Are equity markets overheated?

Are equity markets overheated?  Is it time to book profits or is it actually a good time to invest given the exuberance? These may be just some of the questions running through the minds of investors.  This article delves into various factors to assess whether the stock market is indeed over-valued, what could go wrong with markets at rich valuations and what investors can do to protect their wealth.

Are equity markets overheated

What moved the markets?

Before getting into factors that should alert you on whether the market is overheated, let us briefly see what led to the rally, first. what made the markets rally so much before the underlying economic recovery? Market rallies, broadly speaking, are led by three major factors: liquidity, interest rates and earnings. 

Now, all of these factors have been in play to some extent to raise the market to unprecedented levels. Just to explain briefly, the pandemic resulted in a fresh round of huge stimulus measures from advanced economies (>$10 trillion) across the globe. High liquidity meant low rates but then high inflation.

Still Federal Banks across the world held their rates to help their respective economies bounce back from the pandemic. That meant a prolonged phase of high liquidity and low interest rate. As for earnings, while the bounce back from the Pandemic caused a sharp increase in earnings for large players, a recovery in industrial and agricultural commodities after a lull for a few years, also acted big time in favour of strong earnings growth for India Inc. 

So with all the three factors – liquidity, interest rates and earnings – at play, stock markets globally have gone far ahead of real economic recovery.

What factors suggest overheating?

So we know now that the market did not move without reason. There was money. And money was cheap. It has to be deployed where it would earn better than the low interest that banks and bonds offered. They chased equity and rode the market. Good. But how much is too much? Let’s now look at fundamental indicators and market actions that generally alert you to overheated markets.

#1 Valuation

There is a price you pay for everything to ensure you gain something out of it. Valuation metrics can help decide how much that gain can be from stocks. Typically, valuation is a slave of both earnings and interest rates.

Below, is a table on price earnings (PE) and Price to book value (P/BV) ratios at various index levels (peaks and troughs) for the Nifty 50 index.

Most of the peaks, barring Feb 2020, had one characteristic in common, a strong market rally developing into euphoria. The triggers for correction, of course, were different for each. While the rally in calendar year 2007 was one such - riding on infrastructure and real estate- the one in 2010 was led by banks, especially PSU banks. It marked the peak for PSU banks followed by a decade of significant wealth erosion (triggered by high NPAs) while the Nifty corrected ~30%.

The rally in 2015, post a change of government, also developed into an euphoric market. The depth of correction that followed (~25%) took investors by surprise at that time. The peak in 2018 was led by a euphoric rally in mid and small caps that followed with a 40% correction.  

For reference, the peaks and troughs are marked in the Nifty 50 chart below in green and red respectively, to give an overall picture of the stock market rally.

Are equity markets overheated

Going by the EPS estimates (average of top 4 domestic brokerages) for FY22, the consensus estimate for FY22 is around Rs.710 and it is around Rs. 820 for FY23. Based on this, Nifty at ~18,000 is trading at nearly 26 times FY22 earnings and nearly 22 times FY23 earnings. As per NSE data, the trailing 12-month PE of Nifty is presently (October 25, 2021) at 27 times. A low interest scenario typically accommodates a higher PE (your willingness to pay more to get higher returns goes up in a low interest scenario).

Therefore, an estimated PE of 26 times, albeit higher than historic averages, may be the leeway that is taken for the prolonged low rate scenario. But we need to note that the FY22 and FY23 EPS estimates capture the earnings upside from cyclical sectors as well going by the rally seen in the stocks from this segment. 

These sectors, such as metals, capital goods, oil & gas, real estate, PSU banks did not contribute much to India Inc.’s earnings growth (and your wealth) for half a decade. In other words, the estimates have accounted for the best case even in sectors that showed no prospects for long. That leaves very little upside to account for in terms of earnings growth, unless there is a significant rally in banks.

So, it is quite possible that even a 10% rally (say 28 times FY-22) in the short-term can push markets into the ‘overvalued’ zone leaving little margin for error on the valuations. This is likely what the market is beginning to perceive, going by the pockets of correction that has started.

Check for 20-year data on Nifty PE ratio from primeinvestor.in.

MCap to GDP ratio: Another ratio that offers clues to market valuation is the market capitalization to GDP ratio.

De-Jargonizer

Market capitalisation to GDP Ratio: This ratio looks at the value of all stocks traded in the market to the value of output in an economy (GDP). Since the assumption is that these two have to be in sync, when market cap is far undervalued then the GDP, the markets are said to be trading cheap while if they traded way above the GDP, then they are said to be expensive. The comparison, like many other ratios, is done with historical averages. This ratio is also known as the ‘Buffett Indicator’ — after investor Warren Buffett, who popularized its use.

If the ratio falls between 50% and 75%, the market can be said to be undervalued, while the market may be considered fairly valued if the ratio is between 75% and 90%. If it falls within 90% and 115%, the market may be considered overvalued.

India’s market cap to GDP ratio recently crossed the 115% mark after hovering below the 90% mark for the last several years. The ratio hit a low of 55% in March 2020 due to the out-break of COVID-19. It had hit the same level during the global financial crisis in 2009. Just before the global financial crisis, our market cap to GDP ratio touched 150%, the highest level recorded in the last two decades. In the current scenario this traditional valuation metric provides a reasonable assessment of the valuation and a 110% level indicates that the market may be getting into the ‘overvalued’ zone.  

