In one of my favourite books on investing, The Intelligent Investor, father of value investing Ben Graham makes a very important point right at the start.

He argues that an investor’s chief problem, and even his worst enemy, is likely to be himself.

So very true, isn’t it?

Remember, this was way before the whole behaviour finance revolution kicked off. It’s why you need to give Graham the credit for being so spot on with his observation.

Decades later, behaviour psychologists like Daniel Kahneman and Amos Tversky would undertake a full-fledged study of the biases that affect our thinking and often come in the way of sensible decision making.

And guess what? As far as investing is concerned, they came to the same conclusion as Graham.

One of their more famous works is known as ‘On the Psychology of Prediction’. They explain how humans are such bad predictors and what we can do to improve the accuracy of our predictions.

According to them, there are 3 things to consider to make an effective prediction:

• The base rate
• The individual case
• How to weigh the two

Let me help you with an example which, although silly, does its job quite well.

Imagine you are walking down a street and suddenly you encounter a dog. Should you be careful and quickly get out of its reach or should you keep walking, hoping that the dog won’t bark loudly at you?

Well, if you consider statistics then it is found that 60%-70% of all dogs bark aggressively at strangers.

Therefore, the dog in front of you is the individual case and your base rate is 60%-70%.

So, how are you going to weigh the two factors? 

Well, if it was me, I would steer clear of the dog. I would ensure I’m well outside the range of its leash. The odds that the dog won’t bark at me are not in my favour.

That’s the power of using a base rate right there. Even if it was a small dog, you’d be well advised to steer clear of it based on historical base rate.

Base rate is very useful in the field of investing as well.

The next time you are tempted to invest in a highly speculative small-cap company that has no profits currently but is likely to be profitable in the future, you need to ask yourself what is the base rate here? How many times have people ended up making huge money on such investments?

Well, if it is a low number and there’s very little that separates this company from a typical speculative stock of the same size, you’d do well to stay away from the stock.

Thus, an understanding of the base rate is such an important quality to have while investing in stocks. It not only helps us invest in stocks and asset classes with a greater reward potential than risk but also helps us steer clear of highly speculative counters.

Little wonder, Daniel Kahneman called base rates as one of his favourite concepts.

Conclusion

The market punishes prediction arrogance but rewards probability humility. Base‑rate thinking is simply a structured way of staying humble. Adopt it, and you’ll:

• Avoid most capital‑destroying fads.
• Enter high‑quality ideas at valuations that still leave upside on the table.
• Sleep better because your portfolio is built on odds, not anecdotes.

Try this for one earnings season: each time you feel that itch to buy or sell, pause and ask, “What does the base rate say?” Chances are, you’ll make fewer moves—but far better ones.

Ben Graham spotted this trap 80 years ago.

Kahneman quantified it 40 years ago.

But you can exploit it starting today.

If you’re looking for a ready‑made framework that bakes base rates, check out MultiplyRR’s research stack and see how a data‑first approach can stack the odds in your favour.

Invest smart, stay curious, and let the numbers keep you honest.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

A couple of days ago, the Bombay Stock Exchange (BSE) celebrated its 150th birthday.

We even covered a detailed analysis showing BSE’s journey from under a Banyan tree to a powerhouse today.

While most investors focused on BSE’s 150th anniversary, one thing that went unnoticed was the sheer growth of BSE’s underlying index BSE Sensex. 

The Bombay Stock Exchange created BSE Sensex on April 1, 1979. Starting from a base of 100 points back then, it touched a record level of 86,000 in 2024 and currently trades around 82,000 levels.

BSE Sensex’s Growth Trajectory

That’s an eye-popping rise of approximately 800 times. If you’d invested Rs 1 lakh in the index when it was created, it would have turned into the princely sum of over Rs 8 crore today.

The question then arises – with such amazing returns, wouldn’t it be a good idea to simply invest in the passive index?

Why try to pick individual stocks? Why bother with doing anything else at all?

Because currently, there are multiple ways one can invest in the Sensex –

Sensex Mutual Funds: These are mutual fund schemes that passively track the BSE Sensex. They invest in the exact same 30 stocks, in the same proportion as the index.

Sensex ETFs: These are traded on stock exchanges just like individual stocks. They mirror the performance of the Sensex and offer intraday liquidity.

DIY Portfolio Creation: If you’re a hands-on investor, you can even manually buy all 30 Sensex stocks in the same weights as the index. While it’s more effort, it gives full control over your holdings and dividend income. Platforms like MultiplyRR make this possible. 

So, the obvious question is – with such massive returns, why not just invest in the index itself?

It’s not that simple… Here’s why.

The Two Ways to Business-like Investing

Father of value investing Benjamin Graham would say – “Investment is most intelligent when it is most businesslike.”

Yes, stocks are not mere pieces of paper. Rather, they represent underlying businesses and you have to invest in stocks like you’re buying a stake in the business.

And broadly, there’s two ways to do such business-like investing:

One, you buy a stake in the business to profit from the rise in its fair value over time. As the company increases the business it does every year, its revenues go higher. As its revenues move higher – so do its profits. And as this process continues over the years, the value of the company too increases as with greater profit making capacity comes a greater market value.

