Markets closed lower compared to yesterday’s closing point.

IT stocks and realty stocks fell the most today. Media stocks and auto stocks rose the most.

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

News

• Regional Rural Banks’ gross loans rose 10.30% to Rs 578,349 crore in FY26 compared to Rs 524,163 crore in the previous year.

• DoT, Government of Chhattisgarh, CSBIL, BSNL and CHiPS signed an agreement worth Rs 3,942 crore for implementation of BharatNet program in the state to strengthen digital infrastructure and expand broadband connectivity.

• The government imposed a minimum import price of Rs 34,000 per tonne on clear float glass with 4mm to 12 mm thickness for a year to protect domestic manufacturers from cheaper imports. Imports below this threshold will face restrictions.

IPO Corner

• Horizon Industrial Parks was subscribed 0.24 times on day 2. Retail subscription: 0.43 times. The IPO will close for subscription on 19 August.

• Lalithaa Jewellery Mart was subscribed 3.07 times on day 2. Retail subscription: 2.78 times. The IPO will close for subscription on 19 August.

• Milky Mist listed at Rs 165 on NSE, a premium of 17.86% over its issue price and closed 29.64% higher.

Stocks Updates

• ICICI Bank: raised $750 million through a 5-year senior unsecured bond issue at a 5.417% coupon rate via its IFSC Banking Unit, maturing in August 2031.

• Bajaj Finance: allotted secured NCDs worth Rs 498.22 crore on a private placement basis at a 7.79% coupon, maturing in July 2036.

• ONGC: subsidiary ONGC Videsh got US approval to carry out oil and gas operations at San Cristobal and Carabobo-1 assets in Venezuela. It also commissioned gas evacuation facilities at Khoraghat, Assam.

• Samvardhana Motherson: NCLT approved the buyout of the 7.04% minority stake in Motherson Technology Services Ltd for Rs 33.52 crore, after which it will become fully owned by its parent company.

• DLF: subsidiary DLF Info Park Developers (Chennai) Ltd will acquire a 26.97% stake in Balang Renewables Pvt Ltd for Rs 4.20 crore to meet captive renewable power requirements.

• Varun Beverages: completed merger of step-down subsidiary Twizza (Pty) Ltd into its South African holding company The Beverage Co (Pty) Ltd.

• Lenskart Solutions: incorporated step-down subsidiary Wenzhou Framekart Trade Co., Ltd in China for trading and procurement of spectacle frames and optical products.

• One 97 Comm (Paytm): Resilient Asset Management will sell up to a 4.98% stake in Paytm via a block trade.

• Mankind Pharma: completed realignment of security for its NCDs. The shares it had pledged as security in Bharat Serums and Vaccines Ltd (38.68% stake) have now been released.

• Manipal Health: will acquire Kinder Women’s Hospital and Fertility Centre, a 100-bed facility in Bengaluru, for Rs 130 crore; the hospital reported FY26 revenue of about Rs 20.75 crore.

Word of the Day

Delta

It is the difference between two numbers

Say one mutual fund has given a return of 14% per annum over the last 10 years.

And another one has managed to give 16% per annum over the same period.

The difference in their returns is (16-14)% = 2%.

So we can say there is a delta of 2% between the two mutual funds.

6 Day Course

Theme: opex and capex

Day 2: Tuesday

Practically speaking, all the money a company spends can be categorised as either opex or capex.

Debt principal payment, dividends, and buybacks are not counted in capex or opex.

These expenses are made using the cash a company has — the profit money that the company has.

Some tax payments like payroll taxes, property tax, sales tax, etc are a part of the day to day operations of a company and hence are counted under opex.

Income tax applies on the cash that is left after paying all opex.

All capex spendings take place from the cash a company has.

Which means, dividends, buybacks, and capex all come from the same pool of money — cash reserves.

————

Markets closed lower compared to Friday’s closing point.

Realty stocks and metal stocks rose the most today. IT stocks and FMCG stocks fell the most.

Global markets: US markets fell on Friday. Most Asian markets rose on Monday. Most European markets fell (as of 6 pm IST).

News

• India’s unemployment rate fell to a four month low of 5.10% in July compared to 5.50% in June.

• RBI advanced the deadline for swap facility for FCNR(B) deposits to 31 August instead of the earlier announced 30 September, after inflows of over $56 billion.

IPO Corner

• Horizon Industrial Parks was subscribed 0.14 times on day 1. Retail subscription: 0.19 times. The IPO will close for subscription on 19 August.

• Lalithaa Jewellery Mart was subscribed 0.69 times on day 1. Retail subscription: 0.74 times. The IPO will close for subscription on 19 August.

• Dhoot Transmission listed at Rs 1200 on NSE, a premium of 37.77% over its issue price and closed 35.83% higher.

• Molbio Diagnostics listed at Rs 980 on NSE, a premium of 21.44% over its issue price and closed 30.86% higher.

Stocks Updates

• L&T: Energy Hydrocarbon Offshore business secured an ultra-mega order (above Rs 15,000 crore) for a strategic offshore development project in the Middle East. It will design, procure, build, install and commission multiple offshore facilities.

• Sun Pharma: got a favourable ruling in the US Lipitor antitrust case. The judgment was in favour of the company and its subsidiaries, largely bringing the case to an end unless the plaintiffs take further legal action.

• GMR Airports: started commercial operations at Alluri Sitarama Raju International Airport in Bhogapuram, Andhra Pradesh.

• Lupin: received final USFDA approval for Pitolisant Tablets, a generic version of Wakix.

• Aurobindo Pharma: got a USFDA inspection report saying its Raleigh facility is VAI (Voluntary Action Indicated) and the inspection is now closed. Pending product approvals from this site can now move forward in the USFDA review process.

Word of the Day

Alpha

It is the additional return earned over the overall system you are talking about

Say you are talking about Nifty 50 index. If a fund invests in large-cap stocks and gives returns higher than Nifty 50, the fund is said to be generating an alpha.

Example: Nifty 50 index gave a return of 12% per annum. A large-cap mutual fund gave a return of 15% per annum.

This means, the mutual fund was able to generate 3% more returns over the overall system it is a part of (large-cap stocks).

So we can say the mutual fund generated an alpha of 3%.

6 Day Course

Theme: opex and capex

Day 1: Monday

Opex = Operating expenditure

Capex = Capital expenditure

Opex is the money a business uses to run daily operations.

All the costs that are spent to make the business run within a certain period (usually that quarter or financial year) are grouped into this.

It includes expense like rent, salaries, material consumed, maintenance and repairs, marketing, services, etc.

An expense that is made for a future use is called capex.

Future use in this case is when an expense buys something beyond an accounting period (quarter or year).

Which means, if a company buys an equipment that it will use for many years, it will be grouped under capex.

Example: buildings, factories, warehouses, equipment, vehicles, IT hardware, acquired licenses and patents, software licenses, etc.

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What If

India’s GDP is one of the most important numbers people look at to understand how the economy is doing.

It is closely tracked by investors, policymakers, and global institutions, and it often shapes interest rates and government policy, which in turn affect companies across different sectors.

As an investor, you might have wondered if the economy is doing well, companies should do well, and so should your portfolios.

But is that really how it works?

In today’s What If, we studied 20 years of data to find out whether India’s GDP growth actually has any real link with stock market returns, or if the connection people assume exists at all.

Read the latest What If here

In 2026, the International Air Transport Association expects a record 5.1 billion passengers to travel by air. Planes were also very full, with about 84% of seats filled on average, the highest level ever.

At first, this sounds like great news for airlines.

But it isn’t that simple.

Fuel prices went up because of the war in the Middle East. At the same time, Boeing and Airbus were not able to deliver enough new, fuel-efficient planes, so airlines had to keep using older ones that cost more to run. On top of that, low-cost airlines kept ticket prices low because of competition.

So even though more people were flying, airlines were not necessarily making much more money.

IATA eventually cut its expected industry profit margin for the year from 3.9% to just 2%.

In other words, more activity did not automatically mean more profit.

This brings us to a belief many investors naturally hold about the economy and the stock market.

When India’s GDP grows quickly, it simply means more activity is happening in the economy. People are spending more, companies are selling more, factories are producing more, and businesses are expanding.

So the logic feels straightforward.

If the economy is doing well, companies should do well. And if companies are doing well, their stock prices should rise too.

But the real question is, does it actually work like that?

Does faster GDP growth really mean better stock market returns?

We decided to test this.

And we looked at the relationship in two simple ways: first, whether GDP growth and Nifty returns actually move together year by year, and second, whether the companies in the stock market even reflect the same parts of the economy that GDP is measuring.

The Study

We looked at 21 Indian financial years, from FY06 to FY26, and compared two numbers for each year: the Nifty 50’s annual return and India’s real GDP growth.

Then we asked a simple question:

How often did GDP and the Nifty move in the same direction?

But there was one problem.

The Nifty goes up in most years anyway. So even if stocks rose in most years when GDP grew, that alone would not prove that GDP was a useful signal.

So we also compared the result with the Nifty’s normal base rate — how often it went up regardless of GDP.

This helps us see whether knowing that the economy was growing actually told an investor anything extra about what the stock market would do.

What We Found

1. At first, GDP and the Nifty seem to move together

In 14 of the 21 years, GDP and the Nifty moved in the same direction. In the other 7 years, they did not.

At first, that looks like a solid relationship. But it is also important to know that the Nifty rose in 15 of the 21 years anyway.

GDP grew in 20 of those 21 years, and the Nifty rose in 14 of those 20 years. That is a 70% success rate.

The Nifty’s normal base rate was 71%.

So knowing that GDP grew did not really improve your chances of predicting whether the Nifty would rise.

Most years look like they support the idea that a growing economy goes with a rising market. But the highlighted years show why that relationship is not dependable and FY16 and FY21 are the clearest examples.

2. Some years showed a very different picture

FY16 is a good example.

India’s economy grew by 8%, but the Nifty fell 9.87%.

One reason was that the market had already risen 26.33% in the previous year, partly because investors were expecting strong growth. By FY16, concerns about China’s slowdown and weak corporate earnings became more important.

FY21 showed the opposite.

India’s GDP fell 5.78% because of the Covid lockdowns.

Yet the Nifty rose 77.99% during the same financial year.

The market had already crashed when investors feared the worst in March 2020. It then started rising as investors expected the economy to recover.

This highlights an important difference.

GDP tells us what happened in the economy. The stock market tries to price what investors think will happen next.

3. GDP is only one of many things that move stocks

Stock prices also depend heavily on company profits.

For example, during the mid-2010s, India’s GDP was growing at around 7–8%, but earnings of listed companies barely grew as banks dealt with large bad loans.

Then, in 2019, the government cut corporate tax rates. That directly improved company profits even though GDP growth did not suddenly jump.

Valuations also matter.

A company’s share price depends not only on how much it earns, but also on how much investors are willing to pay for those earnings.

That can change because of interest rates, foreign investor flows, wars, crises and other market developments.

So even when GDP is growing strongly, another factor can become more important for the stock market in that particular year.

What the Market Is Made Of vs What the Economy Is Made Of

There is another reason GDP and the Nifty may not move together, and it comes down to a basic but important point: they are measuring two very different things.

GDP is designed to capture the entire Indian economy — everything from farming and manufacturing to services, government activity and informal work. If you break India’s economy into broad buckets, it usually comes down to three parts: agriculture, industry and services.

Over the last two decades, this structure has been fairly stable. Services have consistently been the largest share, contributing around 60% of total output, while agriculture and industry have each stayed roughly around 20%.

India’s GVA by broad sector, FY06 vs FY26. The economy’s shape barely changed. Source: MoSPI National Accounts (series change noted below).

The Nifty, however, is not built to reflect this structure. It is not a miniature version of the economy. It is simply an index of 50 large, listed companies.

And that difference matters.

For example, agriculture still accounts for nearly 18% of India’s economy, but there is no agriculture company in the Nifty 50 at all. In other words, a sector that represents almost one-fifth of economic activity is completely missing from the stock market index.

This is the first clear gap between the two: large parts of the real economy are not represented in the market at all, while some sectors are heavily overrepresented.

Even services mean different things

Services are the biggest part of both India’s economy and the stock market index. So at first glance, it feels like they should move together.

But the important point is this: “services” does not mean the same thing in both places.

In the real economy, services are everything people use in daily life. This includes small shops, local transport, restaurants, hotels, delivery services, and also government services like schools, hospitals, and administration. A large part of this is informal and spread across millions of small businesses and workers.

In the stock market (the Nifty), “services” is a much narrower and more corporate group. It is mostly made up of large listed companies, especially banks and IT companies.

This creates a mismatch.

GDP growth vs Bank Nifty and Nifty IT returns, FY06–FY26. Source: NSE, World Bank WDI.

Take IT companies first.

Big Indian IT firms earn most of their money from clients outside India — mainly in the US and Europe. So their performance depends more on global technology demand and the value of the dollar compared to the rupee, rather than how fast India’s own economy is growing. Because of this, there were several years in our study where Nifty IT fell even though India’s GDP was growing.

Now look at banking.

Banks are closely linked to the Indian economy because they lend to Indian households and businesses. So in that sense, they do reflect domestic conditions.

But in the stock market, banks are extremely important because they take up a very large share of the index.

Today, financial services make up about 37% of the Nifty. In comparison, in the broader economy, the entire category that includes finance, real estate, IT and professional services is only about 27% of total output (GVA) — and banking is just one part of that.

So what this means is:

• The economy is made up of millions of small and large service activities spread across the country.

• The Nifty is heavily influenced by a small number of large financial and IT companies.

Because of this difference, the stock market can move in ways that do not always match what is happening in the broader economy.

The Nifty itself has also changed.

The Indian economy has stayed broadly similar in its structure over time, but the Nifty has changed a lot in what it represents.

For example, in 2005, oil and gas companies made up about a quarter of the entire index, making them the most important part of the Nifty. By 2025, their share had dropped to around 10%.

At the same time, financial companies became much more important. Their weight in the index rose from about 13% to 37%.

IT companies moved in the opposite direction, falling from around 20% to 10%.

Nifty 50 sector weights, 1995–2025. Unlike the economy, the index reshaped itself completely. Source: NSE Nifty 50 whitepaper.

What this means is simple: the Nifty today is not the same “basket” it was 20 years ago.

So when we compare GDP with the Nifty, we are not really comparing the same thing.

GDP is a picture of the entire Indian economy — everything from farming and factories to shops, services and government activity.

The Nifty, on the other hand, is just a group of 50 large listed companies, and some sectors like banking and finance have a much bigger influence on it than others.

Because of this difference, it is natural that the Nifty and GDP do not always move together.

Note

Nifty returns exclude dividends. This changes the return level slightly, but not whether the market rose or fell.

GDP and Nifty are measured differently. GDP is inflation-adjusted; the Nifty is not.

GDP data comes from the World Bank. FY26 growth is estimated at 7.57%, versus India’s provisional 7.7%.

GVA methodology changed over time. So FY06 and FY26 sector shares are useful for broad comparison, not exact like-for-like comparison.

Nifty and GVA sectors are classified differently. The sector comparison is therefore directional, not exact.

Nifty sector-weight methodology also changed. Older data uses full market cap, while newer data uses free-float market cap.

Moving together does not mean GDP caused the market move. That is why we compare the result with the Nifty’s normal base rate.

Research Analyst Disclaimer

Markets closed lower compared to yesterday’s closing point.

Pharma stocks and metal stocks fell the most today. Media stocks and consumer durables stocks rose the most.

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

News

• India’s forex reserves rose $14.14 billion to $707 billion for the week ended on 7 August.

• India’s wholesale price inflation fell to 9.78% year-on-year in July compared to 9.87% in June.

• Shiprocket IPO was subscribed 99.38 times on day 3. Retail subscription: 46.42 times. IPO closed for subscription.

• LEAP India listed at Rs 165.90 on NSE, a premium of 4.34% over its issue price and closed 8.18% lower.

• Zetwerk filed an updated DRHP for an IPO, consisting of a fresh issue of Rs 2,600 crore and an Offer For Sale of 9.68 crore shares.

Stocks Updates

• Reliance: announced plans to partner with Rolls-Royce to jointly develop and manufacture an indigenous combat engine for India’s AMCA program. They will also explore setting up an Aerospace Gas Turbine Complex in India.

• ICICI Bank: completed the issuance of $300 million by issuing bonds through its IFSC Banking Unit. The issue is part of its $7.5 billion Global Medium Term Note program.

• Adani Enterprises: Subsidiaries acquired Path Highways LLP for Rs 91.34 crore, increasing their effective stake in Mancherial Repallewada Road Ltd, Suryapet Khammam Road Ltd and Bilaspur Pathrapali Road Ltd to 99.99%.