This valuation metric may lose its relevance if the nature of companies listing in the market come with a different kind of business model – like the emerging tech plays in the US. For example - e.g., if RIL demerger Jio Platforms, it may command higher PE multiple than RIL itself.  Likewise, Bajaj Finance is valued much higher than ICICI Bank as a fin-tech company. High value unicorns such as PayTM, Flipkart, Byjus, Nykaa, etc. may also be making their market debuts in the future. At present, India has 66 unicorns.  If such companies make market debuts at high valuations, this ratio may stay elevated in the near future and lose its significance as a reliable indicator.

#2 Stock market sentiments

Same stroke for different folks: When the market is overtly positive, it paints a pretty with no discrimination across sectors and sector fortunes quickly hopping from one to the other. From pharma and commodities six months ago, it is realty, telecom and IT now. It also heavily bets on a favorable outcome for sectors that are not yet out of the woods or those with inferior business fundamentals. 

Companies in the hotel & tourism sector like Indian Hotels and quick service restaurant (QSR) chain - Westlife (Mc Donald’s), have gone past their pre-COVID market capitalisation even while the opening up of the economy is yet to happen fully.  The stock of another QSR, Barbeque Nation, has doubled post its IPO while that of Burger King and Devyani (KFC, Pizza hut) have reported smart gains. 

Even the stocks of multiplex chain, PVR, and fashion retailers, Aditya Birla Fashion and Trent, are near or past their pre-COVID market capitalisation, despite the fact that PVR and ABFRL had to raise more equity to survive the pandemic.  Luggage maker and retailer, VIP Industries, which was a proxy to a travel boom pre-pandemic, has almost fully gained back its pre-pandemic market capitalisation. All this with very weak fundamentals for these companies. 

So, is the impact of pandemic over or are these stocks running ahead of time? With significant inflow of money, a high level of optimism and narratives having takers, the buying and selling in stocks seems to be price-action driven rather than value-driven at this point.  This characteristic is not uncommon in a prolonged bull market. The exuberance is not restricted to the secondary market as IPO listings will testify. 

It’s raining IPOs: If we take a close look at the IPO market, it usually takes off in a big way during bull markets. As the first few IPOs debut with stellar gains, the sentiment turns up-beat and almost anything sells afterwards. Till now, 2021 has seen 43 IPOs, while more are lined up in the coming months. While the number of issues is still far from what we saw in 2007 and 2010  the money raised in those years has already been surpassed.

Over the past decade, the nature of IPOs has also changed as many companies took to IPOs to provide an exit route for private equity and venture capital money as against the traditional capital raising issues. Private equity investors provide capital to companies at early stages and then use a buoyant capital market to exit at rich valuations. Such exits are typically done when the funders feel the buoyant market offers the right opportunity to command high valuations (and on the other hand also means that they fear staying longer means losing such opportunity, if a correction follows). Consequently, it opens up a tough question for debate – Do IPOs leave enough on the table for investors? The following table will give you an idea of returns delivered by IPOs that came in bull markets.

The table above tells you that only 23% of stocks listed during 2007 gave positive returns since then (to date) while it was 22% for those listed in 2010. The percentage has significantly improved for stocks listed in the 2017-18 period to 56%. This period saw many high quality companies with strong earnings growth debut. It needs to be seen how the listings during the current IPO boom will end up in the years to come.

NFOs too are not far behind: Not just stocks, mutual fund new fund offers (NFO) are also seeing a big thumbs up. SBI MF collected a whopping Rs. 14,500 crores from over four lakh investors through its Balanced Advantage Fund NFO in August 2021, the highest ever for an open-ended equity fund during its NFO period. In July 2021, ICICI Prudential Flexicap Fund collected Rs. 9,500 crore, the highest ever NFO collection up until then, a record that was broken in a month. 2007-08 also saw record collection in mutual fund NFOs. Themes based on infrastructure that were market favourites then were lapped up by retail investors. 


New demat accounts: A buoyant capital market also leads to a large number of demat account openings. If we look at the chart below, you can see the sharp increase in the number of new demat accounts in 2017-18 following which it stagnated as markets corrected. But what we will see in 2020-21 is manifold times that. The 3X rise in new demat accounts in a pandemic-ridden year as against the average for the past three years is nothing but a reflection of a buoyant stock market sentiment. This may also have to do with low interest rates as well as the ease of opening accounts. However, stock market returns and a buoyant IPO market are key drivers of the number of new demat accounts.

Are equity markets overheated

Stock market turnover: The stock market average daily turnover (value of trades in cash market segment of NSE) has also seen a significant jump from Rs. 11,200 crore in FY 2013-14 to Rs. 61,800 crore in FY 2020-21. It was just Rs. 36,400 crore in FY2020.  Data released by the exchange early this year points to 45% share of retail investors in overall trading turnover. 

While these data points on a standalone basis are not any sign of market excesses considering the size of the population and low levels of participation in equity markets, overall, the sudden spike in new demat accounts, fresh issues and market volumes during a bullish market phase, can all be alerts about the high market sentiment. 

All of these indicate just one thing: that the system is flush with money. Whether it is IPOs or new demat accounts, there is money that is waiting to be deployed. When liquidity is at play, fundamentals can take a backseat. That means the market can get overheated without your realizing it since the bellwether indices scaling new heights can only trigger positive sentiments.

Do all good things come to an end?

Well, they do in life. But for markets, it is more of a cycle and history offers some cues here. History tells us that a richly valued stock market alone need not suggest that a market crash is imminent. Major corrections have happened due to outlier events that have had a ripple effect across economies be it the Asian Financial Crisis in 1997 or the US financial crisis in 2008. If we look at the last two decades, two major crashes (>50% fall in indices) have happened only due to such extraordinary (called black swan) events. 

Outside of such extraordinary events, the stock markets move in cycles with several tops and bottoms. The returns are never linear as it is an active system where every news can create an impact, be it a pandemic, climate change, demand-supply for goods and services, interest rates, fund flows or a shift in the balance of power in the global economy.  

