if the housing is expensive and you have limited funds.In this blog, we explore both the options.Owning a Dream HomePicture Raj and Priya stepping into their own little fortress. It’s all about stability, investing in the future, and being the kings & queens of your castle without worrying about landlords or rent hikes.Interestingly, do you know where does India invest the most?As per a Jefferies report, majority of the Indian household assets ownership include investment in properties with share ofover 50%.

Source: Jefferies , TradingQ&AComing back to Raj & Priya, they go ahead, take huge home loans and make sure they are able to pay theequated monthly installments (EMIs).Suppose they choose fixed interest rate. Note that, interest rates play a crucial role in this decision.With afixed rate, your monthly payments stay the same, giving you peace of mind and stability. But with afloating rate, they can fluctuate with the market, which can be risky but might save you some money in the long run.Imagine Raj eyeing a sweet pad in bustling Mumbai. The buy vs. rent debate here is a real head-scratcher – property prices, rental rates, maintenance costs, and potential appreciation, oh my!Let’s do a quick number crunching for him.

Buying Scenario:Property PriceDown PaymentRs 1 croreRs 20 lakh (20%)Property PriceLoan AmountRs 1 croreRs 80 lakhProperty PriceLoan TermRs 1 crore20 yearsProperty PriceFixed Interest RateRs 1 crore7%Property PriceEMI (Fixed)Rs 1 croreRs 59,000 (approx.)Property PriceFuture Value Assumption (10 years)Rs 1 croreRs 2 croreProperty PriceRs 1 croreDown PaymentRs 20 lakh (20%)Loan AmountRs 80 lakhLoan Term20 yearsFixed Interest Rate7%EMI (Fixed)Rs 59,000 (approx.)Future Value Assumption (10 years)Rs 2 crore

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Stock SIP - A Systematic Way to Invest in Stocks

Key highlightsStock SIP allows systematic investment in stocks.Stock SIP gives you the benefit of rupee cost averaging and lets you take advantage of the power of compounding.SipIt by Kotak Neo allows you to systematically invest in equity shares and exchange-traded funds.You must have heard aboutsystematic investment plansor SIPs, right? SIPs are amongst the most preferred ways to invest in mutual funds and build a corpus for various life goals. However, can you start SIPs in mutual funds and stocks? Yes! Stock SIP is the new flavour of the stock market through which you can systematically invest in your chosen stocks. Read on to learn what stock SIP is and its benefits.What is Stock SIP?Like its mutual fund counterpart, a stock SIP entails investing a fixed amount at regular intervals, typically monthly. The difference? Instead of mutual funds, you put your money into stocks. Over time, you accumulate many stocks without breaking a sweat.Benefits of Stock SIPNow that you know the meaning of stock SIP, let’s examine its benefits. A stock SIP brings these benefits to the table:-Disciplined Investing Without Lumpsum InvestmentIt’s a common belief that investing in stock markets requires enormous capital upfront. However, it’s not true. Stock SIPs allow you to invest a small sum in your chosen stock at predefined intervals. You need not worry about having a sizeable investible surplus to get started. Regular investments through stock SIPs help in building a consistent and disciplined investment habit, which is essential for wealth creation in the long run.The Advantage of Rupee Cost AveragingLike in mutual funds, a stock SIP allows you to benefit from rupee cost averaging. Regularly investing a fixed amount leads you to buy more shares when prices are down and less when prices are high, potentially lowering the average acquisition cost.Bringing Compounding into PlayStock SIPs allow you to benefit from the power of compounding, a phenomenon that can significantly enhance the growth of wealth over time. Many stocks pay dividends, which are a distribution of profits to shareholders.With a stock SIP, these dividends can be reinvested to purchase additional shares. This reinvestment amplifies the compounding effect as you earn returns not just on the initial investment but also on the accumulated returns.Enter Market With Lower RiskThis is another significant benefit of stock SIP. As stock SIP entails investing a small amount and not a lump sum investment, it allows a strategic entry into stock markets at a lower risk, regardless of the market condition. Additionally, it ensures your participation in markets over different market cycles. This could enhance overall risk-adjusted returns in the long run.Maximise Benefits from Stock SIPs With SipItWith these host of benefits, it will not be an understatement to say that a‘Stock SIP Sahi Nahi…Kaafi Sahi Hai’. SipIt by Kotak Neo allows you to start an SIP in Equity Shares and Exchange-Traded Funds (ETFs).That’s not all. SipIt allows you to explore curated lists like:Most SIP’d– A list of Stocks/ETFs in which most numbers on SIPs have been startedBuzzing Stocks– A list of Stocks/ETFs in which most numbers on SIPs have been created in the last 7 daysTop Gainers- A list of Stocks/ETFs with the highest CAGR in the last 5 yearsPowered by Kotak research section- A list of Buy Calls given by Kotak Research teamSectors that drive the marke’- A list of top-performing stocks bifurcated based on their sectors.So, what are you waiting for? Make the most of Stock SIPs with SipIt today.

https://www.kotaksecurities.com/mutual-funds/mutual-funds-in-a-low-interest-rate-environment/

Mutual Funds in a Low-Interest Rate Environment

Over the years, the popularity ofmutual fundshas gone up by several notches, with retail investors investing in them to build a corpus for various life goals. While several categories of funds have given impressive returns, investors often question their utility in a low-interest rate environment.With the Reserve Bank of India (RBI) pausing key rate hikes in subsequent monetary policy meets, there’s a growing consensus about rate cuts in the coming days. So, how will funds perform in a low-rate environment, and should you invest in them in such a scenario? Let’s find out.What is a Low-Interest Rate Environment?A low-interest rate environment is when the prevailing interest rates are relatively lower than historical averages. In such an environment, borrowings become cheaper. The primary goal of implementing a low interest rate is to stimulate economic activities and encourage borrowing and spending.Bond Funds Expected to Do WellDebt funds, especially bond funds, are expected to perform well when interest rates are low. Bond funds invest a significant portion of their assets in bonds issued by government and corporations. Bond prices and interest rates are indirectly proportional. It means when interest rates are low, bond prices are high, and vice-versa.In a low-interest rate regime, bond prices increase. This, in turn, increases the fund’snet asset valueor NAV, which potentially translates into higher returns for investors. Also, in a low-rate environment, the yield or the interest income from fixed-income securities in mutual funds goes up. This results in potentially higher gains from mutual funds.Impact on Equity FundsEquity fundsalso benefit from a low-interest rate regime. When interest rates are low, borrowing becomes less expensive for companies. This, in turn, can boost a company’s performance and profitability. This enhances returns from equity mutual funds and increases your portfolio’s value.On the other hand, when interest rates rise, borrowing becomes expensive for companies, and it hurts their profitability. This brings down the returns from equity funds.Investing Mantra in Mutual Funds When Interest Rates Are LowInvesting in mutual funds when interest rates are low doesn’t need to be any different. The basics remain the same. Ensure:Optimum DiversificationMake sure to diversify well across funds - debt and equity. This ensures you capture the upsides well and benefit from both these funds. The right dose of equity and debt offers stability to your portfolio in the long run.Regularly Review Your PortfolioMutual fund investment is not a one-time exercise. You need to review your portfolio regularly and ensure your investments align with your goals. Rejig your portfolio if necessary to take advantage of the upside during bull runs and protect the gains from eroding when markets are down. Don’t act under impulse and seek help from a professional when in doubt.In ConclusionAs evident, both debt and equity funds tend to benefit from a low-interest rate regime. With inflation peaking and major central banks, including the RBI, hinting at lowering rates in the coming days, we could be heading towards a low-interest rate regime. Stay invested and reap the benefits! FAQs on Mutual Funds in a Low-Interest Rate EnvironmentHow are Mutual Funds Affected by Interest Rates?When interest rates are high, bond funds suffer due to a price drop. Equity funds, on the other hand, are also affected by high interest rates as they affect a company’s profitability and subsequently hurt returns.Should I Increase My Mutual Fund Investments in a Low-interest Regime?While most funds tend to do well when interest rates are low, whether you want to increase your investments or not depends on your goals, risk appetite, and the availability of investible surplus.

https://www.kotaksecurities.com/mutual-funds/relationship-between-mutual-funds-and-interest-rates/

Relationship Between Interest Rates and Mutual Funds

Interest rates impact several aspects of finances, and mutual fund investment is one among them. One of the key economic indicators, interest rate, has a profound impact on how mutual funds perform, and as an investor, it’s essential for you to understand it for informed decision-making. Let’s start.What are Interest Rates and Why Do They Change?Before delving deep into the impact of interest rates on mutual funds, let’s first understand what interest rates are. Simply put, interest rate refers to the rate of borrowing money set up by the RBI. It is the base that decides the cost of borrowing for all financial transactions, including bank-to-bank loans and bank-to-customers.Several factors drive the dynamics of interest rates. The RBI closely monitors key economic indicators such asinflationand economic growth to compute appropriate interest rate levels. When inflation is high, the RBI increases interest rates to bring it down and prevent a further price uptick. On the other hand, when there's a slowdown in the economy, the RBI raises interest rates to stimulate borrowing and spending.Impact of Interest Rates on Mutual FundsBoth debt and equity funds feel the impact of interest rates. Here’s how:Interest Rate Impact on Debt FundsDebt fundsthat invest in fixed-income securities, such as bonds, treasury bills, commercial papers, etc., are negatively impacted when interest rates are high. The impact is more profound on debt mutual funds with bonds as their underlying portfolio. This is because bond prices and interest rates move in opposite directions. When interest rates are up, bond prices are down, and vice-versa.When interest rates are high, new bonds offer better returns than old bonds, and your investments in them are likely to suffer. The greater the maturity period, the higher the chances of them being susceptible to interest rate risk. That said, funds with shorter durations that invest in floating-rate bonds are less likely to be affected by changes in interest rates as against funds that invest in fixed-rate bonds.Interest Rate Effect on Equity Mutual FundsInterest rates also influenceequity mutual funds. When rates are low, borrowings become less expensive for companies. This, in turn, can boost their profitability and returns. If it happens, it enhances returns from equity mutual funds. On the contrary, when interest rates go up, borrowing becomes expensive for companies, and their profitability takes a hit. In such a scenario, equity funds may see a dip in returns.Also, in a high-interest rate regime, generally, a negative investor sentiment adds tomarket volatility. In such a scenario, most investors tend to pull out money from equities and shift to safer investment options. This shift in preference could lead to selling pressure in equities, thereby affecting their performance.Ways to Navigate Interest Rate Risk in Mutual FundsWhile you can do little to control interest rates, what you can do is tailor your investment strategy in a manner that allows you to cushion your investments against interest rate risks. Some strategies you can adopt are as follows:Understand the Interest Rate EnvironmentStay informed about the prevailing interest rate environment and keep a tab on RBI’s monetary policy meets. Decisions regarding key policy rates are taken during these meetings. Following them closely can help you know RBI’s take on the current interest rate environment and the economy in general.Invest in Short Duration Debt FundsDebt funds with a higher maturity duration are more likely to be impacted by adverse interest rate movement. Hence, it’s crucial for you to invest in short-duration debt funds that are likely to be less sensitive to interest rate movements.Monitor and RebalanceReview your portfolio regularly and rebalance it to maintain your desired asset allocation. Changes in interest rates can impact the balance of your portfolio. Rebalancing helps make sure that your investments align with your risk tolerance and investment goals.In ConclusionAs evident, interest rates profoundly influence the performance of various asset classes, particularly bonds within mutual fund portfolios. Flexibility and a readiness to adapt to evolving market conditions are key elements in mitigating interest rate risks. By staying informed, adopting a diversified approach, and, when necessary, seeking professional advice, you can better position yourself to weather the impact of interest rate fluctuations and make informed decisions in sync with your financial goals. FAQs on Relationship Between Interest Rates and Mutual FundsHow do Interest Rates Influence Mutual Funds?Mutual funds, both debt and equity, suffer when interest rates are high. On the other hand, when rates are low, they are likely to perform well.Do Mutual Funds Go Down When Interest Rates Go Up?Generally yes. When rates go up, underlying securities' value go down, which subsequently pulls down returns from funds.

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What is the Timing of Intraday Trading and Its Importance?

Key Highlights:Intraday trading timings for the equity segment are from 9:15 am to 3:30 pm and 9 am to 11:30 pm for commodities.Importance of timings:Trade execution: Helps you execute your trade efficiently.Manage volatility: Aids in managing market volatility.Monitor liquidity: Allows you to execute trade at favourable prices.An essential aspect ofintraday tradingis knowing its timings. In this form of trading, stocks are bought and sold on the same day. Knowing intraday trading timing can help you make the most of the available time, which plays a vital role. If you are looking forward to intraday trading, this blog will help you understand the timing of intraday in India and its importance. Let's begin.Intraday Trading Timing in IndiaAs intraday trading involves settling trades on the same day, its timing is the same as that of the stock market, i.e., from 9:15 am to 3:30 pm (Monday to Friday), barring Saturdays, Sundays and other designated market holidays. That said, though theoretically, intraday ends at 3:30 pm, you don't get to trade till then. Based on their risk management policy, most brokers square off your position five to ten minutes before the market closes.Note that the above-mentioned intraday trading timing is for the equity segment.Commodity trading timesare much longer, from 9 am to 11:30 pm (Monday to Friday).Timing of Intraday in India: ImportanceKnowledge of intraday trading timing is essential because of the following reasons:Trade executionKnowledge of the timings helps you efficiently execute your trade. As you need to buy and sell securities on the same day, knowing precise timings enables you to do that within a reasonable timeframe and gain from short-term price movements.Volatility managementEffective management of market volatility is the key to successful intraday trading. You can effectively manage it by knowing the timings as to when markets are likely to be more volatile, which can be during the opening hours or at the closing hours following significant announcements. This allows you to tailor your strategies to ride through choppy waters easily.Liquidity considerationsAs an intraday trader, you need to monitor liquidity levels closely. Liquidity is how quickly you can buy and sell a security without compromising its price. This is important as it allows you to execute trades at a favourable price. If you know the timings, you can find out when you are likely to witness higher liquidity during the day.This allows you to enter and exit your position efficiently, thus boosting overall profitability. On the other hand, when liquidity is low, which can be towards the end of the trading session, you need to adopt a more cautious approach to your trade. If you try to trade in large volumes during such times, there are chances of losses.Maximising opportunitiesKnowledge of intraday trading timings can help you maximise the opportunity for maximising profits. You can focus on precise times when markets are more favourable and tailor your trading strategies accordingly.Optimal Intraday Trading TimingsWhile there’s no fixed time, experts generally recommend the first couple of hours to be the most beneficial. Every trader is different, and you should trade as per your goals and risk tolerance. As a good practice, wait for some time after markets open to gauge their movement and monitor stock prices before trading.Wrapping it UpKnowing the intraday trading timing, you can make the most of the available time. Be disciplined with your trade and do the necessary homework for maximising profits from this form of trading. Frequently Asked QuestionsWhat is the time frame for Intraday Trading?Timing for intraday in India for the equity segment is from 9:15 am to 3:30 pm and from 9 am to 11:30 pm for commodities.Which Time Interval is Good for Intraday Trading?Though there's no rule of thumb; generally, a couple of hours after the markets open is the optimum time for intraday trading.How Many Times Can I Do Intraday Trading in One Stock?There's no limit on the number of times you can purchase or sell a stock in intraday trading.How Long Do Intraday Traders Hold?Intraday traders can hold positions for hours, minutes or even seconds. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.

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What is Gap Up and Gap Down in Stock Market Trading?

Key Highlights:Gap up is when a stock’s opening price is higher than the previous day’s closing price; gap down is when it’s lower than the last day’s closing price.Gap up signals:Bullish sentiment - Indicates strong buying interest.Growth potential - Indicates potential growth opportunity.Gap down signals:Bearish sentiment - Suggests loss of confidence among investors.Market uncertainty - Indicates broader market uncertainty.If you are intostock market investment, you must have often heard two terms - gap and gap down. These two terms describe a situation when a stock's opening price is higher or lower than the previous day's closing price. Gap refers to the difference in price levels between a day's close and the next day's opening.What is Gap Up and Gap Down?Let's understand the meanings of gap up and gap down with an example. Suppose a stock's closing price on Monday is Rs 200. When markets open on Tuesday, its opening price is Rs 220. Gap up refers to this situation. On the other hand, if the stock's opening price on Tuesday is Rs 190, it refers to a gap down.Gap up and gap down are essential as they indicate the market's sentiment towards a particular stock. Gap up and gap downs can be complete or partial (see table below): Full Gap UpIt happens when a stock’s opening price exceeds the previous day's.Full Gap DownIt occurs when a stock’s opening price is lower than the previous day.Partial Gap UpIt happens when the opening price is higher than the previous day's close price but not higher than the last day's high price.Partial Gap DownIt happens when the opening price is lower than the previous day's close price but not lower than the previous day's low price.Full Gap UpFull Gap DownPartial Gap UpPartial Gap DownIt happens when a stock’s opening price exceeds the previous day's.It occurs when a stock’s opening price is lower than the previous day.It happens when the opening price is higher than the previous day's close price but not higher than the last day's high price.It happens when the opening price is lower than the previous day's close price but not lower than the previous day's low price. What Does Gap Up Signal?A gap up signals:Bullish sentimentA stock's gap indicates bullish sentiment. It indicates increased buying interest from buyers. When you see a gap up in a stock, it means investors are confident and optimistic about a company's prospects. It attracts more buyers and can further appreciate a stock's price.Potential for growthA gap up can signal potential growth opportunities. You can capitalise on a stock's growth momentum and profit from the price increase. That said, it's essential for you to analyse the sustainability of the uptrend thoroughly.What Does Gap Down Signal?A gap down signals:Bearish sentimentsA stock's gap down can signal bearish sentiments among investors. It may suggest a loss of confidence in the company among investors. It can be because of several reasons, such as poor earnings, legal troubles, or any internal issues with the company.Market uncertaintyA gap down can also indicate broader market uncertainty. Several factors, including domestic and geopolitical events and economic indicators, can impact stocks, resulting in a gap down.In ConclusionGap up and gap down are essential components of technical analysis and are an essential input for trading. However, you need to use them with other technical indicators such as volumes, moving average convergence divergence (MACD), and moving averages to identify trends and make an investment decision.Read More:Allied Blenders and Distillers IpoVraj Iron and Steel Ipo Frequently Asked QuestionsHow Would I Know If the Market Will Open a Gap Up or Gap Down?If the underlying sentiment is positive, chances are for a gap up. If not, chances are of a gap down.Do Down Gaps Get Filled?It may or may not. Once a stock's price records a fall, filling the gap becomes difficult.What Happens After a Gap Up?There could be increased profit-taking, and the stock's demand can dry up.What Causes a Stock's Gap Up or Down?A gap up can occur due to positive market sentiment and robust company profits. On the other hand, a gap down can happen due to economic indicators, poor company performance, geopolitical events, etc. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.

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Understanding Mutual Fund Regulation and Compliance

With mutual funds becoming one of the most sought-after financial instruments among investors to grow their wealth, the SEBI has drafted certain regulations and compliance to protect investors’ interests and ensure transparency and smooth functioning of the industry. As an investor, it’s crucial for you to know them so that you can make an informed choice.SEBI Guidelines for Mutual Fund InvestmentsSEBI, the capital market regulator, oversees mutual fund operations in India. Time to time, it comes up with regulations to keep the interest of investors intact. While there are many regulations and compliance guidelines, here are the ones that matter to you the most as an investor:Be KYC-CompliantIf you are a new investor willing to invest in mutual funds, you need to beKYC-compliant. It’s a customer identification process and is mandatory under the Prevention of Money Laundering Act 2002. From 1st January 2012, a centralized KYC registration process through SEBI-registered KYC Registration Agencies (KRAs) is in force. For KYC, you need to provide basic documents (address and identity proofs) along with your PAN card.You can do KYC online or offline. For offline KYC, visit any of the registered KRAs with your documents and fill out the KYC form. You can download the KYC form from the website of fund houses or registrar and transfer agents. You can get your KYC done online on websites of fund houses. In the online process, your in-person verification is done via video call, where you need to show your original documents.KYC is a one-time process, and once done, you can invest in any number of funds across fund houses.Add a NomineeYou must abide by this essential compliance while investing in mutual funds. Your mutual fund investments need to have a nominee who will get the proceeds in case something happens to you. If you don’t want to add a nominee, you need to opt out of it. However, if you don’t do so and fail to add a nominee, your mutual fund folio may be freezed.If freezed, you cannot withdraw units from your mutual funds. Inmutual funds, you can add up to three nominees, indicating the percentage of shares you want them to receive. If you haven’t added a nominee, you can do so online or by visiting the nearest branch of the fund house.Disclosure of Portfolio and PerformanceSEBI has mandated that all fund houses must disclose their portfolio and performance regularly. Whileportfoliodisclosure is required once every six months, the fund’s performance must be disclosed monthly. The disclosure must include information on investment strategy, sector-wise allocation, top holdings, etc.Its purpose is to ensure transparency and boost investors’ confidence. You can get vital information by reviewing these disclosures and gauging whether the fund’s objectives align with your goals. You can also find out about any major changes in the fund’s asset allocation strategy and credit quality of the securities.Ad Code RegulationsAs per SEBI’s regulations on mutual fund ads, fund houses must resort to ethical practices during advertisements and not resort to any false or misleading information. Recently, the Association of Mutual Funds in India (AMFI) has directed fund houses to use only the 10-year CAGR to showcase investment returns in their ads. It has also asked fund houses not to show future returns, which could mislead investors.While numerical illustrations can be used for SIP, SWP, and STP, fund houses can only show the CAGR returns prescribed by AMFI. The table given below showcases the maximum past returns that fund houses can use for various schemes are as follows: Scheme TypeEquityMaximum Permissible Returns12.64% for Sensex; 12.93% for NiftyScheme TypeFixed-income FundsMaximum Permissible Returns7.20%Scheme TypeEquity Hybrid FundsMaximum Permissible Returns11.5%Scheme TypeBalanced Hybrid FundsMaximum Permissible Returns10.07%Scheme TypeDebt-inclined Hybrid FundsMaximum Permissible Returns8.56%Scheme TypeMulti-asset FundsMaximum Permissible Returns9.92%Scheme TypeMaximum Permissible ReturnsEquity12.64% for Sensex; 12.93% for NiftyFixed-income Funds7.20%Equity Hybrid Funds11.5%Balanced Hybrid Funds10.07%Debt-inclined Hybrid Funds8.56%Multi-asset Funds9.92% In ConclusionThe above mentioned regulations are designed to create a secure and transparent environment for investors. By adhering to these regulations, investors and the industry can build trust and contribute to their financial well-being. As an investor, understanding these regulations empowers you to make informed decisions and navigate the mutual fund landscape with confidence. FAQs on Understanding Mutual Fund Regulation and ComplianceWho is Responsible for Legal Compliance in Mutual Funds?The Securities and Exchange Board of India (SEBI) ensures legal compliance in mutual funds.What is Mutual Fund Compliance?Mutual fund compliance refers to adherence to regulatory guidelines and laws governing the operation and management of mutual funds, ensuring transparency, fairness, and investor protection. It involves monitoring and ensuring that fund activities comply with legal requirements set by SEBI.

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Asset Management Companies and Their Impact on Mutual Funds

Asset management companies, or AMCs as they are popularly known as, play a crucial role in the realm ofmutual funds. They are architects behind the success and performance of mutual funds and influence how investors' money is managed and invested. The success of a mutual fund hinges largely on the investment philosophy adopted by the AMC. That said, there are several ways through which AMCs impact mutual funds. Let’s see how.What are Asset Management Companies?AMCs are firms that invest funds pooled from investors in securities to earn optimal returns in exchange for a fee. They maintain a diverse portfolio by investing in both high and low-risk securities such asstocks, debt, bonds, and pension funds, among others. AMCs have professionals known as fund managers who manage investments on behalf of their clients. In simple words, an AMC is the fund house that manages and runs various mutual fund schemes.Impact on Mutual FundsHere’s how AMCs impact mutual funds:Research and AnalysisTo boost investors' wealth, AMCs conduct extensive research on market trends. They have a team of researchers who study macroeconomic and microeconomic factors and market trends. Based on this, appropriate securities are chosen to meet investors' return expectations.The success of a fund depends greatly on how well the research is conducted and its subsequent analysis. If done well, it boosts returns. If not, the fund suffers, and so does your wealth.Performance and ReturnsThe strategic decisions undertaken by AMCs directly influence the performance of mutual funds. Each AMC has its investment style based on which it employs fund managers. Based on the AMCs investment philosophy and the funds' objective, the fund managers curate the investment portfolio by selecting various assets such as stocks, bonds and other securities.The strategic decisions AMCs make regarding asset allocation, timing of investments, and risk management all contribute to the overall performance of mutual funds.Asset AllocationOptimum asset allocation is one of the fundamental investing principles. Based on the research, the AMC allocates its assets through its fund manager. For example, in debt-oriented mutual funds, the AMC may distribute a certain portion of its assets in bonds, commercial papers, and treasury bills.On the other hand, for equity funds, it may allocate a high amount towards equity and the rest in debt. Even in that, it may choose to invest in different companies across industry verticals to achieve optimum diversification. AMCs ensure that funds mitigate risks effectively by adopting a prudent asset allocation strategy.Innovation and Product DevelopmentAMCs play a vital role in introducing new mutual funds and adapting existing ones to meet changing market conditions and meet investor preferences. Their ability to innovate and offer attractive investment opportunities can impact a fund's competitiveness in the market.During innovation and the change of its existing product portfolio, AMCs ensures compliance with SEBI’s regulations. If they fail to do so, not only do they need to pay a penalty, but their reputation also takes a hit. This can negatively impact a fund’s return. An AMC’s commitment to regulatory compliance ensures that funds operate within the legal framework, protecting investors’ interests.Summing it UpAs evident, the impact of an asset management company on a mutual fund is comprehensive. It encompasses strategic decision-making, risk management, performance outcomes, and adherence to regulatory standards. You should carefully consider the reputation, expertise, and track record of AMC when choosing a mutual fund for your investment portfolio. FAQs on Asset Management Companies and Their Impact on Mutual FundsWhat is the Purpose of an Asset Management Company?The purpose is to pool funds from investors and invest in various securities, including stocks, bonds, etc.How Does the AUM of an AMC Affect Mutual Funds?You can consider AUM as the performance gradient of a mutual fund. A higher AUM of an AMC indicates better investment inflow for a fund house. It also says about the quality and management experience.

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Mutual Fund Industry - Challenges and Opportunities

The Indian mutual fund industry has come a long way since its beginning in 1963. The industry'sassets under management(AUM) has grown from Rs 8.90 trillion on November 30, 2013, to Rs 49.05 trillion on November 30, 2023, a fivefold increase in 10 years. While investors have embraced mutual funds to accomplish various life goals, the industry still has certain challenges to address. At the same time, there lies ample opportunities to be tapped, which, if done, can further boost growth.Challenges for the IndustrySome of the challenges that the industry needs to overcome are as follows:Need for Mutual Funds to Become a Pull ProductMutual funds need to position themselves as a "pull" product rather than a "push" product. A pull product attracts investors with its inherent value, performance, and alignment with financial goals. On the other hand, a push product depends on aggressive marketing and sales tactics. Historically, mutual funds in India have often been pushed to investors through aggressive marketing and sales tactics. Over the years, the industry has pumped in several crores per annum on investors' education.For the industry to truly thrive, mutual funds need to transition into a pull product. This involves leveraging digital platforms and technology to provide investors with user-friendly tools for research, analysis, and portfolio management. Adding mutual funds to the school curriculum can help spread awareness and inculcate the habit of early savings.Robust Distribution NetworksThe industry's success is delicately tied to establishing a robust distribution network. Though urban centers have witnessed significant participation, a gap exists in smaller towns and rural areas. A solid distribution network is imperative for extending the reach of mutual funds to a geographically diverse investor base.A robust distribution network is pivotal in investor education, facilitating transactions, and building trust. Moreover, tailored strategies are needed to address different regions' unique needs and preferences, making localization an integral aspect of the distribution network. As the industry evolves, a solid distribution network becomes a key driver for sustainable growth.Simplified Operational ProcessWhile the industry has made rapid progress in standardizing processes, there's a lot of room for refinement. A prominent challenge is simplifying the know-your-customer (KYC) process to ease investor onboarding. Another significant challenge lies in integrating Aadhar, the unique identification system, with the Permanent Account Number (PAN) for mutual fund investments. The seamless interchangeability of Aadhar and PAN could facilitate a smoother and more efficient validation process for investors.Also, there's a call for allowing investments based on 'Bank KYC,’ which aims to leverage the existing robust KYC processes implemented by banks. By recognizing and accepting bank-verified KYC data, the mutual fund industry can further enhance the accessibility and convenience of investment opportunities, thus fostering a more investor-friendly environment. Addressing them would contribute to the industry's evolution.Opportunities to TapWhile there are challenges to overcome, the industry also has multiple opportunities at its disposal. Lapping them can further accelerate its growth. Some of them are:An Increasing Inclination Towards Mutual FundsA recent survey indicated an increasing inclination towards mutual funds among investors. The survey found that 54% of people chose mutual funds as their preferred investment option. This not only underscores a tectonic shift in investor behavior but also presents a significant opportunity for the industry to capitalize. By offering innovative products, mutual funds can further make inroads into an investor’s portfolio and become their go-to financial instruments to accomplish various life goals.Rising Number of Millennials and YouthIndia's rising millennial and youth demographic presents a vast opportunity for the mutual fund industry. India is one of the world's youngest nations, with more than 55% of the population under 25. This dynamic and tech-savvy generation can become the industry’s driving force in the coming days.As per a report, more than half the first-time investors in mutual funds over the last five years were millennials. The report said that 54% of the 1.6 crore new investors who invested in mutual funds during FY 19-23 were millennials. Also, the rising income levels and changing lifestyle preferences indicate a growing appetite for mutual fund investment.In ConclusionIn the coming days, technology is poised to be the biggest enabler for the industry. With a large population embracing technology, the industry has a tremendous opportunity to leverage. Adoption of fintech solutions will not only enhance accessibility and convenience but also redefine its landscape, making the industry more inclusive and efficient. FAQs on Mutual Fund Industry - Challenges and OpportunitiesWhat is the Future of Mutual Funds in India?The Indian mutual fund industry is set for significant growth by offering immense investment potential, thanks to a growing middle class and rising financial literacy.What is the Role of Mutual Funds in the Changing Scenario in India?Today, mutual funds play a vital role in developing capital markets and the growth of the Indian economy. It allows small investors to build a well-diversified portfolio at a low cost.