• Tata Steel: agreed to sell its entire stake in Jamshedpur Football and Sporting Pvt Ltd to Churchill Brothers Sports Club Pvt Ltd for a nominal Rs 100. The subsidiary contributed only 0.01% of Tata Steel’s FY26 consolidated turnover.

• Adani Energy Solutions: acquired 100% stake in Vizag Power Transmission Ltd from REC Power Development and Consultancy Ltd.

• Bank of Baroda: issued $700 million of senior unsecured fixed-rate bonds. This includes $400 million of three-year bonds at a 5.114% coupon and $300 million of five-year bonds at a 5.318% coupon.

• Vedanta: was declared the successful bidder for the 152-hectare Punnam Manganese Block in Andhra Pradesh. The block is currently at the G4 exploration stage.

• Ashok Leyland: net profit rose 0.78% year-on-year to Rs 615.81 crore in the April-June quarter. The board also approved investing up to 25 million pounds (about Rs 325 crore) in subsidiary Optare Plc and up to Rs 500 crore in Hinduja Housing Finance Ltd by purchasing shares from Hinduja Leyland Finance Ltd.

• Aurobindo Pharma: subsidiary Eugia Pharma Specialities Ltd received a USFDA Warning Letter for its Unit-I formulation manufacturing facility after earlier OAI classification.

Word of the Day

Dead Cat Bounce

Even the worst of assets rise up after falling severely, only to fall again soon

A dead cat bounce is often seen in stocks of even the most severely affected companies that have almost no chance of a revival.

This usually happens because after a severe fall, some investors become hopeful that things will improve.

Often, they think so simply by looking at the fall numbers and not looking at the fundamentals of the company.

This leads to a temporary rise in the stocks’ price.

Obviously this pattern can be seen in the prices of all kinds of poor assets, not just stocks, bonds, commodities, etc.

6 Day Course

Theme: micro-cap investing

Day 5: Friday

Micro-cap investing also happens to have some companies with extremely low float.

This means that some of these companies’ total shares being traded on the markets is extremely small.

This means that even a little bit of buying/selling can drastically affect the price of the stock, causing it to shoot up or down.

Sadly, this nature of these stocks also makes it vulnerable to pump-and-dump scams.

On the flip side, if the due diligence is done well, some of these stocks can experience meteoritic rise — the kind seen in the case of startup investments.

The trick is in identifying these companies, which can be extremely difficult.

Such cases are not as common as we’d like to believe. They happen, but it is not a given that such returns will be achieved by all micro-cap companies.
————

Featured Question

Q. “I noticed yesterday that Sensex ended the day in green and Nifty ended in red. Why does this happen?”

This happens from time to time. This is not abnormal.

Nifty 50 is made up of 50 of the biggest companies on the stock markets.

Sensex is made up of the 30 biggest companies.

So, they are mostly similar and share the first 30 stocks. But Nifty 50 also has 20 more stocks in it.

If by chance, those extra 20 stocks’ performance is different, it can cause the Nifty 50’s performance to vary from the Sensex’ performance.

On most days, Nifty 50 and Sensex’ performance is similar but almost never the same.

On days the markets are flat, this small difference can mean that the Sensex was just above 0% (meaning green) and Nifty was just below 0% (meaning red). Or vice versa.

Markets closed flat compared to yesterday’s closing point.

Metal stocks and cement stocks fell the most today. Chemical stocks and realty stocks rose the most.

Global markets: US markets ended mixed on Wednesday. Most Asian markets also traded mixed on Thursday. European markets showed a mixed trend (as of 6 pm IST).

News

• India’s merchandise exports rose to $44.24 billion in July compared to $36.98 billion a year ago. Petroleum Products, Electronic Goods, Engineering Goods, Organic & Inorganic Chemicals etc, were the major drivers of merchandise exports.

• MSCI will add four companies (Adani Energy Solutions, Billionbrains Garage Ventures, Laurus Labs and Lenskart Solutions) to its Global Standard Index and it will remove Astral, Balkrishna Industries and SBI Cards, effective from 1 September.

• Milky Mist’s IPO was subscribed 56.12 times on day 3. Retail subscription: 8.41 times. The IPO will close for subscription on 13 August.

• Shiprocket IPO was subscribed 3.16 times on day 2. Retail subscription: 9.77 times. IPO will close for subscription on 14 August.

Stocks Updates

• L&T: subsidiary LTN Compute secured a mega order (Rs 10,000 cr - Rs 15,000 cr) to build a 10,000-GPU NVIDIA B300 AI Factory for US-based Together AI at L&T’s Chennai data centre campus.

• Solar Industries: net profit rose 92.66% year-on-year to Rs 652.55 crore in the April-June quarter.

• Jio Financial: Bank of America (BofA) agreed to invest up to Rs 18,268.22 crore in subsidiary Jio Credit Ltd through shares and warrants. BofA will initially acquire 26.50% and can increase its stake to 49.90% after full conversion of the warrants, subject to approvals.

• BHEL: signed a strategic agreement with Norway-based Hystar AS for PEM electrolyser systems for green hydrogen projects in India.

• Tata Motors Passenger: net profit fell 80.25% year-on-year to Rs 775 crore in the April-June quarter. The year-on-year comparison is affected by the demerger of the commercial vehicles business, whose appointed date was 1 July 2025.

• Apollo Hospitals: net profit rose 34.17% year-on-year to Rs 580.70 crore in the April-June quarter.

• GMR Airports: reported a net profit of Rs 91.04 crore in the April-June quarter from a net loss of Rs 211.59 crore in the year-ago quarter. The board also approved raising up to Rs 5,000 crore via securities and up to Rs 1,500 crore through non-convertible bonds to refinance existing NCBs.

• LG Electronics India: net profit rose 27.20% year-on-year to Rs 652.86 crore in the April-June quarter.

• Aditya Birla Capital: allotted secured NCDs worth Rs 835 crore on a private placement basis. The company allotted Rs 350 crore of NCDs at a 7.98% coupon rate and Rs 485 crore at an 8.0163% coupon rate.

• Indian Hotels: received an additional penalty claim of Rs 5.51 crore from the BMC on unpaid property taxes for Taj Lands End, Mumbai, taking the total penalty claim to Rs 103.08 crore.

• Max Healthcare: net profit rose 4.71% year-on-year to Rs 322.49 crore in the April-June quarter. The board also approved around Rs 425 crore of capex to construct an additional hospital block at Max Super Speciality Hospital, Vaishali.

• Aurobindo Pharma: incorporated wholly owned subsidiary Auropharm Overseas Ltd to undertake pharmaceutical manufacturing and marketing operations in India and overseas.

Word of the Day

OEM

OEMs are companies that supply equipment or parts to another company

OEM = Original Equipment Manufacturer

OEMs manufacture products that are sold with the client company’s brand name.

Consider the automobile industry.

A fuel filter making OEM company might be making a part that gets fitted in a car of another company.

That part will be used and sold by that car company as its own part.

The same part may be manufactured by many different OEM companies and supplied to the car company as per its exact specifications.

6 Day Course

Theme: micro-cap investing

Day 4: Thursday

Micro-cap companies usually tend to be a lot more susceptible to shocks.

Since their operations are small and have a limited number of customers, many of them suffer greatly when a change in consumer behaviour occurs or an external shock stresses the company.

This is why many micro-cap companies go bankrupt or suffer huge hits to their revenues during recessions.

The flip side of this is that since these companies are small, they are also much more nimble.

They are often able to adapt quickly and make changes to their operations and products in response to the markets’ demands.

It is this nimble nature of theirs that enables them to grow fast too.

This is why some micro cap companies’ earnings grow very fast and therefore result in their stocks growing fast as well.

————

Featured Question

Q. “Quite often we receive a communication from mutual fund AMCs regarding increase in base expense ratio. Is there any cap/regulation on the frequency or quantum of increase of the expense ratios?”

There is no restriction on the number of times an AMC can change a mutual funds’ base expense ratio (BER).

But there is a cap on the max base expense ratio they can charge.

These caps are based on the category and subcategory of the mutual fund and total money that mutual fund is managing or Assets Under Management (AUM).

The bigger a mutual fund (higher AUM), the lower the max BER allowed.

Markets closed lower than yesterday’s closing point.

IT stocks and FMCG stocks fell the most today. PSU Bank stocks and media 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 retail inflation rose 4.45% in July compared to 4.38% in June. Food inflation rose 5.52% in July (vs 5.32% in June).

• Net Direct Tax collection rose 23.09% year-on-year to Rs 8.11 lakh crore as of 10 August (compared to Rs 6.59 lakh crore a year ago).

• SEBI Chairman said that they have observed no market manipulation under the Closing Auction System yet but data is being monitored continuously; as per media reports.

IPO Corner

• Milky Mist’s IPO was subscribed 2.17 times on day 2. Retail subscription: 2.44 times. The IPO will close for subscription on 13 August.

• Shiprocket’s IPO was subscribed 0.97 times on day 1. Retail subscription: 3.34 times. IPO will close for subscription on 14 August.

• Dhoot Transmission’s IPO was subscribed 74.21 times on day 3. Retail subscription: 8.12 times. IPO closed for subscription.

• Molbio Diagnostics’ IPO was subscribed 70.26 times on day 3. Retail subscription: 12.96 times. IPO closed for subscription.

Stocks Updates

• SBI: completed a $500 million senior unsecured fixed-rate bond issue with 5-year maturity and 5.25% coupon, via its London branch.

• UltraTech: agreed to acquire a 26% stake in Solaris Horizon Energy Pvt Ltd for up to Rs 27.76 crore. The SPV will supply 91 MWp DC/65 MW AC of solar power to UltraTech’s plants in Chhattisgarh.

• HAL: net profit rose 14.88% year-on-year to Rs 1,589.68 crore in the April-June quarter.

• Coal India: signed a non-binding MoU with ArcelorMittal Nippon Steel India Pvt Ltd to explore use of syngas from a proposed coal gasification facility near AMNS’s Paradip pellet plant.

• Grasim: net profit rose 51.07% year-on-year to Rs 2,145.91 crore in the April-June quarter.

• Tata Motors: net profit rose 83.25% year-on-year to Rs 2,560 crore in the April-June quarter. The company also acquired an additional 18.1% stake in Freight Tiger for about Rs 96 crore, making Freight Tiger its subsidiary.

• JSW Energy: subsidiary JSW Neo Energy Ltd signed a shareholders’ agreement with Bhutan’s Druk Green Power Corporation Ltd to jointly develop the 920 MW Punatsangchhu-III hydro project in Bhutan, with JSW Neo Energy holding a 49% stake in the JV.

• Lenskart: net profit rose 269.24% year-on-year to Rs 221.84 crore in the April-June quarter. The board also approved the acquisition of an additional stake in JV, Baofeng Framekart Technology and the setting up of step-down subsidiaries in South Korea and China.

• Dixon: is setting up Adivistar Electronics India Pvt Ltd with 51% stake. The company will do OEM manufacturing of electronic devices, including smartphones.

Word of the Day

ISIN

It is a unique identification number given to each stock in the world

ISIN = International Securities Identification Number.

Just like how every person has a unique Aadhaar number in India, every stock (across different countries) is assigned a unique ISIN.

No two companies in the world can have the same ISIN.

Example: US0378331005 is the ISIN for Apple. INE090A01021 is the ISIN for ICICI Bank.

Your stocks details are stored in your demat account using the ISIN of each stock.

ISIN is different from ticker symbols.

Ticker symbols are more useful for trading since they are shortened names of companies that can be read very quickly.

6 Day Course

Theme: micro-cap investing

Day 3: Wednesday

Companies report their numbers for investors to see but how true are the numbers?

Is the company telling the truth about its business, operations, and metrics?

Are the proprietors and the management of the company reliable and trustworthy?

Many companies suffer from poor management and governance which is a huge risk in case of micro-cap companies.

In case of larger companies, scrutiny is greater.

Various investors (institutional as well as individual) are closely tracking and monitoring every aspect of these companies.

The same is not true in case of micro-cap companies.

Scrutiny is lower and investors should invest only if they’re sure of these aspects.

This is why many micro-cap companies’ shares are avoided even though they look good on paper.

————

Featured Question

Q. “There were ample number of companies not listed and doing well. In that case, what is the benefit for companies to list in stock exchange?”

Companies go for an IPO and list on the share markets for two reasons:

- To raise more money

- To allow their older investors and proprietors to sell shares and exit

Often, it is a combination of both these factors.

If both these factors are not relevant, companies need not list themselves.

There are many healthy companies that are working perfectly fine that are not listed.

They do not need extra money to fund their growth or are able to meet that need via loans/debt.

Many family-owned businesses and companies operate like this.

Also, listing on the exchanges requires many extra steps that are recurring like audits, quarterly reports, etc.

Many companies are not able to justify the added work and expense to get the benefits of being listed.

There are a few other reasons too. Companies that are listed often find it easier to raise money via debt, offer ESOPs to employees, etc.

It won a contract to make hand grenades for the Indian Army.

This was the first time a private company in India had been entrusted with large-scale production of live battlefield ammunition.

For decades, weapons like these were made almost entirely by government-owned ordnance factories or imported from foreign suppliers, because strict rules and a tightly controlled defence system left very little space for private companies to make live ammunition.

Even when private companies were allowed into defence production, they were mostly restricted to safer, low-risk parts rather than live ammunition filled with explosives.

As a result, for a long time it was widely believed that a private company could not independently manufacture and supply large-scale ammunition to the Indian Army.

But that system was starting to change.

When the Ministry of Defence opened up ammunition manufacturing to private companies, only a handful of firms were actually in a position to take advantage of it. This was not like setting up a normal factory. Ammunition production needs deep experience with explosive materials, strict safety systems, large-scale chemical manufacturing, and the ability to meet very tight military quality standards every single time.

Solar Industries.

It won an order to manufacture ten lakh hand grenades worth Rs 409 crore.

This was the first time a private company in India had been given such a large contract for live ammunition.

After this, the business expanded quickly.

Within five years, the same company moved into advanced defence systems, entering a space where the Indian Army had largely relied on Israeli and other foreign loitering munitions. It built loitering munitions that were tested against old and established players from Israeli and Polish companies.

It also began exporting guided rockets to Armenia, marking one of the first times an Indian private explosives company entered the global precision-guided weapons market.

Here’s the strange part. The company we are talking about, Solar Industries, was not a defence company by origin. It had spent its first 25 years making something far less glamorous.

Explosives used to blast coal out of the ground.

Today, Solar Industries is India’s largest explosives manufacturer and holds around 24% of the industrial explosives market.

Its rise was not the result of one product or one large defence order.

Over several decades, the company built a strong foundation in the explosives space, which allowed it to move early and then quickly take up opportunities once the Indian government began opening up defence manufacturing to private players.

Today, Solar Industries is not only India’s largest explosives manufacturer. It has also become one of the country’s most important private defence companies.

So how did a mining-explosives maker from Nagpur build such a strong position across two difficult industries?

This article explores how Solar Industries built its competitive edge, why that advantage strengthened over time, and why competitors have struggled to recreate it.

The ‘ton-kilometre’ trap

An explosives company could not profitably survive more than 300 kilometres away from its centralised factory.

The problem began with the product itself.

Commercial explosives are dense and volatile chemicals. They are shipped in bulk to highly cost-conscious customers such as Coal India and other large mining contractors.

Coal India is the biggest buyer of commercial explosives in the country. It typically awards contracts through competitive tenders, where the lowest bidder has a strong chance of winning the order.

This gave Coal India considerable bargaining power.

Since suppliers were competing for the same large contracts, they could not simply increase prices whenever their costs went up. A higher price could mean losing the entire order to another manufacturer.

But the real problem was freight, which in India is priced on a tonne-kilometre basis.

This means the cost depends on two things: the weight of the material being transported and the distance the truck travels.

For an explosives manufacturer, the selling price per tonne may remain fixed once the contract is awarded. But the freight cost rises with every additional kilometre the delivery truck travels.

Take a simple example. Suppose a manufacturer sells one tonne of bulk explosives for Rs 50,000 and expects to earn a profit of Rs 5,000. If freight costs Rs 10 per tonne-kilometre, delivering the material to a mine 100 kilometres away costs Rs 1,000, leaving the supplier with Rs 4,000.

But if the same tonne had to be delivered to a mine 500 kilometres away, the freight bill would rise to Rs 5,000. The entire profit would disappear.

The product and selling price are the same. Only the distance changes.

Beyond a certain radius, the manufacturer does not merely earn a lower margin. It begins losing money on every delivery.

