Hence, there won’t be any updates on the Nifty 50, Sensex, Top Gainers, and Top Losers sections today.

Global markets: US markets rose on Thursday. Asian markets traded mixed on Friday and European markets also showed a mixed trend (as of 6 pm IST).

News

• India’s forex reserves fell $18.34 billion to $747.56 billion for the week ended 25 Sep.

• The government extended RoDTEP (an export tax-refund scheme) until 31 Dec from 30 Sep for several categories of exporters, including SEZ and export-oriented units.

Stock Updates

• HDFC Bank: RBI approved Anup Bagchi as MD & CEO for 3 years from 27 Oct. He will replace Sashidhar Jagdishan.

• ICICI Bank: subsidiary ICICI Life’s CEO Anup Bagchi will step down on 13 October to join HDFC Bank. Sidharatha Mishra has been approved as its next MD & CEO, subject to IRDAI approval.

• Bajaj Finance: plans to raise up to Rs 17,500 crore, including Rs 11,700 crore through a QIP and Rs 5,800 crore by issuing warrants to its parent company Bajaj Finserv, which can later be converted into Bajaj Finance shares.

• Tata Steel: NCLT approved the merger of wholly owned subsidiary Rujuvalika Investments into Tata Steel. The merger is meant to simplify the group structure.

• Hindalco: terminated its proposed acquisition of US-based AluChem Companies and its specialty alumina business because the deal could not be completed on time.

• PNB: received a SEBI warning over alleged insider-trading-rule violations involving three designated persons and their relatives. No financial penalty was imposed on the bank.

• Zydus Lifesciences: extended the deadline for its proposed 50:50 Sri Lankan JV with Sunshine Healthcare to December 2026 as required conditions are still being completed.

• Aurobindo Pharma: subsidiary Apitoria completed the acquisition of A1 Biochem Group’s contract research services business.

Word of the Day

Buying Pressure

It is when the demand for a share or any financial asset is higher than supply

It causes the price of the share/asset to rise.

The greater the buying pressure, the greater the share price increase.

The opposite of this situation would be ‘selling pressure’.

6 Day Course

Theme: US Fed rate changes

Day 5: Friday

So, we can see how various assets are impacted by the US Fed rates.

What makes this unpredictable is that the rate increases and decreases are not predictable.

The US Fed increases/decreases the rates based on their goals.

These goals are mainly to do with increasing economic activity and controlling inflation.

Thus, nobody can tell for sure how the US Fed rates will change in the future.

Many times, the US Fed tries to hint about their moves in order to not surprise everyone.

They also try to increase or decrease rates in small incremental steps like 0.25% at a time.

Usually, they meet 6-8 times a year and decide on changes. Not all meetings result in rate changes.

Many times, they decide to keep the rates unchanged.

Featured Question

Q. “Rate of inflation fluctuates. Then how can one decide on the retirement planning? Like how much corpus one needs to raise after the age of retirement?”

It is true, inflation cannot be accurately predicted.

Some years, it is low, and some high.

What most people do while planning is to use historical averages of inflation. To do that, they add some extra safety margin.

So if the historical inflation has been around 5%, 1% or 2% is added to that and used. Which means, they will consider 6% to 7% as inflation and calculate their retirement corpus.

Granted, this is not a 100% fool proof solution. If economic conditions change very fast and in a negative manner, even this could turn out false.

Adding more safety margin can help.

So far, historical averages have worked fairly well in calculating retirement corpus.

Also, individual inflation can be different from average inflation. This also needs to be factored in.

————

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended lower compared to yesterday’s closing point.

Foreign investors sold shares worth over Rs 20,000 crore in the last two days as US benchmark bond yields rose to 5.34% (highest since 2002). This could have led to the fall.

All sectors’ stocks fell today except for IT stocks and private bank stocks. Auto stocks and metal stocks fell the most today.

Global markets: US markets traded mixed on Wednesday. Most Asian markets rose on Thursday. Most European markets fell (as of 6 pm IST).

News

• India’s gross GST collection rose 14.7% year-on-year to Rs 2.04 lakh crore in September.

• The government cut sugar stockholding period to 15 days from 30 days and fixed the stock holding limit to 1,000 quintals with effect from 15 Oct to 30 Nov 2026, ahead of the festive season to prevent speculative trading.

• Inox Clean Energy filed a DRHP for an IPO that will comprise a fresh issue of Rs 8,000 crore and an offer for sale of Rs 2,000 crore.

• The government reduced windfall taxes on diesel to Rs 16 per litre (vs 20 earlier), and ATF to Rs 10.5 per litre (vs 15 earlier).

• Carlsberg India, TMC Transformer (India) Ltd and 2 other companies received SEBI approval for IPO.

• Moneyview listed at Rs 55 on NSE, a premium of 61.76% above its issue price and closed 57% higher.

Stock Updates

• Reliance: raised about Rs 13,009 crore through 10-year unsecured NCDs at a 7.90% interest rate. The bonds will mature in October 2036.

• ICICI Bank: received a Rs 229.14 crore GST show-cause notice, excluding potential interest and penalty.

• Adani Ports: inaugurated the $750 million Phase II expansion of Colombo West International Terminal in Sri Lanka, doubling its container-handling capacity.

• Kotak Mahindra: RBI approved Anup Kumar Saha as MD & CEO for three years from January 2027, subject to board and shareholder approval.

• Adani Green: added 481.9 MW of solar and wind capacity and 3,081 MWh of battery storage in Gujarat. Its total battery-storage capacity has increased to 6,632 MWh.

• Lupin: its Philippine business Multicare Pharmaceuticals bought back the remaining shares held by other investors, making it fully owned by Lupin’s subsidiary Nanomi.

• Samvardhana Motherson: raised Rs 200 crore through 83-day commercial paper at 6.25% interest.

• Wipro: completed its previously announced acquisition of select customer contracts from Alpha Net Consulting and its subsidiaries.

• Varun Beverages: subsidiary Bevco’s Rs 13.15 crore acquisition of South Africa-based Crickley Dairy has been cancelled after a required condition was not met by the deadline.

• Aurobindo Pharma: subsidiary Apitoria’s stake in A1 Biochem Labs will reduce from 100% to 80% after A1 Biochem’s promoter invested Rs 33.80 crore for a 20% stake.

Word of the Day

Standing Order

It is a transaction type where a bank account holder automates a payment.

Example: you can make a standing order in your bank account to transfer Rs 10,000 to your mother’s account on the 3rd day of every month.

It is useful wherever a recurring payment occurs and the payment amount is fixed.

Standing orders are set up by the account holder and are entirely in their control. It can be cancelled any time by the account holder.

This is opposed to a direct debit where you instruct your bank to pay a certain person/company/organisation automatically if they ask for it.

An example of this is some people automate electricity and phone bills.

Whenever a new bill is generated, the company requests the bank account for the money and the money gets automatically paid.

6 Day Course

Theme: US Fed rate changes

Day 4: Thursday

Now, let’s talk of the various assets involved and how to move into or away from them.

Let’s take a case where the US Fed interest rates have been increased.

US govt bonds: more money flows to them since they carry least-risk and higher than before returns.

High quality corporate US bonds: money usually flows since even their interest rates go up due to the US Fed rates.

Low quality junk bonds: money flows out of them since their risk is high.

Stocks of large stable US companies: small amounts of money may flow out into bonds.

Riskier stocks like tech and growth stocks: more money tends to flow out of these stocks.

Emerging market stocks (like India): money tends to flow out of these stocks.

Gold and silver: it depends but often, money flows out a bit.

Real estate: since higher interest rates mean less home loans will be taken, interest rates increasing is not good news for real estate. Money tends to flow out of real estate.

Riskier investments (venture capital, start ups): money tends to flow out of these sectors.

In short, whenever US Fed rates go up, money moves away from riskier investments into safer investments.

The opposite happens when US Fed rates are reduced.

Featured Question

Q. “Which are the other exchanges dealin in stocks in India otherthan BSE & NSE”

BSE and NSE are the main active stock exchanges in India.

There used to be many other exchanges also. Calcutta Stock Exchange, Madras Stock Exchange, Ahmedabad Stock Exchange, Delhi Stock Exchange, etc. But they are all inactive now.

There are other exchanges as well but most of them deal in other products (not stocks) like commodities. But there, stock trading is not available to them.

————

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended lower compared to yesterday’s closing point. Nifty and Sensex rose during the day but closed in red.

Healthcare stocks and pharma stocks fell the most today. Media stocks and realty stocks rose the most.

Global markets: US markets fell on Tuesday. Most Asian markets rose on Wednesday. European markets showed a mixed trend (as of 6 pm IST).

News

• India’s fiscal deficit widened to 41.9% of the annual budget estimates between April and August, from 38.1% in the same period last year.

• The government approved Rs 1.86 lakh crore under the Green Energy Corridor Phase-III scheme to build infrastructure for up to 135 GW of renewable energy.

• Elevate Campuses listed at Rs 355.10 on NSE, a discount of 1.91% below its issue price and closed 11.69% lower.

• Jewellery maker Royal Chain filed a DRHP for an IPO that will consist of a fresh issue of Rs 850 crore and an offer for sale of Rs 150 crore.

Stock Updates

• L&T: won two road-infrastructure contracts in Dubai (a large order worth Rs 2,500 cr to 5,000 cr and a significant order worth Rs 1,000 cr to 2,500 cr). The projects include roads, bridges, tunnels and an interchange.

• Infosys: extended its partnership with ABN AMRO Bank to help develop, test and modernise the Dutch bank’s IT systems using AI.

• Maruti Suzuki: received an income-tax penalty order of Rs 14.96 crore relating to FY23. The company plans to appeal.

• NTPC: NTPC Green Energy will start commercial operations of another 153.94 MW of its Kalasar solar project in Rajasthan from 1 Oct.

• Avenue Supermarts (DMart): raised Rs 500 crore through 90-day commercial paper at 6.12% interest.

• Ambuja Cements: shareholders approved the proposed merger of ACC into Ambuja. Final NCLT approval is still required.

• Solar Industries: overseas subsidiary set up Solar Explochem Proprietary Ltd in Botswana to expand its explosives business and invested $325,000 in the new company.

• Jio Financial: invested Rs 320.05 crore in its Jio Allianz General Insurance JV. Allianz invested the same amount, taking the total fresh investment in the JV to Rs 640.10 crore.

• IRFC: received a GST show-cause notice for about Rs 396.91 crore, including interest and penalty, for FY23. The company said it will respond to the notice.

• Vedanta: raised Rs 2,000 crore through unsecured NCDs via private placement.

Word of the Day

Tailwind

Tailwinds are factors that are usually outside the control of a company or a sector/industry.

Example: the government decides to spend Rs 50,000 crore building new highways.

This would mean a high demand for cement.

So we can say, “the government spending on building highways is a tailwind for the cement industry”.

More people wanting to travel to popular tourist spots thanks to social media would be considered a tailwind for the airline, hotels, tourism, etc sectors.

The opposite of tailwind is called headwind — an external factor that acts against a company or industry.

6 Day Course

Theme: US Fed rate changes

Day 3: Wednesday

Next, we need to understand that the global financial markets are extremely connected.

Also, investors invest in all sorts of assets, not just one type.

This means, an institutional investor in New York would be investing in US bonds, US stocks, US startups (venture investment), gold, silver, real estate, etc along with stocks, bonds, real estate, and venture investments across the world.

This means, any changes in the US Fed interest rates would have an indirect effect on all these different assets.

It would entirely depend on the risk associated with each and their expected return.

Whenever US Fed interest rates increase, investors can get more returns by taking less risk.

Therefore, more money is allocated to US govt bonds. This means the investors would be selling assets somewhere else.

Whenever US Fed interest rates decrease, investors are willing to take more risk in order to get their target returns.

Less money is allocated to US govt bonds. This means the investors would be selling US govt bonds and investing in other assets.

Featured Question

Q. “Every financial advisor says choose a good MF and do the SIP for long term (20-25yrs) and compounding works.. But, say after 5 years there is another MF which is performing great .. what i need to do ?should we change the MF or stick on to theold one itself.. I'm unclear how does this work”

There will always be a mutual fund that performs better than yours.

It is not a very smart strategy to chase after the best mutual fund.

If you look at the past mutual funds’ returns over any long period, you will observe that the best performing mutual fund in any category often changes.

A better strategy is to ensure that you have invested in a good mutual fund, that may or may not be the absolute best performer.

Also, it goes without saying, always compare mutual fund returns within the same category and sub category.

Every category and sub category of mutual fund gives different returns and carries a different level of risk.

Also, it is possible that a certain mutual fund’s performance is poorer compared to others in the same sub category for short durations. This is normal.

If a mutual fund continues to perform poorly compared to others, an investor may simply pause new investments in it and start investing in other mutual funds.

Moving already invested money to another mutual fund will involve taxes and other charges.

It may or may not make sense depending on individual conditions.

Investors need to evaluate which makes more sense — leaving already invested money or withdrawing even that.

————

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended lower compared to yesterday’s closing point. Nifty and Sensex opened lower, rose around 11 am but ended in red.

Consumer durable stocks and chemical stocks fell the most today. Metal stocks and pharma stocks rose the most.

Global markets: US markets fell on Monday. Most Asian markets closed lower on Tuesday. European markets showed a mixed trend (as of 6 pm IST).

News

• BSE Ltd stock will enter Nifty 50 from tomorrow and Wipro will exit in accordance with the NSE release in August.

• 17 out of 19 sub-sectors rose as per Index of Services Production (ISP) data for July 2026. Only repair services and air transport fell.

• SEBI settled non-compliance with minimum public shareholding proceedings against Adani Group Chairman Gautam Adani and 4 other group companies for a settlement amount of Rs 1.48 crore.

• EverBrands India which operates restaurant brands like Subway, Lavazza and Dilmah, filed DRHP for an IPO. The issue will comprise a fresh issue of Rs 600 crore with no offer for sale component.

IPO Corner

• Orient Cables’ Rs 552 crore IPO was subscribed 92.27 times on day 3. Retail subscription: 30.55 times. The IPO is closed for subscription.

• Runwal Enterprises’ Rs 500 crore IPO was subscribed 2.50 times on day 3. Retail subscription: 1.12 times. The IPO is closed for subscription.

• Varmora Granito listed at Rs 155 on NSE, a premium of 4.73% over its issue price and closed 0.95% higher.

Stock Updates

• ITC: acquired the remaining stake in Sproutlife Foods (Yoga Bar owner) for about Rs 645 crore, increasing its holding from around 47.5% to 100%.

• HCLTech: will acquire Croatia-based automation software company Robotiq.ai for 9 million Euros.

• Coal India: signed a non-binding MoU with Hindustan Urvarak & Rasayan Ltd to explore a coal-to-urea project at Sindri, Jharkhand.

