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Nykaa IPO - Information Note

Nykaa IPO Note
by 5paisa Research Team 25/10/2021

FSN E-Commerce, the company that owns and operates the Nykaa digital brand, proposes to come out with an IPO of Rs.5,352 crore. The issue opens on 28-October and closes for subscription on 01-November. Nykaa is a digital platform that offers an agnostic market place for beauty products, healthcare products, apparel and accessories. It offers a one-stop shop for a range of brands across a plethora of price points.

FSN E-Commerce Ventures was promoted by Falguni Nayar, the former head of investment banking at Kotak Mahindra Capital. Falguni was also an independent director on the board of Tata Sons. FSN E-Commerce Ventures was floated in 2012 and it has emerged as one of the few profitable digital specialized ecommerce properties in India.

Below are the terms which you should know about Nykaa IPO

Key terms of the IPO issue of FSN E-Commerce Ventures (Nykaa)

Key IPO Details

Particulars

Key IPO Dates

Particulars

Nature of issue

Book Building

Issue Opens on

28-Oct-2021

Face value of share

Rs.1 per share

Issue Closes on

01-Nov-2021

IPO Price Band

Rs.1,085 - Rs.1,125

Basis of Allotment date

08-Nov-2021

Market Lot

12 shares

Refund Initiation date

09-Nov-2021

Retail Investment limit

14 Lots (168 shares)

Credit to Demat

10-Nov-2021

Retail limit - Value

Rs.189,000

IPO Listing date

11-Nov-2021

Fresh Issue Size

Rs.630.00 crore

Pre issue promoter stake

54.22%

Offer for Sale Size

Rs.4,721.92 crore

Post issue promoters

52.56%

Total IPO Size

Rs.5,351.92 crore

Indicative valuation

Rs.53,204 crore

Listing on

BSE, NSE

HNI Quota

15%

QIB Quota

75%

Retail Quota

10%

Data Source: IPO Filings
 

Here are some of the key merits of the FSN E-Commerce Ventures (Nykaa) business model

a) Nykaa has a diverse portfolio of beauty, fashion and personal care products

b) It is the only digital profit making ecommerce venture in India

c) Provides a platform for leading national and international brands

d) Nykaa Vertical offers a platform for beauty and personal care products

e) Nykaa Fashions Vertical offers a platform for apparel and accessories

f) Nykaa combines proprietary brands, white labelled brands and external brands


Also Check - Nykaa IPO - 7 Things to know before applying for IPO
 

How is the FSN E-Commerce Ventures (Nykaa) IPO structured?

The IPO will be a combination of a fresh issue and an offer for sale. Here is a gist of the IPO offer of the company.

a) The fresh issue component will entail the issue of 56 lakh shares and at the peak price band of Rs.1,125 per share, the fresh issue amount will be Rs.630 crore. 

b) The OFS component will comprise of the issue of 4,19,72,660 shares and at the peak price band of Rs.1,125, the OFS value would be Rs.4,722 crore resulting in a total IPO issue size of Rs.5,352 crore.

c) The Falguni Nayar family trust will offer 48 lakh shares as part of the OFS and as a result the promoter stake will come down marginally from 54.22% to 52.56%, although they will still retain their majority ownership.

Apart from the promoter group, other early investors including PE funds and family offices will also be participating in the offer for sale. At the upper end of the price band, FSN E-Commerce Ventures (Nykaa) will be valued at Rs.53,204 crore.
 

Financials of Nykaa

Financial Parameters

Fiscal 2020-21

Fiscal 2019-20

Fiscal 2018-19

Sales Revenues

Rs.2,452.64 cr

Rs.1,777.85 cr

Rs.1,116.38 cr

Net Profit

Rs.61.95 cr

Rs.-16.34 cr

Rs.-24.54 cr

Total Assets

Rs.1,301.99 cr

Rs.1,124.48 cr

Rs.775.66 cr

Net Profit Margins

2.53%

-0.92%

-2.20%

Asset Turnover (X)

1.88 times

1.58 times

1.44 times

Data Source: Company RHP

One of the selling points for Nykaa has been that they have been among the rare profitable digital ecommerce plays in India. Nykaa has not only reported a profit in FY21 but also in the Jun-21 quarter, albeit small. The bigger advantage for Nykaa is the asset light model, which is evident from the robust asset turnover ratios, which has shown a consistently rising trend over the last 3 financial years.