This kept India’s commercial explosives market fragmented and regional for decades. A company could serve mines located close to its factory, but supplying customers hundreds of kilometres away became increasingly uneconomical.

And freight was only one part of the problem.

Finished explosives are tightly regulated because they must be stored, handled and transported carefully.

Specially licensed vehicles may have to travel at controlled speeds, avoid densely populated areas and operate only during permitted hours. A journey that would normally take ten hours could stretch to two or three days.

The obvious solution was to build another factory closer to the customer.

But setting up an explosives plant was not like opening a normal manufacturing facility.

A new plant required an industrial licence, approval from the Petroleum and Explosives Safety Organisation, and no-objection certificates from police, district and local authorities.

Each new facility required capital, regulatory clearances, suitable land and a strong safety record.

So every manufacturer faced the same two barriers: distance damaged margins, while regulation made expansion slow and difficult.

Solar Industries found a way to turn both problems into an advantage.

First, the compliance layer

Satyanarayan Nuwal, the founder of Solar Industries, didn’t start out as a manufacturer. In the 1980s, he was a consignment trader and distributor, selling explosives made by established companies and running licensed storage facilities called explosive magazines.

These were tightly regulated storage facilities. The amount of explosives that could be kept was strictly limited, access was controlled, and every movement of material had to follow safety rules and government regulations.

Running these magazines gave Nuwal a clear understanding of how the industry worked. He saw how mining companies placed orders, how explosives were stored and transported, and how firms dealt with regulators.

Over time, this also built something important: a compliance record.

Solar Explosives was incorporated in 1995. A year later, it received its first manufacturing licence to produce 6,000 tonnes of slurry explosives in Nagpur. By then, Nuwal had already spent years operating within the system, so the company was not starting from zero in the eyes of regulators.

This mattered because every new explosives plant needed fresh approvals, and new companies had to prove again and again that they could safely make, store, and transport hazardous materials. Solar, however, already had a track record of running compliant operations that regulators could check.

Each safely run magazine added to its credibility, and every new manufacturing facility strengthened it further. Over time, this built a compounding advantage, where each successful operation made the next approval process a little easier.

Solar did not avoid regulations. It just got better at working within them than new companies entering the industry for the first time.

But knowing the rules was not enough to fix the freight problem. To solve that, Solar had to change where and how the business was set up.

Second, the proximity network

Knowing how to navigate regulation gave Solar Industries an advantage.

But it still had to solve the freight problem.

Solar did not try to solve this by building one enormous centralised factory. Instead, it restructured the entire system of production and delivery around the mines themselves.

The timing mattered because India’s coal industry was dominated by surface mining, which accounted for more than 90% of total output. To extract coal buried under layers of hard rock, mining companies needed both heavy excavators and large volumes of explosives.

And after India’s economic liberalisation in 1991, the economy began expanding rapidly. New factories were built, villages were electrified, and industrial activity accelerated across the country. All of this required one thing above everything else: electricity.

In India, that meant coal, which still accounts for about 70% of power generation.

As demand for electricity surged, coal production had to rise just as quickly. Coal India, which supplied most of the country’s coal, came under constant pressure to increase output to keep pace with the economy’s growth.

But higher output was not just a mining problem. It was also a logistics problem.

Traditional packaged explosives were poorly suited to this scale of demand.

They were transported as finished explosives, often in wooden crates. Moving them over long distances created serious logistical and safety bottlenecks. The material required careful handling, licensed vehicles, and strict regulatory compliance throughout the journey.

Solar Industries started using Bulk Delivery Vehicles, or BDVs.

A BDV carried the main ingredients separately, including the emulsion matrix and gassing agent. They were mixed only at the mining site.

This made blasting simpler, faster, and cheaper to carry out.

The BDV also reduced the need to move, unload and manually place large quantities of finished explosives.

But the vehicles alone were not enough.

The real shift in Solar Industries’ strategy came when it stopped thinking of factories as fixed assets in one place.

It began treating factories as part of the mining ecosystem itself.

Instead of producing everything in Nagpur and transporting it across the country, Solar started building smaller plants close to major coal and mining belts.

Each plant was placed near a large customer with regular demand.

The Jharsuguda plant served Mahanadi Coalfields. Ramgarh supplied Central Coalfields, while Korba catered to South Eastern Coalfields. Waidhan served Northern Coalfields, and Chandrapur supported Western Coalfields.

Solar was not expanding randomly. It was placing production exactly where the explosives would be used.

This changed the economics of the business.

The logic was simple.

A competitor supplying from a distant centralised factory still had to pay high freight costs over long distances.

Solar removed most of that disadvantage even before the bidding started.

By making explosives closer to the customer and using BDVs for final delivery, it could offer a lower delivered price while keeping its own margins intact.

For Coal India, the benefits were practical. Explosives were available closer to the mine, deliveries were faster, handling was easier, and the mix could be adjusted based on local rock conditions. Overall costs went down.

For Solar, every new plant meant it could serve more mines profitably.

Large Coal India contracts also gave steady, predictable volumes. That stable demand helped keep plants running efficiently, supported more BDVs, and made it easier to expand further.

Over time, this model became hard for others to compete with.

A company making explosives from far away could not match Solar’s prices once transport costs were added.

But even setting up a new plant near the same mining area was not a good option, because the demand would then be shared, making both plants less efficient.

Solar had already reached the customer first and set up its capacity right next to the mines. This made it harder for new players to enter profitably.

As a result, companies that still depended on large, central factories were at a disadvantage. Whatever they saved in production efficiency was often lost in freight costs.

Solar was not just optimising production.

It was redesigning the entire delivery network.

Over time, the company built 34 decentralised manufacturing facilities across India, many positioned close to coalfields, mines and infrastructure projects.

It also reduced its dependence on outside suppliers.

In 1998, Nuwal set up Economic Explosives Ltd to make detonators and other ignition systems. This gave Solar control over another key part of the explosives process.

Now Solar could make the main explosive, produce the ignition components, and deliver the final mix directly into the mine. In simple terms, it controlled almost the entire chain from production to use.

A competitor could copy the chemical formula or buy similar machines. It could even use its own delivery vehicles. But copying Solar’s full system was much harder.

It needed many approved plants near mining areas, multiple licences, special BDV fleets, reliable access to ignition systems, strong customer relationships, and most importantly, years of experience to run everything safely and consistently at scale.

Each new plant increased Solar’s reach. Each big contract improved how well the network was used. Each safely run facility strengthened its record with regulators. And each step made the next expansion easier and cheaper.

Over time, this created a compounding effect. Solar built more than 400,000 tonnes of annual capacity across explosives, emulsions, and initiation systems, becoming India’s largest industrial explosives company with about 24% market share.

Its strong position in India also helped it expand globally. Today, it supplies customers in over 75 countries and has manufacturing units in places like South Africa, Turkey, and Zambia.

But the most important result of this network was not size or geography.

It was the steady, predictable cash the business generated.

The self-funding flywheel

Solar’s proximity to mines helped it win more than just market shareIt helped it make steady money.

Coal India usually gives contracts for about two years and then asks companies to bid again. Solar also had to compete every time, but it was already in a stronger position than others.

Its factories were already close to the mines. Its trucks were already working there. It had long relationships with customers because it supplied them regularly.

A company far away could offer a cheaper price at the factory, but after adding transport cost, it often became more expensive.

So Solar kept winning contracts.

In 2017, it got a Coal India contract worth Rs 1,143.63 crore. In 2025, it again won a contract worth Rs 1,746 crore to supply bulk explosives to Coal India and its companies.

These contracts gave Solar a steady and reliable stream of business.

Explosives factories make good money only when they are running at full capacity. Because Coal India kept placing regular orders, Solar’s plants stayed busy and earned stable profits every year.

In 2010, Solar began using the steady cash generated by its commercial explosives business to enter defence.

At first, the move looked large. Mining explosives break rocks, while defence explosives go into ammunition, rocket motors and warheads.

But the underlying capabilities were similar.

Solar already had decades of experience handling volatile chemicals, operating high-risk plants, following strict safety rules and manufacturing explosives at scale. Defence was a more demanding extension of skills it had already built.

The company also had an important financial advantage.

Its mining business generated enough cash to fund specialised defence plants, technical teams and product development internally, without depending heavily on debt or external investors.

This mattered because defence products can take years to earn their first rupee.

Military explosives, propellants and ammunition must pass long rounds of testing under heat, cold, vibration, storage and battlefield-like conditions. During this period, the manufacturer keeps spending on facilities, technical teams and trial production, with no guarantee that the product will be approved.

Many smaller companies may have the technology but cannot survive years without revenue.

Solar could. Its commercial business supported the defence division through this waiting period.

Once a product is approved, however, the economics change. A qualified supplier can remain part of a weapon system for 20–30 years because replacing it requires fresh testing and may force the system to be qualified again.

This makes defence orders far more stable than mining contracts, which are rebid every few years.

Solar was also well placed when India began opening ammunition manufacturing to private companies. It already had explosives experience, factories, regulatory approvals, safety systems and the cash needed to survive long development cycles.

When the market opened, Solar did not have to build these capabilities from scratch.

It was already ready.

The orders that changed the business

The first major breakthrough came in 2020, when Economic Explosives received a Rs 409 crore order to manufacture ten lakh multi-mode hand grenades for the Indian Army.

The order showed that a private company could manufacture live ammunition at scale while meeting military safety and quality standards.

It also changed how Solar was seen. It was no longer only a mining explosives company.

In 2023, Solar received a Rs 212 crore order for Nagastra-1, an indigenous loitering munition that competed against established Israeli and Polish systems.

In 2025, the Army placed another order worth around Rs 158 crore for upgraded Nagastra-1R units. This showed that the first order was not a one-time success.

Then came the largest order in Solar’s history.

In early 2025, it received a Rs 6,084 crore contract to manufacture rockets for the Pinaka multi-barrel rocket launcher, with deliveries spread over several years.

Solar also became the first private company to supply fully indigenous 30mm ammunition to the Indian Navy and began exporting guided Pinaka rockets to Armenia.

Economic Explosives was later renamed Solar Defence and Aerospace.

Between FY21 and FY25, defence revenue grew at around 68% annually. Its share of Solar’s total revenue increased from about 6% to around 17%, while the defence order book crossed Rs 13,000 crore.

Mining had provided the cash to enter defence. Defence was now providing long-term revenue visibility.

At the same time, Solar began strengthening its mining business.

Instead of only selling explosives, it started offering integrated blasting services through Solar Mining Services. It handled on-site mixing, blast design and execution, and expanded further by acquiring South African drilling-and-blasting company Problast in 2024.

It also promoted electronic and digital detonators, bringing more of the blasting operation onto its own system.

This changed the customer relationship.

When Solar only supplied explosives, a rival could replace it by offering a lower price. But when Solar managed the blasting process itself, switching suppliers could disrupt the mine’s operations.

Solar was turning a product sale into an embedded service.

Why the full system is difficult to copy

Other companies had parts of Solar’s capabilities.

IDL Explosives had early experience in detonators but did not expand at the same scale. It was sold to Apollo Defence in 2025 for Rs 107 crore—less than 2% of Solar’s Pinaka order.

Premier Explosives developed real capabilities in propellants and defence products but lacked a large commercial explosives business that could fund years of development without revenue.

Most competitors had one or two pieces.

Solar had the complete system: commercial cash flows, manufacturing plants, regulatory experience, safety approvals, customer proximity and qualified defence products.

These advantages strengthened one another.

Cash from mining funded defence development. Regulatory experience supported new approvals. Manufacturing scale improved execution. Defence qualifications created long-term contracts.

A competitor could copy a product, buy similar equipment or build a factory.

But it would still need years to create the cash flows, approvals, safety record, customer relationships and testing history that hold the system together.

The advantage is not risk-free.

Solar’s mining business remains dependent on coal demand. A long-term slowdown in coal production could reduce volumes and weaken the cash engine supporting its expansion.

The government is also encouraging other defence suppliers, including Munitions India, Adani Defence and Bharat Forge, to avoid depending on one company.

Solar also deals with powerful customers. Coal India can pressure commercial explosives prices, while the government has similar bargaining power in defence.

Safety and execution remain permanent risks. One serious accident could disrupt production and damage the company’s regulatory record. Large defence contracts also require years of timely delivery at consistent military quality.

Still, Solar’s position is not defined by a single product or contract.

It is defined by how different parts of the business interact.

Commercial explosives generate cash. That cash supports defence development. Defence approvals create long-term contracts. Manufacturing infrastructure supports both segments.

Each layer reinforces the others.

A competitor may be able to copy a product or set up a plant, but copying the full system is much harder. It requires building cash flows, regulatory approvals, a manufacturing network, and long-term customer relationships over many years.

The products have changed over time, but the system behind them has stayed the same.

And that system is the real moat.

Research Analyst Disclaimer

Markets closed lower than yesterday’s closing point.

Cement stocks and FMCG stocks fell the most today. Pharma stocks and IT stocks rose the most.

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

News

• Equity mutual fund inflows fell 15% to Rs 24,697.39 crore in July compared to Rs 28,973 crore in June. Debt funds saw a net inflow of Rs 1.87 lakh crore compared to net outflow of Rs 1.09 lakh crore in June.

• Nifty 50 and Nifty 50 Equal Weight indices will be reshuffled on 30 September. Wipro will exit the index and the BSE Ltd stock will enter the index.

• SBI Capital Markets will now sell 8.78 million NSE shares in the exchange’s proposed IPO, without changing the overall issue size, as per an addendum to its DRHP.

• SEBI proposed widening the participation of FPIs in Exchange Traded Commodity Derivatives (ETCDs), including trade in non-agricultural and non-cash settled non-agricultural commodity derivatives.

• The government approved the RBI’s proposal for introduction of one billion plastic notes of Rs 10 and Rs 20 for field trials. Plastic bank notes are proposed to be issued along with paper notes.

• The government halved the incentives for electric two wheelers to Rs 2,500 per kWh from Rs 5,000 per kWh. The scheme has been extended by a year to 31 March 2028.

• SEBI proposed raising the number of unique identification numbers for securities (ISIN) that can mature in a year for privately placed debt securities to 17 from 14 to ease refinancing pressures.

• Milky Mist’s IPO was subscribed 0.79 times on day 1. Retail subscription: 0.96 times. The IPO will close for subscription on 13 August.

• LEAP India IPO was subscribed 8.38 times on day 3. Retail subscription: 1.71 times. IPO closed for subscription.

• Dhoot Transmission IPO was subscribed 3.94 times on day 2. Retail subscription: 2.97 times. IPO will close for subscription on 12 August.

• Molbio Diagnostics IPO was subscribed 3.11 times on day 2. Retail subscription: 3.18 times. IPO will close for subscription on 12 August.

Stocks Updates

• L&T: agreed to transfer its data centre and cloud services business to wholly owned subsidiary Vyoma.AI for Rs 1,400 crore. It will also transfer its entire stake in L&T Network Services Pvt Ltd to Vyoma for Rs 30 crore.

• Avenue Supermarts (DMart): allotted commercial paper worth Rs 300 crore with a 90-day tenure at a coupon rate of 6.70%, maturing on 9 Nov 2026.

• Grasim: started commercial production at its CPVC resin plant in Vilayat, Gujarat, developed in collaboration with Lubrizol Advanced Materials India. The plant has a planned capacity of about 50,000 tonnes per annum.

• Siemens: net profit rose 406.74% year-on-year to Rs 2,143 crore in the April-June quarter. The company also reported a Rs 2,099 crore provisional gain from the sale of its Low Voltage Motors business.

• Canara Bank: increased its MCLR by 5 basis points across tenures from one month to three years, effective 12 August. The one-year MCLR will rise to 8.80%, while the overnight MCLR remains unchanged at 7.95%.

• Zydus Lifesciences: net profit fell 35.93% year-on-year to Rs 939.80 crore in the April-June quarter. During the quarter, the company completed the acquisition of US-based Assertio Holdings for about $166.4 million.

• Godrej Consumer: appointed current CFO Aasif Malbari as Managing Director and CEO for five years effective 12 August, following the resignation of Sudhir Sitapati. Vishal Kedia was appointed interim CFO.

• Ashok Leyland: allotted unsecured NCDs worth Rs 300 crore on a private placement basis with a 7.5% per annum coupon rate and mature on August 10, 2028.

Word of the Day

Gross Profit

It is the profit calculated by deducting the cost of making a product from the revenue

Gross profit takes into account only the cost of products sold.

This includes raw materials, labour charges, assembling costs, rent of factory, depreciation of the machines used, etc.

It does not factor other charges of running the company like the cost of R&D of developing the product, marketing, salaries of other employees like accountants, etc.