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Investing in Mutual Funds - Active vs Passive Strategies

Prudent investment in mutual funds can help you grow wealth. That said, there are primarily two types ofmutual fundinvesting strategy that you can opt for - active and passive. Each of these strategies differs from each other and has its pros and cons. So, what are these, and which one should you opt for? Let’s find out.What is an Active Mutual Fund Strategy?An active mutual fund strategy involves investing in actively managed mutual funds. These funds are overseen by a team of professional fund managers who actively make decisions regarding buying, selling, or holding securities. The primary objective of active funds is to generate alpha and beat the fund's benchmark index.Advantages of an Active Mutual Fund StrategyAdopting an active strategy brings the following advantages to the table:1. Professional ExpertiseExperienced professionals manage active funds. They conduct in-depth research and analysis, and investors benefit from the fund manager's expertise. With skilled fund managers aiming to identify opportunities that could lead to higher returns, investing in actively managed funds can significantly boost your wealth in the long run.2. Dynamic Portfolio ManagementIn active funds, fund managers can adjust the fund's portfolio in response to changing market conditions. This adaptability helps capitalize on emerging opportunities and mitigate risks. Fund managers can actively manage risk by adjusting the fund's portfolio composition. They may reduce exposure in certain securities or sectors if they perceive higher risks, potentially protecting your wealth from dipping due to significant downturns.Disadvantages of Active Mutual Fund StrategyThere are certain disadvantages to an active mutual fund strategy. These include:1. Higher CostsActive mutual funds have higher fees compared to passive funds. The fees cover the cost of research and analysis, and expertise of the fund manager. A high cost can erode your returns over time.2. No Guarantee of OutperformanceWhile active funds primarily aim to outperform the index they are tracking, there’s no guarantee that they will do so. In many cases, economic factors and market conditions impact a fund's performance. Also, some funds may underperform their benchmark indices, especially considering the cumulative impact of fees.3. Subject to Managerial RiskAn active fund's success depends heavily on the skills and decisions of the fund manager. In case there's a change in the management team, it can affect the fund's performance.What is a Passive Mutual Fund Strategy?A passive mutual fund strategy involves investing in a fund that tracks a particular index, such as theNifty 50or the BSE Sensex. Passive mutual funds aim to mimic the index they are tracking and hold securities in the same proportion as the index they are tracking.Advantages of Passive Mutual Fund StrategySome of the benefits of passive strategy include:1. Lower costsPassive funds typically have lower fees as they don't require constant management from fund managers. This lower cost can translate into high returns.2. SimplicityPassive mutual fund strategy is straightforward. This makes it a great option for investors who want a hands-off approach to their investment.Disadvantages of Passive Mutual Fund StrategyLike active funds, passive funds also have certain disadvantages. These include:1. Limited Outperformance PotentialPassive mutual fund strategies have limited potential for outperformance as they are designed to track an index and not outperform it. Because of it, they may not generate high alpha compared to active funds in certain market conditions.2. Lack of FlexibilityThe structure of passive funds is such that they don't adapt to changing market conditions and capitalize on investment opportunities. This limits their potential to mitigate risk and capture gains.Choosing Between Active and Passive StrategyChoosing between active and passive mutual fund strategies is based on your risk appetite and financial goals. If you are seeking high returns and have a higher risk tolerance, you can opt for active funds. On the other hand, if you are looking for a low-cost, low-risk investment strategy, you can choose passive funds.In ConclusionCombining active and passive funds can help you create a diversified portfolio to help you navigate market conditions and meet your financial goals. Before investing, conduct an extensive research and consult with your financial advisor. FAQsWhy Do People Invest in Active Mutual Funds?People invest in active mutual funds to earn higher returns. This is because the primary objective of an active mutual fund is to beat its benchmark index.Who Manages Funds in Active Investing?It’s the fund manager who manages funds in active investing. The fund manager takes calls based on the fund’s objectives and prevailing market conditions.How Do Passive Mutual Funds Work?Passive mutual funds don’t aim to outperform an index. They aim to replicate its performance by holding securities in the same proportion as that of the index it’s tracking.

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The Future of Mutual Fund Investing

Mutual fundshave evolved as a well-known financial vehicle millions use to invest and build a corpus for different life goals. The industry is poised for growth in the coming days thanks to increasing financial literacy and a shift towards market-linked products. If you are wondering how mutual funds will shape up in the future, read on.Mutual Fund Investing FutureA Considerable Focus on Index FundsOf late, several investors have gravitated towards index funds. These funds track a particular index, such as theNifty 50, Sensex, etc., and hold securities in the same proportion as their tracking index. A recently concluded survey found that 87% of investors invest through index funds when it comes to passive investing. The spike in flows can be primarily attributed to their openness, low-cost structure, and a change in tax laws for fixed-income mutual funds from FY 23-24.Inclination Towards Sector-specific/ Thematic FundsA shift towards sector-specific or thematic funds has also come to the fore, particularly in sectors like healthcare and technology. These sectors have gained significant traction after the Covid-19 pandemic. The assets under management (AUM) of thematic funds have gone up by 30% to Rs 2.18 lakh crore in October 2023 from Rs 1.68 lakh crore in October 2022.Attractive returns from thematic funds are one of the primary reasons behind their popularity. For instance, returns from PSU funds have been quite impressive in the three-year returns chart. It’s anticipated that inflows in thematic funds will continue to see a further uptick in the coming days.Emergence of New PlayersThe mutual fund industry has seen quite a few new players emerging. In 2023, several financial institutions gained regulatory approval to open a mutual fund business. The emergence of new players means more options for mutual fund investors. The availability of various options translates into increased diversity in investment strategies.This diversity empowers you to align your investment choices as per your goals and risk appetite. Also, the entry of new players in the mutual fund landscape contributes to competition, which could lead to innovative products and implement sound investment strategies. In a nutshell, you can gain from potential improvement in overall quality of mutual fund offering and services.Simplification of Investments Through TechnologyTechnology, especially digitalization, has accelerated mutual fund investments significantly. The infusion of innovative technological solutions is expected to simplify mutual fund investments further. You can expect simplified onboarding processes and a seamless investment experience in the coming days.Furthermore, AI and machine learning are likely to play a pivotal role in simplifying investment strategies. Today, robo advisors, powered by AI algorithms, are gaining traction, offering investors automated and personalized investment advice.Summing it UpThe future of mutual fund investing appears to be an interplay of focus on index funds, an inclination towards thematic funds, the emergence of new players, and investment simplification through technology. With a growing number of players entering the market and support for innovation, you can anticipate a diverse range of options and competitive offerings. With the industry undergoing rapid transformation, emphasis on transparency, convenience, and personalized investment strategies will define the landscape. FAQs on The Future of Mutual Fund InvestingAre Mutual Funds a Good Investment for the Future?Yes, they are. With professional management, diversification, and the ability to offer inflation-beating returns, mutual funds are a prudent investment for the future.What is the Future Outlook for Mutual Funds?The Indian mutual fund sector is poised for robust growth due to innovative campaigns and growing financial literacy.Why is Mutual Funds the Future?Mutual funds are the future because they are one of the most flexible financial instruments that help you accomplish various life goals. You can invest in mutual funds through a systematic investment plan or lump sum as per your liking.

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The Role of Mutual Funds in Wealth Building

Mutual fundsneed no introduction. Their popularity can be gauged from the fact that in a span of 10 years - from Nov 30, 2013, to Nov 30, 2023 - the assets under management (AUM) of mutual funds have witnessed a five-fold increase. Long-term wealth creation is one of the primary reasons why investors are drawn toward mutual funds.Prudent investment in them can help you build wealth for various short and long-term goals. The following attributes of mutual funds highlight their role in wealth creation.Role of Mutual Funds in Wealth CreationGoal-based InvestingThe beauty of mutual funds is that they help you invest as per your goals. Whether accumulating vacation funds or building a retirement corpus, they help you link your investments accordingly. The mutual fund universe is so vast that you can choose different types of funds for the goal you want to achieve (see table below) GoalTax savingsType of Mutual FundELSSGoalVacation / Down payment for car or houseType of Mutual FundShort-term Debt FundsGoalEmergency fundType of Mutual FundLiquid FundsGoalChildren’s higher education / RetirementType of Mutual FundEquity FundsGoalType of Mutual FundTax savingsELSSVacation / Down payment for car or houseShort-term Debt FundsEmergency fundLiquid FundsChildren’s higher education / RetirementEquity Funds Goal-based investing ensures that you have money available when needed.Inflation-beating ReturnsAn essential part of wealth creation is to beatinflation. Inflation has a decompounding effect, bringing down the value of money. So, it’s essential to stay a step ahead of inflation. This is where mutual funds, especially equity funds, play a crucial role. Equity funds have the potential to deliver inflation-beating returns in the long run.The table below captures the returns of various asset classes over the last 3, 10, and 20 years period, as per the Wealth Conversations November 2023 report: Asset ClassEquity (Nifty 50 TRI)3-Year Return19.3%10-Year Return13.1%20-Year Return14.8%Asset ClassGold3-Year Return6.1%10-Year Return7.4%20-Year Return11.9%Asset ClassDebt3-Year Return4.9%10-Year Return7.3%20-Year Return7.2%Asset ClassReal Estate3-Year Return4.8%10-Year Return4.5%20-Year Return9%Asset Class3-Year Return10-Year Return20-Year ReturnEquity (Nifty 50 TRI)19.3%13.1%14.8%Gold6.1%7.4%11.9%Debt4.9%7.3%7.2%Real Estate4.8%4.5%9% It clearly indicates that equities have outperformed all asset classes over the long run. Thus, investing in equities through mutual funds and staying committed to your investments can help you counter inflation and bolster your wealth.DiversificationRisk mitigation through optimumdiversificationis one of the fundamental investing principles. Diversification ensures your investments are spread across asset classes, and your portfolio’s performance doesn’t depend on the performance of one financial instrument. Mutual funds offer you diversification benefits by spreading your investments across companies in different sectors.Through optimum diversification, mutual funds ensure you benefit from the rally in one or more sectors and mitigate the impact of poor performance in any single sector. In the long run, optimum diversification helps you ride market volatility and protect the gains.Start Small and Stay InvestedMutual funds help you start small and stay invested for the long haul. Through systematic investment plans (SIPs) in mutual funds, you can commence your investment with as little as Rs 500 per month. Also, through SIPs, you can take advantage of rupee cost averaging. It means you buy more units when markets are down and vice versa.This averages out the cost of buying with time and helps build wealth. Even a modest SIP of Rs 500 monthly in a mutual fund offering 10% annualized returns for 20 years can help you accumulate close to Rs 4 lakhs, subject to fund performance. SIP also inculcates a disciplined savings habit, highly essential for wealth creation.Top Up InvestmentsMutual funds also help you top up your investments in line with an increase in income. This helps in accumulating a bigger corpus. For example, you can top-up your SIPs every year by a fixed percentage as your income rises, which can have a multiplier effect on wealth creation (see table below) SIP AmountRs 1000Annualized Returns10%Investment Duration20 YearsTop UpNilFinal CorpusRs 7.65 lakhsSIP AmountRs 1000Annualized Returns10%Investment Duration20 YearsTop Up10% Every YearFinal CorpusRs 14.61 lakhsSIP AmountAnnualized ReturnsInvestment DurationTop UpFinal CorpusRs 100010%20 YearsNilRs 7.65 lakhsRs 100010%20 Years10% Every YearRs 14.61 lakhs As you can see, with an annual top-up of 10%, your corpus swells nearly 2 times.Summing it UpWealth creation through mutual funds is a continuous process. By staying committed to your investments and making the necessary adjustments to your portfolio as and when needed goes a long way in your wealth creation journey. FAQs on The Role of Mutual Funds in Wealth BuildingCan I Build Wealth Through Mutual Funds?Yes, you can build wealth through mutual funds. Prudent investments in mutual funds can help in long-term wealth creation.Are Mutual Funds Good for Wealth Creation?Yes, they are. Mutual funds, with their inherent characteristics of diversification and inflation-beating returns, can help create wealth.

https://www.kotaksecurities.com/mutual-funds/mutual-funds-in-the-post-pandemic-world/

Mutual Funds in the Post Pandemic World

It will not be an understatement to say that Covid-19 was a turning point for the economy and markets. A lot has changed since markets tanked ferociously following the declaration of COVID-19 as a pandemic by the World Health Organization (WHO). Both the Sensex and Nifty have scaled new peaks. There has been a major shift in the mutual fund industry during the pandemic, which has seen massive inflows. Read on to learn how mutual funds have performed in the post-pandemic world.Evolution of Mutual Funds in the Post-Pandemic WorldGrowing Preference for Mutual FundsPost-pandemic, there has been a shift in investors’ preferences from traditional investments to mutual funds. During the pandemic, when interest rates were low, retail and corporate investors poured more money into mutual funds. Data from SEBI shows that most households channelled funds into equity schemes in 2022-23.Mutual funds invested Rs 1.73 trillion in equity markets in FY 23. This accounted for 97% of net household flows into mutual funds. This shows the growing popularity of mutual funds in the post-pandemic world.Spike in SIP ContributionSystematic investment plans, or SIPs, as they are commonly known, have captivated the imagination of investors. The increasing number of SIP contributions to mutual funds is a testament to their growing popularity among investors.SIPs allow you to invest specific money at predetermined intervals in your chosen funds. They help build disciplined savings habits and give you the advantage of rupee cost averaging. The table given below shows SIP contribution in mutual funds across FY 21, FY 22, and FY 23: FY 23Rs 1,55,972 croreFY 22Rs 1,24,566 croreFY 21Rs 96,080 croreFY 23Rs 1,55,972 croreFY 22Rs 1,24,566 croreFY 21Rs 96,080 crore There has been a significant jump in SIP contribution in mutual funds, which shows their popularity and the preferred investment vehicle among investors. The Indian mutual fund industry currently has 7.44 crore SIP accounts through which investors invest in various schemes.Increase in AUM of Mutual FundsThere has been a significant growth in the assets under management (AUM) of mutual funds between March 2020 and March 2023. During this period, the AUM of mutual funds grew 77% from Rs 22.26 trillion to Rs 39.42 trillion. While a buoyant recovery of markets was the primary catalyst, fresh flows into mutual funds also contributed to this growth.Another exciting development is the growth in AUM of passive funds during the period between March 2020 and March 2023. AUM of passive funds has recorded a growth of 322% during the post-Covid period.This shows investors are embracing passive funds and making them a part of their portfolio. Unlike active funds, the primary objective of passive funds is to mimic the index they’re tracking and hold securities in the same proportion as the index.Summing it UpThe numbers stack in favour of mutual funds in the post-pandemic world. Offering professional management and diversification, they have made deep inroads and are expected to continue their rise in investors’ preference ladder in the coming days. FAQs on Mutual Funds in the Post Pandemic WorldHow Have Mutual Funds Performed Post Covid?The Indian mutual fund industry has performed impressively post-COVID. There has been a rise in inflow, and the AUM of the industry has also recorded a surge.Why Have SIPs Risen in the Post-Pandemic World?Increasing awareness, innovative campaigns undertaken by fund houses, and investment flexibility have led to a SIP surge.

https://www.kotaksecurities.com/mutual-funds/mutual-funds-and-the-impact-of-inflation/

Impact of Inflation on Mutual Funds

It’s common knowledge that mutual funds are market-linked products, and several factors impact their performance. One critical factor that has an impact on mutual funds is inflation. Inflation, which refers to the gradual rise in the price of goods and services, often has a domino effect on mutual funds.This is because when inflation is on the rise, companies in which your fund invests may experience a higher operating cost. This, in turn, can affect their profit margin, subsequently impacting returns on your investment.Inflation Impact on Debt FundsWhile inflation affects the performance of almost all types of funds, their impact on debt funds is quite profound. Debt funds are funds that invest in fixed-income securities such as treasury bills, corporate and government bonds, etc. They are generally less volatile than equities and offer predictable returns.When inflation rises, the Reserve Bank of India (RBI) raises key policy interest rates to bring it down. When this happens, bond prices fall, and the value of your investment in debt funds tends to come down. Note that bond prices and interest rates share an inverse relationship. It means bond prices come down when interest rates increase and vice versa.Let’s understand it with an example. Suppose you invest in a bond with a face value of Rs 1000 with an interest rate of 5%. It means you will receive an interest income of Rs 50 annually. If interest rates rise due to inflation, new bonds in the market are issued at a higher interest rate of 7%. As the new bonds offer a higher interest rate, the demand for existing bonds decreases. This, in turn, hurts your investments.The longer the maturity of a debt fund, the greater the chances of it getting impacted by interest rate movements due to inflation. On the other hand, a decline in inflation brings down rates, which subsequently enhances returns from debt funds, particularly bond funds.Impact of Inflation on Equity FundsInflation also impacts equity funds. High inflation brings down the real rate of returns. The real rate of returns is the returns you earn up and above inflation. For example, if the return from your equity mutual funds is 8% and inflation is 10%, the real rate of return is negative (-2%).Also, inflation takes its toll on the profitability of companies and hits their revenues. This is because operating costs go up due to inflation, which brings down profits. With companies grappling with high expenses, the same brings down returns from funds investing in them.Equity mutual funds can potentially deliver inflation-beating returns in the long run. In other words, if you stay committed to your investments in fundamentally strong equity funds, you can earn returns up and above inflation.How to Combat the Impact of Inflation on Mutual Funds?While you can do little to tame inflation, you can use specific strategies to ensure your mutual fund investments remain cushioned amid inflation. Some strategies you can adopt are:Optimum DiversificationOptimally diversifying your portfolio across different types of funds can help you shock-proof your mutual fund portfolio. Ensure you have investments across equity, debt, and hybrid funds so that performance remains stable and doesn’t plunge amid high inflation.Regularly Review and Make AdjustmentsMonitor your portfolio and make the necessary adjustments. For instance, in a prolonged regime of high interest rates due to inflation, you can tone down your debt fund investments a little. On the other hand, when inflation is down, you can enhance your exposure to debt funds and increase your equity allocation.Summing it UpWhatever approach you take, make sure not to act under impulse. More often than not, impulsive decisions are likely to backfire and do more harm than good. In case of any doubt, consulting with a certified financial advisor is better. Remember, combating inflation is a part of mutual fund investment, and you can do so with the right approach and discipline. FAQs on Impact of Inflation on Mutual FundsHow are Mutual Funds Affected by Inflation?In an inflationary environment, debt funds investing in fixed-income securities such as bonds can have a negative impact. This is because bond prices and interest rates move in opposite directions.Is it Good to Invest in SIP During Inflation?When markets are down due to an inflationary environment, investing in mutual funds via SIPs allows you to benefit from rupee cost averaging. You can accumulate more units during such times.

https://www.kotaksecurities.com/articles/rk-swamys-key-financial-metrics/

In Focus - Important Financial Figures in R K Swamy’s IPO

Key Highlights:R K Swamy’s revenue growth has increased from Rs 1735.46 million in 2021 to Rs 2,926.13 million in 2023The company’s return on net worth increased from 3.13% in 2021 to 22.20% in 2023Diluted EPS increased from 0.69 in 2021 to 7.03 in 2023PAT increased from Rs 30.77 million in FY 21 to Rs 312.58 million by 2023R K Swamy will come out with itsinitial public offering(IPO) on 4th March 2024. One of the key aspects of investing in a company’s IPO is looking at key financial metrics. Evaluating them can help you understand the company’s financial health. Here are vital figures about R K Swamy that deserve your attention.Crucial Financial FiguresRevenue GrowthThe company's revenue grew from Rs 1735.46 million in 2021 to Rs 2,926.13 million in 2023. The upward trend shows the firm's resilience and consistent performance in its business operations. It reflects the effectiveness of the company's strategic initiatives, its ability to navigate key market dynamics and maintain a reliable revenue stream over a specific period.Return on Net WorthThe company's return on net worth (RoNW) has witnessed a positive trajectory from 3.13% in 2021 to 22.20% in 2023. This showcases its efficiency in utilising the company's equity capital to generate profits. It also reflects the firm’s adeptness in maximising returns for its shareholders. At the same time, it underscores the firm's operational effectiveness, paving the way for sustainable growth and bolstering investors' confidence.Earnings per share (EPS)The company's dilutedEPShas witnessed a surge and considerable improvement, from 0.69 in 2021 to Rs 7.03 in 2023. This indicates significant earnings in each of the company's shares. It reflects the company's enhanced profitability and improved shareholder value. It also signifies the firm's operational efficiency and suggests promising prospects for its future growth trajectory.Profit after taxThe company's profit after tax has significantly increased from Rs 30.77 million in FY 21 to Rs 312.58 million by 2023. This showcases its operational scalability and adeptness in boosting profitability. It also signifies the company's strategic alignment of resources, effective management strategies and streamlined processes.Asset and Liability ManagementThough the company's total assets decreased in FY 2023, there has been a substantial reduction in total liabilities. The firm has significantly improved itsdebt-equity ratiofrom 22.63 in 2021 to 0.76 in 2023. It underscores the firm's robust financial restructuring and prudent risk management strategies. This also showcases the firm's enhancement in its financial stability and resilience.In conclusionR K Swamy's financial performance has witnessed remarkable growth over the years. These position the company well for future success and deliver value to its stakeholders over the long term. Frequently Asked QuestionsWhat is the share allotment date of R K Swamy's IPO?The share allotment date is 7th March 2024.What is the price band of R K Swamy IPO?The price band of the IPO is R 270 to Rs 288 per share.What is the issue size of R K Swamy's IPO?The IPO's issue size is Rs 423.56 crore. Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.

https://www.kotaksecurities.com/articles/indias-space-sector-gets-fdi-boost-is-now-the-time-to-invest/

India’s Space Sector Gets FDI Boost! Is Now the Time to Invest?

Kotak Insights | Date 01/03/2024In the year2023, something fascinating happened inIndia’s space sector.The stocks related to space started soaring high, catching the eye of both big-time investors and everyday folks.Why?Well, it all started when the Indian Space Research Organisation (ISRO) launchedChandrayaan-3mission andAditya L1which was India's very first solar space mission.Suddenly, every market participant wanted a piece of the action.But there’s a catch – there aren't many space-related companies listed on the Indian stock market. So when abig mission like Aditya L1comes along, the few space stocks available tend to skyrocket. This frenzy clearly shows that investors are eager to hop aboard the space bandwagon.Now, there are over a hundred startups buzzing in India's space sector. But most of them are small fries, not ready for the stock market spotlight just yet. What investors really want is for these startups to grow fast – really fast – so they can join the big leagues and get listed on the stock market in a few years' time.But here's the kicker: to grow that quickly, these startups need loads of cash or capital. Without it, they might not scale up quickly.India's Spacetech Companies Biggest ChallengeYou see, gettingaccess to capitalis the biggest hurdle for these spacetech firms.Investors have been a bit wary of diving into India's space-tech startup scene in the past owing to higher barriers to entry, strict regulation, and a high risk of failure.Moreover, there just wasn't enough private investment flowing into the space economy, making it a tough nut to crack.But that’s going to change, and there's good news on the horizon. As per a Inc42 data, approximately$233 millionin funding was raised by India’s spacetech startups across 30+ deals between 2014 and July 2023. And that's not all – the Indian government has stepped up to the plate too to boost this funding further.The government, on21st February, decided to loosen the reins on foreign investment in the space sector.The Union Cabinet chaired by Prime Minister Narendra Modi gave the green light for up to100% Foreign Direct Investment (FDI)in certain activities within the industry.This move marks a turning point, aiming to attract foreign investors and private companies to India's rapidly expanding space industry.Let’s have a closer look at it.Game-Changing Reforms in Space FDI PolicySo, what exactly changed?Well, the rules around foreign investment in the satellite sector got a major overhaul. Now, different parts of the satellite sector have their own limits on how much foreign investment is allowed.Here is a look at all the changes:Launch Vehicles and Associated Systems/Subsystems: Foreign investors can put in up to49%of the capital through the automatic route. Anything more than that needs a nod from the government. This covers activities like setting up spaceports for launching and receiving spacecraft.Satellite Manufacturing and Operation: Here, up to74%of the investment can come from foreign sources under the automatic route. But if they want to go beyond that, they'll need the government's thumbs-up. This covers satellite manufacturing, operation, satellite data products and both the Ground Segment and User Segment.Manufacturing of Components and Systems/Subsystems: This is where foreign investors can go all in – up to100%investment is allowed through the automatic route in manufacturing components and systems for satellites, ground segments and user segments.Please note that it is not that India doesn't allow foreign investment in the space sector. Currently, it does, in the area of satellite development and operations. But this investment can be done only via the government route or government approval, and not directly between companies.With the above development, the investments can be done between companies up to 74% FDI under the automatic route, and beyond 74%, these activities will fall under the government route.Now, you might be wondering, why all this fuss over foreign investment?Well, it's part of a bigger plan outlined in theIndian Space Policy 2023. The goal is to create a friendlier environment for investors and encourage non-government entities (NGEs) to invest in Indian space companies.By opening up the doors to foreign investment, India hopes to spark technological advancements, expand its global footprint, and cement its position in the global space economy.The above FDI announcement has sparked a surge in space related stocks likeMTAR Technologies, Bharat Electronics, Apollo Micro Systems, Paras Defence and Space Technologies, Data Patterns (India), etc.How Does This Benefit the Sector?Years ago, the current US President Joe Biden was among the politicians who denied India much-needed cryogenic technology to power its rockets. Coming to the current situation…With the recent Chandrayaan-3 Mission and Aditya L1, Indians all over the world are witnessing a new era for its space sector. The success of Chandrayaan-3 proved that India was at par with other nations when it came tospace technology.While the country’s space spending as a percentage of itsgross domestic product(GDP) is still relatively lower compared to the US and Russia, India is way ahead of many developed peers in the Group of 20 (G20) nations.Coming to the current development, the approval of liberalized FDI policies in India's space sector marks a big step towards boosting innovation, attracting investments and positioning the country as a key player in the global space economy.As per experts, the latest FDI announcements will accelerate momentum in thesatellite sectorand it will also make the Indian space sector an even more attractive destination for foreign investors.Permitting up to 49% FDI for launch vehicles also seems a logical step reflecting the balancing act offoreign investment with national security.Lastly, the above developments will leverage private sector participation, stimulatejob creation, and use the latesttechnological advancementsto drive India's space ambitions to new heights.What’s in it for Investors?For investors eyeing the space sector, here's the deal – most spacetech startups are still finding their feet. So, patience is key.While waiting for these startups to hit their stride, you might want to check out somekey technology partnersandlisted companiesassociated with these budding space ventures.In a nutshell, if India continues on the current path of progress when it comes to space technology, there is a high likelihood that numerous space related products will be manufactured and early investors in space stocks will be the ones to benefit most.If you’re looking to venture into this sector, watch out for the companies that supply components for aerospace satellites and missiles, and or are primarily engaged in some or the other way with India’s space missions.Some of the companies directly or indirectly involved in this space areLarsen & Toubro, Mishra Dhatu Nigam, Data Patterns, HAL, etc. Make sure to track them in the coming time along with the other space related companies we highlighted earlier.We will be back with another exciting story next week!Until next time…Stay Tuned!Sources: Kotak Securities, Economic Times, Press Information Bureau, Moneycontrol, ISRO, Inc42, BSEDisclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimerhere.

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Why Are Mutual Funds Subject To Market Risks?