Below is a chart of the Nifty 50 Index over the last two decades.

Are equity markets overheated

Source: NSE India, Nifty50 fact sheet

Excluding the corrections due to black-swan events, other major corrections have been to the extent of 15% to 30%.  There have been only two major timewise corrections (that lasted for a year or more). The one between Nov 2010 and Dec 2011, and the other between March 2015 and Feb 2016 to the extent of 28.5% and 25% respectively.  

Interestingly, recent corrections have happened due to interest rate actions. In Nov 2010, the stimulus measures post the global financial crisis, resulted in over-heating of the domestic economy and the RBI had to go in for a series of rate hikes. In 2015, the RBI decided to keep rates high despite an ailing economy which did not go well with the market. But post 2015, interest rates dropped by almost 50%, from the peak of 8% to 4% now, giving a significant leg-up to market returns despite an anemic economic growth.  

The correction of 16% in mid-2013 and 15% in the beginning of 2018 due to US FED stimulus wind-up/rate tightening lasted only a few months as concerns abated. The period between mid-2013 and early 2014 also saw emerging economies facing a currency crisis (when the rupee hit Rs. 70 to the US dollar in August 2013) as the US FED prepared for stimulus winding-up.  

What are the macro concerns now that can trigger a correction? Aplenty. Let’s list a few:

  • While there is news on the possibility of the US FED stimulus wind-up starting later this calendar year, crude oil is on the boil joining other industrial commodities. 
  • Central banks, both domestic and globally, have down-played inflation concerns so far while supply disruptions are getting more severe.
  • Right from container shortages to rising commodity prices, manufacturing disruptions in China to a global energy crisis, the supply concerns don’t seem to be abating soon.  
  • A fresh round of thought is that there is significant under-investment in capacity creation in the last decade due to environmental concerns.  

So we spoke about less comforting valuations, high liquidity and macro concerns. And yet, the market chugs on. But when the markets remain elevated for a long time, one negative trigger can set the ball rolling for a series of negative events.  What can you do as an investor to avert any pain or reduce it, when a correction does happen?

  • Long term investors have less to worry as they have to go through up and down cycles to reap the benefits of equity returns eventually. Timing the market is impossible.  But, for those investors who follow asset allocation, this may be a time to check and re-balance the portfolio accordingly. Take a look at our  re-balancing calculator to make sure you are on the right track. 
  • For those with high equity allocation, this may be the right time to check the quality of companies in your portfolio and also look out for any profit booking opportunities where valuations have gone up substantially. If the recent correction in small cap stocks is any indication, this could be the segment to book out first. 
  • Short term investors need to be wary of going too optimistic and pumping more money into the markets especially in smaller companies with poor fundamentals or low liquidity. Check our Stock Ranking Tool to check how the various companies in your portfolio fare in terms of growth, quality and valuation (for the top 500 stocks).
  • New investors would do well to take a conservative approach, having an asset allocation and using the mutual fund route through index funds and taking slow exposure to equity once they get familiar with the idea of investing in equity through funds. If you are a new entrant looking to begin your investing journey through mutual funds, check our index funds. For stocks, our equity screener will come in handy to sift through a large universe and narrow your choices.

Conclusion

High market valuation alone need not have to be a trigger for correction. A correction need not always be a massive one like in 2008. It can be short ones that remove froth. Those are healthy and necessary. Those are also more common as illustrated earlier in this article. The correction can also be disproportionate and in some pockets like IT in 2001 and infrastructure and real estate in 2008. Hence, frothy sectors in bull markets need to be treated with caution. Asset allocation and systematic investing can help reduce the pain of such corrections.

More like this

2 thoughts on “Are equity markets overheated?”

  1. Can you share the sector wise valuation hype, esp IT, Banks, FMCG etc – vs two there comparable crash periods thx

    1. N V Chandrachoodamani

      Welcome your query sir

      We have a tool called “Stock Screener” where you can choose a “sector” from left menu and look at it on various valuation parameters.

      Below is our recent article on Investing Approaches where IT sector is covered along with valuation. Given also a video link on how to use the “Stock screener” also. You can EXPORT the data to Excel also.

      https://www.primeinvestor.in/top-down-and-bottom-up-approaches-to-pick-stocks/

      IT had its peak on valuation in 2001 (during Nasdaq bubble) while banks haven’t gone over-board.

      For FMCG, they are at highest in a decade as the PE expansion for the sector started somewhere in 2011 from 25-30 times to 75-80 times recently.

      Generally, valuation bubbles happen in sectors where high growth is there/expected while there is lot of investor interest based on story/narratives rather than visible earnings

      Hope this provides with some insights. Kindly go through our stock screener for data/numbers for each sector.

      Thank you

Comments are closed.

Hold On

You are being redirected to another page,
it may take a few seconds.
Login to your account
OR

Become a PrimeInvestor!

Get stock & mutual fund recommendations

Start registration

Start registration

OR
user icon
user icon
user icon

Terms & Conditions

A copy of the T&C has been sent to your email.

Last modified on February 18, 2025

This website www.primeinvestor.in (“Website”) is owned and operated by PrimeInvestor Financial Research Pvt. Ltd. (“RA”), a SEBI-registered Research Analyst with Registration No. INH200008653.