• Shriram Finance: will buy back about $460 million of its overseas bonds and pay about $479 million in total, including interest. The bought-back bonds will be cancelled.

• Tata Steel: invested another $340 million (around Rs 3,260 crore) in its overseas subsidiary T Steel Holdings. This is part of its earlier approved plan to invest up to $2 billion.

• Tata Motors: subsidiary TSCMSL and Mateshwari Urban Transport Solutions won a tender to operate and maintain electric buses for Telangana’s state transport corporation.

• Bank of Baroda: one of its auditors will not review the Sept-quarter results because it reached the regulatory limit on audit assignments. The bank said this is not a resignation or disagreement.

• GMR Airports: prepaid Rs 1,500 crore of bonds ahead of their 2028 maturities, along with accrued interest and redemption premium.

• Ambuja Cements: shareholders approved the merger of Orient Cement into Ambuja Cements. The merger still needs final NCLT approval.

• JSW Energy: raised Rs 500 crore through unsecured NCDs at 7.90% interest rate, maturing in Sept 2033.

Word of the Day

Due Diligence

It is a detailed analysis performed on a company, investment asset, deal, etc

Due diligence is usually done before an investment, transaction, or deal takes place.

It includes auditing, systems investigation, and analysis of other factors.

Due diligence can include aspects like financial health, accounting accuracy, identifying risks, checking legal and regulatory compliance, etc.

Example: investors often perform due diligence on companies in which they wish to invest money.

6 Day Course

Theme: US Fed rate changes

Day 2: Tuesday

Continuing from yesterday, we spoke about investors not keeping allocation percentages constant.

It greatly depends on the money returns they are able to make risk-free.

What does this mean?

If the US Fed reduces its interest rates, the government bond returns also become lower.

This means investors need to invest more money elsewhere if they want to earn higher returns (riskier bonds, share markets, emerging markets, etc).

Example:

Allocation before US Fed lowered interests rates:

20% in US govt bonds, 60% in US stocks, 20% in emerging markets stocks.

Say the US Fed decreased interest rates by 0.5%.

Allocation after US Fed lowered interests rates:

16% in US govt bonds, 62% in US stocks, 22% in emerging markets stocks.

The opposite also happens when the US Fed increases rates: more money gets shifted to US government bonds.

Featured Question

Q. “difference between buying share on nse & bse both show same script then why on both exchange not in one which is good between them to buy ?”

They are the same shares being available on two different exchanges.

Think about it like this: you can buy a Sony brand TV from Reliance Digital, Tata Croma, Sony World, etc.

It’s the same TV model available at different outlets.

Similarly, in India, we have two main active stock exchanges: BSE and NSE.

Most major shares are listed on both the exchanges.

Some stocks are available only on one exchange. That means those stocks can be bought and sold only on that one exchange.

For all other major stocks, they are available on both exchanges.

Companies tend to list on both exchanges in order to be able to reach more investors.

The price of stocks are almost the same on both exchanges.

This is because when the share price falls on one exchange, investors start quickly buying the stocks on the exchange where it is cheaper.

And then they sell the shares on the other exchange where it is more expensive.

This happens in milliseconds and it is performed by institutional investors who are able to trade very fast.

The price difference makes for a quick profit.

Because of this quick buying and selling, the price starts rising on the first exchange and falling on the other exchange.

This is why the gap in price on both exchanges is very small.

They are almost the same price. Sometimes it will be slightly more on one exchange and sometimes the other.

Practically speaking, it does not matter which exchange you buy the shares from.

The only time it matters is if you are trying to profit from the price difference — which is mostly not possible for individual investors. It is done by HFTs and other institutional investors.

————

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended lower compared to Friday’s closing point.

Brent crude oil prices jumped up to $106 on Friday after US President Trump rejected Iran’s proposal to reopen the Strait of Hormuz. This led to markets opening significantly lower and closing in red.

All sectors’ stocks fell today. PSU Bank stocks and realty stocks fell the most.

Only 3 stocks in Nifty 50 rose today. Hence there are only 3 stocks in the top gainers section.

Global markets: US markets rose on Friday. Most Asian markets ended in red on Monday. Most European traded higher (as of 6 pm IST).

News

• India’s industrial production rose 8% in August from 6.7% in July. The growth was led by electricity & gas supply and manufacturing sectors.

• The government extended the due date for providing income return for AY 26-27 for persons subject to audit to 21 Nov from 31 Oct.

• The government approved Rs 223 crore for Kavach 4.0, an Automatic Train Protection (ATP) system in the Varanasi division and Rs 122 crore separately, for an additional 6 km stretch in Odisha.

• Tonbo Imaging India Ltd, Pioneer Fil-med Ltd, and Functional & Innovative Foods Ltd received SEBI approval for IPO.

IPO Corner

• Moneyview’s Rs 1,091.68 crore IPO was subscribed 98.46 times on day 3.Retail subscription: 19.57 times. The IPO is closed for subscription.

• Orient Cables’ Rs 552 crore IPO was subscribed 8.32 times on day 2.Retail subscription: 9.16 times. The IPO will close for subscription on 29 Sep.

• Runwal Enterprises’ Rs 500 crore IPO was subscribed 0.71 times on day 2. Retail subscription: 0.42 times. The IPO will close for subscription on 29 Sep.

Stock Updates

• IRFC: signed a Rs 4,200 crore term-loan agreement with Damodar Valley Corporation (DVC) to finance solar and battery-storage projects in Jharkhand and West Bengal.

• Sun Pharma: signed an exclusive agreement with LIB Therapeutics to manufacture and sell cholesterol-lowering drug lerodalcibep outside the US and China. The drug is already approved in the EU.

• Power Grid: won a transmission project in Maharashtra with annual transmission charges of Rs 430.67 crore.

• Samvardhana Motherson: raised Rs 300 crore through 64-day commercial paper at a 6.25% interest rate.

• Pidilite: partnered with South Korea’s Hwaseung Chemical to introduce advanced footwear adhesives in India.

• Zydus Lifesciences: a USFDA inspection of its New Jersey drug-safety system ended with zero observations. A separate inspection of its SEZ II manufacturing plant in Ahmedabad ended with one observation.

• PFC: Malegaon Power Transmission Ltd as an SPV for a proposed 400/220 kV substation at Malegaon in Nashik, Maharashtra.

• Canara Bank: paid Rs 377 crore of annual interest on its Rs 5,000 crore long-term bonds.

• NTPC: subsidiary NTPC Green Energy started commercial operations of the first 81.34 MW of its 650 MW Kalasar solar project in Rajasthan.

• Lloyds Metals: invested Rs 606.76 crore in subsidiary Thriveni Earthmovers and Infra, increasing its holding to 71.89%.

• Aditya Birla Capital: raised Rs 500 crore through secured NCDs that will mature in September 2029.

• REC: subsidiary RECPDCL transferred Ranipur Chunar Power Transmission Ltd to HG Infra Engineering and Balsane Power Transmission to Resonia.

Word of the Day

Risk-free Return

This is the return against all other returns that end up getting compared.

It tells us if a risk is worth taking. If the returns of a risky investment are similar to or only slightly higher than the risk free return, then the investment is not a good one.

Technically speaking, nothing is risk-free. “Risk-free return” is usually an extremely low-risk investment option.

The returns given by the USA government bonds are deemed the least-risky returns in the world.

Similarly, the returns given by government bonds of other major and stable economies are also deemed risk-free (example: UK and Japan).

Returns given by government bonds of major economies like China and India are also deemed quite low-risk though not as much as the USA’s.

6 Day Course

Theme: US Fed rate changes

Day 1: Monday

Why does so much start happening when the US Fed (central bank of the USA) changes its rates?

This week, we will understand this in greater detail.

The rates offered by the US Fed influence the interest of all loans and deposits in the US.

The USA’s markets are very open which means many investors from across the world also invest in USA’s bonds and stock markets and vice versa.

Investors use these bonds to store money safely while investing in more risky options to get higher returns.

Every investor allocates different percentages.

Example: 20% in US govt bonds, 60% in US stocks, 20% in emerging markets stocks.

Most investors don’t keep these percentages constant. They change and tweak it based on the returns offered by different investments.

————

What If

When property prices rise, real-estate-linked investments are expected to do well.

In India, investors can bet on this theme in two ways. Realty stocks are developers; companies that build and sell homes.

The other option is Real Estate Investment Trusts (REITs), which own properties like office buildings and malls, rent them out, and pass most of the income to investors.

Both are listed as real estate. But do they work the same way? And do they actually move with house prices?

In today’s What If, we compared three office REITs and three developer stocks from March 2021 to March 2025.

We tested whether they moved with the RBI’s house price index, how they reacted when interest rates rose and fell, and what their total returns looked like.

Read the latest What If here

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

That was the name of America’s first modern open-ended mutual fund.

Investors could put money into the fund and, whenever they wanted to leave, redeem their units directly with the fund.

That basic structure eventually became the model for modern mutual funds.

But there is an interesting story behind the word “Trust” in its name.

It actually has its roots in real estate.

Back then, some investors in Massachusetts wanted to pool their money and buy properties together.

But there was a problem.

Companies could not simply buy buildings just to rent them out. They were generally allowed to own property only if they needed it for their own business, like an office or factory.

So some Boston lawyers and investors found a loophole.

Instead of forming a company, they used an older legal structure called a trust.

A few people, called trustees, would legally hold and manage the properties. The people who put in money would get certificates giving them a share of the income and value of those properties.

Because a trust was not technically a company, the restriction on companies did not apply.

So even if one person could not afford a large property, many people could pool their money and invest together.

By the late 1800s, these real estate trusts had become fairly common.

They also had a tax advantage. From 1913 to 1935, they were generally not taxed like normal companies.

But in 1935, the US Supreme Court changed how these trusts were taxed.

The trust could now be taxed on the income it earned. And when that money was passed on to investors, they could be taxed again.

So the same income could effectively be taxed twice.

A year later, the rules changed for funds that invested in stocks, so they no longer had to deal with this extra layer of tax.

Real estate trusts were left out.

That changed in 1960.

At the time, the US Congress, basically the American version of Parliament, was passing a law called the Cigar Excise Tax Extension Act.

It was mainly about taxes on cigars, but lawmakers can also add other provisions to a bill that is already being passed.

One of those provisions was about real estate trusts.

Until then, these structures went by names such as Massachusetts trusts, business trusts and common-law trusts.

The 1960 law gave qualifying trusts a common legal identity: Real Estate Investment Trusts, or REITs.

So what exactly is a REIT?

Understanding mutual funds will help you understand REITs.

A mutual fund pools money from thousands of investors and uses it to buy stocks.

A REIT does something similar, except it uses that money to own real estate, such as office buildings, malls and other large properties.

But there are two important differences.

First, a REIT does more than just hold properties. It also runs them and signs leases, collects rent and maintains the buildings.

So in that sense, it is closer to a landlord business than just a portfolio of investments.

The second difference is how the money comes back to investors.

In a mutual fund, dividends and gains usually stay inside the fund and show up in the NAV. You generally get the money when you sell your units, unless you have chosen a payout option.

A REIT is different.

In India, REITs are required to distribute at least 90% of their net distributable cash flow to investors.

Most listed REITs make these payouts every quarter. India introduced REIT regulations in 2014.

Now, if you want to invest in real estate through the stock market, you now have two options.

A developer company that mainly makes money by building and selling properties or a REIT that mainly owns completed properties, rents them out, and earns regular income from them.

Both give you exposure to real estate, but they work very differently.

Do REITs and real estate developer stocks, also called realty stocks, actually behave the same way? And which factors matter more for their returns?

That is what we decided to test.

Results

Did real estate stocks follow house prices?

We started with the most obvious question: if house prices rise or fall, do REITs and real estate developer stocks move in the same direction?

We compared them from March 2021 to March 2025, starting after Brookfield was listed, which gave us 16 quarters.

For all six investments, along with the Nifty 50 and Nifty Realty, we used quarter-end closing prices and compared them with the RBI All-India House Price Index, or HPI.

For every quarter, we checked whether house prices went up or down and whether each REIT or developer/realty stock moved in the same direction.

If these investments closely followed house prices, they should have matched them most of the time.

They did not.

As the chart shows, none of the six REITs or developer/realty stocks matched house prices more than 50% of the time.

The relationship looked a little better when house prices were rising, with match rates of around 42% to 58%.

But in the four quarters when house prices fell, never by more than 1.1%, the relationship became much weaker.

Brookfield and Nifty Realty matched in 2 of the 4 quarters, Embassy, DLF and Prestige matched in just 1, while Mindspace, Oberoi Realty and the Nifty 50 did not match in any of them.

The size of the moves told a similar story.

Over the four years, house prices rose around 14% and REIT prices rose around 12% to 30%, but developer/realty stocks rose far more and even outpaced the Nifty 50’s roughly 60% gain.

So why weren’t these investments moving with house prices?

One reason could simply be timing.

The RBI’s house price index is based on property registrations. A property deal may have been agreed earlier, but it can show up in the data only when the registration happens.

Stock prices do not have that delay.

They can react immediately to earnings, new projects, policy changes or even a change in overall market sentiment.

That is why we also compared the total move over the full four-year period, where this timing gap matters less.

But timing is only part of the story.

A listed real estate stock can move for many reasons that have little to do with house prices.

A developer can launch a new project, report better profits, reduce debt or simply rise because the broader stock market is doing well.

Property prices also usually move much more slowly. If a homeowner does not like the price being offered, they can simply wait. A listed stock cannot do that. Its price changes every day as buyers and sellers react to new information.

And there is another important difference when we look at REITs.

The RBI HPI tracks residential house prices. The REITs in our study mainly own office properties. So there is no reason to expect both to move in exactly the same way.

Put all of this together, and the result makes more sense.

Rising house prices alone were not enough to explain how these investments moved. Other factors were clearly playing a role.

That brings us to REITs. REITs earn rental income from office properties and regularly distribute a large part of that cash to investors.

So investors can compare the income from a REIT with what they can earn from safer investments like government bonds.

If interest rates rise, those safer investments can become more attractive. If rates fall, REIT income can start looking more attractive again.

So if house prices were not explaining REIT prices very well, the next question was quite natural:

Did interest rates have a bigger role in moving REIT prices?

What did they respond to instead?

If house prices were not explaining REIT prices well, the next thing we tested was interest rates. We compared the three REITs and three developer/realty stocks with India’s 10-year government bond yield, or G-sec yield.

This is the return investors earn by lending money to the government for 10 years. Since the government has very low default risk compared with a company, this yield is often treated as a benchmark.

The logic is simple. If government bond yields rise, safer bonds become more attractive. REITs cannot suddenly increase the rent they earn from their buildings. So one way their own yield can become more attractive is if their market price falls. In theory, the opposite should happen when government bond yields fall.