Investment Perspective for FSN E-Commerce Ventures (Nykaa)

Nykaa will be the biggest digital IPO after Zomato raised Rs.9,375 crore and got a whopping 38 times oversubscription.

Here are some key valuation pointers for Nykaa.

a) The profit trend and the healthy asset turnover ratios will work in favour of Nykaa since loss making digital plays are getting significantly higher valuations in the market.

b) It has a fantastic portfolio of products. In beauty and personal care, Nykaa offers 1.97 lakh SKUs (stock keeping units) across 2,476 brands while in the apparel and accessories segments, it offers 18 lakh SKUs across 1,350 brands.

c) Nykaa is betting on the Omnichannel experience which will combine offline, online, proprietary brands, external brands, pull strategy and push strategy for sales.

d) The fresh issue proceeds will be allocated towards debt repayment, investment in brands, investments in store expansion and in storage warehousers. All these are expected to be value accretive for the stock overall.

While traditional valuation parameters may still not be applicable, its profitable turn and high asset turnover ratios will favour valuations post listing. Nykaa promises to be a good play on the emerging trend of higher-end brand consumption online.

 

Nykaa IPO - details explained

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Karwa Chauth Gift for Your Wife: Investment Options for Securing Her Future

by 5paisa Research Team 25/10/2021

Every year on Karwa Chauth, your wife observes one of the most difficult fasts, praying for your long life. Isn’t it only fair then that you give her a gift that’s precious enough to last her entire life? Historically, the lure of clothes and jewellery has remained the brightest for Indians. But, these fade away with time, and as we have all learnt during the COVID-19 pandemic, life can turn unpredictable within a blink of an eye! Thus, we believe it is time to add some invaluable investment products to secure your wife’s future.

 

Stock Systematic Investment Plan (SIP)

You might be familiar with mutual fund SIPs, but did you know you can also make SIP investments in stocks? Under this strategy, investors can buy a fixed number of shares or invest a fixed amount in an individual stock on a fixed date of every week, month or year. Basically, SIP is a buy and hold method, which encourages regular savings and also provides tax efficiency. It saves you the hassle of timing markets, protecting your hard-earned money. So, what are you waiting for? Buy a stock SIP in your wife’s name.

 

Mutual Fund Systematic Investment Plan (SIP)

SIPs have become the most preferred mode of investments for retail investors as they safeguard them from extreme volatility in the market. You can invest small amounts in your wife’s name, regularly. The amount can be as small as Rs. 500. Click here to know more.

 

Sovereign Gold Bonds (SGB)

You can continue with the tradition of gifting your wife her favorite yellow metal, albeit in a different form. Unlike gold jewellery, SGBs are more profitable, more liquid and provide tax benefits. SGBs are issued by the Government of India at different points. You can invest in denominations of 1 gm and units are allotted in the form of gold bond certificates. The seventh tranche of SGBs is open for subscription from October 25, click here to apply.

 

Term Insurance

This product helps secure the future of a family in the unfortunate event of untimely death of the main bread-earner of the family. It helps to pay for important events such as a child’s education or marriage, repaying existing loans, among others. Know more here.

 

Health Insurance

In the post pandemic world, there is increased awareness about investing in one’s health and healthcare. A good health insurance policy can provide cover for large, unforeseen medical expenses and provide some comfort during a health crisis.

You can also consider gifting Corona Rashak, Corona Kavach and other health policies to your wife.

This Karwa Chauth, gift your wife one or more of these products and see her smile with pride and contentment.

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Fino Payments Bank IPO - 7 Things to Know

Fino Payments Bank
by 5paisa Research Team 25/10/2021

The IPO of Fino Payments Bank opens on 29th October and closes for subscription on 02nd November. Fino Payments Bank is a Fintech company that offers a wide array of digital financial products for customers. Here is a quick look.
 

Highlights of the Fino Payments Bank IPO


1) Fino Payments Bank is coming to the IPO market with an overall issue size of approximately Rs.1,300 crore. This will include a fresh issue of Rs.300 crore and an offer for sale of 1.56 crore shares. That implies a price band in the range of Rs.610-640 for the IPO, although the actual announcement of price band is yet to be made.

2) Fino Payments Bank was incorporated in 2017 as a pure digital payment bank registered with RBI. It offers CASA deposits, facilitates remittances, offers debit card related transactions, CMS and cash withdrawal via micro ATMs and Aadhar enabled ATMs. Its revenues come from feel income and commissions from merchant networks.