This is opposed to net profit that is calculated by subtracting all costs from the revenue.

Net profit includes everything, right from the raw materials, labour, depreciation, R&D cost, salaries, rent, debt repayment, taxes etc.

6 Day Course

Theme: micro-cap investing

Day 2: Tuesday

For this course, we are considering anything outside the 500 biggest companies as micro-cap.

One of the first characteristics to understand about this category of stocks is liquidity.

These companies are small and often, there aren’t enough shares being bought and sold.

This means that it is possible that investors might not be able to buy or sell when they wish to.

So, when the stock’s price might be at a level that’s attractive to buy at, there might not be many sellers.

Similarly, when the price shoots up, there might not be many buyers.

To make matters worse, it is possible that liquidity is good when you’re buying but becomes poor when you’re selling.

Looking at the historical daily trading volume can help in such cases though it does not guarantee anything.

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Featured Question

Q. “I have shares of few compamies pocured years ago. I cannot remember the purchase price of these shares. How would I calculate LTCG if shares are sold now?. Is it my onus to pay LTGS while filing IT return?”

The question is, how long ago did you buy the shares?

If you bought shares 30-40 years ago, you will need to find the buying price somehow. It is necessary to calculate the tax you owe.

Do check out the 2018 tax change rule (Section 112A).

There is one potential relief in it.

Say you bought shares decades ago.

And say you are sure that the share price was much lower when you bought compared to the price on 31st January 2018.

Then, you will be able to use the share price on 31st January 2018 as your buying price.

Things get more complex if the selling price is lower than the price on 31st January 2018.

These calculations are a bit complicated. It is best to consult a Chartered Accountant (CA) for this.

If you bought some time in the last 20 or so years, chances are you bought the shares using a digital platform.

The buying price would most likely be recorded by your investment platform.

Most investment platforms automatically generate capital gains reports based on this buying price.

You can try to reach out to the platform to know this.

To answer your last question — yes, the onus to calculate and pay taxes is on you (the investor).

Markets closed higher than Friday’s closing point.

Realty stocks and private bank stocks rose the most today. PSU Bank stocks and oil & gas stocks fell the most.

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

News

• India’s imports of Russian crude oil rose 2.10% month-on-month in volume, with total import value of 5.50 billion euros in July and hit a record high for the second consecutive month.

• The government removed physical duty payment challans for exporters to ease compliance burden and save transaction cost, effective on voluntary duty payments from 1 August.

• Labour force participation stood at 54.60% in the April-June quarter compared to 55.50% in the previous quarter. The unemployment rate in urban areas was 6.70% (vs 6.60%) and the rural unemployment rate rose to 4.80% from 4.30%.

• India’s state fuel retailers revenue loss on sale of LPG narrowed to Rs 188 per cylinder in August from loss of Rs 500 per cylinder in July.

• LEAP India IPO was subscribed 0.49 times on day 2. Retail subscription: 0.41 times. IPO will close for subscription on 11 August.

• Dhoot Transmission IPO was subscribed 0.63 times. Retail subscription: 0.74 times. IPO will close for subscription on 12 August.

• Molbio Diagnostics IPO was subscribed 0.83 times. Retail subscription: 0.77 times. IPO will close for subscription on 12 August.

Stocks Updates

• SBI: raised $100 million by issuing floating-rate notes that will mature in July 2029. The interest rate is SOFR plus 100 basis points, and the notes were issued through its London branch.

• Bajaj Finance: allotted Rs 1,115 crore of secured NCDs through private placement at a coupon rate of 7.78% per annum. The NCDs mature in November 2029.

• Bharat Electronics: received additional orders worth Rs 541 crore since 31 July for communication equipment, electro-optics, ammunition fuzes, CBRN systems, spares and services.

• Hindustan Zinc: restrictions placed on the company under a promoter-group loan agreement of up to $80 million have been removed after the loan was repaid and the agreement was cancelled.

• TVS Motor: allotted Rs 1,000 crore of unsecured NCDs through private placement at a coupon rate of 7.28% per annum. The NCDs have a 39-month tenure and mature in November 2029.

• Lupin: received USFDA approval for Sodium Zirconium Cyclosilicate for Oral Suspension, used to treat hyperkalemia in adults. The reference drug Lokelma had estimated annual US sales of $568 million.

• Airtel: partnered with ITI Ltd to offer connectivity, data centres, sovereign cloud, IoT, AI and cybersecurity services. The companies did not disclose the deal value or its financial impact.

• Vodafone Idea (Vi): net loss reduced to Rs 3,754 crore in the April-June quarter from Rs 6,608 crore a year ago. The quarter included a net exceptional gain of Rs 1,611 crore, primarily from remeasurement of settlement assets.

• Lloyd Metals: net profit rose 164.87% year-on-year to Rs 1,726.59 crore in the April-June quarter. The board also approved investment of up to Rs 625 crore in subsidiary Thriveni Earthmovers and Infra Pvt Ltd and acquisition of at least 26% stake in renewable-energy projects.

• Bharat Forge: reported a net loss of Rs 89.73 crore in the April-June quarter, compared with a net profit of Rs 283.68 crore a year ago. The loss included Rs 358.01 crore of exceptional expenses, mainly related to restructuring its German subsidiary. The board also approved raising up to Rs 2,500 crore and setting up a semiconductor-related subsidiary in Malaysia.

Word of the Day

Line of Credit

It is an arrangement between a lender and a borrower which allows the borrower to take a loan and repay multiple times.

This arrangement has a pre-approved borrowing limit.

As long as the borrowed amount is below that limit, the loan is given without extra approvals.

Interest is charged only on the amount borrowed.

For example, many businesses maintain lines of credit with lenders for their operations.

Another example is a credit card.

Credit card holders are technically borrowing money from the bank.

As long as they are within the credit limit, they get the amount instantly and must pay back by the end of the month (usually).

6 Day Course

Theme: micro-cap investing

Day 1: Monday

By now, investors have become familiar with the 3 main categories of stocks based on size or their market cap:

Large-cap: 100 biggest companies

Mid-cap: next 150 biggest companies

Small-cap: the remaining 250 companies

That’s a total of 500 companies’ stocks. What’s beyond that?

Technically, they are also small-cap. But the small-cap companies index includes only 250.

So unofficially, companies that are beyond the biggest 500 companies are called micro-cap.

Some investors also consider companies beyond the 750 biggest companies to be nano-cap.

For reference, there are about 2,700 companies listed on the National Stock Exchange (NSE).

The number of companies listed on the Bombay Stock Exchange (BSE) is even higher — roughly 5,600 companies.

————

What If

Over the last few years, sanctions have become more common in global politics.

But how they affect our markets is rarely clear when the news about sanctions break out.

When that happens, it might look severe on day one, but the real impact depends on how countries and companies respond. What initially feels like a major global shock can sometimes end up having a much smaller, or very different, impact over the following weeks.

In today’s What If, we looked at major sanction events and tried to understand how they affected markets and what they could have meant for investors.

Read the latest What If here

Its author, Robert Armstrong, was trying to make sense of something unusual happening in the US stock market.

It started on 2 April 2025.

Donald Trump announced what he called “Liberation Day” tariffs. The US said it would put a 10% tax on most imports, and even higher tariffs on some key trading partners.

Investors around the world quickly got worried.

People started thinking that other countries might hit back with their own tariffs, US companies could end up paying more for imported goods, global trade might slow down, and overall economic growth could take a hit.

So markets reacted badly.

But just a few days later, on 9 April, Trump put a 90-day pause on many of the higher tariffs. The 10% base tariff stayed in place, and China was still treated differently as tensions between the two countries continued. Over the next few weeks, the administration also signalled openness to negotiations and made small adjustments to its stance.

And markets recovered.

Armstrong pointed out something interesting. It wasn’t like the problem had actually gone away. The tariffs were still in place, and there was still a lot of uncertainty.

But investors had started to see a pattern.

Trump would announce a big tariff, and markets would drop right away because people worried things would get much worse.

Then, after a few days or weeks, the policy would often get softened. Tariffs might be pushed back, some goods might get exemptions, or talks would start to change the plan.

Armstrong gave this pattern a name: TACO — Trump Always Chickens Out.

The phrase quickly caught on, and traders started calling it the “TACO trade”.

The phrase itself was cheeky. But the problem it described was very real for investors.

When a tariff was announced, nobody knew what the final policy would actually look like.

It could stay as announced, be reduced or delayed, include exemptions, or escalate if the other country retaliated.

The problem was that investors had to make a decision before they knew which of these would happen.

And that is what made the TACO trade interesting.

It was not saying that tariffs did not matter. They did. Even if Trump later softened his position, existing tariffs and all the uncertainty around them could still hurt businesses and the economy.

The real question was different:

How much of the fear on announcement day would actually turn into real economic damage?

Sanctions create a very similar problem.

Suppose the US announces sanctions on a Russian oil producer. The sanction is real, but for an Indian investor the impact is uncertain. Will oil prices rise? Will India lose access to discounted Russian oil? Will refiners face higher costs, and if so, will it actually be enough to hurt profits or stock prices?

The headline hits immediately, but the real economic impact takes time to show up.

So we asked a simple question: when major sanctions are announced, should Indian investors actually sell? Does the Nifty keep falling? Do the most exposed sectors get hit harder? Or does the initial fear fade away?

To find out, we studied eight major sanctions shocks over the last decade and a half.

THE EXPERIMENT

But first, we had to decide which sanctions to study.

That was not as simple as it sounds.

Governments announce thousands of sanctions and restrictions. But most are very narrow — one person gets added to a sanctions list, one company gets blocked, or one ship loses access to insurance.

These usually don’t move a broad market index like the Nifty, so including them would just add noise.

So we used two simple filters.

First, the sanction had to be big enough to matter economically — something affecting banks, oil exports, key technology, or trade with India, not just a single person or vessel.

Second, there had to be a clear way for the shock to reach Indian companies.

That could happen through oil prices, technology and supply chains, the global financial system, or direct trade pressure on India.

If a sanction sounded dramatic but had no obvious connection to Indian businesses, we left it out.

Using these filters, we picked eight major sanctions episodes.

We also made sure they covered different kinds of shocks (energy, technology, banking and direct trade) instead of studying eight versions of the same problem.

And when several sanctions were announced within a few days as part of the same crisis, we counted them as one episode. Otherwise, one crisis could end up appearing several times in the study.

Most importantly, we fixed these events before looking at what happened to the Nifty afterwards because otherwise it would be easy to pick only the sanctions that coincided with big market falls.

We did not do that.

Some of the events in our list barely moved the Nifty. The Huawei blacklist is one example. The Russian oil price cap also produced very little immediate market reaction.

We kept them anyway. Removing events where markets didn’t react would bias the results and create a false pattern. The eight events start in 2018 because that’s when we have reliable daily Nifty and sector data.

For every event, Day 0 is the first trading day in India after the announcement.

We then asked three simple questions: how much did the Nifty fall over the next 20 trading days, how long it took to recover, and what would have happened if an investor sold on Day 0.

We also compared the most exposed sector in each case with the Nifty to see if it actually underperformed the broader market.

One important exception is February 2022, when Russia was sanctioned at the same time as the Ukraine invasion, making it hard to separate the impact of the two events.

How much did the market actually fall?

The real question is not what happens on the day of the news, but how much damage actually sticks after things settle.

In 7 of these 8 episodes, the Nifty did fall below its pre-event close at some point over the next 20 trading sessions. So there was usually some weakness after the sanctions news. But importantly, this weakness was often short-lived or shallow.

When we look at the depth of those moves, a clear pattern emerges.

The first thing we noticed was that most sanctions did not lead to a big market fall.

In 5 of the 8 cases, the Nifty never fell more than 2% below where it had started.

In other words, even after a full month of trading, the market was still broadly holding its ground. The Huawei episode was even milder. The Nifty never actually closed below its pre-event level, suggesting that the event barely had any lasting impact on the market.

Then came the mid-range reactions.

In 2 cases, the Nifty fell between 2% and 5%. After the US exited the Iran nuclear deal in 2018, the Nifty fell by a maximum of about 2.7%, as investors worried about oil prices and global supply. The December 2022 Russian oil price cap led to a bigger fall of about 4.8%. This came at a time when global inflation was already high and energy markets were sensitive, so the shock had more room to affect equities.

And then there was one clear outlier. Only 1 of the 8 episodes saw the Nifty fall more than 5%. In February 2022, the Nifty fell about 7% from its 23 February close. But this was not a clean sanctions-only event. Russia’s invasion of Ukraine happened at the same time, triggering a much broader sell-off across global markets. So it is difficult to say how much of that 7% fall came from the sanctions alone.

Each bar in the chart shows the maximum fall (peak-to-trough) in the Nifty over the 20 trading sessions after each event, measured against the Nifty’s closing level on the day just before the event or announcement happened. It helps compare how deep the market actually went in each case, rather than just how it reacted on the day of the announcement.

A 1% or 2% move might not sound dramatic, but in market terms it still reflects real uncertainty. The key takeaway, however, is that the initial fear in headlines was usually much larger than the actual, sustained impact on the index.

How long did the fall last?

How far the market falls is only one part of the story. A small fall can still hurt if the market stays down for a long time.

So for the 7 events where the Nifty fell below its level before the announcement, we looked at how long it took to recover from its lowest point and close back at or above that starting level.

In most cases, the recovery was fairly quick.

4 of the 7 events recovered within 5 trading sessions of hitting their low. The Nifty recovered in just 1 session after the Iran sanctions were fully reimposed, 3 sessions after the Rosneft-Lukoil sanctions, and 5 sessions after both the China chip controls and the 2025 India tariff.

Another 2 recovered within 8 sessions. The 2018 Iran nuclear-deal exit took 6 sessions, while the February 2022 episode took 8.

That leaves just 1 clear exception: the December 2022 oil price cap, which had still not recovered 60 sessions later. We look at it separately below

This shows how many trading sessions it took for the Nifty to recover from its lowest point back to its pre-event level. In other words, it measures how long the market stayed weak after the initial fall before getting back to where it started. Huawei is excluded because the Nifty never fell below its pre-event close.

But there is an important distinction here. When we say the Nifty “recovered”, we only mean that the index returned to its pre-event level. It does not mean the sanctions disappeared or stopped having an economic impact. The market was also reacting to many other things at the same time.

Did bigger falls take longer to recover?

The next question is an intuitive one.

If the market falls more after a sanctions shock, does it also take longer to recover?

If that were true, the size of the fall could at least tell investors something about how serious the weakness might become.

But in these 8 episodes, that pattern does not really show up.

This table shows each event in order of how much the Nifty fell. For every case, it also tells you when the lowest point happened, how many days the index stayed below its starting level, and how long it took to recover back to that level.

Take February 2022. It produced the deepest fall in the entire sample, with the Nifty dropping about 7%. Yet once the market hit its low, it took only 8 trading sessions to get back to its pre-event level.

Now compare that with the December 2022 oil price cap. The Nifty fell less, about 4.8%, but it still had not recovered 60 sessions later.

The smallest fall did recover the fastest: after the full Iran sanctions were reimposed, the Nifty’s deepest decline was just 0.7%, and it recovered in 1 session. But beyond that, there is no clear pattern where a deeper fall automatically meant a longer recovery.

The timing of the lowest point was unpredictable too.

In 7 of the 8 episodes, the Nifty did not hit its lowest point on Day 0. The low came anywhere from 1 to 14 trading sessions later.

So the market’s first reaction did not tell you how far it would eventually fall, how long the weakness would last, or even when the worst point would arrive.

Sessions after each shock when the Nifty reached its lowest point. In most cases, the low did not arrive on Day 0.

What if you sold when the news came out?

So far, we’ve looked at what the market did after these events. But for an investor reading the headline, the decision is either sell or stay invested?

To test that, let’s assume you sold the Nifty at the end of Day 0 because the sanctions news felt scary.

We then looked at what actually happened over the next month.

In 6 of the 8 cases, the Nifty was higher 20 trading sessions later than it had been when you sold.

Only 2 of the 8 cases ended the month below the Day-0 selling level

This shows where the Nifty was 20 trading sessions after Day 0 — i.e., the level an investor would have been at if they sold immediately after the news and checked back a month later.

But there is an important catch here.

Looking at it does sound impressive. The Nifty was higher after 6 of the 8 sanctions events. But that alone doesn’t mean much, because markets usually go up over time anyway.

In our full dataset of 4,331 starting points, we looked at what happens if you pick any random day and check where the Nifty is 20 trading sessions later. In about 61.3% of those cases, the index was higher than where it started.

Basically it means that in most normal periods, the market tends to go up over a one-month horizon. So when we see that 6 out of 8 sanctions events also ended higher after 20 sessions, it is not unusual by itself; it is actually quite close to how the market behaves in general.

