Markets opened above yesterday’s closing point.

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

Global markets: US markets closed in the green. Asian markets and most European markets rose (as of 6 pm IST).

News

• India’s composite PMI fell to 57.1 in June (vs 59.3 in May). Services PMI fell to 57.4 (vs 59.8 in May). This means overall economic activity grew less in June than in May.

• India’s forex reserves fell by $5.65 billion to $666.93 billion in the week that ended on 26 June.

Stocks Updates

• Adani Enterprises: opened its Qualified Institutions Placement (QIP) with a floor price of Rs 3,034.68 per share, with the option to offer up to a 5% discount.

• JSW Steel: subsidiary, JSW Rayalaseema Steel Ltd, began development of a 2 MTPA integrated steel plant in Andhra Pradesh’s Rayalaseema region, with a total planned investment of Rs 16,350 crore.

• HCLTech: signed a strategic partnership worth $1.14 billion with a Europe-headquartered Fortune Global 50 company.

• BPCL: subsidiary BPRL Ventures BV completed the acquisition of the remaining 39.14% stake in IBV Brasil Petroleo Limitada for Rs 2,312 crore, increasing its holding to 100%.

• Tata Power: subsidiary Tata Power Renewable Energy Ltd commissioned the 100.8 MW Jewali Wind Project in Dharashiv, Maharashtra, taking its total operational renewable capacity to 6.7 GW.

• Zydus Lifesciences: signed an MoU with Apollo Hospitals to expand access to Guardant Health’s Shield Multi-Cancer Detection (MCD) blood test in India.

Word of the Day

Wholly Owned Subsidiary

It is a company that is fully owned by the parent company

A wholly owned subsidiary company’s shares are all 100% owned by the parent company.

Parent companies may establish or acquire such wholly owned subsidiary companies for various reasons.

Some of these reasons include regulatory requirements, legal separation, entering new markets, tax planning, acquisition, etc.

Subsidiaries that are not wholly owned are often called partly-owned subsidiaries or joint ventures.

6 Day Course

Theme: value trap

Day 5: Friday

Many times investors get drawn to companies that pay good dividends.

Many such companies tend to attract new investors. Sometimes, some of these companies end up becoming value traps.

Their dividends are inconsistent and fall later, resulting in those investments giving very poor returns.

Many times, companies rework their numbers to make them appealing like increasing Earnings-Per-Share (EPS) with the help of buybacks or using accounting tricks.

In such cases, the companies might suddenly appear better. The reality is that the company has not changed and is pretty much the same.

Such cases can also turn out to be value traps.

Another value trap happens when a company’s future looks promising but its direction is constantly changing.

The company is routinely changing its objectives and targets.

6 Day Course

Q. “How a benchmark is different from category average.”

Mutual funds always aim to generate returns higher than the benchmark.

The benchmark is usually an index in that category.

For example: large cap mutual funds often have the Nifty 50 index as their benchmark.

Category average tells you the average returns of all the mutual funds in that category.

Example:

XYZ large cap mutual fund’s 5-year return = 16% p.a.

Category average of large cap mutual funds 5-year = 15% p.a.

Nifty 50 index returns 5-year = 13% p.a.

So in this example, we see that XYZ mutual fund has given returns higher than the benchmark and the category average.

It is possible for the category average to be lower than benchmark.

That would mean that many mutual funds in that category have not been able to beat the benchmark.

It is also possible for a mutual funds’ returns to be below benchmark.

That would mean the mutual fund has not been able to give returns better than the benchmark.

Markets opened above yesterday’s closing point.

All sectors’ stocks rose today except for the PSU Bank stocks. IT stocks and realty stocks rose the most.

Global markets: US markets and most Asian markets fell. European markets rose (as of 6 pm IST).

News

• India and Japan signed a Memorandum of Cooperation (MoC) with an investment of $10 billion in AI, semiconductors, clean energy, and economic security.

• Carlsberg has filed draft papers with SEBI for an IPO through the confidential route.

• CSM Technologies IPO listed on the stock exchanges at the issue price and closed 5% down at the end of the day.

Stocks Updates

• Adani Enterprises: signed an MoU with the Odisha government for an $11.5 billion (around Rs 1.08 lakh crore) aluminium project through a 50:50 JV with IHC Group’s International Resources Holding.

• Kotak Mahindra: acquired a loan portfolio worth Rs 9,587.62 crore from its wholly-owned subsidiary Kotak Mahindra Investments Ltd as part of group simplification and RBI compliance.

• Varun Beverages: South Africa subsidiaries Beverage Company Proprietary Ltd (Bevco) and Twizza Proprietary Ltd approved the merger of Twizza into Bevco, subject to local laws.

• Samvardhana Motherson: indirect wholly owned subsidiary Motherson DRSC Automotive Product Trading (Shanghai) Co Ltd was dissolved following voluntary closure. The company said the dissolution has no material financial impact.

• Tech Mahindra: subsidiary Tech Mahindra Servicos De Informatica acquired 100% stake in Brazil-based Alyis Servicos Tecnicos for BRL 1.2 million (around Rs 2.21 crore).

• Max Healthcare: received no-objection letters from BSE and NSE for the reclassification of Radiant Life Care Hospital Foundation from ‘Promoter Group’ to ‘Public’ category, effective immediately.

• Lupin: received US FDA inspection report for its Somerset, New Jersey facility with Voluntary Action Indicated (VAI) classification. This was following an inspection conducted in April.

• Lenskart: board approved the merger of wholly owned subsidiaries Dealskart Online Services and Lenskart Eyetech into the company to simplify its corporate structure and improve operational efficiencies. It also approved a 80:20 joint venture with China’s Mingfeng Glassesworld Ltd to manufacture metal spectacle frames in India.

• Aurobindo Pharma: completed the transfer of its domestic branded generic pharmaceutical formulations business to wholly owned subsidiary Auropharm Ltd on a slump sale basis.

Word of the Day

Arbitration

Arbitration is a dispute resolution process in which parties resolve their dispute outside the regular court system

When two parties enter into an agreement, they may include an arbitration clause stating that future disputes will be referred to arbitration.

An arbitrator is a neutral person who listens to both parties, considers their arguments and evidence, and then gives a decision known as an arbitral award.

An arbitral award can be binding on the parties and may be enforceable through a court of law.

6 Day Course

Theme: value trap

Day 4: Thursday

One of the biggest risks that a company can have is too much debt.

It is possible that a company has good revenues, earnings, margins, etc but at the same time, has a high debt.

If the business continues the way it is, the company will continue running fine.

But the moment the revenue gets hit due to some external factor (bad sales seasons, competition, etc), the earnings will fall.

In such a period, the debt might become a massive headache for the company and might prevent it from growing. Most of its future earnings in such a case will go towards paying back debt.

This would prevent the company’s business from growing, therefore preventing its share price from rising.

This could potentially serve as a debt trap for the shareholders.

6 Day Course

Q. “What does it mean when a company says it will challenge the GST bill or penalty and why do they do it and what are the benefits of challenge the bill”

In many cases, the company feels it is right in its own calculation of tax. At the same time, the government agency may also feel they are right.

Since they cannot agree on this, they take the matter to court.

Sometimes, the courts rule in favour of the companies and sometimes, in favour of the government agencies. It depends on the case details.

In short, challenging the GST bill or penalty is a way for the dispute to be resolved.

The other option companies have in such cases is to simply pay the GST bill or penalty.

Markets opened above yesterday’s closing point.

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

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

News

• India’s manufacturing PMI fell to 54.2 in June (vs 55.0 in May). This means manufacturing activity rose less in June than in May.

• India’s gross GST revenue rose 13.9% year-on-year to 1.95 lakh crore in June. Net GST revenue rose 11.2% to 1.62 lakh crore.

• The government approved Rs 7,145.14 crore for the construction of a 117.7 km access-controlled Kanpur-Kabrai section of the NH-34 greenfield highway in Uttar Pradesh.

• The government approved Rs 6,969.67 crore for the construction of an 8.1 km, 6-lane road tunnel (NH-148AE) in Delhi.

• Social Worth Technologies has filed draft papers with SEBI for a Rs 750 crore IPO.

Stocks Updates

• Airtel: subsidiary Airtel Money has started commercial operations as a Type-II NBFC after getting RBI registration.

• M&M: revised terms for the sale of its Turkish subsidiary Erkunt. It will infuse TL 2.26 billion (around Rs 471 crore) into the business before closing the transaction, while the buyer will invest $10 million (around Rs 95 crore). The stake sale is expected to close by 15 August 2026.

• NTPC: declared commercial operation of the 15 MW Bhilai Floating Solar Power Station through its JV NSPCL, taking NTPC Group’s total installed capacity to 90,904 MW.

• Avenue Supermarts (DMart): allotted commercial papers worth Rs 200 crore through private placement at a 6.70% coupon rate, maturing on 28 Sept 2026.

• Coal India: got a Letter of Award to set up a 600 MW solar power project at Jalaun Solar Park in Uttar Pradesh. The project will cost around Rs 2,831 crore.

• Wipro: completed cancellation of 60 crore shares under its buyback. Its total outstanding shares reduced from 1,050.35 crore to 990.35 crore.

• HDFC Life: GST demand of Rs 132.7 crore, along with interest and penalty, was upheld by the appellate authority. The company will challenge the order.

• Max Healthcare: completed the first phase of its acquisition of Yerawada Properties, acquiring 100% voting rights and 50.22% economic interest, making it a subsidiary. The acquisition supports the development of a 450-bed super-speciality hospital in Pune.

• Lupin: completed the acquisition and buyback of shares in Philippines-based Multicare Pharmaceuticals, increasing its stake from 56.28% to 99.89%.

• Power Grid & REC Ltd: subsidiary RECPDCL transferred WR ER Part A Power Transmission to Power Grid for Rs 18.62 crore and WR ER Part C Power Transmission to HG Infra Engineering for Rs 11.93 crore.

• Suzlon: secured a 105 MW wind turbine order from Sunsure Energy for deployment in Karnataka. The order will use Suzlon’s newly launched 5 MW S175 turbines and takes the companies’ cumulative partnership to 400.8 MW.

• NTPC Green: subsidiary Ayana Renewable Power won a 193 MW wind power project from MPPMCL at a tariff of Rs 4.17/kWh.

Word of the Day

Greenfield Project

It is a project that is started afresh and is not building upon an existing project.

Whenever a project is built for the first time at a location and is a fresh start, it can be called greenfield.

It is not modifying an existing project.

This term can be used to describe all kinds of projects like factories, highways, solar plants, etc.

6 Day Course

Theme: value trap

Day 3: Wednesday

Another common sign of a value trap is that of reducing margins.

A company may continue to earn profits, continue to have revenue growth, but the margin is reducing.

In such a case, the company is having to spend more money to earn the same amount of earnings.

This can be due to multiple factors like increasing input costs, increasing competition, etc.

In such a case, a company may gradually lose its power to price its products as it wishes.

Many times, this leads to a reduced earnings growth and therefore, a reduced share price increase.

Such a stock can also become a value trap where its revenues are increasing but its margins are shrinking.

Another metric to keep a track of is cash flow. If the cashflow of a company is negative while earnings are positive, the share may become a value trap.

6 Day Course

Q. “Can an individual investor apply for shares under both the category of retail investor as well as small NNI in an IPO?”

This is not allowed.

Only one type of application is allowed per PAN.

An investor can apply only as a retail investor or as an NII investor.

Applying via both categories using the same PAN is treated as multiple applications and will lead to both applications being cancelled.

Markets opened above yesterday’s closing point.

Chemicals stocks and realty stocks rose the most today. IT stocks and media stocks fell the most.

Global markets: US markets and most Asian markets rose. European markets rose (as of 6 pm IST).

News

• The government has extended the customs duty exemption on key imported petrochemicals until 15 July 2026 to keep supplies stable and help manufacturers and consumers.

• The government has lifted temporary fuel sale restrictions from 1 July, allowing bulk buyers to resume normal purchases as fuel supplies have stabilised. The restrictions, introduced on 12 June, had capped diesel sales at retail outlets at 200 litres per customer/vehicle per day.

• Indian Railways has approved three projects: Rs 499 crore for doubling the 44.40 km Mansi–Saharsa section in Bihar, Rs 432 crore for Electronic Interlocking at 27 stations/cabins in Asansol Division, and Rs 200 crore for laying 48-fibre OFC over 1,696.2 route km across South Eastern Railway.