“Mutual fund investments are subject to market risks” is a common saying. You will find it at the end of all mutual fund advertisements. It means that the value of your mutual fund investments can go up or down based on market conditions, and there’s no guarantee of positive returns. But the question is, why are mutual funds subject to market risks?Reasons behind market risksTo understand the reason behind the associated market risks with mutual fund investing, you must understand the underlying structure of mutual funds.Mutual fundspool money from different investors and invest in various securities, such asstocksand bonds. Now, these securities are affected by different market and economic risks, which, in turn, affect funds and exposes them to market risks. Let's explore the connection in detail.Fluctuation in stock pricesMutual funds often allocate a portion of their portfolios to stocks whose price is influenced by factors such as company performance, market sentiment, economic conditions and global events. Consequently, a mutual fund's equity holdings can experience significant variations.Factors affecting bondsAlong with stocks, bonds are another common component of mutual fund portfolios. Bonds are subject to credit risks and interest rate risks. When interest rates go up during periods of high inflation, the value of existing bonds tends to decline. Funds holding a substantial amount of bonds may witness a decline in the value of their bond holdings.Economic risksThe economy's health plays a crucial role in the performance of mutual funds. Recession, unexpected geopolitical events and economic downturns may negatively impact certain businesses in which a fund has invested. This exposes them to market risks, leading to diminished returns.Currency risksSome mutual funds may invest in international securities, exposing them tocurrency risk. Any change in exchange rates can impact returns when computed in the base currency.Dealing with market risks when you invest in mutual fundsWhile you can’t avoid market risks altogether, there are certain ways through which you can deal with them. Some of them are:Portfolio diversificationEffectively diversifying your portfolio ensures you invest in different asset classes like debt, equity, gold, etc. It helps you balance the portfolio's risk-reward ratio and manage market risks effectively. Diversify your portfolio as per your investment objectives and risk profiles.SIP investmentInvesting through systematic investment plans or SIPs can help you mitigate market volatility in mutual funds. Committing a small but regular monthly amount allows you to ride the market's ups and downs effectively. SIPs facilitate rupee cost averaging, whereby you accumulate more units when markets are down and lesser when they are up. It averages your purchase with time. Start small today to make it big tomorrow.SIPs start at just ?100.Invest Now ConclusionBeing market-linked products, mutual funds are inherently risky and volatile. As an investor, you must embrace market risks and not avoid them. Through portfolio diversification and SIP investment, you can mitigate these risks effectively. Frequently Asked QuestionsDo all mutual funds carry market risks?Yes, all mutual funds carry market risks in some form or other. The degree of risk may, however, vary depending on the type of fund.How does market risk affect mutual funds?Market risks can lead to a potential decline in investment value. This risk arises from several factors, including fluctuation in stock prices, economic risk, geopolitical factors, etc.

https://www.kotaksecurities.com/mutual-funds/difference-between-mutual-funds-and-ulip/

Difference Between ULIP and Mutual Fund

Unit-linked insurance plans(ULIPs) and mutual funds are two options for investing in market-linked products. The similarity, however, ends there. ULIPs and mutual funds are distinct financial instruments, each serving different purposes. Knowing the difference between ULIPs and mutual funds can help you make a prudent choice.What are ULIPs?ULIPs are life insurance products, combining the benefits of insurance and investment. In ULIPs, a part of the premium paid gives you life cover, while the other is invested in markets for wealth creation. The underlying securities of ULIPs consist of equities, debt, money market instruments etc.What are mutual funds?Mutual funds, on the other hand, pool money from different investors and invest in underlying securities comprising stocks, bonds, money-market instruments, gold, etc. Unlike ULIPs, they don’t offer life coverage and are managed by asset management companies (AMCs).Difference between ULIPs and mutual funds The table captures the key differences between ULIPs and mutual funds on various parameters:ParametersOffered byULIPsLife insurance companies have ULIPs as one of their core products.Mutual FundsAsset management companies (AMCs) offer mutual fund investments.ParametersLock-in periodULIPsULIPs come with a 5-year lock-in period, which means you can’t withdraw money from them for five years from the date of investment.Mutual FundsMost mutual funds, except equity-linked savings schemes (ELSS), have no lock-in period. ELSS have a lock-in period of 3 years.ParametersRegulatory bodyULIPsThe Insurance Regulatory and Development Authority of India (IRDAI) regulates ULIPs.Mutual FundsThe Securities and Exchange Board of India (SEBI) regulates mutual funds.ParametersPurposeULIPsULIPs serve the dual purpose of life insurance and wealth creation.Mutual FundsWealth creation is the primary goal of mutual funds.ParametersCostsULIPsULIPs have various charges, such as mortality charges, fund management expenses, fund switching charges, etc.Mutual FundsCosts in mutual funds are combined under the head of expense ratio, which includes the fund manager’s fee, marketing and distribution fee, etc.ParametersSwitching facilityULIPsULIPs offer this facility whereby you can switch from one fund to another as per your preference.Mutual FundsMutual funds also offer a switch facility; however it is considered as redemption and fresh investment. Hence, you need to consider tax implications and exit load (if any).ParametersLoyalty benefitsULIPsULIPs offer loyalty benefits if you stay invested for a long period by allocating some additional units.Mutual FundsMutual funds offer no such benefits. However, you can benefit from the power of compounding if you stay invested for a long period.ParametersTax benefitsULIPsPremiums paid towards ULIPs qualify for tax exemption under section 80C of the Income Tax Act, 1961, under the old tax regime.Mutual FundsOnly investments in ELSS funds are tax-exempt under section 80C of the Income Tax Act, 1961, in the old tax regime.ParametersFund optionsULIPsULIPs have few fund options and come with standard equity and debt variants.Mutual FundsMutual funds offer ample options across different categories such as equity, debt and hybrid.ParametersULIPsMutual FundsOffered byLife insurance companies have ULIPs as one of their core products.Asset management companies (AMCs) offer mutual fund investments.Lock-in periodULIPs come with a 5-year lock-in period, which means you can’t withdraw money from them for five years from the date of investment.Most mutual funds, except equity-linked savings schemes (ELSS), have no lock-in period.ELSShave a lock-in period of 3 years.Regulatory bodyThe Insurance Regulatory and Development Authority of India (IRDAI) regulates ULIPs.The Securities and Exchange Board of India (SEBI) regulates mutual funds.PurposeULIPs serve the dual purpose of life insurance and wealth creation.Wealth creation is the primary goal of mutual funds.CostsULIPs have various charges, such as mortality charges, fund management expenses, fund switching charges, etc.Costs in mutual funds are combined under the head of expense ratio, which includes the fund manager’s fee, marketing and distribution fee, etc.Switching facilityULIPs offer this facility whereby you can switch from one fund to another as per your preference.Mutual funds also offer a switch facility; however it is considered as redemption and fresh investment. Hence, you need to consider tax implications and exit load (if any).Loyalty benefitsULIPs offer loyalty benefits if you stay invested for a long period by allocating some additional units.Mutual funds offer no such benefits. However, you can benefit from the power of compounding if you stay invested for a long period.Tax benefitsPremiums paid towards ULIPs qualify for tax exemption under section 80C of the Income Tax Act, 1961, under the old tax regime.Only investments in ELSS funds are tax-exempt under section 80C of the Income Tax Act, 1961, in the old tax regime.Fund optionsULIPs have few fund options and come with standard equity and debt variants.Mutual funds offer ample options across different categories such as equity, debt and hybrid. What to choose - ULIPs or mutual funds?The choice between ULIPs and mutual funds depends on how each fits into your investment plan. If you want the dual benefit of insurance and investment, you can invest in ULIPs. On the other hand, if you wish to build a corpus for different life goals, mutual funds are a better choice. Some financial experts may advise not to mix insurance and investment. Consult a financial advisor who will help you choose either based on your goals and risk tolerance. Start your journey to financial prosperity!Discover our top performing funds and begin growing your wealth.Explore Now FAQs on difference between mutual funds and ULIPsAre ULIPs suitable for the long term?Since ULIPs have a lock-in period of 5 years, they are suitable for the long term. Moreover, you can maximise benefits from ULIPs only when you remain invested for the long term.Are mutual funds better than ULIPs?Mutual funds and ULIPs serve different purposes. That said, mutual funds offer more flexibility than ULIPs and potentially better long-term returns, if your sole purpose of investing is wealth creation.What is the difference between ULIP and ELSS mutual funds?There’s no insurance component in ELSS funds. Also, while ULIPs have a lock-in period of 5 years, it’s 3 years for ELSS funds.

https://www.kotaksecurities.com/articles/important-details-about-bharat-highways-invit-ipo/

Important Details You Need to Know About Bharat Highways InvIT and Its IPO

Key Highlights:Bharat Highways InvIT handles various infrastructure assets in IndiaImportant IPO details:Fresh issue consisting of Rs 2500 croresA total of 250,000,000 shares with a price band of Rs 98 to Rs 100A minimum 150 lot sizeClosely look at valuations before investing and go through the company DRHP to understand the risksIncreasing investor optimism and India’s surging stock markets have resulted in a rush ofinitial public offerings(IPOs). Companies across industry verticals are looking to cash in on optimism, raise funds and list on stock exchanges. Bharat Highways Infrastructure Investment Trust is launching its IPO on 28th February. If you are looking forward to investing in its IPO, you need to know certain essential things. What are these? Let’s find out.About Bharat Highways InvITBharat Highways InvIT, a SEBI-registered InvIT, is a trust handling various infrastructure assets in India. Operating on a hybrid annual model, its portfolio consists of several roads across states, including Punjab, Gujarat, Uttar Pradesh and Maharashtra, among others. The company enjoys high credit ratings from agencies like CRISIL, India Ratings and Research and CARE.IPO Details The IPO’s issue size consists of an entirely fresh issue of Rs 2,500 crores with nooffer for sale. The book-building IPO will offer a total of 250,000,000 shares. The other details of the IPO are as follows:IPO Opens OnIPO Closes On28th February 20241st March 2024IPO Opens OnLot Size28th February 2024150IPO Opens OnIssue Price28th February 2024Rs 98 to Rs 100IPO Opens OnListing Date28th February 20246th March 2024IPO Opens OnListing On28th February 2024BSE, NSEIPO Opens On28th February 2024IPO Closes On1st March 2024Lot Size150Issue PriceRs 98 to Rs 100Listing Date6th March 2024Listing OnBSE, NSE While 75% of the shares will be for qualified institutional buyers (QIB), 25% are for non-institutional buyers. With the proceeds received, the company plans to:Prepay in part or in full its outstanding loans Deploy funds for general corporate purposesCompany financialsThe company’s profit after tax (PAT) has fluctuated over the years. The firm’s PT stood at Rs 149.45 crores on 31st March 2021, Rs 62.87 crores on 31st March 2022 and Rs 527.05 crores on 31st March 2023. It marks a notable increase in profits between 2022 and 2023. Its debt-to-equity ratio stood at 5.14 as of 31st March 2021, 6.16 on 31st March 2022 and 3.36 by 31st March 2023.Strengths and RisksThe company boasts of the following strengths:Nil construction risk with stable profitable assets with long-term predictable cash flows.Stable income stream thanks to a diverse portfolio of roads across different regions in India.Solid fundamentals with strong government support.A long history of maintaining and managing road projects in India.However, there are certain risks associated with the company too. These include: The company's revenue depends on annuity income from the National Highways Authority of India. A decrease in it could impact bottom lines. The company depends on third parties to maintain and operate its assets. It exposes it to the risk of defaults, delays and unsatisfactory performance. Failure to maintain its assets per standards can result in contract termination.Should you invest in Bharat Highways InvIT IPO?If you have a long-term investment horizon, consider investing inBharat Highways InvIT IPO. The industry is attractive, with strong fundamentals and favourable government policies.Also, the geographically diversified road asset portfolio reduces concentration risk. That said, you need to look closely at valuations and read the company'sdraft red herring prospectusto understand if the IPO warrants a place in your investment portfolio.If you want to invest in it, you can easily do so through Kotak Securities mobile trading app. Log in with your credentials and visit the IPO section to invest. Frequently Asked QuestionsHow does an InvIT work?They are similar to mutual funds. They pool money from investors and invest in infrastructure projects.Which InvIT is the best in India?There are many InvITs in India, and Bharat Highways InvIT is one among them. Choose the one that best fits your scheme of things. Watch out for company fundamentals before investing.How many InvITs are listed in India?There are 22 InvITs listed in India as of 8th September 2023. Disclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.

https://www.kotaksecurities.com/articles/things-you-should-know-about-mukka-proteins-ltd-ipo/

What You Should Know About Mukka Proteins Ltd IPO Before Investing?

Key Highlights:Mukka Proteins Ltd is in the business of manufacturing fish oil, fish meal, etc.IPO details:Opening date: 29th FebruaryClosing date: 4th MarchPrice band: Rs 26 to Rs 28Total shares offered: 160,000,000Evaluate the valuations and the risks carefully before investingMukka Proteins Ltd is one of the leading manufacturers of fish oil, fish meal and fish soluble paste. These are essential ingredients in manufacturing aqua feed, poultry feed and pet food. It sells its products in India and also exports them to over 10 countries. Some countries where the company exports its products are Chile, Bangladesh, China, South Korea, Oman, Malaysia, Vietnam, etc.The company is coming out with itsinitial public offering(IPO) on 29th February 2024. This blog captures some essential things you should know before investing in this IPO.Offer detailsThrough the IPO, Mukka Proteins plans to raise Rs 224 crores. The price band for the issue is between Rs 26 - Rs 28, and a total of 160,000,000 shares are on offer. The company will go public on 4th March 2024 and will be listed on the BSE and NSE. You can bid for a minimum of 535 equity shares and in multiples thereof.Issue objectivesThe company plans to use Rs 120 crores from the proceeds received to meet its working capital needs. It intends to allocate Rs 10 crore to meet the working capital needs of its associate company, Ento Proteins. It plans to use the remaining funds for general corporate purposes.IPO allotment structureWhile 50% of the IPO is for qualified institutional buyers (QIBs), 15% is for non-institutional investors (NIIs). 35% is for individual investors.Company financialsFor FY 22, the company achieved a net consolidated profit of Rs 25.8 crore. This is a substantial increase from Rs 11.01 crore in the previous year. Revenue from operations during the same period increased to Rs 770.5 crore from Rs 603.8 crore. In the first nine months of FY 23, ending December, the firm recorded a net profit of Rs 25.6 crore.Risks involvedAs an investor, you need to know about the key risks associated with any company before investing in its IPO, and Mukka Proteins is no different. Some of the key risks are as follows:The company has recently forayed into the insect protein business. It may be unable to expand its business in this domain, which could materially affect its business and financial conditions.Most of its revenues come from selling fishmeal in India, Japan, Vietnam and China. If there are adverse developments or changes in the demand for products or consumption patterns in these countries, it can impact the company's profitability.The company procures its supplies from limited suppliers and has no formal long-term arrangements with raw materials suppliers. Variations in the supply can affect the company's financials.Should you invest?Mukka Proteins Ltd operates in a domain where there is considerable government support. The Indian government's Pradhan Mantri Matsya Sampada Yojana (PMMSY) aims to bolster the country's fisheries sector. Also, fish meal and fish oil are rich protein sources and vital fatty acids and are in high demand in the aquaculture industry.Strong financials coupled with increased demand for animal proteins position the company to make significant gains in the coming days. That said, evaluate the valuations correctly before investing. If you want to invest inMukka Proteins Ltd IPO, you can do so with Kotak Securities app. Log in with your credentials and visit the IPO section to invest. Frequently Asked QuestionsWhat is the IPO size of Mukka Proteins?The company plans to raise Rs 224 crore through its IPO, an entirely fresh issue.What is IPO share lot size?IPO share lot size is the minimum number of shares you can purchase. It varies across companies.What is the minimum IPO price?The minimum IPO price refers to the minimum amount you need to invest in a company's IPO, ranging from Rs 10,000 to Rs 15,000. Disclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions

https://www.kotaksecurities.com/articles/what-you-must-know-about-rk-swamy-ipo/

Want to Invest in R K Swamy IPO? Read This First

Key Highlights:R K Swamy is India's leading integrated marketing services provider with more than five decades of experienceR K Swamy IPO Details:Issue size - Rs 423.56 croresPrice range - Rs 270 to Rs 288IPO closes on - 6th March, 2024Total shares - 14,706,944Evaluate the risks and keenly evaluate valuations before investingR K Swamy, one of India's leading integrated marketing service providers, is coming out with its initial public offering on 4th March. The company offers diverse creative media, market research and data analytics services and has over five decades of experience in offering integrated marketing communication solutions. The IPO's issue size is Rs 423.56 crores. If you are looking forward to investing in this IPO, read this blog to learn the various aspects of this IPO.IPO DetailsR K Swamy Ltd's IPO, scheduled for launch on 4th March, will conclude on 6th March. The price range is set between Rs 270 and Rs 288 per equity share, with the market lot size at 50 shares. If you are an individual retail investor, you can apply for a maximum of 13 lots, equivalent to 650 shares amounting to Rs 1,87,200, considering the upper price band.While the total issue comprises 14,706,944 shares, the fresh issue consists of 6,006,944 shares.Offer for salecomprises 8,700,000 shares. 75% of the offer is for qualified institutional buyers, while 10% is for retail investors. 15% of the offer is for non-institutional investors.Objectives of the IssueThe primary aim of the IPO is to use:Rs 87 crore for working capitalRs 10.985 crore for setting up a DVCP StudioRs 33.342 crore for augmenting its IT infrastructureRs 21.736 crore for setting up a new call centerThe company will use the remaining proceeds for addressing general corporate purposes.Risks InvolvedAs an investor, you must be aware of the risks of investing in a company’s IPO. Some of the risks associated with R K Swamy are:Its revenues depend heavily on critical clients. It can adversely affect the company's business and financial health if it fails to retain or diversify its client base or if its marquee clients reduce marketing budgets.The company's reliance on specific sectors exposes the company to economic risks. Economic uncertainties may impact the company's revenues.The firm's revenues depend heavily on digital operations. Failure to adapt to digital trends and compliance with privacy laws can negatively impact the company's financial conditions and business.Should You Invest in This IPO?India has experienced rapid growth in its digital infrastructure, propelled by 4G/5G network expansion, the Digital India campaign, increased internet and smartphone penetration and digital payments. There is an increased demand for digital and social media marketing across various sectors.These developments poise R K Swamy to take strategic advantage in the coming days, and investing in this IPO can enhance wealth creation for investors. That said, you need to evaluate the company's valuations carefully and have a holistic view of your financial objectives and risk appetite before investing. If you wish toapply for this IPO, you can easily do so through the Kotak Securities app. Login with your credentials and visit the IPO section to invest. Frequently Asked QuestionsHow are IPO shares allocated?Share allotment takes place depending on the response to the IPO. In case the IPO is undersubscribed, you get the lots for which you've applied. If it's oversubscribed, allocation happens through a computerised process.At what time shares get allotted?Shares are generally allotted within 7 days.What is the listing date of R K Swamy IPO?The listing date is 12th March 2024. Disclaimer: _This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. _

https://www.kotaksecurities.com/mutual-funds/percentage-of-income-allocation-mutual-funds/

What Percent Of Your Income Can Go For Mutual Funds?

Investing in mutual funds is a smart technique to wealth-generation. Investing small sums regularly is a good habit. But, how much one should save from one’s salary is a difficult question. There are so many books that recommend saving at least 30-40 percent of one’s salary in a fixed deposit. But there is no clear answer on what percentage should be saved with mutual funds.In this simple guide, let us understand how much one should save or invest every month for a mutual fund. We will understand some strategies that will help generate a bigger wealth corpus.Understanding Your Personal Financial LandscapeBefore diving intomutual fund investments, it's important to understand your current financial situation.Start by calculating your total income. You can try including all the sources that you are getting your money from. These could be salary, bonuses, rent from your house, and others. Next, you need to outline your monthly expenses. This could include regular costs such as rent, mortgage, utilities, or any existing debts.For instance, imagine you earn ₹50,000 per month, and your fixed costs and expenses total ₹30,000. This leaves you with ₹20,000 as the amount that can be used for saving. Knowing this surplus is a foundational step. You can now plan on investing a part of this or the whole towards a mutual fund scheme.Investment GoalsClearly defining your investment goals is pivotal. Whether it's saving for a down payment on a house, funding your child's education, or building a retirement nest egg, understanding your objectives guides your investment strategy.Determine the timeframe for each goal—short-term, medium-term, or long-term. Short-term goals, like a vacation in a year, may require a more conservative approach, while long-term goals, such as retirement in 30 years, allow for a more aggressive strategy with higher potential returns.For example, if your goal is to accumulate a down payment for a home in five years, consider a balanced approach with a mix of equity and debt funds. On the other hand, if retirement is your long-term goal, you might lean more towards equity funds for their growth potential.Risk Tolerance: A Balancing ActOnce you have identified how much you can save every month to meet your goals, the next step is to find out your risk level. Understanding your risk tolerance is very important because different funds can have different levels of risks. It's important therefore to choose a mutual fund scheme that is less risky than your comfort level.Consider Mary, who, with a low-risk tolerance, invested heavily in aggressive growth funds, only to panic during market downturns. This example emphasises the need for a balanced approach that considers both potential returns and individual risk tolerance.Although mutual fund operators clearly explain risks such as market risk, credit risk, and liquidity risk, not every investor understands them. Common mistakes include underestimating risk tolerance, leading to anxiety during market fluctuations, or overestimating it, potentially exposing investors to more risk than they can handle. Evaluating risk tolerance involves assessing your ability to endure potential losses without abandoning your investment strategy.Optimising Your Allocation StrategyOnce you've assessed your financial landscape, determined your risk tolerance, and set clear investment goals, the next step is optimising your allocation strategy. What percentage of your income should go into mutual funds?A widely accepted guideline is the 50/30/20 rule. Allocate 50% of your income to necessities, 30% to discretionary spending, and reserve 20% for savings and investments. Within this 20%, your mutual fund allocation can be further optimised based on your risk tolerance and investment goals.Let's say your disposable income is ₹2,000 per month. Following the 50/30/20 rule, allocate ₹1,000 to necessities, ₹600 to discretionary spending, and reserve ₹400 for savings and investments. Out of this ₹400, you might decide to allocate 70% to mutual funds, amounting to ₹280 monthly.However, these percentages are not rigid and should be adapted to individual circumstances. Factors like emergency funds, existing investments, and additional savings goals also influence the optimal mutual fund allocation.Monitoring and Adjusting Your PortfolioInvesting in mutual funds is not a set-it-and-forget-it strategy. Regularly monitor your portfolio's performance, and adjust your allocation as needed based on changes in your financial situation or market conditions.For example, if your income increases, consider increasing your mutual fund allocation to accelerate wealth growth. Conversely, during economic downturns, reassess your risk tolerance and make adjustments to maintain a balanced and realistic approach.Common Pitfalls to AvoidWhile determining the percentage of your income for mutual funds, beware of common pitfalls:1.Overlooking Emergency Funds: Allocate a portion of your savings to an emergency fund to cover unexpected expenses. Avoid the temptation to invest all available funds, ensuring financial stability during unforeseen circumstances.2.Ignoring Diversification: Diversify your mutual fund investments across different sectors and asset classes. This mitigates risk and enhances the potential for stable, long-term returns.3.Chasing Performance: Avoid chasing past performance. Historical returns do not guarantee future results. Instead, focus on the fund's strategy, management, and alignment with your investment goals.While personal finance experts generally recommend allocating 25-35 percent of your investments to mutual funds, the exact allocation cannot be done using a one-size-fits-all approach. Understanding how much and in what level one should regularly invest in mutual funds, requires a thoughtful and personalised approach. The process itself considers factors such as financial background, risk tolerance, and investment goals. Good investors try to strike a balance between risk and return and align their goals with their strategy. They also regularly monitor and adjust their portfolio for financial success.Remember Oscar Wilde's famous saying, everything in moderation including moderation in itself? Well, that may sound philosophical but it holds true even for mutual fund investments. It is great to have a balanced allocation, but then you should periodically review the allocation. And, prepare yourself with changing circumstances, and seeking professional financial advice. Doing so will not only help you with valuable insights but also enable you to grow your wealth. After all, diligence and prudence are such great traits that they help you navigate the world of mutual funds with ease.

https://www.kotaksecurities.com/mutual-funds/ideal-age-to-start-investing-in-mutual-funds/

Wondering What’s The Ideal Age To Start Investing In Mutual Funds?

Investing in mutual funds is often considered a key component of financial planning, but the question of when to start can be as varied as the investors themselves.Whether you're a fresh graduate, a young professional, or someone contemplating retirement, the benefits of mutual fund investments are accessible at various stages of life. Having said that, investing early isn't all about having a lot of money; it is about starting with what you have and letting “time” do its magic.Let's take a journey through different age groups to explore the ideal age to embark on the mutual fund investment path.Power of Early InvestingWhile it is true that one can invest at any age, it is also valid that those starting early have an undue advantage thanks to compounding. For those in the 18-25 age bracket, the mantra is clear: the earlier, the better. With time as their most valuable asset, young investors have a significant advantage.Compounding is like setting a snowball rolling at the top of a steep mountain. You may start with a small investment, but with each year, your returns are reinvested, adding to the total sum and propelling it forward at an accelerated pace.To understand compounding through an example, visualise two friends, Deepak and Suresh. Both investing ₹1,000 per month in a mutual fund with a 10% annual return. Suresh starts at the age of 25, while Deepak waits until 35. By the time they reach retirement at 65, Suresh's investment will have grown to a staggering ₹1.83 crore, while Deepak's will reach ₹90 lakhs. The difference? A decade of compounding for Suresh, allowing him to gain momentum early and create a larger fortune.Mutual funds that focus on growth, such as equity funds, become attractive options for young investors. While risks are inherent, the extended investment horizon allows them to ride out market volatility and capitalise on the potential for high returns.Ages 25-35: Balancing Ambition with StabilityIn the 25-35 age group, priorities often shift towards stability and long-term financial goals. This phase may involve milestones like buying a home, starting a family, or pursuing higher education. Investors in this bracket benefit from balancing the ambition for growth with the need for stability.Diversifying across asset classes, including equity and debt funds, becomes crucial. For example, consider Rhea, who, at 30, starts investing in a balanced fund—a blend of equities and fixed-income instruments. This strategy allows her to participate in market growth while mitigating some of the risks associated with pure equity funds.35-50: Realities of mid-lifeThe 35-50 age group often encounters mid-life financial responsibilities such as children's education, mortgage payments, and planning for retirement. Here, the ideal age to start investing may not be as critical as the consistency of contributions.Sandeep has started investing in his late 30s. While he may have missed the advantage of early compounding, disciplined and regular investments in a diversified portfolio can still yield substantial results. A mix of equity, debt, and possibly hybrid funds aligns with the need for both growth and stability.50-75: Approaching Retirement with CautionAs retirement approaches, investors between 50 and 75 tend to shift focus from accumulation to preservation. Capital preservation and a reliable income stream become paramount. Jennifer, at 60, starts allocating a portion of her portfolio to debt funds and systematic withdrawal plans (SWPs) to ensure a steady income during retirement.While the emphasis on growth diminishes, maintaining a balance with growth-oriented instruments remains essential. This age group should remain vigilant about risk management and gradually shift towards more conservative investments.Senior Citizens: Nurturing Financial SecurityFor senior citizens, the focus is on nurturing financial security and optimising income. Dividend-paying funds and debt instruments play a crucial role. At 70, Vikram invests in a debt fund that provides regular dividends, supplementing her pension and ensuring financial stability.A senior citizen may not be the ideal customer for a mutual fund, but the emphasis is on wisely managing existing investments to sustain a comfortable lifestyle throughout retirement.The ideal age to startinvesting in mutual fundsis a nuanced concept that evolves with individual circumstances. While the advantages of starting early are undeniable, each life stage presents unique opportunities and challenges.Investors should tailor their approach based on financial goals, risk tolerance, and time horizon. Regardless of the age at which one begins, the key lies in consistency, diversified asset allocation, and periodic reassessment of the investment strategy.Financial planning is a lifelong journey, and there's no one-size-fits-all answer. Whether you're a young professional with decades ahead or a retiree seeking stability, mutual funds offer versatile solutions. Seeking professional financial advice is crucial at every stage, helping investors make informed decisions aligned with their unique circumstances.Also, one should remember that it's not about when you start; it's about staying committed, adapting to changing circumstances, and making sound financial decisions throughout your investment journey. Each age brings its own set of opportunities—embrace them wisely. So, in a nutshell, there isn't a one-size-fits-all approach to mutual fund investments, and the ideal age to start is whenever you're ready to take the plunge.

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What’s the New e-Rupee Programmability?

Kotak Insights | Date 16/02/2024Imagine if India had its own digital money, just like the coins and notes we use, but you can't touch it because it's all online.Well, that's what the Reserve Bank of India (RBI) did by creating thee-Rupeearound a year back.We also wrote about it here –E-Rupee: India’s Digital Currency Explained.The e-Rupee is like digital cash that the RBI makes sure is safe to use. It is designed to help more people use money online, even if they don't have a bank account. And it can bring about a change in India’s digitisation.Let us have a look at what makes it special and the RBI’s recent move.The Birth of the e-RupeeThe e-Rupee is a special kind of digital money called a CBDC, which stands forCentral Bank Digital Currency.It is the RBI's digital version of our everyday rupees. You can use it easily with mobile phones or computers, and since the RBI backs it, it's safe.About a year ago, the RBI introduced the e-Rupee as apilot run, in smaller groups, to test the waters and to see how businesses and people are adopting to the concept.The Centre discussed the idea of having CBDC as a counter to the growing popularity ofcryptocurrencies, which as per the RBI as well as the government, has the potential to be used for criminal activities. And after researching the feasibility, the central bank launched the abovementioned pilot programme for the e-Rupee which commenced in December 2022.The rolled out e-Rupee has unique characteristics: it is a legal tender and is designed for easy accessibility, ensuring that anyone with a mobile device can use it, even without a bank account. It is available in both wholesale and retail formats, thereby catering to a wide range of transactions, from interbank settlements to consumer purchases.It is also different from cryptocurrencies in that it has a centralised ownership i.e. the RBI. And unlike UPI, the e-rupee isn’t a digital payment interface, rather it in itself is cash.So, how did this pilot perform? Well, it was a success as the RBI met its target of1 million daily e-rupee transactionsby the end of 2023.So far, so good.Let us now go over a recent development and the subject of interest – its programmability.The Advent of ProgrammabilityAfter the pilot run, the RBI now wants to take the e-Rupee to the next level.And this next step is theprogrammability of e-Rupee.Last week,RBI Governor Shaktikanta Dassaid that the RBI has introduced programmability and offline functionality in its CBDC (retail) pilot. He further added that programmability will enable users, like government agencies, to ensure payments are made for defined benefits.What’s that, you ask?You see, one of the coolest things about the e-Rupee is that it can be programmed.Programmability in the context of the e-Rupee refers to the ability toembed smart contracts into transactions, enabling the digital currency to execute predefined actions under certain conditions.This means the RBI can set rules for how the e-rupee is used, allocated and controlled.For example, it could make a special kind of e-Rupee that you can only spend on food or education. Or say, corporates will be able to programme specified expenditures, like business travel, for employees with this feature.Apart from this, features likevalidity periodsorgeographical areaswithin which the CBDC may be used can also be programmed.This helps make sure money is used where it is needed.This level of control and flexibility is a first-time for traditional currencies and it could revolutionize how policies and financial interventions are implemented.Moreover, the programmable features of the e-Rupee couldenhance transparencyandefficiencyin financial transactions. By automating payments and ensuring they are executed only when certain criteria are met, the e-Rupee can reduce the risk of fraud, eliminate intermediaries, and streamline the process of financial compliance.With programmable E-Rupee, the RBI can do more to help the economy. Instead of usingmonetary policymeasures to adjust interest rates to change the economic tone, it can send money directly to people or businesses and make sure it's spent in desired ways.It could be a way for the RBI to manage the country's money and make sure it's doing the best.However, the advent of programmability also brings challenges with it.Challenges and ConsiderationsEven though the e-Rupee has a lot of benefits, there are some challenges too.Privacy and Surveillance Concerns:The ability to program and track digital currency transactions raises privacy issues. Programmability could enable surveillance, allowing authorities to monitor spending patterns in real-time.Security Risks:The introduction of smart contracts and programmable functions could increase the attack surface for potential cyber threats.Digital Literacy and Accessibility:While the e-Rupee aims to enhance financial inclusion, its success is contingent on widespread digital literacy and access to technology. Bridging the digital divide is crucial to ensure that the benefits of programmable money reach all segments of the population, especially in rural and underserved areas.Regulatory and Ethical Implications:Programmable money poses regulatory challenges, including the ethical considerations of restricting how and where money can be spent.Fungibility Concerns:Some experts worry this might impact the fungibility of the e-Rupee—its ability to be interchangeable with other units of the same value—if certain units are programmed with restrictions that others do not have.The RBI is working on these issues to make sure the e-Rupee works well for everyone.Despite these challenges, the potential benefits of the e-Rupee—enhanced efficiency, financial inclusion, and the ability to conduct targeted economic interventions—present a compelling case for its development.Moreover, the lessons learned in this process will not only shape the future of the e-Rupee but also contribute to the global discourse on the role of digital currencies in modern economies.ConclusionThe e-Rupee is a big step forward for India, making money easier and safer to use for everyone. It's like having digital cash that you can use with your phone.As we learn more and solve any problems, the e-Rupee could change how we think about and use money every day.For those interested in delving deeper into the intersection of technology and finance, exploring CBDCs and their potential impact on international monetary systems presents a fascinating next step.In all, the journey of the e-Rupee is just one chapter in the broader narrative of digital currencies' role in shaping the future of global finance. It is an exciting time for India's money, and there's a lot more to learn and explore!To know how you can track and invest in Digital India’s Growth Engine,click here to explore the IT Powerhouses stock basket.We’ll be back with another exciting story next week!Until next time,Happy learning!Sources:Kotak Securities, RBI, Economic Times, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/mutual-funds/recent-trends-in-mutual-fund-industry/

Recent Trends in Mutual Fund Industry

The Indian mutual fund industry has come a long way since its humble beginnings in 1961. The industry's assets under management (AUM) have witnessed more than fivefold increase in a span of 10 years - from Rs 8.90 trillion as of November 30, 2013, to Rs 49.05 trillion as of November 30, 2023.Today, mutual funds have emerged as one of the most sought-after financial instruments by retail and institutional investors for achieving various financial goals. The industry has also witnessed several trends highlighting how it is geared for the future.Recent Trends in the Mutual Fund Industry1. Rise of Digitalization Making Mutual Fund Investments SeamlessThe industry has witnessed a marked increase in digitalization, allowing investors to invest, track, and monitor their investments at the click of a button. Today, many fintech platforms have come up with apps that enable you to invest in a range of funds, track them in real time, and get a 360-degree view of your investments.Not only investors but even distributors are collaborating with fintech startups to offer personalized services to investors leveraging their technologies. All in all, digitalization has helped expand the reach and ease of mutual fund investments significantly.2. Increase in the Number of SIPsSystematic investment plans(SIPs) have evolved as the go-to investment mode for investing in mutual funds. The SIP contribution in October 2023 stood at Rs 16,927.86 crores as against Rs 13,041 crores in October 2022. As per AMFI, the total number of SIPs currently stands at about 7.44 crores.Offering ease of investments and imbibing a disciplined savings habit, SIPs help you stay invested across market cycles and offer the benefit of rupee cost averaging. It means you buy more units when markets are down and more when they are up. This ultimately averages out the investment cost and helps you easily navigate market volatility.3. Surge in Investments from Smaller CitiesAnother interesting trend that has come to the fore is the surge in mutual fund investments from smaller cities. Investors from cities like Pune, Kota, Durgapur, Alwar, etc., are growing quickly and giving tough competition to established ones like Mumbai, Chennai, and Kolkata. Efforts made by mutual fund distributors combined with eye-catching campaigns from AMFI have played a key role in attracting investors from smaller cities.The initiatives have empowered investors from these regions to navigate the intricacies of mutual fund investments and make investments aligning with their goals. The shift in investor demographics indicates the growing financial literacy and awareness in smaller cities. Investors from these cities increasingly recognize mutual funds' potential as an effective vehicle for wealth creation and achieving long-term financial objectives.Summing it UpIn recent years, the Indian mutual fund industry has become even more competitive, with new players coming to the fore. Several financial institutions have given regulatory approvals for setting up mutual fund businesses, which will likely present investors with greater choices. The industry is well-poised for growth in the coming days, with small distributors gaining traction and a surge in investments. FAQs on Recent Trends in Mutual Fund IndustryWhy is the Mutual Fund Industry Growing?Rising financial literacy coupled with innovative campaigns by AMFI and a rising culture of savings has propelled the growth of the mutual fund industry.Why are Mutual Funds Becoming Popular in India?Automatic diversification, professional management, and liquidity are the major reasons as to why mutual funds are becoming popular in India.

https://www.kotaksecurities.com/mutual-funds/how-mutual-funds-perform-during-market-crashes/

How Mutual Funds Perform During Market Crashes?

