SEBI’s New Rules for Retail Algo Trading: Key Changes Retail Traders Can Expect

The Securities and Exchange Board of India (SEBI) has released a structured framework to regulate retail investors’ participation in algorithmic (algo) trading. Given the complexities involved, this blog breaks down the key aspects of the new regulations to help traders and algo providers understand their implications.

What is Algorithmic (Algo) Trading?

Algorithmic trading, or algo trading, is an automated process where pre-programmed instructions execute trades at high speeds without human intervention. These strategies generally fall into two categories:

  • Low-Frequency Trading (LFT): Executes trades over hours or days.
  • High-Frequency Trading (HFT): Executes thousands of trades per second, leveraging speed and automation.

What Has Changed in SEBI’s Regulations?

SEBI’s framework provides long-awaited clarity on API-based trading and sets compliance rules for retail traders, algo providers, and marketplaces. Here’s how the new regulations impact different participants in the algo trading ecosystem:

Impact on Retail Traders

Previously, retail traders had no officially recognised method to automate order placement except through expensive co-location services at stock exchanges. Many traders bypassed this using broker APIs, Excel macros, or scripting tools—an area largely unregulated.

With the new framework:

  • SEBI formally recognises API-based trading for retail traders.
  • If the trading frequency remains below an exchange-defined threshold, traders need not register their strategies.
  • For higher-frequency trading, registration with the exchange is mandatory.
  • Retail traders must use a static IP, whitelisted by their broker, to prevent unregistered entities from managing trades for multiple accounts.

These rules aim to protect traders and curb illegal money management practices that involve shared login credentials.

Impact on Algo Providers

A growing number of businesses offer pre-built trading strategies to retail investors. SEBI’s new regulations now formally acknowledge and regulate these services:

  • Algo providers must partner with a broker and register with the exchanges.
  • All algo providers must ensure that their services comply with broker regulations.
  • Strategies are now classified into two categories:
    • White Box Algos – Transparent strategies where users understand the logic.
    • Black Box Algos – Proprietary strategies where users do not have access to the logic.

For black box algos, algo providers must obtain a Research Analyst (RA) licence from SEBI and comply with reporting norms, including:

  • Publishing periodic performance reports.
  • Reporting any strategy modifications to the exchange before rolling them out.
  • Ensuring all algo orders have a unique identifier for tracking.

Exchanges have been given until April 1, 2025, to establish a framework for registering and regulating these algo services.

Algo Marketplaces and Revenue Sharing

Algo platforms have created marketplaces where traders can buy and sell strategies. SEBI’s framework places new restrictions on this model:

  • Traders can share strategies only with family members.
  • Algo providers must have an RA licence to publish strategies and register them with the exchange.
  • The Performance Validation Agency for Algos, which is yet to be set up, will oversee and regulate strategy performance claims.

Additionally, the regulations allow brokerage revenue and subscription charge sharing between algo providers and brokers. However, brokers must ensure there is no conflict of interest in these arrangements—a point that remains open to further clarification.

Key Takeaways 

  • Retail traders using broker APIs can continue, provided their order rate is within exchange-defined limits.

  • Algo providers must partner with brokers and register with exchanges to sell strategies.

  • Marketplaces offering paid algos must comply with exchange empanelment, unique order tagging, and an RA licence for black box strategies.

With SEBI’s framework now in place, retail algo trading has gained much-needed legitimacy, ensuring transparency while protecting traders from potential risks. The industry now awaits further details on how these rules will be implemented before the April 2025 deadline.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing

Redington Share Price Hits 52-Week High; Here’s Why

On February 10, 2025, while Indian equity benchmark indices were trading in the red, Redington Limited stood out as a notable outperformer. The stock surged 3% as of 11:20 AM, reaching a fresh 52-week high of ₹240.25 on NSE. This upward movement comes amid a significant development regarding the company’s strategic expansion in Saudi Arabia.

Major Investment Announcement at LEAP 2025

Redington, a leading technology aggregator and innovation enabler, is making a major impact at LEAP 2025, Saudi Arabia’s premier technology event. Under the theme “Synergising the Tech Ecosystem”, Redington aims to strengthen its position in the Middle East’s growing digital economy.