Through the Website, the RA allows clients to access research recommendations, research reports, and model portfolios, along with tools, personal finance products, and articles, on the payment of a subscription fee (“Research Services”). The terms ‘RA’ or ‘us’ or ‘we’ refer to PrimeInvestor Financial Research Pvt Ltd (SEBI RA Registration No INH200008653) who are the owners of this Website and offering the Research Services. The term ‘you’ and ‘client’ refers to the subscriber of the Services on the Website. The RA provides the Research Services subject to the notices, terms, and conditions set forth in these Terms. By accepting these Terms when you subscribe to the Research Services, you provide your consent to abide by these Terms.

Most Important Terms and Conditions (MITC)

[Forming part of the Terms and Conditions for providing research services]

  1. These terms and conditions, and consent thereon are for the research services provided by the Research Analyst (RA) and RA cannot execute/carry out any trade (purchase/sell transaction) on behalf of the client. Thus, the clients are advised not to permit RA to execute any trade on their behalf.
  2. The fee charged by RA to the client will be subject to the maximum amount prescribed by SEBI/ Research Analyst Administration and Supervisory Body (RAASB) from time to time (applicable only for Individual and HUF Clients).
    Note:
    • SEBI's current cap on fee is Rs 1,51,000/- per annum per family of client for all research services of the RA.
    • The fee limit does not include statutory charges.
    • The fee limits do not apply to a non-individual client / accredited investor.
  3. RA may charge fees in advance if agreed by the client. Such advance shall not exceed the period stipulated by SEBI; presently it is one quarter. In case of pre-mature termination of the RA services by either the client or the RA, the client shall be entitled to seek refund of proportionate fees only for the unexpired period.
  4. Fees to RA may be paid by the client through any of the specified modes like cheque, online bank transfer, UPI, etc. Cash payment is not allowed. Optionally the client can make payments through Centralized Fee Collection Mechanism (CeFCoM) managed by BSE Limited (i.e. currently recognized RAASB).
  5. The RA is required to abide by the applicable regulations/ circulars/ directions specified by SEBI and RAASB from time to time in relation to disclosure and mitigation of any actual or potential conflict of interest. The RA will endeavor to promptly inform the client of any conflict of interest that may affect the services being rendered to the client.
  6. Any assured/guaranteed/fixed returns schemes or any other schemes of similar nature are prohibited by law. No scheme of this nature shall be offered to the client by the RA.
  7. The RA cannot guarantee returns, profits, accuracy, or risk-free investments from the use of the RA's research services. All opinions, projections, estimates of the RA are based on the analysis of available data under certain assumptions as of the date of preparation/publication of research report.
  8. Any investment made based on recommendations in research reports are subject to market risks, and recommendations do not provide any assurance of returns. There is no recourse to claim any losses incurred on the investments made based on the recommendations in the research report. Any reliance placed on the research report provided by the RA shall be as per the client's own judgement and assessment of the conclusions contained in the research report.
  9. The SEBI registration, Enlistment with RAASB, and NISM certification do not guarantee the performance of the RA or assure any returns to the client.
  10. For any grievances,
    • Step 1: the client should first contact the RA using the details on its website or following contact details:
      Customer care: [email protected]
      Grievance officer: [email protected], ATTN: Srikanth Meenakshi
      Compliance officer: [email protected], ATTN.: Bhavana Acharya
      Principal officer: [email protected], ATTN.: Vidya Bala
    • Step 2: If the resolution is unsatisfactory, the client can also lodge grievances through SEBI's SCORES platform at www.scores.sebi.gov.in
    • Step 3: The client may also consider the Online Dispute Resolution (ODR) through the Smart ODR portal at https://smartodr.in
  11. Clients are required to keep contact details, including email id and mobile number/s updated with the RA at all times.
  12. The RA shall never ask for the client’s login credentials and OTPs for the client’s Trading Account, Demat Account, and Bank Account. Never share such information with anyone including RA.

By browsing, viewing, using the Website and subscribing to the Research Services provided therein you consent to and agree to comply with these Terms and Conditions of subscription (“Terms”).

The RA reserves the right to change or modify the Website, the contents thereof and these Terms at any time. All modifications to these Terms & Conditions will be posted on the Website and will become effective immediately upon such posting. Changes once made will be communicated to the client. Continued use of the Website shall be construed as acceptance of the revisions to the Terms by conduct.

The following terms and conditions include but are not limited to minimum mandatory terms and conditions to clients as stipulated by SEBI.

1. Availing the research services

By accepting delivery of the research service, the client confirms that he/she has elected to subscribe to the research service of the RA at his/her sole discretion. The RA confirms that Research Services shall be rendered in accordance with the applicable provisions of the SEBI RA Regulations.

2. Obligations on RA

The RA shall be bound by the SEBI Act and all the applicable rules and regulations of SEBI, including the RA Regulations and relevant notifications of Government, as may be in force, from time to time.

3. Client Information and KYC

The client shall furnish all such details in full as may be required by the RA in its standard form with supporting details, if required, as may be made mandatory by Research Analyst Administration and Supervisory Body(RAASB)/SEBI from time to time. RA shall collect, store, upload and check KYC records of the clients with KYC Registration Agency (KRA) as specified by SEBI from time to time.

4. Standard Terms of Service

The consent of client shall be taken on the following understanding:

“I / We have read and understood the terms and conditions applicable to a research analyst as defined under regulation 2(1)(u) of the SEBI (Research Analyst) Regulations, 2014, including the fee structure.

I/We are subscribing to the research services for our own benefits and consumption, and any reliance placed on the research report provided by research analyst shall be as per our own judgement and assessment of the conclusions contained in the research report.

I/We understand that –

  1. Any investment made based on the recommendations in the research report are subject to market risk.
  2. Recommendations in the research report do not provide any assurance of returns.
  3. There is no recourse to claim any losses incurred on the investments made based on the recommendations in the research report.”