Amarket crashis the worst fear of any investor. Gains made over the years get wiped out in days, and portfolios go red. While nobody wants markets to nosedive, a crash is inevitable in markets, which go through cycles. Like other financial instruments, mutual funds are affected during a crash, and their performance takes a hit. How? Let's find out.Performance of Mutual Funds During Market CrashesNAV of Mutual Funds Come DownNAV, ornet asset value, is the unit price of a mutual fund. The value of your mutual fund holdings depends upon the fund's NAV. When NAV comes down following a crash, so does your investment’s worth. Let's understand it with an example. Suppose a fund's NAV before a crash is 50, and you have 1000 units of it. So, the value of your investment is Rs 50,000 (50 X 1000).However, following a crash, if NAV drops to 40, then the value of your investment drops by Rs 10,000 to Rs 40,000 (40 X 1000).Stocks Take a Hit and So Do FundsThe underlying securities of mutual funds comprise stocks from different companies. Due to this, mutual funds offer you the benefit of diversification. However, during a market crash,stock pricescome down.This, in turn, pulls down the performance of mutual funds holding these stocks. Companies, too, face a tough time with their operations taking a hit, and it takes time for stocks to recover. Performance improves only when stocks recover lost ground.Give the Benefit of Rupee Cost AveragingWhile the performance of mutual funds during a market crash, if you are investing viasystematic investment plans(SIPs), you reap the benefit of rupee cost averaging. It means you gain more units of a fund during a crash. Let's see how. Suppose you invest Rs 1000 in a fund whose NAV before a crash is 10. In such a scenario, you get 100 units of the fund (1000 /10).If NAV drops to 5 following a crash, you get 200 units of the fund (1000 / 5). This averages out the cost of buying with time. When markets recover, you benefit from acquiring these extra units at a lower NAV at the same invested price.Approach to Mutual Fund Investment During a CrashWhile market crashes inevitably impact mutual funds' performance and pull them down, as an investor, you need to remain patient and avoid exiting your investment. If you redeem your investment during a market crash, you essentially convert your notional losses into actual ones.Mutual fundsare long-term investments, and it's important for you to remain calm during a crash. You need to stay invested and take advantage ofrupee cost averaging. Markets have rewarded those who have not pulled out of their investments.For example, when markets fell 38% during the 2020 Covid crash, some funds compounded investors' wealth by 14% or even more. Also, on several occasions, markets have recovered lost ground much more quickly, rewarding those who displayed patience during turbulent times.Summing it UpAs an investor, there's little you can do to prevent a crash and a subsequent plummeting of funds' performance. What you can do, however, is to stay calm and not exit your investment. By doing so, you give yourself the chance to benefit from the market rally and boost your wealth.

https://www.kotaksecurities.com/articles/will-indian-elections-shake-or-shape-your-stocks/

Will Indian Elections Shake or Shape Your Stocks?

Kotak Insights | Date 09/02/2024India's elections are a big show, and with the upcoming General Election in 2024, the stage is set for a roller-coaster ride in the stock markets.The big question on every investor's mind is: How will this event move the markets?Let’s take a closer look at this and understand the potential impacts and how one can navigate the markets in such a scenario.Elections and Sensex ReturnsChecking the history books, one thing keeps popping up – there is a noticeable surge in themarket momentumboth preceding and following the election period.In the short run, the market's response to elections is diverse. It is influenced by anticipated policy changes, economic reforms, and the prevailing sentiment regarding political stability or instability.However, an analysis of theBSE Sensex’s6-monthly and yearly returns before and after the last few Lok Sabha elections show that stock markets mostly have gone up whether you jumped in before the election buzz or waited until after the drama settled.Here’s a tabular look at the Sensex’s performance… Where the Sensex Stood Before & After ElectionsElection Year1999During Election4,6976 months before3,5696 months after4,8661 year before2,9191 year after4,092Election Year2004During Election5,3996 months before4,9496 months after5,9641 year before2,9601 year after6,451Election Year2009During Election11,8726 months before9,3856 months after16,8481 year before17,4341 year after16,994Election Year2014During Election24,1216 months before20,3996 months after28,0461 year before20,2471 year after27,324Election Year2019During Election38,8116 months before34,9816 months after40,3591 year before34,3441 year after30,672Election YearDuring Election6 months before6 months after1 year before1 year after19994,6973,5694,8662,9194,09220045,3994,9495,9642,9606,451200911,8729,38516,84817,43416,994201424,12120,39928,04620,24727,324201938,81134,98140,35934,34430,672 If you notice the table above, the average returns in various timeframes have mostly been positive, with the exception being the year 2019, marked by the COVID-19 pandemic-induced market downfall.Notice the market's run up since the pre-election period up until the election day and how they continued their momentum beyond.What Should Market Participants Do?Amid this market performance we just saw, investors and traders are often caught in a dilemma of whether to act swiftly or adopt a patient stance during elections.However, do understand that the actual market movement can be different in every election year as there are many changing sectors at play. An effective way to approach markets could be to take a detailed approach at the sectors and analyse how the upcoming or anticipated policy changes could affect the economic landscape.At the same time, it is also important to be conservative in your strategy and not get swayed by the increasedmarket volatility.As the smart investor Warren Buffett puts it, "The stock market is designed to transfer money from the active to the patient."In simpler terms, it means being patient usually pays off in the long run. And that can be one of the approaches to navigate the election related market volatility.So, while waiting for the election results might feel like a time of not making up your mind, it's super important to know that the market has its own rhythm. Making quick decisions might sound exciting, but it could lead to unexpected outcomes.That’s whenmind over moneycomes into the picture.Economic Policies and Market DynamicsAttempting to predict market movements solely based on election outcomes is akin to forecasting in turbulent weather.George Soros' perspective, "The financial markets generally are unpredictable," rings true.Remember, in a big economy like India, there's a whole story unfolding – both in the little details and the big picture, at the micro level as well as the macro level.One thing you can keep an eye on during elections is the economic policies. As you analyze them, remember that some policies might make certain parts of the market happy, like when there's talk about building things or making economic changes.On the flip side, any unpredictable changes in policies about taxes, rules, or trade agreements could also make the market a bit jumpy.While specific sectors may react positively to a particular party's victory, the broader market's movements are influenced by a myriad of global and domestic factors.So, one should exercise caution when making predictions and have a diversified and resilient investment strategy in place during such times.ConclusionAs you go about approaching the markets ahead of the general elections, the emphasis should be on informed decision-making, adaptability, and a focus on long-term fundamentals.Here's a wise thought from Benjamin Graham to keep in mind:"In the short run, the market is a voting machine, but in the long run, it is a weighing machine."It's like a little reminder that the quick ups and downs in the market are a bit like voting – things can change in a short time. But what really matters, the big value, comes from looking at the underlying marketfundamentalsthat shape how investments and markets succeed.For more market insights, tune into our research team's recent webinar below, where they talk about the Interim Budget, market strategy, and top stocks.2024 Interim Budget Insights | Budget WebinarWe’ll be back with another exciting story next week!Until next time,Happy learning!Sources:Kotak Securities, BSE, Moneycontrol, Economic TimesDisclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/special-serves-of-the-interim-budget-fy2024-25/

Special Serves of the Interim Budget FY2024-25

TheInterim Budget FY2024-25, presented on the 1st February, 2024 by Finance Minister Nirmala Sitharaman, has been a focal point of discussion and analysis across various sectors.In her press conference, Sitharaman elaborated on several crucial aspects and laid the groundwork for inclusive development across key pillars, such as thePoor,Women,Youth, andFarmers.While no major announcements were made, a detailed budget is expected inJulyafter the General Election is concluded.However, the Interim Budget was fiscally prudent and it has set a promising trajectory for sustainable economic growth until that time.Let us look at some special Interim Budget announcements in detail.India's Economic TrajectoryA highlight of the Budget presser was acknowledgingIndia's consistent economic growth.With three consecutive years of7%Gross Domestic Product (GDP) growth, India stands as the fastest-growing economy in the G20.This growth trajectory is a testament to the government's effective economic policies and resilience amid global challenges.The Finance Minister's articulation of GDP asGovernment,Development, andPerformancereflects a comprehensive economic management view.The focus has been on sustained development and efficient economic handling, gradually reducing the fiscal deficit, even during challenging times.Moreover, the Finance Minister's message tocredit rating agenciesabout aligning and bettering the fiscal consolidation path underlines the government's commitment to fiscal responsibility and economic stability.Also, note that the Interim Budget focuses onFiscal ConsolidationandCapex– both critical in achieving higher medium-term GDP growth. So, one can say there will be momentum in the GDP in the coming time.Let us look at the Capex and Fiscal Consolidation efforts in detail:Focused Capital ExpenditureThe commitment to continue capital expenditure is pivotal, especially in maintaining economic momentum.The government's sustained infrastructure investment is a key driver for future growth and stability.In the Interim Budget FY2024-25, the government proposed the highest capital expenditure spending atRs 11.11 lakh crore.As per the revised estimates, this was notably higher than the Rs 9.5 lakh crore expenditure proposed in FY2023-24.Here’s a look:

https://www.kotaksecurities.com/articles/interim-budget-2024-10-things-you-might-have-missed/

Interim Budget 2024: 10 Things You Might Have Missed

The Interim Budget 2024, presented by Finance Minister Nirmala Sitharaman, is a report of intricate fiscal planning and strategic initiatives, many of which might have flown under the radar in mainstream discussions.This blog post aims to uncover and dissect these less-discussed yet pivotal budget elements.From sustainable blue economies to innovative energy solutions and impactful agricultural reforms, we delve into the nuanced details that paint a comprehensive picture of the Interim Budget and its implications for the future.Here we go…1. Blue Economy 2.0The Interim Budget introduced the Blue Economy 2.0 scheme, which is focused onclimate resilience and coastal aquaculture.This includes setting up five integrated aquaparks and enhancing the Pradhan Mantri Matsya Sampada Yojana(PMMSY)to increase aquaculture productivity from three to five tonnes per hectare, doubling exports to Rs 1 lakh crore, and generating 55 lakh employment opportunities.This initiative aligns with the draft policy framework on India’s Blue Economy released in July 2022.2. Bio-Manufacturing and Bio-FoundryThe budget announces a new scheme for bio-manufacturing and bio-foundry, emphasising the development of biodegradable polymers, bioplastics, biopharmaceuticals, and bio-agri inputs.This aligns with India'snet-zero goals by 2070and includes phased mandatory blending ofcompressed biogas (CBG)in CNG for transportation and PNG for domestic purposes.3. Green Energy CommitmentsThe budget significantly increases the allocation forsolar energytoRs 10,000 croreand forwind powertoRs 930 crore.Additionally, Rs 300 crore is allocated for the bioenergy program, and viability gap funding will be provided for 1 gigawatt (GW) of offshore wind power.4. Agriculture Boost and SchemesThe budget focuses on increasing value addition in agriculture, with a plan to applyNano DAP, which is Di-ammonium phosphate, to various crops in all agro-climatic zones following the successful adaptation of Nano Urea.It also aims to step up efforts under the Pradhan Mantri Kisan Sampada Yojana and Pradhan Mantri Formalisation of Micro Food Processing Enterprises Yojana, which have already benefitted millions.5. Healthcare FocusThe budget extends health coverage under theAyushman Bharat schemeto allASHAandAnganwadi workers.The allocation for this scheme is marginally increased to Rs 7,500 crore for 2024-25.Additionally, the government plans to encouragecervical cancer vaccinationfor girls aged 9 to 14 years.6. Electric VehicleThe interim budget includes measures to strengthen the EV ecosystem, with an allocation ofRs 2671.33 crorefor FY25 under theFAME India scheme.The Production Linked Incentive (PLI) scheme for automobiles and Advanced Chemistry Cell (ACC) battery storage sees a significant increase in allocation, indicating a strong push towards EV adoption.7. HousingThePradhan Mantri Awas Yojna (PMAY)— Grameen beneficiaries will receive increased support of Rs 2 lakh per unit, up from Rs 1.2 lakh.The scheme aims to construct 2 crore pucca households over the next five years, with a budget allocation of Rs 54,500.14 crore for 2024-25.8. Free EnergyThe budget’s green initiative includes a target to enable one crore households to install rooftop solar panels, providing up to300 units of free electricity monthlyunder the rooftop solarisation and‘muft bijli’scheme.This initiative is part of a larger nationwide effort to boost renewable energy adoption.9. Key Numbers You Might Have MissedA goal is to establish a 100 million tonne (MT) capacity for coal gasification and liquefaction by 2030.Rs 14.1 trillion gross market borrowings for 2024-25.10 million taxpayers will benefit from withdrawing historical tax demands until 2014-15.Rs 86,000 crore budgeted for Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) in 2024-25.10. Future OutlookThe budget lays the foundation for a'Viksit Bharat' by 2047, focusing on inclusive growth, strategic positioning, and environmental sustainability.It reflects the government's commitment to a developed India with a strong emphasis ondiversity, democracy, and demographic strengths.ConclusionSo, those were some of the key overlooked details from the recently announced Interim Budget.The Interim Budget FY2024-25 is a comprehensive plan that balances economic growth with sustainability and innovation.Each point highlights a commitment to diverse and inclusive development, showcasing a strategic approach towards building a resilient and developed India by 2047.We will keep you posted on how these developments pan out in the coming year.To get more insightson the Interim Budget 2024,click here:#BeyondTheBudgetStay tuned to this space for all the latest developments and expert insights.Happy learning!Sources:Kotak Securities, Indian Budget, Economic Times, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

https://www.kotaksecurities.com/articles/decoding-indias-mini-economic-survey-2024/

Decoding India’s Mini Economic Survey 2024

Kotak Insights | Date 02/02/2024Every year, a day before theUnion Budgetannouncement, the Ministry of Finance of India releases a report called theEconomic Survey.It offers insights into India's economic trends and aids resource allocation for the Union Budget.But 2024 stood out as an exception.Instead of the usual Economic Survey, the Centre released a shorter version of the report titled'Indian Economy – A Review'. And guess what? - It brings good news for the Indian economy.The report projects India's growth into a$5 trillion economywithin the next 3 years, with aspirations to reach$7 trillion by 2030.What gives? To find out, let us look at some of the key highlights from this report and understand its significance in the context of the Interim Budget announcements.The Economic Survey’s RoleLet’s first start with the Economic Survey and why it is prepared.Typically, the Economic Survey outlines economic trends in India, assisting in the allocation of resources for the Union Budget.It analyses various economic aspects like agricultural and industrial production, employment, infrastructure, money supply, prices, imports, exports, foreign exchange reserves, and other similar factors that have a bearing on the Budget.It is presented inParliamentbefore the budget for economic planning.However, the government didn’t present the Economic Survey this time because 2024 is anelection year. In these cases, the regular Budget process may be disrupted if there is a change in the government after elections.It is this same reason why2024is going to seetwo budgets– anInterim Budgetand a detailed Union Budget which will be announced after the elections.So, to inform the Interim Budget, the government released 'Indian Economy – A Review', a comprehensive report reviewing India's economic journey over the past decade.Here are the key points from the 74-pager document:A Decade of India’s ResilienceAt its core, the report focuses on India’s overall growth in the last decade and how it is set to grow in the next fiscal year.What did the report find out?Well, over the last10 years, the Indian economy has demonstrated remarkable resilience and growth.In 2014, India faced numerous economic challenges, including highinflationand fiscal deficits. However, the decade that followed marked a transformative era.The government's strategic reforms and policies led to stable, sustainable growth, transforming the nation's economic landscape.Here are a few important factors behind this growth:Key Drivers of the Indian Economic GrowthStructural Reforms: The government introduced significant structural reforms that strengthened macroeconomic fundamentals. These reforms included the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC), and liberalisation in various sectors.Digital Revolution: India's digital infrastructure saw massive growth in the last couple of years, enhancing financial inclusion and creating new economic opportunities. Initiatives like Aadhar and digital payment platforms revolutionised the way businesses and consumers interact in India.Infrastructure Development: The government focused on building physical and digitalinfrastructure, improving connectivity, and enhancing the competitiveness of the manufacturing sector.Financial Sector Revitalization: The health of the financial sector improved significantly in the last couple of years. Banks' balance sheets strengthened, and credit growth in the non-food sector saw an upswing. Policy interventions played a crucial role in this.Inclusive Development: Policies aimed at financial inclusion resulted in significant improvements in household financial health. The Jan Dhan Yojana scheme played a crucial role in this aspect by bringing financial services to the underserved population.Here are a few other key highlights to note…Global Economy and IndiaEconomic Growth Projection: The Indian economy is expected to achieve a growth rate of 7% or higher for FY24, and there are predictions of sustaining this growth in FY25. This would mark four consecutive years of robust growth post-pandemic.Global Challenges and Trends: The global economy is facing challenges such as supply chain disruptions, a slowdown in trade, and the impact of Artificial Intelligence. India is seen as resilient, having overcome past shocks and is navigating these challenges effectively.Shift in Global Manufacturing: The era of hyper-globalization in global manufacturing is ending. Governments are focusing on onshoring and friend-shoring, impacting transportation, logistics costs, and final product prices. India is urged to lower logistics costs and invest in product quality to maintain and expand market share.AI and Energy Transition: The emergence of Artificial Intelligence poses challenges to services trade and employment. Additionally, there is a significant focus on the energy transition, with international pressure on developing nations to reduce carbon emissions. India is handling these challenges skillfully, balancing economic growth with climate-related initiatives.Conclusion: Amrit Kaal ReadyAll that says that India is on its way to achieve theAmrit Kaal visionlaid by Prime Minister Narendra Modi where the nation will move forward towards attaining resolutions made for Aatmanirbhar Bharat in the next 25 years.Here’s what the report states,‘India embarks on her ‘Amrit Kaal’ with confidence and the attitude that challenges to growth and inclusive development are stepping stones and not obstacles.’As we step into the future, India's economy is poised for sustained growth, backed by a robustdigital foundationand continued focus on reforms. The government's commitment to building infrastructure and fostering inclusive development ensures that the growth is balanced and sustainable.All that states that India has come along a long way growing in the last 10 years and the coming decade seems promising.India has invested significantly in infrastructure in the last decade, leading to a3.3X increasein public sector capital investment.Thefinancial sectoris healthy, with strong non-food credit growth. The pursuit of inclusive development is evident in improved household financial health,job creation, declining unemployment rates, and progress in education and healthcare indicators.Despiteglobal challengeslike the COVID-19 pandemic and geopolitical tensions, the Indian economy showcased its inherent resilience. The government's efficient management of these crises, adept handling of crude oil supply, along with its focus on economic reforms, played a pivotal role in sustaining growth.In all, the past decade has been a testament to India's economic resilience and potential.With strategic reforms, inclusive policies, India has not only overcome its challenges but has also positioned itself as a global economic powerhouse, ready to take on future challenges with confidence.It would be interesting to see how the coming decade unfolds for India!For more insights on the Indian economy and the Budget 2024 announcements, check out#BeyondTheBudget.See you with another interesting market story next week.Until then - Happy learning!Sources:Kotak Securities, Department of Economic Affairs, Economic TimesDisclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimerhere.

https://www.kotaksecurities.com/articles/4-numbers-to-watch-jasper-infotech-ipo/

Jasper Infotech Pvt Ltd IPO – 4 Numbers That Deserve Your Attention

Key Highlights:Evaluating key financial numbers helps you understand the company’s financial health.Essential number to evaluate:Revenue from operations: It helps you determine the total income the company generates from its primary business activities.Profit after tax: Helps assess whether the company generates ample earnings to cover its expenses.Debt to equity ratio: Aids in measuring the debt the company is using to finance its operations.Earnings per share: Shows the profit the company generates from outstanding shares.You can find these numbers in the company’s annual report.Jasper Infotech Pvt Ltd, known as Snapdeal, will soon come out with its initial public offering (IPO). Among the several things you need to watch out for in an IPO as an investor are some key financial metrics. These help you understand and analyse the company’s financial positioning and health. If you plan to invest in Jasper Infotech Pvt Ltd’s IPO, watch out for these numbers.Important financial metrics to evaluateRevenue from operationsRevenue from operations is one of the critical numbers you need to examine closely. It refers to the total income generated from a company’s primary business activities. It excludes income from non-operating sources such as asset sales or investment.An increase in revenue from operations shows growth in the company’s core business. It’s also crucial in determining a company’s potential to generate profits. The company’s revenue from operations rose by 14% to Rs 539 crore in FY 22 from Rs 471 crore in FY 21 [1].Profit after taxProfit after tax (PAT) is another crucial metric you need to evaluate before investing in Jasper Infotech Pvt Ltd's IPO. PAT shows the company's actual earnings, accounting for all its expenses, including taxes. It gives you a clear picture of a company's profitability. Analysing PAT helps you assess whether the company can generate enough earnings to cover its expenses. It also lets you understand how effectively the company can manage its tax obligations.Note that PAT directly influences the earnings available for distribution to shareholders, and analysing it gives you insight into potential returns you might expect from your investment in the IPO.Debt-to-equity ratioAnother important metric you need to evaluate is the company's debt-to-equity ratio. It can help you measure how much debt the company uses to finance its operations compared to shareholder's equity. A high debt-to-equity ratio poses higher financial risk.It suggests that the company relies heavily on debt financing. On the other hand, a low D/E ratio shows a healthy balance between debt and equity. D/E ratio is calculated by dividing total borrowings by total equity.Earnings per share (EPS)EPS is another vital number you must closely evaluate before investing in Jasper Infotech Pvt Ltd’s IPO. EPS measures a company’s profitability on a per-share basis and shows how much profit the company is generating for each outstanding share.A positive EPS shows profitability, which is essential for long-term sustainability. A consistent increase in EPS shows that the company is efficiently growing its earnings and is a positive indication for you seeking growth opportunities. EPS can also help you assess the risk of investing in the company. A declining EPS is an indication of operational challenges and financial instability.Summing it UpYou can find these key numbers in the company’s annual report. Analyse them carefully and match them with your risk tolerance before investing in the IPO. Seek professional guidance in case of any doubt. Frequently Asked QuestionsWhat is the financial report of Snapdeal?In FY 23, Snapdeal registered Rs 388 crore in revenues. It has shown a significant uptick in its financial performance over the years.Is Snapdeal running in a loss?Snapdeal's FY 23 consolidated loss after tax narrowed down to Rs 282 crore from Rs 510 crore in FY 22.

https://www.kotaksecurities.com/articles/5-minute-summary-of-the-2024-interim-budget/

5 Minute Summary of the 2024 Interim Budget

Finance Minister Nirmala Sitharaman delivered her shortest budget announcement today as she presented theInterim Budget 2024, which lasted alittle less than an hour.Minister Sitharaman's presentation marked hersixth consecutive budget.The Finance Minister highlighted India's booming economy. As per the speech, the Indian economy has witnessed a positive transformation in the last 10 years and people are looking towards the future with hope.Here are a few key Budget 2024 highlights you shouldn’t miss. From taxation updates to big capex plans and economic boosts, we have it all covered!Let’s jump right in…Interim Budget 2024 Key Focus AreasThe Interim Budget stated that the government is focussing on four major goals:1. Garib2. Mahila3. Yuva4. AnnadataHere’s what the budget announced for each of these:Garib Kalyan, Desh ka KalyanIn the pursuit of ‘Sabka ka Saath’ in the last 10 years, the Government has assisted 25 crore people to get freedom from multi-dimensional poverty.PM-SVANidhi has provided credit assistance to 78 lakh street vendors. From that total, 2.3 lakh have received credit for the third time.Momentum for Nari Shakti30 crore Mudra Yojana loans have been given to women entrepreneurs.Female enrolment in higher education has increased by 28% in 10 years.Women's empowerment through entrepreneurship, ease of living, and dignity for them has gained momentum in these 10 years.Welfare of AnnadataEvery year, under PM-KISAN SAMMAN Yojana, direct financial assistance is provided to 11.8 crore farmers, including marginal and small farmers.Crop insurance is given to 4 crore farmers under PM Fasal Bima Yojana.Empowering Amrit Peedhi, the YuvaNational Education Policy 2020 is ushering in transformational reforms.The Skill India Mission has trained 1.4 crore youth, upskilled and reskilled 54 lakh youth, and established 3000 new ITIs.A large number of new institutions of higher learning, namely 7 IITs, 16 IIITs, 7 IIMs, 15 AIIMS and 390 universities, have been set up.Vision of the BudgetThe government stated that besides delivering high growth in terms of Gross Domestic Product (GDP), it is equally focused on a morecomprehensive ‘GDP’, i.e.,’Governance, Development and Performance’.The budget said that the government is working with an approach to development that is all-round, all-pervasive and all-inclusive.It is working to make India a‘Viksit Bharat’ by 2047, and it needs to improve people’s capability and empower them to achieve that goal.The vision is for a Prosperous Bharat in harmony with nature, modern infrastructure and opportunities for all.Fiscal and Macro AnnouncementsCapital Expenditure or Capex outlay for 2024-25 is set atRs 11.11 lakh crore.This is 11% higher and stands at 3.4% of the Gross Domestic Product (GDP).FY24 Fiscal Deficit target is revised to5.8%of GDP from 5.9%.For FY25, the Fiscal Deficit target is set at5.1%.The government plans to reduce the fiscal deficit to4.5% in FY26.For gross market borrowings in FY25, the target is set at Rs 14.13 lakh crore. Net market borrowing is seen at Rs 11.75 lakh crore.Revised expenditure for FY24 is set at Rs 44.90 lakh crore.Total revenue receipts in FY25 are estimated at Rs 30 lakh crore. This is against the revised estimate of Rs 26.99 lakh crore.The Nominal GDP growth is seen at10.5%.FY24 Divestment Target is cut to Rs 30,000 crore; for FY25, the same is set at Rs 50,000 crore.Taxation DevelopmentsIn a surprise move, Finance Minister Nirmala Sitharaman proposedno changesin Direct and Indirect Tax, including Import Tax.So, the same tax rates for Direct and Indirect Tax have been retained. This means the same rates as the last budget announcement will be in effect.Here are a few highlights from this space:The budget announced that the government willwithdrawold disputed direct tax demands of up toRs 25,000till FY09 andRs 10,000for FY11 to FY15. The same is set to benefit1 crore taxpayers.The tax receipts for 2024-25 are projected at Rs 26.02 lakh crore.Tax breaks for start-up investments made by Sovereign wealth funds have been extended to March 31, 2025.The number of tax filers rose by2.4 times, and direct tax collection has trebled since 2014. Moreover, the tax base of Goods and Services Tax (GST) more than doubled.Steering Towards a Resilient EconomySo, those were some of the key updates from the Indian Interim Budget 2024 that were announced by Finance Minister Nirmala Sitharaman today.In conclusion, the Interim Budget promised some big economic reforms to drive India’s economic growth in the coming years.As India moves closer to the upcoming elections, this budget sets a tone of stability and growth, aiming to build a resilient and inclusive economy.For more budget insights, head over to#BeyondTheBudget by clicking here.Sources:Interim Budget 2024, Economic Times, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read the full disclaimer here.

https://www.kotaksecurities.com/articles/markets-react-to-2024-interim-budget-over-the-moon-or-feeling-gloomy/

Markets React to 2024 Interim Budget: Over the Moon or Feeling Gloomy?