• The government has kept interest rates on all small savings schemes, including PPF and NSC, unchanged for the ninth straight quarter from July to September 2026.

Stocks Updates

• Maruti Suzuki: received an income tax penalty order of Rs 6.71 crore, which it will challenge.

• Adani Ports: signed an agreement with MSC Group’s terminal arm, Terminal Investment Ltd (TiL), under which TiL will acquire a 49% stake in Adani Vizhinjam Port for $1.4 billion.

• Kotak Mahindra: signed an agreement to acquire Deutsche Bank’s retail banking, private banking and wealth management business in India for around Rs 281.7 crore, subject to regulatory approvals.

• NTPC: declared commercial operation of the remaining 41.6 MW capacity of its 176 MW Ramagundam Solar PV Project in Telangana, taking NTPC Group’s total installed capacity to 90,899 MW.

• JSW Steel: completed its 50:50 joint venture with Japan’s JFE Steel for Bhushan Power & Steel after JFE acquired an additional 25% stake in JSW JFE Kalinga for Rs 7,875 crore.

• Vodafone Idea (Vi): acquired a 26% stake in MTK Quantum Green Energy for Rs 4.33 crore to source cost-effective renewable energy through a captive solar power plant in Tamil Nadu.

• Power Grid & PFC : subsidiary PFC Consulting Ltd transferred its wholly-owned SPV, Kakinada I Transmission Ltd to Power Grid for Rs 20.51 crore after Power Grid emerged as the successful bidder.

• Tech Mahindra: company’s step-down wholly owned subsidiary, Leadcom Integrated Solutions Myanmar Ltd, was voluntarily liquidated with effect from 29 June.

• Lodha Developers: allotted secured NCDs worth Rs 300 crore on a private placement basis.

• Waaree Energies: subsidiary Waaree Solar Americas received an order to supply 236.22 MW solar modules from an international renewable energy infrastructure company.

Word of the Day

Installed Capacity

It is the electricity that can be produced at full capacity

A power plant does not always run at full capacity. Installed capacity is the max rated capacity of generating electricity of a power plant.

Installed capacity can be used for different groups also.

Example: total installed capacity of a company (total capacity of a power company across all its power plants).

Further, it can be used to describe the total installed capacity of cities, states, countries, etc.

It is measured in Megawatt (MW) or Gigawatts (GW) where:

1 GW = 1,000 MW

6 Day Course

Theme: value trap

Day 2: Tuesday

Many times, stock’s numbers decline due to temporary or cyclical reasons.

Example: a company’s revenues and profits might go low because of seasonal reasons or cyclical reasons.

This is a normal part of the functioning of that business and the numbers will come back up in a different part of the cycle.

But, in cases where the company is structurally going through a difficulty, the numbers will not come back as easily.

Example: a new competitor has made it very difficult for the company’s products to sell well.

In such a case, the low revenue/earnings and also low valuation is not a positive sign nor does it signal a good buying opportunity.

An investment in a stock that is losing and is likely to not bounce back is not always an investment.

More often, it might just act as a value trap.

6 Day Course

Q. “Can an individual invest more than 2 lakh rupees in ipo. Is it legal? Till how much amount can be invested in ipo?”

Yes, it is possible and is legal.

It’s just that the IPO category is different for such investors.

Different types of investors can invest different amounts in an IPO.

Based on your investment amount, you will be categorised into one of the following buckets.

-Up to Rs 2 lakh = individual/retail investor

-Rs 2 lakh to Rs 10 lakh = Small Non-Institutional Investors (NII) and High Net-worth Individual (HNI)

-Rs 10 and above = Big Non-Institutional Investors (NII)

The above is in the case of NIIs like HNIs, trusts, HUFs, NRIs, etc. There are institutional investors too like mutual funds, banks, private equity, etc that are not mentioned here.

Markets opened above Friday’s closing point.

Pharma stocks and healthcare stocks rose the most today. Auto stocks and cement stocks fell the most.

Global markets: Most US markets closed flat. Most Asian markets rose. European markets were flat (as of 6 pm IST).

News

• India’s industrial production grew 5.1% year-on-year in May (vs 4.9% in April). Manufacturing production rose 5.5% (vs 6.1% in April).

• Turtlemint Fintech Solutions IPO listed on the stock exchanges at a discount of 11.25% over the issue price and closed 10.94% down at the end of the day.

Stocks Updates

• SBI: raised $300 million through 3-year senior unsecured floating-rate bonds at SOFR + 100 bps. The bonds will be issued through its London branch on 6 July.

• Hindustan Zinc: executed a composite licence with the Uttar Pradesh government for the 210.01-hectare Nawatola Laband Rare Earth Elements block in Sonbhadra.

• Bajaj Auto: buyback of up to 46.94 lakh shares at Rs 12,000 per share, aggregating up to Rs 5,632.8 crore, will open on 1 July and close on 7 July.

• Power Grid: commissioned the transmission scheme for solar energy zones in Ananthapur (2,500 MW) and Kurnool (1,000 MW) in Andhra Pradesh.

• Adani Green: company’s step-down subsidiary, Adani Renewable Energy Eight, commissioned a 150 MW solar power project at Khavda, Gujarat. With this, Adani Green’s total operational renewable energy capacity increased to 19,985.8 MW.

• HAL: board recommended a final dividend of Rs 10 per share for FY26. Record date: 14 Aug. Subject to shareholder approval.

• Samvardhana Motherson: acquisition of a 28.15% stake in HR Dhauliganga Pvt Ltd (HRDPL), an SPV of Hinduja Renewables Energy Pvt Ltd, proposed to support captive power sourcing, is now expected to be completed in Q4 FY27 instead of Q1 FY27.

• BPCL: will acquire a 40% stake in Tiki Tar and Shell India Pvt Ltd (TTSIPL), a joint venture of Tiki Tar Group and Shell Gas B.V. for Rs 85 crore to expand its value-added bitumen business.

• Aditya Birla Capital: allotted NCDs worth Rs 300 crore (Rs 200 crore at zero coupon and Rs 100 crore at 8.26% p.a. coupon) on a private placement basis.

• Aurobindo Pharma: USFDA completed an inspection of subsidiary Auroactive Pharma’s API manufacturing facility in Andhra Pradesh with two observations.

Word of the Day

Discounting

It shows how much a future amount of money is worth today.

That is, it gives the present value of a future amount. Money today is always worth more than the same amount in the future because of inflation and the opportunity to invest and earn returns.

Discounting helps investors decide if an investment is worth it by comparing future returns in today’s terms.

A higher discount rate means future money is worth less today, usually because of more risk or uncertainty.

A lower discount rate means future money is worth more today, indicating less risk or a better investment environment.

6 Day Course

Theme: value trap

Day 1: Monday

Value trap is an investment that looks like it is available for cheap but ends up trapping people’s money.

In this week’s course, we’ll look at some common traits of value traps.

The first and foremost value trap is that of a low-PE ratio stocks.

This does not apply to all stocks with a low PE ratio. But some stocks have a low PE ratio and stay that way.

The reason for it might be because the company is actually a low-growth business or has fundamental flaws that prevent it from performing well.

Investors who invest in such companies’ stocks might think they are buying a cheap undervalued stock but end up getting low returns because the stock never performs well or gives good returns.

This can apply to all metrics used for valuation of a company including PE ratio, PB ratio, cashflow multiple, revenue multiple, etc.

We explored the question “What if you chose a debt fund instead of an FD?”

Check out the full report here .

Did you like this edition?
Leave a feedback here!

The Union Budget had already been presented almost two months earlier. Most investors assumed the major tax changes for the year were already known. But while Parliament was discussing the Finance Bill, one more amendment was introduced.

It changed how many debt mutual funds would be taxed.

Now, that may sound like a technical change. But for investors who compared debt funds with bank fixed deposits, it mattered a lot.

For years, one of the biggest reasons investors preferred debt mutual funds over FDs was not just returns. It was tax.

To really see why this mattered, we need to take a step back and look at how things used to work before 2023.

Suppose you have Rs 1 lakh to invest. You can either put it in a bank fixed deposit or invest it in a debt mutual fund.

At first glance, these look like very different products. An FD is a bank deposit. A debt fund is a mutual fund.

But if you zoom out, both are connected to lending. When you put money in an FD, the bank uses its pool of deposits to lend and invest. When you invest in a debt mutual fund, the fund buys debt securities issued by companies, banks, PSUs, or the government.

So in broad terms, both are trying to earn returns from debt.

But the tax treatment was very different.

In an FD, the interest is taxed at your income-tax slab. So if your FD earns Rs 80,000 in interest and you are in the 30% slab, that interest is taxed at 30%. In other words, every year, a portion of the interest your FD generates goes toward paying taxes, reducing your effective return.

Debt mutual funds worked differently under the old rules.

If an investor stayed invested for more than 3 years, the gains could qualify as long-term capital gains. And that came with an important tax benefit called indexation.

Now, indexation sounds like a complicated tax term, but the idea was actually quite simple.

Before calculating your tax, the government allowed you to increase your original purchase price to account for inflation using something called the Cost Inflation Index.

Why did that matter?

Because if your purchase price became higher, your taxable profit automatically became smaller. And if your taxable profit was smaller, you paid less tax.

For someone in the 20% or 30% tax bracket, it meaningfully improved the final after-tax return.

That is why the FD vs debt fund comparison was never only about returns. It was also about post-tax returns.

A debt fund did not always need to beat an FD by a huge margin before tax. For a higher-tax investor, the old tax treatment itself could improve the final result.

Then came the 2023 amendment.

For fresh investments made on or after 1 April 2023, the old indexation benefit was removed for most debt mutual funds. Instead, the gains would be taxed according to the investor’s income-tax slab.

So the obvious question was, if debt funds lost their tax advantage, did fixed deposits become better?

But to answer that properly, we cannot look only at the tax rule.

We also need to look at what actually happened to returns.

Because even after losing a tax benefit, a debt fund could still beat an FD if its return was high enough. And even with a tax benefit, a debt fund could still lose if its return were weak.

So we tested this using historical FD rates, debt fund NAVs, and post-tax returns.

The Experiment

We assumed an investor had Rs 1 lakh to invest on 1 April each year.

The investor had two choices:But we did not randomly choose funds.

For every 1 April investment date, the investor looked at the previous financial year’s best-performing fund in that category and invested in that fund.

So if the investment date was 1 April 2020, the fund was selected based on its performance from the previous financial year. Then the investor held it for the full comparison period.

This reflects a common investor behaviour: looking at last year’s return table and choosing the fund that performed best.

We then compared that selected fund with an SBI FD over the same holding period.

For the 1-year part, we used liquid funds because investors often use them to park money temporarily.

For the 3-year part, we used Banking & PSU Funds because they are one of the cleaner open-ended debt fund comparisons for a conservative FD investor.

They are still not FDs. The return is not fixed, and the NAV can move. But these funds mainly invest in debt issued by banks, PSUs, and public financial institutions, so they are more suitable for this comparison than funds like Credit Risk, Gilt, Dynamic Bond, or Medium Duration Funds.

We also kept the FD comparison clean.

There was no FD rollover. If the holding period was one year, the comparison ended after one year. If the holding period was 3 years + 1 day, it ended after 3 years + 1 day.

This way, we were not asking what happens if someone keeps renewing FDs for many years.

We were asking a simpler question:

If an investor knows they need the money after one year or after three years, would the selected debt fund leave them with more money than an SBI FD over the same period?

How tax was applied

For this study, we focused on a 30% tax slab investor.

We chose this because the old debt fund tax advantage was most significant for higher-tax investors. Interest earned on fixed deposits (FDs) is taxed at the investor’s income-tax slab, so someone in the 30% slab pays much more tax on FD interest than someone in the 5% slab.

For debt funds, the tax rule depended on the investment date.

This is important because the 2023 tax change does not affect all parts of the study equally.

For Liquid Funds, the holding period was only one year, so indexation was not really relevant even under the old rules.

For Banking & PSU Funds, the holding period was 3 years + 1 day, so the old indexation benefit mattered for investments made before 1 April 2023.

That is why the study has two parts.

The Liquid Fund section checks whether a short-term debt fund meaningfully beat a 1-year FD.

The Banking & PSU section checks what changed when the old 3-year debt fund tax advantage was removed.

Result

What happened in the 1-year category?
Liquid Fund Vs FD

For the 1-year comparison, we focused only on Liquid Funds.