The declaration of the RA is as follows:

  1. We are duly registered with SEBI as an RA pursuant to the SEBI (Research Analysts) Regulations, 2014 and our registration details are: registration no SEBI INH200008653, with registration date 19th August, 2021
  2. We have the registration and qualifications required to render the services contemplated under the RA Regulations, and the same are valid and subsisting;
  3. Research analyst services provided by us do not conflict with or violate any provision of law, rule or regulation, contract, or other instrument to which it is a party or to which any of its property is or may be subject;
  4. The maximum fee that may be charged by the RA is ₹1.51 lakhs per annum per family of client. Our current fee structure, the term and duration of our subscription for our Research Services, can be viewed on our website here: https://primeinvestor.in/prime-pricing
  5. The recommendations provided by us as part of the Research Services do not provide any assurance of returns.

5. Consideration and mode of payment

The client shall duly pay to the RA the agreed fees for the services that RA renders to the client and statutory charges, as applicable. Such fees and statutory charges shall be payable through the specified manner and mode(s)/ mechanism(s).

The payment of fees shall be through a mode that shows traceability of funds. Such modes include but are not limited to credit cards/debit cards/ UPI/ net banking or any other mode specified by SEBI from time to time. However, the fees shall not be in cash.

6. Risk factors

  1. Investments are subject to market risk. Investing or trading in financial products involves risk. Past performance of the recommendation is not an indication of future returns. Past performance of the RA is not an indicator of future performance. Past performance of the security is not an indication of future returns.
  2. There are no assurances or guarantees that the objectives of any investment in financial products will be achieved.
  3. The names of financial products mentioned herein do not in any manner indicate their prospects or returns. The performance in the equity may be adversely affected by the performance of individual companies, changes in the market place and industry specific and macro-economic factors.
  4. The performance of the investments/ products recommended by the RA are subject to a wide range of risks, including but not limited to: performance of the respective companies, changes in equity and debt market conditions, micro and macro factors and forces affecting equity and debt markets, general levels of interest rates and interest rate risk, credit risk, liquidity risk, reinvestment risk, economic slowdown, volatility & illiquidity of the stocks, risks associated with trading volumes, liquidity and settlement systems in equity and debt markets and/or such other circumstance beyond the control of the RA or any of its Associates.
  5. Other risk factors include that may affect the performance of the investments/ products recommended by the RA include but are not limited to economic policies, changes of Government and its policies, acts of God, acts of war, civil disturbance, sovereign action and /or such other acts/ circumstance beyond the control of the RA or any of its Associates.
  6. The recommendations provided by the RA as part of its Research Services may not be suitable to all categories of investors.
  7. The client should read all scheme and security related documents carefully before investing.
  8. Returns and performance figures mentioned in the research report represent past performance and should not be constituted to be future returns or guaranteed returns.

7. Conflict of interest

The RA shall adhere to the applicable regulations/ circulars/directions specified by SEBI from time to time in relation to disclosure and mitigation of any actual or potential conflict of interest. Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors. Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

General disclosures: PrimeInvestor Financial Research Pvt Ltd (with brand name PrimeInvestor) is an independent research entity offering research services on personal finance products to customers. We are a SEBI registered Research Analyst (Registration: INH200008653). PrimeInvestor Financial Research Pvt. Ltd., its employees, directors or agents, do not have any material adverse disciplinary history as on the date of publication of this report.

Restrictions on trading: To ensure no conflict of interest, the RA declares as follows:

  1. Personal trading activities of the individuals employed as research analysts shall be monitored, recorded and subject to a formal approval by the directors or compliance officer of PrimeInvestor Financial Research Private Limited.
  2. Research analysts employed by PrimeInvestor Financial Research Private Limited or their associates or relatives shall not:
    • Deal/ trade in stocks recommended/ tracked by the research analyst within 30 days before and five days after the publication of a research report;
    • Deal/ trade in securities that the research analyst reviews in a manner contrary to the given recommendation;
    • Purchase or receive securities of the issuer before the issuer's initial public offering, if the issuer is principally engaged in the same types of business as companies that the research analyst follows or recommends.

Disclosures with respect to Research and Recommendations Services:

  1. The RA or its directors or any of its officer/employee does not trade in securities which are subject matter of recommendation.
  2. The RA, or any of its officers, directors, employees, or subsidiaries have not received any compensation/ benefits whether monetary or in kind, from the AMC, company, government, bank or any other product manufacturer or third party, whose products are the subject of its Research Services or investment information.
  3. The Research Analysts who have prepared the research reports that form part of the Research Services (“Research Analyst”) certify that all of the views expressed in the research report accurately reflect their views about the subject company or subject security.
  4. The RA or directors or employees or Research Analyst certify that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
  5. The Research Analyst has not served as director, officer or employee in the subject company, AMC or insurance company of the mutual fund or insurance policy that is the subject of this report, or company whose bonds, NCDs, fixed deposits or other savings products that is the subject of this report.
  6. The Research Analyst or their relatives do not have any known direct or indirect material conflict of interest including long/short positions in the subject company.
  7. The Research Analyst may hold investments in the stocks, mutual fund schemes, bonds, fixed deposits, insurance policies, or other products that are the subject of the recommendations provided as part of the Research Services. The Research Analyst certifies that they will not act in a manner contrary to their views on these securities except in the event of significant news or event or change in personal financial circumstances and without formal approval from the directors of PrimeInvestor Financial Research Pvt. Ltd. or the compliance officer.
  8. There are no actual or potential conflicts of interest arising from any connection to or association with any issuer of products/ securities, including any material information or facts that might compromise its objectivity or independence in the carrying on of the Research Services. Such conflict of interest shall be disclosed to the client as and when they arise.
  9. The RA or its directors or its employee or its associates have not managed or co-managed the public offering of any company. The RA or its directors or its employee or its associates have not received any compensation for investment banking or merchant banking of brokerage services from the subject company. The RA or its directors or its employee or its associates have not received any compensation for products or services other than above from the subject company. The RA or its directors or its employee or its associates have not received any compensation or other benefits from the Subject Company or 3rd party in connection with the research report/ recommendation.
  10. The subject company of its research recommendations was not a client of the RA or its directors or its employee or its associates during twelve months preceding the date of recommendation services provided.
  11. The RA or its directors or its employee or its associates has not served as an officer, director or employee of the subject company. Research Analysts has not been engaged in market making activity of the subject company.