We split the four years into three periods: before the RBI started hiking rates, during the rate hikes and after the hikes ended.

March 2021 to April 2022

Before the RBI started hiking rates, the 10-year G-sec yield rose from 6.18% to 7.14%. If interest rates were the only thing moving REITs, their prices should have fallen.

But they did not.

The average REIT price rose 28%. Brookfield gained 48.7%, while Embassy rose 18.3%.

Embassy’s own yield actually fell from 7% to 5.74%. So investors were willing to pay more for the same income even though government bonds were also offering higher yields.

One possible reason was offices reopening after Covid. During the pandemic, there was a fear that work from home could permanently reduce demand for offices. As companies brought employees back, that fear reduced and investors may have become more positive about office REITs.

Developer/realty stocks also rallied strongly. Prestige and Oberoi rose 55.3% and 67%, while the three developers gained around 50.6% on average. The broader post-Covid stock-market rally and company-specific factors could also have helped.

So this period showed us that interest rates were clearly not the only thing moving REIT prices.

April 2022 to February 2023

This is where the relationship became much clearer. The RBI raised the repo rate from 4% to 6.5%. The 10-year G-sec yield stayed around 7.1% to 7.5%, much higher than the roughly 6% levels seen in early 2021.

All three REITs fell between 16% and 21%, with the average down almost 19%. Developer/realty stocks also fell, but by much less. The Nifty 50 actually rose 1.2%.

What makes this interesting is that the REITs were still paying almost the same amount of cash.

Embassy continued paying around Rs 5.26 to Rs 5.46 per unit every quarter, while Mindspace and Brookfield also had fairly steady payouts. The buildings were still earning rent.

What had changed was the return available elsewhere. Government bonds were now offering higher yields.

Since REITs could not suddenly raise rents, their prices fell. That pushed their own yields higher and made them more competitive with bonds.

Embassy’s yield rose from 5.74% to 7%, while Mindspace’s yield rose from 5.35% to 6.47%. This is similar to how bonds behave: when market yields rise, prices tend to fall. During this period, REITs behaved a lot like fixed-income investments.

Higher interest rates can hurt developers too because home loans and borrowing become more expensive. Developer/realty stocks did fall, but less than REITs. Strong sales, new projects and other company-specific factors may have helped cushion the fall.

February 2023 to March 2025

Then the direction changed again. The 10-year G-sec yield fell from 7.46% to 6.58%. The average REIT price rose 18.9%.

By March 2025, REIT yields had fallen to around 5.4% to 6.5%, compared with a G-sec yield of 6.58%.

Developer/realty stocks, however, rallied much more. They rose 125.4% on average. DLF and Oberoi nearly doubled, while Prestige nearly tripled.

One possible reason was that lower interest rates made equities more attractive and supported borrowing and economic activity. The broader stock market was also doing well, while earnings, valuations and company-specific factors could have added to the rally.

So what did we learn?

Interest rates did matter for REITs.

During the rate-hike period, they behaved a lot like fixed-income investments.

But the first period showed that the relationship was not perfect. Office demand, rents and leases, new property acquisitions, taxes and other business factors could still move REIT prices.

Developer/realty stocks behaved differently. They moved in much bigger swings and appeared to respond more to the broader stock market and company growth. They also fell when rates rose, but less than REITs.

And that led us to the next question.

So far, we have only compared prices. But REIT investors also receive regular cash payouts. What did investors actually earn after including those payouts?

What did you actually earn?

So far, developer/realty stocks looked much better than REITs. But comparing only their price returns is not completely fair.

Developers can keep most of their profits and use that money to buy land or build new projects. REITs work differently because they have to distribute a large part of the cash they generate to investors.

So for a developer, more of the return can show up in the share price. For a REIT, a bigger part can come as regular cash payouts. That means looking only at price can make REITs look worse than they actually performed.

Comparing total returns

To make the comparison fair, we calculated the total return of all six investments from March 2021 to March 2025. We used their actual, unadjusted market prices and added every dividend or REIT distribution ourselves.

For the Nifty 50, we used the Nifty 50 TRI, which already includes dividends. We also assumed that every payout was immediately reinvested into the same investment.

And this made a big difference for REITs.

Embassy’s price rose only 12.3%, but it also paid Rs 87.73 per unit over the four years. Once those payouts were reinvested, its total return became 44.3%.

Brookfield’s price rose 29.8%, but its total return was 68.4%, almost the same as the Nifty 50 TRI. Mindspace’s total return was around 60%.

Developer/realty stocks still did better. DLF’s price rose 137.1%, and after including dividends, its total return became 143.7%.

The difference was much smaller because developers do not have to regularly distribute cash the way REITs do. So even after including payouts, developer/realty stocks still outperformed the REITs in our study, but the gap became smaller.

For example, DLF’s lead over Embassy was around 125 percentage points when we looked only at prices. On total returns, that gap fell to around 99 percentage points.

So the takeaway is simple: for REITs, price return alone does not show the full picture. The cash payouts are an important part of what investors actually earn.

Conclusion

Even though REITs and realty stocks both come under real estate, investing in them is very different.

When you buy a realty stock, you are investing in a company just like you would with any other stock. Its share price can move because of its sales, profits, new projects, debt, future growth and what is happening in the broader stock market.

The company can also keep most of the money it earns and use it to buy more land or build more projects. If investors believe this will lead to higher profits in the future, the stock price can rise.

A REIT works differently. It owns properties that earn rent and distributes a large part of the cash it generates to investors. So a bigger part of an investor’s return may come through regular payouts, rather than only through a rise in the REIT’s price.

And that is exactly what we saw in our study.

Housing prices alone did not explain the movement of either REITs or realty stocks. Realty stocks showed much bigger swings and appeared to react more like regular stocks, with company performance and the broader market playing an important role.

REITs behaved differently. At times, especially when interest rates were rising, they behaved more like fixed-income investments. But office demand, rents and other business factors mattered too.

We also saw why comparing only prices can be misleading. Once the cash payouts were included, the gap between REIT and developer-stock returns became smaller.

So the two may both give you exposure to real estate, but they give it to you in very different ways. A realty stock is an investment in a business that builds and sells property. A REIT is largely an investment in properties that earn rent and distribute cash.

And our study shows that neither can be understood by looking at housing prices alone.

Note

• The study covers only March 2021 to March 2025 and one major rate-hike cycle.

• The sample is small: 3 REITs and 3 developer/realty stocks.

• Study 1 has only 16 quarters, and house prices fell in just 4 of them.

• The RBI HPI tracks residential property prices, while the REITs mainly own offices.

• Study 2 depends on the chosen interest-rate periods. Different dates could change the exact numbers.

• Mindspace and Brookfield yield data starts later because four quarters of payout data were needed.

• Total returns assume every payout was reinvested at the ex-date closing price.

• Taxes and transaction costs are not included.

• Data came from ACE Equity, NSE and Investing.com, so figures may differ slightly from official sources.

• The study shows patterns, not causes. Other factors could also have moved prices.

• Past performance does not guarantee future results.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer

More than once.

The underwriter realised that there was high demand.

And that meant they could get a higher price.

We are talking about the IPO process of Facebook (now Meta).

During an IPO, the underwriter (usually an investment bank), takes on the task of taking the company public.

They are responsible for finding the right value of the shares of the company, and therefore also the valuation of the company.

Before a company’s shares can be offered to the public in an IPO, they must be offered to institutional investors.

The idea is that large institutional investors would do their homework about a company. They would also be better at catching bad offers and fraudulent practice.

Based on the demand it received from such institutional investors (called anchor investors in India), the underwriter is able to decide a price range for the shares.

The system is designed to protect individual investors (retail investors).

Once the demand from institutional investors is received, the underwriter can offer a price range to retail investors during the subscription period.

This is what we hear about — “IPO subscription is open from x date to y date”.

During this period, investors bid for the shares within this set price range. When the bids received are for more shares than available, it is said to be oversubscribed.

We then hear, “XYZ IPO was oversubscribed by 20x”.

This means for every single share, 20 bids were received.

In such a case, the shares are allotted randomly (this is how it works in India). They are not allotted based on a first-come-first-serve basis.

Facebook’s Roadshow

The 2008-2009 period was horrible at Wall Street as we are all aware. The Great Recession.

Things were starting to look up. The mood was changing. A few tech companies’ IPOs were lined up.

The LinkedIn, Groupon, Pandora, and Zynga IPOs set the ball rolling.

Around then, the big daddy of tech companies announced its IPO plans. Facebook.

The company had 900 million users already and was still growing fast.

In 2011, they had a revenue of $3.7 billion. And an extremely enviable $1 billion in earnings. This number was 88% higher than the previous year.

By any measure, these are incredible numbers.

The company was hot.

Every major institutional investor wanted to attend the roadshow to know more. The first roadshow was held on 7th May, 2012, in New York.

Subsequent roadshows were held in various major cities across the country.

The underwriter positioned Mark Zuckerberg as a rockstar CEO.

And the institutional investors were impressed. So impressed, the underwriting team felt they could increase the share price.

Why IPO?

Before that, one may wonder, why does a company do an IPO?

Why does it want its shares to be traded on the stock exchange?

There are two main reasons for this.

Reason 1: Raising money from investors for future expansion.

Reason 2: Exit opportunity for existing shareholders.

Reason 1

In a fresh issue, brand new shares are created by the company and offered to investors. The money from these sales go directly to the company.

This is why in the IPO, companies tend to state what their intention with this money is.

Investors judge the future potential of the company based on this among others.

Reason 2

Doing an IPO lets existing shareholders sell their shares (and new investors to buy) easily.

In this case, all shares sold are existing shares.

It could be an early investor in the company (venture capitalists, angel investors, etc), it could be the employees with stocks, and even the founders themselves.

The money from selling these shares goes to whoever is selling. It does not reach the company.

Such shares are called Offer-For-Sale (OFS) shares.

Many IPOs are a mix of both: there are some fresh issue shares and some OFS shares.

In their papers, IPO-bound companies reveal this clearly: number of shares on offer, and the number of fresh issue, and OFS shares.

Yes, there are cases where companies do a 100% fresh issue IPO and also a 100% OFS IPO.

Neither of the two is automatically better. It all depends on why and how. It is extremely subjective.

Facebook’s IPO had about 43% fresh issue shares and about 57% OFS shares.

Underwriter?

Now, wait, who is the underwriter?

In Facebook’s case, Morgan Stanley was the lead underwriter while several others were also a part of the process.

The underwriter is hired by the company going public. In case of very large IPOs, multiple underwriters may be appointed.

What is an underwriter’s task anyway?

Well, it is appointed by the shareholders for their benefit.

Their first task is to ensure due diligence. They check all the company numbers and make sure everything is correct and accurate.

They prepare the paperwork and ensure the company is fully compliant with all listing requirements.

Then, they try to establish the right share price.

At first, they prepare the estimates based on all existing numbers and future prospects.

Then they file with the regulators to seek clearance to go ahead with the IPO. If all checks out, they are ready to start asking for bids.

At this stage, the Draft Red Herring Prospectus (DRHP) is made publicly available.

DRHP is what it’s called in India. In the USA, it’s called the S-1 Filing.

This document contains all details that investors must know to decide whether they want to invest or not.

After the release of the documents, the underwriter conducts roadshows.

Roadshows are basically conferences where prominent institutional investors are invited to express interest in the shares of the company via bidding.

In Facebook’s case, the initial price range quoted was $28 to $35 per share.

This translated to a valuation of $77 billion to $96 billion.

Mid-way through the roadshows, this was raised to $34 to $38 per share. This meant Facebook was being valued up to $104 billion.

Then, they kept the price range the same, but increased the total shares on offer by 25%.

At the end of the roadshow, the final price was $38. A valuation of $104 billion.

Leaving Money on the Table

Predicting the “right” price is an extremely tough task. It can be considered impossible to do perfectly.

If the underwriter keeps the share price too low, the share gets sold at a price too low to IPO investors. The money the company gets in such a case is too low.

Then, when the share lists, the share price shoots up. Investors and flippers who bought the stock during the IPO process make big money.

This is often described as “leaving money on the table”.

The company misses out on the potential money it could have made from the IPO.

The challenging bit is estimating how positively or negatively a company will be received by the larger investment community.

Every single bumper IPO listing or crash is viewed as a miss by underwriters. It means their estimates were wrong.

On the flip side, if they price the share too high, fewer investors will buy into the IPO. They’d expect the share price to fall after listing and thus would not be interested.

If an underwriter does their job extremely well, the share price would be flat after listing.

A situation like that would mean the company left less “money on the table”.

In reality, this almost never works.

Listing prices are seldom flat. They are either up or down.

Or, they are very up or very down.

After Listing

On the day of Facebook’s listing, 18th May 2012, chaos ensued.

The exchange algorithm got overwhelmed by the massive number of orders being placed. It glitched.

The stock finally listed 30 min after it was supposed to.

The price shot up to as high as $45.

However, it was clear that the glitches were not solved. The price was not reliable. Nobody trusted the price shown. Total chaos.

Towards the end of the trading day, the price started plummeting down. From $45, it fell to around $38.

If a share price falls below the issue price, it is deemed a failure. It wouldn’t have looked good for Facebook. It wouldn’t have looked good for its underwriters either.

It is common for underwriters to try to “support” the price.

How did they support the price?

Green shoe option.

Green Shoe Option

A green shoe option is an agreement underwriters sign with other investors.

The green shoe option lets underwriters sell up to 15% more shares. These shares don’t exist by the way. This is a naked position.

What happens is that the underwriter is supposed to buy these shares from the open markets and supply the shares to the buyers.

By using the green shoe option, the underwriter had been able to gather $2.4 billion.

This is how they supported the shares.

They started buying as the share price fell towards the end of the day.

This kept the price above $38.

The day closed with Facebook’s share trading at $38.23 — an extremely small listing gain.

Over the next few days, when the underwriter was no longer supporting the price, the share price fell well below the $38 mark.

The underwriters had placed shorts at $38 and as the share price fell, they were able to make $100 million in profits.

The green shoe + naked shorting was what did the trick for them.

The green shoe option is a fully legal method that is used to ensure price stability. Underwriters do not always use this option.

In India, this kind of a naked green shoe option is not allowed. They must borrow shares, not sell shares that don’t exist.

Also, in India, underwriters cannot profit from green shoe options. The green shoe option must only be used to stabilise the share price.

Share Price After IPO

It wasn’t just the IPO. The company was also facing challenges.

Facebook’s revenues were almost entirely reliant on ads from its website.

2012 was a period when a rapid shift from computers to smartphones was taking place.

There were fears about how Facebook’s future revenues would fare.

By September 2012, the stock had fallen by over 50%. This also coincided with the ending of the lock-in period of many early investors.