The rise in the Sensex you saw over the last 45 years is a result of this process. As the value of the companies that make up the index increased, over this period, so did its value. In this case, the rise from 100 to 86,000 over 45 years means it rose at a compounded annual rate of 16% over this time.

Which brings us to the second way in which one can go about businesslike investing. You see, while the above process takes place over the long term, it is not a smooth one way street up. In the shorter term, stock prices see massive gyrations depending on how excited or disinterested the public gets about stocks.

Due to this, stock prices sometimes go much above the underlying fair value of the company, and at times much lower.

As a result, it often becomes possible to buy a company when its stock becomes undervalued in the market, and sell it when it reaches fair value.

In this case, you are trying to profit from the market’s undervaluation of the business rather than a rise in its fair value on account of growth in revenues and profits.

This second form of businesslike investing is what most investors seek and perform. That is, to profit from undervaluation rather than increases in fair value of a business.

As to ‘Why bother?’, it’s this second way that gives one an opportunity to get returns even higher than what one could get by simply trying to ride the growth in fair values of companies over time.

In other words, if one wants to beat that 16% return that the market gave over the long term, this is the way to go!

But There’s a Catch: Most Don’t Follow Either Approach Seriously

While both these methods sound simple on paper, the real-world investor often follows neither.

Most people don’t stay invested long enough to enjoy the 16% CAGR of the index.

And most who try to find undervalued stocks lack either the research depth or the patience to hold on till value emerges.

That’s why despite 800x growth in the Sensex, equity participation in India remains shockingly low.

This is where research-backed advisory firms come in.

In a market where most investors either exit too early or enter too late, the role of a trusted advisory becomes invaluable.

Identifying fundamentally strong companies trading below fair value isn’t easy. It requires time, experience, and an unemotional lens.

And that’s exactly what a good equity research advisory helps you with — filtering noise, and bringing serious business-like investing to your portfolio.

The Final Takeaway

So yeah — you can ride the Sensex and do well over time.

Or, if you have the temperament and tools, you can do even better by identifying mispriced businesses.

The key is to pick the approach that fits your personality and stick to it with discipline.

Either way, businesslike investing — not tips, trends, or Twitter — is the real path to wealth creation.

Happy Investing.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

In a world increasingly powered by tech, sometimes the smartest bet isn’t on the final product — but on the builders behind it.

India’s electronics manufacturing space is riding a powerful wave:

• Global outsourcing is on the rise
• The government is offering strong incentives through the PLI scheme
• And homegrown players are rapidly scaling up their capabilities

Right at the heart of this transformation is Dixon Technologies.

A true wealth creator for early investors, Dixon’s share price surged again today, following its latest earnings announcement — reaffirming market confidence.

Dixon Share Price Since Listing

So what’s driving this recent rally?

Let’s break down what worked for Dixon in Q1, what didn’t, and what lies ahead for this electronics giant.

Dixon Technologies Q1 Result Analysis

Following the announcement of its Q1FY26 results, Dixon Technologies’ stock rose nearly 3% this morning.

The rally was largely driven by exceptional growth in the company’s mobile manufacturing business, even as some other segments showed signs of weakness.

Dixon Technologies is India’s largest electronics manufacturer, producing products for several global brands.

The company designs and manufactures:

• Consumer electronics
• Lighting products
• Home appliances
• Mobile phones
• Security cameras

It operates across multiple manufacturing verticals, with mobile phones now emerging as the company’s largest revenue driver.

Q1FY26 Performance Overview

Dixon delivered a strong performance in Q1:

• Revenue: Up 95% YoY
  
• Operating Profit: Up 95% YoY
  
• Net Profit: Up 107% YoY

The company’s Mobile & EMS division led the performance, with revenue growing 125% YoY. This segment now contributes 91% to total revenue, up from 79% in Q1 last year — clearly establishing itself as Dixon’s primary growth engine.

However, revenue from the Consumer Electronics and Lighting Products segments declined, indicating some pressure in those areas.

Positively, despite an increase in raw material costs (as a % of sales), the company maintained stable operating margins — driven by strict control over employee and operational costs.

Dixon Tech Outlook After Q1 Results

Dixon’s Q1 performance signals that its Electronics Manufacturing Services (EMS) business is now entering a scalable and predictable growth phase.

The company plans to manufacture 40–42 million phones in FY26, with a target of 60–65 million by FY27. This growth will be supported by strong export orders from key clients like Motorola, which is expected to offset delays in the Vivo JV (now pushed to FY27).

While the end of the mobile PLI scheme in FY26 may pressure margins, Dixon’s backward integration strategy — manufacturing more components in-house — is expected to improve profitability.

Additionally, the Q-tech acquisition and joint venture with Inventec will strengthen integration efforts, expand the product portfolio, and boost margins.

Dixon has firmly positioned itself as a key player in the ‘Make in India’ theme. If the company executes its deeper manufacturing strategy successfully, the long-term growth story remains intact.