PrimeInvestor Financial Research Pvt. Ltd., its Associates, the Research Analysts or their relatives holds ownership of 1% or more, in respect of the said issuer company(ies)? – NO

8. Termination of service and refund of fees:

The RA may terminate or suspend rendering of Research Services to the client in the following circumstances:

  1. On account of suspension/cancellation of registration of RA by SEBI. In case of suspension of certificate of registration of the RA for more than 60 (sixty) days or cancellation of the RA registration, RA shall refund the fees, on a pro rata basis for the period from the effective date of cancellation/ suspension to end of the client’s subscription period.
  2. The RA voluntarily chooses to terminate its Research Service. In the event of such termination of the Research Service, the RA shall refund the fees, on a pro rata basis for the period from the date of such termination of research service to end of the client’s subscription period.

9. Grievance redressal and dispute resolution:

Any grievance related to:

  1. nonreceipt of research report, or
  2. missing pages or inability to download the entire report, or
  3. any other deficiency in the research services provided by RA

shall be escalated promptly by the client to the person/employee designated by RA, in this behalf as under:

Name: Bhavana Acharya
Designation: Director & Compliance Officer, PrimeInvestor Financial Research Pvt Ltd
Email: [email protected]

The RA shall be responsible to resolve grievances within 7 (seven) business working days or such timelines as may be specified by SEBI under the RA Regulations.

RA shall redress grievances of the client in a timely and transparent manner. Any dispute between the RA and his client may be resolved through arbitration or through any other modes or mechanism as specified by SEBI from time to time.

If the client is not satisfied with the response of the RA, he/she can lodge his/her grievances with SEBI at scores.sebi.gov.in. Alternatively, the client may also write to any of the offices of SEBI. For any queries, feedback or assistance, please contact SEBI Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575

Details on grievances are available on the Website as follows: https://primeinvestor.in/ra-grievance/

10. Additional clauses:

Scope of the Research Service: The Research Services will be limited to providing independent research recommendation and shall not be involved in any advisory or portfolio allocation services. The Research Services are not meant to be tailor-made or customized solutions that specifically apply to each client based on his/her risk profile.

The RA never guarantees the returns on the recommendation provided. Investor shall take note that investment/trading in stocks/Index or other securities is always subject to market risk. Past performance is never a guarantee of same future results. The RA shall not be responsible for any loss to the Investors.

This service is not directed for access or use by anyone in a country, especially the USA, Canada or the European Union countries, where such use or access is unlawful or which may subject PrimeInvestor Financial Research Pvt Ltd or its affiliates to any registration or licensing requirement.

The Research Service, including recommendations, research reports, updates, and other information will be accessible through the RA’s website https://primeinvestor.in only. Such recommendations and updates will not be provided over phone calls.

Fees: Our current fee structure, the term and duration of our subscription for our Research Service, can be viewed on our website: https://primeinvestor.in/prime-pricing. Eligibility for any discounts is ascertained at the time the client subscribes. Any such discount and its tenure shall be at the discretion of the RA.

Subscription and access to content services fall under the purview of Goods and Services Tax (GST) as per the current indirect taxation policy, Government of India. Unless otherwise indicated, prices stated on our website are exclusive of applicable GST, any applicable value added tax (VAT) or other sales taxes. We are a business-to-consumer (B2C) service provider and we do not commit to provide any input tax credit on GST charged on subscription to our Research Service.

We may change the Subscription Fees and charges then in effect, or add new fees or charges which will take effect at the end of the client’s subscription period, by giving notice in advance and an opportunity to cancel renewal of the subscription.

Subscription Access & Renewal: Subscription to the Website commences immediately on the realisation of payment of the Subscription Fees. Subscriptions are set to be renewed automatically at the end of the subscription period.

Unless the client notifies us before the end of his/her subscription period, or the client cancels the auto-renewal mandate within the period specified by law, that the client does not wish to renew his/her subscription, the client’s subscription will renew for the period defined by the client’s subscription plan. We will charge the subscription using the same payment method that you previously used.

Although the client may notify to us his/her intention to his/her subscription, such notice will only take effect at the end of his/her then current subscription period, and he/she will not receive a refund other than as set out under Clause 8 in these Terms.

The client may notify us of his/her wish to cancel his/her subscription by sending an email to [email protected]. The client must provide at least 5 business days advance notice for this to be implemented.

Refunds: There can be no cancellation and refund of subscription fee paid once the subscription is active, other than as stated in Clause 8 of these Terms. If the client is entitled to a refund as specified under Clause 8 of these Terms, the RA will credit that refund to the card or other payment method used by the client to submit payment, unless it has expired - in which case the RA will contact the client to proceed with the refund. If we do issue a refund or credit due to circumstances outside the obligations specified under Clause 8, we are under no obligation to issue the same or a similar refund in the future.

