DHANAVRUKSHA
Equity investments have consistently delivered some of the highest long-term returns, even after factoring in inflation. Unlike other asset classes, equities help preserve and grow your purchasing power—allowing you to maintain and elevate your lifestyle over time.
Despite their potential, equity investments remain underutilized in India, with penetration levels still around 5%—far behind developed economies. This represents a massive untapped opportunity for Indian investors.
Success in equity investing depends on selecting the right companies. Key factors include:
More stable, lower risk
Higher growth potential, but come with higher volatility
High risk, high reward
A well-diversified equity portfolio—aligned to your risk appetite and goals—can be a powerful tool for long-term wealth creation.
An equity derivative is a financial instrument whose value is derived from the price movements of an underlying equity asset, such as a stock. For example, a stock option is an equity derivative because its value is based on the price movements of the underlying stock.
Equity derivatives can act like an insurance policy. The investor pays a premium (the cost of the derivative contract) to receive a potential payout. This allows investors to manage risk or speculate on price movements without directly owning the underlying asset.
For example:
Equity derivatives can also be used for speculative purposes. Traders can buy equity options instead of the actual stock to profit from the underlying asset’s price movements. This strategy has two advantages:
Market volatility can lead to significant price fluctuations, and there's a risk of losing invested capital if the stock price declines.
Highly leveraged positions can amplify losses, and complex pricing can introduce counterparty and liquidity risks.