This is not the same as an FD. In an FD, the bank promises a fixed return. In a Liquid Fund, the fund invests in very short-term debt and money market instruments, and the return comes through NAV movement. So the return is not fixed.

But for short-term parking, Liquid Funds are one of the closest debt fund comparisons because investors often use them when they want to keep money for a short period without taking equity-like risk.

Here, the investor picked the previous financial year’s best-performing Liquid Fund on every 1 April and held it for one year. The same ₹1,00,000 was also invested in a 1-year SBI FD.

The returns below are total post-tax returns over the full 1-year holding period, not annualised comparisons beyond that period.

The result is mixed.

The selected Liquid Fund beat the FD in 5 out of 10 years. The FD beat the selected Liquid Fund in the other 5 years.

More importantly, the difference was usually small. In 2019, Quant Liquid Plan beat the FD by just 0.02 percentage points. That is barely a meaningful gap. In 2025, Sundaram Liquid Fund was selected because it was the previous year’s best-performing Liquid Fund, but it still lost to the FD by around 0.52 percentage points.

So this does not show one clear winner.

It shows that for 1-year money, picking last year’s best Liquid Fund did not reliably beat a 1-year SBI FD. Sometimes it worked. Sometimes it did not. And most of the time, the gap was not very large.

The tax-change angle is also different here.

Because this was only a 1-year holding period, indexation was not really relevant even under the old debt fund tax rules. So the 2023 tax change does not explain much in the Liquid Fund result.

The takeaway is that over a 1-year horizon, choosing the previous year’s best-performing Liquid Fund did not provide a reliable advantage over an FD. The winner varied from year to year, and the return gap was usually too small to be decisive.

If Liquid Funds are more flexible, why use an FD at all?

This is the natural question.

If the difference in returns is usually small and liquid funds offer greater flexibility, why would anyone still choose a fixed deposit?

Because the products solve different problems.An FD exists because many investors want certainty. They know the rate before investing, they know the maturity date, and they know what they will receive if they hold till maturity. For someone who needs money exactly after one year and does not want NAV movement, an FD is simpler.

A liquid fund exists for a different reason. It is useful when the investor wants to park money but is not sure exactly when it will be needed. The money may be required in a few days, a few weeks, or a few months. In that case, flexibility matters more than locking into a fixed maturity.

So the choice is not just about return.

If the investor wants a known return and a fixed date, the FD fits better.

If the investor wants flexible parking and can accept small NAV movement, the Liquid Fund fits better.

That is why both products exist.

In our data, the selected Liquid Fund beat the FD in 5 out of 10 years and lost in the other 5. The gap was usually small. So the result does not prove that one product is clearly better. It only shows that, for 1-year money, the return difference was not strong enough to make the decision purely about returns.

What happened in the 3-year ?

Banking & PSU fund Vs FD

For the 3-year comparison, we focused on banking & PSU funds.

This is not the same as an FD. In an FD, you are lending money to the bank, and the bank promises a fixed return. In a Banking & PSU Fund, the fund buys debt issued mainly by banks, public sector companies, and public financial institutions. The return is not fixed because the fund’s NAV keeps moving.

But for a conservative FD investor, this is still one of the cleaner debt fund comparisons because the broad exposure is to relatively stable borrowers, not to credit-risk funds, gilt funds, or long-duration interest-rate bets.

Here, the investor picked the previous financial year’s best-performing Banking & PSU Fund on every 1 April and held it for 3 years + 1 day. The same Rs 1,00,000 was also invested in a matching SBI FD for the same period.

The returns below are total post-tax returns over the full holding period, not annual returns.

This result is much cleaner than the 1-year liquid results.

In every completed 3-year period from 2016 to 2023, the selected Banking & PSU Fund beat the matching SBI FD after tax for a 30% taxpayer.

But the important part is not just who won. It is why the fund won.

For the 2016 to 2022 start years, the investment was made before the 2023 tax change. So the fund had two things working for it: the actual return of the fund and the old indexation benefit.

The 2023 row is different.

That investment was made after 1 April 2023. So the old indexation benefit was not available. Under Section 50AA, gains from specified mutual funds acquired on or after 1 April 2023 are taxed at the investor’s applicable slab rate, even if they were held for more than three years.

So UTI Banking & PSU Fund still beat the FD in the 2023 window, but the gap was smaller. The fund gave 16.42% after tax over the full holding period, while the FD gave 14.41%. That is a difference of only 2.01 percentage points.

Now, to see what the tax change actually did, we can run one counterfactual.

What if the old tax benefit had still applied in 2023?

This is only an illustration, because the Apr 2026 redemption would technically need the FY2026-27 CII, and the official CII table currently lists values only up to FY2025-26, where the CII is 376.

So using the latest available CII value as a conservative placeholder, the picture would have looked like this:This is the tax change in one table.

Under the actual post-2023 rule, the selected fund still beat the FD. But it beat it by around Rs 2,009 on a Rs 1 lakh investment.

If the old indexation-style benefit had still been available, the same fund would have beaten the FD by roughly Rs 6,166 using the conservative CII placeholder.

So the 2023 tax change did not flip the winner in this case. The Banking & PSU Fund still came out ahead.

But it clearly reduced the advantage.

That is the real point.

Before 2023, a good 3-year debt fund could beat an FD through both return and tax treatment. After 2023, the same kind of fund has to rely much more on actual performance.

The fund can still win.

But tax is doing much less of the work.

Conclusion

So, what did we actually learn?

The biggest takeaway is that the FD versus debt fund debate was never just about taxes.

Before 2023, the tax rules gave debt mutual funds a meaningful advantage, especially for investors in higher tax brackets. That made it easier for a debt fund to come out ahead of a fixed deposit on an after-tax basis.

The 2023 tax change removed a large part of that advantage.

But that does not automatically mean fixed deposits became the better choice.

In this study, the selected debt fund could still beat the FD in several comparisons. The difference is that the advantage became smaller once the old indexation benefit disappeared.

In other words, the rules of the game changed.

Earlier, a debt fund had two ways to beat an FD. It could earn a higher return, and it could benefit from more favourable tax treatment.

Today, one of those advantages is largely gone. So if a debt fund is going to justify its place against an FD, it has to do so more through actual performance.

That also makes the choice between the two products clearer.

If the priority is certainty, a fixed deposit still does exactly what it always has. The investor knows the interest rate, the maturity date, and the amount they should receive if they hold it till the end.

A debt mutual fund is different. Its return is not guaranteed, but it offers flexibility and the possibility of earning more if the underlying portfolio performs well.

So the question investors should ask today is not just:

“Is a debt fund more tax-efficient than an FD?”

It is this:

“After applying the tax rules that exist today, did the debt fund earn enough to beat the FD over the same period?”

That is the comparison that matters now.

And as this analysis shows, the answer depends on the debt fund category, the holding period, and the return the fund actually delivers.

Research Analyst Disclaimer

Based out of Toronto, Andrew owned a desirable SUV.

A GMC Yukon. This SUV was kept parked right outside his house.

Andrew and his wife had returned from a trip and had been suspicious since then.

The car’s steering wheel was slightly bent. The seat position was adjusted differently.

In 2024, he looked outside after dinner and saw what he had been fearing — the car was gone.

Andrew had worried about this situation. To try and prepare for such a day, he had installed two AirTags on his car.

The idea was that if the car was stolen, he’d be able to track it in real-time. He hoped that that information would help the police recover his vehicle for him.

Andrew checked his phone and could see that his SUV was still very much in the city.

He did not waste time. He called the cops. To be doubly sure, he even hired private investigators.

The police officer who responded to his calls went after the car based on the live location shared by Andrew.

Some time later, the cop sent pictures of shipping containers loaded onto a train. The cop was sure the car was inside one of the containers.

He had managed to trace the car, thanks to Andrew’s AirTag.

But Andrew did not have any reason to be happy.

The cop informed him that he couldn’t just go and open the containers. He didn’t have the authority to do so. He would have to raise the matter with the train authorities.

While he was still figuring that out, the train departed as per its schedule.

Andrew watched his car’s location update live on his phone. It was now moving towards the Port of Montreal.

Different authorities, bodies, and agencies were involved in each part of this network.

The authorities were still figuring out a way to flag the container’s contents as stolen.

The container had already been put on a ship. And that ship had sailed out to the seas.

Andrew watched it all on his phone, live.

The live tracker went offline as it left the port.

Andrew got an update a month later. The car had been offloaded at a port in Belgium, Europe. A few days later, it showed up in Dubai.

Andrew’s private investigator found the car in a used car showroom in the UAE.

A theft of this kind, where the car can be tracked live, and yet not stopped, is possible thanks to the incredibly efficient global supply chain network.

And central to that system is one single invention — the container.

Shipping Container

Trade by sea. There’s nothing new about it. It had been happening for centuries.

Grains were put in sacks and loaded on ships. Boxes for easily broken items. Baskets for fruits. Some items were loaded directly onto the ships.

In the mid-1900s, Malcolm McLean was working in this very industry.

He was in the trucking business. He hated the long waiting time. Once he reached port with his truck full of cargo, he often waited an entire day for them to load the items onto the ship.

The lines were long and seemed like a monumental waste of his time. While he viewed the situation from the perspective of a trucker, the same logic applied to the ship.

It was an expensive machine wasting time just standing.

With nothing much to do while waiting in queues, he eventually started wondering if simply loading the truck’s trailer itself would save time.

The idea evolved and he concluded that the wheels were not needed either.

Large boxes loaded on trucks would make loading and unloading ships and trucks much faster.

He took out a loan, bought 2 ships, and started using large steel boxes for easy loading and unloading. McLean’s patented steel boxes had posts on all corners that enabled them to be locked in place.

This allowed them to be easily loaded on truck trailers.

These boxes were also made sturdy enough to be stacked up to a certain height and load limit.

In 1956, his first ship completed its first journey with 58 containers.

The trucking and shipping industry veterans were watching keenly.

There were obstacles but all of them paled in comparison to the advantages.

The shipping costs were lower, the items arrived safe and dry, and the loading/unloading time was much shorter.

His company, Sealand Industries, was off to a flying start.

McLean understood that for these containers to be truly efficient, they needed to be standardized. Fixed sizes of containers. One type of corner locking mechanism.

A lot needed to change before these containers became the standard.

Ports would have to be better designed with cranes for loading and unloading containers. More truck-trailers that could handle containers were needed.

Above all else, ships designed exclusively for containers would need to be built.

Mass Adoption

The idea was simple, yet brilliant.

Sealand Industries had the patent to their container design. But unlike other companies that profit from keeping their design exclusive, Sealand needed mass adoption.

Without others adopting the same standards, Sealand wouldn’t be a widespread success.

So they offered the patent to many other companies operating in the same industry, for free.

And the trick worked.

Soon, more truck-trailers started being built optimized to carry the containers. Trains too. Ships started being built specifically to ferry containers.

The supply chain industry adapted to shipping using containers better.

The ease and speed was such, the container enabled globalized trade like never before.

Toys could be made in a factory in one remote corner of the world and loaded in a container.

That would then ride on trucks, trains, and ships to reach children on literally the other side of the globe.

This meant that containers were built, repaired, handled, and customized by companies across the world. Nearly 70 years later, the container hasn’t changed. It’s still pretty much the same in the external shape, size, and locking mechanism.

Today, some of the world’s biggest ships can easily carry more than 24,000 TEU (Twenty-foot Equivalent Unit).

Which means, these ships can carry 24,000 containers that are 20 ft long.

Compare that number to the 58 containers carried by the first ship.

Just to be clear, the containers these ships carry are most often 40 ft long. Which means, a ship with 24,000 capacity would be able to carry around 12,000 containers that are 40 ft long.

Some estimates say there are 40 million containers in the world.

About 250-300 million containers are moved per year (the same containers do multiple trips in a year).

There are different types of containers too now. But the overall form factor remains the same.

The scale and speed of this is absolutely staggering. Things move so fast, countries and border police have a difficult time ensuring illegal items don’t get transported.

This greatly explains why Andrew’s car left Canada before the police could intervene.

Containers & Modern Life

Modern life is impossible without containers.

It just isn’t possible without these steel boxes.

Just look around. Most things would have been inside a container. The device you are reading this write-up on has definitely been inside a container.

If something was made outside India, it would have almost certainly been inside a container and on a container-carrying ship too — through the various ports and supply chain systems.

Some examples of item-categories transported in containers.