The2024 Interim Budgethas been a focal point for market analysts, traders, and investors alike.With key announcements impacting fiscal policies and market dynamics, dissecting how these changes shape the overall market sentiment is crucial.Here is a look at how the Interim Budget announcements bode for the economy, sectors, and markets.Fiscal Policies and Market Reaction1. Fiscal Deficit and Borrowing:Fiscal deficit is the difference between the total income and the total expenditure of the government in a year. The fiscal deficit at 5.1% and gross borrowing of Rs 14.13 lakh crore for FY25 surpassed market expectations.What this means is that the Centre will borrow Rs 14.13 lakh crore from the markets in 2024-25 in gross terms to finance its fiscal deficit of 5.1% of the GDP. This is Rs 1.3 lakh-crore lower compared to the estimate of Rs 15.43 lakh crore for the current fiscal, and it has topped market expectations.There was also a positive impact on bond markets, reflecting a better-than-expected fiscal discipline.2. Capital Spending and Growth:An 11.1% increase in capital spending at Rs 11.11 trillion for the fiscal year starting 1st April 2024 aligned with market expectations and also cheered the infra sector.This should create a multiplier impact on the economic growth, employment creation, and bolster growth until private capital expenditure ramps up.3. Infrastructure Focus:Emphasis on railways, metros, power, and capital goods – the government spending in these areas is expected to remain robust, offering sustained support.In railways, three major economic railway corridor programmes will be implemented– (1) energy, mineral, and cement corridors, (2) port connectivity corridors, and (3) high-traffic density corridors. This could spur development in the railway sector.The Ministry of Road Transport and Highways (MoRTH) will get an allocation of Rs 2.78 lakh crore in FY25, up 2.8% year-on-year. This could help boost activity in the construction and highways sector.4. Green Energy:The ‘Pradhan Mantri Suryoday Yojna' or the rooftop solar scheme is expected to result in savings of about 300 units of electricity per month for such homes. This signals that the government is looking at building green energy infrastructure and it could help many related sectors.Taxation and Investment ImpactStability in Capital Gains and TaxesThere was no change in long-term/short-term capital gains tax and direct or indirect taxes. This means that the investment returns are unaffected by the budget and remain unchanged for investors, maintaining the status quo in post-tax return economics.Market Outlook:As far as the markets are concerned, the big reforms, policy changes, and the positive outlook could attract foreign investors, especially when global liquidity is flowing back into emerging markets. With that out of the way, let’s quickly go over some of the winners and losers from the budget announcements:Winners in the 2024 Budget1. Agriculture Sector:Investments in Post-Harvest Activities: Increased funding for modern storage and supply chains.Dairy and Fisheries: Specific programs aimed at development indicate a multi-faceted agricultural growth approach.2. Housing and Middle Class:Housing Aid: Financial support for home ownership, reinforcing the government's commitment to 'housing for all'.3. Tourism Sector:Development of Tourist Centers: A strategic move to enhance India's global tourism footprint.Funding Support: Interest-free loans for states can significantly boost local tourism infrastructure.Losers in the 2024 Budget1. Electric Vehicles:Subsidy Program: The EV industry was hoping for extension of the Faster Adoption and Manufacturing Electric (FAME) subsidy scheme.The government, however, reduced the budget allocation for the Faster Adoption and Manufacturing of (Hybrid and) Electric Vehicle (FAME) scheme by nearly 44%.This non-extension of the existing subsidy program could slow the momentum of EV adoption.2. Disinvestment Target:The government's divestment plans have fallen short for the fifth consecutive year. It has only raised Rs 10,051.73 crore this financial year so far from divestments, mainly through Central Public Sector Enterprises (CPSEs), IPOs, and Offer For Sales.The budget lowered the divestment target for FY24 to Rs 30,000 crore from Rs 51,000 crore and set the target for FY25 at Rs 50,000 crore. The reduction in target for divestments reflects challenges in high-value stake sales, which could also impact the government's revenue generation strategy.3. Jewellery Import Duty:To keep the industry competitive on a global scale, the Gem and Jewellery Export Promotion Council (GJEPC) has requested the government to reduce import duties on gold and cut and polished diamonds.The industry relies heavily on imports and maintaining a high tax rate could impede industry growth and consumer affordability.Additional Budget 2024 HighlightsIncome Tax Rates: No changes, maintaining consistency for taxpayers.Tax Demand Cases: Dropping old and petty tax demands, some dating back to 1962.Housing Scheme: Announcement of a new scheme for those living or renting in chawls and slums.Tourist Hubs and LTA Benefits: Potential benefits for employees claiming Leave Travel Allowance.In ConclusionThe 2024 Interim Budget appears to have struck a positive chord in the market.While not many investors would have noticed, the Finance Minister proposed an11.11%hike in the capex outlay for FY25. She said that the provision for FY25 capital expenditure will be raised by11.11%to Rs11.11lakh crore.For some traders and investors, it's a moment to be cherished as many believe that seeing the time 11:11 on a clock is a sign of good luck.We will have to wait and watch on how these planned expenditures, reforms, and changes pan out in the coming year.In conclusion, investing is a roller-coaster ride. Ups and downs are part of the experience. And no one knows with 100% certainty when and for how long the market moves from the above changes will come.With elections in the coming months, there was surely a lack of big announcements in the Budget.Despite that, the government did a pretty good job in addressing concerns about many industries and also not going overboard in its commitments.For more budget insights, head over to#BeyondTheBudget by clicking here.Sources:Kotak Securities, Interim Budget 2024, Economic Times, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/fmcg-industry-in-india-soaring-to-new-heights/

FMCG Industry in India Soaring to New Heights

Driving Force Behind India’s FMCG SectorThe Indian FMCG industry is expected to grow at a CAGR (compound annual growth rate) of14.9%, from USD 110 billion in 2020 to a staggering USD 220 billion in 2025. One big reason for this growth is the rise of larger-sized product packages. People are showing a clear trend of switching to medium and high-value packages for various FMCG products.Also, with consumers getting better deals on larger packs, this is creating a win-win situation for both parties. At the same time, government initiatives such as51% foreign direct investment(FDI) in multi-brand retail and100% FDI in food processinghave further propelled the growth of the sector.This has made it easier for players in the sector to make and sell products, create jobs, and make people notice their brands. In 2020, the government’s plan to uplift the sector even more through the production-linked incentive scheme (PLI) has worked really well. This has boosted exports and manufacturing capacity.Promising FMCG StocksSome of the stocks you can contemplate investing are:ITC LimitedHeadquartered in Kolkata, ITC has established itself as a leading player in various sectors, including FMCG, agribusiness, hotels, information technology, and paperboards and packaging. With a commitment to creating enduring value for all its stakeholders, ITC is renowned for its sustainability initiatives and innovative products that cater to the evolving needs of consumers.As of 7th November 2023, the 3-year-trailing return from ITC Ltd’s stock stood at 35.50%.

https://www.kotaksecurities.com/articles/energy-stocks-to-energize-your-portfolio/

Energy Stocks to Energize Your Portfolio

Energy Stocks to Buy1. Coal India Ltd - A Maharatna CompanyCoal, also called black diamond, is one of the primary ingredients for energy generation. Coal India Ltd was set up to harness its potential and illuminate the light of millions. Renowned for its unwavering commitment to mining, this state-owned enterprise plays a pivotal role in ensuring India’s energy security through its vast and abundant coal reserves.Annual returns from Coal India’s stock in 2022 stood at 54.09%.

https://www.kotaksecurities.com/articles/how-etfs-help-you-diversify-your-portfolio/

How ETFs Help You Diversify Your Portfolio?

What are ETFs?Exchange-traded funds(ETFs) are financial instruments that combine the attributes of both stocks and mutual funds. These versatile investment vehicles can be bought and sold on the stock exchanges, similar to individual stocks, throughout regular market hours. Simultaneously, ETFs expose investors to a diverse range of assets, including stocks, bonds, gold, and more.In India, individuals can invest in ETFs on both the BSE and NSE.Portfolio Diversification Through ETFsIn India, several ETFs track indexes such as Nifty 50, SENSEX, Nifty Smallcap, and more. You can combine these ETFs to create a comprehensive ETF portfolio or blend them with other assets to form a portfolio of ETFs. You can construct a well-diversified ETF portfolio by incorporating index ETFs, like a domestic index such as Nifty, a global index like NASDAQ, and safe-haven assets.You can create a robust ETF portfolio by combining sectoral ETFs with individual stocks. Suppose you identify an industry poised for growth over the next 5 years. In this case, you can construct a portfolio with an ETF tracking the industry index and carefully selected stocks from that sector with anticipated strong performance. This approach enables a portion of your portfolio to yield returns closely aligned with the industry's performance while the other portion concentrates on growth stocks.Build an all-ETF Portfolio With Smart Alpha BasketThe Smart Alpha Basket of StockCase comprising ICICI Prudential Nifty Alpha ETF and ICICI Prudential NV 20 ETF helps you diversify your portfolio through ETFs. Many investors have already benefited from this StockCase basket and have built a robust portfolio. It's your chance now. Start your StockCase journey today!

https://www.kotaksecurities.com/articles/banking-stocks-that-deserve-attention/

Banking Stocks That Deserve Your Attention

Banking Stocks to Buy1. State Bank of India - Banker to Every IndianImagine wandering into the tiniest village or bustling city, and there is an SBI branch – a familiar face in every nook and corner. SBI isn’t just a bank but a companion in the financial journey of individuals and businesses nationwide. Its branches aren’t just buildings; they are gateways to financial inclusion, making banking services reach even the country's remotest corners.SBI is the banker to every Indian, a title earned through years of dedicated service and vast presence. As per itsannual report 2022-23, the bank had 22,405 branches with a 22.99% market share of deposits. It has something for everyone. Whether you are a saver starting small or an investor diving into the complexities of finance, SBI has your back. Annual returns of SBI stocks stood at 33.28% in 2022, much higher than the S&P BSE Bankex at 21.03% (image below).

https://www.kotaksecurities.com/articles/promising-future-for-indias-energy-sector/

Promising Future for India’s Energy Sector

Catalysts for India’s Energy SectorIndia's energy sector, including the power sector, has gained significant momentum due to the renewables revolution, thanks to the government's push towards electric vehicles and railway electrification, among others. With the target to reach500 GWof renewable energy capacity by 2030, India's plentiful solar and wind resources are making it an appealing place for people to invest in renewable energy.Renewable-powered generation centers have sped up the improvement of India's transmission network. They aim to make it work better and handle the ups and downs in renewable energy generation. Green Energy Corridors and Renewable Energy Management Centers help connect lots of renewable energy and make it work well.Programs like Ujjawal DISCOM Assurance Yojana (UDAY) make power companies financially stronger, which makes it easier to invest in power generation and transmission. Real-time market platforms and Green Energy Corridor projects improve transmission and renewable energy.Top Energy Stocks to Invest InSome of the top stocks you can invest in are:Coal India LimitedEstablished in 1975, Coal India Ltd is one of the largest coal producers and suppliers in the world. With a vast network of coal mines spread across various regions in India, Coal India Ltd contributes significantly to the country's energy security and economic development.As of 27th October 2023, 3-year trailing returns of Coal India's stocks stood at 39.67%

https://www.kotaksecurities.com/articles/indian-banking-sector-on-a-growth/

Indian Banking Sector on a Growth Trajectory

Positives for the Indian Banking IndustryThe Indian banking sector has witnessed several changes over the years, and the adoption of digital technologies has been significant among them. Banks have also undergone a significant change in the form of privatization. Although the government still owns most public sector banks, the entire sector is gradually becoming privatized.In March 2010, public sector banks held 75.1% of outstanding bank loans and 74.2% of deposits. Private banks now hold a larger portion of loans, increasing from 17.5% to37.3%. Their share of deposits has also grown, rising from 17.7% in March 2010 to 31.4% in September 2022.Over the last ten years, Indian banks have shown strong credit growth, advancing at a healthy rate of about10%. These banks have steadily provided loans and credit to individuals and businesses, helping them meet their financial needs and aspirations.Bad loans have been the bane of the banking industry for long. However, banks have reduced their bad loans from₹10.4 trillionin March 2018 to ₹7.4 trillion in March 2022. With fewer bad loans, banks can potentially lower interest rates for all customers. This is because the overall risk associated with lending decreases, leading to more favourable terms for borrowers.Top Banking Stocks to Invest InSome of the top banking stocks that you invest in are:1. State Bank of IndiaWith its extensive reach, robust financial performance, and government backing, SBI remains a favourite among investors seeking stability and growth in the banking sector. As a key player in India's economic growth story, SBI's strategic positioning and resilience make it a go-to stock for those looking for long-term investment prospects.As of 16th October 2023, 3-year trailing returns of SBI stocks stood at 44.18%

https://www.kotaksecurities.com/articles/indian-bfsi-sector-experiencing-high-growth/

Indian BFSI Sector Experiencing High Growth

What's Driving the BFSI Industry?Along with technological advancements and regulatory reforms, the growth is happening for many reasons. Some of them include more people who haven't used credit before, more spending by a growing middle class, and companies being better at giving out credit both in physical stores and online. The industry has witnessed a renewed resurgence in investment interest, with deals worthUSD 5 billionin 2022.The advent of mobile banking, online payment systems, and digital wallets has transformed how financial services are delivered. Digital platforms not only enhance the customer experience but also provide cost-effective solutions for financial institutions. The push towards a digital economy, catalyzed by initiatives like the Digital India campaign, has further accelerated the transformation in the industry.With the implementation of Jan Dhan Yojana, millions of Indians now have access to basic banking services, insurance, and pension schemes. This inclusive approach benefits individuals and contributes to overall economic growth by expanding the customer base for financial institutions.Investors engaged with the sector injected substantial capital and expressed confidence in its potential for growth. It is expected to be thethird largest in the world by 2025.Promising Banking and Finance Stocks to Invest InHere are the some of the BFSI stocks that you can invest in:1. State Bank of IndiaAs a powerhouse in the Indian banking sector, SBI has an extensive network of branches and a significant market presence. Its extensive customer base and diversified operations, including retail and corporate banking, give it stability.As of 1st November 2023, the 3-year trailing return of SBI stocks stood at 44.25%

https://www.kotaksecurities.com/articles/fmcg-stocks-to-bank-on/

FMCG Stocks to Bank On

FMCG Stocks to Buy1. ITC LimitedITC Limited has evolved into a powerhouse with a diverse portfolio ranging from biscuits to incense sticks, hotels to paperboards, and everything in between. If you’re enjoying a cup of aromatic tea with a trusty biscuit, chances are both have ITC’s touch.In 2022, ITC Ltd’s stocks delivered a staggering annual return of 52.05%.

Link: https://www.kotaksecurities.com/articles/bfsi-stocks-on-your-investment-radar/

Content: BFSI Stocks to Invest1. State Bank of IndiaThe State Bank of India (SBI) is not just a bank; it's a financial behemoth that weaves itself into the very fabric of India. With roots dating back to the early 19th century, SBI has weathered the storms of time and emerged as the largest bank in India and one of the largest in the world. Its presence is as ubiquitous as the chaiwallah on a bustling Indian street corner.In 2022, annual returns from SBI's stocks stood at 33.28%.

https://www.kotaksecurities.com/articles/diversifying-your-investment-portfolio/

Why Diversifying Your Investment Portfolio is a Must for Financial Success?

What is Diversification?Diversification is investing across different asset classes such as stocks, bonds, mutual funds, and maybe even a little cash. It’s a bit like having a variety of flavors in your ice cream cone instead of just one. This way, if one part of your investment isn’t doing well, the others can compensate for it.Why is Portfolio Diversification Important?Here are the reasons as to why portfolio diversification is essential:Risk ReductionDiversification is your shield against financial storms. Think about it like this: If you put all your money into a single company’s stock, and that company faces trouble – say, a scandal, a lawsuit, or a bad financial quarter – you could lose a major portion of your savings. However, if you have different types of investments, like stocks, bonds, and mutual funds, a setback in one area won’t hurt you as much. When one investment is down, another may be up, helping to balance things out.Steady GrowthDiversification is not just limited to reducing the impact of losses; it’s also about promoting steady and long-term growth. Some investments might go up in value while others go down, which is completely normal in the world of finance. By having a diversified portfolio, your overall investments can continue to grow steadily over time, even if some individual assets are experiencing fluctuations. This consistent growth is crucial for building wealth and reaching your financial goals.Peace of MindEmotion and finance don’t always mix well. If you put all your money into one investment, you might constantly worry about its performance. Diversification can help you sleep better at night. When you know that your investments are spread out across different assets, you’re less likely to panic over every market hiccup. This peace of mind can lead to better financial decisions and improved quality of life.Diversify With Golden Opportunity BasketStockCase’s Golden Opportunity Basket allows you to achieve optimum diversification by enabling you to invest in these ETFs - Kotak Gold ETF and Kotak Nifty 50 ETF. It not only helps reduce risk but also ensures gains made over the years don’t lose value due to market volatility. To kickstart your StockCase investment and gain from expert-recommended ETFs, click here.

https://www.kotaksecurities.com/articles/the-making-of-indias-union-budget-process-classification-and-outcomes/

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TheUnion Budget of Indiais not just an annual financial statement but a reflection of the nation's aspirations, challenges, and socio-economic priorities.Prepared by theDepartment of Economic Affairs (DEA)in theMinistry of Financeand presented by theFinance Minister, the budget outlines the government's estimated earnings and expenditures for the upcoming fiscal year.Ever wondered what goes behind crafting the Union Budget?Well, the budget-making process in India is a meticulous exercise. It combines economic forecasting, detailed planning, strategic policymaking, and many other factors that aim to steer India towards growth and stability.Let’s have a look at how the budget is prepared – right from the planning to its announcement.How Budget Is Prepared?1. Laying the groundworkThe budget-making process commences in the third quarter of thefinancial year. It begins with thefinance minister, aided by advisors and bureaucrats, initiating consultations and gathering suggestions from various sectors.This stage involves issuing budget circulars to ministries and departments, collecting data on current and past fiscal years, and estimating future financial needs.2. Estimates of Expenditures and RevenuesExpenditure AssessmentAt this stage, ministries provide estimates of expenditures, which are crucial in resource allocation.Financial advisors prepare these estimates, and after intense discussions and scrutiny, the expenditure secretary consolidates them into a budget estimate for the upcoming fiscal year.Revenue ProjectionsAn assessment of expected revenues is made alongside expenditure assessment.Revenue projections are vital to the Union Budget as they determine the government's capacity to fund its activities for the upcoming fiscal year.This process involves assessing various income streams and balancing economic trends with fiscal strategies.These could be capital receipts or current receipts.• Capital ReceiptsCapital receipts, which include loan recoveries, proceeds from divestments, and borrowings, are significant but non-recurring sources of revenue. They reflect the government's asset management and borrowing strategies, impacting long-term financial health.• Current ReceiptsCurrent receipts, mainly comprising tax revenues and non-tax revenues, form the backbone of regular government income. Tax revenues, includingdirect taxesand indirect taxes, are projected based on economic trends, existing tax policies, and potential reforms. Non-tax revenues, such as dividends from public enterprises and fees, offer a more stable income source to the government.• The Process of Revenue EstimationRevenue estimation involves analysing economic indicators, assessing the impact of policy changes, and reviewing historical data to project future trends.This exercise requires careful consideration of economic growth,inflation, and consumer behaviour, along with an understanding of how policy shifts might affect revenue streams.These estimates are critical in projecting the government's financial capacity for the upcoming year.3. First Estimates of DeficitHere, the Finance Ministry compares the projected expenditures against the expected revenues.This comparison reveals theinitial fiscal deficit- the gap between what the government earns and what it plans to spend.With inputs from the Chief Economic Advisor, the government decides the optimal level of borrowing to finance this deficit, keeping in mind the impact on the economy.4. Narrowing the DeficitIn this stage, the government fine-tunes its fiscal strategy.If the deficit is larger than desired, it might consider revising tax rates or finding new revenue sources.However, often the adjustments are made in planned expenditures due to the rigid nature of non-plan expenditures, like subsidies and interest payments, which are politically sensitive and less flexible.5. Finalising the BudgetThe final budget is prepared in adherence toconstitutional requirements.The finance minister presents the budget inParliament, usually on thefirst working day of February.This presentation is mandated by Article 112 of the Constitution, which requires the government to present anannual financial statement.• The Legislative ProcessAfter the presentation, the budget goes through thelegislative process, involving the introduction and passage of the Appropriation Bill (authorising expenditure) and the Finance Bill (detailing tax proposals).The Appropriation Bill is also known as supply bill or spending bill and it is a proposed law that authorises the expenditure of government funds.The Finance Bill specifies all legal amendments required for the changes in taxation proposed by the Finance Minister.Both of these bills need approval from both houses of Parliament and the President's assent to become law.• The Vote-on-AccountIn the case ofInterim Budget, where the formal approval of the budget extends beyond the beginning of the fiscal year, the government seeks avote on account.This allows the government to meet essential expenses and keep the administration running until the full budget is passed.So, the heart of the budget-making process involves the allocation of revenues to administrative ministries and the drafting new public welfare schemes.If there are any disputes over resource allocation, they are often sent to the Union Cabinet or the Prime Minister for a final decision.Simultaneously, the Finance Ministry collaborates with the taxation departments to project future tax revenues. These projections, coupled with expenditure plans, form the Union Budget.Importantly, the Ministry also engages with public stakeholders like farmers and entrepreneurs, ensuring a budget that resonates with diverse needs.6. The Halwa Ceremony and Printing the BudgetThe Halwa Ceremony, traditionally conducted before the commencement of the budget printing process, brings together India's rich cultural heritage and its modern bureaucratic practices.This ceremony is an annual ritual in which traditional desert Halwa is prepared and served to officials and staff members of the finance ministry involved in the preparation of the Budget.This ritual, dating back several decades, signifies the beginning of the lockdown period for the officials involved in budget printing, ensuring the document's confidentiality.7. Presenting the Budget in ParliamentThe culmination of this process is the presentation of the Union Budget in Parliament, typically onFebruary 1.Inelection years, the Budget is presentedtwice.Initially, anInterim Budget, known as a vote on account, is presented, which provides an estimate of expenditures and receipts for the next two to four months. After the election, the new government presents the final Budget for the remaining fiscal year.So, there you have it - the important steps involved in the development of the Union Budget and how they play a significant role in shaping the country's financial landscape.Conclusion: The Union Budget's Role in Shaping India's FutureAs we look ahead, the Union Budget will continue to play a pivotal role in shaping India's economic and social trajectory.It's not just a financial statement but a reflection of the country's priorities and a blueprint for its future.The challenges and opportunities that lie ahead in budget formulation, especially in the face of current global economic uncertainties and technological advancements, are significant.India's budget process must adapt to these changes, balancing fiscal prudence with the need for growth and development.To know moreabout the budget and how it impacts your life,click here for all the Budget 2024 Updates.Sources:Kotak Securities, Economic Times, Moneycontrol, Business TodayDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/union-budget-2023-flashback-key-highlights-and-impact/

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As the Budget 2024 draws close, it's insightful to look back at theUnion Budgetof 2023, presented by Finance Minister Nirmala Sitharaman on February 1, 2023.The Union Budget 2023 was the first budget inAmrit Kaal- signifying an auspicious time during which new work can be started. The term was introduced in 2021 during India's 75th anniversary where Honorable Prime Minister Narendra Modi laid the roadmap for the 25-year-long leadup to India at 100.The 2023 budget was heralded as a pro-people and pro-market Budget. Let us look at the key initiatives and reforms it introduced and how it has laid the foundation for India's current economic trajectory.Union Budget 2023: Key HighlightsThe 2023 budget was presented at a pivotal time - as the5th budgetof the Modi 2.0 government and the last detailed one before the general elections.Finance Minister Nirmala Sitharaman'spresentation underscored India's strong economic position and its optimistic path towards a bright future.The 'Saptarishi' PrioritiesThe budget was structured aroundseven key priorities, each critical in shaping the policy direction. These were:Inclusive Development:Focusing on equitable growth, ensuring benefits permeate all layers.Reaching the Last Mile:Aimed at enhancing accessibility to services and resources for remote regions.Infrastructure and Investment:Allocating significant resources for infrastructural advancements, laying a foundation for sustainable growth.Unleashing the Potential:Capitalizing on India's demographic and economic potential through various initiatives.Green Growth:Prioritizing environmental sustainability, aligning development with ecological conservation.Youth Power:Targeting youth empowerment through education, skill development, and employment opportunities.Financial Sector:Strengthening the financial framework, enhancing stability and inclusivity in economic growth.These priorities have since driven targeted developmental efforts across various sectors.Here are some other key developments:Macroeconomic Stability and Growth•GDP and Fiscal Deficit:India’sGross Domestic Product (GDP)growth, pegged at 7% in the 2023 budget, has been a testament to the nation's resilient economic structure. The fiscal deficit targets set at 6.4% for FY23 and 5.9% for FY24 have been crucial in maintaining fiscal discipline.•Capital Expenditure:The 33% hike in Capital expenditure to Rs 10 lakh crore, marked as 3.3% of GDP, significantly impacted various sectors from transportation to digital connectivity.Direct Tax Reforms: A New EraThe 2023 budget introduced major tax reforms, making the new tax regime the default but allowing taxpayers the choice to adhere to the old regime.Here’s a look at theincome slabsand the tax rates introduced in budget 2023:Income Range (in Rs) and Tax RatesRs 0 to Rs 3 lakh - NILRs 3 to Rs 6 lakh - 5%Rs 6 to Rs 9 lakh - 10%Rs 9 to Rs 12 lakh - 15%Rs 12 to Rs 15 lakh - 20%Above Rs 15 lakh - 30%Apart from the above, the budget 2023 also increased income taxrebate limitto Rs 7 lakh. It also introduced astandard deductionof Rs 50,000 from the taxable income.The tax exemption on leave encashment on the retirement of non-government salaried employees was raised to Rs 25 lakh from Rs 3 lakh earlier.The highestsurcharge ratewas also reduced from 37% to 25%.With direct taxes out of the way, here’s a look at the indirect tax amendments from budget 2023:Indirect Taxes ReformsHere’s a look at some of the key changes:• As part of the Green Growth priority, the Government proposed to exempt excise duty on GST-paid compressed biogas.• The basiccustoms dutyon parts of open cells for TV panels was reduced to 2.5%.• The customs duty for electric kitchen chimneys was raised from 7.5% to 15%.• The customs duty on chimney heat coils was reduced from 20% to 15%.• Taxes on cigarettes was hiked by 16%.• A new exemption was introduced for the basic customs duty on chemicals and petrochemicals.• Import duty for Silver was increased.Savings Schemes•Senior Citizen Savings Scheme:The maximum deposit limit under this scheme was increased to Rs 30 lakh.•Monthly Income Scheme:Limits under this scheme were doubled to Rs 9 lakh and Rs 15 lakh for joint accounts.•Mahila Samman Saving Certificate:This scheme was launched with a 7.5% interest rate, valid until 2025, focusing on women's economic empowerment.Healthcare Sector Boost• The budget 2023 increased the allocation for Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) to Rs 7200 crore, while Rs 646 crore has been allocated for the Ayushman Bharat Health Infrastructure Mission (PM-ABHIM).• The government also announced the mission to eliminate sickle cell anaemia by 2047.Agriculture Sector DevelopmentsThe government said that an Agriculture Accelerator Fund will be set up to encourage agri-startups by young entrepreneurs.The agricultural credit target was increased toRs 20 lakh croreswith a focus on animal husbandry, dairy and fisheries.It said that over the next 3 years, one crore farmers will get assistance to adopt natural farming and 10,000 bio input resource centres will be set up.Budget and Senior Citizens• The maximum deposit limit in the Senior Citizen Savings Scheme was revised upwards from Rs 15 lakh toRs 30 lakh.• The maximum deposit limit for the Post Office Monthly Income Scheme was increased from Rs 4.5 lakh toRs 9 lakhfor a single account. The same for a joint account was raised from Rs 9 lakh toRs 15 lakh.Digitalisation InitiativesThe budget allocated Rs 3,000 crores for promotingdigitalisation, with a focus on increasing access to digital infrastructure and services.The budget aimed to promote digital transactions and boost the country's digital infrastructure.The government proposed to set up a new institution to provide digital infrastructure and services and to increase the use of digital payments by incentivising merchants.Budget and the Economy•Capital Expenditure:The 33% year-on-year increase in Capital Expenditure outlay for the financial year 2023-24 to Rs 10 lakh crore significantly boosted infrastructure development.•Fiscal Deficit Management:Keeping the deficit at 5.9% of GDP and allowing states a fiscal deficit of 3.5% deficit of Gross State Domestic Product (GSDP) has been pivotal in maintaining economic stability. States were also provided a fifty-year interest free loan where the entire fifty-year loan to states has to be spent on capital expenditure within 2023-24.•MSMEs and Credit Flow:The infusion of Rs 9,000 crore for Micro, Small, & Medium Enterprises (MSMEs) and an additional credit guarantee of Rs 2 lakh crore has helped revitalize the MSME sector.So, these were some of the major announcements from the Union Budget 2023.The above changes make it clear that Budget 2023 was more than just a financial statement.The budget's focus on inclusive development, infrastructural enhancement, and fiscal stability helped reshape our economic landscape and set the stage for sustainable and equitable growth.The anticipation for further developments in these crucial sectors is palpable.TheInterim Budget2024will undoubtedly build on this foundation, introducing new reforms and initiatives to propel India towards becoming a global economic powerhouse.Impact of these policy decisions on the markets, individual livelihoods, and the nation's overall progress will be closely analysed by market participants.It would be interesting to know about further amendments in the above sectors in the upcoming budget.Watch out this space for more interesting Indian Budget 2024 updates!Sources:Kotak Securities, Union Budget 2023, Economic Times, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/oravel-stays-limited-key-financial-metrics/