So this does not mean sanctions were good for the market. It simply means that these sanctions episodes were not followed by unusually bad one-month returns.

In other words, a rule that says “sanctions have been announced, so sell for the next month” would not have worked consistently in this sample.

And if we extend the period further, there is no clear pattern either. After 60 trading sessions, the Nifty was higher in only 4 of the 8 cases.

To understand whether that is unusual, we compare it with normal market behaviour. In the full historical data (across all time periods, not just sanctions events), the Nifty is higher after 60 trading sessions about 66.5% of the time (about 2 out of every 3 times, the market is higher 3 months later anyway).

So neither the one-month nor the three-month numbers give us a reliable rule for what the market does after sanctions.

Conclusion

Across the eight events we studied, the Nifty’s response was generally modest. In 5 out of 8 cases, the maximum fall over the next month stayed within 2%, and only one case saw a decline greater than 5%. Of the events where the index did fall, six of seven recovered their pre-event level within eight sessions of the low, and in 6 of 8 cases, an investor who sold on Day 0 would have been worse off a month later.

Taken together, the pattern suggests that sanctions headlines do not consistently lead to large or persistent equity drawdowns in India.

That said, the reaction is not random or meaningless. It happens because the market has to price something it doesn’t fully understand yet.

On Day 0, investors react to what could go wrong, like trade getting disrupted, payment issues, supply chains breaking, or tensions getting worse. But at that point, nobody knows how much of it will actually happen.

As more details come out, companies adjust, exemptions get added, and global trade finds new routes. That’s why the initial fear often fades.

So the first reaction is often bigger than what actually ends up happening, because the market is reacting to many possible bad outcomes, most of which don’t fully play out.

That said, this is not a reason to ignore these events. The headline is just the starting point. What matters more is what the restriction actually changes for the companies involved, how directly they are affected, and whether the market has already priced in a worst-case scenario.

Sanctions can definitely have real economic impact. But in this sample, the initial fear on announcement day was not a very reliable guide to how much Indian equities would fall, or how long any weakness would last.

Research Analyst Disclaimer

He was bleeding from his chest.

This was a summer night in Chicago. The year, 1893.

He was taken to the Provident Hospital.

The founder of the hospital was a doctor named Daniel Williams.

Back then, many hospitals refused to accept black patients. Daniel was black and urgently felt the need for a hospital that readily accepted patients of both races.

And thus, with some support, he started the Provident Hospital.

It had only been a few years since starting. The hospital’s reputation had not been well-established just yet.

It was against this backdrop that this particular tense evening presented itself to Daniel.

Daniel rushed to the operating room.

While doing so, he pulled in 6 other doctors with him to the operation — two black and four white doctors. They were not there to help him. Their only job was to be witnesses to what he was about to do.

This might not make sense to us initially, but we’ll talk about that later.

In the small and cramped operating room, he inspected the stab wound.

He found an artery had been ruptured. He stitched it and reduced the bleeding.

Upon further inspection, he found a bigger problem.

The stabbing had ruptured the pericardium — the sac that surrounds the heart — and slashed a blood vessel in the heart.

This was a devastating discovery.

Common Convention

In those days, a problem like this would be solved by external treatment.

Doctors would wait and hope a heart injury would heal while providing salt water, and other support.

Most patients would die as the heart could not heal so quickly.

But the heart was never operated upon.

The common belief was that the beating heart was the final limit of the human capacity to operate.

Surgery could not be performed on it while it was still beating. But a heart that did not beat was a dead person’s heart.

Thus, heart injuries remained out of reach of surgeons.

In such cases, the risk of performing surgery was considered extreme as any opening of the chest cavity also entailed lung-related risk.

The heart itself is always moving and any operation on it carries the risk of worsening an already bad situation.

And so, doctors maintained that the heart must never be touched.

The Solution

1893 was an era when extreme skepticism followed black doctors.

Any death on their watch was scrutinised to a greater extent than in the case of white doctors.

For any deaths on their watch, they’d have to explain what went wrong.

People with injuries like James Cornish’s never made it. A knife stab that tore open a heart artery almost always led to the patient’s death.

It was because of this certainty that Daniel decided to take a risk.

This probably explains why Daniel had pulled in 6 doctors into the operation theatre, especially given that the majority of them were white.

It was because of what he was planning to do next.

Daniel decided to attempt to stitch the ruptured heart-artery.

He rinsed the wound, held the ruptured ends with forceps, and sutured the open wound. Then he stitched the sac that the heart sits in.

James Cornish walked out of the hospital 51 days later. His heart surgery had been a success.

James Cornish lived for another 20 years after the surgery.

Daniel’s decision to perform open heart surgery had proven to be a success.

This also happened to be one of the world’s first ever open-heart surgeries.

Despite the risk of reputational damage, and possible scrutiny, Daniel had the presence of mind to continue.

He saw an injury that looked treatable.

He took some precautions — the 6 witnesses.
He weighed his odds — the patient would probably die without surgery anyway.

And decided to go ahead.

It worked.

Templeton

This lesson on situation awareness — that of knowing when to go against the commonly established practices — is one of the most telling traits of successful surgeons.

It also applies to investors.

The investment world is filled with examples like these.

One such case was that of John Templeton.

He had practically retired in 1992, at an age of roughly 80 years old.

John had been a young man during the Great Depression of the 1930s.

After studying law, he had the unique experience of travelling to 35 countries. This period was marked by conflicts and economic hardship.

The voyages gave him a perspective few in his time had.

His trading and investment journey started in 1937 — a little before the time the Second World War started. In the thick of extreme pessimism and doom, Templeton saw what others were not seeing.

Even in that era, Templeton had spent considerable time researching history.

Wars mean certain sectors pick up extremely well.

Railroads were one such. Steel and manufacturing were others. There were a bunch of others like them.

He had carefully bought stocks that had the potential to turn around in times of war.

The success from this investing marked the start of his fortunes.

Owing to his global exposure, he started a mutual fund called the Templeton Growth Fund in 1954 — a mutual fund that invested in stocks across the globe.

Templeton was often called one of the world’s best global fund managers because of this mutual fund.

Between the fund’s inception in 1954 and John Templeton retiring in 1992, the fund gave a return of around 15% per annum.

In 1968, he moved to the Bahamas. His reasoning was that it was necessary for him to stay away from Wall Street in order to not mimic their mistakes. Some also speculated that it was for tax-saving reasons.

In 1992, he sold his mutual fund to Franklin Resources and retired.

His focus would now turn towards philanthropy.

2000s

And yet, despite retiring, despite being 87 years old, despite quitting the money management world — he was back to the markets in the year 2000.

The tech boom was at its peak.

Everyone else saw dotcom companies’ valuations reach astronomical levels. Nobody knew how to price these internet companies.

Many were trading almost 100x their earnings.

John Templeton just couldn’t resist.

He had seen many booms and busts. Unlike others, he was seeing a pattern.

Many dotcom companies were doing IPOs.

After the IPO, the founders and major investors (venture capitalists) were locked in. They could not sell their shares immediately.

But they could sell once the lock-in period ended after a few months.

These insiders (founders, venture capitalists, etc) knew that there was no way they could ever make enough earnings to justify a 100x valuation.

They would all start selling their shares as soon as the lock-in period ended.

John Templeton had never studied dotcom companies in history. They never existed in the past.

But from past experience, he knew what overhyped companies looked like. They looked like what he was seeing in the dotcom companies.

He started placing shorts on all these dotcom companies’ shares, starting in Jan 2000 when optimism and euphoria were touching new peaks.

He had a very specific strategy: the shorts were placed exactly 11 days before the lock-in ended.

With near-perfect timing, the shorts worked in his favour.

According to some reports, he made about $86 million from just shorting dotcom companies.

He lived till 2008, dying at the age of 95.

Quick Takes

+ India’s gross GST collections rose 15.40% year-on-year to Rs 2.11 lakh crore in July 2026 compared to Rs 1.83 lakh crore a year ago.

+ The government increased windfall taxes on fuel exports. The export duty on petrol was increased to Rs 3.50 per litre. Diesel export duties increased to Rs 25.50 per litre. ATF exports were raised to Rs 22 per litre.

+ LIC’s Rs 31,410 crore OFS was subscribed over 3.3 times from institutional investors on day 1. The government is selling up to 6.50% stake at a floor price of Rs 382 to comply with minimum public shareholding norms. The offer will open for retail investors tomorrow.

+ RBI kept the repo rate unchanged at 5.25% and maintained a ‘neutral’ policy stance.

+ The government operationalised the Inventory-based Cross-border E-Commerce Export Framework under the Foreign Trade Policy, 2023 for exports of goods manufactured or produced in India.

+ RBI Governor Sanjay Malhotra said that plastic currency notes will be in circulation from next financial year.

+ SEBI proposed allowing depository receipts to be issued against units of REITs and InvITs in a consultation paper. This is aimed at attracting foreign inflows.

+ The government approved construction of a 135.87 km, four lane Guwahati-Tezpur Corridor along the NH-15 in Assam worth Rs 8,970.20 crore.

+ The government approved Rs 23,731 crore for ‘GOBARdhan’-India’s national unified scheme for compressed biogas.

+ The government clarified that India is neither importing nor intends to import ethanol from the US for fuel blending. The fuel blending programme and ethanol procurement is entirely from domestic producers.

+ Coal production rose 7.51% year-on-year to 69.75 MT in July. Coal dispatch grew 18.03% in the same period to 86.85 MT.

+ India remained a net importer of steel in July. Finished steel consumption rose 6.50% year-on-year to 14.40 MT in July. Steel production rose 1.40% to 13.70 MT in the same period.

+ India’s forex reserves rose by $10.51 billion to $692.87 billion in the week that ended on 31 July.

+ Nine companies including Rediff.com India, Garuda Aerospace, and Playsimple Games Limited received Sebi approval for their proposed IPO.

+ SEBI streamlined inspection of market intermediaries by mandating joint inspections by stock exchanges and depositories.

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

Team Groww Digest

Markets closed lower than yesterday’s closing point. The difference between Nifty and Sensex was due to the closing auction system.

Private Bank stocks and consumer durable stocks fell the most today. Auto stocks and IT stocks rose the most.

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

News

• India’s forex reserves rose by $10.51 billion to $692.87 billion in the week that ended on 31 July.

• Nine companies including Rediff.com India, Garuda Aerospace, and Playsimple Games Limited received Sebi approval for their proposed IPO.

• RBI proposed restrictions on NBFCs, barring them from offering revolving credit facilities and only offering term loans. This will not be applicable to NBFCs authorised to issue credit cards.

• SEBI streamlined inspection of market intermediaries by mandating joint inspections by stock exchanges and depositories.

• SEBI reiterated that the introduction of the closing auction system ensures enhanced price discovery, minimizing volatility and achieving cross-market consistency in its annual report.

Stocks Updates

• Airtel: subsidiary Nxtra Data agreed to acquire up to 85% each in Rochak Systems Pvt Ltd and Rovision Tech Hub Pvt Ltd.

• SBI: net profit rose 13.73% year-on-year to Rs 24,113 crore in the April-June quarter.

• Titan: net profit rose 62.88% year-on-year to Rs 1,777 crore in the April-June quarter.

• M&M: wholly owned subsidiary Mahindra Overseas Investment Company, along with Erkunt Traktor, divested its entire stake in Erkunt Sanayi Anonim Sirketi (Erkunt Foundry).

• Coal India: was selected as the preferred bidder for the Gadadharpur Iron Ore Block in Odisha, which has estimated resources of 288 million tonnes. The mining lease carries an auction premium of 114.05%.

• Hindalco: net profit rose 75.15% year-on-year to Rs 7,013 crore in the April-June quarter. It plans to expand capacity at its Kuppam unit by 10,000 tonnes per annum for Rs 768 crore by FY29. The US review of its AluChem acquisition has been delayed and is now expected to conclude by 2 Sept, subject to approval.

• Britannia Industries: net profit rose 13.56% year-on-year to Rs 591.35 crore in the April-June quarter.

• Lloyds Metals and Energy: allotted Rs 700 crore through secured NCDs via private placement at a coupon rate of 9.02%. The NCDs mature in August 2036.

• GMR Airports: agreed to acquire up to 49% in TIM Goa Airport Advertising Pvt Ltd for up to Rs 16.59 crore. The company will operate advertising at Manohar International Airport, subject to approvals.

• Godrej Consumer: net profit rose 11.51% year-on-year to Rs 504.52 crore in the April-June quarter. Interim dividend declared: Rs 5 per share, Record date: 13 August.

• Lupin: net profit rose 16.08% year-on-year to Rs 1,415 crore in the April-June quarter.

• JSW Energy: completed the acquisition of Maruti Clean Coal & Power Ltd for an enterprise value of Rs 1,410 crore. The company operates a 300 MW thermal power plant in Chhattisgarh, taking JSW Energy’s operating capacity to about 14.8 GW.

Word of the Day

Net Importer

It means that a country is importing more than it is exporting an item

A country may be exporting and importing the same item in different quantities.

When all imports are added, and all exports are subtracted from that number, we get the net import number.

In short, being a net importer of an item means we import more than we export that item.

6 Day Course

Theme: phases of stock markets

Day 5: Friday

The last phase is the bear phase.

It is also called the contraction or decline phase.

In this phase, some factor causes lots of stocks prices to fall significantly.

During such phases, the markets dip and pessimism spreads.

In a bid to prevent losses investors start selling their stocks.

This selling further worsens the fall making matters worse.

Institutional investors are also forced to sell in these periods as they come under pressure from their investors.

So many times, even if they would like to hold on to the stocks, they are forced to sell.

Emotionally, this phase is extremely difficult as watching investments turn red is not a good sight no matter how experienced an investor is.

This phase can be short or long — it is not easy to say how long it will last.

This only makes matters worse for investors.

After this phase, the next phase is the recovery phase. We already spoke about that phase in Tuesday’s course.

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Featured Question

Q. “If an individual investing Rs.20,000/- pm wef 1-1-2020for morethan 10 years (Invested Rs.24.00Lacs) in a MF company and later withdraws Rs.15,000/- pm (total value suppose 31 Lacs+) what will be effect on LTCG. Since he is withdrawing only his principle amount not LTCG?”

There is no concept of principal and interest in case of mutual fund investments.

Think of it like buying a house.

Say you bought a house worth Rs 1 crore in 2022.

You sold it for Rs 1.3 crore in 2025. So, in three years, you gained Rs 30 lakh.

You will have to pay a tax on this Rs 30 lakh profit.

Likewise, whenever you invest in a mutual fund, you are buying mutual fund units.

Think of buying many tiny homes.

The price of each unit is called its NAV.

So, if a mutual fund’s NAV is Rs 10, and you invest Rs 1000, you are buying 100 units of that mutual fund.

Say 5 years later, this investment has become Rs 1800.

So what happened is that each unit’s price went up from Rs 10 to Rs 18.

When you withdraw money from a mutual fund, you are selling these units.

When you withdraw a small portion of that entire investment, you are selling a small number of units.

So the tax applies accordingly.

Tax is calculated based on each unit and its price increase.

In case of SIPs, each month’s investment is bought at different NAV values. So their individual tax will be different.

You don’t have to calculate this amount yourself.

Most mutual fund platforms will automatically calculate and tell you your total capital gains per financial year.

You can simply pay a tax based on this capital gain.

Markets closed higher than yesterday’s closing point. The major difference between Nifty and Sensex this week was due to the closing auction system.

PSU Bank stocks and chemical stocks rose the most today. Realty stocks and media stocks fell the most.

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

News

• The government approved construction of a 135.87 km, four lane Guwahati-Tezpur Corridor along the NH-15 in Assam worth Rs 8,970.20 crore.

• The government approved Rs 23,731 crore for ‘GOBARdhan’-India’s national unified scheme for compressed biogas.

• The government clarified that India is neither importing nor intends to import ethanol from the US for fuel blending. The fuel blending programme and ethanol procurement is entirely from domestic producers.

• Coal production rose 7.51% year-on-year to 69.75 MT in July. Coal dispatch grew 18.03% in the same period to 86.85 MT.

• India remained a net importer of steel in July. Finished steel consumption rose 6.50% year-on-year to 14.40 MT in July. Steel production rose 1.40% to 13.70 MT in the same period.

• Indian retail automobile sales grew 25.89% year-on-year to 25.91 lakh units in July, according to Federation of Automobile Dealers Associations (FADA).

• Juniper Green Energy listed at Rs 245 on NSE, a premium of 8.89% over its issue price and closed 16.67% higher by the end of the day.