The key highlight of Redington’s participation is its announcement of a SAR 2 billion investment in Saudi Arabia over the next decade. This substantial investment, funded entirely through internal accruals, will be utilised for:

  • Establishing a state-of-the-art headquarters
  • Setting up an advanced automated smart distribution centre
  • Investing in talent development initiatives

Strengthening Presence in Saudi Arabia

Redington has been operating in Saudi Arabia for 24 years, underlining its long-term commitment to the region. In 2024 alone, the company delivered $1.5 billion worth of technology solutions across the country. Its expansive network of warehouses in major cities plays a crucial role in ensuring efficient tech distribution.

This expansion aligns with Saudi Arabia’s Vision 2030, which focuses on digital transformation and technological advancement. By further embedding itself in the Kingdom’s tech ecosystem, Redington is set to strengthen its market leadership.

What LEAP 2025 Means for Redington?

Through LEAP 2025, Redington is creating new opportunities for businesses by:

  • Showcasing innovative technology solutions
  • Enabling collaborative partnerships
  • Providing insights into emerging market trends and success stories
  • Demonstrating real-world use cases for advanced technologies

Attendees at LEAP 2025 will have the opportunity to engage with industry experts, explore Redington’s technological advancements, and gain first-hand insights into the future of digital transformation.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing

MCX Trading Times Revised – Know About New Timings

In a significant update for commodity traders, the Multi Commodity Exchange (MCX) has announced a revision in its trading hours due to changes in the United States daylight saving time. This adjustment will come into effect from March 10, 2025.

MCX is a leading commodity derivatives exchange that facilitates online trading of commodities, including metals, energy products, and agricultural commodities. Since its inception in November 2003, the exchange has played a crucial role in the Indian commodities market.

Current MCX Trading Hours

At present, MCX operates with the following trading hours from Monday to Friday:

  • Non-Agri Commodities: 9:00 AM – 11:30 PM (extended up to 11:55 PM between November and March due to daylight savings)
  • Agri Commodities: 9:00 AM – 5:00 PM

Revised Trading Hours from March 10, 2025

MCX has officially updated its trading hours, which will take effect from March 10, 2025, in line with daylight saving changes in the United States. The modified trading hours and client code modification timings are as follows:

Non-Agri Commodities

  • New Trading Hours: 9:00 AM – 11:30 PM
  • Client Code Modification: Allowed until 11:45 PM

Select Agri Commodities (Cotton, Cotton Oil & Kapas)

  • New Trading Hours: 9:00 AM – 9:00 PM
  • Client Code Modification: Allowed until 9:15 PM

All Other Agri Commodities

  • New Trading Hours: 9:00 AM – 5:00 PM
  • Client Code Modification: Allowed until 5:15 PM

MCX Trading Holidays in 2025

Apart from the revised trading hours, MCX has also scheduled market closures on several occasions in 2025. A total of 15 trading holidays are listed for the year, including:

  • January 1 – New Year
  • February 26 – Mahashivratri
  • March 14 – Holi
  • March 31 – Id-ul-Fitr
  • April 10 – Mahavir Jayanti
  • April 14 – Dr. Baba Saheb Ambedkar Jayanti
  • April 18 – Good Friday
  • May 1 – Maharashtra Day
  • August 15 – Independence Day
  • August 27 – Ganesh Chaturthi
  • October 2 – Gandhi Jayanti
  • October 21 & 22 – Diwali
  • November 5 – Guru Nanak Jayanti
  • December 25 – Christmas

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing

Retirement Planning: How a One-Time Investment of ₹10 Lakh Can Create ₹3.5 Crore Retirement Corpus

When envisioning retirement, financial security and comfort take precedence. Throughout life, individuals work tirelessly, earn, and make financial sacrifices to secure a stable future. As income sources diminish during retirement, having a reliable corpus ensures independence, dignity, and the ability to maintain one’s lifestyle without financial stress.

The question arises: how does one build such a corpus? Passive income from investments plays a crucial role. This investment can be structured either as a lump sum or through periodic contributions.

This article explores the significance of a retirement corpus, its necessity, and the impact of compounding in wealth accumulation. Specifically, we examine how a single investment of ₹10 lakh can potentially grow into a substantial retirement corpus over time.

