The presentation tries to give an overview of why an individual (retail investor) should opt for investing in the financial markets through various vehicles for getting returns that can beat inflation and other asset classes. Reach out for getting more clarity or assistance regarding the same.

1. The Intelligent Investor
Gurudatt Rao
Alumni IIT Bombay & Ohio State University
NISM Certified Research Analyst
Director, Zargun Electronics & Science

2. Summary of Talk
❖ Why is Investing Essential?
❖ Indian Financial Securities Market
❖ Securities Flow (Equity Listing)
❖ What are the Risks of Investing?
❖ Is Covid-19 an opportunity?

3. Why is Investing Essential?
Stay Ahead of Inflation (1)
To Build Wealth (2)
For Retirement (3)
To Save Taxes (4)
To Meet Other Goals (5)
Investing in the Market is different than
saving money in a Fixed Deposit or RD
or Savings A/C
● Income Generation (NPS)
● Corpus Protection
● Corpus Growth
● ELSS
● PPF
● Tax-free bonds
● Second Home
● Vacation
● Children’s Education

4. Example: Wealth Building
Comparison over a period spanning
almost 2 decades
Observation:
1) Despite recession of 2008, dotcom
bubble of 2000 and various other
events, equities have beaten the
benchmark handsomely
2) In short, equities are the best asset
class in the long run as compared to
the other forms

5. Indian Financial Securities Market
Securities
Equities Debt Currency Commodities
Need: It allocates limited resources in the
nation’s economy and serves as an agent
between the investors & collector by
mobilizing capital between them
Def: A financial securities market is a word
that describes a marketplace where equity,
bonds, currencies & commodities are traded
(Capital Market)
● Stocks
● Equity Oriented MF
● ETF
● ELSS
● Balanced MF
(Capital Market)
● Bonds (Govt/
Corporate)
● Debt Oriented MF
● Balanced MF
(Money Market)
● T-Bills
● Commercial Papers
● Certificates of Deposit
(F&O)
● Bullion (Gold & Silver)
● Commodities
● Metal
● Energy

6. Securities Flow(Equity Listing)
Stock Market
Primary Market
Secondary Market
Pre-listing
Post-listing
Capital Shares
100000 80
5000 20
Total 105000 100
Capital Shares
100000 100
Total 100000 100

7. Example: Bonds(Debt Instrument)
Issuer: Government/Corporate Bond
Stability: Credit Rating (AAA/AA+/AA-/A) [This will decide the return]
Example: Kotak Corporate Bond Fund
This invests in Government & Corporate Bonds as pool which have a rating above AA+ to generate a
decent return
Net Asset Value(NAV) = Rs. 2854.73 (As on 26th June,2020)
Interest Rate = ~9.2%/p.a. (from all the participants in the fund)
PS: The above fund is only for explanation & not a recommendation

8. Example: Mutual Fund(Equity Oriented)
PS: The above fund is only for explanation & not a recommendation
Issuer: Mutual Fund House
Stability: Based on Top Stock Holdings, Sectoral & Market Capital Allocation [This will
decide the return]
Example: Principal Emerging Bluechip Fund
This invests dominantly in equity & equity related instruments of large cap & midcap stocks.
1. Top Bets: HDFC Bank, RIL, ICICI Bank and Divis Lab
2. Market Cap Bets: Large Cap(46.58%), Mid Cap(40.36%), Small Cap(10.33%) & Other Cap(~0%)
3. Allocation by Sector: Financial, Energy, Healthcare & Chemicals
Return over last 5 yrs = ~8.5%/p.a. (with factors like demonetisation, GST, Covid-19 etc.)

9. Example: Mutual Fund(Balanced Fund)
PS: The above fund is only for explanation & not a recommendation
Issuer: Mutual Fund House
Stability: Based on Top Stock Holdings, Sectoral & Market Capital Allocation [This will
decide the return]
Example: ICICI Prudential Asset Allocator Fund
This invests in equity & debt related instruments which will be reorganized based on the market condition to reduce
volatility(losses). In this case, Equity = 70% & Debt 30%
1. Market Cap Bets(Equity): Large Cap(55.24%), Mid Cap(13.61%), Small Cap(2.11%)
2. Debt: Sovereign Bonds(15.3%);Bonds(3.46% & 2.87%); Money Market(3.88%)
Return over last 5 yrs = ~8.93%/p.a. (with factors like demonetisation, GST, Covid-19 etc.)

10. Example: Exchange Traded Fund(ETF)
PS: The above fund is only for explanation & not a recommendation
Issuer: Mutual Fund House
ETF: It is a basket of securities that trade on an exchange, just like a stock. ETF share prices fluctuate all day as the
ETF is bought and sold; this is different from mutual funds that only trade once a day after the market closes
Stability: Based on Top Stock Holdings, Sectoral & Market Capital Allocation [This will decide the return]
Example: Quantum Nifty ETF
This invests primarily in equity related instruments which will be reorganized based on the market condition to reduce
volatility(losses). In this case, Equity = 99.79%, Debt = 0.02% & Others = 0,19%
Return over last 3 yrs = ~3.76%/p.a. (with factors like demonetisation, GST, Covid-19 etc.)
ETFs—exchange-traded funds—are taxed in the same way as its underlying assets would be taxed. If the ETF is held for more
than a year, then capital gains tax payout will be less. If it is held for less than one year, any profits will be treated as ordinary
income.

11. What are the Risks of Investing?
1. As the graph shows, the risk can be managed
with a portfolio i.e. a mix of the following
1) Stocks/Shares
2) Corporate Bonds
3) Government Bonds
4) Fixed Deposit
5) Gold
6) T-Bill
2. Depending on the age, money at disposal and
fresh cash flow - the portfolio can be decided
Higher Returns = Higher Risk!!
Managing Risk is Important

12. Example: Managing Risk
Portfolios as per Appetite
1. Aggressive Portfolio (High Gain or High Loss)
2. Prescribed for Young Investors ( 20 < Age < 35 )
3. Horizon Long-Term
1. Passive Portfolio (Medium Gain or Medium Loss)
2. Prescribed for Mature Investors ( 35 < Age )
3. Horizon Short to Medium-Term with focus on Liquidity

13. Is Covid-19 an opportunity?
1) Value buying(discounted cost of stocks during the
pandemic) of bluechips is a feasibility
2) Different Asset classes can be moved around in
proportion to take advantage of their gain during the
pandemic eg. Gold
Concerned Investors outside NSE watch it
tumble

14. Example: Disciplined Investing
March 23
7610.25
June 26
10,383.00
Absolute Return: ~36.43%

15. Parting Thought….
“The ultimate measure of a man is not where he stands in moments of
comfort and convenience, but where he stands at times of challenge and
controversy.” - Martin Luther King Jr.

16. Thank You
Questions Anyone???