In the last few days, we all saw that upper circuits were marked in MAFANG ETF. We have seen the upper circuit in stock many times, but the upper circuit in an ETF is a big deal in itself.
Because ETF can increase only by two to three percent in a day, then why is the upper circuit being imposed? Demand and supply are the main reasons for the upper circuit in MAFANG ETF.
Let us understand in today’s article why the effect of demand and supply is affecting this ETF, due to which an upper circuit is imposed.
MAFANG ETF is Motilal Oswal’s product. Through this ETF, you invest in the top 10 most prestigious and popular companies in America whose names are as follows.
COMPANY | SECTOR | ASSET(%) |
---|---|---|
NVIDIA Corporation (USA) | Capital Goods | 14.17 |
Meta Platforms | Services | 12.61 |
NetFlix Inc. (USA) | Services | 10.82 |
Broadcom Corporation (USA) | Capital Goods | 10.28 |
Amazon. com Inc. (USA) | Services | 10.23 |
Microsoft Corporation (US) | Technology | 9.51 |
Alphabet Inc Class A | Services | 8.99 |
Snowflake | Technology | 8.25 |
Apple Inc. (USA) | Consumer Discretionary | 7.86 |
Tesla | Automobile | 7.26 |
The most amazing thing about this ETF is that you can invest in these 10 best companies in America through any Indian Demat account while sitting in India.
As we know SEBI has made rules in the Indian Stock Market and the stock market has to work based on these rules.
One of these rules is that if you have to invest in markets outside India, then a limit has been created for it.
This limit means that SEBI has decided that only a limited amount can be invested by any institution or individual investor in the stock market of any foreign country.
MAFANG ETF invests in 10 American companies and the limit of this ETF has been reached. This means that investors have bought its maximum shares, and now there are no more shares to sell in this ETF.
When the people who have bought these shares hold the shares, an upper circuit occurs in it, and as soon as any buyer sells his shares, an upper circuit is released.
This situation is called demand and supply error. This means there is not as much supply of MAFANG ETF Shares as the demand for this ETF Share has increased.
This situation depends on many factors. If this ETF alias increases the limit for outside investment then this problem can be solved.
Now many factors will be involved in increasing this limit such as either Motilal Oswal can further increase his funds by talking to some other ETF company or SEBI may increase ETF investment from India by bringing some changes in its rules.
In this article, we have discussed these topics.
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