Unlocking Oravel Stays Limited - Key financial metrics to watch

Key HighlightsOyo’s financial revenue for FY 23 crossed ₹5500 croreOyo narrowed losses for FY 23 to ₹1,286.5 crore from ₹1,941.5 crore in FY 22An important aspect to watch out for as an investor of a company going for aninitial public offeringis its financial metrics. While an initial public offering (IPO) is an essential event in a company’s lifecycle, understanding the firm’s financial health is crucial for making informed decisions. Oravel Stays Limited, better known as Oyo, will soon come out with its IPO. Watch out for these financial metrics before you invest.Essential financial metrics you should considerRevenue from operationsRevenue from operations indicates a company’s ability to generate income from its core business activities. It shows a firm’s ability to create sales and sustain its operations. Increasing revenue typically indicates growth, and it’s a fundamental component in calculating profitability ratios such as gross profit margin, net profit margin and operating profit margin. These ratios help assess how efficiently a company can convert sales into profits.Oyo’s revenue from operations recorded an increase of 14.3% to ₹5464 crore [1] in FY 23 from ₹4871 crore in FY 22.Profit after taxProfit after tax or PAT represents the net income available to shareholders after deducting all expenses and taxes. In other words, it reflects a portion of the revenue available to the company's shareholders after deducting all costs.Consistent and growing PAT indicates that the firm is generating substantial revenue to cover its expenses and can retain its earnings for future investments. A higher PAT demonstrates that the company can provide better returns to its shareholders.EBITDAEBITDA provides a snapshot of a firm's operating performance by focusing on its core business operations. It presents a clearer picture of how well a company generates profits from its main business activities. EBITDA helps assess a company's operational efficiency without being influenced by tax regulation or capital structure variations.A high EBITDA reflects robust operational profitability and efficiency. As per Moody's, Oyo's EBITDA is expected to jump 65% year-on-year in FY 24 [2].Debt-to-equity ratioThis ratio reflects the proportion of a firm's financing coming from debt compared to equity. A highdebt-to-equity ratiosuggests that much of the company’s financing comes from debt, while a lower ratio indicates more reliance on equity.A higher ratio typically implies higher financial risk, as companies with significant debt face increased interest payment risks. This can impact profitability, especially during times of economic downturns.Return on equityReturn on equity or ROE is another key is another essential parameter that helps you gauge a company's profitability. It's an indication of how well a company has utilised the money of shareholders. A high ROE indicates that the company can effectively turn equity into profits, which is favourable for investors. It also provides insights into how well the company's management is deploying shareholders' capital to generate profits.While a higher ROE is generally positive, it's vital to consider the underlying factors contributing to the return and if they are sustainable.Summing it upWhile these are some of the essential metrics you need to watch before investing in Oyo’s IPO, make sure to go through the company’s draft red herring prospectus (DRHP) to understand the potential risks. Seek help from a financial advisor to ensure the investment aligns with your goals. FAQsWhat is the financial result of Oyo?Oyo's revenue from operations grew by 14.3% in FY 23 - from ₹5,464 crore in FY 23 to ₹4,871 crore in FY 22.What is Oyo's debt-to-equity ratio?As of 31st March 2022, Oyo's debt-to-equity ratio stood at 3.47.What is Oyo's gross profit margin?Oyo's adjusted gross profit increased by 23% - from ₹2,347 crore in FY 23 to ₹1,915 crore in FY 22.

https://www.kotaksecurities.com/articles/budget-2024-expectations-economy-sectors-and-markets/

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Budget 2024 Expectations: Economy, Sectors, and MarketsWith Finance Minister Nirmala Sitharaman scheduled to present theInterim Budgeton1st February 2024, anticipation is rife among traders, investors, and various industry sectors. This budget, set against the backdrop of the upcoming General Elections, will lay down the fiscal blueprint for the year ahead, shaping economic policies and market directions.You can get all theLIVE budget updates here:Union Budget 2024 UpdatesThe interim budget for 2024–2025 serves as a precursor to the comprehensive post-election Union Budget.Thisinterim declarationis pivotal, as it sets the initial economic agenda and reflects the government's priorities until the new government is elected as well as for the forthcoming fiscal year.Stakeholders across the board are keenly awaiting policy announcements that could impact market dynamics and investment strategies.Let us have a look at what is expected from the Budget 2024.Expectations Across SectorsTaxation ExpectationsStandard Deduction Revamp:The anticipation of an increase in standard deduction, a change long overdue since 2019, is high. A progressive amendment, potentially linking standard deduction to a percentage of salary, could level the playing field for employees across various income brackets.Income Tax Relief Hopes:With every budget, the clamour for easing income tax burdens grows louder. Expectations of revised tax slabs and enhanced exemption limits are prevalent, reflecting the public's desire for more disposable income and financial relief.Spending and Overseas TransactionsExemption on TCS:A potential waiver on tax collection at source (TCS) for overseas credit and debit card expenditures could spur international spending, a move that might have broader implications on foreign exchange dynamics and consumer behaviour.Healthcare and InsuranceEnhancing Health Insurance Deductions: In light of escalating healthcare costs, there's a significant demand for increasing theSection 80D deductionlimits for health insurance premiums – a change that would benefit a large segment of the population.Expansion of Ayushman Bharat:Increasing the insurance coverage underPradhan Mantri Jan Arogya Yojana(PMJAY) reflects a substantial commitment to enhancing healthcare accessibility, a move that could have far-reaching effects on public health and the insurance sector.The Indian Pharmaceutical Alliance, an association of major Indian pharma manufacturers, has proposed that the 2024 Budget should accelerate the pace of life-sciences innovation & Research & Development. They noted that the Indian pharma sector aims to achieve market size of $120–130 billion by 2030 and $400-450 billion by 2047, from the current market size of around $50 billion.Financial Markets and InvestmentsAs per the Industry, the budget should take measures to boost economic growth in the country as India marches towards becoming the 3rd largest economy in the coming years. Industry body CII has suggested the launch of the 'National Mission for Advanced Manufacturing' to enhance quality and productivity in manufacturing.STT Revisions:The trading community is hopeful for a revision or removal of the Security Transaction Tax (STT), especially in the cash market. Such a change could invigorate market participation and influence trading volumes.Divestments:There is an expectation on increase in divestments post-elections to leverage the good performance of public sector undertakings (PSUs) in various sectors.Cryptocurrency Framework:Withdigital currenciesgaining prominence, a clear regulatory framework post the G20 Summit discussions could define the trajectory of crypto markets in India.Sector-Specific ExpectationsRailways and Infrastructure:The Railways, a critical component of India's infrastructure, might see substantial budget allocations. Investments in fuel-efficient Vande Bharat trains and infrastructure upgrades could be on the agenda.Pharmaceutical Sector:Given its high-risk, high-reward nature, the pharma sector is eyeing substantial support from the government. This could include incentives for research and development, as well as policy measures to boost manufacturing and exports.Real Estate Hopes:The demand for granting industry status to real estate reflects the sector's need for easier credit access. Additionally, expectations of reduced interest rates on project finance could invigorate the sector, potentially impacting housing affordability and market growth.Energy Sector Focus:Investments in sustainable energy solutions and support for the oil and gas industry are anticipated, aligning with global environmental goals and energy security needs.Agriculture Sector:Post the challenges posed by El Nino, substantial budgetary support for agriculture is expected. This may include initiatives for climate-resilient farming, enhanced subsidies, and support for rural infrastructure.What's at Stake for Traders?Short-term market players will be on the edge of their seats tracking the markets during budget announcements. The immediate aftermath of the budget announcement often sees significantmarket volatility. Traders are generally keen on tax reforms, especially any changes in the Securities Transaction Tax (STT) or Commodity Transaction Tax (CTT). They'll also be watching out for announcements affecting specific sectors like tech, auto, pharma, or infrastructure, which can trigger swift sectoral shifts.Long-term InvestorsThe investment community scout for clues that spell long-term growth during the Budget phase. They're less concerned with immediate fluctuations and more with policies that shape the economic landscape over years. Their key areas of interest will generally include capital gains tax regulations and measures to bolster market integrity and transparency. A budget that signals stability and growth can be a beacon for long-term investments, especially in burgeoning sectors like renewable energy and digital infrastructure.Industry ExpectationsIndustry experts, armed with analyses and predictions, have their version of a wishlist. Financial analysts will look for a budget that continues to support recovery and growth, especially for hard-hit sectors. They also look forward to push towardsdigitalisationand sustainable development that aligns with global economic trends.ConclusionThere are many expectations from the Union Budget 2024 right from the sectors, to markets, and the economy at large.For traders and investors, understanding the nuances of this budget is the key.The budget's impact on various sectors will shape investment strategies and market dynamics.So, as we approach the budget announcement, staying informed and adaptable is important.This budget is not just about immediate reactions; it's about understanding the long-term implications and aligning investment strategies to leverage the opportunities it presents.To know moreon the Budget 2024 and how it impacts your life,click here:#BeyondTheBudgetAnd stay tuned to this space for all the latest developments and expert insights. Happy learning!Sources:Kotak Securities, Economic Times, Livemint, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/assessing-the-oravel-stay-limited-ipo-for-investment/

Assessing the Oravel Stays Limited IPO for Investment

About Oravel Stays LimitedOravel Stays Limited is better known by the name it does its business - Oyo - an online syndicator of short-stay homes and hotel rooms. It's a new-age technology platform empowering the highly fragmented global hospitality ecosystem. The company has reshaped the dynamics of the short-stay accommodation space since being incorporated in 2012.Short-stay accommodation market poised for significant growthThe short-stay accommodation market is positioned for remarkable growth in the coming days, with several factors creating a favourable environment for expansion. This market is expected to reach USD 1.9 trillion by 2030 due to strong macroeconomic and favourable demographic factors.A key catalyst for this growth is the rise of the sharing economy that has made digital platforms the go-to choice for property owners to list their spaces, empowering travellers with an extensive array of choices. Moreover, the global shift towards experimental travel has increased demand for personalised and unique accommodation experiences. Short-stay options are well-positioned to capitalise on this trend. Today, travellers are increasingly seeking accommodations that go beyond mere functionality. They aim for an immersive and memorable stay that contributes to the overall enjoyment of their travel experience.Also, India is one of the fastest-growing short-stay accommodation markets in the world. Before the COVID-19 pandemic, India's short-stay accommodation market grew at a CAGR of 16.5% as against the global market, which grew at a CAGR of 7.5%. Oravel Stays Limited is poised to take significant advantage of this growing trend with its:Expanded presence with a dominant position in key growth marketsThe company has an extensive presence of more than 1.5 lakh storefronts spanning more than 35 nations. It has the distinction of the largest footprint in terms of hotel storefronts in India and Southeast Asia. This extensive network not only positions them as a formidable player but also gives customers a range of choices, thereby fostering increased engagement.Comprehensive technology platform driving strong value propositionThe company's technological infrastructure is one of the cornerstones of its business. It owns an extensive technology suite that allows it to introduce new products and align its platform with customers' evolving needs. Its comprehensive presence across the value chain enables it to gain a profound understanding of customer's needs and tune its offerings accordingly.Robust and reliable brandThe company has firmly established itself as a robust and trustworthy customer brand. It was identified as the most valuable Travel and Hospitality brand in India in 2020 by a study conducted by Kantar. Through meticulous attention to detail and a keen understanding of customer preferences, it has gained a reputation for delivering unparalleled comfort and quality.Should you invest?Going by the above factors, investing in the Oravel Stays Limited IPO can potentially benefit you in the long run. With the travel and tourism industry rebounding from the aftereffects of the COVID-19 pandemic, Oravel Stays Limited is well-positioned to gain from the increasing consumer demand for creating memorable accommodation experiences. That said, it’s imperative to gauge valuations carefully before investing in any IPO, and you must do the same for Oravel Stays Limited.

https://www.kotaksecurities.com/articles/is-jasper-infotech-ipo-wise-choice-for-investors/

Is Jasper Infotech Pvt Ltd IPO a Good Investment Opportunity?

Key HighlightsJasper Infotech Pvt Ltd, also known as Snapdeal, is one of India’s leading e-commerce platformsThe company offers a broad range of products to its customersIt has a track record of strong governance practices and is backed by marquee investorsWith India emerging as one of the strongest economies amid global turmoil, companies across industry verticals are looking to ride this growth throughinitial public offerings(IPOs). Jasper Infotech Pvt Ltd, better known as Snapdeal, is among the several companies looking to get listed on Indian stock exchanges through IPO. Does this IPO merit your attention, and should you invest in it? Let’s find out.About Jasper Infotech Pvt LtdJasper Infotech Pvt Ltd, established in 2007, is better known as Snapdeal. It operates in the e-commerce domain and offers diverse products in several categories, such as fashion, home, beauty, personal care, and general merchandise. It has revolutionised the shopping experience for customers through its personalised, multilingual interface and state-of-the-art technology platform. By providing the most suitable products to customers, the company has delivered significant value to its customers over the years.India’s e-commerce market on a growth trajectoryIndia has one of the rapidly-growing e-commerce markets globally, projected to reach USD 150 billion by 2026 [1]. This is because of several factors, including increased smartphone penetration, rising affluence, and affordable data prices, among others.E-commerce adoption has reached nearly 100% of pin codes in India, with more than 60% of transactions originating from Tier-II and smaller towns. Tier-II and Tier-III cities, comprising almost half of all shoppers, contribute three out of every five orders for leading e-retail platforms. The sector has also witnessed an increase in PE/VC funding, with a two-fold increase to USD 15.4 billion in 2022 from USD 8.2 billion in 2020 [2].Jasper Infotech Pvt Ltd is well-poised to ride this e-commerce growth because:It’s one of India’s most extensive value-centric e-commerce platformThe company is one of India’s largest pure-play value e-commerce platforms that has significantly impacted the country’s online retail landscape. It has carved a niche by prioritising affordability and diverse product offerings. The platform’s emphasis on value is in sync with the preferences of a vast and price-conscious consumer base. It has and continues to play a pivotal role in shaping the shopping experience for millions.It offers a broad range of reasonably priced value merchandiseSnapdeal offers a diverse array of value merchandise at a cost-effective price point. The platform curates a wide selection of products from a network of quality-focussed sellers. This makes it a go-to destination for consumers seeking value for their money. With a focus on customer satisfaction, the company ensures competitive pricing and maintains stringent standards for sellers in its network. This has contributed to its popularity.Purchasing journey guided by AI and MLTo enhance customers’ shopping experience, the company uses artificial intelligence and machine learning. With them, it assists customers in finding out the products they are looking for on its platform. Also, the platform is mobile-friendly for better user engagement. By leveraging AI and ML, the company fosters a personalised shopping experience for its users.User-friendly and multi-lingual support systemSnapdeal has emerged as a customer-centric e-commerce platform. This is mainly because of its user-friendly and multi-lingual support system, which supports multiple languages. Customers can get their queries solved through numerous channels, such as WhatsApp, FAQs, interactive voice response (IVR) and conversations with live agents. Be it product-related queries or general support, Snapdeal's robust customer support goes a long way in enhancing the shopping experience for its users.Proven track record of strong governance practices, proficient management team and renowned investorsSnapdeal is known for its strong governance practices, which have supported its growth over the years. At the same time, its management team boasts highly skilled and competent individuals who are well-versed in e-commerce and technology. The team has industry veterans who have worked with leading firms. It also has an array of marquee investors, such as BlackRock, SoftBank, Intel Capital, eBay, etc. These have collectively contributed to the company's success over the years.Should you invest?Jasper Infotech Pvt Ltd has the potential to benefit from a thriving e-commerce market that’s expected to reach new heights in the coming days. With the company being a household name, investing in its IPO can help you grow wealth in the long run. That said, you need to go through thedraft red herring prospectusto know the potential risks. Also, ensure you accurately gauge the valuations before investing. FAQsIs Snapdeal in loss or profit?Snapdeal has narrowed down its losses and has registered a revenue of ₹388 crore for FY 23.What is the value of Snapdeal?At its peak, the company was valued at USD 6.5 billion.

https://www.kotaksecurities.com/articles/understanding-key-risks-to-consider-before-investing-in-oravel-stay-limited-ipo/

Navigating Potential Pitfalls: Uncovering Key Risks of Oravel Stay Limited Prior to Investing in its IPO

Key HighlightsOyo has been making losses since its inceptionOyo may not be able to achieve its target growth ratesOyo is subject to risks in the travel industryInvesting in an initial public offering (IPO) is a great way to participate in a company's growth story. One such company whose IPO has been the talk of the town is Oravel Stays Limited, better known as Oyo. However, every IPO has its share of risk you need to know as an investor, and Oyo is no different. Given below are the potential risks of investing in Oyo through its IPO.Risks you need to be mindful ofThe associated risks are as follows:History of perpetual lossesWhile Oyo has emerged as one of the most popular platforms for booking hotels, note that the company has experienced annual net losses since its inception. The recurrent financial setback raises concerns about its ability to attain profitability and introduces an element of uncertainty in its future prospects.The historical pattern of continuous net losses poses a potential obstacle, casting doubt on its ability to achieve financial sustainability. As per the company's draft red herring prospectus, it has incurred losses worth ₹23,645.32 million, ₹131,227.77 million and ₹39,438.44 million for FY 2019, 2020 and 2021, respectively.Inability to match historical growth ratesThe company acknowledges its inability to achieve growth rates consistent with historical trends poses a significant risk. Further, challenges in effectively executing expansion plans and implementing strategic growth initiatives are additional concerns.Though the company recognises the importance of addressing these issues, if not done, it can negatively impact its overall performance and long-term sustainability. Further, there is no assurance that the company will be able to grow and achieve the desired profitability.Business dependent on existing patrons and customersShould Oyo face challenges in retaining its current patrons and existing customers and cost-effectively acquiring new ones, the same could potentially hinder its operations. Due to this, the company may experience a decline in revenues, adversely affecting its overall business and operational outcomes. Also, the inability to effectively manage customer retention and acquisition could pose a significant threat to its success in the market.Negative publicity and technological challengesOne of the key catalysts for Oyo's success over the years is its strong brand presence due to positive publicity. However, any adverse publicity may compromise the integrity of the brand. The company operates in a space where negative publicity is always around the corner.Also, if it fails to foster innovation or stay up-to-date with technological advancements, it risks losing its competitiveness. Its repercussions would be evident in the overall performance and sustainability of the business. Maintaining a proactive approach to innovation is imperative for continued success, and failure to do so can result in diminished market shares, decreased customer satisfaction and an overall decline in the company's standing within the industry.Operations in a highly competitive industryOyo operates in a highly competitive industry. If it fails to cater to the changing needs of customers, it could impact the company's bottom line. Therefore, the company needs constant adaptation and strategic positioning to maintain its position.Reliance on third-party distributorsThe company has strategic partnerships with several leading third-party distributors. This includes online travel agencies (OTAs), travel management companies and global distribution systems. An increase in the proportion of storefronts booked through third-party distributors may affect its margins and profitability.In addition, if these third-party distributors can negotiate higher commissions, reduced rates for patrons and customers or other significant concessions, it could adversely affect its revenues, margins and profitability.Wrapping it upAs an investor, carefully assess these risks, conduct due diligence and weigh the potential rewards before investing in the IPO. A large part of the success of the company’s IPO will depend on how well it navigates these challenges and delivers sustainable value to its investors. FAQsIs Oyo facing a loss?With time, Oyo has narrowed its losses, from ₹747 crore in the first half of 2022-23 to ₹801 crore, compared to a similar period the year ago.Is Oyo profitable in 2023?In the second quarter of FY 23-24, Oyo reported its first-ever profit after tax of ₹16 crore.What is the turnover of Oyo?Oyo's revenue from operations saw a 14% jump in FY23, from ₹4,781 crore in FY22 to ₹5,463 crore in FY23.

https://www.kotaksecurities.com/articles/jasper-infotech-ipo-insights-and-breakdown/

Unveiling the Essentials – Jasper Infotech Pvt Ltd IPO Breakdown

Key Highlights:Jasper Infotech Pvt Ltd, aka Snapdeal, is one of India’s leading e-commerce platformsIts IPO consists of a fresh issue and an offer for sale consisting of 30,769,600 equity sharesThe company plans to use the funds for funding organic growth initiatives and general corporate purposesAmong the several companies whose IPO has generated a considerable buzz among investors is that of Jasper Infotech Pvt Ltd. The company, known as Snapadeal, is looking to ride investors’ confidence and raise funds to fulfil various objectives. Here are the essential details of this IPO.About Jasper Infotech Pvt LtdFounded in 2007, Jasper Infotech Pvt Ltd operates in the e-commerce space and hosts a range of merchandise across different lifestyle categories. In itsDRHPfiled with SEBI, the company claims to be one of the top four online lifestyle shopping destinations in the country as of 31st August 2021. Kunal Bahl and Rohit Kumar Bansal are its whole-time directors.IPO DetailsAccording to the DRHP, the company's IPO consists of a fresh issue of equity shares aggregating up to ₹1250 crore. Itsoffer for saleconsists of up to 30,769,600 equity shares. The bidding dates, minimum investment, lot size and price range are not yet announced.Issue objectivesThe company plans to utilise the proceeds received from the fresh issue to:Fund its organic growth initiatives to the tune of ₹9,000 million Fulfil general corporate purposesCompany strengths and risksThe company boasts of the following strengths:One of India’s largest online retail platforms focused on value-based offeringsAvailability of a range of high-quality merchandise at budget-friendly prices sourced from a network of sellers who are committed to excellenceIntegration of AI and ML offering shoppers a personalised buying journeyUtilisation of cutting-edge technology and asset-light strategies to enhance operational control and elevate user satisfactionReadily available multi-lingual customer assistance targeted towards new internet shoppersTailor-made proprietary technology stack designed for the needs of value-focused e-commerceA proven track record of solid corporate governance backed by marquee investorsThe associated risks are as follows:History of losses in the past which could continue even in the futureBusiness growth is dependent on the growth of the e-commerce industry and its ability to respond to changing user behavioursLiability threat for illegal, unauthorised and counterfeit products sold on its platformDependence on Apple Store and Google Play Store for app promotionIn conclusionThe Indian e-commerce market is on a growth trajectory and is expected to reach new heights in the coming days, thanks to the digital revolution. In such a scenario, Snapdeal can benefit and help in wealth creation for its investors. However, one must wait and watch how the IPO shapes up once the final dates are announced. FAQsWhat is the issue size of the Snapdeal IPO?As per the company’s DRHP, the issue size of the IPO consists of a fresh issue comprising ₹ 1250 crore along with an offer size of 30,769,600 equity shares.What Makes Snapdeal Unique?Snapdeal is one of India’s leading e-commerce platforms with cutting-edge technology and a multilingual interface.Is Snapdeal Still Profitable?The company is profitable at the unit economics level, cutting FY 23 losses by over 90%.

https://www.kotaksecurities.com/articles/key-risks-to-know-before-investing-in-jasper-infotech-ipo/

Risk Radar - Key Risks You Should Know About Jasper Infotech Pvt Ltd IPO

Key HighlightsJasper Infotech Pvt Ltd has a history of financial strugglesIts business growth is dependent on how India’s e-commerce industry shapes upIt faces liability threat for illegal and counterfeit products on its platformJasper Infotech Pvt Ltd, aka Snapdeal, will soon come out with its initial public offering. A leading name in the Indian e-commerce space, investors are eagerly waiting for its IPO. Amid the IPO buzz, it’s essential for you as an investor to be aware of the associated risks with this IPO to ensure the safety of your capital. Read on to learn about some critical risks before investing in this IPO.Risks associated with Jasper Infotech Pvt Ltd IPOHistory of past losses with chances of them in the futureJasper Infotech Pvt Ltd has a history of financial struggles and has suffered losses in the past. As per the company’sDRHP, it has suffered losses in FY 2019, FY 2020 and FY 2021, amounting to ₹1870.29 million, ₹2735.40 million and ₹1254.40 million, respectively.These have hurt the company's growth initiatives, and chances of such losses in the future can't be ruled out. Before investing, you must closely monitor the company's financial health to ensure it can effectively meet the challenges of the market and remain afloat.Business growth dependent on the growth of India's e-commerce industryWhile Jasper Infotech Pvt Ltd is one of India's leading e-commerce platforms, its fortunes are heavily dependent on the growth of the country's e-commerce industry. Along with external market forces, the firm's ability to constantly adapt and refine its offering as per changing customers' preferences is pivotal in its growth.Concerns about delayed shipments, exchanging products purchased online, security of online transactions and features of online platforms always pose a risk to its business.Liability threat for unauthorised, illegal and counterfeit productsJasper Infotech Pvt Ltd faces challenges from unauthorised, illegal, and counterfeit products. With the company expanding operations and market reach, it becomes increasingly susceptible to suppliers and third-party sellers introducing fake products in the supply chain.This not only poses a threat to the company's reputation but also has legal consequences that could hamper operations and profitability.Failure to maintain required order levels and existing users can impact revenue baseThe company's user base is pretty diverse and spans across different age groups and genders. As a result, their needs and preferences vary. If the company fails to maintain the required order level, it can't significantly impact its revenues and jeopardise its finances.At the same time, note that the company operates in a competitive industry and if it fails to compete well with its rivals, it can negatively impact its business.Summing it upWhile these are some of the key risks associated with investing in Jasper Infotech Pvt Ltd’s IPO, go through the company’s DRHP for a comprehensive overview of the risks. Make sure to understand them fully before investing. FAQsWhat are the risk factors of an IPO?Market volatility is one of the foremost risks of an IPO. That said, every company has internal risk factors that you need to be mindful of.Is Snapdeal in profit or loss?While it has a history of losses in the past, it has registered revenues of ₹388 crore in FY 23.

https://www.kotaksecurities.com/articles/unmasking-key-details-of-oravel-stays-limited-ipo/

Insider’s Guide - Unmasking Key Details of Oravel Stays Limited IPO

About Oravel Stays LimitedOravel Stays Limited, founded by Ritesh Agarwal, is an Indian multinational chain of living spaces, homes and franchised hotels. Launched in 2012, Oyo has become one of the dominant players in the short-stay accommodation market. With a PAN India and global presence, it has reshaped the short-stay accommodation segment. It has also developed a technology platform to address the pain points of its patrons on the supply side and customers on the demand side.Its patrons comprise lessors, owners and storefront operators on its platform. More than 157k storefronts are using its tech to boost their revenues.IPO detailsIPO dateThe company filed its draft red herring prospectus (DRHP) in September 2021. However, the exact dates of the IPO are yet to be announced.Price bandThe IPO's price band is yet to be set. The price band is the range you can apply for the IPO. When the IPO opens, you must choose a price within the band to apply for the issue.Issue sizeAs per the initial DRHP filed with SEBI, the issue size consisted of equity shares aggregating up to ₹ 84,300 million. Out of this, ₹70,000 million worth of equity shares were fresh issues, while offer for sale constituted equity shares aggregating up to ₹14,300 million.Lot sizeLot size refers to the minimum number of shares you need to purchase. So, suppose an IPO’s lot size is 50, it means you can’t purchase less than 50 shares. That said, the lot size of the company’s IPO is yet to be known.Utilisation of the IPO proceedsAs per the initial DRHP, the company plans to utilise:₹24,410.10 million for prepayment or repayment in part certain borrowings availed by its subsidiaries₹29,000 million for funding its organic and inorganic initiatives for growthThe company plans to use the remaining proceeds for general corporate purposes.Company strengths and risksThe following are the strengths of the company:Elevated presence and influence in key growth marketsComprehensive technology platform delivering a compelling value proposition to our patrons and customersDeep involvement with its patron and customer communityRobust flywheel powered by potent network effectsA reliable consumer brandThe associated risks are:The company has experienced net losses every year since its incorporation and therefore attainment of profitability may be postponed.The company may not sustain growth at historical rates and could encounter challenges in expanding and implementing its growth strategies.Failure to maintain its current patrons and customers may lead to a revenue decline. It could adversely impact its business and financial standing.The company depends on external distributors, travel management firms and global distribution systems to distribute and promote its storefronts. This could impact its margins and profitability negatively.Wrapping it upWith the short-stay accommodation market poised for growth, Oyo is well-positioned to take advantage of it, thanks to its technological prowess and dominant presence. It will be interesting to see how its IPO shapes up when announced and whether it can live up to its hype or not.

https://www.kotaksecurities.com/articles/indias-wealth-boom-and-luxury-wave-in-markets/

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Kotak Insights | 25/01/2024India is witnessing a rise in affluence.A recent report by Goldman Sachs states that India's affluent class is expanding at a pace that could reshape the economy. Currently, around 60 million people earn approximately Rs 8 lakhs per year. And this figure is expected to soar to100 millionby 2027.This increase is more than just numbers; it represents ashift in consumptionpatterns driven by a growing affluent class influencing market trends and product features.The evidence behind this rise is as compelling.Income tax filings reveal a19%annual increase in individuals declaring over Rs 10 lakh income, outpacing the overalltax filinggrowth. It’s because the rise in the number of tax filings has grown only by8%. Goldman Sachs’ report expects this trend to continue.Adding to this, a Knight Frank report projects a 50% growth in high net-worth individuals (HNIs) in India between 2020 and 2025.SBI Research also found a trend where they stated that the weighted mean income a decade ago in India, which was around Rs 4.4 lakhs, has now grown toRs 13 lakhs. As per them, this is partly attributed to more people moving from the lower to higher income groups.Now, how is this shift moving the economy?A Shift in Lifestyle and ConsumptionWhile the USA and China have long enjoyed the status of superpowers for luxury growth, India is rapidly catching up, transforming itself into apremium producthaven.The newfound economic security has led to a surge in discretionary spending, where people are no longer bound by the essentials but are free to indulge in luxury and leisure.This means Indians are buying more premium products. And this is evident in the average selling price (ASP) of several categories, including televisions, refrigerators, laptops, smartphones and shoes, which has shot up in the past year.Credit consumption is also one of the key drivers of this lifestyle change. With increasing credit card usage and spending exponentially, there's a clear trend towards more ambitious and luxurious living standards.The Luxury Market BoomAs India strides forward, its market trends are undergoing a shift.Companies that cater to the premium segments like Nestle India and Metro Shoes, among many others, are witnessing a growth.These companies aren't just selling products; they're selling aspirations. They're riding the wave of premiumisation, where quality, not quantity, rules the market.The appetite for premium products is evident across various categories. From appliances to fashion, the average selling price is climbing, signalling a shift in consumer preferences towards premium quality.Investing in the Era of LuxuryFor investors and market participants, this shift presents an opportunity. The key is to focus onluxury stocks, which represent companies with a legacy of premium offerings and strong brand value. Thesestocks with good growthare not just investments; they're more resilient in times of economic downturns.When we say luxury stocks, think of strong brands and timeless products.Take the example of the Indian jewellery makerTitan, which is India's largest branded jewellery maker and the fifth largest integrated own-brand watch manufacturer.The company took over the premium jewellery segment by storm once it forayed into the business in 1990. It then differentiated itself from the competition by new product offerings at regular intervals.Also, back in the nineties, there were no regulations about jewellery hallmarking, and jewellers were often suspected of cheating people by selling low-quality gold. Titan was again early to recognise the opportunity and it launched the Karatmeter, which checks the purity of gold using X-rays.Titan’s stability surprises many, primarily because affluent individuals tend to maintain their buying habits even during economic downturns. This aspect provides resilience to Titan’s luxurious products (and the company’s stock price!).So, as India makes its mark on the global luxury stage, the time is ripe for investors and traders to capitalize on this potential opportunity.In summary, premiumization is a trend that has remained relatively under the radar, presenting numerous untapped investment and trading opportunities. Now, in an era of growing affluence, these opportunities are becoming increasingly attractive.Which luxury product companies and luxury stocks are you keeping an eye on? Let us know in the comments section below.See you with another interesting market story next week.Until then - Happy learning!Sources:Kotak Securities, Economic Times, Company PresentationDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/bajaj-energy-ipo-power-up-your-portfolio-or-pass/