General disclaimers: The recommendations made herein in the Research Services are expression of views and/or opinions and should not be deemed or construed to be advice for the purpose of purchase or sale of any security, nor a solicitation or offering on any investment/ trading opportunity on behalf of the company, AMC, insurance company, or issuer of security referred to herein.

The content and research reports generated by the RA does not constitute or is not intended to constitute an offer to buy or sell, or a solicitation to an offer to buy or sell financial products, units or securities.

The information/ opinion/ views mentioned in research reports or by the RA are not meant to serve as a professional guide to the client or recipients of this Report. The research report, recommendation, or any other content published by the RA do not assure or guarantee any minimum or fixed returns to the client or recipients of the reports/ recommendations/ content.

Use of this information is at the client’s own risk. The client must make his/ her own investment decisions based on his/her specific investment objective and financial position and using such independent advisors as he/she believes necessary. The services rendered by the RA are on a best-effort basis. All information in the content or research report of the RA is provided on an as is basis. Information is believed to be reliable but the RA does not warrant its completeness or accuracy and expressly disclaim all warranties and conditions of any kind, whether express or implied.

While due care has been taken to ensure that the disclosures, information, and opinions given are fair and reasonable, PrimeInvestor Financial Research Pvt Ltd and/or none of its officers, directors, partners, employees, agents, subsidiaries, affiliates or business associates shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way whatsoever from the information/ opinions/ views contained in the research report and recommendations that form part of the Research Service, and/or mails, social media or notifications issued by PrimeInvestor Financial Research Pvt Ltd or any other agency appointed/authorised by PrimeInvestor Financial Research Pvt Ltd. Returns and performance figures mentioned in the research report represent past performance and should not be constituted to be future returns or guaranteed returns.

Any agreements, transactions or other arrangements made between the client and any third party named on (or linked to from) the Website are at your own responsibility and entered into at your own risk. Any information that you receive via the Website, whether or not it is classified as “real time”, may have stopped being current by the time it reaches you. Market price information may be rounded up/down and therefore may not be entirely accurate.

The purpose of these disclosures is to provide essential information about the Research Services in a manner to assist and enable the prospective client/client in making an informed decision for engaging in Research Services before onboarding.

History, present business and background: PrimeInvestor Financial Research Private Limited is registered with SEBI as Research Analyst with registration no. INH200008653. The Research Analyst got its registration on August 19, 2021 and is engaged in offering research and recommendation services.

Disciplinary history: There are no pending material litigations or legal proceedings against the Research Analyst. As on date, no penalties / directions have been issued by SEBI under the SEBI Act or Regulations made thereunder against the Research Analyst relating to Research Analyst services.

Details of the RA's associates: No associates.

Usage of Website Content: This Website is controlled and operated by the RA. All material, including research reports, recommendations, portfolios, ratings, lists of financial products, illustrations, statements, opinions, views, photographs, products, images, artwork, designs, text, graphics, logos, button icons, images, audio and video clips and software (collectively, “Content”) are protected by copyrights, trademarks and other intellectual property rights that are owned and controlled by the RA or by other parties that have licensed their material to us.

Except where otherwise agreed in writing with the RA, material on the Website is solely for the client’s personal, non-commercial use. Except as provided below, the client must not copy, reproduce, republish, upload, post, transmit or distribute such material in any way, including by e-mail or other electronic means and whether directly or indirectly and the client must not assist any other person to do so.

Without the prior written consent of the RA, modification of the materials, use of the materials on any other web site or networked computer environment or use of the materials for any purpose other than personal, non-commercial use is a violation of the copyrights, trademarks and other proprietary rights, and is prohibited. Any use for which the client receives any remuneration, whether in money or otherwise, is a commercial use for the purposes of these Terms.

The client may occasionally distribute a copy of a research report, or a portion of the same, from the Website in non-electronic form to a few individuals without charge, provided the client includes all copyright and other proprietary rights notices in the same form in which the notices appear, original source attribution, and the phrase “Used with permission from PrimeInvestor Financial Research Pvt. Ltd.”

While the client may occasionally download and store research reports or information from the Website for his/her personal use, he/she may not otherwise provide others with access to the same. The foregoing does not apply to any sharing functionality we provide through the Website that expressly allows the client to share Content or links to Content with others. In addition, the client may not use Content he/she has downloaded for personal use to develop or operate an automated trading system or for data or text mining.

The client agrees not to rearrange or modify the Content available through the Website. The client agrees not to display, post, frame, or scrape the Content for use on another website, app, blog, product or service, except as otherwise expressly permitted by these Terms. You agree not to create any derivative work based on or containing the research products and Content. The framing or scraping of or in-line linking to the Services or any Content contained thereon and/or the use of webcrawler, spidering or other automated means to access, copy, index, process and/or store any Content made available on or through the Services other than as expressly authorized by us is prohibited.

The client further agrees to abide by exclusionary protocols (e.g., Robots.txt, Automated Content Access Protocol (ACAP), etc.) that may be used in connection with the Research Services. The client may not access parts of the Research Services to which he/she is not authorized, or attempt to circumvent any restrictions imposed on your use or access of the Services.

As a general rule, the client may not use the Content, including without limitation, any Content made available through one of our RSS Feeds, in any commercial product or service, without our express written consent.

The client may not create apps, extensions, or other products and services that use our Content without our permission. The client may not aggregate or otherwise use our Content in a manner that could reasonably serve as a substitute for a subscription to the Website.

The client may not access or view the Services with the use of any scripts, extensions, or programs that alter the way the Services are displayed, rendered, or transmitted to you without our written consent.

The client agrees not to use the Services for any unlawful purpose. We reserve the right to terminate or restrict the client's access to the Website if, in our opinion, the client's use of the Services may violate any laws, regulations or rulings, infringe upon another person's rights or violate these Terms.