Stocks Updates

• LIC: net profit rose 23.98% year-on-year to Rs 13,584.25 crore in the April-June quarter.

• Power Grid: net profit fell 0.89% year-on-year to Rs 3,598.42 crore in the April-June quarter.

• Samvardhana Motherson: net profit rose 101.64% year-on-year to Rs 1,032.05 crore in the April-June quarter.

• Trent: net profit rose 20.79% year-on-year to Rs 519.01 crore in the April-June quarter.

• Aurobindo Pharma: net profit rose 25.20% year-on-year to Rs 1,032.56 crore in the April-June quarter. The board also approved merging its two step down subsidiaries into it’s wholly owned subsidiary Eugia Pharma Specialities Ltd.

• Persistent Systems: Launched a voluntary takeover offer to acquire Germany-based Nagarro at Euro 81 per share.

• Vedanta Aluminium Metal: stock exchanges sought clarification on a media report that the company may raise Rs 13,500 crore from Axis Bank, HDFC Bank and ICICI Bank. The company neither confirmed nor denied the report and said it regularly evaluates funding options.

Word of the Day

OFS

It is a process via which promoters or major shareholders sell their shares in a company to investors.

OFS stands for Offer For Sale.

In OFS, no new shares are created. Since the sellers of these shares are other major shareholders, the money goes to their pockets.

Hence, the company does not get any money from an OFS.

In an OFS, the share sellers define a floor price (minimum price) and then invite bids from investors.

The allocation of shares is done based on this bidding.

Many times, OFS is conducted along with the IPO procedure — which means a company can do an IPO with fresh issue shares, or with fresh issue shares + OFS shares or only OFS shares.

A company can also do an OFS after the IPO process.

6 Day Course

Theme: phases of stock markets

Day 4: Thursday

The next phase is called plateauing or topping out.

This usually happens when the bull run has extended for a long time pushing share prices up to astronomical levels.

In this phase, a common tug of war observed is that of pessimism vs optimism.

Many investors are preparing for a correction/fall. Many believe the markets are going to continue climbing.

Therefore, this phase is often marked by lots of trading but low price movement.

The markets and share prices tend to remain in a narrow range until some external event causes the situation to change.

Many people start commenting that various stocks are trading at overvalued levels.

Do note, this phase is sometimes skipped. It is entirely possible that a bull run is interrupted with a sudden negative news that has wide implications.

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Featured Question

Q. “As individual invester if we buy stocks/shares of particular company, individual has to pay transaction charges, service charges, exchange charges etc., on the value of the shares bought likewise does AMCs will also have to pay while buying/selling of stocks...and brokerage who will get? And NAV of MSs includes all these charges on buy or sell?”

Yes, the same charges apply to AMCs buying and selling stocks as well.

This includes brokerage, STT, exchange transaction charges, stamp duty, GST, etc.

The brokerage is paid to the broker the AMC has tied up with to execute its trades.

Because of the high volume of transactions they carry out, AMCs negotiate extremely low brokerage charges.

These charges are included in the NAV. Investors do not have to pay them separately again.

The difference to note is that they do not have to pay any STCG tax or LTCG tax.

That applies to investors only when they withdraw money from the mutual fund.

Markets closed slightly higher than yesterday’s closing point. The rise at the end of the day was due to the closing auction system.

Metal stocks and auto stocks rose the most today. Media stocks and private banks’ stocks fell the most.

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

News

• RBI kept the repo rate unchanged at 5.25% and maintained a ‘neutral’ policy stance.

• The government operationalised the Inventory-based Cross-border E-Commerce Export Framework under the Foreign Trade Policy, 2023 for exports of goods manufactured or produced in India.

• RBI Governor Sanjay Malhotra said that plastic currency notes will be in circulation from next financial year.

• SEBI proposed allowing depository receipts to be issued against units of REITs and InvITs in a consultation paper. This is aimed at attracting foreign inflows.

• Manipal Health Enterprises listed at Rs 652 on NSE, a premium of 10.51% over its issue price and closed 12.40% higher by the end of the day.

• LIC’s about Rs 31,410 crore OFS was subscribed 1.22 times including the green shoe option. Institutional investors subscribed 1.28 times while retail investors portion was undersubscribed at 0.7 times.

Stocks Updates

• ONGC: net profit rose 21.37% year-on-year to Rs 11,898.93 crore in the April-June quarter.

• Power Grid: commissioned the transmission system to transfer power from the 20 GW renewable energy zone in Rajasthan under Phase-III Part-H.

• TVS Motor: Its subsidiaries approved a scheme to merge STPL Trading and Services Pvt Ltd into Home Credit India Finance Pvt Ltd. Home Credit India Finance Pvt Ltd and TVS Housing Finance Pvt Ltd will then merge into TVS Credit Services Ltd, subject to approvals.

• Samvardhana Motherson: subsidiary Samvardhana Motherson Adsys Tech Ltd incorporated Samvardhanan Motherson Adsys Tech Holland Holding B.V. to hold the Motherson Group’s international aerospace businesses.

• Cummins India: net profit rose 0.89% year-on-year to Rs 609.30 crore in the April-June quarter.

• BSE: net profit rose 62.03% year-on-year to Rs 874.02 crore in the April-June quarter. The board also approved acquiring additional shares in IIBH IFSC Ltd for Rs 50.50 crore, increasing BSE’s direct stake from 3.33% to 20%.

• Adani Enterprises: Subsidiary Adani Defence Systems & Technologies Ltd acquired the remaining 44.60% stake in Flight Simulation Solutions Pvt Ltd. Another subsidiary, Adani Airport Holdings Ltd, incorporated AAHL Global IFSC Ltd to operate a Global Treasury Centre under IFSCA regulations.

• Marico: net profit rose 25% year-on-year to Rs 630 crore in the April-June quarter.

• United Spirits: Received an FSSAI order over allegedly non-compliant labels on certain whisky products made at its third-party unit in Madhya Pradesh.

Auto Updates (July)

• Maruti Suzuki: sales stood at 2.41 lakh units. Domestic sales stood at 2 lakh units and exports stood at 30,056 units.

• M&M: sales grew 26% year-on-year to 1.03 lakh units. Domestic passenger vehicle sales grew 20% to 60,048 units while commercial vehicle sales grew 23% to 25,204 units.

• Tata Motors Passenger: sales grew 59% year-on-year to 63,760 units.

• Hyundai Motor: sales stood at 75,360 units including export sales of 21,150 units.

• Eicher Motors: sales grew 34% year-on-year to 1.18 lakh units.

• TVS Motor: sales grew 38% year-on-year to 6.29 lakh units. EV sales stood at 60,934 units.

• Ashok Leyland: sales grew 30% year-on-year to 19,590 units.

• Bajaj Auto: sales grew 30% year-on-year to 4.74 lakh units.

• Tata Motors: sales grew 37% to 39,641 units.

Word of the Day

Acquisition

It refers to one company taking over another company via share purchase.

Often, acquisitions need not involve taking over a company fully.

Acquiring over 50% of the company is enough to gain operational control over a company as it often means all voting rights are with the acquirer.

This does not work in cases where the voting rights are not even. Some companies have higher voting power shares that allow some key people to have greater voting power than others.

While acquiring, a company might buy shares by paying cash, or by giving shares in itself, or a combination of both.

6 Day Course

Theme: phases of stock markets

Day 3: Wednesday

The next phase is called the bull run.

This phase is also called the expansion, uptrend, rally, or markup phase.

In this phase, a lot of the doubt and worry about the markets reduce significantly.

Stocks rise consistently and markets recover from the previous crash or downturn. They may even touch new all time highs.

This period is marked by euphoria and buying.

Most retail investors are convinced about the recovery and also start putting money in the markets.

This also means that many stocks’ valuations get pushed upwards as more money chases the same stocks.

Investors who had invested in the previous phase would now be sitting on healthy returns.

This phase can sustain for a while, which means, many investors who started investing late in this phase might also be able to see good returns.

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Featured Question

Q. “Due to RBI's restrictions on Foreign Investments, the Indian ETFs investing in Foreign Stocks have become premium, although the Base Price of the underlying asset has not increased much. Does the same hold good if we buy Mutual Funds that invest in Foreign Stocks, (if any funds are still accepting investments), i.e., if we invest in those MFs, are we also buying them in premium?”

Great question.

Let us understand how ETFs and mutual funds work.

ETFs are traded on the markets. Every time the ETF’s demand goes up, its price goes up.

But for each unit of the ETF, there is supposed to be a corresponding asset behind it.

So, if you buy Rs 3,000 worth of a gold ETF, there is supposed to be Rs 3,000 worth of gold backing those ETF units.

What is a premium in ETFs?

When the price of each unit is greater than the asset it holds, the ETF is said to be trading at a premium.

Example: a unit of a gold ETF costs Rs 500 but each unit is backed by only Rs 450 worth of gold.

So, here Rs 50 is the premium.

ETF companies resolve this by buying additional gold.

So why do we still have ETF premiums then?

That happens when there is no asset to buy. Say investors keep buying ETF units but there is no gold in the market to buy.

In such a case, there will be a premium.

So, if an ETF invests in an international index but fresh investments in the index are paused, premium of the ETF will rise.

Mutual funds do not operate like this.

Mutual fund units are not traded on the markets.

When money is put in a mutual fund, it is considered invested in the underlying asset.

If a mutual fund is not able to invest in that asset, it is common for them to stop accepting fresh money.

So in the case of mutual funds, there are no premiums.

There is one complication here though.

Many mutual funds that invest in foreign assets do it via ETFs.

So the mutual fund would be investing in an ETF investing in a foreign country.

What happens in these cases?

It depends on the fund manager. They may choose to stop accepting fresh investments citing the premiums in ETFs or may continue investing despite the premiums if they feel it is ignorable.

Markets closed lower than yesterday’s closing point.

Realty stocks and oil & gas stocks fell the most today. Media stocks and metal stocks rose the most.

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

News

• The government increased windfall taxes on fuel exports. The export duty on petrol was increased to Rs 3.50 per litre. Diesel export duties increased to Rs 25.50 per litre. ATF exports were raised to Rs 22 per litre.

• LIC’s Rs 31,410 crore OFS was subscribed over 3.3 times from institutional investors on day 1. The government is selling up to 6.50% stake at a floor price of Rs 382 to comply with minimum public shareholding norms. The offer will open for retail investors tomorrow.

Stocks Updates

• Airtel: net profit rose 37.32% year-on-year to Rs 8,167.40 crore in the April-June quarter.

• L&T: subsidiary L&T Energy Hydrocarbon Offshore (LTEH Offshore) secured an ultra-mega order (more than Rs 15,000 crore) from ADNOC Offshore to develop multiple offshore facilities in the Middle East.

• Pidilite Industries: net profit rose 29.74% year-on-year to Rs 872.41 crore in the April-June quarter.

• Samvardhana Motherson: subsidiary MSSL Global RSA Module Engineering Ltd acquired the remaining 49% stake in Vacuform 2000 Proprietary Ltd, making it an indirect wholly owned subsidiary.

• Varun Beverages: subsidiary Varun Beverages (Zimbabwe) Pvt Ltd formed a 70:30 joint venture with Mega Market Pvt Ltd for activities in Zimbabwe.

• Billionbrains Garage Ventures (Groww): State Street Global Advisors’ investment in Groww Asset Management Ltd was completed after receiving required approvals.

• SBI Funds Management: net profit rose 3.70% year-on-year to Rs 880.26 crore in the April-June quarter. The board also approved an investment of up to Rs 25 crore in wholly owned subsidiary SBI Funds International (IFSC) Ltd.

• Zydus Lifesciences: received USFDA final approval for Indocyanine Green for Injection, with 180-day exclusivity. The drug has annual US sales of about $125.8 million.

• Cipla: subsidiary InvaGen Pharmaceuticals received a USFDA Establishment Inspection Report (EIR), confirming closure of inspection at its Hauppauge facility in New York.

• Nykaa: net profit rose 243.10% year-on-year to Rs 80.01 crore in the April-June quarter. The board also approved the acquisition of a 51% stake in skincare company Aminu Wellness Pvt Ltd for up to Rs 32 crore.

Word of the Day

Offshore

It refers to any entity that is registered in another country for financial benefits.

In finance, offshore is often used to describe low-tax or low scrutiny countries.

For example, offshore companies are often shell companies registered in island-countries like the Cayman Islands, Mauritius, Bahamas etc.

Offshore banks are bank accounts opened in countries where the details of the account openers required by banks is less.

Offshore investment funds are funds that might invest globally but are registered in low-tax countries.

6 Day Course

Theme: phases of stock markets

Day 2: Tuesday

Let’s start with the first phase: consolidation.

This phase is also often called the bottom out phase because it is that phase in the markets when a falling market starts showing signs of recovery.

Investors are generally very sceptical, and often scared during this phase having been hurt because of the past falls.

Everyone is being cautious and the mood is sombre.

It is at this stage that institutional investors notice that the stocks are available at very low valuations.

They start buying and accumulating stocks in large quantities. They often treat this phase as a good buying opportunity.

Stocks that usually remain very highly valued are often available for very low prices.

For this reason, many also call this phase the accumulation phase.

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Featured Question

Q. “Why is it difficult to make 1% consistent Monthly returns even after diversification in Stocks and Mutual funds?”

If you look at Nifty 50 index fund returns, you will see that 12% per annum returns over a period of a few years are easily possible.

Many good mutual funds have been able to give much higher returns than just that.

The problem comes with consistency.

The markets are never consistent. They move in lumps. Sometimes they move downward, sometimes upward, and sometimes they remain flat.

So making 12% per annum returns (over a few years) in the markets has so far been easily possible.

But making a guaranteed 12% per annum every year is hard. You will notice that in some years, the index even gives negative returns.

Now, you can imagine making 1% per month every single month, consistently, is going to be harder.

It is not impossible. There are highly skilled traders and investors who have been able to do it. Many are able to make even higher returns than that.

But it is not easy for sure.

Even the best investors and traders in the stock markets usually have negative and positive periods.

Markets closed significantly higher than yesterday’s closing point. The introduction of the Close Auction System (CAS) led to the spike at the end of the day.

All sectors’ stocks rose today except for the media stocks. IT stocks and cement stocks rose the most.

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

News

• India’s gross GST collections rose 15.40% year-on-year to Rs 2.11 lakh crore in July 2026 compared to Rs 1.83 lakh crore a year ago.

• India reached near-universal banking coverage with 99.92% of inhabited villages served by a banking outlet within a 5 km radius.

• Coal production from captive and commercial mines rose 9.61% year-on-year in July 2026. Coal production for the month was 14.78 MT while dispatch was 17.49 MT.

• Juniper Green Energy’s IPO was subscribed 7.97 times on day 3. Retail subscription: 0.93 times. The IPO closed for subscription.

Stocks Updates

• Reliance: step-down subsidiary Radisys Cayman Ltd merged with its holding company, Radisys International LLC, effective from 31 July.

• HCLTech: completed the acquisition of Guardian India Operations Pvt Ltd and Hewlett Packard Enterprise’s Telco Solutions Business.

• ITC: completed the acquisition of the Century Pulp and Paper business of Aditya Birla Real Estate Ltd, along with its assets, liabilities, contracts and employees, on a slump-sale basis.

• UltraTech Cement: allotted unsecured NCDs worth Rs 5,000 crore on private placement basis at coupon rates of 7.22% to 7.25%.

• JSW Steel: merger of wholly owned subsidiaries Amba River Coke, Monnet Cement and JSW Retail and Distribution with the company became effective from 1 August.

• Divi’s Labs: net profit rose 65.50% year-on-year to Rs 902 crore in the April-June quarter.

• Varun Beverages: subsidiary VBL Industries (Kenya) Ltd completed the $32 million acquisition of the value-added dairy beverages, juices and packaged drinking-water business of Devyani Food Industries (Kenya) Ltd.

• PFC: subsidiary PFC Consulting Ltd transferred Ananthpuram Transmission Ltd to Apraava Energy Pvt Ltd for Rs 19.62 crore and Krishnagiri REZ Transmission Ltd to Power Grid for Rs 19.82 crore.

• Tata Power: electricity appeals body, APTEL, asked the Maharashtra Electricity Regulatory Commission (MERC) to reconsider its decision rejecting Tata Power’s tax-related claims worth about Rs 268 crore. The final decision is still pending.

• Zydus Lifesciences: received an Establishment Inspection Report from the USFDA for its injectable facility at Zydus Biotech Park, Ahmedabad, with Voluntary Action Indicated classification.

• United Spirits: filed a petition in the Bombay High Court challenging an FSSAI order related to the labelling of a product manufactured at its Baramati plant.