Understanding Retirement Corpus and Its Importance

A retirement corpus is the sum of money set aside to fund expenses post-retirement. It ensures a stress-free life without financial dependency on family or external support. Given the rising cost of living and inflation, having a well-planned corpus is essential to maintain one’s lifestyle and meet medical and other unforeseen expenses.

Key factors influencing retirement corpus growth include:

  • Investment tenure
  • Rate of return
  • Power of compounding

Let’s examine how a one-time investment of ₹10 lakh can generate a sizeable corpus over different time frames and return rates.

Check Retirement Calculator.

Scenario 1: 12% Annualised Return Over 20 Years

Investing ₹10 lakh and allowing it to grow at an annual return of 12% for 20 years results in the following:

  • Investment Amount: ₹10,00,000
  • Annual Return: 12%
  • Duration: 30 years
  • Total Corpus: ₹35,949,641

Breakdown:

  • Principal Amount: ₹10,00,000
  • Total Interest Earned: ₹3,49,49,641

This demonstrates how compounding amplifies wealth over time. A single investment left untouched for 3 decades can create a substantial nest egg.

Scenario 2: 15% Annualised Return Over 24 Years

A slightly longer investment tenure with a higher annual return of 15% over 24 years further magnifies the corpus:

  • Investment Amount: ₹10,00,000
  • Annual Return: 15%
  • Duration: 24 years
  • Total Corpus: ₹35,790,617

Breakdown:

  • Principal Amount: ₹10,00,000
  • Total Interest Earned: ₹3,47,90,617

The additional four years of compounding significantly impact the corpus, highlighting the importance of an extended investment horizon. Compound interest calculator is used for calculation. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

RBI’s First 25 bps Rate Cut in Almost 5 Years: What It Means for Mutual Fund Investors?

The Reserve Bank of India (RBI) recently reduced the repo rate by 25 basis points, bringing it down to 6.25%. This marks the first rate cut since May 2020, following 11 consecutive meetings where the rate was held at 6.5%. Additionally, in the December policy meeting, a 50 basis point reduction in the Cash Reserve Ratio (CRR) was announced, lowering it to 4% to enhance liquidity and support credit growth.

This move has significant implications for mutual fund investors, particularly those investing in debt and equity funds, as interest rate changes influence various asset classes.

Impact on Debt Mutual Funds

A rate cut typically makes debt mutual funds more attractive due to the inverse relationship between bond yields and prices. When interest rates fall, existing bonds with higher coupon rates appreciate in value, leading to gains in the net asset value (NAV) of debt mutual funds.

Who Benefits the Most?

  1. Long-Duration Bond Funds – These funds benefit significantly from falling interest rates as they hold bonds with extended maturity periods, allowing investors to capitalise on price appreciation.
  2. Gilt Funds – Since these funds invest in government securities, they experience a direct impact from rate cuts, potentially leading to capital gains.
  3. Dynamic Bond Funds – These funds adjust their portfolio duration based on interest rate movements, making them well-positioned in a falling rate scenario.

Despite the rate cut, investors should monitor inflation trends and global interest rate movements, as these factors influence future RBI decisions.

Equity Market Implications

Lower interest rates often stimulate economic growth by reducing borrowing costs, which benefits sectors reliant on credit availability. Some of the key beneficiaries include:

  • Banking Sector – A rate cut enhances credit demand, potentially improving banks’ loan growth and profitability.
  • Real Estate – Lower mortgage rates make housing loans more affordable, which could drive demand in the real estate sector.
  • Automobile Industry – Reduced financing costs encourage vehicle purchases, providing a boost to the sector.

Investors in equity mutual funds might consider flexi-cap and large-mid cap funds that provide diversified exposure to multiple sectors that could gain from falling interest rates.

Navigating the Rate Cut: Investment Strategies

1. Barbell Strategy for Debt Funds

A barbell strategy involves investing in both short-duration and long-duration debt instruments.

  • Long-duration bonds benefit from falling rates through price appreciation.
  • Short-duration bonds provide liquidity and stability, mitigating interest rate risks.

2. Systematic Investment Plans (SIPs) for Equity

SIPs remain a stable way to invest in equity markets, allowing investors to manage market fluctuations and benefit from rupee cost averaging over time.

3. Portfolio Diversification

Maintaining a balanced allocation between equity and debt ensures that investors mitigate risks while optimising returns based on their investment horizon and risk appetite.