Obviously, a lot of things are better not transported by containers. Some examples:

Revenue & Profits

An industry that is so essential, the world would crumble without it. Surely that’s a great moat to have for companies in this space?

Not quite.

In fact, the container industry and industries around it are infamously low margin. It’s all down to fierce competition and thin margins.

In that sense, it is very similar to the airline industry — absolutely essential and yet brutally difficult to survive in.

— High Capex —

This is a very high capex or capital expenditure industry. Everything requires spending lots of money before the first dollar starts coming in the form of revenue.

To make matters worse, the industry goes through violent cycles.

There are periods when the margins are non-existent. Sometimes, even below operating cost.

And then there are periods when margins are thick.

Half the trick is being able to survive a thin-margin period till the next cycle of thick-margins.

— Competition is Fierce —

Containers are containers. There’s not much different that companies can offer. It’s easily replicable across the world. Same with ships carrying them, ports loading and unloading them, and so on.

So competition among the players in this space is fierce. They keep eating into their margins.

— Scaling Up or Down Takes Time —

If demand for global shipping increases, new containers cannot just be added. They take time to manufacture and put into service.

Conversely, if demand subsides, companies cannot just get rid of excess containers. There’s a lot of it and needs storage when not in use. Or, they need to be sold as scrap/recycled material.

All of those require time, effort, and money.

The above is true not only in the case of containers, but also in the case of the very ships that carry them.

— Demand Unpredictability —

Now, all of this ties into the unpredictable nature of demand.

Yes, many industries face unpredictable demand. But most of those industries never face the kind of challenges the container industry (and related industries) face in scaling up or down.

Wars, interest rates, inflation, crude oil prices, manufacturing output, tariffs, ports, weather, changing demand trends — there’s a lot that can move demand for the container space.

As for Sealand Industries, it was acquired by different companies until it was finally acquired by Maersk.

Maersk is one of the world’s biggest shipping companies. For a few years, they used the Sealand brand name.

As of today, even that does not exist. It’s just called Maersk.

Quick Takes

+ India’s infrastructure output of core industries grew 0.5% year-on-year in May (vs 1.7% in April). Electricity, cement and steel production increased, while coal, crude oil, natural gas, petroleum refinery products and fertilizer production declined.

+ SBI Mutual Fund received SEBI’s approval for a Rs 13,000 crore IPO.

+ India’s manufacturing PMI fell to 57.4 in June (vs 59.3 in May) as per preliminary estimates. Services PMI fell to 54.5 (vs 55.0 in May). Composite PMI fell to 57.3 (vs 59.8 in May). This means that economic activity grew less in June than in May.

+ The RBI sold a net $8.9 billion in April to protect the rupee amid West Asia war tensions, while physical gold holdings remained unchanged: RBI

+ The government will auction securities worth Rs 28,000 crore on 25 June, including Rs 17,000 crore of 6.68% GS 2040 and Rs 11,000 crore of 7.43% GS 2076.

+ Ministry of Statistics and Programme Implementation (MoSPI) will launch the Index of Services Production (ISP) in July 2026, a new monthly indicator to track growth in India’s services sector, similar to the Index of Industrial Production (IIP) for manufacturing.

+ The government has approved 96 road projects worth Rs 211.71 crore in Tripura under PMGSY-IV. The projects will cover 163.9 km.

+ RBI has proposed draft guidelines requiring banks to strengthen governance and risk management of AI and machine learning models.

+ The government has removed restrictions on the supply of commercial LPG cylinders and restored supplies to pre-West Asia crisis levels. It has also resumed bulk LPG supplies at 50% of pre-crisis levels.

+ The government is planning to estimate the economic value of India’s coal reserves, helping track their role in the economy and environment rather than their market price.

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

Team Groww Digest

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

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

Stocks Updates

• L&T: completed 100% divestment of Nabha Power Ltd to Torrent Power for Rs 3,632.35 crore. Following this Nabha Power has ceased to be a subsidiary of the company.

• Adani Power: subsidiary Adani Atomic Energy Ltd incorporated wholly owned step-down subsidiary Progressive-UP Atomic Energy Ltd to generate, transmit and distribute nuclear/atomic energy power.

• NTPC: incorporated wholly owned subsidiary NTPC (Mauritius) Energy Ltd with capital of MUR 1 million (around Rs 19.8 lakh) to develop floating solar projects and other power projects in Mauritius.

• HCLTech: completed its Rs 1,427.25 crore investment in Axonwise Private Ltd (Sarvam AI), acquiring a 10.46% stake.

• Power Grid: board approved raising borrowing limit to Rs 2.2 lakh crore, subject to shareholder approval. It also approved raising up to $500 million through an External Commercial Borrowing (ECB) from Bank of Baroda, and sanctioned a Rs 772.65 crore investment to upgrade the Udumalpet–Madurai 400 kV transmission line.

• Cholamandalam Investment: allotted unsecured subordinated NCDs worth Rs 2,000 crore (including Rs 1,400 crore green shoe) at a coupon rate of 8.88% via private placement basis.

• Zydus Lifesciences: formed a 50:50 joint venture with Sri Lanka’s Sunshine Healthcare Lanka Ltd to set up a pharmaceutical manufacturing facility in Sri Lanka.

• Lupin: received tentative USFDA approval for Enzalutamide tablets used to treat prostate cancer.

• Aurobindo Pharma: acquired a 26% stake in Swarnaakshu Solar Power Pvt Ltd and signed a power purchase agreement for captive solar power consumption against an approved investment of up to Rs 10.40 crore.

Word of the Day

Greenshoe Option

It is an option used during an IPO or a bond/NCD issue to issue more securities than originally planned

It is also called the over-allotment option.

In an IPO, underwriters can issue up to 15% extra shares if investor demand is high.

In bond/NCD issues, the greenshoe option lets the company increase the issue size and raise more money when demand is strong.

Example: Cholamandalam Investment raised Rs 2,000 crore through NCDs (including Rs 1,400 crore green shoe). This means the company originally planned a smaller issue but increased the issue size because investor demand was strong.

6 Day Course

Theme: crucial points in IPO

Day 5: Friday

In case of IPOs, another important metric to check is the lock-in and large sellers.

Investors must remember that anchor investors usually have a lock-in till which they cannot sell.

This means, they are allowed to sell only after a certain time period. This usually ranges from 30 to 90 days.

If many large investors are waiting to sell, the share price can fall drastically as the lock in period ends.

On similar lines, IPO investors must also check sentiments of other investors in general.

Why are most other investors buying into the IPO?

Is it because of quick listing gains? In that case, the investor needs to be careful since the share price might fall or be volatile upon listing.

Is it because they are excited about the company’s long-term future? In such a case, the IPO may be a good candidate for long-term holding.

Featured Question

Q. “While Selling why I'm not allowed to sell which transaction date stock to be sold to decide my own P&L. Why it is always First In First Out is followed while selling MF units/equity shares.”We include this line in every Groww Digest Daily and update the numbers everyday.

FIFO or First In First Out principle is followed while selling shares or mutual funds’ units in India.

It is the default way of selling. It is in compliance with the tax regulations in India.

From the investors’ perspective, FIFO allows the lowest possible tax burden since long term tax has a lower rate.

Hence, it is the default option in India.

Markets opened above yesterday’s closing point.

Auto stocks and FMCG stocks rose the most today. Metal stocks and oil and gas stocks fell the most.

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

News

• The government has removed restrictions on the supply of commercial LPG cylinders and restored supplies to pre-West Asia crisis levels. It has also resumed bulk LPG supplies at 50% of pre-crisis levels.

• The government is planning to estimate the economic value of India’s coal reserves, helping track their role in the economy and environment rather than their market price.

• Waterways Leisure Tourism IPO was subscribed 1.46 times. Retail subscription: 4.19 times. IPO is closed for subscription.

Stocks Updates

• ONGC: bp (UK-based oil and gas company) has been appointed as the Technical Services Provider (TSP) for ONGC’s fields in the Western Offshore Basin. bp will provide technical expertise to improve oil and gas production from offshore fields.

• Hindustan Zinc: deployed India’s first 250 metric tonne capacity electric crane at Zinc Smelter Debari in Rajasthan to reduce emissions and improve energy efficiency.

• GMR Airports: subsidiary GMR Nagpur International Airport Ltd (GNIAL) took over operations of Dr. Babasaheb Ambedkar International Airport, Nagpur, effective from 25 June.

• Shree Cement: GST appellate authority in Patna has rejected the company’s appeal against an earlier GST demand order on technical grounds. The company will challenge the orders.

• Tata Steel: invested $172 million (around Rs 1,625 crore) in its wholly owned Singapore subsidiary, T Steel Holdings Pte Ltd (TSHP), through subscription to equity shares. The funds are part of Tata Steel’s previously approved investment plan of up to $2 billion.

• L&T: subsidiary Vyoma.AI incorporated a wholly owned step-down subsidiary LTA Data Centres Pvt Ltd to develop data centres and related technology-enabled services.

Word of the Day

Private Equity Firms

They are institutions that invest money in other companies.

They usually invest in companies not listed on the stock market.

These firms pool money from large investors like rich individuals, pension funds, insurance companies, family offices, and other institutions and use it to buy a part of another company.

Private equity is different from venture capital.

VCs usually invest in very young companies, and PE firms invest in companies that are already established but need support to grow further.

PE firms often buy a large part of the company. Sometimes, even buy the full company or take a controlling stake.

Their goal is to hold the investment for a few years, improve the business, and later sell their stake at a profit through an IPO, merger, or acquisition.

6 Day Course

Theme: crucial points in IPO

Day 4: Thursday

Every IPO has anchor investors — reputed institutional investors who are investing in the IPO.

Anchor investors are decided before the IPO opens up for individual investors to invest in.

Good anchor investors does not necessarily mean that the IPO will be a good investment for individual investors.

But missing good anchor investors is usually not a good sign. It shows they choose to stay away from the IPO for some crucial reason.

Investors also keep a tab on how many times a particular IPO has been oversubscribed. Example: “XYZ IPO was oversubscribed by 7.2 times.”

This tells us about how much the IPO is in demand.

We also get this number’s breakup based on each investor type. Example: oversubscription in the QIB segment, individual investor segment, etc.

Featured Question

Q. “Kindly explain Nifty 50 has risen between 0% and 1% about 539 times in the last 5 years (22 june & 24 June )”

We include this line in every Groww Digest Daily and update the numbers everyday.

The markets are always falling and rising.

The intensity of that varies. So, sometimes, it falls or rises by a percentage that is between 0% and 1%.

In a few days, it rises or falls between 1% and 2%.

Even more rare is a rise/fall between 2% to 3%. So on.

With this line we are trying to show how commonly or rarely the rise/fall is occurring.

Example: let’s say the markets have risen by 1.2% on a particular day. That means it has risen between 1% and 2% on that day.

So we try to count the number of times the markets have risen between 1% and 2% (over the previous 5 years).

So, in the example given by you in the question, the markets had risen between 0% and 1% on ~539 days over the last 5 years.

Since we are measuring the number of times the market rose/fell over exactly 5 years, the number may or may not be the same.

The discussion went on for a few years.

This was in the 1970s.

The challenge was that Brazil had vast Cerrado grasslands. These grasslands were mostly flat and vast.

This made these grasslands potentially ideal for agriculture.

But the soil quality was inferior. It was too acidic, lacking in nutrients, and often had elements that killed agricultural plants.

The soil needed to be treated.

This is where the Japanese came in.

They started a program to jointly work together starting in 1979.

The Japanese provided expertise, infrastructure, and funding for the initiative. The soil was treated with multiple different methods. Crops were rotated to increase biomass availability.

It all started bearing fruit in the 1980s.

Brazil obviously wanted that for itself. They wanted food security. They had been independently working on it for decades.

The Japanese assistance catalysed the effort.

Sometime in the 1980s, Brazil went from being a net importer of food to a net exporter of food.

Today, Brazil is also the world’s biggest producer of soybeans.

Japan and Brazil are a world away from each other. Why did they involve themselves in this initiative half a world away in Brazil?

The answer is that a long chain of unexpected events pushed them to it.

Peruvian Anchoveta Crisis of 1972

Peru was one of the biggest suppliers of this fish called the Peruvian anchoveta.

This tiny fish is not a particular favourite among people. But this fish had become an extremely integral part of the world’s food supply chain system.

Peruvian anchoveta was used as fishmeal. It was the food fed to fish and chickens. And fish and chickens are what is critical in the global food supply chain system.