• DLF: net profit rose 4.09% year-on-year to Rs 793.90 crore in the April-June quarter.

Word of the Day

XIRR

It is a way to measure returns when there are multiple instances of investments and withdrawal.

XIRR stands for Extended Internal Rate of Return.

Most other kinds of measurements of returns (CAGR, absolute returns, etc) do not account for multiple investments and withdrawals.

XIRR tells us how investments have performed after accounting for multiple investments and withdrawals.

One example where it is useful is in the case of SIP where new money gets invested every month.

6 Day Course

Theme: phases of stock markets

Day 1: Monday

There are many different ways of classifying the phases of the markets.

In this week’s course, we will discuss one of the most commonly spoken about set of phases.

Something to keep a note of is that the market never has phases that are distinct or absolutely clear. There is no formula to determine this with ease.

The phases also do not follow a fixed duration. Which means, a phase can be much longer than the one before or after it.

Yet another thing to note about these phases is that they are not consistent. One phase might be having many smaller periods of ups and downs.

This is why phases tend to get described more clearly after they are over, not during the phase itself.

The phases are: consolidation, bull run, plateauing, and bear run. We’ll get into each phase tomorrow.

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We explored the question “What if your portfolio was up, but not as much as the Nifty 50?”

Check out the full report here.

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They were at 17 runs for 5 wickets. Five batsmen were already out, and the World Cup campaign looked almost over.

Then Kapil Dev came in and scored 175 not out. India finished with 266 runs.

Now, if you only saw the final score, which was 266, you might think the whole team batted well.

But that was not the case.

Kapil Dev alone scored 175. The next-highest score was just 24. Most of the team contributed very little.

So the final total looked strong, but it did not show what actually happened inside the team.

That idea of a single headline number hiding a very uneven reality is also useful when we look at markets, though in a slightly different way.

On 2 January 2026, the Nifty 50 closed at an all-time high. It was up 0.7% that day, and the market looked strong on the screen. Since this milestone came after over one year of underperformance, it seemed like the worst was over.

But many investors did not feel this way. Most noticed that their portfolios were red or flat despite Nifty being at an all-time high.

Some were green, but investors were still confused because the Nifty went up 0.7% on that day, but their portfolio was up 0.2%. Technically, they knew they made money. But it did not align with what they saw on the screen for Nifty 50.

So how can the Nifty be at a record high level while your portfolio is not?

Because, like a cricket total, the Nifty is one number. And one number can hide how the individual players did.

To understand this, we decided to study the biggest rallies and falls of the last 15years to see whether the Nifty 50 is a good indicator of portfolio performance.

The study

We took fifteen years of Nifty 50 data and identified its 3 biggest rallies and falls. A rally began when the Nifty started rising from a recent low. If it gained at least 10% before reaching its peak, we counted it as a rally. The rally ended once the index fell 10% from that peak.

Similarly, a downturn began when the Nifty started falling from a recent peak. If it declined by at least 10% before reaching the bottom, we counted it as a downturn. The move was considered over once the index recovered 10% from the bottom.

For each of these six moves, we did two things.

First, we compared the Nifty 50 with two broader indices, the Nifty Midcap 150 and the Nifty Smallcap 250, over exactly the same dates. This helped us to see whether mid-sized and smaller companies performed differently from the large companies in the Nifty 50.

Second, we looked inside the market itself.

For each period, we took the Nifty 100 stocks that were part of the index on the first day of that move. We did not use today’s list, because that would allow hindsight to affect the results.

We then calculated the return of each stock over the period and counted how many stocks beat the Nifty and how many lagged behind it.

A few companies from the older periods have since been delisted, merged or renamed and could not be priced. So, depending on the period, our analysis includes between 84 and 96 stocks instead of the full 100.

Everything went up. Some things went up much more.

So in the three rallies we studied, the broader market did not merely follow the Nifty. It amplified the move.

An investor with a meaningful mid-cap or small-cap allocation could therefore have experienced a much stronger rally than the Nifty suggested.

But this cannot be turned into a general rule that the broader market always moves more sharply.

The three falling periods produced a more mixed result.

During the covid crash, Nifty fell 35.40%, and the small-cap index fell slightly more at 36.60% in the same period. This makes sense with the high-beta theory.

Beta measures the stock’s volatility. The baseline for the index is typically 1. If a stock is a high-beta stock, it means that its stock price moves faster and more aggressively than the market. It amplifies the move in the market. Mid-caps and small-caps are considered to be high-beta stocks.

The midcap index however, fell only 31.60% in the 2019 downturn.

In fact, in the other two downturns of the study, both midcaps and smallcaps fell less than Nifty.

So investing in the broader markets seems like a great bet, right? Amplified returns but lesser losses? That is not always the case.

One possible reason the downturns behaved differently is that each was caused by a different type of selling.

It is important to note that the downturn in 2011 and 2015 was driven by factors that affected large-caps specifically.

The falls in 2011 and 2015 happened during global risk-off periods (the Eurozone crisis and China’s economic slowdown). Foreign investors were pulling money out of Indian stocks during these periods.

Since foreign investors typically invest in large and liquid companies, these large-cap stocks or Nifty 50 stocks, faced more selling pressure. Midcaps and smallcaps remained relatively less affected as domestic investors are the majority investors in these.

Covid crash was different, it was not a calculated sell-off but what is known as a panic sell-off.

When investors are in panic mode, the number of buyers for smallcaps goes down since it is riskier compared to large-caps.

Another factor is valuations. If midcaps and smallcaps are perceived to be valued higher than their actual worth, then any negative trigger can cause them to fall sharply.

If the valuations were cheaper, then those may not have fallen as much as the others.

That is why the mix of stocks in a portfolio matters.

An investor with more midcap and smallcap stocks may have earned much more than the Nifty during the rallies. During the falls, however, the experience depended on the particular period and the stocks they owned.

Either way, the Nifty may not have reflected what that investor actually experienced.

But this still does not explain why portfolios made up mainly of large-cap stocks can also perform very differently from the Nifty.

Why did some large-cap investors still feel left behind?

The answer lies not only in how much the market rose, but also in how unevenly those gains were spread across stocks.

Everything rose, but not equally

We decided to dig deeper and took the Nifty 100 constituents as they existed at the start of each period and measured how each individual stock performed.

We also counted how many of those stocks actually beat the Nifty and compared the index return to the return of the typical, or median, stock.

Some constituents from the older periods have since been delisted, merged, or renamed and could not be priced. These were excluded, so the number of priced stocks per period ranges from 84 to 96 rather than a full 100. The older periods are therefore based on slightly fewer stocks.

Nifty 100 stocks that beat the index vs those that lagged, in each move. The label above each bar is the share that beat it.

“Beat the Nifty” means the stock did better than the index — it fell less, or rose. A move where most stocks beat the index (like May 2022) is broad; one where few do (like May 2020) is narrow.

All 94 stocks in the covid recovery rally from May 2020 rose with Nifty. Not one fell.

However, only 38 of these actually beat the Nifty’s 109% returns. This means the majority of them, 56 of them or around 60% rose but less than the Nifty.

In the May 2022 rally, nearly 60% of the 96 stocks that we studied beat Nifty.

How is that possible?

The Nifty index is made up of the 50 biggest companies – weighted by size. So the biggest among these 50 carry a higher weight. If a handful of these heavyweights rally, it can move the Nifty index meaningfully and much faster than most of the individual stocks are actually moving.

So the median stock rose 93%, while the Nifty index rose 109%. This difference of 16% came from the few large-cap companies that did most of the heavy lifting.

Simply put, if an investor’s portfolio was made up of Nifty stocks but not the exact ones that led the rally, then their portfolio may have gone up. But not as much as the index did.

Everything went up. It just did not go up equally.

90 out of the 94 stocks in the study fell during the October 2019 downturn. Almost everything fell, but not in the same magnitude.

41 stocks fell less than Nifty, while 53 stocks fell more than the index itself. Of course most of them fell in this period but not all of them. The median stock fell 37.9%, which means the average stock fell more than Nifty itself.

So portfolios that had most of the stocks which remained resilient during the fall may have fallen less. And vice versa.

Not all rallies are built the same

Now let’s compare two rallies: the May 2020 and May 2022 rallies.

We found out that only 40% of the Nifty 100 stocks beat the index during the May 2020 rally.

On the surface the index looks strong, but most of its constituents did not keep up with it.

This is called a narrow rally. The index is pushed higher by a relatively small group of strong-performing stocks, while most others lag behind.

The 2022 rally was different. A majority of the stocks participated, and the median stock performed better than the Nifty.

This is called a broad rally, where gains are spread across a larger number of stocks.

You cannot tell whether a rally is broad or narrow simply by looking at how much the Nifty has risen. The index can show a similar gain in two periods, while the experience of individual stocks can be completely different. To understand that, you have to look inside the index.

The same is true during downturns.

During the downturn that began in March 2011, 47 of the 84 stocks in our study fell less than the Nifty. The median stock also performed better than the index.

This means the decline was not spread evenly across most stocks. A smaller group of heavily weighted stocks pulled the Nifty down more sharply.

This brings us to an important point: the Nifty is not the entire market. It is a weighted index of 50 large companies, and the largest companies have the greatest influence on its movement.

Most investor portfolios do not hold the same stocks in the same proportions as the Nifty, so their returns depend on what they own.

A portfolio with more midcaps and smallcaps may behave very differently from one made up mainly of large-cap stocks. These segments usually move more sharply than the Nifty, though not in every period.

Even two large-cap portfolios can have very different returns. One may own the few stocks driving a narrow rally, while the other may not.

No two rallies or downturns are exactly the same. A portfolio may perform well in one and lag in another, depending on its holdings and whether the market move is broad or narrow.

What This Tells Us

The Nifty tells us how a particular basket of 50 large companies performed, based on their weights in the index.

It does not tell us how the typical stock performed or how an investor’s portfolio performed.

Suppose the Nifty rises 20%, driven mainly by a few heavily weighted companies. An investor who does not own those companies in similar proportions may lag, even if most of their stocks performed reasonably well.

That does not necessarily mean the portfolio was badly constructed. It may simply mean that the portfolio and the index owned different stocks in different proportions.

The reverse is also possible. When gains are spread across a larger number of stocks, a portfolio may rise more than the Nifty without owning its biggest constituents.

So before comparing a portfolio with the Nifty, investors should first ask whether it is the right benchmark.

A portfolio with mostly midcaps and smallcaps should not be expected to move like a large-cap index. But even a large-cap portfolio may behave differently unless it holds roughly the same companies in roughly the same weights.

Conclusion

The Nifty is not misleading. It is doing exactly what it is designed to do.

The mistake is expecting one market number to describe every portfolio.

When the Nifty reaches an all-time high and your portfolio does not, it may simply be because the stocks driving the index are missing from your portfolio or are held in smaller proportions.

Similarly, when your portfolio rises more than the Nifty, it may be because you own parts of the market that are performing better or because the rally is spread across more stocks.

So the real question isn’t just whether your portfolio beat the Nifty. It is whether what you owned was similar enough to what actually drove the Nifty in the first place.

The thing is, Nifty gives us the final scoreboard. But to understand what an investor experienced, we still need to look at the players who produced it.

Research Analyst Disclaimer

He had become a billionaire who started as a truck driver.

In 2020, Lim filed a direct and blunt legal affidavit. The affidavit was also read by major banks in Singapore.

The banks were flabbergasted. A wave of panic spread.

It led to arrests and sweeping regulatory changes.

But before that, let’s talk about who Lim Oon Kuin was.

Lim Oon Kuin

In the 1960s, Lim Oon Kuin (also known as OK Lim) arrived in Singapore from China. He was only 20 years old.

Singapore back then was not the developed city-state that it is today.

It was undergoing a phase shift. The government was trying to attract investors, encourage economic activity, and solve potential conflicts among different ethnic groups.

OK Lim owned one truck. He bought diesel wholesale, and sold it to fishing boat operators, bus operators, etc.

He wasn’t just a driver, he was also an oil trader.

OK Lim’s company was called Hin Leong Trading.

People who traded or worked with Lim described him as a hard working and determined man. He was able to expand his business and buy more trucks.

In 1968, he bought his first sea vessel.

This purchase changed the nature of his work. He was no longer limited to being a last-mile fuel delivery operator.

By 1973, he had added more vessels to his fleet. Hin Leong became an oil trading company.

Hungry for more, he started trading beyond Singapore and bought oil tanker ships for his operations.

In the 1980s, he started trading oil with China and that monumentally changed his fortunes.

The momentum only grew from there. By the 2010s, he had a fleet of over 100 ocean-going tanker ships.

By 2019, the company reported a revenue of around $20 billion. A staggering number for any company anywhere in the world.

Hin Leong Trading

What made Hin Leong Trading more unique was that this company had cast a wider net than its peers.

Instead of just buying and selling oil, they did other parts of the chain too.

Ocean Tankers was a company run by Lim’s son.

This was the company that owned close to 150 tanker ships that were used to transport the oil.

They also owned moored ships in the ocean that were used not to transport oil but merely as oil storage tanks.

Universal Terminal was another company. It was majorly owned by Lim’s family.

Universal Terminal owned oil storage tanks on land. They were in the business of only storing and not transporting oil.

There were a few other companies that were also owned by family members of Hin Leong.

The First Sin

Hin Leong used to trade in oil futures as a way to hedge against oil price fluctuations.

This can act as an insurance policy against unpredictable price swings.

But Hin Leong went a bit further. They tried to make extra profits using these futures trades.

The challenge with these speculative bets is that they can be a double edged sword as well — when the bets go wrong, losses can be huge.

For several years in the 2010s, Hin Leong Trading had been incurring losses from such speculative trading activities. These losses were hidden.

Fearing a backlash, Hin Leong never disclosed the losses it was suffering in these trades. Over time it had accumulated about $800 million in losses from these speculative trading activities.

To cover up these losses, they needed more cash.

Circle Trade

This is where Hin Leong got into a vicious cycle.

Hin Leong would sell oil to another company (Company 1).

Company 1 would take a loan for this purchase.

Then Company 1 would sell the oil to another company (Company 2).

Company 2 would take a loan to buy this oil. This would be paid to Company 1.

So Company 1 would be able to pay back its loan.

Then, Company 2 would sell the very same oil back to Hin Leong.

And Hin Leong would take a loan for this purchase.

With the money received from the sales, both Company 1 and Company 2 would be able to pay back their loans.

The oil changed hands on paper and returned to Hin Leong.

But now, Hin Leong has some extra cash on its hands.

Because it was technically selling oil successfully, banks were willing to lend it money to buy oil too.

This cycle would continue.

It artificially increased Hin Leong’s revenue to $20 billion.

This is called a circular trade.

Actual trade didn’t happen. But banks gave money to the company for it.

Circle Trade

Didn’t the banks check?

Valid question. Yes, they did.

They were using the oil as collateral. So to check, they would seek certificates of storage and transport from the companies involved.

But remember the two companies run by Lim’s daughter and son?

Universal Terminal, the oil storage company run by his daughter, and Ocean Tankers, the oil tanker ship company run by his son.

They were easily able to give (fake) certificates needed as proof of movement of oil.

There were other non-family-run companies that got in on this trade too, along with Hin Leong. Some claimed to know. Others claimed they weren’t aware of what they were doing.

Could the banks have been more careful?

Yes. But OK Lim’s reputation was such that banks trusted him after doing the basic required due diligence. He had built a name for himself over 5 decades.

Discovery

This was not unravelled by some detective or forensic expert.

Everything was going well.

The $800 million loss was from speculation — Hin Leong was betting the oil prices would rise. But they had not. That is how the losses increased further.

But then, the pandemic hit in 2020 and demand for oil collapsed globally.

His already loss-making futures bets expanded and became even bigger losses.

This made the entire act difficult to hide.

At the same time, remember banks used oil as collateral?

When the price of oil went down, banks called Hin Leong to increase the oil quantity kept as collateral (so that their collateral’s value still matched the loan value).

April 2020, various banks started calling the company asking for more oil, or for their money to be returned.

No replies.

On 17th April, OK Lim submitted a legal affidavit.

Plainly, without hiding behind legal words, he mentioned that he was responsible for all that had happened.

The total loans he had taken were worth $3.85 billion.

The company’s total assets were worth only $714 million.

Because the various banks had no simple way of checking with each other, many banks had given loans keeping the same oil as collateral.

Hin Leong Trading was using borrowed money to buy its own oil back from other companies.

This is called circular trading.

It is illegal.

It is illegal because the sales are not real.

It’s just deceptive accounting to show fake sales.

They sold something, took out a loan, and bought that thing back. The cycle repeated.

Revenue kept climbing.

Nothing the company sold was actually being consumed.