(Early investors like venture capitalists, angel investors, founders, etc. are locked in for some period. They cannot sell their shares on the listing day. In the case of Facebook, it was between 90 and 180 days).

Which means, many of them were selling their shares.

Around this time, Facebook initiated a massive shift to being mobile-first. Acquiring Instagram and WhatsApp was a part of this strategic shift.

Early indicators of this were starting to become visible. In October 2012, it was revealed that 14% of Facebook’s revenue was coming from smartphones (website and apps).

This was the turning point.

About a year later, the turn around was complete as the stock finally crossed the $38 mark.

After that of course Facebook grew at a pace so good that it became one of the best performing stocks of the last decade.

Measured between the listing date (May 18 2012) and this month (Sept 2026), the stock has returned around 23% per annum.

Today, it stands at about $750 per share.

IPOs

Facebook’s IPO is an excellent lesson in IPOs.

It shows us how underwriters try to “discover” the price of a stock before the listing takes place.

It also shows us how wrong they can be — not only because it’s hard to estimate, but also because the factors affecting companies keep changing.

The companies themselves keep changing.

To keep matters simple, some details have been skipped. The reality is that this particular IPO had some controversies too. And that’s a lesson as well — there are vested interests and some bad behaviour can happen.

This is why investors’ analysis into each IPO matters.

The gist of all of this is: a company decides to make its shares available on the share markets.

The share price range is estimated and offered to institutional investors. Based on that, a more realistic price is reached.

The newly arrived price range is then offered to retail investors.

Investors bid for this and get shares allotted.

When the share lists, the share price shoots up if investors think the shares are still underpriced. Or shoots down, if it is grossly overpriced.

Or, they move slightly up or down if priced more or less correctly.

Eventually, in the long run, the company’s fundamental business catches up.

Its operations, revenues, earnings, and future potential determine its share price.

The IPO becomes a distant memory.

Quick Takes

+India’s Core Industrial Output rose 4.8% in August, as per provisional data compared to 5.4% in July. Out of the 9 sectors, coal, natural gas, crude oil, and fertilizers fell.

+The India-New Zealand Free Trade Agreement (FTA) will come into effect from 20 Oct. It provides duty free access for 100% of Indian exports to New Zealand.

+The government signed a contract worth Rs 586 crore with Accurate Industrial Controls to purchase auxiliary power units for T-72 and T-90 tanks.

+SEBI settled adjudication proceedings against 5 Adani group companies after settling with an amount of Rs 1.50 crore over corporate governance issues highlighted in the Hindenburg report.

+NPCI clarified that merchants do not bear the cost of GST on MDR as it will be adjusted against GST payable on sale of goods, clarifying concerns on additional burden on merchants.

+The government signed a contract with Bharat Dynamics worth Rs 810.79 crore for 160 Satellite Smart Anti Airfield Weapons and associated equipment.

+All PSU Banks and regional rural banks will be open on Sunday, 27 Sep ahead of the nationwide bank strike from 28 Sep to 30 Sep.

+The government connected a remote area in South Chhattisgarh through a new rail line that will facilitate iron ore transportation to Bhilai Steel Plant.

+SEBI approved multiple decisions in its board meeting, including portfolio management regulations, Unified Common Advertisement Code (CAC), Depository Receipts (DRs) for REITs and InvITs, among others.

+The government reduced customs duty on imported crude edible oils due to high international prices. Crude Sunflower Oil: 10% to nil, Crude Soybean Oil and Crude Palm Oil: 10% to 5%.

+Finished steel production rose 4.1% year-on-year to 68.3 million tonnes between April and August.

+The government extended anti-dumping duty on decor paper imports from China till Mar 2027. The duty imposed in Dec 2021 was $110-$542 per tonne for 5 years.

+NSE listed at Rs 1,800 on BSE, a premium of 0.84% over its issue price and closed 1.85% higher.

+India’s forex reserves fell $14.88 billion to $765.90 billion for the week ended 18 Sep.

+India recorded the highest ever FDI inflow of $94.53 billion in FY25-26: Commerce Minister Piyush Goyal. The cumulative inflows between FY14-15 and FY25-26 stood at $843 billion.

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended higher compared to yesterday’s closing point.

Nifty and Sensex stayed in a range for most of the day and rose around 2 pm and closed in green.

Consumer durables stocks and realty stocks rose the most today. Healthcare stocks and media stocks fell the most.

Global markets: US markets ended mixed on Thursday. Most Asian markets traded mixed on Friday. Most European markets traded in green (as of 6 pm IST).

News

• India’s forex reserves fell $14.88 billion to $765.90 billion for the week ended 18 Sep.

• India recorded the highest ever FDI inflow of $94.53 billion in FY25-26: Commerce Minister Piyush Goyal. The cumulative inflows between FY14-15 and FY25-26 stood at $843 billion.

• Elevate Campuses’ Rs 2,100 crore IPO was subscribed 1.79 times on day 3. Retail subscription: 1.01 times. The IPO is closed for subscription.

• Moneyview’s Rs 1,091.68 crore IPO was subscribed 6.01 times on day 2. Retail subscription: 5.18 times. The IPO will close for subscription on 28 Sep.

• Orient Cables’ Rs 552 crore IPO was subscribed 1.96 times on day 1. Retail subscription: 2.43 times. The IPO will close for subscription on 29 Sep.

Stock Updates

• SBI: changed the interest-payment date for one of its bond series from Sep 28 to Sep 27 due to a change in the bank working-day calendar.

• Adani Power: NCLT Mumbai approved the merger of Vidarbha Industries Power, which operates a 600 MW thermal plant, into Adani Power.

• JSW Steel: group company JSW One Platforms filed its DRHP with SEBI, BSE and NSE for an IPO.

• SBI Life: received a GST demand of about Rs 1.13 crore relating to alleged excess input tax credit. The company plans to appeal.

• Adani Energy: set up 8 new wholly owned subsidiaries for power generation, transmission, storage and distribution businesses. The combined initial investment is Rs 40 lakh.

• Bank of Baroda: received Rs 1,372.35 crore from the sale of NSE shares through NSE’s IPO.

• One 97 Comm (Paytm): increased its stake in Little Internet Pvt Ltd from 62.53% to 77.42%. It also completed its previously approved Rs 100 crore investment in Paytm Money Ltd.

• LG Electronics: received a customs show-cause notice for about Rs 153.58 crore over alleged underpayment of customs duty on certain imported goods.

Word of the Day

Standard Deviation (SD)

It is a measure of how volatile stocks’ or mutual funds’ returns are.

A lower SD would mean lower deviation or volatility. A higher SD would mean a higher deviation.

Example: when conditions are good, mutual funds returns shoot up by a big margin. But when conditions are not favourable, the returns fall sharply. This would mean its SD is high.

SD is often used to indicate riskiness of stocks and mutual funds.

A high SD does not necessarily mean the stock or mutual fund is a bad performer.

Example: small cap mutual funds almost always have a higher SD than large cap mutual funds. But small cap mutual funds tend to usually give higher returns.

It does show that small cap mutual funds are riskier in nature.

6 Day Course

Theme: how fund managers handle money

Day 5: Friday

Whenever selling pressure increases (more withdrawals by investors than expected), fund managers have to sell against their planning.

This can hamper their plans.

So, they often try to prepare in advance for major inflows and outflows.

Example: investments increase after a period of good performance in the markets, withdrawals increase after poor performance, etc.

So, they keep ready the stocks/bonds/assets they will sell first in case the withdrawals increase.

Similarly, they keep ready a list of stocks/bonds/assets they will buy in case more than expected money comes in.

Featured Question

Q. “In an IPO, how very first listing price is decided or calculated? Why it is different from issue price”

What happens is that a company’s underwriters determine what they think is the right share price for the company.

They publish a price band that they think is the right level for a share.

Investors bid in this band. The issue price therefore is somewhere in this band.

Then, on the day the share is supposed to actually list on the stock markets, orders start being placed during the pre-market hours (9:00 am to 9:45 am in case of IPOs).

Based on the buy/sell order prices in this window, the share price is decided at the market opening time. For IPOs, this happens at 10:00 am.

The price we see at 10:00 am is the listing price.

So, if many investors start placing orders to buy shares at a much higher price than issue price, the listing price can shoot up.

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The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended significantly lower compared to yesterday’s closing point.

A sharp increase in US benchmark yields of over 5% (highest level since 2007) and oil prices rising over $105 a barrel, raised risk of foreign outflows and could have led to the fall.

All sectors’ stocks fell. Private bank stocks and metal stocks fell the most. There were only 3 stocks in the Nifty 50 that rose today. Hence, there are only three stocks in the ‘Top Gainers’ section.

Global markets: US markets fell on Wednesday. Asian markets traded mixed on Thursday. Most European markets traded in red (as of 6 pm IST).

News

• SEBI approved multiple decisions in its board meeting, including portfolio management regulations, Unified Common Advertisement Code (CAC), Depository Receipts (DRs) for REITs and InvITs, among others.

• The government reduced customs duty on imported crude edible oils due to high international prices. Crude Sunflower Oil: 10% to nil, Crude Soybean Oil and Crude Palm Oil: 10% to 5%.

• Finished steel production rose 4.1% year-on-year to 68.3 million tonnes between April and August.

• The government extended anti-dumping duty on decor paper imports from China till Mar 2027. The duty imposed in Dec 2021 was $110-$542 per tonne for 5 years.

IPO Corner

• NSE listed at Rs 1,800 on BSE, a premium of 0.84% over its issue price and closed 1.85% higher.

• Varmora Granito’s Rs 1,096.04 crore IPO was subscribed 1.58 times on day 3. Retail subscription: 1.00 time. The IPO closed for subscription.

• Elevate Campuses’ Rs 2,100 crore IPO was subscribed 0.23 times on day 2. Retail subscription: 0.23 times. The IPO will close for subscription on 25 Sep.

• Moneyview’s Rs 1,091.68 crore IPO was subscribed 1.44 times on day 1. Retail subscription: 1.79 times. The IPO will close for subscription on 28 Sep.

Stock Updates

• Maruti Suzuki: started operations at its first 300 kW green-hydrogen pilot plant at Manesar. It is also setting up a 10-tonne-per-day biogas plant and has approved four CBG projects worth Rs 561 crore.

• UltraTech: added 4.6 mtpa of cement capacity, including 3.6 mtpa at a new plant in Andhra Pradesh and 1 mtpa through upgrades at existing plants.

• Power Grid: acquired Barmer HVDC Power Transmission Ltd for Rs 18.98 crore. The project will transmit 6 GW of solar power from Rajasthan to Maharashtra through a roughly 1,000 km line.

• Samvardhana Motherson: completed the previously announced sale of its indirect 26% stake in AES (India) Engineering Ltd to JV partner T-NET Japan.

• Varun Beverages: its Zimbabwe arm signed an exclusive deal with Mondelez to distribute chocolates, biscuits, candy and gum from 1 October, using its existing network.

• Lenskart: subsidiary NESO invested another Rs 2.71 crore in French eyewear brand Le Petit Lunetier, increasing its stake from 31.82% to 34.34%.

• GMR Airports: subsidiary GMR Hospitality won the licence to operate food and beverage outlets at Terminal 3 of Delhi Airport until May 2036, with a possible 10-year extension. The deal is with another GMR Airports subsidiary.

• Nykaa: completed its previously approved acquisition of a 51% stake in Aminu Wellness Pvt Ltd, making Aminu a subsidiary.

Word of the Day

MCLR

MCLR = Marginal Cost of Funds-based Lending Rate

All loans offered by a lender (bank or NBFC) have their interest rates linked to the MCLR.

So, it is something like (MCLR + x)%.

MCLR was in use earlier for all types of loans. But since this number was set by the bank, the banks took time to pass on the benefits of lower interest rates to borrowers.

So, for home, car, education, etc loans, MCLR has been replaced by a newer and faster system called ECLR.

MCLR is still predominantly used in corporate loans and working capital loans.

6 Day Course

Theme: how fund managers handle money

Day 4: Thursday

So far, we have spoken about how fund managers manage inflows from investors, outflows to investors, and storage of money in the mutual fund itself.

Now, let’s talk about how money is deployed into stocks/bonds/etc.

One of the most common ways to buy any asset is to stagger the purchase.

If the fund manager has decided to buy a certain quantity of a stock, the purchase is made over a few days or weeks.

Since they buy large volumes, their buying can push prices up. This method reduces the chance of a price spike caused by the fund’s buying.

Similarly, they also have a staggered approach to selling.

They also keep some cash for opportunistic buying — say a target stock or bond is available at a very attractive level.

Featured Question

Q. “Why is there a capital gains tax when we switch to another mutual fund or when there is an STP. Since the money is not coming to my account, I believe there should be no tax.”

This is because technically speaking, there is no “switch” option.

Whenever you switch, your investments are withdrawn and reinvested.

So for tax purposes, it is counted as withdrawing and reinvesting.

You are correct in arguing that the money never actually gets withdrawn (reaches you the investor). It stays in the same mutual fund.

But as per current tax regulations, this is how it is treated.

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The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended higher compared to yesterday’s closing point. Nifty and Sensex opened higher and closed in green.

Metal stocks and FMCG stocks rose the most today. IT stocks and media stocks fell the most.

Global markets: US markets ended mixed on Tuesday. Most Asian markets were mixed on Wednesday. Most European markets traded in red (as of 6 pm IST).

News

• The government signed a contract with Bharat Dynamics worth Rs 810.79 crore for 160 Satellite Smart Anti Airfield Weapons and associated equipment.

• All PSU Banks and regional rural banks will be open on Sunday, 27 Sep ahead of the nationwide bank strike from 28 Sep to 30 Sep.

• The government connected a remote area in South Chhattisgarh through a new rail line that will facilitate iron ore transportation to Bhilai Steel Plant.

IPO Corner

• Varmora Granito’s Rs 1,096.04 crore IPO was subscribed 0.27 times on day 2. Retail subscription: 0.40 times. The IPO will close for subscription on 24 September.

• Elevate Campuses Rs 2,100 crore IPO was subscribed 0.20 times on day 1. Retail subscription: 0.13 times. The IPO will close for subscription on 25 September.

• SS Retail listed at Rs 624 on NSE, a premium of 47.17% over its issue price and closed 76.60% higher.

• Jindal Supreme (India) Ltd listed at Rs 120 on NSE, a premium of 29.03% over its issue price and closed 35.48% higher.

• Hero Motors listed at Rs 82 on NSE, a discount of 2.38% below its issue price and closed 17.14% higher.

Stock Updates

• Shriram Finance: received GST orders worth around Rs 11.18 crore relating to its erstwhile Shriram City Union Finance business.