Bajaj Energy IPO: Power Up Your Portfolio or Pass

Bajaj Energy: Illuminating Uttar Pradesh's progressImagine a business controlling almost 20% of power generation in an economy with constant growth of its people and numbers. In the private thermal power segment in Uttar Pradesh, Bajaj Energy is unrivalled and has an enormous total installed capacity of 2430 MW. This capacity is unparalleled, pointing to Bajaj Energy's critical role in fueling homes and industries and powering people's lives statewide.However, the value of Bajaj Energy's contribution is not only numerical. It is closely intertwined in the cloth of Uttar Pradesh's progress. Without resignation to power generation, Bajaj Energy contributes significantly towards electrification and empowerment of communities. The2,430 MWinstalled capacity is not just a number: it symbolises the trigger for development and an enhanced way of life for those living in Uttar Pradesh.This is not just a number story; this is an impact story. The fact that Bajaj Energy is such a leader in the private thermal power sector means it does not just view energy as another commodity but sees it as an agent of change. This scenario comes to life as we peel away the layers of details attendant on theimminent IPO. Bajaj Energy becomes more than an investment opportunity; it is a lighthouse leading us into a future guided by innovation, aspiration and energy.

https://www.kotaksecurities.com/articles/analysis-of-the-oravel-stay-limited-ipo/

Should You Invest in OYO? Analysis of the Oravel Stays Limited IPO

About Oravel Stays LimitedOravel Stays Limited is better known by the name it does its business - Oyo - an online syndicator of short-stay homes and hotel rooms. It's a new-age technology platform empowering the highly fragmented global hospitality ecosystem. The company has reshaped the dynamics of the short-stay accommodation space since being incorporated in 2012.Short-stay accommodation market poised for significant growthThe short-stay accommodation market is positioned for remarkable growth in the coming days, with several factors creating a favourable environment for expansion. This market is expected to reach USD 1.9 trillion by 2030 due to strong macroeconomic and favourable demographic factors.A key catalyst for this growth is the rise of the sharing economy that has made digital platforms the go-to choice for property owners to list their spaces, empowering travellers with an extensive array of choices. Moreover, the global shift towards experimental travel has increased demand for personalised and unique accommodation experiences. Short-stay options are well-positioned to capitalise on this trend. Today, travellers are increasingly seeking accommodations that go beyond mere functionality. They aim for an immersive and memorable stay that contributes to the overall enjoyment of their travel experience.Also, India is one of the fastest-growing short-stay accommodation markets in the world. Before the COVID-19 pandemic, India's short-stay accommodation market grew at a CAGR of 16.5% as against the global market, which grew at a CAGR of 7.5%. Oravel Stays Limited is poised to take significant advantage of this growing trend with its:Expanded presence with a dominant position in key growth marketsThe company has an extensive presence of more than 1.5 lakh storefronts spanning more than 35 nations. It has the distinction of the largest footprint in terms of hotel storefronts in India and Southeast Asia. This extensive network not only positions them as a formidable player but also gives customers a range of choices, thereby fostering increased engagement.Comprehensive technology platform driving strong value propositionThe company's technological infrastructure is one of the cornerstones of its business. It owns an extensive technology suite that allows it to introduce new products and align its platform with customers' evolving needs. Its comprehensive presence across the value chain enables it to gain a profound understanding of customer's needs and tune its offerings accordingly.Robust and reliable brandThe company has firmly established itself as a robust and trustworthy customer brand. It was identified as the most valuable Travel and Hospitality brand in India in 2020 by a study conducted by Kantar. Through meticulous attention to detail and a keen understanding of customer preferences, it has gained a reputation for delivering unparalleled comfort and quality.Should you invest?Going by the above factors, investing in the Oravel Stays Limited IPO can potentially benefit you in the long run. With the travel and tourism industry rebounding from the aftereffects of the COVID-19 pandemic, Oravel Stays Limited is well-positioned to gain from the increasing consumer demand for creating memorable accommodation experiences. That said, it’s imperative to gauge valuations carefully before investing in any IPO, and you must do the same for Oravel Stays Limited.

https://www.kotaksecurities.com/articles/key-details-about-the-oyo-ipo/

Unpacking the OYO IPO: Key Details

About Oravel Stays LimitedOravel Stays Limited, founded by Ritesh Agarwal, is an Indian multinational chain of living spaces, homes and franchised hotels. Launched in 2012, Oyo has become one of the dominant players in the short-stay accommodation market. With a PAN India and global presence, it has reshaped the short-stay accommodation segment. It has also developed a technology platform to address the pain points of its patrons on the supply side and customers on the demand side.Its patrons comprise lessors, owners and storefront operators on its platform. More than 157k storefronts are using its tech to boost their revenues.IPO detailsIPO dateThe company filed itsdraft red herring prospectus(DRHP) in September 2021. However, the exact dates of the IPO are yet to be announced.Price bandThe IPO's price band is yet to be set. The price band is the range you can apply for the IPO. When the IPO opens, you must choose a price within the band to apply for the issue.Issue sizeAs per the initial DRHP filed with SEBI, the issue size consisted of equity shares aggregating up to ₹ 84,300 million. Out of this, ₹70,000 million worth of equity shares were fresh issues, while offer for sale constituted equity shares aggregating up to ₹14,300 million.Lot sizeLot size refers to the minimum number of shares you need to purchase. So, suppose an IPO’s lot size is 50, it means you can’t purchase less than 50 shares. That said, the lot size of the company’s IPO is yet to be known.Utilisation of the IPO proceedsAs per the initial DRHP, the company plans to utilise:₹24,410.10 million for prepayment or repayment in part certain borrowings availed by its subsidiaries₹29,000 million for funding its organic and inorganic initiatives for growthThe company plans to use the remaining proceeds for general corporate purposes.Company strengths and risksThe following are the strengths of the company:Elevated presence and influence in key growth marketsComprehensive technology platform delivering a compelling value proposition to our patrons and customersDeep involvement with its patron and customer communityRobust flywheel powered by potent network effectsA reliable consumer brandThe associated risks are:The company has experienced net losses every year since its incorporation and therefore attainment of profitability may be postponed.The company may not sustain growth at historical rates and could encounter challenges in expanding and implementing its growth strategies.Failure to maintain its current patrons and customers may lead to a revenue decline. It could adversely impact its business and financial standing.The company depends on external distributors, travel management firms and global distribution systems to distribute and promote its storefronts. This could impact its margins and profitability negatively.Wrapping it upWith the short-stay accommodation market poised for growth, Oyo is well-positioned to take advantage of it, thanks to its technological prowess and dominant presence. It will be interesting to see how its IPO shapes up when announced and whether it can live up to its hype or not.

https://www.kotaksecurities.com/mutual-funds/whats-driving-sip-investing-in-india/

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Kotak Insights | Date 19/01/2024Picture this - Indian share markets are ablaze with a frenzy of investors, all armed with a powerful weapon.No, it’s not the power that helps you avoid losses or any superficial prowess that helps you get all the insider stock tips in advance. Instead, the weapon is a small yet super effective strategy that allows you to earn a minimum guaranteed return even if all hell breaks loose -Systematic Investment Plan (SIP).Whether a bear market or a bull market,SIPshave emerged as a valuable option for savvy investors. SIP is along-term investment strategyinvolving investing a fixed amount of money regularly.This approach provides a cushion against market volatility. It becomes challenging to remain invested during market volatility and corrections. Fear often leads investors to panic and sell stocks. But if you take the SIP route, you’re not trying to time the market; instead, invest for the long term.The benefits don’t end there. When you go the SIP way, you can increase, decrease, or pause investments. Meanwhile, thepower of compoundingover time is visible as the investor continues to invest regularly. The returns generated from the initial investment are reinvested, leading to higher returns over time.No wonder SIPs have been gaining popularity among Indian investors.Here is some data that proves the rising SIP adoption in India - The total SIP inflow in the calendar year 2023 stood atRs 1,83,741 croreafter December witnessed an SIP inflow to the tune of Rs 17,610 crore.As compared to this, in the calendar year 2022, the corresponding figure stood at Rs 1,49,437, thus indicating an increase of23%in 2023 over 2022.It is vital to note thatDecember 2023saw the highest ever level of SIPs. Now the SIPAUM(assets under management) stands at Rs 9,95,925 crore as compared to Rs 9,31,333 crore for November 2023.Moreover, for mutual funds, retail mutual fund folios (i.e. Equity + Hybrid + Solution Oriented Schemes) hit at an all-time high of 13,18,55,261 for the month of December 2023 as compared to 12,92,21,994 in November 2023.Never before have we seen this level of enthusiasm and bullishness from retail investors.From the above data, it’s clear that domestic investors are warming up to the concept of mutual funds and investing aggressively in them. The liquidity pouring through SIPs is relatively stable, reliable, and long-term.Select stocks like Computer Age Management Services (CAMS) have also gained popularity as retail investors chase equity exposure through mutual fund SIPs.Now, there are a couple of reasons behind India’s SIP rush.First, thedisciplined approachthat investors have been following has worked wonders. If you want to play the India growth story, go the SIP way. That’s the mindset even youngsters are setting these days.Senior citizens and regular investors were undoubtedly following some SIPs – a stock SIP or a mutual fund SIP. But now, even youngsters and ‘so-called millennials’ have joined the bandwagon. Since there’s no minimum investment requirement and you can start with as little as Rs 500, youngsters have found this avenue attractive.This ‘affordable’ factor comes into play here. And since everything’s online with almost zero paperwork, many investors, especially the youth, are investing in SIPs online.If one sticks to SIPs in both good and bad, we’re pretty confident it could be the best investment strategy.You cannot stop your SIPs in a falling market and expect to earn good returns over the long term.SIPs must be persistedirrespective of what the broader market is doing.Thesecondreason behind the SIP rush is therupee cost averaging. SIPs have facilitated channelizing domestic household savings into equity markets. This has provided investors with the benefit of rupee-cost averaging.In the case of rupee cost averaging, you buy fewer stocks when the market is high, and when the market is low, you buy more stocks. This way, the cost of buying stocks is averaged over the long term, reducing the impact of market volatility on the portfolio's overall performance. This is known as rupee cost averaging.The other reasons why SIPs have found favour are India’srising incomelevel andstandard of living.We wrote about howpremiumizationis changing Indian consumers. As people’s standard of living improves as a result of more disposable income, Indians would like to be prepared if there’s any crisis financial-wise. So, much of their disposable income could be set aside towards SIPs.Does it make sense to take the SIP route when markets peak?That is the question bugging investors these days. Sure, they’re not worried about taking the SIP route, but there’s a sense of curiosity about what might happen when someone takes the SIP route in a bull market.It shouldn’t matter. And we have data points to make our case.SIPs provide the freedom from timing the market, instead helping investors focus on remaining invested to compound their hard-earned money.Consider a systematic investment plan of Rs 1,000 monthly into the S&P 500 index between January 2012 and February 2021. The investor starts on January 1, 2012, or the first few months of 2012 and ends on February 28, 2021.January 1, 2012, marked the beginning of a bull market as the S&P 500 had steadily recovered from the financial crisis of 2008. Conversely, February 28, 2021, can be considered a bear market bottom because the market experienced a sharp decline due to the COVID-19 pandemic.So, how did this investment perform?During this period, the investor would have earned an annual return of 9.5%. Considering dividends, the returns climb to around 11%.However, let's explore the potentialimpact of market timing:If the investor had started the investment journey at the bull market's peak on January 1, 2012, and panicked during the market crash in February 2021, he would have achieved a lower return. If he exited the market during the bottom, the annual return would have been around 8.2% without considering dividends.This shows that the investor achieved a decent return even with imperfect market timing. It highlights the importance of staying invested long-term and not trying to time the market, as the potential gains from holding on during market recoveries can be significant.It will show similar results when considering the Indian benchmark, Sensex, instead of the S&P 500 index. Here, you’ll have to take the starting date as December 2010 because Sensex was at its peak, and the end date could be the same.By the end of March 2020, if you followed the SIP investing strategy and put Rs 1,000 monthly into Sensex, you would have earned an annual return of6.6%.If you had stayed invested for 15 more months and persisted with the same amount, your returns would have climbed to an impressive15%.It’s all about long-term investing and sticking to your goals through thick and thin.Next time someone questions you about investing in SIPs at the current market highs, you know what to say. Sticking with it through markets ups and downs will be the X factor that works wonders for your portfolio.See you with another interesting market story next week.Until then - Happy learning!Sources: Kotak Securities, Economic Times, Livemint, SEBIDisclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions.Read thefull disclaimer here

https://www.kotaksecurities.com/articles/top-6-anticipated-ipos-to-set-2024-ablaze/

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Kotak Insights | Date 12/01/2024Over 490 billion rupees.That’s the amount which was raised by a total of 57 Indian companies via mainboardinitial public offerings (IPOs)in 2023.Of these, 50 IPOs were oversubscribed.If this doesn't scream IPO frenzy, what does?It begs the question –Is this frenzy about to continue in 2024?And if yes, which are the most awaited IPOs market participants are excited for.Let’s take a closer look in the IPO markets to answer this.2024 and the IPO RenaissanceThe recent surge in IPO activity mirrors the trend of2021when companies raised a staggering Rs 1.1 trillion through initial public offerings.And the resurgence in IPO enthusiasm in2023was seen on the back of several factors, including increased investor appetite andDalal Street's record run.Looking ahead, this IPO rush is set to continue its momentum in2024, with many mainline and SME public issues in the pipeline.It is because 2024 promises to keep the adrenaline flowing with homegrown unicorns seizing the opportunity presented by a robust economy, heightened liquidity, and a thirst for listing gains.Here’s a look at 6 of the most anticipated IPOs lined up for 2024.1. MobiKwik: Fuelling Financial DreamsImagine a one-stop shop for all things digital finance, catering to the underserved masses in tier 2 and tier 3 cities. That's MobiKwik for you.With over 140 million registered users, 3.7 million ecommerce, physical retailer and biller partners, and a revenue of Rs 560 crore in FY23, MobiKwik is not just facilitating payments; it's scripting a financial revolution.Positioned as a digital bank, MobiKwik's focus on vernacular language gives it an edge in the untapped market.The company's use of big data analytics and machine learning ensures continuous improvement, making it a potent player in India's projected US$350 billion digital payments market by 2030.The company has recently filed a fresh draft red herring prospectus (DRHP) to raise Rs 700 crore through a fresh issue of shares.2. Ola Electric: Revolutionising Green MobilityKicking off our electrifying journey is Ola Electric.Ola Electric, the market leader in electric two-wheeler segment, with a little over 156,000 electric scooters sold in FY23, is gearing up for one of the most anticipated IPOs in recent Indian history.The company is planning for its IPO in 2024 by issuing new equity shares worth up to Rs 5,500 crore, along with a sale offer (OFS) of 95,191,195 existing shares, each with a nominal value of ₹10.The company boasts of flagship 2-wheeler models like the S1 and S1 Pro and it is redefining the streets with eco-friendly mobility.It reported a revenue of Rs 2,630.93 crore in the financial year 2023 and a net loss of Rs 1,427 crore.The company's next move includes unveiling its current electric scooter line-up of three models - S1 Pro Gen 2, S1 Air and the S1 X lineup. It is also planning to launch its first electric car in 2024, signaling a shift in gears towards a greener future.In addition, Ola Electric is setting up a Gigafactory in Tamil Nadu through its subsidiary Ola Cell Technologies. The factory is expected to start production of cells by March 2024 with a capacity of 1.4 GWh.3. FirstCry: Crafting Childhood ExperiencesIn the world of baby and kids' retail, FirstCry is the undisputed pioneer.Boasting over 400 brick-and-mortar stores and a robust online platform, it's more than just a shopping destination; it's an experience.In FY23, FirstCry witnessed an impressive 135% jump in its revenue at Rs 5,633 crore. However, the bottomline painted a different picture with a net loss of Rs 486 crore in FY23 due to increased expenses.The parent company – Brainbees Solutions – has filed an IPO application, eyeing a valuation of $3.5 to $3.75 billion, as per multiple reports.The company’s seamless integration of online and offline stores, powered by machine learning, could set it on the path to dominate India's estimated US$15 billion baby and kids' market by 2025.4. PhonePe: Beyond Digital PaymentsNext up in our financial spotlight is PhonePe.PhonePe isn't just a digital payments platform; it's the financial heartbeat of Bengaluru, Karnataka, India.With a registered user base of around 50 crore and 23.5 crore monthly active users (as of November, 2023), PhonePe dominates as a payment option in most of the pin codes across the nation.The company is anticipating an IPO in 2024-25, backed by a $200 million Walmart investment and a $2 billion fund raise.The company’s future plans involve a robust expansion of its merchant network over the next five years, setting the stage for a financial spectacle in the years to come.5. Swiggy: Food Delivery MilestonesBorn in Bangalore in 2014, Swiggy has evolved into more than just a food delivery platform; it's a culinary maestro serving 500+ Indian cities.With expansions into groceries and packages through Swiggy Instamart and Genie, Swiggy commands around 46% market share in food delivery.Marching to the beat of profitability, Swiggy achieved a milestone by turning a profit in the March quarter of FY23 in its food delivery business.The company is set to sizzle in the IPO scene in 2024, which aims to fortify Swiggy's war chest, fueling its growth and expansion endeavors.6. Emcure Pharma: Scripting Global Healthcare NarrativesEmcure Pharma isn't just a pharmaceutical company; it's a global player with a presence in over 70 locations worldwide.With a diverse product range and a strategic focus on therapeutic areas with low generic penetration, Emcure Pharma stands tall in India's pharmaceutical landscape.As the company expands into high-growth areas like oncology and diabetic care, it is poised for significant growth in a market set to reach new heights.The Bain Capital-backed pharma company has filed fresh preliminary papers to raise funds via an IPO in 2024. As per the DRHP, the IPO will comprise of a fresh issuance of equity shares worth Rs 800 crore and an OFS of 1.36 crore equity shares.Conclusion: Navigating the IPO WaveAs we gaze into the IPO crystal ball for 2024, cautious optimism is the key theme.The abovementioned IPOs, among the other top IPOs lined up for 2024, represent the vibrant spectrum of India's economy, each armed with unique growth strategies.Thedigitalization wave, government initiatives, and market trends are favorable winds for these IPOs. However, the upcoming elections could inject a dash of uncertainty, and market dynamics and company performances may sway in the wake of policy changes.It’ll be exciting to see how these IPOs perform on the listing day on the bourses.Also, hold on to your hats because while the potential returns from these IPOs could be alluring, the IPO rollercoaster comes with risks.Thorough research, meticulous planning, and informed decision-making will be your compass in this thrilling ride.As we have highlighted in the past, the inherent risk in any IPO lies in itsvaluationsand one should look out for it before making a decision to subscribe to any offering.In the realm of IPOs, 2024 is not just a year; it's an adventure waiting to unfold. Embrace it wisely!Which IPOs are you looking forward to in 2024? Let us know in the comments!And for more market insights, join our Research Team experts as they discuss Q3FY24 market expectations, triggers, and top stocks in this latest webinar:Expectations & Triggers for Q3FY24We’ll be back with another exciting story next week!Until next time,Happy learning!Sources:Kotak Securities, Economic Times, Company DRHP, Livemint, MoneycontrolDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/medi-assist-healthcare-services-ltd-ipo/

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Key HighlightsMedi Assist Healthcare Services Ltd is one of the India’s leading TPAs servicing insurance companiesThe company’s IPO consists of OFS with a price issue of Rs 397-418Listing will take place on January 22, 2024If 2023 was a promising year forinitial public offeringsin India, 2024 seems to be no different. Several prominent companies are in the pipeline to cash in on investors’ renewed vigor in the Indian growth story. Medi Assist Healthcare Services Ltd is one of the several mainline companies looking to get listed on exchanges in January 2024 with its upcoming IPO. Here are its key details.About the CompanyMedi Assist Healthcare Services Limited offers third-party administration services to insurance companies through its wholly-owned subsidiaries. It has been in business for over two decades and has 97 offices in India. Its premium under management for H1 for FY 24 stands at a staggering over Rs 95 billion. The company has evolved as a PAN-India healthcare provider with 18,754 hospitals spread across 31 states in India and 141 countries worldwide.IPO DetailsThrough its IPO, which opens on January 15, 2024, the company aims to raise Rs 1,171.58 crores, consisting ofoffer-for-saleby promoters and investors, who plan to sell 2.8 crore shares of the company. Some of the other vital details of the company’s IPO are as follows: IPO opens onIPO ends onJanuary 15, 2024January 17, 2024IPO opens onLot sizeJanuary 15, 202435IPO opens onIssue priceJanuary 15, 2024Rs 397 - 418IPO opens onFace valueJanuary 15, 2024Rs 5IPO opens onListing onJanuary 15, 2024BSE, NSEIPO opens onListing dateJanuary 15, 2024January 22, 2024IPO opens onIssue sizeJanuary 15, 2024Rs 1,171.58 croresIPO opens onJanuary 15, 2024IPO ends onJanuary 17, 2024Lot size35Issue priceRs 397 - 418Face valueRs 5Listing onBSE, NSEListing dateJanuary 22, 2024Issue sizeRs 1,171.58 crores The primary aim of the issue is to complete the OFS and get the benefits of listing on stock exchanges. The company plans to enhance its visibility and brand image with the IPO.Financial SnapshotThe company registered an 18.7% on-year growth, and its consolidated net profit stood at Rs 75.31 crores for the year ending March FY 23. Its revenue from operations grew by 28.2%, while EBITDA increased by 30.8% and stood at Rs 119.35 crores. Here are some of the other key financial details of the company for FY 23. Total assetsTotal liabilitiesRs 7,057.16 millionRs 3,220.44 millionTotal assetsBasic earnings per shareRs 7,057.16 million10.94Total assetsRs 7,057.16 millionTotal liabilitiesRs 3,220.44 millionBasic earnings per share10.94 Strengths and RisksGiven below are the key strengths of the company:Well-established third-party administratorThe company is one of India’s premier third-party administrators. It enhances its ability to benefit from the growing prospects of India’s rising health industry, thus enhancing its profitability.Scalable technology-enabled infrastructureThe company boasts of a scalable technology-enabled infrastructure, which is vital in addressing the constituents of the health insurance ecosystem. Following the COVID-19 pandemic, the significance of technology has become even more important among retail and group insurance providers.Diversified base of group accountsThe company has a diversified base of corporates whose health insurance requirements it fulfills. It enjoys long-standing relationships with them. For FY 2023, the company has served more than 9500 group accounts, with the premiums managed for group accounts increasing at a CAGR of 37.08% between FY 21 and 23.RisksThe associated risk factors are as follows:Increasingly competitive TPA industry.The company got 71% of its revenue from the top five clients in the six months ending on September 2023. If it loses any of these clients, the same could adversely affect its business. Changing rules and regulations coupled with legal uncertainties may adversely affect its businessAny decrease in outsourcing claims processing of insurance companies and other activities related to TPAs could affect its businessIn ConclusionFollowing the COVID-19 pandemic, there has been a rise in health insurance in India. With more and more people opting for health insurance in India, business prospects for TPAs are on the rise. Changing insurance dynamics led by modified consumer behaviors present an increasing need for TPAs to handle insurance claims. In such a scenario, Medi Assist Healthcare Services Ltd can see growth in their business in the coming days.That said, just like investing in any IPO requires careful consideration and a keen evaluation of the company’s valuations, you must do the same for Medi Assist Healthcare Services Ltd. Review the company’sred herring prospectusfor a detailed view and invest accordingly. Watch and LearnAll you need to know about Medi Assist Healthcare IPOTune in to know more about the company, IPO issue details, future strategies, important financial details, its presence and reach, product/service portfolio, and much more with Kinjal Parekh!Medi Assist Healthcare Services IPO Review | Insurance Sector | Issue details, strategies and moreKotak Securities•3m 30s

https://www.kotaksecurities.com/articles/5-risks-factors-jyoti-cnc-automation-ltd-ipo/

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Essential Risks to ConsiderHistory of Negative Return on Equity in the PastJyoti CNC Automation Ltd has a history of negative returns in the past, and future losses could adversely affect the company’s growth prospects. The company’s losses in the fiscal 2022 and 2021 were primarily due to the losses suffered by its subsidiaries. The situation can potentially impact the company’s overall development. The table below shows instances of negative return on equity: ParticularsProfit/(loss) for the year periods6 months period ended September 30, 202333.52Fiscal 2023150.60*Fiscal 2022-483Fiscal 2021-700.29ParticularsReturn on equity (%)**6 months period ended September 30, 20231.33%Fiscal 202318.35%Fiscal 2022-117.36%Fiscal 2021-62.20%Particulars6 months period ended September 30, 2023Fiscal 2023Fiscal 2022Fiscal 2021Profit/(loss) for the year periods33.52150.60*-483-700.29Return on equity (%)**1.33%18.35%-117.36%-62.20% No Long-term Purchase ContractsThe company doesn’t enter into long-term purchase contracts with its customers. It means it can face issues of retaining its existing customers. It can adversely affect the company’s growth prospects if it fails to do so. While it has customers from diverse sectors, the fact that CNC machines are not consumer products means that the company generally doesn’t have repeat customers annually.Substantial Debt Servicing ObligationsThe company has incurred significant indebtedness and has a highdebt-to-equity ratioand a low debt-service coverage ratio. If it fails to generate enough cash flows from its operations, its liquidity and the ability to service indebtedness could be adversely affected. A high debt-to-equity ratio and a low debt-service coverage ratio could:Result in a significant portion of the cash flow being directed towards the repayment of existing debt, thus hampering available cash flow to fund business requirementsImpact the company’s ability to raise borrowings at commercially viable terms, which can hinder expansion plansResult in default of payment and other obligationsNo Long-term Agreement With Suppliers for Input MaterialsThe company’s business depends heavily on the availability of high-quality input materials. These materials must have special properties such as dimensional stability, impact resistance, etc. However, Jyoti CNC Automation doesn’t have long-term agreements with suppliers for input materials. In case of a shortfall or deterioration of the quality of materials, the same could hurt the company’s operations.Also, the absence of long-term contracts makes the company susceptible to short-term supply challenges and exposes it to volatility in the prices of input materials.Delay in the Submission of Audited Consolidated Financial Statements in the PastIn the past, the company has delayed submitting its audited financial statements for the 2021 and 2022 fiscals. While it has paid late fees for delayed submission, there’s no assurance that a penalty or fine shall be levied on the company as prescribed under the Companies Act 2013. As a company that will be listed on stock exchange(s), it has to ensure that its reporting and disclosure processes work well.This involves keeping good records of its daily transactions. To do this, the company needs to put a lot of effort and attention into improving and maintaining these processes. However, this might mean that its management gets focused on these tasks instead of other important aspects of business. This shift in attention could negatively impact the company’s business, future opportunities, how well it operates, and its financial health.In ConclusionWhile these are some of the key risks you need to consider while subscribing to the IPO of Jyoti CNC Automation, read the company’s red herring prospectus for a complete overview of the associated risks. This will help you gain more insights into the IPO and make a prudent investment decision.

https://www.kotaksecurities.com/mutual-funds/mutual-funds-impact-economic-indicators/

Mutual Funds and Impact of Economic Indicators

What are Economic Indicators?Economic indicators are statistical data collected and released by several government agencies. They help gauge how an economy is performing and project future estimates of economic progress through data reflected in the indicators. Several economic indicators help track an economy’s performance.Economic Indicators and Their Impact on Mutual FundsNow that you know what are economic indicators let’s see the various indicators and their influence on mutual funds:Gross Domestic ProductGross Domestic Product, or GDP, as it’s known, is one of the most widely used economic indicators. It showcases the total value of goods and services within a specific time frame. A high GDP indicates a strong economy and expresses a generally bullish sentiment in the country. High GDP can lead to strong corporate growth, which in turn, can uplift a mutual fund’s performance.On the contrary, a shrinking GDP indicates that the economy is struggling to maintain growth, and companies cannot generate enough profits. This negatively impacts mutual funds and brings down their returns over the long term.Interest RatesInterest rates are another key economic indicator. The Reserve Bank of India (RBI) sets interest rates as a part of its monetary policy. Recently, when inflation was above the RBI’s comfort level, it raised key interest rates to bring it down. Note that bond prices and interest rates share an inverse relationship. It means bond prices come down when interest rates go up and vice versa. So, bond holdings in mutual funds tend to suffer in a high-interest rate regime.Also, raising money from the market becomes costly for companies when interest rates are high. At the same time, it becomes expensive for them to serve their existing loans, and their profits take a hit. In such a scenario, a company’s financials suffer, and this affects the performance of funds that have such companies in their underlying portfolio.InflationHigh inflation erodes money’s purchasing power and significantly impacts fixed-income funds. If interest rates fail to keep pace with inflation, the real rate of returns may be lower. Also, during such times, the RBI increases key policy rates, such as therepo rate, to control inflation. When it happens, bond prices fall, and a fund’s performance may suffer.At the same time, news about high inflation hurts investors’ sentiments, and they get spooked. They tend to stop their investments or withdraw money in such a scenario. If it happens, it has a negative impact on a fund’s performance. On the other hand, when inflation is under control, it sends positive vibes among investors and makes them more confident in their investments.Employment and Income LevelsThe level of employment and income affects consumer spending and corporate earnings. This, in turn, affects the performance of mutual funds. Robust levels of employment and income have a positive impact on funds. Note that consumer spending is a key driver for several sectors and impacts a company’s inflow. Mutual funds tend to benefit if it’s on the higher side.Currency Exchange RatesIf you’ve invested in an international fund whose underlying securities comprise foreign companies, currency exchange rates can affect its performance. For example, if you have invested in a fund primarily investing in US-based companies, an appreciation of the dollar will improve the fund’s performance. On the other hand, if the dollar experiences a depreciation, it can have a negative impact on the fund.In ConclusionAs evident, economic indicators have a significant say in the performance of mutual funds. As an investor, it’s essential for you to keep a tab on them and align your mutual fund portfolio accordingly. Track these indicators from time to time and make the necessary adjustments. FAQs on Mutual Funds and Impact of Economic IndicatorsHow do Economic Indicators Affect Mutual Funds?Different economic indicators affect mutual funds differently. For instance, while a high GDP can boost a fund’s performance, high inflation brings it down.What is the Purpose of Economic Indicators?Economic indicators help gauge how an economy is performing. If the economy is performing well, it positively influences mutual funds.