Quick Takes

+India received foreign capital worth $32 billion so far after measures announced on 5 June, said RBI Governor in media interviews. The current scheme has surpassed the 2013 level of $26 billion in 45 days. Majority of the inflows are through FCNR(B) deposits.

+India’s engineering goods exports rose 21% year-on-year in June to $11.48 billion. Shipments to China increased 74% to $361.47 million from a year ago. The US was the largest market for engineering goods at $1.95 billion in June.

+India’s Industrial Output rose 7.3% in June (vs 5.1% in May). This is the fastest pace of growth since July 2024. Manufacturing output increased 7.8% year-on-year in June (vs 5.2% in May).

+India’s exports rose to the highest ever at $863.10 billion in FY25-26. Merchandise exports stood at $441.80 billion and services exports increased to $421.30 billion. FTA’s with UAE, UK and Australia were the core drivers of growth.

+Regional Rural Banks reported the highest ever net profit of Rs 10,177 crore in FY25-26. Credit Deposit Ratio improved to 75.2% (vs 73.4% in FY25). Net NPA stood at 2.1% (vs 2% in FY25).

+India launches its first 40-wagon, direct commercial container freight train to Nepal under the revised India-Nepal Rail Transit protocol.

+Public Sector Banks’ net profit is at record high of Rs 1.98 lakh crore. Gross NPA was at a record low of 1.9% in FY25-26.

+The government released Index of Services Production (ISP) data for May 2026. 16 out of 19 sub-sectors grew, with accommodation & food and real estate growing the most. Air Transport, postal & courier and information and broadcasting were the only ones that fell.

+SEBI will replace the current volume-weighted average price method and use the Close Auction System to calculate the closing prices of shares that have F&O contracts from Monday (3 August).

+The US Federal Reserve kept the benchmark interest rate unchanged at 3.50%-3.75%.

+The government said that the Ethanol Blended Petrol programme trials confirmed that E20 is safe for use under prescribed standards and legacy vehicles do not exhibit any significant variation in performance or abnormal wear and tear due to E20.

+The Bank of England kept interest rates unchanged at 3.75%.

+Veritas Finance re-filed for an IPO with SEBI. The IPO will comprise a fresh issue of Rs 900 crore and an offer for sale of 1.28 crore shares. The company had earlier filed for an IPO in January 2025.

+India’s forex reserves rose by $6.11 billion to $682.35 billion in the week that ended on 24 July.

+India’s fiscal deficit widened to Rs 3.07 lakh crore in the April-June quarter compared to Rs 2.81 lakh crore in the same period a year ago.

+The government approved Rs 84,084 crore for the National Offshore Exploration Scheme of the Ministry of Petroleum and Natural Gas up to FY30-31.

+The government approved Rs 5,070 crore for development of 5,000 MW floating solar photovoltaic projects with energy storage systems.

+SEBI introduced the ‘GARUDA’ framework to simplify and expedite the launch of AIFs effective from 30 July. This allows AIFs to launch 10 day after filing a Private Placement Memorandum (PPM).

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

Team Groww Digest

In 2008, an old paper mill in Hamina, Finland, stopped operating. A year later, Google bought the site and began turning it into a data centre.

At first, an abandoned paper mill may seem like an unusual place to build a data centre. But Google was interested in more than just the building.

In the first part of this series, we looked at the biggest cost, the chips and servers themselves. The reason Google chose this site will help explain the second-biggest cost: the infrastructure needed to keep those chips running.

The mill already had the kind of infrastructure that a large data centre needed.

It had access to electricity, large tanks and pipes, and a 450-metre tunnel carved through granite that brought seawater in from the Gulf of Finland.

Instead of starting from scratch, Google could reuse and adapt much of what was already there.

That is what made the old mill valuable, not the building itself, but the power connection, pumps, pipes, water access and space for large industrial equipment.

A data centre works in much the same way. Most of the money does not go into the walls and roof but into the systems that bring in electricity, distribute it to thousands of chips, provide backup power during outages and continuously cool the equipment.

Together, the building and its supporting systems account for about 40% of the total build cost, making them the second-largest expense after the chips and servers, which account for roughly 60%.

This cost is usually measured per megawatt, or MW, of IT load. Basically, it tells how much money is needed to build the facility and supporting systems required to run 1 MW of computing equipment continuously.

In 2026, building this infrastructure is estimated to cost around $11.3 million per MW, up from $7.7 million in 2020.

AI data centres are more expensive because powerful GPUs do much more computing work and require much more electricity in each rack (a server cabinet that holds computing equipment). For example, NVIDIA’s GB200 NVL72 rack uses about 120 kW, while a normal server rack only uses around 5-10 kW.

At this point, regular cables and power systems are not enough anymore. A future 1 MW AI rack using today’s 54-volt setup would need around 18,500 amps, up to 200 kg of copper-based hardware, and almost a full rack of power equipment just to supply the electricity.

As a result, data centres need larger transformers, thicker cables, higher-capacity switchgear, and more powerful backup systems. Transformer prices have risen by about 77-95% since 2019, while the electrical systems for a 50 MW facility can cost around $40-80 million. All of this also increases cooling costs, and with better cooling, these changes can push the cost of an AI-ready data centre to over $20 million per MW.

There are many other infrastructure challenges beyond these core components that further add to complexity and expense.

And that still does not include the chips.

After adding GPUs, servers and other computing hardware, the total cost can reach around $30-40 million for every MW of computing capacity.

Although each MW costs millions, the building structure (walls, roof, concrete) is only 10-15% of the non-IT build cost.

Most of the money goes into the electrical and cooling systems needed to run the servers.

Electrical systems are usually the largest single expense, accounting for roughly 40-45% of the non-IT construction cost. Cooling systems make up another major part of the cost.

The electrical system is expensive because electricity from the grid cannot be sent directly to the servers. It must pass through transformers, switchgear and other equipment that lowers the voltage, controls the flow and protects the machines.

Around 55% of the total cost of the power system is used for this equipment. The other 45% is used for backup systems like UPS units, batteries, and generators, which keep the servers running when the main power supply fails.

These power systems are becoming even more expensive as AI servers use more electricity. A traditional server rack used around 5-10 kW of power, while a new AI rack can use 70-100 kW. This requires larger transformers, thicker cables, stronger backup systems and more advanced cooling.

At the same time, this equipment is becoming harder to obtain. Five years ago, a large transformer could often be delivered within about a year. Today, some can take 3 to 4 years.

The reason is that demand is growing much faster than manufacturers can increase production. The supply chain was built when electricity demand was rising slowly, not for the sudden construction of large AI data centres.

Some estimates suggest that data centres could account for up to 40% of US demand for electrical equipment by 2030, compared with less than 5% in 2020.

As a result, technology companies are now competing with utilities, factories and renewable-energy projects for the same transformers, switchgear and other equipment.

Manufacturers such as GE Vernova, ABB and Eaton are receiving new orders faster than they can complete old ones. As waiting lists grow, prices are also rising. Large transformers now cost roughly 80% more than they did five years ago (about 1.8x higher).

But buying and installing this power equipment is only the upfront cost. Once the data centre starts operating, it must keep paying for the electricity flowing through these systems every second of every day.

Because AI servers use far more power than traditional servers, electricity becomes the data centre’s biggest ongoing expense.

Electricity

The chips may be the biggest thing a data centre company buys, but electricity is the biggest thing it keeps paying for.

A data centre runs all day and night. The servers cannot be switched off when demand is low, and the cooling systems must keep running as long as the chips are producing heat.

Let’s say a 100 MW data centre is running continuously.

That means it is using 100 megawatts of power every hour, 24 hours a day, 365 days a year. Over a full year (8,760 hours), this adds up to around 876,000 MWh of electricity. At a price of $50-80 per MWh, the annual electricity bill would be around $44-70 million.

And 100 MW is considered relatively small on today’s date. New data-centre campuses are being planned at the gigawatt scale.

1 GW (1,000 MW) is roughly the electricity produced by one large nuclear reactor.

Meta’s Hyperion data centre campus in Louisiana, for example, could eventually require as much as 5 GW of power (output of about 5 large nuclear reactors).

A 1 GW data centre running throughout the year would consume around 8.76 million MWh of electricity. At current industrial power prices, its annual electricity bill could exceed half a billion dollars.

Across the US, the numbers are even bigger.

Data centres used about 5.9% of the country’s electricity in 2026. Bloomberg estimates this could rise to around 12% by 2030 and 20% by 2035.

By 2035, data centres might need around 194 gigawatts of power. That’s almost the same as the electricity made by about 200 big nuclear power plants running at the same time.

But not all this electricity is used directly for computing. GPUs consume huge amounts of power, and much of it eventually turns into heat. That heat must be removed continuously, which requires even more electricity.

Pumps move liquid through the building to carry heat away, machines called chillers cool that liquid, and fans and cooling towers then push the heat out into the air outside.

But all this cooling equipment also needs electricity to run. In older air-cooled data centres, cooling can consume as much as 40% of the facility’s total power. This is one reason companies are moving towards liquid cooling, which can remove heat more efficiently.

It creates a continuous cycle. More powerful chips use more electricity. More electricity produces more heat. More heat requires stronger cooling systems, and those systems use still more electricity.

This is why large technology companies no longer treat electricity as just another monthly bill. They now treat it like a critical raw material and are securing supplies many years in advance.

The clearest example is the rush towards nuclear power we talked about in our previous report. By the middle of 2026, technology companies had announced around 13 nuclear deals covering more than 9.8 GW of capacity for AI and data centres.

But securing enough electricity is only one part of the problem. The power supply also needs to be reliable and continuous.

Even a short power outage can stop thousands of GPUs working together during an AI training run, wasting valuable time and work worth millions of dollars.

This is why data centres need lots of backup power, and it gets very expensive.

When the main power grid goes down, batteries and UPS systems kick in for a few minutes while big diesel generators start up. These generators are huge, usually producing 2-3 MW each, and can cost between $500,000 and $2 million. A large data centre may need 50 or more, taking the total generator cost to around $25-100 million.

In Virginia, the world’s largest data centre hub, each site has about 54 diesel generators on average.

But generators are only one part of the backup system. Operators also need fuel storage, electrical switchgear, protective enclosures and exhaust systems. Together, these can add another $10-23 million, while the generator area itself can take up two to five acres.

UPS systems are another big cost. For a 50 MW facility, they can range from about $50-150 million depending on how much backup power is needed.

All together, generators, UPS systems, and other backup equipment can make up around 45% of the total power equipment cost.

Companies are willing to spend this much because downtime is extremely expensive. At the biggest facilities, even a single minute of downtime can cost tens of thousands of dollars.

This is what makes electricity so expensive for a data centre. Companies must first spend millions building the systems that bring in, distribute and back up the power. Once the facility opens, they must keep paying for the electricity it uses every second of every day.

But the cost does not end there. Almost all the electricity used by the chips eventually turns into heat. Removing that heat requires another expensive layer of pumps, chillers, pipes and cooling systems.

That brings us to the next major cost of an AI data centre: cooling.

That is the next cost we will explore in this series.

Read Part 1

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.

Markets closed higher than yesterday’s closing point. Nifty and Sensex rose 2.6% this week.

Media stocks and auto stocks rose the most today. IT stocks and FMCG stocks fell the most.

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

News

• India’s forex reserves rose by $6.11 billion to $682.35 billion in the week that ended on 24 July.

• India’s fiscal deficit widened to Rs 3.07 lakh crore in the April-June quarter compared to Rs 2.81 lakh crore in the same period a year ago.

• The government approved Rs 84,084 crore for the National Offshore Exploration Scheme of the Ministry of Petroleum and Natural Gas up to FY30-31.

• The government approved Rs 5,070 crore for development of 5,000 MW floating solar photovoltaic projects with energy storage systems.

• SEBI introduced the ‘GARUDA’ framework to simplify and expedite the launch of AIFs effective from 30 July. This allows AIFs to launch 10 day after filing Private Placement Memorandum (PPM).

• Manipal Health Enterprises Limited’s IPO was subscribed 4.92 times on day 3. Retail subscription: 0.93 times. The IPO closed for subscription.

• Juniper Green Energy’s IPO was subscribed 0.47 times on day 2. Retail subscription: 0.22 times. The IPO will close for subscription on 3 August.

Stocks Updates

• L&T: signed a six-year EPC framework agreement with Petroleum Development Oman (PDO).

• Maruti Suzuki: net profit fell 9.11% year-on-year to Rs 3,446.90 crore in the April-June quarter.

• ITC: net profit fell 16.21% year-on-year to Rs 4,394.13 crore in the April-June quarter.

• Sun Pharma: net profit rose 27.04% year-on-year to Rs 2,894.79 crore in the April-June quarter.

• Bajaj Finserv: net profit rose 12.31% year-on-year to Rs 3,132.35 crore in the April-June quarter. The board also approved entering the reinsurance business through a new subsidiary, subject to IRDAI and other approvals.

• Dixon Tech: net profit rose 194.89% year-on-year to Rs 663.42 crore in the April-June quarter.

• M&M: subsidiary MLMML will raise about Rs 322 crore through an equity issue to Lightrock Cayman Holdings Ltd, along with existing investors. It also incorporated step-down subsidiary Novavayu Aerospace Ltd (NAL) to manufacture aircraft and aerospace products and provide related services.

• BEL: received additional orders worth Rs 847 crore since its last disclosure on 13 July. The orders cover electro optics, security operation centre, seekers, components, spares and services.

• Indian Oil: reported a net loss of Rs 1,630.74 crore in the April-June quarter, compared with a net profit of Rs 6,813.71 crore in the year-ago period.

• BSE: acquired a 3.33% stake in India International Bullion Holding IFSC Ltd (IIBH) for Rs 10.10 crore.

• Bajaj Holdings: net profit fell 22.37% year-on-year to Rs 2,706.45 crore in the April-June quarter. The year-ago quarter included a Rs 1,521.88 crore profit from the sale of Bajaj Finserv shares.

• GAIL: net profit rose 96.92% year-on-year to Rs 4,665.36 crore in the April-June quarter.

• Lupin: received USFDA approval for diazepam injection (used for treating anxiety disorders). The product’s estimated annual sales in the US are $77.9 million.

• Aditya Birla Capital: net profit rose 40.07% year-on-year to Rs 1,174.70 crore in the April-June quarter.

• Shree Cement: net profit fell 17.66% year-on-year to Rs 529.19 crore in the April-June quarter.

• Lenskart: incorporated a joint venture company, Lenskart Metalframes Pvt Ltd, with China’s Mingfeng Glassesworld Ltd (MGL) to manufacture metal spectacle frames and allied optical products in India.

• ICICI Bank: completed the issuance of $1 billion senior unsecured fixed-rate notes through its IFSC Banking Unit under its $7.5 billion Global Medium-Term Note programme.

• Airtel: received a Rs 6.3 lakh financial penalty from TRAI for alleged violations of mobile-number portability regulations. The company will pay the penalty.

Word of the Day

MoU

It is a document signed by two or more parties that expresses intent to work together

Unlike agreements, MoUs are not always legally binding.

Signing an MoU is the step that usually occurs before an agreement is signed and allows both parties to define the roles and intentions of the work they will do together.

6 Day Course

Theme: bonds

Day 5: Friday

So far, we were talking about bonds of one kind: fixed interest rate.

You must remember that even in the bond market, there are several different types of bonds being traded.

Depending on the type of bond, each type would be priced differently.

And different factors would affect each of them though largely, they are similar.

For example, government bonds are usually trusted more and therefore have lower interest rates.

Some bonds’ interest rate is tied to a benchmark and changes from time to time (floating interest rate).

Some bonds pay the interest only upon maturity. Some pay in a fixed interval.

Some bonds are callable — the issuer can choose to pay the bond before the tenure is over.

Junk bonds are low-priced bonds that offer higher interest rates but carry extreme risk of defaulting.

There are many more types.

————

Featured Question

Q. “When a person buying share from exchange does a portion of shares kept for buying or selling from the company which is only for trading role. If a certain selling happens who is actually buying and vice versa.”

The exchange’s job is to match buyers and sellers.

It does not stock shares to sell to anyone.

So when you buy shares someone somewhere is selling those shares to you.

When you sell shares, someone is buying from you.

We never know who the buyer/seller on the other side of the trade is.

Of course, these trades are happening at a price that everyone considers “fair”.

If you set a limit buy order at a very low price, nobody might want to sell and your order will not get executed.

Whenever there is no buyer/seller for shares, the shares cannot be bought/sold.

In such a condition, the shares are said to be illiquid.

It is rare for shares of large companies to be illiquid. Smaller companies’ shares do become illiquid more often.