In 1972, Peru suddenly banned fishing for the Peruvian anchoveta.

Every year, fishermen would go out into the Pacific Ocean to catch them.

In 1972, the population of these fish was so low, Peru had no choice but to ban the fishing outright.

Why?

In April, the waters had suddenly turned warmer than usual, and the fish either didn’t reproduce enough or were driven away somewhere else.

Seeing the record low numbers, scientists warned the government about the risk of damaging the existing population from overfishing.

Thus, the ban was enforced.

The warm waters alone weren’t responsible for the fish population crash. Overfishing too was a factor. But the warm waters really pushed it over the edge.

Despite the warnings of the scientists, the government allowed fishing again with strict restrictions.

Still, the chain effect of damage had been done.

Peru was one of the biggest suppliers of these fish. In the absence of this fish, farmers turned to another crop to feed their fish and chickens. Soybeans.

The US was already a large producer of soybeans. But the Peruvian anchoveta shortage was so large, the US decided to restrict the export of soybeans in 1973.

And that was where the Japanese came in. They were heavy importers of soybeans.

Over-reliance on the US for these beans spooked them. They wanted to diversify their soybean supply, among other food items.

They looked across the world. One of the few countries they decided to rely on was Brazil.

Today, Brazil is the world’s largest producer of soybeans, and the US is the second largest.

Combined, today both these countries supply over 65% of the world’s soybeans.

Eventually the Peruvian anchoveta’s population recovered. But the farmers who relied on them to feed their fish and chickens had switched to soybeans.

Many never went back to the anchoveta.

Now, why exactly did the Pacific waters turn warm in 1972?

El Nino

El Nino. That’s the effect’s name.

The oceans are kilometers deep. The top layer of the ocean gets heated by the sun. The bottom layers do not get much sun. So it remains cooler.

Trade winds blow across the Earth’s equator. They blow from the east to the west.

The Pacific Ocean is the world’s biggest ocean. If you took a flight from South America to Australia, it would take you 12 hours to cross the Pacific Ocean.

Over this vast ocean, the winds blow from east to west, from near the Americas to Asia and Australia.

These winds push the topmost water layer towards the west.

So we get more warm water near Asia and Australia. To fill the empty space, colder water rises from beneath the ocean and rises to the surface near the east.

The cooler water from below is rich in nutrients. They support abundant life. Which is why the East Pacific Ocean makes for such great fishing waters.

Normal years:

Sometimes, these trade winds weaken.

This means that not enough warm surface water gets pushed west. So, it stays near the Americas. The less nutrient-rich warm water leads to fewer fish.

This is called El Nino.

El Nino years:

It does not occur at fixed intervals. It can happen anywhere from every 2 to 7 years. When it does occur, it lasts for about 9-12 months. Some have lasted longer than that though.

El Nino is why Peru experienced the 1972 Peruvian Anchoveta Crisis.

That, unfortunately, is a fairly localised event.

El Nino has a far greater impact. In fact, its impacts can be felt across the globe.

Effects

The global weather is linked.

One change in one part of the world can affect another.

Given just how massive the Pacific Ocean is, any change in surface temperatures can have a chain impact across the global weather system.

Its effects can be felt across the Americas, Africa, South Asia, Southeast Asia, and Australia.

The regular weather patterns get broken. Some parts experience more dryness than normal. Some experience more rainfall and storms than normal.

The dryness can result in forest fires that are hard to control. The excessive rains can cause flooding and infrastructure disruption.

In India, it often manifests as less-than-normal rainfall in the monsoons. It may also manifest in the form of higher than normal rainfall in winters in parts like Tamil Nadu and Kerala.

During El Nino years, the entire Earth becomes slightly warmer.

What sounds like a minor inconvenience is actually a disruption of giant proportions.

Farming and food supplies get hampered. Loss of livelihood and migration becomes a common pattern in these regions.

Thousands of people die every El Nino event because of the effects of the disrupted weather.

El Nino History

El Ninos aren’t always the same.

Some are massive. Some are less intense.

One of the strongest El Nino years in recent times was only about 2 years ago, in the 2023-24 period.

It was rated as being one of the strongest in the last 2 decades.

Another one in 2015-16 was similarly strong.

Other noteworthy El Nino years have been 2009-10, 2002-03, 1997-98, and 1991-92.

The Peruvian anchoveta example is one example that might help us get a sense of how unexpected and far-reaching the effect of El Nino can be.

Some more examples might aid here.

1991-92

In the 1991-92 period, higher than normal rain led to a vegetation boom in the Southwestern part of the USA.

The denser vegetation resulted in an explosion of mice. A higher-than-normal mouse population led to greater human-mouse contact. And that led to more diseases.

This El Nino resulted in a hantavirus outbreak in 1993 in the region.

1997-98

This El Nino created excessively dry periods in the Southeast Asia region.

Forest fires became so common that they affected tourism, airports, shipping, and health systems. El Nino didn’t directly cause forest fires, but the lack of rains resulted in uncontrollable forest fires.

1876-78

This one’s about 150 years old but is infamous for being one of the deadliest.

It resulted in famines across India, China, parts of Africa, and Brazil. Indirectly, it killed 50 million people.

2026-27

Yes, this year is an El Nino year too.

Yes, there will be disruptions.

And yes, this one’s supposed to be a big one.

What could it mean?

Well, this isn’t the first time. We’ve seen these come and go. We’ve also seen some El Nino years in the recent past.

The challenge with these is that we cannot fully understand all that will happen.

The general expectation is that the country might face severe heat in some parts and extreme flooding in some parts.

That’s the first and most immediate effect. How that will play out for the rest of the system is hard to predict.

We can look at yesteryears to get some sense of this.

One of the most common patterns is less than normal monsoon rainfall.

That impacts the food and agriculture products grown in the country. Any shortages there lead to higher prices of food items.

But then, does it always manifest in that way? Not really. Many times, governments stockpile food in cold storages to prepare for El Nino’s drought years.

So we cannot even say for sure that food prices will climb. They may climb.

Beyond that, the more wacky chain of events cannot be predicted.

It’s not a normal year. But it’s also not a once-in-a-century event.

But we’ve been through these before.

Quick Takes

+ India’s wholesale inflation rose to 9.68% year-on-year in May (vs 8.26% in April). Fuel inflation rose 30.33% year-on-year (vs 24.89% in April).

+ India’s merchandise exports rose 18% year-on-year to $45.2 billion in May while imports rose 20.6% to $73.41 billion. The trade deficit increased to $28.21 billion (vs $22.56 billion in April)

+ India’s unemployment rate rose to 5.5% in May (vs 5.2% in April).

+ Razorpay has filed for an IPO with SEBI through the confidential route.

+ India’s passenger vehicle sales grew 27.3% year-on-year to 4.39 lakh units in May: SIAM

+ India’s Union Minister Nitin Gadkari has officially signed rules giving legal recognition to 100% ethanol fuel (E100) for vehicles in India.

+ The sales of India’s listed private non-financial companies grew 13.9% year-on-year in the Jan-March quarter.

+ The government has increased the export duty on diesel to Rs 14 per liter and aviation turbine fuel (ATF) to Rs 12.5 per liter, while leaving petrol levies unchanged.

+ The US Fed kept the interest rate unchanged in the 3.5% to 3.75% range.

+ The US and Iran have officially signed an interim peace agreement to end the West Asia war. Iran has agreed to dilute its enriched uranium in exchange for major economic relief. In return, the US will lift its naval blockade and waive oil sanctions, while Iran will reopen the Strait of Hormuz.

+ The India-UK Free Trade Agreement (CETA) will officially take effect on 15 July, 2026, significantly reducing tariffs for both sides.

+ NSE has filed draft papers with SEBI for a Rs 30,000 crore IPO.

+ India’s forex reserves fell by $9.98 billion to $671.63 billion in the week that ended on 12 June.

+ Jio Platforms has filed draft papers with SEBI for an IPO with a fresh issue of up to 27 crore equity shares.

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

Team Groww Digest

Yes, it’s famous for many others as well. But tequila is an easy recall.

And maybe that’s why we now talk about the Tequila Crisis of 1994 (it wasn’t about tequila at all).

In the 1990s, Latin American countries were starting to look tempting.

They were viewed as “emerging markets”. Among them, Mexico was a particular favourite among international investors.

It was right next to the USA. It had a large working age population.

Foreign money started entering the country.

It was really in 1988 when the newly elected president raised the level of optimism among foreign investors.

With the signing of NAFTA, Mexico was supposed to become the ‘factory of the USA’.

Mexico had a history of rebel factions fighting the government. They threatened to destabilize the “hot new emerging market” narrative.

NAFTA came into effect on Jan 1, 1994.

Confidence was high, backed by the then president’s promises.

And then a rebel uprising in the south of the country raised a few eyebrows.

“Is Mexico really as stable as we were assuming?”, thought investors.

And then, the presidential candidate was assassinated. Investors lost more confidence.

Eventually, they started selling their investments and exiting the country.

That was the gradual start of the crisis — The Tequila Crisis of 1994.

The Peso (Mexican currency) started spiralling down.

The formal name is the Mexican peso crisis.

International observers nicknamed it the “Tequila Crisis” or “Tequila Effect” because Mexico’s financial shock quickly “spilled over” into other emerging markets, especially in Latin America, much like a hangover spreading beyond the original party.

If you’re not familiar with how currency exchange rates work, the above few lines might confuse you. Let’s try to understand that in depth, and the Tequila Crisis will start making more sense.

Strengthening & Weakening

Currencies are often traded. Which means, you can buy them — like buying shares or bonds or milk.

When you visit Italy, you cannot use Indian Rupees. You have to use Euros. So you buy some euros to use in Italy (you pay for them using your Indian Rupees).

Once your trip is done, you return to India, where Euros are not accepted. So you need to convert the Euros you have back to Indian Rupees.

So you use your Euros to buy Indian Rupees (you pay in Euros to buy Rupees).

The moment buying and selling is involved, there’s supply and demand.

And we know all too well that supply and demand can increase or reduce the price of a commodity.

When too many people are trying to buy Euros (by selling their Indian Rupees):

+demand for Euros is up
+therefore supply of Rupees is also up

The obvious happens. The price of Euros goes up. The price of Rupees falls down.

If earlier you had to pay Rs 120 to get €1, now you might have to pay Rs 125 to get €1 (example).

So we will say ʼthe Euro strengthened and the Indian Rupees weakenedʼ.

This is called the exchange rate — the amount of one currency needed to buy another currency.

The above was an example of the Euro-Indian Rupee exchange rate.

At any point, millions and billions of currencies are being bought and sold. This keeps the net price at a similar level.

When trades lean one way more or the other, the exchange rates increase/decrease accordingly.

BoP

So what’s the problem? What happens if the exchange rate goes too high or too low?

A lot can happen. It can be good. It can also be bad. People worry mostly about the bad parts (of course).

If a country imports food products, a falling exchange rate can mean more expensive food. Very worrying — not good.

Similarly, if it imports critical items and relies on them heavily, it will hurt the country’s economy and people.

The opposite does not automatically mean good.

For exporting nations, a strong currency is not good.

Many countries have factories that are appealing to richer countries because factory-worker salaries are cheap. If the country’s currency strengthens, those salaries automatically go up.

It could mean that fewer orders come to those countries, resulting in loss of trade and jobs.

Countries that rely heavily on exporting actually intentionally weaken their currency too.

By now you would be able to guess the positives here.

A strengthening currency is good if you’re importing. A weakening currency is good if you’re exporting.

In fact, it isn’t just about imports and exports. Money enters and leaves a country due to several other factors.

Some of those factors are:

+Import & export of goods (already discussed)
+Import & export of services
+Remittances (people working in foreign countries sending money home)
+Foreign Direct Investment
+Portfolio investment (investing in stock markets, bonds, etc)
+Borrowing and repayment of loans (companies taking loans from foreign lenders)
+Sending back profits to home country (foreign companies do this)
+And a few others

Each of these causes money to flow in and out of a country. And therefore, each of these affects the exchange rate of a country.

This is called Balance of Payments (BoP).

The balance is between payments coming in and leaving from the country.

Mexico

Back to Mexico.

The Tequila Crisis was a Balance of Payment Crisis.

The Mexican peso exchange rate with the US dollar was kept stable thanks mostly due to incoming investments.

So when investors started pulling out, the exchange rate started crashing. That made it difficult for them to import essential items which only worsened the situation.