https://www.kotaksecurities.com/articles/jyoti-cnc-automation-ipo-key-details-you-need-to-know/

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About the CompanyJyoti CNC Automation is one of the top manufacturers of CNC machines and accounted for 8% market share in the 2022 fiscal. It has a diverse portfolio of CNC machines, including CNC Turn Mill Centers, CNC Horizontal Machine Centers, CNC Vertical Machine Centers, and CNC Turning Centers, among others.The company caters to the needs of the aerospace, defense, auto and auto components, and general engineering sectors. The company claims to have more than 3000 clients spread across continents and, since April 1, 2004, has supplied over 30,000 CNC machines across the globe.IPO DetailsThe company’s IPO consists of a fresh issue of Rs 1,000 crore. While details about the issue price, size lot, IPO subscription date, closing date, etc., are awaited, the company plans to use Rs 450 crore to repay its debt and use Rs 300 crore to meet its long-term capital requirements. It plans to use the remaining funds for general corporate purposes.Financial SnapshotAs of June 30, 2023, the firm's order book stood at Rs 3143.05 crore, which included an order of Rs 260.25 crore from an electric manufacturing services company. Some other key financial details for FY 23 are as follows: Total AssetsTotal EquityRs 15,153.81 millionRs 820.63 millionTotal AssetsTotal IncomeRs 15,153.81 millionRs 9526 millionTotal AssetsTotal ExpensesRs 15,153.81 millionRs 9552.01 millionTotal AssetsReturn on EquityRs 15,153.81 million18.35%Total AssetsRs 15,153.81 millionTotal EquityRs 820.63 millionTotal IncomeRs 9526 millionTotal ExpensesRs 9552.01 millionReturn on Equity18.35% Strengths and RisksHere are the company’s key strengthsOne of the World’s Top CNC Manufacturing CompaniesJyoti CNC Limited is one of the world’s leading manufacturers of CNC machines, and in the 2022 fiscal, it was India’s second-largest CNC machine manufacturer. The Economic Times has recognized the company as the Best Brand in the Metal Cutting Industry for 5 consecutive years from 2018 to 2022. The company has a wide range of customizable product portfolios.Diversified Global Customer BaseThe company has a well-diversified global customer base. During the last three fiscal years, it has supplied over 7200 machines to more than 3000 customers in India and across Asia, North America, Europe, and the rest of the world. The company’s client base includes Space Applications Centre ISRO, Bharat Forge Limited, Turkish Aerospace, BrahMos Aerospace Thiruvananthapuram Limited, Bosch Limited, etc.Vertically Integrated Operations Enabling CustomizationThe company operates out of 3 manufacturing facilities. Two of them are in Rajkot, Gujarat, while one is in France. The firm’s integrated operations enable it to manufacture critical machine components with ease and precision. This reduces dependence on third parties and bolsters operational efficiencies. It also allows the company to maintain control over its manufacturing processes.RisksThe risks involved are:No long-term purchase contracts with customersNo long-term agreements with suppliers for input materialsComplete reliance on third-party logistics service providers for transport of input materials and finished productsHigh working capital requirementIn ConclusionThe CNC machine market is expected to notch healthy growth in the coming days, with many industries moving towards industry 4.0 and automation. With market players looking for more precision-oriented machines, the demand for CNC machines is expected to increase. CNC machines will also gain from increasing capex investments. These developments position Jyoti CNC Automation to gain significantly. Including shares of Jyoti CNC Automation in your portfolio can boost wealth creation in the coming days. That said, you must go through the company’sred herring prospectusto know the risk factors before investing.

https://www.kotaksecurities.com/mutual-funds/esg-investing-mutual-funds/

ESG Investing With Mutual Funds

What is ESG Investing?Before delving deep into ESG mutual funds, let's understand ESG investing. ESG investing is all about considering the impact of an investment on the environment, society, and governance. In a way, it's about saying that companies should be more responsible by adopting practices that positively impact the environment and society. In other words, they should refrain from business practices that adversely affect the environment and society.What are ESG Mutual Funds?ESG mutual funds invest in companies compliant with ESG parameters and focus on sustainable growth. These companies have business protocols that make them environmentally friendly and committed to social responsibility. These firms aim to generate decent returns while positively impacting society and the environment.Types of ESG Mutual FundsNow that you have an idea of ESG investing and what ESG mutual funds are, let's look at their various types. The different types of ESG mutual funds that can help you with ESG investing are as follows:Exclusionary Funds - These ESG funds exclude companies operating in specific sectors such as weapons, tobacco, etc.Best-in-Class Funds - These ESG funds invest in companies with the best ESG ratings in their respective industries.Impact Funds - These ESG funds invest in companies that aim to have a positive social impact alongside higher returns.Benefits of ESG Investing Through Mutual FundsThere are several benefits of ESG investing through mutual funds. Some of them are as follows:Create a Positive ImpactThis is the biggest benefit of ESG investing through mutual funds. By investing in ESG funds, you can contribute to positive environmental and social change in the economy. In other words, you can align your portfolio with the values you believe in.Better Positioned for Long-term SuccessSeveral studies have suggested that ESG-compliant companies are better positioned for long-term success. By following strong ESG practices, they are likely to outperform in the long run. In such a scenario, ESG investing through mutual funds can help you achieve better returns on your investment.Portfolio DiversificationDiversificationis one of the fundamental investing principles. It helps you mitigate risk. ESG investing through mutual funds can help you diversify your portfolio and reduce traditional investment risks. By investing in diverse companies following ESG practices, you can also reduce the impact of poor-performing funds in your portfolio. Also, companies growing sustainably are less likely to get into legal troubles that could lower their stock price.In ConclusionThough ESG investing with mutual funds is still evolving, it is slowly gaining traction. Through ESG investing, you can not only help the environment but also give your portfolio the required edge by steering it to long-term success. However, as with any mutual fund, ESG funds also have their share of risk, and it's essential to know the risk factors well for informed decision-making. FAQs on ESG Investing With Mutual FundsWhat to Look Before Investing in ESG Funds?Before investing in ESG funds, look at your values and priorities and analyze if the fund aligns with those values. Equally important is to evaluate the fund's long-term performance.What are the Limitations of ESG Investing?Perhaps the biggest limitation of ESG investing is the limited pool of ESG-compliant companies. This can limit the investment options for funds investing in such companies.

https://www.kotaksecurities.com/articles/the-art-of-doing-nothing-in-the-stock-market/

Investor Zen: The Art of Doing Nothing in the Stock Market

Kotak Insights | Date 09/01/2024As we usher in the New Year 2024, let's not just make resolutions; let's also set a tone for smarter investing.Have you ever found yourself making impulsive decisions in the stock market, driven by the need to take action rather than careful consideration?You're not alone. It’s a common phenomenon known asAction Bias. In the dynamic realm of equities, understanding and overcoming this bias is crucial for success.The Art of HesitationImagine yourself by the beach, watching the ebbs and flows and the waves roll in.A seasoned surfer waits patiently, assessing the waves' size, strength, and rhythm. In the stock market, successful investors often approach decisions like skilled surfers, patiently waiting for the right opportunity.Now, contrast this with the novice surfer who hastily jumps onto any wave, without understanding its characteristics. Similarly, in the stock market, action bias reflects this impulsive behavior - hastily jumping into trades without thorough analysis, often driven by the fear of missing out (FOMO) on potential gains.Action Bias in Action: The Tale of Two InvestorsConsider Riya and Sid, both avid investors.Riya, armed with the knowledge of the Action Bias, takes a deliberate approach in the stock markets. She meticulously researches stocks, analyzes market trends, and carefully considers the potential risks and rewards. In contrast, Sid, influenced by action bias, impulsively buys and sells stocks based on short-term market fluctuations.As the market experiences a sudden dip, Sid succumbs to panic and goes on hastily selling his stocks in fear of further losses.Riya, on the other hand, remains composed, recognizing that market fluctuations are part and parcel of the stock market game.In the long run, Riya's strategic approach proves more successful, while Sid'simpulsive actionslead to missed opportunities and financial setbacks.The Domino Effect: FOMO and Action BiasAction bias often intertwines with the fear of missing out (FOMO).Imagine a crowded theater where one person stands up for a better view, triggering adomino effectas others follow suit.Similarly, in the stock market, one investor's impulsive actions can trigger a chain reaction as others, driven by FOMO, blindly follow suit.Statistically speaking, studies show that during periods of heightened market activity, action bias tends to spike.Consider April 2022: the Sensex hit 60,000, talks of it reaching 70,000 were ensued. However, months later, a plunge to 51,000 was seen.Did anyone profit from this peak or 'buy the dip'? It’s quite unlikely.This is because despite history warning against market timing, we convince ourselves this time is different for better gains, seeking certainty in a random market.Imagine embarking onSensexinvestments in 2000, navigating through crises, political shifts, and pandemics.But what if you tried timing the market, went on tinkering your investments, and in the process, missed its best days while chasing the market bottom?In fact, if you had stayed invested all the way along, your investment would’ve grown substantially. However, missing just 10 of the best days in these 23 years would leave you with considerably diminished returns. And mind you, that would make a huge difference.Conclusion: Mastering the Stock Market WavesTo navigate the waves of Action Bias successfully, investors should adopt a strategic approach. This involves settingclear investment goals, diversifying portfolios, and having a steadfast long-term perspective.Moreover, embracing and incorporating data-driven decision-making can act as a surfboard, helping investors ride the waves ofmarket fluctuations.By relying on fundamental analysis, leveraging technical indicators, and heeding historical data, investors can make informed decisions rather than succumbing to the pitfalls of impulsive actions.In the sagacious words of Warren Buffett,“The stock market is a device for transferring money from the impatient to the patient.”So, remember that it's not about catching every market wave but about riding the right ones.The next time you feel the urge to impulsively act in investing, take a step back, analyze the waves, and make decisions that align with your goals.In conclusion, mastering the art of doing nothing in investing goes beyond a strategic approach. It involves understanding the psychological aspects, staying attuned to market sentiments, and as well as committing to continuous learning.The ability to navigate the stock market with wisdom and insight is not just about making the right moves but also about knowing when not to move.In this ever-evolving journey, embrace the art of hesitation, and you'll find it to be your greatest ally.Until next time,Happy learning!Sources: Kotak Securities,My Money Sage,The Decision LabDisclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/mutual-funds/role-of-technology-mutual-fund-investments/

The Role of Technology in Mutual Fund Investments

1. Gateway to AccessibilityTechnology has opened the gateway to accessibility to mutual funds. Gone are the days when you had to deal with cumbersome paperwork. Today, you can do everything at the click of a button. Be it completing KYC, tracking funds, checking theirnet asset value(NAV), or seeking real-time information on your investments, you can do everything on the go. The entire journey has been made more user-friendly, and you can be on top of your investments from anywhere, anytime.Not only invest, you can also request redemption, set up asystematic transfer plan(STP) or a systematic withdrawal plan (SWP). In a nutshell, you can be in charge of your investment and make decisions accordingly.2. Virtual Financial Guides Through Robo AdvisorsThe growth of technology has given rise to a new breed of financial advisors, known as robo-advisors. Powered by AI and machine learning, these advisors are equipped to offer personalized advice and track portfolios, thus helping you make smart and intelligent decisions.Robo advisors available 24x7 have also taken up mundane tasks that earlier used to take physical intervention, thus allowing asset management companies (AMCs) to focus on other aspects that warrant human intervention. Now AMCs can redirect human intervention towards crafting personalized investment strategies, conducting in-depth market analysis, and cultivating client relationships.3. Data AnalyticsThanks to technology, mutual fund companies can now do the number crunching quite easily to identify patterns, trends, and investment opportunities and suggest the same to their clients. This not only helps cultivate a robust client relationship but also goes a long way in gauging fund performance across different market cycles.The insights provided help fund managers take prudent calls and make informed decisions. Not only this, but technology also helps assess and manage risks associated with mutual fund investments. This contributes to more effective risk management strategies.4. Help Young Generation InvestMillennials and Gen Z are tech-savvy. The smartphone generation loves to do everything over their phone and technology has helped the young generation to invest in funds of their choice. Several fund houses allow investors to invest in funds through instant messaging apps, and this has helped them get significant inflows.Also, online platforms and mobile apps have provided millennials with user-friendly interfaces, making it convenient for them to research, track, and invest in mutual funds from anywhere, anytime. With readily available details offering much-needed transparency, millennials are now more confident in their decisions in mutual funds and building a corpus for essential life goals.In ConclusionTechnology has transformed the landscape of mutual fund investments, making them more accessible, efficient, and personalized for investors. However, it is essential to recognize that maintaining a balance between technological advancements and the need for investor education and regulatory oversight to ensure a secure and reliable investment environment. FAQs on Role of Technology in Mutual Fund InvestmentsHow Does Technology Help in Mutual Fund Investments?Thanks to technology, investors can now easily invest in a range of funds, track their investments, monitor fund performance in real-time, and analyze market trends.What is the Role of Technology in Managing Mutual Fund Investments?Technology can help you get a 360-degree view of your investments, compare fund performance to benchmark index, and evaluate their performance.

https://www.kotaksecurities.com/articles/did-2023-set-the-stage-for-a-market-revolution-in-2024/

Did 2023 Set the Stage for a Market Revolution in 2024?

Kotak Insights | Date 05/01/2024Greetings andHappy New Yearas we usher in 2024!Indian stock markets were in for a treat in 2023. Not only did they scale all-time highs, but also delivered impressive returns.From theIPO frenzyto the surge in mid and small-caps, the market was abuzz with activity that fuelled positive sentiments.Let's take a swift look back at 2023 and explore the potential market landscape for the year ahead.Reflecting On 20232023 will go down in Indian stock market history as one of its best years.Amidst the Adani-Hindenburg saga that unfolded in January, predicting a year-end Nifty closing level of21,700seemed improbable.However, reality defied expectations, and today,Nifty at 22,000appears to be a mere formality.India’s robust economic expansion outpaced other major economies. This also played a pivotal role in uplifting domestic equities in 2023.A key contributor to this surge was also the growing presence of investors. Theinflux of investors, coupled with improved financial literacy and accessibility to financial services, resulted in an upswing in mutual fund accounts – from fewer than 60 million in 2016 to over 150 million in 2023.Looking at the index performance, India's blue-chip Nifty 50 andBSE Sensexrose around20%in 2023. This was their second-best year since 2017, and the indexes were among the top-performing stock indexes globally.The real winners in 2023 were found in themidcapandsmallcapspace.These stocks rose so much that questions were being asked about a market bubble.To assess this, let's delve into the current market scenario and examine how the small-cap index compares with the Sensex today.The Current Markets LandscapeThe rally seen in smallcaps, starting from March 2023, has been nothing short of a dream run. However, as with all favorable trends, there comes a point when the trajectory begins to shift.It appears that this golden period for smallcaps could be nearing its conclusion. The evidence lies in the Sensex to Smallcap Ratio chart, which has plummeted to levels not witnessed since the top of the smallcap bull run in 2018.Presently, this ratio has touched a 15-year low, signaling that smallcaps may have limited room for further outperformance. So, the landscape is evolving, and investors need to recalibrate their expectations accordingly.This also begs the question: Arelarge-capsnow emerging as attractive investments?Well, it would be incorrect to paint all large-caps with the same brush. Besides, the current Nifty PE ratio of around 23 does not suggest that large-caps are cheap.In essence, one should act with caution and a nuanced examination before investing or trading in stocks in this evolving market scenario.As you move ahead, here are some things to keep in mind…What Lies Ahead for 2024?The benchmark index tends to exhibit volatility in a year of shifting macros, and 2024 appears poised for such fluctuations.Several factors could influence the markets:Geopolitical Unrest:Ongoing geopolitical tensions, including the Israel-Hamas conflict and China-Taiwan disputes, have the potential to disrupt global trade, impacting market indices. Any major hurdles to global trade, because of the geopolitical risks can weigh on the markets.Election Influence:Elections in India and the US can bring about significant changes in the stock markets, with certain sectors potentially becoming less favorable to traders and investors. Also, stocks in the overvalued zone or with weak earnings could be the most affected in any election led market crash.Midcap and Smallcaps:After a substantial rally in mid and smallcap stocks in 2023, a broader market correction could have a swift negative impact on these segments as these segments are more affected than the larger peers in the event of any major market downturn.Capex Dynamics:The current capex cycle in India seems robust, driven by events like RERA, GST, and the China plus one megatrend. India has been a great beneficiary, especially with the policies like Make in India and production linked incentive schemes. To add to thatMNCs like Appleresolved to make India the key sourcing hub. Any unexpected capex slowdown in 2024 could shake stock valuations that have already factored in the returns.Navigating the Markets in 2024In summary, while the market delivered stellar returns in 2023, it has also become expensive acrossmarket caps, sectors, and themes.The year 2024 may bring disappointments if earnings growth fails to meet expectations or if external shocks occur.Going forward, market participants will be closely tracking theQ3FY24 earningsandmanagement commentaryfor any market outlook.Also note that India shines as an attractive destination for global investors in the current market environment. The country is viewed positively for its improved business, favorable demographics, and a friendly environment for sovereign investors. In a way, investors in Indian share markets are more optimistic.India Ratings and Research (Ind-Ra) has recently revised upwards itsgross domestic product (GDP) growthestimate for FY24 to 6.7% from 6.2% earlier. A number of factors, including the resilience of the Indian economy, which grew 7.6% year-on-year in 2QFY24, leads this revision.Nevertheless, there are risks as well from macro as well as micro economic factors.In all, we’d like to highlight that making predictions is complex, and no one can predict the market’s direction with 100% accuracy.This is wherediversificationcomes in handy for investors and traders. It can act as a key strategy to mitigate risks. Plus, it ensures investors can exploit potential opportunities while safeguarding their investments.Allocating funds across different asset classes that aligns with your financial goals can ensure a balanced portfolio.Whether opting for a higher allocation to stocks or exploring alternatives like gold orsystematic investment plans (SIPs)in mutual funds, diversification remains a prudent approach.Investors comfortable with having a higher risk-reward ratio can have a higher allocation tostocks.Start your journey by clicking here >>If stocks are not the first choice, and you prefer safety over returns, you couldlook at gold.Or you can simply start with a systematic investment plan (SIP) in mutual funds.Click here to know more on this.As we embark on 2024, remember to trade and invest wisely, employing time-tested strategies and robust risk management measures.For a comprehensive market outlook, tune into our research team's video below, where they talk about the markets, the strategy for January, and top stocks to watch out for.Stocks & Strategy Webinar – January 2024We’ll be back with another exciting story next week!Until next time,Happy learning!Sources:Kotak Securities, Economic Times, BSE, NSEDisclaimer:This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with financial professionals before making any investment decisions. Read thefull disclaimer here.

https://www.kotaksecurities.com/articles/jpy-carry-trade-surge-sustained-premium-allure-draws-indian-investors/

Currency 5th January: JPY Carry Trade Surge: Sustained Premium Allure Draws Indian Investors

In the dynamic world of investment banking, the pursuit of lucrative opportunities often takes traders to various corners of the global market. Lately, the spotlight has been on Japanese Yen (JPY) carry trading, where investors leverage the interest rate differentials between the Yen and higher-yielding currencies. The latest trend indicates a growing appetite for short positions in the Yen as the month-over-month premium remains irresistibly attractive.Carry trading involves borrowing in a low-interest-rate currency, like the Japanese Yen, and investing in higher-yielding assets. This strategy has been a favourite among investors in India, drawn to the potential gains from interest rate differentials. The persistent allure of this approach has led to a surge in short positions on the Yen, with traders from investment banking firms actively participating in this trend.The month-over-month premium, representing the interest rate advantage of holding higher-yielding currencies, continues to be a driving force behind the increased short interest in the Yen. Traders in India, known for their strategic approach in the global financial markets, have been quick to capitalize on this trend, navigating the complexities of the forex market with finesse.As the global economic landscape evolves, so do the opportunities and risks in the financial markets. The JPY carry traders seem undeterred, embracing the challenges and seizing the moment as the attractive premiums persist. Whether this trend will sustain or face a shift in the coming months remains uncertain, but for now, investors in India and beyond are riding the wave of Yen shorts with a keen eye on the evolving dynamics of international finance.

https://www.kotaksecurities.com/mutual-funds/how-to-invest-in-a-mutual-fund/

How to Invest in Mutual Funds

Key HighlightsMutual funds pool money from multiple individuals and invest in various securities.While investing in mutual funds, assess your risk tolerance and compare historical performance. Moreover, diversify your investments and regularly monitor their performance.Online investment in mutual funds can be done through the official website of an AMC. You can also invest with third-party mutual fund aggregators.Investors can also invest in mutual funds offline. They can obtain the application form AMC and submit it with essential documents. They will receive the mutual fund units after the due payment.Mutual funds include the expense ratio and transaction fees. Investors also have to pay exit load and Securities Transaction Tax (STT).Process of Investing in Mutual FundsYou should follow this procedure to invest in a mutual fund.Step 1:First, assess your risk tolerance. This is crucial to select the right mutual fund to invest in.Step 2:Asset allocation is the next step. You have to allocate funds to different asset classes. To balance the risk, your portfolio should include both debt and equity instruments.Step 3:Now, compare mutual funds by analysing their historical performance.Step 4:Choose the mutual fund plan to invest in.Step 5:For better returns, diversify your investments and monitor the performance of funds. Adjust your portfolio whenever it is necessary.How to Invest in Mutual Funds OnlineOnline mutual fund investing is easy. Here are the steps to invest in mutual funds online.1. Through the Official Website of an AMCThere are several mutual funds on the official websites of all asset management companies (AMCs). Fill out all the necessary information and submit it by following the directions on the website.Complete the KYC procedure online (e-KYC) using your Aadhar number and PAN. The AMC verifies the information. You may begin investing after successful verification.2. Using an AppAMCs make it simple and quick for investors to purchase mutual funds using mobile applications. Third-party mutual fund aggregators also offer platforms for investing in mutual funds. The apps facilitate investors to purchase and sell units. They can also get account statements and check their portfolio. Using these apps, Investors can invest in a variety of mutual funds of numerous fund firms.Offline Mode of Investing in Mutual FundsInvestors can also invest in mutual funds offline. Here are the steps to invest in mutual funds offline.Step 1:Choose the asset management company.Select the AMC that you want to invest with. Research various mutual fund houses and pick a suitable one.Step 2:Get the application form.To find the application form, get in touch with the AMC or go to its website. You may also get it from a financial mutual funds distributor.Step 3:Properly fill out the application formProvide your personal information, the amount of investment, and other details correctly. Make sure all the details are accurate.Step 4:Submit the application to the AMCOnce the application is complete, submit it to the AMC. Also, provide a copy of your PAN card or other essential documents.Step 5:Make the due paymentFinally, pay the due amount using a demand draft or a check.You shall receive the confirmation shortly. You may receive an email or an account statement.Costs Involved in Mutual Funds InvestingYou will incur the following costs while investing in mutual funds.1. Expense Ratio:The percentage of average assets under management that AMCs spend on these costs is the expense ratio. For instance, AMCs have administration, distribution, and other costs.2. Transaction Fee/One-Time Charge:Investors may have to pay a small amount as transaction fees. This usually varies with different AMCs.3. Output Load:An exit load is applicable when an investor withdrawal funds. It is expressed as a percentage of the current Net Asset Value (NAV) of the plan.4. Securities Transaction Tax (STT):A Securities Transaction Tax is imposed when an investor chooses to sell mutual fund units.Factors to Must Consider Before Investing in Mutual FundsWhen choosing a mutual fund, you should consider the following factors.1. Investment ObjectiveHaving clear objectives helps you to choose the right fund according to them. So, you must determine your goal first. It may be buying a new home, vehicle, wedding, child's education, retirement, or anything else. Knowing the investment objective will help you understand the amount of wealth and time required to achieve it.2. Select Funds AppropriatelyIt might be difficult to choose the right mutual funds because there are so many options available on the market. Thus, it is vital that to conduct in-depth study. Consider your investment goal, risk tolerance, and affordability when evaluating the fund you choose. If you want, you may also get assistance from an expert.3. Examine the Risk Elements:You must also keep in mind the risks associated with mutual funds. High-return funds usually have higher risks. If you want large returns and have a high tolerance for risk, you should consider equity plans. Debt plans, on the other hand, are good if you prefer low-risk with modest returns.4. Maintain Updating Your KYC DocumentsIf one does not comply with Know Your Customer (KYC), he cannot invest in mutual funds. So, investors must adhere to KYC regulations. You'll need your PAN card, identity, and address proof to update your KYC status.ConclusionToday, investing inmutual fundshas become easier. One can directly invest with the asset management companies. Individuals can visit their website and invest in the mutual funds they offer. In addition, third-party platforms also facilitate investing in mutual funds. You can invest in several funds of different AMCs on such platforms. Alternatively, you may also invest in mutual funds offline. You can reach out to the AMC and get the application form to buy mutual funds units. So, you can choose the method which is convenient for you. However, ensure you research properly before investing in any fund. Choose the funds that match your risk profile and goals. FAQs on How to Invest in Mutual FundsHow to directly invest in mutual funds?You can directly invest in a mutual fund through a Direct Plan available on the AMCs website.Is there no tax on SIP?There is no tax on SIP for particular mutual fund categories. One such category is equity-linked savings plans (ELSS).Can anyone invest in mutual funds?Yes, any individual with a bank account and PAN card can invest in mutual funds.Is SIP better than FDs?You can invest in an FD if your objective is capital preservation instead of higher returns. Invest in SIPs if you'd like to make target-oriented investments that will provide greater returns.Can you redeem mutual funds units and get cash?Yes, you can redeem mutual fund units and convert your holdings to cash.

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Dynamic Asset Allocation Funds - A Deep Dive

What are Dynamic Asset Allocation Funds?As the name suggests, a dynamic asset allocation fund dynamically adjusts between equity and debt as per the prevailing market conditions. Unlike traditionalmutual fundswith a fixed allocation, dynamic asset allocation funds can change their asset allocation based on market conditions. This flexibility allows fund managers to capitalize on opportunities and shield investors from potential downturns.How Dynamic Asset Allocation Funds Work?Dynamic asset allocation funds are managed by experienced professionals who actively monitor market conditions and adjust the portfolio's asset allocation accordingly. The asset allocation can vary between equity and debt instruments, depending on the fund manager's outlook on the market and as per the fund’s investment philosophy.Fund managers rely on various quantitative models,economic indicators, and market signals to make informed decisions. For example, when the market is bullish, the fund manager may increase the allocation to equity instruments to capitalize on potential gains. Conversely, during bearish market conditions, the manager may reduce the equity allocation and shift towards debt instruments to safeguard against potential losses.Benefits of Dynamic Asset Allocation FundsDynamic Asset Allocation funds bring the following advantages to the table:-Risk ManagementThese funds excel in adjusting their asset allocations based on prevailing market conditions. This adaptability allows them to respond to changes promptly, potentially mitigating risks during periods of market volatility.Also, they maintain diversified portfolios across various asset classes. This diversification can act as a risk mitigation strategy, as it reduces the impact of poor performance in a specific asset class on the overall portfolio.Capitalizing on Market OpportunitiesDynamic asset allocation funds are managed actively, with fund managers utilizing quantitative models and market indicators to make informed decisions. This proactive approach enables the fund to capitalize on emerging investment opportunities and adjust the portfolio for optimal returns.Also, they have the flexibility to allocate assets based on their assessment of market trends tactically. This allows them to take advantage of potential upswings in specific sectors or asset classes, potentially leading to higher returns.Helps Ride Market VolatilityBy dynamically adjusting allocations, these funds aim to reduce the portfolio's overallvolatility. This can particularly appeal to investors who prefer a smoother investment experience and wish to avoid extreme market fluctuations.The focus on risk management can improve risk-adjusted returns, providing you with a more stable and predictable investment journey.Flexibility and AdaptabilityDynamic asset allocation funds can adjust their allocation percentages to different asset classes based on their outlook for market conditions. This adaptability is crucial in navigating changing economic environments and evolving investment landscapes.The proactiveness to respond to changes depending on factors, such as interest rates or economic indicators, positions them to optimize returns while actively managing downside risk.Tax Treatment of Dynamic Asset Allocation FundsDynamic asset allocation funds that maintain 65% or more in equities are taxed as per equity funds. That means they are taxed at 10% for long-term capital gains if held for more than a year on profits above Rs 1 lakh. If the holding period is less than a year, the gains are classified as short-term capital gains (STCG) and taxed at 15%.Funds with less than 65% in equities get the tax treatment of debt funds. As per the latest amendment in the taxability of debt funds, they no longer enjoy indexation benefits while calculating long-term capital gains and, hence, are taxed as per your applicable tax slab.Consideration for InvestorsAs an investor, these are the essential considerations you should have while investing in dynamic asset allocation funds:-Investment Horizon:Dynamic asset allocation funds are suitable for long-term investors who can tolerate some degree of market volatility. It is essential to understand your investment goals and time horizon before investing in these funds.Expense Ratio:Like any mutual fund, dynamic asset allocation funds have anexpense ratiocovering management fees and operating expenses. You should compare the expense ratios of different funds to ensure they are getting value for their money.Fund Performance:Reviewing the fund's historical performance is essential before investing in a dynamic asset allocation fund. While past performance does not indicate future results, it can give insights into the fund manager's ability to navigate different market conditions.In ConclusionDynamic asset allocation funds offer a proactive and adaptive approach to investing, aiming to navigate the complexities of financial markets. By staying attuned to market signals and adjusting portfolios accordingly, these funds strive to optimize returns while managing risks. FAQsWhat is the Power of Dynamic Asset Allocation?The power of dynamic asset allocation helps maximize gains when markets are at a high while protecting gains when they are down.Which is the Best Dynamic Asset Allocation Fund in India?There is no fixed fund as such. Before you put money in a dynamic asset allocation fund, look at the fund’s long-term track record and consistency in performance.What is the Difference Between Dynamic Asset Allocation Fund and Multi-asset Fund?Dynamic asset funds differ significantly from multi-asset funds in their ability to shift across a broader spectrum of equity and debt exposure, whereas the latter generally adhere to a more stable allocation.