• Grasim: invested about Rs 235 crore in subsidiary Aditya Birla Renewables through a preferential share allotment. The investment plan had been announced earlier.

• Samvardhana Motherson: set up MH Supply Chain Ltd in the US through its logistics joint venture with Hellmann Worldwide Logistics. The company will provide logistics and supply-chain services, mainly for the automotive industry.

• Aditya Birla Capital: raised Rs 192 crore through unsecured subordinated NCDs at an 8.0668% interest rate. The bonds will mature in April 2036.

• Bharat Forge: completed its QIP and raised Rs 2,000 crore by issuing about 1.06 crore shares at Rs 1,890 each. The Government of Singapore received about 16.8% of the shares issued in the QIP.

• REC: subsidiary RECPDCL transferred two transmission projects to Power Grid and Ashoka Buildcon for about Rs 18.98 crore and Rs 3.06 crore, respectively.

Word of the Day

Floating Interest Rate

These are loan or deposit interest rates that change with time

The way they work is there is a benchmark index (which changes based on some factors like repo rate set by the RBI, etc).

On top of the benchmark interest rate, a margin is added which is called spread.

So, say a person has taken a home loan at (benchmark + 2)% interest rate.

This means the interest rate applicable on his loan will always move according to the benchmark interest rate + 2%.

Most home, and education loans these days have a floating interest rate.

Personal loans and vehicle loans usually have fixed interest rates — which means the rate does not change and remains fixed for the entire duration of the loan.

6 Day Course

Theme: how fund managers handle money

Day 3: Wednesday

When we talk about cash in mutual funds, the money is not literally kept as cash in a current bank account.

This money is invested in extremely safe options from where money can be withdrawn very fast.

One example is RBI monitored overnight lending options like TREPs.

T-Bills or Treasuring Bills offered by the RBI is another location for storing this cash.

Commercial papers and certificates of deposit are also used.

Some might use other funds like liquid funds and overnight funds to store this cash.

This way, the cash is at least able to earn a small return instead of 0%.

Featured Question

Q. “IPO comes with a price band. Whether any action can be taken against a company by SEBI if the listing price goes down very much below the minimum price for any reason? Can the IPO be kept in any abeyance ?”

Each company is different and we do not know how much its shares should be priced.

So shares are offered in the share markets (via an IPO) and the price is decided based on demand and supply.

When a company goes for an IPO, it is trying to estimate this price.

The price band on offer is generally speaking the price range the company thinks is the right price for its shares.

This is never a 100% sure process. Companies can be inaccurate about their estimates.

After the share lists, supply and demand can change the price.

When a company underestimates its share price, the share price moves up after listing.

When a company overestimates its share price, the share price moves down after listing.

In both cases, the price of the share after listing can easily fall outside the price band during the IPO. There is nothing illegal about it.

This is why investors must be careful while investing in IPOs. They must ensure that they are not investing in a company that is overestimating its share price.

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The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended lower compared to yesterday’s closing point. Both Nifty and Sensex opened in green but started falling around 10:30 am and ended in red.

IT stocks and consumer durable stocks fell the most today. Media stocks and realty stocks rose the most.

Global markets: US markets rose on Monday. Most Asian markets rose on Tuesday. Most European markets traded mixed (as of 6 pm IST).

News

• SEBI settled adjudication proceedings against 5 Adani group companies after settling with an amount of Rs 1.50 crore over corporate governance issues highlighted in the Hindenburg report.

• NPCI clarified that merchants do not bear the cost of GST on MDR as it will be adjusted against GST payable on sale of goods, clarifying concerns on additional burden on merchants.

• Varmora Granito’s Rs 1,096.04 crore IPO was subscribed 0.11 times on day 1. Retail subscription: 0.20 times. The IPO will close for subscription on 24 September.

Stock Updates

• NTPC: subsidiary NTPC Green Energy started commercial operations of another 56.7 MW of wind capacity in Gujarat.

• Samvardhana Motherson: holders of its Rs 1,500 crore CCDs can start converting them into shares from 1 Oct. Any remaining CCDs will compulsorily convert by September 2027, increasing the share count.

• Bank of Baroda: set up BOB Pension Fund Management Company Ltd to enter the pension-fund management business. The bank plans to invest about Rs 80.10 crore for an 80.10% stake.

• Dixon Tech: invested Rs 2.55 crore for a 51% stake in newly incorporated Adivistar Electronics India Pvt Ltd, which will manufacture electronic devices including smartphones as an OEM.

• Persistent Systems: its Nagarro acquisition deal has received enough shareholder acceptances to move ahead, and it also plans to delist Nagarro from the Frankfurt Stock Exchange.

Word of the Day

Debentures

It is a type of debt that a company takes from investors.

Companies take money from investors and agree to return it later, usually with interest.

These are called debentures.

Some debentures come with a condition that instead of returning the money in cash, the company can give shares to the investor.

These are called convertible debentures

Some of the main types of debentures are:

- Non-convertible Debentures (NCD): cannot be converted into shares and are repaid in cash

- Compulsorily Convertible Debenture (CCD): must be converted into shares of the company

6 Day Course

Theme: how fund managers handle money

Day 2: Tuesday

Let’s understand withdrawals.

Around most times, mutual fund managers are both receiving money from investors and having to pay back to withdrawing investors.

This balance tips from time to time.

In times when the incoming money and outgoing money is the same, they simply use the incoming money to pay the withdrawers.

When the withdrawals exceed the incoming amounts (like during market corrections, crashes, etc), they have to pay investors from the cash reserve.

If the cash reserve is small, or if the withdrawals are very high, fund managers have to sell assets to create cash for investors.

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Featured Question

Q. “What's a greenshoe option?”

In a company’s IPO, if the demand for shares is high, a green shoe option lets the underwriter offer extra shares.

The underwriter is the investment bank or other organisation that handles the entire IPO process for the company going for the IPO.

Usually, up to 15% additional shares can be offered using the green shoe option.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended higher compared to Friday’s closing point. This could be due to a fall in crude oil prices despite ongoing tensions between the US and Iran.

Pharma stocks and realty stocks rose the most today. Metal stocks fell the most, along with IT stocks.

Global markets: US markets ended mixed on Friday. Most Asian markets rose on Monday. Most European markets traded in green(as of 6 pm IST).

News

• India’s Core Industrial Output rose 4.8% in August, as per provisional data compared to 5.4% in July. Out of the 9 sectors, coal, natural gas, crude oil, and fertilizers fell.

• The India-New Zealand Free Trade Agreement (FTA) will come into effect from 20 Oct. It provides duty free access for 100% of Indian exports to New Zealand.

• The government signed a contract worth Rs 586 crore with Accurate Industrial Controls to purchase auxiliary power units for T-72 and T-90 tanks.

• NSE’s Rs 22,562 crore IPO was subscribed 5.70 times on day 3. Retail subscription: 1.37 times. The IPO closed for subscription.

Stock Updates

• NTPC: declared 68.22 MW of its Dahod solar project and 9.45 MW of its Vanki wind project commercially operational.

• ONGC: discovered gas in a deepwater well in the Mahanadi Offshore Basin, around 43 km from Konark. The size and commercial value of the discovery are still being assessed.

• Indian Oil: approved Rs 2,448.70 crore to build a 424.65-km Kochi-Kanyakumari-Thoothukudi natural gas pipeline.

• Canara Bank: raised Rs 2,042 crore through AT1 bonds at an 8.10% interest rate. The base issue was Rs 2,000 crore, with a greenshoe option to raise up to another Rs 2,500 crore if there was enough demand.

• Samvardhana Motherson: subsidiary Samvardhana Motherson Adsys Tech will acquire a 50.1% stake in Rotary Connectors Pvt Ltd, which makes military-grade connectors used in aerospace and defence. The deal values the business at Rs 500.40 crore.

• Shriram Finance: offered to buy back up to $460 million of its overseas bonds from investors. Bonds bought back will be cancelled.

• Billionbrains (Groww): Sequoia Capital Global Growth Fund sold 1.55 crore shares, reducing its holding from 1.57% to 1.32%.

Word of the Day

Basis Points

It is a way of quantifying a change in percentage

1 basis point = 0.01%

Therefore, 100 basis points = 1%

Basis points are also abbreviated as ‘bp’. Sometimes, they are also written as ‘bps’ and even ‘bips’.

When the percentages are changed, it can be confusing.

Example:

The current interest rate is 5%. The interest rate was increased by 0.5%.

Does this mean the interest rate was increased from 5% to 5.5%?

Or does this mean 0.5% of 5%? That is, it went from 5% to 5.025%?

Using basis points clears this up as we can simply say, the interest rate was increased by 50 basis points (5% to 5.5%).

6 Day Course

Theme: how fund managers handle money

Day 1: Monday

The moment we invest in a mutual fund and are allocated units in the mutual fund, our investment has taken place.

The money is effectively invested in the mutual fund’s entire holding. We will get all the benefits of portfolio appreciation.

But, how is the money received by mutual funds handled? What are the strategies used by fund managers?

In this week’s course, we will explore how fund managers handle cash.

One of the first things to notice is that nearly all mutual funds keep some cash.

This can be seen in the mutual funds’ holding.

This could be as small as less than 1% of the total value or even be in double-digit percentages.

The fund manager can keep this portion in cash based on various factors like to pay investors who are withdrawing their money, markets being overvalued, waiting for a good opportunity, etc.

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What If

Sometimes, a stock lists after an IPO and ends up moving well above its issue price.

Then, months or even years later, it falls back close to that original IPO price.

When that happens, it can feel like a second chance to buy. Especially if you remember that the stock had once traded much higher.

But just because a stock is back near its issue price does not necessarily mean it is cheap or that it will go back up.

So we wanted to know what actually happens when investors get this “second chance”.

In today’s What If, we looked at mainboard IPOs from 2015 to 2025 and studied what happened when a stock first rose and came back to the original IPO price. We then checked how those stocks performed after that point.

Read the latest What If here

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

When the Titanic left Southampton, it was carrying more than 2,000 people and had 20 lifeboats on board.

That sounds low for such a huge ship. But Titanic was actually following, and even exceeding, the British lifeboat rules that existed at the time.

The problem was that those rules had been written years earlier, when ships were much smaller. Once a ship crossed a certain size, the number of lifeboats required did not keep increasing in proportion to how much bigger the ship became.

Titanic was far bigger than the ships those rules had originally been designed around.

So the number was not random. It came from a rule that had once been set for a reason.

The problem was that the ship had changed a lot, while the reference being used to judge had not changed with it.

And that is the interesting thing about old reference points.

Once a number becomes important, we tend to keep coming back to it even much later, sometimes after everything around that number has changed.

The same habit of holding on to an old number can show up with IPOs.

Imagine a company comes out with an IPO at an issue price of Rs 100.

After listing, the stock moves up. Say it reaches Rs 140 and, over the next few months, goes on to Rs 200.

Maybe you did not get shares in the IPO. Or maybe you simply did not buy the stock after it was listed.

Then, a few months or years later, you notice that the same stock has fallen back to Rs 103.

Now Rs 103 can feel different from just another market price.

You remember that the IPO itself came at Rs 100. You also remember that the stock had traded much higher after that.

So it is easy to wonder:

“If this company originally came to the market at Rs 100, am I now getting another chance to buy it around that same price?”

That is the idea we wanted to test.

So we asked a simple question:

If an IPO first went up meaningfully and then later came back near its issue price, what happened if you bought it there?

Was it really a second chance?

The Study

To test this, we started with 492 mainboard IPOs whose issues opened between 2015 and 2025. We had a usable price history for 480 of them, using data available up to 17 September 2026.

But we did not want to count stocks that simply stayed around their issue price.

So first, the stock had to close at least 20% above its issue price. If the IPO came at Rs 100, the stock had to first close at Rs 120 or more. That could happen on the listing day itself or sometime later.

Only after that did we look for the first time the stock came back near its issue price.

For our main study, “near” meant within 5% above or below the issue price. So for a Rs 100 IPO, we looked for the first close between Rs 95 and Rs 105.

We then treated that as the entry point and checked what happened after 1 month, 3 months, 6 months, 12 months and 24 months.

And if a stock came back near its issue price more than once, we only used the first revisit.

So if a stock went from Rs 100 to Rs 160, came back to Rs 103, went up again and later fell to Rs 98, we used Rs 103.

That way, we were looking at the first real second chance an investor would have seen, not picking a better price later with hindsight.

We also ran the same study using the next trading day’s opening price as the entry, and repeated it with a wider 10% band around the issue price.

How often did this happen?

Of the 480 companies in the study, 401 closed at least 20% above their issue price at some point after listing.

We used that 20% rise as the first filter because we did not want to include stocks that simply stayed around their IPO price from the beginning. We wanted stocks that had first moved clearly above the issue price and then later came back near it.

Out of those 401 stocks, 270 later returned within 5% of their issue price.

That works out to roughly 67%, or about two out of every three stocks that had first risen at least 20%.

So the situation we are studying was actually quite common.

The other 131 stocks did not return to this 5% range during the period we followed them. This does not mean they will never return. Some of the newer IPOs have simply had much less time than companies that listed several years ago.

The time taken to come back also varied quite a bit.

In 21 cases, the stock returned close to its issue price within 30 days of listing.

So this was not only something that happened immediately after listing. In many cases, the stock stayed away from the issue price for months or even years before eventually coming back.

What is interesting here is simply how often the original issue price came back into the picture. Even after a stock had first moved at least 20% higher, roughly two-thirds of these companies later traded close to that starting price again.

Our data does not tell us why each stock returned there. The reason could be different for every company. But it does show that returning near the issue price after an earlier rise was common enough to study separately.

The bigger question is what happened after investors got that second chance near the IPO price.

How much had they already fallen?

The next question was how far these stocks had already fallen before coming back near their issue price.

For each of the 270 stocks, we took the highest closing price it had reached before the revisit and compared it with the price on the day it came back into the 5% range.

Each bar = number of stocks (out of 270), grouped by how far the price had fallen from its earlier peak by the time it came back near the issue price.

So 159 stocks had already fallen at least 30% from their earlier high, and 59 had already fallen by at least half.

That is important because two stocks could both be back near their issue price and still have had very different journeys.

One may have fallen only a little from its earlier high. Another may have already lost half its value.

So being “back near the IPO price” did not tell us how much the stock had already fallen.

But that still leaves the more important question.

Once it came back near the issue price, was it actually a good place to buy?

What happened a year after buying?

For 209 of the 270 stocks, we had enough data to follow them for a full year after the first revisit.

Of these, 90 were higher and 119 were lower than their starting price one year later.

So 43.1% went up and 56.9% went down.

The outcomes were very different across stocks.

32 stocks gained at least 50% over the year.

At the other end, 70 stocks lost at least 20%, including nine that lost at least half their value.

So buying near the issue price did not always go badly. Some stocks did very well.