Actually, initially, the Mexican central bank was able to control the exchange rate fall. How?

Central banks can control the exchange rate to some extent. They do so by maintaining reserves of foreign currencies.

When demand for the peso fell, Mexico’s central bank sold dollars from its reserves and bought pesos. This created demand for pesos and helped slow the fall.

Since the supply of the foreign currency goes up because of this, it can offset the effect of the increased supply of the local currency.

But it can only work for some time. The reserves eventually run low and the central bank can’t do much after that.

The crisis left a deep scar in Mexico’s economy. But they did bounce back from it after reforms and some loans being extended.

There have been many famous big BoP crises.

+Asian Financial Crisis of 1997
+Black Wednesday (UK) of 1992
+BoP Crisis India in 1991
+Argentina in 2001-2002
+Russia in 1998

It’s an interesting list. Each of them makes for an interesting read.

Quick Takes

+ India has launched E85 fuel, an 80-85% ethanol blend designed specifically for flex-fuel vehicles, across 48 retail outlets. It is priced around Rs 20 less than normal petrol (per litre). A flex-fuel vehicle is a vehicle equipped with an engine that can run on petrol, ethanol, or any blend of the two.

+ India’s current account surplus narrowed to $7.1 billion (0.7% of GDP) in the Jan-March quarter (vs $13.7 billion or 1.4% of GDP in the same quarter last year).

+ Zepto has filed an updated DRHP (Draft Red Herring Prospectus) for a Rs 8,010 crore IPO.

+ Fresh military strikes have taken place between the US and Iran, disrupting talks for a peace deal.

+ The government has approved Phase 2(A) of the Ahmedabad Metro Rail Project at a cost of Rs 2,169 crore.

+ CMR Green Technologies IPO listed on the stock exchanges at a premium of 39.58% over the issue price and closed 25.62% up at the end of the day.

+ The government has extended its zero-tax (no excise duty) exemption on petrol blended with higher levels of ethanol from E22 up to E30.

+ India’s annual inflation rate rose to 3.93% in May (vs 3.48% in April).

+ India’s forex reserves fell by $0.71 billion to $681.61 billion in the week that ended on 5 June.

+ The government has banned industrial and commercial users from buying bulk petrol and diesel at retail petrol pumps. Retail diesel purchases are now capped at 200 liters per vehicle daily for the next 90 days.

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 opened above yesterday’s closing point.

All sectors’ stocks rose today except for the auto stocks and metal stocks. Realty stocks and IT stocks rose the most.

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

News

• The government will auction securities worth Rs 28,000 crore on 25 June, including Rs 17,000 crore of 6.68% GS 2040 and Rs 11,000 crore of 7.43% GS 2076.

• Ministry of Statistics and Programme Implementation (MoSPI) will launch the Index of Services Production (ISP) in July 2026, a new monthly indicator to track growth in India’s services sector, similar to the Index of Industrial Production (IIP) for manufacturing.

• The government has approved 96 road projects worth Rs 211.71 crore in Tripura under PMGSY-IV. The projects will cover 163.9 km.

• RBI has proposed draft guidelines requiring banks to strengthen governance and risk management of AI and machine learning models.

Stocks Updates

• Bajaj Finance: allotted NCDs worth Rs 2,000.45 crore at a coupon rate of 7.92% through a private placement basis.

• IRFC: Ministry of Railways exercised the oversubscription option in its Offer for Sale (OFS), increasing the total offer size from 13.07 crore shares (1.0% stake) to 24.31 crore shares (1.86% stake).

• Bajaj Auto: disclosed a ransomware attack that impacted its systems and those of subsidiary Bajaj Auto Technology Ltd. The company said precautionary actions were taken, and the incident was reported to CERT-In.

• ABB India: partnered with Kolkata Metro to deploy electrification and motion control solutions across its network.

• Vedanta: incorporated wholly owned subsidiary Vedanta Property Platforms Ltd in Mumbai to undertake real estate and related business activities.

• Bharat Forge: subsidiary BF Industrial Solutions Ltd completed the acquisition of a 90% stake in RS Aerostructures Ltd (RSAL), making it a step-down subsidiary.

• Infosys: partnered with US-based healthcare provider Sentara to scale AI adoption across hospital operations, clinical support and enterprise functions.

Word of the Day

Contract Note

It is an official document that is issued by stockbrokers to their clients

Every time a transaction takes place in the stock market (buying or selling shares), this note is generated.

It contains details such as the stock traded, whether it was bought or sold, the trade time, order number, brokerage charges, and broker information.

Brokers are required to send contract notes for equity and derivatives trades. Contract notes are not issued for mutual fund transactions.

It acts as an important legal record in case of any dispute between an investor and a broker and is proof for all the transactions made on the stock markets.

Most brokers sent contract notes via email in the form of Electronic Contract Notes (ECNs).

6 Day Course

Theme: crucial points in IPO

Day 3: Wednesday

The shares that are sold during an IPO are of two types.

Fresh issue and Offer for Sale (OFS).

In case of a fresh issue, the company is literally creating fresh shares and selling in the IPO.

This means all the money that is raised in the IPO will go directly to the company.

It can use this money for the company’s growth, operations, future expansion, debt clearing, etc.

On the other hand OFS is the sale of existing shares by existing shareholders.

In this case, the money does not go to the company, it goes to the shareholders.

This allows early-stage investors to sell their shares and exit the company.

During IPOs, many companies do a mix of fresh issues and OFS.

Sometimes, all shares are fresh issues and sometimes, all are OFS.

Investors like to keep an eye on this because it can hint about how the company thinks about its own future and what its early investors plan.

Featured Question

Q. “If I have held shares of a company for more than one year and continue buying additional shares over time, and the company later undergoes a demerger resulting in shares of a new company being allotted to me, how is the holding period of the new company’s shares determined for capital gains tax purposes? If I sell those new shares, will the gains be treated as short-term or long-term capital gains?”

The new shares are treated as bought on the original date of purchase.

The tax is calculated based on the original date of purchase, not based on the date of demerger.

If you bought shares multiple times, you will have to calculate the tax for each purchase separately.

Example:

Let’s say you bought 100 shares 3 years ago. Then you bought 50 shares 6 months ago.

On the shares you bought 3 years ago, you will pay a Long Term Capital Gains tax (LTCG tax) since the investment is more than 1 year old.

On the shares you bought 6 months ago, you will pay a Short Term Capital Gains tax (STCG tax) since the investment is less than 1 year old.

Likewise, each share purchase will have to be treated as a separate investment and tax calculated accordingly.

Markets opened below yesterday’s closing point.

Pharma stocks and healthcare stocks rose the most today. Metal stocks and IT stocks fell the most.

Global markets: Most US markets and Asian markets fell. Most European markets fell (as of 6 pm IST).

News

• India’s manufacturing PMI fell to 57.4 in June (vs 59.3 in May) as per preliminary estimates. Services PMI fell to 54.5 (vs 55.0 in May). Composite PMI fell to 57.3 (vs 59.8 in May). This means that economic activity grew less in June than in May.

• The RBI sold a net $8.9 billion in April to protect the rupee amid West Asia war tensions, while physical gold holdings remained unchanged: RBI

• Waterways Leisure Tourism IPO has been subscribed 0.19 times. Retail subscription: 0.99 times. IPO closes on 25 June.

• Turtlemint Fintech Solutions IPO was subscribed 1.20 times. Retail subscription: 1.07 times. IPO is closed for subscription.

Stocks Updates

• Airtel: completed the acquisition of an additional 16.3% stake in Airtel Africa plc from Indian Continent Investment Ltd (ICIL), increasing its effective stake to around 79%.

• Infosys: expanded its multi-year partnership with GlobalFoundries, a semiconductor manufacturer, to provide AI-led managed services across application, infrastructure, data and service desk operations.

• NTPC: subsidiary PVUNL declared commercial operation of Unit-2 (800 MW) of the Patratu thermal power project from 25 June. Following this, NTPC Group’s installed capacity increased to 90,857 MW.

• HCL Tech: partnered with Circles and GreySkies under TM Forum’s Catalyst Program to develop an AI-powered multi-agent framework for network operations and customer experience.

• Bajaj Auto: subsidiary Bajaj Auto Credit Ltd allotted and listed NCDs worth Rs 500.19 crore on NSE through private placement basis.

• Hindalco: subsidiary East Coast Bauxite Mining Company Pvt Ltd was struck off and dissolved following voluntary closure.

• Grasim: invested Rs 2,880 crore in Aditya Birla Capital through a preferential issue, increasing its stake from 52.27% to 52.30% on a fully diluted basis.

• Aditya Birla Capital: allotted 11.24 crore equity shares through a preferential issue, raising around Rs 4,000 crore from Grasim Industries, Suryaja Investments and the International Finance Corporation (IFC).

• Wipro: expanded partnership with Palo Alto Networks to offer AI-driven managed detection and response (MDR) cybersecurity services. The company also said the acquisition of select customer contracts of Alpha Net Consulting LLC is now expected to be completed by 30 Sept instead of 30 June.

• Vodafone Idea (Vi): allotted 430 crore warrants to the promoter group entity Suryaja Investments, an Aditya Birla Group entity, at Rs 11 per warrant, raising Rs 1,182.5 crore through the upfront payment.

• PFC: subsidiary Bihar Infrapower Ltd was struck off and dissolved by the Ministry of Corporate Affairs following the closure of the Banka UMPP project.

Word of the Day

PMI (Purchasing Managers' Index)

It is an economic indicator that measures business activity in the manufacturing and services sectors

The PMI is based on monthly surveys of purchasing managers, who provide insights on factors such as new orders, production, employment, and business activity.

A PMI above 50 indicates expansion in business activity, while a PMI below 50 suggests contraction. A PMI of 50 indicates no change.

PMI provides an early indication of the economy’s direction before official GDP data is released.

Example: if the PMI has dropped from 58 to 53, business activity is still expanding (because it’s above 50), it has just expanded at a slower pace than last month (and vice versa).

6 Day Course

Theme: Theme: crucial points in IPO

Day 2: Tuesday

The shares that are sold during an IPO are of two types.

Fresh issue and Offer for Sale (OFS).

In case of a fresh issue, the company is literally creating fresh shares and selling in the IPO.

This means all the money that is raised in the IPO will go directly to the company.

It can use this money for the company’s growth, operations, future expansion, debt clearing, etc.

On the other hand OFS is the sale of existing shares by existing shareholders.

In this case, the money does not go to the company, it goes to the shareholders.

This allows early-stage investors to sell their shares and exit the company.

During IPOs, many companies do a mix of fresh issues and OFS.

Sometimes, all shares are fresh issues and sometimes, all are OFS.

Investors like to keep an eye on this because it can hint about how the company thinks about its own future and what its early investors plan.

Featured Question

Q. “how do you calculate returns on a mutual fund in which you invested different amounts at different times example- I invested 5K for the first three months and further invested 10K for 6 months”

A public company is one of which you can buy shares in the share markets.

This can be done using XIRR.

It even allows you to factor in withdrawals in between.

The formula to calculate XIRR is a bit complicated. It is far easier to calculate the XIRR on Excel or Google Sheets.

There are readymade formulas you can use to do the same.

In this, you need to give the various different investment/withdrawal amounts and their respective dates, along with the current value of the investment.

Many investment platforms automatically calculate the XIRR and show it to investors so the investors need not do the calculation themselves.

Markets opened significantly above Friday’s closing point.

All sectors’ stocks rose today except for FMCG and consumer durables stocks. Media stocks and pharma stocks rose the most.

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

News

• India’s infrastructure output of core industries grew 0.5% year-on-year in May (vs 1.7% in April). Electricity, cement and steel production increased, while coal, crude oil, natural gas, petroleum refinery products and fertilizer production declined.

• SBI Mutual Fund received SEBI’s approval for a Rs 13,000 crore IPO.

• Turtlemint Fintech Solutions IPO has been subscribed 0.52 times. Retail subscription: 0.60 times. IPO closes tomorrow (23 June).

Stocks Updates

• L&T: subsidiary Vyoma.AI Ltd incorporated wholly owned step-down subsidiary LTN Compute Pvt Ltd to build AI compute infrastructure and provide technology-enabled services.

• Sun Pharma: will acquire 100% stake in Innovcare Lifesciences Pvt Ltd for around Rs 271.20 crore to strengthen its product portfolio.