Plan your SBI SIP investments better! Use our easy-to-use SBI SIP Calculator and estimate future returns with just a few clicks. Your financial growth starts here.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.

Why Indians Think Bata Is an Indian Brand—And So Does the Rest of the World!

Did you know that Bata is not actually an Indian brand? Despite being a household name in India for generations, Bata was founded in 1894 in Zlín, Czechoslovakia (now the Czech Republic). Today, it is headquartered in Switzerland. What’s even more fascinating is that this perception is not unique to India—wherever Bata operates, people believe it to be a local brand. 

But this is no coincidence. It is a carefully crafted strategy that has helped Bata integrate seamlessly into diverse markets across the world.

Let’s take a closer look at how Bata has cultivated this hyper-local identity while expanding its global footprint. Before moving ahead, Bata share price is trading at ₹1,343 on NSE as of 10:29 AM. 

The Township Model: More Than Just a Business

One of the defining aspects of Bata’s localisation strategy is its township model. Instead of merely setting up factories, the company builds entire communities around them, providing housing, schools, hospitals, and other essential services for employees and their families.

This creates a deep-rooted sense of belonging and loyalty among its workforce and the surrounding communities.

In India, this approach led to the development of towns like Batanagar in Kolkata and Bata Ganj near Patna. These are not isolated instances—Bata has established similar townships worldwide, including Batapur in Pakistan, Bata Dorp in the Netherlands, and Batawa in Canada. 

By embedding itself so deeply into the local fabric, Bata strengthens its presence and fosters an emotional connection with consumers.

Speaking the Language of the People

Another pillar of Bata’s localisation strategy is its branding and communication. Unlike many multinational companies that maintain a uniform global identity, Bata adapts its logo and advertisements to reflect regional languages and cultures.

In India, for instance, Bata’s name appears in Hindi, Bengali, Odia, Tamil, and other regional languages. This level of customisation extends across countries—whether in French, Serbian, German, or Spanish-speaking markets, Bata ensures that its branding resonates with the local population.

Take a look at old Bata advertisements, and you’ll find an astonishing variety of culturally adapted campaigns. This linguistic and visual flexibility has helped the brand become more relatable, fostering a strong local identity in each market.

Tailoring Products to Regional Needs

Bata’s localisation efforts don’t stop at branding; its product offerings are also customised to cater to the unique needs of different markets.

  • In India, Bata is synonymous with affordable school shoes and everyday footwear for the masses.
  • In Canada, it produces rugged boots and winter footwear suited for extreme weather.
  • In Europe, it offers stylish yet comfortable shoes for working professionals.

By aligning its products with local consumer preferences, Bata ensures that its offerings remain both relevant and desirable, allowing it to maintain a stronghold in every region.

A Masterclass in Localised Marketing

Bata’s advertising campaigns provide a fascinating case study in hyper-local marketing. Over the years, the brand has seamlessly blended its global appeal with region-specific messaging.

  • In India, its advertisements often highlight family values, school life, and affordability.
  • In Latin America, the focus is on fashion and lifestyle trends.
  • In Europe, the messaging leans towards heritage, durability, and premium quality.

This adaptability has enabled Bata to remain relevant and trusted across generations, no matter where it operates.

Bata’s Legacy: The Art of Belonging Everywhere

Bata’s ability to integrate into local cultures while remaining a global powerhouse is an extraordinary feat. The company’s approach goes beyond selling shoes—it builds communities, speaks the language of its consumers, and tailors its offerings to fit seamlessly into daily life.

This strategy has allowed Bata to cultivate a loyal customer base worldwide, proving that a brand doesn’t have to be “foreign” to succeed internationally. Instead, by embracing local identities, it can become a trusted household name in every market.

So, the next time you step into a Bata store, remember—you’re not just buying a pair of shoes. You’re engaging with a brand that has mastered the art of being local everywhere.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing

5 Simple Ways to Check Gold Purity at Home

Gold has been a prized possession for centuries, symbolising wealth and security. However, with counterfeit gold becoming increasingly common, how can you ensure your gold is real? Instead of relying solely on jewellers, you can perform simple at-home tests to check gold purity. 

Here are 5 easy and effective methods:

The Hallmark Test

Most genuine gold jewellery and coins come with a hallmark or carat stamp that indicates their purity (e.g. 24K, 22K, or 18K). These small engravings are usually found on the inner band of rings or the back of jewellery.