3) The company has turned around to making profits in FY21. In the fiscal year ended March 2021, Fino Payments Bank earned revenues of Rs.791 crore and reported profits of Rs.20.5 crore. It has total asset base of around Rs.1,010 crore.

4) The promoter, Fino PayTech Ltd holds 100% stake in Fino Payments Bank and will dilute its stake as part of the offer for sale (OFS) component. The fresh issue component will be used by Fino Payments bank to augment its Tier-1 capital to meet the needs of future asset book expansion.

5) Fino Payments Bank, under the conditions of the RBI Payment Bank License, is not allowed to give loans. It has to largely rely on fee income. Its focus is on the mass market with low literacy and low levels of access to financial products and services.

6) Fino Payments Bank has some achievements to its credit. Ministry of Electronics has ranked Fino third among banks facilitating digital transactions in India. According to CRISIL, Fino Payments Bank has the largest network of micro-ATMs and its deposit growth was third-best, albeit on a very small base.

7) The Fino Payments Bank IPO will be lead managed by Axis Capital, CLSA India, ICICI Securities and Nomura. KFintech will be the registrars to the issue.

The demat credits are expected to happen on 11-October and listing on 12-October.

Also Read:-

Upcoming IPOs in 2021

List of Upcoming IPOs in October 2021

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JSW Steel to Levy Surcharge on OEM Customers

JSW Steel to Levy Surcharge on OEM Customers
by 5paisa Research Team 25/10/2021

Indian steel companies are reeling under the onslaught of rising manufacturing costs. JSW Steel being one of the largest integrated steel producers in India, is no exception. Now JSW Steel has come up with an innovative idea of levying a surcharge on steel products sold. To begin with, this surcharge will only be levied on long term OEM customers.

The OEM customers or Original Equipment Manufacturers are the large institutional buyers of steel having long term contracts with JSW Steel. These include sectors like construction, automobiles etc. Since prices are decided in advance, this surcharge is a temporary method to offset some of the input cost spikes in recent times.

Some of the key inputs that go into manufacture of steel like ore and coking coal have gone up sharply. For example, coking coal accounts for 40% of the cost of steel production and India largely relies on imports for coking coal. However, the price of coking coal has rallied from $120/tonne to $400/tonne in the last one month.

Read: Steel in Demand

The net result is that the steel manufacturers have seen a spike of Rs.6,600 per tonne between July and September this year. In percentage terms, this translates into a cost spike of 19%. There is no way such cost spikes can be either absorbed or passed on to incremental buyers. That is why JSW is planning to levy surcharge on OEM customers.

Speaking on the subject, JSW Steel CFO Seshagiri Rao pointed out that the concept of surcharge may be novel in India but it is common across UK and Europe. Steel companies pass on higher cost in different forms like energy surcharge, transport surcharge etc. The bottom line is that even Indian steel companies have to rework prices in the current context.

Steel companies broadly cater to the retail market, export market and the OEM market. In the retail market, the prices fluctuate on a daily basis and surcharge would not be required. The export market is driven by global competitiveness.

The only market that is left is the OEM market where surcharge makes sense due to the long term nature of contracts. Steel is one more case of industries being squeezed by a spike in the cost of minerals, coal, coking coal etc. They really have no choice but to pass on the cost hikes.

Also Read:- 

Is the pressure on metal stocks likely to continue?

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Best Mutual Funds For SIP In 2021

Best Mutual Funds For SIP In 2021
by 5paisa Research Team 25/10/2021

In recent times, people have moved beyond fixed deposits and insurance policies to look for better ways to invest and grow their money. While old savings schemes offer secure and stable ways to keep money, they often do not provide high growth or interest rates to satisfy all. Mutual funds are an excellent way to grow your money in a short period of time.

If you are someone who is recently discovering mutual funds and SIPs, you must read a lot to understand which funds are the best currently. While some investors risk their money by their gut feeling, some prefer to do extensive research before starting their investment journey.

For the unversed, mutual funds are professional investment funds that pool money from several investors and purchase securities. This system is managed by experts and they try to minimize risks and maximize profits for everyone who has put money in.

However, you must know how to invest in the best mutual funds for SIP so that you get maximum returns in the time period of your preference.

 

What is SIP (Systematic Investment Plan) ?

A Systematic Investment Plan or SIP is a facility by mutual funds in which investors can put money in an organized manner. In an SIP, you can invest a fixed amount of money at regular intervals in your selected mutual fund scheme. The investment interval can be predecided before making the SIP.