• Bharat Electronics: received additional orders worth Rs 1,081 crore since its last disclosure on 25 May. Major orders include communication equipment, radars, CBRN protection systems, seekers, avionics, upgrades, spares and services.

• Bajaj Auto: shareholders approved the company’s buyback of up to 46.94 lakh shares at Rs 12,000 per share, aggregating up to Rs 5,632.80 crore via the tender offer route.

• Hindustan Zinc: signed an MoU with Advantek Associates LLP and Aero Eagle Automobiles to explore green hydrogen and alternative clean energy solutions for mining operations, including heavy earth-moving machinery, surface vehicles and generators.

• Tata Motors: secured orders for over 3,400 electric commercial vehicles across freight, logistics and passenger mobility segments.

• Aurobindo Pharma: received US FTC approval for its $250 million acquisition of Lannett Company. The deal is expected to close before the end of June.

Word of the Day

Contingent Liability

It is the possible cost that a company might have to pay in the future.

It depends on whether a certain event happens or not.

If the event seems possible and the cost can be estimated, the company shows it in its financial statements. It keeps aside money in case the event happens.

Example: say a company is being sued. The outcome of the case is uncertain. If the company loses, it may have to pay a settlement. The company would keep aside money as a contingent liability until the case is resolved.

6 Day Course

Theme: crucial points in IPO

Day 1: Monday

Many new investors are growing more interested in IPOs.

In this week’s course we’ll try to explore the important points to look at in greater detail.

The first thing to remember is that an IPO must be looked at as any other share.

Behind the stock name and price is a business. That business must be analysed.

This is true for companies that are going for an IPO as well as companies that are already on the stock markets.

This includes understanding the company’s business model, cash flows, revenue, earnings/losses, debt, valuation, business stage, etc.

Beyond those points, the next point to look at is the reason for going for an IPO.

Companies choose to go for an IPO for multiple reasons. One of the most common reason is to raise money.

What will this money be used for? That’s the first question to be asked in case of IPOs.

We explored the question “What if you invest in a Nifty 50 Equal Weight Fund instead of a Nifty 50 Index Fund?”

Check out the full report here.

What does this exactly mean?

In a standard Nifty 50 Index Fund, your money is not divided equally among India’s 50 largest companies. Instead, each company receives a different allocation based on its free-float market capitalisation the number of shares available for trading in the market).

Simply put, the larger the company, the larger its weight in the index, and the more of your money gets invested in it.

For example, for every Rs 10,000 invested in a Nifty 50 Index Fund, roughly Rs 1,056 goes into HDFC Bank alone. Another Rs 832 goes into ICICI Bank, while Rs 827 goes into Reliance Industries.

Currently, the biggest 10 companies in the Nifty 50 account for nearly 50% of the entire index!

Source: NSE

This raises an interesting question. What if every company in the Nifty 50 received the same allocation? Would the returns differ?

We decided to test it out.

The Experiment

To test this idea, we compared Nifty 50 Index Funds with Nifty 50 Equal Weight Index Funds from the same fund house.

While the Nifty 50 Index assigns weights based on market capitalization, the Equal Weight Index gives every stock an equal weight of 2%.

The Nifty 50 Equal Weight Index was introduced by the NSE in 2017. Because of that, mutual funds tracking this index are relatively new, with most launched around 2020.

This is why the comparison period is shorter than our previous experiments.

To ensure a fair comparison, we only compared funds within the same AMC. This removes differences arising from fund management practices and allows us to focus purely on the impact of the underlying index methodology.

The fund pairs selected for the analysis were:

• HDFC Nifty 50 Index Fund vs HDFC Nifty 50 Equal Weight Index Fund (Aug 2021 to June 2026)

• DSP Nifty 50 Index Fund vs DSP Nifty 50 Equal Weight Index Fund (Feb 2019 to June 2026)

• ABSL Nifty 50 Index Fund vs ABSL Nifty 50 Equal Weight index Fund (June 2021 to June 2026)

We assumed a simple SIP strategy for comparison: an investor puts Rs 10,000 every month into both the Nifty 50 Index Fund and the Nifty 50 Equal Weight Index Fund. The performance is tracked from the start date of each Equal Weight fund (or the point at which both choices became available to invest in) up to 1 June 2026.

This was done across all three fund house pairs and tracked how the investments grew over time during the respective comparison periods.

Results

Here is what the data showed:

The equal weight index significantly outperformed the standard market-cap index across all three AMCs.

Why did this happen?

Why did this happen?

The answer lies in how both indices behave.

A Nifty 50 Index Fund is driven heavily by a small set of large companies. When these companies perform well, the index rises quickly. But when a few of them underperform, their large weight drags the overall returns.

An Equal Weight Index works differently. Every company contributes equally to performance. This means gains are not concentrated in a few stocks but spread across all 50 companies.

In simple terms, the Equal Weight strategy reduces dependence on a handful of giants and increases exposure to mid-sized companies within the index, many of which go through stronger growth phases over time.

However, this may also come with trade-offs. Equal weight indices may have higher volatility because smaller large-cap stocks are generally more volatile than mega-caps.

Equal weight index also involves more frequent rebalancing, which increases turnover. And importantly, performance is cyclical. This means equal weight does better when the broader market participates, but can underperform when a few large caps drive most of the returns.

Conclusion

The experiment shows that even when the underlying stocks are the same, the way an index is constructed can meaningfully change returns over time.

A Nifty 50 Index Fund is driven by a few large companies, which makes it more concentrated and dependent on their performance. A Nifty 50 Equal Weight Fund, on the other hand, spreads exposure evenly across all 50 stocks, allowing broader participation to play a bigger role in returns.

Neither approach is universally better. Each performs differently depending on market cycles. Sometimes concentration may help, and sometimes diversification within the index works in its favor.

Your investing outcomes are shaped not just by what you own, but also by how those holdings are weighted.

Limitations of the Experiment

• The analysis is based on a specific time period, which may not reflect how the indices perform across full market cycles. Different phases of the market can lead to very different outcomes.

• The period studied was relatively short in equity terms. Long-term performance patterns can change when tested over multiple decades and varying economic conditions.

• Real-world costs such as fund expenses, rebalancing impact, tracking error, and transaction costs are not fully captured in the simplified comparison.

• Past performance in this experiment should not be treated as an indicator of future returns.

Research Analyst Disclaimer

Markets opened significantly below yesterday’s closing point.

Healthcare stocks and pharma stocks rose the most today. IT stocks and oil and gas stocks fell the most.

Global markets: US markets closed in the green. Most Asian markets and most European markets fell (as of 6 pm IST).

News

• India’s forex reserves fell by $9.98 billion to $671.63 billion in the week that ended on 12 June.

• Jio Platforms has filed draft papers with SEBI for an IPO with a fresh issue of up to 27 crore equity shares.

• Turtlemint Fintech Solutions IPO has been subscribed 0.45 times. Retail subscription: 0.29 times. IPO closes on 23 June.

Stocks Updates

• Bharat Forge: signed a Rs 425 crore contract with the Ministry of Defence to supply gas turbine generators for Indian Navy warships.

• Hindalco: commissioned an aluminium bicycle components manufacturing facility in Chakan, Pune, with an annual capacity of 5 lakh frames and forks, 7.5 lakh handlebars and 8 lakh pairs of wheel rims.

• Cholamandalam Investment: allotted NCDs worth Rs 100 crore at a coupon rate of 8.08% and a re-issue yield of 8.15% on a private placement basis.

• Tata Power: Received a Letter of Intent from REC Power Development and Consultancy to acquire Ryapte Power Transmission Ltd, an SPV developing a 250-km transmission network in Karnataka, with annual transmission charges of Rs 521.07 crore.

• Aurobindo Pharma: received approval from the US Federal Trade Commission for its proposed acquisition of Lannett Company LLC. The deal is expected to close before the end of June..

Word of the Day

Capital Gains Tax

It is the tax you pay on the profit made after selling an asset.

The profit earned after selling assets like stocks, bonds, real estate, etc is known as capital gains.

The amount of tax paid depends on how long you have had the asset.

Short-term and long-term capital gains (STCG and LTCG) are taxed differently. The time required for an asset to qualify as long-term or short-term can also vary.

For example:

If you sell equity shares within 12 months, the profit is taxed at 20% (STCG).

If you sell them after 12 months, the profit is taxed at 12.5% (LTCG) with exemption up to Rs1.25 lakh annually.

6 Day Course

Theme: understanding FIIs

Day 5: Friday

Finally, let’s talk about geopolitics.

When FIIs invest, they have expectations of a certain kind of returns and a minimum threshold.

Below that threshold, they are not comfortable investing.

Anything that threatens this leads to FIIs selling and withdrawing.

One common observation is that of conflicts. Whenever countries or regions enter into a conflict, FIIs get nervous about their future prospects.

For smaller scale conflicts, it affects only the Emerging Markets (EM) involved directly.

But for larger conflicts with an impact across the global economy, FII starts selling across all EM.

Likewise, if good developments take place, FIIs start investing uniformly across all EM.

In case of more regional threats, they start investing in greater quantities in the EM that were involved.

In short, fear of a disruption causes FIIs to sell and withdraw. Opportunities including potential growth leads them to invest in EM.

Featured Question

Q. “What is the difference between a public and a private company”

A public company is one of which you can buy shares in the share markets.

It is also called a publicly listed company. As in, the company that is listed on the share markets.

Private companies are those that are not available on the share markets.

Another common way these labels are used is to describe who owns the company.

A public-sector company is a government run company.

A private-sector company is a company that is not a government company.

Here’s the crucial distinction.

A publicly listed company can be both types of companies — privately owned and government owned.

Similarly, an unlisted company can also be privately owned and government owned.

In short:

Publicly listed: shares available on share markets (government company or private company)
Unlisted company: shares not available on share markets (government company or private company)

Markets opened below yesterday’s closing point and stayed in the green.

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

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

News

• The US Fed kept the interest rate unchanged in the 3.5% to 3.75% range.

• The US and Iran have officially signed an interim peace agreement to end the West Asia war. Iran has agreed to dilute its enriched uranium in exchange for major economic relief. In return, the US will lift its naval blockade and waive oil sanctions, while Iran will reopen the Strait of Hormuz.

• The RBI has removed interest rate limits on fresh foreign currency NRI deposits until 30 Sept (allowing them to offer higher interest rates) to bring in foreign cash and keep the Rupee stable.

• The India-UK Free Trade Agreement (CETA) will officially take effect on 15 July, 2026, significantly reducing tariffs for both sides.

• NSE has filed draft papers with SEBI for a Rs 30,000 crore IPO.

Stocks Updates

• Bajaj Finance: allotted NCDs worth Rs 1,455.40 crore at 7.07% interest rate on a private placement basis.

• Wipro: will acquire an additional 20% stake in Aggne Global IT Services for $2.1 million, increasing its holding to 80%.

• Varun Beverages: partnered with Japan’s Asahi Group Holdings to launch dairy-based beverage brand ‘Calpis’ in India from the second half of 2026, with Varun Beverages handling manufacturing, distribution, and sales.

• Tata Motors: will increase prices of its commercial vehicles by up to 2.5% from 1 July due to rising commodity and input costs.

• Bharat Forge: subsidiary Kalyani Strategic Systems partnered with US-based AM General to jointly offer mounted artillery gun systems for global defence markets.

• IDBI Bank: clarified that there is no undisclosed price-sensitive information behind the recent surge in trading volumes and that all developments related to its strategic disinvestment are being disclosed as required.

Word of the Day

Asset Turnover Ratio

It measures how efficiently a company uses its assets to generate revenue

A higher asset turnover ratio indicates that the company is generating more sales from its assets, while a lower ratio may suggest that assets are not being utilized effectively.

It is a metric used to assess the operational efficiency of a business and can be used to compare companies within the same industry.

6 Day Course

Theme: understanding FIIs

Day 4: Thursday

FIIs often invest in multiple emerging markets (EM).

These are countries like India, Vietnam, Brazil, Mexico, South Korea, etc.

Each of these countries are governed by their own individual factors.

Many times FIIs sell in one country to invest in another because they think they’ll get a better return there.

Example: stocks in another country seem very undervalued and therefore attractive. FIIs might sell existing shares they have to buy more shares in the other EM.

Or, if something goes wrong in one EM country, they’ll sell stocks there and invest in other healthier EM countries.

Example: a policy announcement in one EM might signal tougher times ahead. So FIIs start selling shares in that EM and buying shares in other EMs.