However, beware—some counterfeit pieces may have fake hallmarks. If the stamp looks suspicious or unclear, you may need to verify with additional tests.

The Magnet Test

Gold is a non-magnetic metal, meaning it won’t be attracted to a magnet. Here’s how to check:

  • Take a strong magnet and bring it close to your gold piece.
  • If the gold sticks to the magnet, it is likely impure or made with other metals.
  • While this test is a useful first check, be aware that some non-magnetic metals are also used in gold jewellery, so it is not entirely foolproof.

The Vinegar Test

A simple vinegar test can help determine whether your gold is genuine:

  • Pour a small amount of white vinegar into a bowl.
  • Drop the gold item into the vinegar and wait for a few minutes.
  • If the gold darkens or changes colour, it is fake. Real gold remains unchanged.

This is an easy and safe test, as vinegar is non-toxic and will not damage real gold.

The Water Test (Float Test)

Gold is a heavy and dense metal that should sink in water. To conduct this test:

  • Fill a glass with water.
  • Drop the gold item into the water.
  • If it sinks straight to the bottom, it is likely genuine. If it floats or hovers in the water, it may be gold-plated or mixed with other metals.

This method works best for small items like coins or pendants.

The Scratch Test (Ceramic Plate Test)

Gold is a soft metal but leaves a distinct mark when scratched against an unglazed ceramic surface. To check:

  • Use an unglazed ceramic plate or tile.
  • Lightly rub the gold piece against the surface.
  • If it leaves a gold streak, it is real. If the streak is black or grey, the item is likely fake.

Be careful when using this test, as it may leave minor scratches on your jewellery.

Final Thoughts

These home tests provide quick and easy ways to check gold purity, but for absolute certainty, it is always best to visit a professional jeweller or use an electronic gold tester. If you are investing in gold, verifying its authenticity is crucial to protect your money and peace of mind.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing

Advanced Sys-Tek Ltd Files for IPO to Expand Industrial Automation Business

Advanced Sys-Tek Ltd has filed a Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO). The offering comprises a fresh issue at ₹115 per share and an Offer for Sale (OFS) of up to 1.53 million shares by existing promoters and shareholders. The funds raised will be utilised for capital expenditure and long-term working capital needs. Inga Ventures and Sowilo Capital Advisors will act as the book-running lead managers for the IPO.

IPO Structure and Fund Allocation

The IPO includes a fresh issue of shares alongside an Offer for Sale (OFS) by promoters Mukesh R Kapadia and Umed Amarchand Fifadra, each set to divest up to 7.64 lakh shares. The capital raised from the fresh issue will be directed towards expanding operational capacity and strengthening working capital resources. The company aims to enhance its infrastructure and technological capabilities to support future growth.

Company Expertise and Market Presence

With a legacy of over three decades, Advanced Sys-Tek Ltd is a specialist in industrial automation, offering comprehensive measurement and control solutions. The company focuses on Industrial Automation Solutions (IA Solutions), particularly automated metering systems for oil and gas terminals. It has successfully completed more than 200 installations in India and international markets as of 30 September 2024.

Advanced Sys-Tek provides automation solutions for petroleum, oil, and lubricant (POL) storage terminals, including terminal automation (TA) and custody transfer metering of hydrocarbons. Additionally, the company delivers metering skids for precise gas flow measurement in pipelines. It has also executed automation projects for LPG bottling plants and is currently engaged in fuel farm automation at Indian airports.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

NIBE Inaugurates State-of-the-Art Defence Manufacturing in Pune

NIBE Limited, a key player in the defence manufacturing sector, has taken a significant step towards advancing India’s self-reliance in defence production. The company inaugurated its cutting-edge Missiles Complex and Precision Machining – Small Arms Complex in Pune. This event coincided with the celebration of NIBE’s Foundation Day, symbolising its continued commitment to innovation and excellence.

The grand inauguration ceremony witnessed the presence of prominent dignitaries, including Maharashtra’s Chief Minister, Shri Devendra Fadnavis, Deputy Chief Minister Shri Ajit Pawar, and other government officials. Industry leaders, including executives from Larsen & Toubro (L&T), were also in attendance.