But the main result is that more stocks finished the year lower than higher.

How much further did prices fall along the way?

The one-year return still does not show the full experience.

A stock can finish the year with a gain and still fall sharply before recovering.

So we also checked the daily closing prices during that one-year period to see how far each stock fell below the buying price.

These groups overlap. So a stock that fell 50% is also included in the 20% and 30% groups.

Of the 209 stocks, 123 fell at least another 20% below the buying price during the year. 90 fell at least 30%, while 22 fell by at least half.

Even among the 90 stocks that ended the year higher, 25 had first fallen at least 20% below our buying price.

Quess Corp is one example.

It eventually ended the year 123.9% higher.

But before that happened, the stock had at one point closed 45.5% below the price at which our study entered.

So even a stock that later became a big winner could make you sit through a very large fall first.

This is important because looking only at the one-year return can hide what happened in between.

The stock may have already fallen a lot before you bought it. That did not mean the downside was over.

How different could individual results be?

The overall numbers tell us how often stocks went up or down. But looking at individual stocks shows how different the actual experience could be.

Zomato

Zomato’s issue price was Rs 76. Before coming back near that price, the stock had closed as high as Rs 160.30.

On 22 February 2022, it closed at Rs 79.70, which meant the stock was already down about 50% from its earlier high.

But the fall did not stop there.

A year later, Zomato closed at Rs 52.95. Someone buying at Rs 79.70 would have been down 33.6% after one year, and during that year the stock had at one point closed 47.7% below the buying price.

So just because a stock had already fallen a lot did not mean most of the downside was already over.

IRFC

Now look at IRFC.

Its issue price was Rs 26. Before coming back near that level, the stock had reached an earlier closing high of Rs 35.65.

On 27 February 2023, it closed at Rs 27.10. A year later, it was at Rs 151.60, which is a 459.4% gain from the starting price.

During that year, its largest further fall below the buying price was only 5.9%.

What is interesting here is that IRFC did not just recover its old high. Going from Rs 27.10 back to Rs 35.65 would have been a gain of around 31.5%, but the stock went much further than that.

Taken together, Zomato and IRFC show why the issue-price setup alone was not enough to tell you what would happen next.

Both stocks had first moved higher and later came back near their issue price, but one kept falling while the other went on to rise several times over.

So while the rule helped us identify the same kind of starting point, it did not tell us which stock would become a winner and which one would become a loser.

Did a bigger earlier rise improve the outcome?

We also wanted to check whether a bigger earlier rally made any difference.

So we grouped the 209 stocks based on how far they had risen above their issue price before coming back near it.

The pattern was not very clear.

Stocks that had risen more earlier did not consistently have better one-year outcomes after returning near the issue price.

The group that had risen the most did show a higher share of positive outcomes, but it had only 14 companies, so it is too small to draw a strong conclusion from.

We also checked whether the listing gain made a difference.

Among stocks that had listed at least 20% above their issue price, 33 out of 80 were higher one year after the revisit.

For stocks that had listed at a smaller premium, it was 34 out of 78.

And for stocks that had listed at or below their issue price, it was 23 out of 51.

So a bigger listing gain or a bigger rally before the fall did not clearly improve the chances of a positive one-year outcome.

In simple terms, the fact that a stock had once gone much higher did not make the later return near issue price more reliable.

We also checked whether changing the entry rule made much difference.

If we bought at the next trading day’s opening price, 91 of 209 stocks were higher after one year, or 43.5%. In our main test, it was 43.1%.

We also widened the issue-price range from 5% to 10%. Here, 104 of 231 stocks, or 45.0%, were higher after one year.

So the numbers changed slightly.

But the overall result did not.

Even after changing the entry price or widening the range, fewer than half the stocks were higher after one year.

Did holding for longer help?

We also checked what happened over different holding periods.

At first, it may look like waiting two years helped, because the share of positive outcomes rises from 43.1% after one year to 51.0% after two years.

But these are not the same group of stocks.

Only 145 stocks had enough data for a full two-year comparison, while the one-year group had 209.

So we also looked only at those same 145 stocks.

Among them, 72 were higher after one year and 74 were higher after two years.

That means the positive share moved only from 49.7% to 51.0%.

So for this same group of companies, waiting another year did not suddenly turn the outcome clearly positive. It remained close to half and half.

Among these 145 stocks, 74 also reached their earlier closing high at some point during those two years, although they did not necessarily stay there.

So, what does this tell us?

The issue price is the price at which shares were offered to investors in the IPO. At that time, investors were looking at the company’s financials, growth expectations and market conditions as they existed then.

By the time the stock comes back near that price, months or even years may have passed. The company’s earnings, growth outlook and the valuation investors are willing to pay could all be very different.

Our study does not tell us which of these things changed for each company. We did not study profits, debt, growth or valuation. We only looked at what happened to the share price after this setup appeared.

And the results were mixed.

Some stocks went on to become large winners. Others kept falling. A bigger earlier rally did not show a clear, consistent advantage, and changing the entry rule or widening the price range still left fewer than half the stocks higher after one year.

So the issue price can still be a useful reference because it tells you the price at which the shares were originally offered in the IPO.

But it does not automatically tell you whether the stock is cheap when it comes back there.

The issue price tells you what investors paid in the IPO. It does not, on its own, tell you what the business is worth today.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer

Starbucks was looking for a CEO again.

They needed his help.

This was not the first time Howard Schultz had been asked to become the CEO of Starbucks.

Not even the second time. It was the third time.

Why did he choose to return each time? And why did he leave in the first place?

To understand how Howard became Starbucks’ CEO a third time, we have to delve back in time.

Starbucks Not Founded by Schultz

Technically speaking, Howard was employed at Starbucks. He did not found the company.

Back then, Starbucks was a small coffee bean and coffee equipment supplier.

A trip to Milan, Italy, convinced Howard that Starbucks needed to open lively cafes where people hung out.

The founders of Starbucks were not interested.

So in 1985, Howard Schultz left to start his own company, Il Giornale.

Il Giornale was what Howard had in mind. The coffee beans were sourced from a reliable source (the original Starbucks).

Il Giornale did well. So well, in fact, that they wanted to in-house sourcing coffee beans.

Around the same time, Starbucks’ founders wanted to exit their company.

And thus, Il Giornale acquired Starbucks.

Il Giornale was a brand name proving to be difficult to associate for the American customers.

Howard decided to rebrand Il Giornale to a brand Americans were more familiar with — Starbucks.

This is why we can say Starbucks was not founded by Schultz. But technically speaking, Howard Schultz did found the company that acquired Starbucks.

So he was the founder of the company that is Starbucks today.

Schultz Doesn’t Own Starbucks

In 1992, Starbucks went for an IPO.

At that point in time, they had around 160+ Starbucks outlets.

Howard Schultz had needed money to reach this point.

At the time of IPO, he owned roughly 8% of Starbucks. The rest was with venture capital investors, angel investors, private equity, etc.

8% is significant, but in no way is it a controlling stake.

Since its IPO in 1992, Howard’s stake kept reducing as he sold some shares to diversify his own wealth, and Starbucks issued new shares.

In 2000, Howard decided to step down from the role of CEO.

He was tired from the intense grind of heading the company. By the time he stepped down, the cafe count had reached over 3,000 (from the 165 cafes at the time of IPO).

Howard became the Chairman and Chief of Global Strategy while handing over the role of CEO to Orin Smith (who was the COO till that point).

This era was one where Starbucks was rapidly expanding and quality suffered a bit, though the reach was getting better and better.

In 2005, Orin was succeeded by Jim Donald.

The expansion continued.

The in-cafe experience kept deteriorating. The baristas were not as well trained. The vibe was not what Starbucks had been known for.

It was becoming just-another-cafe-chain.

Schultz Is Back

Howard Schultz owned only about 2-3% of Starbucks by 2008.

As the chairman, he didn’t have much operational power to change things.

Howard wrote to the management about this in 2007, about the commoditization of the Starbucks experience.

The board agreed with him.

They fired Jim a year later and hired Howard Schultz as CEO again.

There was one famous evening when all 7,100 Starbucks outlets in the US were shut so the baristas could be upskilled.

Howard’s second stint as the CEO of Starbucks was marked by another round of consistent high-quality growth.

The number of stores expanded, the quality of service improved, and offerings were made more relevant.

The star work of this period, however, was the rewards program coupled with an app to pay. Most other companies in the space had not done this with success as well as Starbucks had.

In 2017, he decided to step down again. He would become the executive chairman and focus his attention on philanthropy, and some other responsibilities.

Kevin Johnson, the COO at the time, was appointed as the new CEO.

At the time of quitting, Schultz still owned around 2-3% of Starbucks. Roughly the same as his stake in 2008 when he rejoined as CEO.

But thanks to the immense growth, the market-cap of the company had gone from about $12 billion to about $80 billion.

And thus, Howard Schultz’s net worth had climbed proportionately.

The Kevin Era

The new CEO, Kevin, had come with tech experience.

He was previously at Microsoft and was driven to improve efficiency and integrate tech throughout the value chain.

Kevin scaled up customised drinks during his period.

He even navigated the brand through one of the toughest times in the global economy — the 2020 pandemic period.

At the same time, employee resentment was growing because of customised orders, poor equipment, and wage-related issues.

Kevin missed out on catching this development early.

Towards 2022, he announced his retirement.

The Starbucks board was faced with a mounting challenge of a rebellious workforce, and deteriorating trust.

Third Time

Desperate to find a good CEO who could restore the trust of its employees, they looked, once again, towards Howard Schultz.

He came back a third time as the CEO of Starbucks in April 2022.

This was going to be an “interim” role. In short, he was there till the board found the correct CEO for the job.

Howard moved quickly to restore order.

He suspended a share buyback plan and redirected $1 billion towards cafe equipment and employee benefits.

It worked.

A few months later, Laxman Narasimhan was hired as CEO. He shadowed Howard till March 2023, after which he took over the company’s reins fully.

The market-cap of the company was around $115 billion during this CEO transition.

Key CEO

Despite not holding a significant stake in the company, Howard Schultz remained a key figure at Starbucks for decades.

He became the firefighter who was brought back repeatedly — and brought back the company successfully each stint.

This story is an excellent example of promoters running their companies more effectively.

This is one reason why investors love keeping an eye on the promoters’ stake in the company. Although Howard himself didn’t change his stake much.

Starbucks’ challenges didn’t end in 2023 though.

Laxman Narasimhan left in only 17 months. Declining sales were cited as the main reason.

The next CEO was appointed in 2024, and news of his arrival was received with a 25% stock price increase.

A lot happened in that period.

That’s for another story altogether.

Quick Takes

+India’s wholesale inflation rose to 9.92% year-on-year in August compared to 9.78% in July. India’s retail inflation rose to 4.82% in August compared to 4.45% in July.

+The total revenue from allocated commercial coal mines was Rs 3,090 crore in FY25-26. The government expects annual revenue of around Rs 47,500 crore from the 147 coal blocks since 2020 across 9 states.

+SEBI issued a consultation paper, proposing changes to the Closing Auction Session (CAS), market timings and settlement rules for derivative contracts. It has invited public comments until 3 October.

+India’s unemployment rate fell to a 6 month low of 5.00% in August compared to 5.10% in July.

+The government introduced Merchant Discount Rate (MDR) of 0.4% on person-to-merchant UPI transactions above Rs 2,000 from 15 Oct. The MDR will be capped at Rs 300 for transactions above Rs 75,000. There will be no charges whatsoever on person-to-person UPI transactions.

+India’s trade deficit decreased to $26.86 billion in August compared to $31.98 billion in July.

+Passenger vehicle sales rose 36.5% year-on-year to 4.39 lakh units in August, according to SIAM data.

+The government approved increasing the EPFO wage ceiling to Rs 25,000 per month from Rs 15,000 per month. As a result, an additional 51 lakh employees could come under mandatory coverage.

+The government removed the requirement of certificate of registration for export consignments of up to Rs 3 lakh to lower entry barrier for MSMEs and first time exporters.

+The government said the possible US tariffs of 100% on Russian oil importing countries, including India, could impact bilateral ties. The bill is yet to be signed into a law.

+The government denied media reports alleging that MDR on UPI payments were introduced under any external influence.

+The government reduced windfall taxes on petrol exports to Rs 0.5 per liter (vs Rs 1.5 earlier); diesel, Rs 20 (vs Rs 25 earlier); ATF, Rs 15 (vs Rs 19 earlier).

+India’s textile sector exports rose 16.10% year-on-year to Rs 29,776 crore in August, from Rs 25,656 crore a year ago.

+India’s forex reserves fell $4.92 billion to $780.78 billion for the week ended 11 Sep.

+The government relaxed the existing 15 days’ stockholding limit on sugar for bulk consumers subject to conditions.

+The government approved multiple railway projects; a 38.21 km rail line worth Rs 493 crore near Maharashtra-Telangana border and doubling the 10.86 km Chouk-Karjat section worth Rs 497 crore.

+India’s net direct tax collections rose 12.96% year-on-year to Rs 12.12 lakh crore as of 17 Sep.

+India’s crude oil imports fell 11.17% in August to 19.01 million metric tonnes, from July: Petroleum Planning and Analysis Cell.

+Digital lending platform Social Worth Technologies (Fibe) got SEBI approval for IPO (fresh issue Rs 750 crore and OFS of 4 crore shares).

The information contained in this Groww Digest is purely for knowledge. This Groww Digest does not contain any recommendations or advice.

Team Groww Digest

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets ended mixed compared to yesterday’s closing point. Sensex ended in red after the CAS, while Nifty ended in green.

Metal stocks and media stocks rose the most today. IT stocks and consumer durable stocks fell the most.

Global markets: US markets rose on Thursday. Most Asian markets rose on Friday while most European markets traded in red(as of 6 pm IST).

News

• India’s forex reserves fell $4.92 billion to $780.78 billion for the week ended 11 Sep.

• The government relaxed the existing 15 days’ stockholding limit on sugar for bulk consumers subject to conditions.

• The government approved multiple railway projects; a 38.21 km rail line worth Rs 493 crore near Maharashtra-Telangana border and doubling the 10.86 km Chouk-Karjat section worth Rs 497 crore.

• India’s net direct tax collections rose 12.96% year-on-year to Rs 12.12 lakh crore as of 17 Sep.

• India’s crude oil imports fell 11.17% in August to 19.01 million metric tonnes, from July: Petroleum Planning and Analysis Cell.

• Digital lending platform Social Worth Technologies (Fibe) got SEBI approval for IPO (fresh issue Rs 750 crore and OFS of 4 crore shares).

IPO Corner

• NSE’s Rs 22,562 crore IPO was subscribed 1.16 times on day 2. Retail subscription: 0.72 times. The IPO will close for subscription on 21 September.