Featured Question

Q. “While starting a SIP in MF time will be prefixed for a certain period like 10years or 5 years 1month etc. After completion of SIP say after 5 yrs total SIP investments 5.00lacs and Fund value with NAV may be around 12.00 lacs. Can I lock this NAV value because of Maturity of Fund and withdraw 12.00 lacs in 5 years in monthly instalments without further participating in market due to fluctuations (NAV may be come less and fund value also may be reduced) or I have to withdraw entire 12.00 lacs at the time of maturity of my SIP?”

This is a misconception many investors have.

Mutual funds have no maturity period.

That’s the best part. Money does not automatically stop being invested.

Once you invest in a mutual fund, the amount remains invested forever — until you withdraw it.

For that period, the money continues to be invested and keeps growing.

Think of it like buying a house. Once you buy a house, you will get money when you sell it.

There’s no period after which your money will automatically be given out.

Many investors develop this misconception because nearly all mutual fund pages show historical mutual fund returns commonly in 6 month, 1 year, 3 years, and 5 years format.

So they assume that these are the optimal investment periods.

That is a wrong assumption. The options exist merely for you to analyse the mutual fund’s past performance.

Markets opened above yesterday’s closing point.

Consumer durables stocks and PSU bank stocks rose the most today. Auto stocks and realty stocks fell the most.

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

News

• The sales of India’s listed private non-financial companies grew 13.9% year-on-year in the Jan-March quarter.

• The government has increased the export duty on diesel to Rs 14 per liter and aviation turbine fuel (ATF) to Rs 12.5 per liter, while leaving petrol levies unchanged.

• The Indian Railways approved multiple infrastructure projects including: Rs 493 crore for the doubling of the Adipur-Bhuj line in Gujarat, Rs 405 crore for upgradation across 32 Eastern Railway stations, Rs 172 crore for the Somtane-Chikhli chord line in Maharashtra, and Rs 139 crore to rebuild the Shastriya Road Over Bridge in Indore, Madhya Pradesh.

Stocks Updates

• M&M: Mahindra Summit Agriscience (MSAL), a joint venture between Mahindra Agri Solutions and Japan’s Summit Agro, has issued new shares to Summit Agro. As a result, MSAL will cease to be a subsidiary and become an associate company/joint venture.

• Power Grid: has been declared the successful bidder for the ‘WR-ER Inter-Regional Network Expansion Scheme Part-A’ project through the Tariff Based Competitive Bidding (TBCB) route. It involves setting up two new 765/400 kV substations in Jharkhand and Chhattisgarh.

• Motherson: subsidiary SMR Automotive will acquire a 67.78% stake in China-based Shenzhen Autocruis Technology for about $22.6 million to strengthen its automotive vision systems business.

• Tata Capital: board approved raising up to Rs 36,000 crore through NCDs, perpetual debt, green bonds and other debt instruments.

• HDFC Life: allotted 1.45 crore equity shares to promoter HDFC Bank on a preferential basis, raising around Rs 1,000 crore.

• Lupin: launched Azilsartan Medoxomil tablets used to treat hypertension in the US. The company has 180-day generic exclusivity for the product. The branded drug had annual US sales of around $53.5 million.

• TCS: won a multi-year deal from Norway-based packaging company Elopak to transform and manage its global IT operations using AI and cloud technologies.

Word of the Day

Listing Gains

It refers to the profit earned when an IPO share lists on the stock exchange at a price higher than its issue price.

The issue price is the price at which shares were offered to investors in the IPO.

Listing gains occur when there is strong demand for the IPO and investors are willing to buy the shares at a higher price after listing.

Many investors apply for IPOs with the aim of benefiting from potential listing gains. However, listing gains are not guaranteed, and a stock can also list below its issue price.

6 Day Course

Theme: understanding FIIs

Day 3: Wednesday

FIIs tend to invest using US dollars. Which means, they convert their money from USD to INR and then invest.

This means that they tend to measure their returns in USD terms, not in INR terms.

So, let’s say their Indian investments were up 20% in value (when calculated in INR), but at the same time, USD-INR exchange rate changed by 5% where USD got stronger.

This will effectively mean that when they calculate their returns in USD, their Indian investment would have returned 15%, and not 20%.

The opposite can happen if the Rupee grows stronger.

So FIIs’ investment decisions are also greatly affected by the exchange rates.

India is a heavy crude oil importer. When the price of crude oil rises, India has to spend more money to import oil. This leads to the weakening of the INR.

Thus, crude oil prices heavily affect the exchange rates and therefore, crude oil prices also affect FII investors’ behaviour.

Featured Question

Q. “Do Foreign Institutional Investors (FIIs) face a lock-in period when investing in India? Additionally, if they have already invested in U.S. Treasury bonds, how can they withdraw their funds, and do those bonds have a lock-in period?”

The rules are the same for Indian individual investors and FIIs in this case of shares.

FIIs can buy and sell shares any time they want to.

They must pay the relevant taxes as per the investment period, but that’s it.

There are some lock-ins applied in case of IPO investment which can be up to 90 days.

Yes, bonds are held till maturity for getting the payout but bonds are also trade-able. Which means, bonds can be bought and sold before their maturity period also.

So, say you own a bond that matures in 10 years from now. But you need money today. So you can sell this bond to a willing buyer at a price you both can agree upon.

10 years later, the maturity amount will be received by the new owner of the bond.

Markets opened above yesterday’s closing point.

Realty stocks and IT stocks rose the most today. Metal stocks and healthcare stocks fell the most.

Global markets: US markets and most Asian markets rose. Most European markets rose (as of 6 pm IST).

News

• India’s passenger vehicle sales grew 27.3% year-on-year to 4.39 lakh units in May: SIAM

• India’s Union Minister Nitin Gadkari has officially signed rules giving legal recognition to 100% ethanol fuel (E100) for vehicles in India.

• RBI has given final guidelines banning third-party cash or travel incentives for bank staff to eliminate conflicts of interest and curb mis-selling from 1 Jan, 2027. They also classify financial influencers as Direct Selling Agents, making banks fully liable for any misleading promotional claims made by online creators.

Stocks Updates

• Airtel: incorporated a wholly owned subsidiary, Airtel Global IFSC Ltd in GIFT City, Gujarat, to undertake global treasury and related financial activities. The company also received a DoT penalty of Rs 1.06 lakh for alleged violation of subscriber verification norms and has decided not to contest it.

• TCS: announced a multi-year strategic partnership with Tottenham Hotspur Football Club to serve as the club’s digital transformation partner.

• Infosys: partnered with Finland-based Valmet for an AI-led IT transformation programme to modernise its IT operations and cloud infrastructure.

• M&M: subsidiary, Mahindra Holidays & Resorts India Ltd completed the acquisition of a 100% stake in Aditatva Estates for Rs 37.5 crore. Aditatva owns a 50-acre coffee estate in Chikmagalur, Karnataka, which will be used for expanding the company’s leisure resort business.

• Adani Ports: expanded partnership with US-based Kaleris to deploy AI-powered terminal operating systems across 15 container terminals in India and overseas.

• Grasim: inaugurated Phase 1 of its CPVC resin manufacturing plant at Vilayat, Gujarat, with a planned capacity of approx. 50,000 metric tonnes per annum.

• Zydus Lifesciences: completed the acquisition of US-based Assertio Holdings through its wholly-owned subsidiary Zara Merger Sub Inc.

Word of the Day

Subsidiary

It is a company that is controlled by another company, known as the parent company

A company is generally considered a subsidiary when the parent company owns more than 50% of its voting shares or has control over its operations and decisions.

If the parent company owns 100% of the shares, it is called a wholly-owned subsidiary.

Subsidiaries allow companies to expand into different businesses or markets while remaining under the same corporate group. They can protect the parent company from the subsidiary’s legal and financial liabilities.

6 Day Course

Theme: understanding FIIs

Day 2: Tuesday

Many different factors affect the buying/selling/holding decision of FIIs.

Each of them is governed by their own set of criteria. But some factors are common to them all.

One such factor is US interest rates.

This seems trivial but a lot of money moves in and out of emerging markers (like India) simply because of the US interest rates.

The US government bonds are considered the least risky of all investments in the world. But their returns are also very low.

So whenever the interest rates are increased in the US, many investors move some part of their money to the US. This leads to sell off in countries like India and Vietnam (emerging markets).

Most investors have rough targets for their investments. Based on these targets, investors invest in different assets in different percentages.

When the US bond rates go up, they sell elsewhere and move some money into US bonds.

The opposite also happens. When the interest rates are reduced, money starts flowing away from the US bonds and into emerging markets.

Featured Question

Q. “I see some actively managed mutual funds have more than 1 fund managers. How do they mostly divide the responsibilities of managing the fund among themselves?”

There can be many reasons for having multiple fund managers.

Many times, it is based on expertise.

Example: one fund manager may be an expert in certain industries while the other one specialises in other industries.

Or it may be based on strategy — example, one is a more value oriented fund manager while another is a more growth oriented manager.

In some funds it is based on assets. Example: balanced funds might need one fund manager for equity investments and another for debt investments.

Sometimes, one fund manager is the more experienced fund manager while the other is a junior fund manager who will take the fund over from the senior manager at a later stage.

In short, it is a hand over process for someone’s exit or retirement.

There can be other reasons behind having multiple fund managers as well.

Markets opened significantly above Friday’s closing point.

Nifty 50 opened higher due to positive global sentiments over the news of a US-Iran peace agreement.

Realty stocks and consumer durables stocks rose the most today. Pharma stocks and healthcare stocks fell the most.

Global markets: US markets and Asian markets rose. European markets rose (as of 6 pm IST).

News

• Iran and the US have reached an agreement, providing for an immediate ceasefire on all fronts, including Lebanon. The deal (MoU) is expected to be signed on Friday.

• India’s wholesale inflation rose to 9.68% year-on-year in May (vs 8.26% in April). Fuel inflation rose 30.33% year-on-year (vs 24.89% in April).

• India’s merchandise exports rose 18% year-on-year to $45.2 billion in May while imports rose 20.6% to $73.41 billion. The trade deficit increased to $28.21 billion (vs $22.56 billion in April)

• India’s unemployment rate rose to 5.5% in May (vs 5.2% in April).

  Razorpay has filed for an IPO with SEBI through the confidential route.

Stocks Updates

• HCL Tech: will invest Rs 1,427 crore in Axonwise Pvt Ltd, Sarvam AI’s parent company, for a 10.46% stake to strengthen sovereign AI and enterprise AI capabilities.

• Adani Enterprises: announced its intent to form a strategic alliance with Jabil Inc. to develop an AI and data centre infrastructure manufacturing platform in India, including AI racks, servers and power equipment.

• Dr Reddy’s: launched the first generic version of Bosulif, a blood cancer drug, in the US with 180 days of generic exclusivity. The brand had annual US sales of about $253.8 million as of April 2026.

• Waaree Energies: received an order to supply 800 MW solar modules from a domestic energy solutions provider, to be executed in FY2026-27.

• JSW Energy: will acquire a 100% stake in Maruti Clean Coal & Power Ltd for an enterprise value of Rs 1,410 crore, adding a 300 MW thermal power plant in Chhattisgarh, subject to approvals.

Word of the Day

Public Private Partnership (PPP)

It is an arrangement where the government and private companies work together to develop and operate public infrastructure projects.

The private company typically brings funding, expertise, and execution, while the government provides support through approvals, land, or revenue arrangements.

PPP projects are commonly used for roads, airports, metro systems, ports, and hospitals.

The aim is to improve public infrastructure by sharing costs, risks, and responsibilities between the public and private sectors.

6 Day Course

Theme: understanding FIIs

Day 1: Monday

Many of us know that Foreign Institutional Investors (FIIs) form a big chunk of investors in India.

Their buying/selling can influence the markets greatly.

But many of us tend to treat them as one block that acts the same which is obviously not the case.

In this week’s course we’ll dive deeper into this category and try to understand more about FIIs.

Any institutional investor that is not based out of India is categorised as FII.

This includes sovereign wealth funds, pensions funds, mutual funds, ETFs, index funds, hedge funds, banks, private equity funds, trusts, and even high-net worth individuals who use family offices to invest.

That is a very diverse group of investors. Each of these investors has their own style, investment duration, investment target, style, objective, holding period, etc.

We explored the question “What if your large-cap funds shared most of their portfolio?”

Check out the full report here.