Cutting-Edge Technology for Defence and Aerospace

The newly inaugurated facility is equipped with state-of-the-art Vertical Machining Centres (VMCs) with Computer Numerical Control (CNC). Some of the advanced machinery installed at the facility include:

  • Kairos V5 16000
  • BMV 50 and 60+ machines

These high-precision machines will enable NIBE Limited to manufacture critical components for small arms, such as Light Machine Guns (LMGs) and Assault Rifles, along with missiles and rocket launcher structures. The enhanced production capabilities are expected to contribute significantly to India’s defence and aerospace sectors.

NIBE Limited: A Growing Force in Defence Manufacturing

Founded in 2021, NIBE Limited has rapidly emerged as a key defence manufacturer, specialising in:

  • Critical Components for Defence and Aerospace, including structures and sub-assemblies
  • Missile systems, small arms, and electronic components
  • Projects such as Modular Bridges, Pinaka Launchers, and MRSAM Launchers

With a focus on domestic and international applications, the company aligns its operations with the Atmanirbhar Bharat initiative, reinforcing India’s self-reliance in defence production.

Stock Performance Reflects Market Sentiment

Following this significant development, NIBE Limited’s share price hit an upper circuit at ₹1,660.30 on the BSE during the trading session.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing

Nippon India Active Momentum Fund NFO: A Factor-Based Approach to Investing

Nippon India Mutual Fund has announced the launch of its latest New Fund Offer (NFO)—Nippon India Active Momentum Fund. This open-ended equity scheme is designed to generate long-term capital appreciation by investing in a diversified portfolio of equity and equity-related instruments, primarily focusing on momentum investing. The fund will be available for subscription between 10 and 24 February.

Momentum investing is a well-known factor-based investment strategy that relies on stocks demonstrating sustained price trends over time. This approach is based on the premise that assets that have performed well in the past may continue to do so, while those that have underperformed may continue to lag.

Understanding Factor-Based Investing

Factor investing is a rules-based investment approach that aims to eliminate emotional decision-making and human biases. It relies on fundamental attributes such as:

  • Alpha (excess returns above benchmarks)
  • Low volatility (stable performance with reduced fluctuations)
  • Quality (strong financials and robust business fundamentals)
  • Value (undervalued stocks with potential for growth)
  • Growth (companies with strong earnings momentum)

Momentum is one such factor, and the Nippon India Active Momentum Fund builds its strategy around this principle.

Momentum Investing: A Proven Concept

Historical data indicates that momentum-based indices have delivered consistent returns. For instance, in a typical year, momentum as an index delivers top returns approximately 8 times on a cumulative basis. Additionally, the Nifty 500 Momentum 50 Index has outperformed the Nifty 500 in 13 out of the last 19 years.

However, momentum investing can be highly volatile, particularly during market downturns. Instances such as the early pandemic phase and the global financial crisis have shown that momentum-based portfolios can suffer sharp underperformance at decisive turning points.

How the Fund Aims to Reduce Risk

To mitigate the risks associated with momentum investing, the Nippon India Active Momentum Fund incorporates a multi-factor quantitative model that blends:

  1. Technical factors – Price momentum to identify stocks that continue to perform.
  2. Fundamental factors – Earnings revision to assess a company’s growth trajectory.
  3. Conditional indicators – Beta (to benefit from market uptrends) and minimum volatility (to reduce risk during downturns).

The fund’s strategy adapts to market phases, commonly referred to as “Risk ON” and “Risk OFF” periods:

  • During Risk ON phases, the fund enhances upside potential by adding the Beta factor to momentum.
  • During Risk OFF phases, minimum volatility helps stabilise the portfolio and mitigate drawdowns.

Additionally, the portfolio will undergo monthly rebalancing to dynamically adjust to market conditions.

Key Features of Nippon India Active Momentum Fund

  • Fund Category: Open-ended equity scheme
  • Investment Strategy: Momentum-based investing with a blend of technical and fundamental factors
  • Benchmark Index: Nifty 500 TRI
  • Minimum Investment: ₹500 (and in multiples of ₹1 thereafter)
  • Subscription Period: 10 – 24 February
  • Portfolio Rebalancing: Monthly

Ensure steady returns with systematic withdrawals! Estimate your withdrawals with our SWP Calculator and manage your finances seamlessly.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.