• Hero Motors’ Rs 1,000 crore IPO was subscribed 6.66 times on day 3. Retail subscription: 8.23 times. The IPO closed for subscription.

• SS Retail’s Rs 500 crore IPO was subscribed 103.30 times on day 3. Retail subscription: 36.36 times. The IPO closed for subscription.

Stock Updates

• Asian Paints: started production at its new VAE facility (a chemical used to make paints) in Dahej, Gujarat, with an annual capacity of 1.5 lakh tonnes.

• Power Grid: approved raising up to Rs 5,000 crore through unsecured bonds via private placement. The base issue is Rs 1,000 crore with a greenshoe option of Rs 4,000 crore. The bonds will have a 10-year tenor.

• Grasim: its 45%-owned Canadian pulp joint venture (AV Group NB Inc.) will temporarily shut its Nackawic plant around the end of October due to weak market conditions.

• Vedanta: approved issuing up to Rs 3,500 crore of unsecured NCDs through private placement in one or more series.

• Mazagon Dock: signed an MoU to be the main shipyard in a proposed new shipbuilding cluster at Dugarajapatnam, Andhra Pradesh.

• Dr Reddy’s: signed an exclusive agreement with Takeda (Japanese pharma company) to market and distribute QDENGA, India’s first approved dengue vaccine, in the private market.

• Persistent Systems: reached the minimum shareholder acceptance needed for its takeover offer for Nagarro.

Word of the Day

Cash Drag

It is the lower performance caused because of holding cash.

As we know, cash gives some of the lowest returns possible.

So the more cash an investor keeps, the lower the returns.

When a portfolio (investment manager, mutual fund, PMS, etc) holds too much cash, the returns can suffer because a big portion of their investment is earning extremely low returns.

Keeping cash is not always a bad strategy. Many investors keep cash when the markets are overvalued for similar reasons.

6 Day Course

Theme: finding correct valuation

Day 5: Friday

Whatever we have discussed so far is still a bit of an ideal scenario.

There are many things that can go wrong.

Example: One common trap is: a company’s earnings might grow 3x in 5 years. But its stock price was already so high, it didn’t give good returns over 5 years.

So, determining if a company’s stock is correctly valued or not depends on its future earnings.

And it also depends on the current share price not being too high compared to the future earnings level.

Also, a lot can go wrong with the earnings itself. A company can end up not earning as much as expected because of various reasons — both within and outside its control.

By the way, great investors don’t always get this right. Even their estimates and valuation-judgements turn out wrong.

It is nearly impossible to be perfect in this.

Some mistakes are okay. Too many mistakes lead to poor returns or losses.

————

Featured Question

Q. “As we purchased Mutual Funds schemes and taxed for Capital Gains, do MF portfolio get taxed when they purchase Stocks in their portfolio at the time of redemption or frequent withdrawal?”

Investors have to pay STCG or LTCG tax when withdrawing from a mutual fund.

The same is not true for when a mutual fund buys/sells assets. This alone makes mutual funds more tax efficient.

They still have to pay STT, brokerage, and other relevant charges when transacting stocks or other assets.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets closed flat compared to yesterday’s closing point after the US Fed raised interest rates by 25 basis points to 3.75-4%.

Pharma stocks and healthcare stocks rose the most today. Both private bank and PSU Bank stocks fell the most.

Global markets: US markets fell on Wednesday. Most Asian markets traded mixed on Thursday. Most European markets traded in green (as of 6 pm IST).

News

• The government said the possible US tariffs of 100% on Russian oil importing countries, including India, could impact bilateral ties. The bill is yet to be signed into a law.

• The government denied media reports alleging that MDR on UPI payments were introduced under any external influence.

• The government reduced windfall taxes on petrol exports to Rs 0.5 per liter (vs Rs 1.5 earlier); diesel, Rs 20 (vs Rs 25 earlier); ATF, Rs 15 (vs Rs 19 earlier).

• India’s textile sector exports rose 16.10% year-on-year to Rs 29,776 crore in August, from Rs 25,656 crore a year ago.

IPO Corner

• NSE’s Rs 22,562 crore IPO was subscribed 0.43 times on day 1. Retail subscription: 0.44 times. The IPO will close for subscription on 21 September.

• Hero Motors’ Rs 1,000 crore IPO was subscribed 3.37 times on day 2. Retail subscription: 5.02 times. The IPO will close for subscription on 18 September.

• SS Retail’s Rs 500 crore IPO was subscribed 5.78 times on day 2. Retail subscription: 7.55 times. The IPO will close for subscription on 18 September.

• Manipal Payment and Identity Solutions listed at Rs 330 on NSE, a discount of 2.65% below its issue price and closed 2.68% higher.

• Asset Reconstruction Company (India) listed flat at Rs 139 and closed 1.33% lower.

• Rentomojo listed at Rs 482.45 on NSE, a premium of 19.41% over its issue price and closed 35.15% higher.

• Karamtara Engineering listed at Rs 320 on NSE, a premium of 25.98% over its issue price and closed 38.58% higher.

Stock Updates

• BEL: received additional orders worth Rs 648 crore for defence equipment, cybersecurity solutions, AI software, upgrades, spares and other services.

• Tata Motors: will increase prices of its commercial vehicles by up to 1% from 1 Oct due to higher input costs.

• PNB: set up a $1.5 billion overseas bond programme, which allows it to raise funds in the future.

• Canara Bank: raised Rs 2,042 crore through perpetual Additional Tier-I bonds at an 8.10% interest rate.

• Mazagon Dock: signed an MoU to become the main shipyard in a proposed shipbuilding cluster at Dighi, Maharashtra. The project is expected to involve around Rs 27,000 crore of investment and have an annual capacity of at least 1.2 million gross tonnes.

• Manipal Health: used part of the money raised from its IPO to repay Rs 5,310 crore of debt taken by subsidiary, Manipal Hospitals Pvt Ltd, along with interest and other charges.

• Bharat Forge: opened a Qualified Institutional Placement (QIP) to raise money from institutional investors. The floor price has been set at Rs 1,947.70 per share and the final fund-raise size has not yet been disclosed.

• Federal Bank: approved a $500 million overseas bond programme. The bank can raise the money in foreign currencies through branches, including GIFT City.

Word of the Day

Repo Rate

It is the interest rate set by the RBI that affects all other interest rates like loan rates, FD rates, etc

It is the rate at which banks borrow money from the RBI.

Hence, it directly affects all rates offered by banks and lenders (loans and deposits).

The RBI adjusts this repo rate to achieve various economic goals (control inflation, encourage economic growth, etc).

6 Day Course

Theme: finding correct valuation

Day 4: Thursday

The challenge is always estimating future earnings.

The best investors are always trying to estimate what a company’s future earnings would be (and therefore its future share price).

Based on that, they’re trying to compare the share price today.

The wider the difference, the greater the returns earned.

But future earnings are not guaranteed.

In fact, sometimes, even the best CEOs fail to estimate their own future earnings — both negatively and positively.

So the best investors try to keep some margin for error. This is done by underestimating the future earnings (taking a worst case scenario).

Even then, there can be unexpected surprises (positive and negative).

Example:

Let’s say the share price is too high compared to its present earnings. Say, PE ratio is 90.

But compared to its potential earnings and share price 5 years from now, it is extremely low.

Such a company might not be seen overvalued — simply because the share price is very cheap compared to its potential value 5 years from today.

————

Featured Question

Q. “Why isn't the fed rate a single percentage (like 4%) instead it is a bandwidth (3.75%-4%)”

Fed rates (rates announced by the US Federal Reserve) are presented as a range.

This is because the US Fed does not mandate the rate. It tries to encourage the interest rates towards a certain target range.

Why?

Because in the US, there’s a lot of cash that was printed during the 2008 recession.

This means that many banks have cash reserves to lend.

Because of this, banks don’t necessarily have to borrow from the US Fed. They can borrow from other banks as well at negotiated rates.

So by changing its own rates, the US Fed aims to nudge the interest rates in a certain range.

It is unable to keep it at an exact number because of the higher reserves in the banking system.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets closed higher than yesterday’s closing point after two days of fall.

FMCG stocks and PSU bank stocks rose the most today. IT stocks fell the most along with pharma stocks.

Global markets: US markets fell on Tuesday. Most Asian markets rose on Wednesday. Most European markets traded in green (as of 6 pm IST).

News

• The government approved increasing the EPFO wage ceiling to Rs 25,000 per month from Rs 15,000 per month. As a result, an additional 51 lakh employees could come under mandatory coverage.

• The government removed the requirement of certificate of registration for export consignments of up to Rs 3 lakh to lower entry barrier for MSMEs and first time exporters.

IPO Corner

• Hero Motors’ Rs 1,000 crore IPO was subscribed 1.39 times on day 1. Retail subscription: 2.23 times. The IPO will close for subscription on 18 September.

• SS Retail’s Rs 500 crore IPO was subscribed 1.44 times on day 1. Retail subscription: 2.20 times. The IPO will close for subscription on 18 September.

• Prasol Chemicals listed at Rs 610 on NSE, a discount of 9.76% below its issue price and closed 0.74% lower.

• Kanohar Electricals listed at Rs 685 on NSE, a premium of 8.34% over its issue price and closed 19.30% higher.

• Glasswall Systems listed at Rs 194 on NSE, a premium of 6.59% over its issue price and closed 18.68% higher.

Stock Updates

• Reliance: raised Rs 12,000 crore through unsecured NCDs at a 7.47% interest rate. The bonds will mature in September 2031.

• Infosys: expanded its Indore development centre with a new 3.3 lakh sq ft software block. The center will support work in AI, cloud, cybersecurity and software development.

• Samvardhana Motherson: its Indonesian subsidiary received an IDR 14.94 billion (around Rs 8.13 crore) tax penalty relating to the period before Motherson acquired it. It also provided a Rs 75 crore guarantee for another subsidiary, Yutaka Autoparts.

• One 97 Comm (Paytm): from October 15, businesses receiving UPI payments above Rs 2,000 may have to pay a fee of up to 0.4%. Paytm expects this to increase revenue from merchant transactions that were earlier free.

Word of the Day

NPA

It is the part of a bank’s loan that is expected to be a total loss

NPA = Non Performing Asset.

When a borrower makes no EMI payment for 90 days, the lender categorises the loan as an NPA.

NPA is measured in terms of the total loan amount given by the lender.

Example: XYZ Bank’s NPA is 1.8%. This means that of the entire sum of money lent by the bank, 1.8% is not expected to be paid back.

NPA is an important metric for assessing any lender. A lower NPA is considered better.

6 Day Course

Theme: finding correct valuation

Day 3: Wednesday

Yesterday we saw how the PE ratio alone cannot tell us if a stock is overvalued/undervalued/fairly valued.

We also learnt that if a company is growing fast enough, a higher PE ratio can still mean the stock is undervalued.

To account for growth, another ratio was formulated.

PEG Ratio = PE Growth Ratio.

In this case, we take a company’s PE ratio and divide it by the earnings growth over the last 1 year.

A PEG ratio of 1 is considered ideal. More than 1 is considered high, and below 1 is considered low.

Of course different investors approach this method differently.

The challenge with PEG ratio is that it can easily miss companies that are about to turn around.

This makes it especially difficult for companies that operate in cyclical sectors.

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Featured Question

Q. “If one is not in a position to sell the shares , how to treat the loss for tax purposes ..To make my question clear , I have purchased 100 shares earlier at Rs 50/- . One of my friend also purchased 100 number at 50/- . He is able to find a purchaser for rs 10/-at the time of de listing . His loss is rightfully accounted for ,for tax purpose . I did not find any person and as such the total amount is loss to me. Any benefit would accrue to me in tax angle .”

Long term losses in equity can be offset against long term gains.

This means that if you sell stocks (or equity mutual funds) for a loss, you can use that for tax advantage.

In the above case mentioned by you, the shares are still owned by you. No sale has taken place. You have not booked your loss.

And therefore, you cannot count it as a loss for tax purposes.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Markets closed lower than Friday’s closing point.

The markets fell throughout the day and this may have been mainly due to geopolitical tensions in the Middle East (supply of oil from Saudi Arabia has been cut).

Oil prices rose to $108 and US bond yields rose to the highest level since 2007 (5.04%). Such events typically indicate increased expectations of an interest rate hike in the US which could have added to negative sentiments in the market.

All sectors’ stocks fell, except for the IT stocks. Realty stocks and chemical stocks fell the most today.

Global markets: US markets fell on Monday. Most Asian markets fell on Tuesday. Most European markets also traded in red (as of 6 pm IST).

News

• India’s unemployment rate fell to a 6 month low of 5.00% in August compared to 5.10% in July.

• The government introduced Merchant Discount Rate (MDR) of 0.4% on person-to-merchant UPI transactions above Rs 2,000 from 15 Oct. The MDR will be capped at Rs 300 for transactions above Rs 75,000. There will be no charges whatsoever on person-to-person UPI transactions.

• India’s trade deficit decreased to $26.86 billion in August compared to $31.98 billion in July.

• Passenger vehicle sales rose 36.5% year-on-year to 4.39 lakh units in August, according to SIAM data.

• The CMs of Uttar Pradesh, Uttarakhand, Himachal Pradesh, Rajasthan, Delhi and Haryana signed the Kishau Multipurpose agreement under which 97,000 hectares of land will be irrigated and hydropower of 1,476 million units will be generated.

Stock Updates

• TCS: partnered with the Dubai Gold & Commodities Exchange to upgrade its trading systems. It also partnered with Germany’s Aareal Bank to modernise its IT systems using cloud and AI.

• BHEL: approved another Rs 65 crore investment in its 50:50 Joint Venture (JV) with NTPC. It also formed a JV with Titagarh Rail Systems to maintain Vande Bharat Sleeper trains for 35 years.

• Bajaj Holdings: declared an interim dividend of Rs 65 per share. The record date is 21 September.

• Canara Bank: paid Rs 159.80 crore interest on its Rs 2,000 crore AT1 bonds. RBI also allowed it to repay Rs 1,500 crore of AT1 bonds early, meaning the bank can return the money to bond investors and close the bond issue.

• Bharat Forge: entered a strategic aerospace-engine partnership with Pratt & Whitney Canada to study the use of its turboprop engines in DRDO’s indigenous high-altitude UAV programme.

• Aurobindo Pharma: received USFDA approval for a respiratory inhaler, a generic version of Teva’s QVAR used for asthma treatment. The US market is estimated at $301 million.

Word of the Day

NCLT

It is an authority in India that hears disputes and legal proceedings for companies in India

NCLT = National Company Law Tribunal

Matters like mergers, acquisitions, company dissolution, bankruptcy, etc are approved by NCLT.

Disputes like share transfer, shareholder grievances, etc are also handled by them.