Prohibited content: The Website includes comments sections, blogs and other interactive features that allow interaction among clients and between clients and the RA. We call the information posted by or contributed by users “Contributed Content.” In the course of availing of the Research Services or uploading any post or comment on the Website, the client shall not post any Contributed Content that (i) contains nude, semi-nude, sexually suggestive photos, (ii) tends or is likely to abuse, harass, threaten, impersonate or intimidate other users of the Website and/or Research Services, (iii) is lascivious or appeals to the prurient interest or if its effect is such as to tend to deprave and corrupt persons who are likely to use or have access to the Website and/or Services, or (iv) otherwise violates, is prohibited or restricted by applicable law, rule or regulation, is offensive or illegal or violates the rights of, harms or threatens the safety of other users of the Website and/or Services (collectively “Prohibited Content”).

We reserve the right to cease to provide the client with the Research Services or access to the Website, or terminate your subscription, with immediate effect and without notice and liability, for violating these Terms, applicable law, rules or regulations and reserves the right to remove Prohibited Content which is in violation of these Terms, or is otherwise abusive, illegal or disruptive. The determination of whether any content constitutes Prohibited Content, violates these Terms, or is otherwise abusive illegal or disruptive, is subject to the sole determination of the Firm.

Changes to Research Services: We are constantly endeavouring to improve the quality of Research Services provided to our clients. Due to this, the form and nature of the Research Services provided may change from time to time without any prior notice to the client. We reserve the right to introduce and initiate new features, functionalities, components to the Website and/or Research Services and/or change, alter, modify, or discontinue existing ones without any prior notice to the client.

Warranty and liability disclaimer: The Website, Research Services, and all the materials and services, included on or otherwise made available to the client through this Website is provided by the RA on an “as is” and “as available” basis without any representation or warranties, express or implied except otherwise specified in writing. Without prejudice to the foregoing paragraph, the RA does not warrant that:

  • This Website and/or Research Services will be constantly available, or available at all;
  • The information on this Website or provided through the Research Services is complete, true, accurate or not misleading; or
  • The quality of any products, services, information, or other material that you obtain through the Website or Services will meet your expectations.

The RA, to the fullest extent permitted by law, disclaims all warranties, whether express or implied, including the warranty of merchantability, fitness for particular purpose and non-infringement. The RA makes no warranties about the accuracy, reliability, completeness, or timeliness of the Website, Research Services, Content, Contributed Content, Services, software, text, graphics and links.

The RA does not warrant that this Website, Research Services, information, content, materials, or any other material included on or otherwise made available to you through this Website, their servers, or electronic communication sent by the RA are free of viruses or other harmful components.

Nothing on this Website constitutes, or is meant to constitute, advice of any kind.

Indemnification: The client:

  1. Represents, warrants and covenants that no materials of any kind provided by him/her will:
    1. Violate, plagiarise, or infringe upon the rights of any third party, including copyright, trademark, privacy or other personal or proprietary rights; or
    2. Contain libellous, Prohibited Content or other unlawful material;
  2. Hereby agree to indemnify, defend and hold harmless the RA and all of the RA’s officers, directors, owners, agents, customers/clients, information providers, affiliates, licensors and licensees (collectively, the “Indemnified Parties”) from and against any and all liability and costs, including, without limitation, reasonable advocate’s fees, incurred by the Indemnified Parties in connection with any claim arising out of any breach by the client of these Terms or the foregoing representations, warranties and covenants. The client shall cooperate as fully as reasonably required in the defence of any such claim. The RA reserves the right, at its own expense, to assume the exclusive defence and control of any matter subject to indemnification by the client.

Applicable law: This Website, including the Content and Contributed Content and information contained herein, and the provision of Research Services shall be governed by the Securities and Exchange Board of India, laws of the Republic of India and the courts of Chennai, India which shall retain exclusive jurisdiction to entertain any proceedings in relation to any disputes arising out of the same. As such, the laws of India shall govern any transaction completed using this Website.

Information gathered and tracked: Information submitted or collected on the Website or pursuant to the use of the Services is stored in a database. Specifically, we store the username, name, e-mail address, contact number, as submitted or collected on our Website or through the provision of the Research Services. We may use such information to send out occasional promotional materials, including alerts on new Services available, or other promotional and marketing material relating to our clients and customers.

In accordance with the Information Technology Act 2000, the name and the details of the Grievance Officer at PrimeInvestor is provided below:

Mr. Srikanth Meenakshi
PrimeInvestor Financial Research Pvt. Ltd., Registered office: 659, 4th Avenue, D-Sector, Anna Nagar Western Extension, Chennai 600 101.
Email: [email protected]

11. Mandatory notice:

Clients shall be requested to go through Do’s and Don’ts while dealing with RA as specified in SEBI master circular no. SEBI/HO/MIRSD-POD-1/P/CIR/2024/49 dated May 21, 2024 or as may be specified by SEBI from time to time.

12. Optional Centralised Fee Collection Mechanism:

SEBI has operationalized a centralized fee collection mechanism for IA and RA. Under this mechanism, clients shall pay fees to IAs/RAs through a designated platform/portal administered by a recognized Administration and Supervision body. This is an optional mechanism for the registered entities. At this time, PrimeInvestor has opted out of this fee collection mechanism. Therefore, all subscription payments for the Research Services will be through the modes as specified in Clause 5 of these Terms.

Enter the OTP sent to (Edit)
By doing this you agree to our terms & conditions
Didn't receive OTP? Resend

Have an account?
Login To Your Account
OR
Don’t have an account ? Register for free