 

Best Mutual Funds for SIP in 2021

Since there are so many investment funds and options in the market, beginners often get confused about which mutual funds to invest in, and specifically which mutual fund is best for SIP. This is why we bring a list of the best mutual funds for SIP that you can trust in 2021.

 

BOI AXA Mid & Small Cap Equity & Debt Fund

This is a hybrid SIP that has seen 78.26% three-year returns and 15.62% in one-year returns. BOI AXA Mid & Small Cap Equity & Debt Fund has an 80.91% investment in Indian stocks presently. Of that, the fund has 13.67% investment in debt, where 1.97% is in government securities and 11.7% has funds invested in securities with very low risk.

This aggressive mutual fund scheme has no lock-in period and has an expense ratio of 1.9%, which is higher than most other aggressive hybrid funds. It last doubled investment in one year and three months, which means it is a great SIP to invest in.

 

ICICI Prudential Bluechip Fund

ICICI Prudential Bluechip Fund is one of the most stable and consistent performers when it comes to mutual fund SIPs. It is a large-cap fund that has given around 32% returns in 2017 and 9% returns in 2019. 

If you do not see immediate growth with this investment, do not fear. This bluechip fund is aimed at long-term growth in equity schemes. Keep investing and see your finances improve steadily.

 

PGIM India Flexi Cap Fund

This flexi cap fund has seen three-year returns of 68.98% and a one-year return of 23.47%. It aims to reduce the volatility of market conditions and adapt itself to provide maximum security to its investors. Basically, PGIM India Flexi Cap Fund SIP dynamically allocates portfolios across market caps to generate risk-adjusted returns.

It is ideal for investors who want to keep their money invested for at least three to four years without worrying too much about minor losses. At the end of this period, you will get high returns. This fund has 92.67% in Indian stocks, of which 46.02% is in large-cap stocks.

 

Axis Bluechip Fund

Axis Bluechip Fund is another long term capital investment SIP with a good track record of returns. It has seen 51.1% returns in the last three years and 22.6% in one year. It archives long term appreciation by investing in a diversified portfolio that consists mostly of equity and equity-related securities.

This large-cap fund provides growth that can beat inflation in a few years and is extremely suitable for people looking to invest for more than five years, ideally between 10 to 15 years. The longer you invest, the higher returns you can expect from this fund. Although Axis Bluechip has moderately high risks, it has a great long term return record. 

 

Parag Parikh Flexi Cap Fund

This flexi cap fund is a direct-growth mutual fund scheme from PPFAS Mutual Fund. It was initiated in 2013 and has since served steady returns to its investors. Currently, Parag Parikh Flexi Cap Fund has over 14,590 crore rupees worth of assets and is a small fund. Its expense ratio is 0.87% and its last one-year returns rate is 59%. 

This fund is known for delivering consistent results and doubling the invested money in less than two years. It also has the ability to control losses above averagely during bad phases in the market. Most of its funds are invested in technology, finance, automobiles, and FMCG sectors.

If you invest in this SIP, you can expect returns without major ups and downs and also choose to withdraw your money in lesser time as compared to other SIPs.

Check - Top Performing Equity Mutual Funds

Conclusion

Mutual fund SIPs are a great way to start your investment journey and get some constructive knowledge about the market. Before taking big judgement calls and higher risks, it is advisable that you invest in these reliable mutual funds for SIP to ensure higher returns and lower risk factors over time.

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NAV In Mutual Funds - Things You Should Know

NAV In Mutual Funds - Things You Should Know
by 5paisa Research Team 25/10/2021

To have a clear idea about NAV, you should first know about Mutual Funds. A mutual fund is a professionally managed investment company, which pools money from many individual investors and invests them according to a particular investment objective stated in its prospectus.

The MF Industry's AUM has grown significantly from ₹ 15.63 trillion since August 31, 2016, to ₹36.59 trillion on August 31, 2021, which is a double-fold increase in a span of 5 years.

If you check the performance of a mutual fund online, you will come across its Net Asset Value (NAV). But what exactly do you need to know about NAV? Let's look closely at the details!

What is NAV?


Source: NAV

The NAV or Net Asset Value is the price per share that would bring the assets of the fund up to par with its liabilities.

As per SEBI regulations, NAV can have two components - Market Price and Value of Assets. The market price changes every second based on demand and supply, but the value of assets remains constant till it gets sold off completely (if ever). Hence this difference is called net, which means net value.