If parties are not satisfied with NCLT’s decisions, they can appeal to NCLAT (National Company Law Appellate Tribunal). If still not satisfied, they can appeal to the Supreme Court.

6 Day Course

Theme: finding correct valuation

Day 2: Tuesday

So yesterday, we discussed PE Ratio.

Let’s go deeper. Why is PE Ratio only the starting point?

If a company is growing fast, its future earnings will be much higher than today even though its earnings might not be that high today.

Seeing the future potential of immense growth, investors are willing to pay a higher price for a company’s share.

Think about this:

Company A:

Profits: Rs 1,000 cr.
Potential profits after 3 years: Rs 7,000 cr.
Current PE Ratio of stock: 25

Company B:

Profits: Rs 1,000 cr.
Potential profits after 3 years: Rs 1,600 cr.
Current PE Ratio of stock: 19

Which of the stocks would make for a better investment?

Company A will grow more. So despite having a higher PE Ratio, its chances of giving higher returns are more.

That is, despite having a higher PE, Company A can be considered not overvalued.

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What If

When markets become volatile, prices can move sharply in a very short period of time.

And when that happens, the price of the same stock in the cash market and futures market can end up having a difference between them.

The difference between these two prices is called an arbitrage opportunity. And there are mutual funds, called arbitrage funds, that try to earn from these price differences.

Now, when markets become more volatile, these price gaps may also end up changing.

So we wanted to know if arbitrage funds actually earn more when market volatility rises?

In today’s What If, we looked at all the arbitrage funds and India VIX data from 2013 to 2026 to see whether higher volatility really helped arbitrage-fund returns.

Read the latest What If here

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

That is the Apple phone unveiled last week, its first foldable iPhone.

And like most new Apple launches, one of the first things people started looking at was the price.

Let’s not get into whether the phone is overpriced or underpriced. There is something more interesting we can learn from how differently the same phone is priced across countries.

In India, the 256GB version starts at around Rs 3 lakh. But the exact same phone costs much less on the other side of the world.

In the UAE, for example, Apple lists the 256GB version at AED 8,499, which is around Rs 2.22 lakh at the current exchange rate.

That is almost a Rs 78,000 difference for the same phone.

Now, if you are anything like us, one thought is pretty obvious: why can’t I just buy it there and sell it here?

On paper, that looks like Rs 78,000 sitting there for you to make.

But obviously, it is not that simple.

Once you add customs, taxes, travel costs, currency changes and even the difficulty of selling it at the Indian price, that difference gets smaller.

So seeing a price difference is one thing. Actually being able to capture that difference is another.

There is something similar to this that happens in the stock market.

Take a stock trading at Rs 100 today.

If you buy it normally in the stock market, you pay Rs 100. That is the cash market.

But the same stock can also have a futures price.

Think of the futures price as the price at which traders are agreeing today to buy or sell that stock at a later date.

So while the stock is available for Rs 100 today, its futures price for a later date might be Rs 102.

That means the same stock has two prices at the same time:

• Rs 100 in the cash market

• Rs 102 in the futures market

So for the same stock, there is a Rs 2 price difference between the cash and futures markets.

Trying to earn from a price difference like this is called arbitrage.

And there are mutual funds that mainly look for these kinds of opportunities. They are called arbitrage funds.

That leads to the next question: when are these differences more likely to become attractive?

One possibility is when markets become more uncertain and prices start moving sharply.

And that is where India VIX helps us.

India VIX tells us how much movement the market expects in the Nifty over roughly the next month. A low VIX means the market expects relatively calmer movement. A higher VIX means it expects bigger swings.

So the idea is If VIX rises and markets become more volatile, maybe arbitrage funds get better opportunities to earn.

But does that actually happen?

That is what we decided to find out.

The Study

We started with 40 Direct Growth arbitrage funds, along with India VIX and Nifty 50 data.

Out of these, 39 funds had enough NAV data for at least one complete monthly period.

For every month, we took the first available NAV and compared it with the first available NAV of the next month.

So if we entered a fund in early May, we checked its NAV again in early June.

This gave us 3,417 actual fund returns across 164 monthly entry periods.

We then compared each fund’s return with its return in the previous monthly period.

For example, if a fund returned 0.40% in one period and 0.55% in the next, its return had improved. If it moved from 0.55% to 0.40%, its return had fallen.

Both returns could still be positive. We were simply checking whether the return became higher or lower.

To do this, a fund needed two back-to-back monthly returns. The first usable return for each of the 39 funds had nothing earlier to compare with.

That left us with 3,378 cases across 163 monthly periods, from February 2013 to August 2026.

One case means one fund compared across two back-to-back monthly periods.

We then did the same with VIX. If the VIX reading before the new period was higher than before the previous period, we said VIX rose. If it was lower, we said VIX fell.

Then we asked one simple question:

When VIX rose, did the same arbitrage fund earn more or less than it had in the previous period?

Did the individual funds tell the same story?

We then checked the funds one by one.

There were 77 months when VIX had risen compared with the month before.

Now imagine one of those months had just three arbitrage funds:

• Fund A

• Fund B

• Fund C

For that month, we would ask:

Did Fund A’s return improve compared with the previous month?

Did Fund B’s return improve?

Did Fund C’s return improve?

So that one month gives us 3 results.

If the next time VIX rose there were four funds available, that month would give us 4 more results.

We repeated this for every fund available in every one of the 77 months when VIX rose.

The funds are repeated across months. We are not talking about 1,560 different funds.

There were only 39 usable funds in the entire study.

But because the same funds were checked again every time VIX rose, those 77 months together gave us 1,560 cases.

In simple terms:

One case = one fund compared across two back-to-back monthly periods.

Then we checked whether that fund’s return was higher or lower than it had been in the previous monthly period.

After VIX rose, the fund’s return improved in 552 of 1,560 cases, or 35.4%.

In the other 1,008 cases, the fund earned less than it had in the previous period.

When VIX fell, returns improved in 1,160 out of 1,818 cases, or 63.8%.

So in our data, arbitrage-fund returns were more likely to become lower than higher after VIX rose.

We also checked the funds individually to make sure this result was not being caused by just one or two schemes.

Twenty-seven funds had enough rising-VIX months for us to study them properly.

For all 27 funds, there were more rising-VIX months in which their return became lower than rising-VIX months in which their return became higher.

This does not mean rising VIX caused arbitrage-fund returns to fall. It simply tells us that the pattern was visible across many different funds.

A rising VIX is not the same as a high VIX

There is an important difference between a rising VIX and a high VIX. For example, a move from 12 to 16 means VIX has risen, while a move from 35 to 30 means VIX has fallen, even though 30 is still a much higher level.

Our main test looks at whether VIX rose or fell before the investment started. But we also wanted to see what happened when investors entered at different VIX levels, so we divided the observations into four groups

We used simple VIX ranges of below 15, 15–20, 20–30 and 30 or above. These are only used to make the historical comparison easier to understand; they are not official investment thresholds.

Negative returns were rare across most VIX levels.

When VIX was below 30, only 3 out of 3,341 fund observations were negative.

But when VIX was 30 or above, 3 out of 76 observations were negative.

So even though arbitrage funds were positive in most periods, very high VIX did not guarantee a positive return.

This table only tells us whether the return was positive or negative. It does not tell us how large the return was.

One example from the data

Before the May 2021 investment period, VIX was 23.03. Before the June period, it had fallen to 16.89.

There were 24 funds with returns available for both periods, and all 24 earned more in the June period than in the May period, even though VIX had fallen.

For example, Aditya Birla SL Arbitrage Fund, Direct Growth returned:

So in this example, VIX fell, but the fund’s return increased. One example does not prove a rule, which is why the study looks at every eligible period across all the funds rather than relying on one month.

So what should we take away?

Arbitrage funds try to earn from price differences between the cash and futures markets.

VIX tells us something different. It shows how much volatility the market expects over the next 30 days.

A higher VIX can mean markets are more uncertain, but it does not automatically mean that the cash-futures price gap available to an arbitrage fund will be larger.

In our study, VIX by itself was not a reliable signal for deciding when to enter an arbitrage fund.

When VIX rises, it can seem logical to assume that arbitrage funds will get more opportunities and earn better returns. But our data did not show that consistently.

So waiting for VIX to become high before investing, or moving money into an arbitrage fund just because markets have become more volatile, may not be very useful.

A better way to look at an arbitrage fund is to start with why you are investing in it.

If you are using it to park money for a relatively short period, things like how long you plan to stay invested, the fund’s exit load and the possibility of a small negative return over shorter periods are also important to consider.

Arbitrage-fund returns depend on whether the fund can actually find and capture useful price differences between the cash and futures markets.

VIX only tells us how much volatility the market expects. It does not tell us how large those cash-futures price gaps will be.

So instead of asking:

“Is VIX high enough for me to invest in an arbitrage fund?”

The more useful question is:

“Does an arbitrage fund make sense for the period and purpose for which I want to use this money?”

Note

• A higher VIX does not automatically mean a better arbitrage opportunity. Futures can trade close to cash prices or even below them, and different funds may hold different stocks, futures and debt instruments.

• The study uses monthly returns, so short-lived arbitrage opportunities within a month may not be captured. The monthly holding periods can also differ slightly because of weekends and holidays.

• The fund universe changes over time, and the supplied data may not include every arbitrage fund that closed or merged during the period.

• The VIX ranges used in the study are only for comparison and are not official investment thresholds. The VIX 30+ group is also relatively small, so that result should be read cautiously.

• NAV returns already reflect fund-level expenses, but investor-level costs such as taxes and exit loads are not included.

• These are historical observations and should not be treated as a prediction of what will happen the next time VIX rises.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer

Research Analyst Disclaimer

Hence, there won’t be any updates on the Nifty 50, Sensex, Top Gainers, and Top Losers sections today.

Global markets: US markets rose on Friday. Most European and Asian markets fell (as of 6 pm IST).

News

• India’s wholesale inflation rose to 9.92% year-on-year in August compared to 9.78% in July. India’s retail inflation rose to 4.82% in August compared to 4.45% in July.

• The total revenue from allocated commercial coal mines was Rs 3,090 crore in FY25-26. The government expects annual revenue of around Rs 47,500 crore from the 147 coal blocks since 2020 across 9 states.

• SEBI issued a consultation paper, proposing changes to the Closing Auction Session (CAS), market timings and settlement rules for derivative contracts. It has invited public comments until 3 October.

Stock Updates

• JSW Steel: NCLT will hear the proposed merger of Piombino Steel into JSW Steel on 24 September. The merger has not yet been approved.

• NTPC: subsidiary NTPC Green Energy started commercial operations of another 6.3 MW of its Vanki wind project in Gujarat. NTPC Group’s total commercial capacity has now crossed 90,000 MW.

• Grasim: Customs authorities searched Grasim’s Cellulosic Staple Fibre plant in Nagda, Madhya Pradesh, over import-export transactions.

• Solar Industries: subsidiary Solar SA Investments agreed to acquire 100% of South Africa-listed Omnia Holdings for about $1.36 billion (Rs 12,951 crore) in cash. Omnia operates across 23 countries in explosives, mining solutions, chemicals and agriculture.

• Lenskart: invested about Rs 8 crore to acquire another 1.8% stake in smart-glasses company Ajna, increasing its holding from 7.21% to 9.01%.

• Lloyds Metals and Energy: subsidiary Lloyds Global Resources set up a new company called Vector Asset Holdings Ltd in the Isle of Man for holding and financing international investments.

• Aurobindo Pharma: subsidiary A1 Biochem Labs invested $1 million in its newly set up US subsidiary, A1 Biochem USA, which will provide contract research and development services.

Word of the Day

Frothy

When the price of something reaches a level where it gets hard to justify, it is said to be frothy. In short, overvalued

A common use case is when the stock markets as a whole become extremely overvalued.

It can be used in case of individual share prices, or even prices of other assets and commodities.

Example: this company’s earnings per share is only Rs 3 but its share price has reached frothy levels at Rs 400.

Overvaluation is a subjective matter. There’s no hard formula for it. So not everyone will agree on the ‘frothiness’ of prices.

6 Day Course

Theme: finding correct valuation

Day 1: Monday

We have heard many times that certain stocks are overvalued or undervalued or fairly valued.

This week, we’ll try to decode this better.

The first and simplest method used by most investors is to use PE Ratio (Price to Earnings Ratio).

In this we are comparing how much a company earns versus how much it costs.

So the ratio is basically comparing the price of one share vs the earnings per share.

This is a basic method and can serve well in many cases.

Usually, investors have a certain number in mind for a stock being undervalued, overvalued, or fairly valued.

Example: one investor might feel that stocks with a PE ratio below 18 are undervalued, 19-22 are fairly valued, and anything above that is overvalued.

But the PE Ratio is only the starting point.

Depending only on this ratio may mean investors miss out on other signals that might tell us more about a stock’s valuation.

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Featured Question

Q. “During delisting what happens to investment, is it a loss or will company provide?”

It depends on how the delisting is happening.

If it is voluntary (company is doing it willingly), they offer a buyback to existing investors.

In short, they buy shares from the existing investor.

Some companies are delisted when they are acquired or merged.

In such cases, they might do a buyback of shares or might provide shares of the new company instead. Sometimes, they do a mix of both.

If the delisting happens for regulatory reasons, the shares stop trading, but investors still own them.

In such cases, they can buy/sell those shares Over the Counter (OTC), which means investors will have to find the person to trade with individually.

The stock exchange will not do it for the investor.

This is difficult and requires work. Many investors tend to treat it as a total loss case.

In case of companies being delisted because of bankruptcy, the share price falls hard.

In such cases also, the shares can be traded OTC but the share price is so low, many investors don’t bother with it and treat it as a full loss.

Or, they may sell it if they find buyers but still the money received in such cases is extremely minimal.

The information presented in this post has been compiled and prepared by Groww Invest Tech Pvt Ltd and is intended solely for informational purposes. It is not tailored to any specific investment objectives, financial situations, or needs of any individual investor. The content should not be construed as investment, financial, legal, or tax advice and should not be relied upon as a substitute for professional consultation.

Investing in securities markets involves inherent risks. Investors are advised to carefully review all relevant documents and consider their own risk tolerance before making any investment decisions.

Mutual fund investments are subject to market risks; please read all scheme-related documents carefully. Past performance of financial instruments, schemes, or markets is not indicative of future results.

Groww Invest Tech Pvt Ltd is registered with the Securities and Exchange Board of India (SEBI) under Registration No: INZ000301838, as a Research Analyst under No: INH200008662, as a Depository Participant under No: IN-DP-417-2019, and with the Association of Mutual Funds in India (AMFI) under ARN-111686.

SEBI registration details: View registered name and registration numbers

Research Analyst Disclaimer: View Research Analyst disclaimer