The measure is an indicative value based on the value of all the securities that constitute that particular scheme. The calculation is done once every day at the end of market hours, and it reflects the exact value of all the securities held. This value is arrived at after considering all transactions and price movements since the previous NAV was calculated.

Note: If there is a dividend distribution, the previous NAV may change to affect valuations.

NAV Calculation

NAV is derived by dividing the total value of all the investments in a fund's portfolio by the number of outstanding units (shares). The NAV in mutual funds determines the purity of your investment.

NAV can be calculated using either "mark-to-market" (MTM) or "mark-to-model" (MTM). While MTM uses actual market prices, MTM uses information from past performances of the portfolio.

 

Source: NAV in Mutual Funds

These fluctuations can occur because a mutual fund incurs operating costs or administrative fees throughout a trading day. For example, if a mutual fund incurs a 1% management fee each year, its net assets will decrease by 1% each day regardless of whether its prices have gone up or down.

How is NAV essential for investment in Mutual funds?

Mutual funds are one of the most popular investment options available in India currently. This is because mutual funds offer several benefits over other investment options such as direct stock investing. Still, they are usually not associated with too much volatility like direct stock investing can sometimes be.

For this reason, many investors choose to invest in mutual funds instead of directly choosing to invest in stocks (or other types of securities). However, many people make it their top priority to know about the performance of their mutual fund investments instead of learning more about the NAVs of their respective investments.

Source: NAV in Mutual Funds

To understand how this works, consider an example where you have X, and Y. Fund X has a NAV of Rs. 100 while Fund Y has a NAV of Rs. 110. Now assume that both these funds have the same benchmark indices and the market value of both these funds is Rs. 1,000. In such a case, Fund X will be trading at a discount, and Fund Y will be said to be trading at a premium.

The NAV in mutual funds is calculated after accounting for all inflows and outflows. The value will be lower if there are more inflows than outflows and vice versa.

Difference between NAV and AUM

AUM stands for Assets Under Management. It is the total market value of assets invested by investors, whether directly or through mutual funds. Depending on the situation, the NAV might be different from the AUM.

The NAV can be higher or lower than the AUM, depending on whether investors buy or sell shares in the fund. If investors are buying shares, then the NAV rises while the AUM remains unchanged. This means that mutual funds can have a high NAV even if they don't have many investors. On other occasions, when investors sell shares, the NAV will fall while the AUM remains unchanged because new shares are being created to accommodate new investments coming into the fund.

Factors affecting NAV

The NAV of your mutual fund will be affected by the following factors. Let us understand each of these in detail:

1. Net Purchases/Redemptions

This refers to the net change in the number of units held by investors. When a mutual fund has more inflows than outflows, its NAV increases. When there are more outflows than inflows, its NAV decreases. This is a common phenomenon and occurs due to several factors, such as:

i) Investors becoming aware of a particular mutual fund scheme and investing in it.

ii) The performance of the scheme being good, which attracts more investors into that scheme.

iii) A particular investor having a large amount of money to invest, which they want to invest in that particular scheme only.

iv) Some investors redeeming their units for some reason (e.g. due to an emergency).

2. Dividends Distribution

The NAV of your mutual fund will be reduced if it declares a dividend. In such a case, an investor will have to pay more money to buy the same units from you.

The dividend declared is usually announced in advance and can affect the fund's price on the days leading up to the declaration date.

3. Capital gains:

When a fund manager sells a stock or a bond that has gone up in value, he generates capital gains for himself and his investors. This leaves them with fewer stocks of this particular company, so they have to sell some other stocks to buy back the shares sold earlier.

They can't do it unless someone is willing to sell them those shares at that moment; therefore, when they are buying back shares from investors, they're also selling an equal number of new shares to someone who is buying into that fund for the first time (in simple terms: when you buy back old shares, new money comes in).

So, if you invest in a fund before it declares its capital gains, you will get paid for your old investments by the new investments coming in after trading resumes.

4. Inflow of Funds

The NAV can also be impacted when new money comes into a mutual fund. This can happen when an existing investor decides to add more money into their existing investment or when a new investor comes in and places fresh cash into their account. In both cases, additional money will flow into your mutual fund, and its NAV will increase accordingly.

Wrapping Up

NAV is not static and does change over time. It changes every day since new assets are added while some assets are sold off, and some liabilities are paid off. Know your basics before you begin investing!

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