Strong Long Term Prospects

The electronics industry is one of the fastest-growing sectors in India, drawing strong investor interest. Over the past two decades, it has attracted over US$ 4.4 billion in foreign direct investment (FDI) — a clear reflection of its rising global relevance.

Looking ahead, India’s ambition of becoming a US$ 5 trillion economy by FY27 will rely heavily on the growth of electronics manufacturing. The government has set a bold goal — to export 40% of total electronics production to global markets.

Dixon is well placed to ride the tailwinds as it has undertaken significant capex in recent years to expand capacities across various verticals and enter new product categories.

Conclusion

Dixon has set its sights high — aiming to break into the list of the world’s top 10 EMS (Electronics Manufacturing Services) companies over the next five years.

Over time, it has steadily expanded its presence across all key segments of electronics manufacturing, earning the trust of several top-tier global clients.

Now, the company is moving up the value chain — entering high-margin verticals like precision components, mechanical parts, camera modules, and battery packs. These segments not only offer better profitability with double-digit margins, but also lay the foundation for Dixon’s next phase of growth.

That said, expectations are already sky-high — and so is the valuation. At current levels, the stock commands a premium multiple, reflecting the market’s confidence in its future.

But in the world of growth stocks, expectations are everything. If Dixon stumbles or fails to deliver on projected growth, the stock could face sharp corrections — the market rarely spares high-flyers that miss the mark.

Still, if the company executes well — especially on backward integration, export growth, and deeper manufacturing — Dixon could continue to be one of India’s most compelling Make-in-India success stories.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.

Picture this: you have been tracking a stock that has stayed right at the level of ₹1,000 for the last few weeks. Each time the stock seems to be able to break through, it pulls back. 

There is no major news coming up, no strong momentum, and the stock has clearly settled into a trading range. You are confident that the stock is likely to remain below ₹1,000 for the foreseeable future. 

Now imagine that there is a way to monetise that confidence.

Some traders do just this. Rather than hoping for a big rally or crash they are getting paid for betting the market is going to stay just where it is. The idea is simple. If you believe that a stock is not going to go above a certain price, you can benefit by taking money upfront by way of premium. If you are correct the premium is yours to keep.

Of course, a short call trade does come with risk. If the market takes off above the price you were counting on, your losses can be substantial. Thus, experienced traders who are comfortable putting a short call trade on, can manage the risk and have a solid view of market behaviour. 

What is a Short Call Strategy?

Before we can get into the mechanics of the short call strategy, it is necessary to understand the concept of “shorting” as it relates to trading.

Short selling is the process of selling an asset that one does not own with the intent of repurchasing it later at a lower price. An investor will employ short selling when they expect the price of an asset to drop. In other words, the larger the decline in price, the more profit the short seller stands to gain when they repurchase the asset.

With regards to options, the person selling an option is called the option writer. When the writer is selling a call option, they are creating a new contract between themselves and the buyer. A purchased options contract gives the buyer the right (but not the obligation) to buy/sell an underlying asset at a specified strike price, during a specified period.

So, when someone is taking a short position on a call option, they are fundamentally expressing a bet that the price of the underlying asset will not rise but ideally fall or remain flat. Conversely, the option buyer is hoping for the opposite—an upward movement in price of the asset.

If the price of the underlying asset increases over the strike price, the value of the call option increases, and potential risk of loss occurs to the seller. If the asset price remains flat or below the strike price, the call option should expire worthless. In this case, the seller gets to keep the entire premium at the time of selling the option and that is the maximum profit the seller can obtain.

Making a Short Call

Imagine we are tracking a stock that is priced at ₹200. After evaluating market conditions and technical analysis, the trader makes a prediction that the stock will have a hard time making it past ₹220 anytime soon. From there, the trader could sell a call option with a ₹220 strike for a premium of ₹12, since they are somewhat bearish or neutral on the stock.

By selling the option to the option trader, the trader is paid ₹12 per share upfront. On the total option contract, depending on the lot size of 100 shares, the trader is credited ₹1,200 immediately to their trading account.

At expiry, the option will have two possible outcomes:

• If the stock is under ₹220: The call will expire worthless since the buyer will NOT exercise their right to purchase at a premium above market price. The seller keeps the premium in its entirety as profit.
• If the stock is over ₹220: The buyer will likely exercise their option, and the trader must now deliver their stock at the price of ₹220, while buying their stock at a premium market price (say ₹240), resulting in a loss of ₹20 per share (₹240-₹220), minus what was paid for the premium. Their net loss will be: ₹2,000 (₹20 x 100) – ₹1,200 premium = ₹800 loss.

In examples like these, profits are limited to what you collect in premium; but the risk is open-ended if the market price of the underlying assets rises—which is why you should approach a short call strategy with extreme caution.

Analysing the Short Call and Long Put

When traders have a market or a specific stock that they expect to go down, they might consider two popular options strategies: the Short Call and Long Put. While both options strategies would happen in a bearish market, they differ in terms of how they are structured, how profits and losses are defined, and finally the type of risk involved.

Before you decide which strategy is best for your market outlook, risk tolerances and experience, it is a good idea to learn how they differ.

Short Calls: Speculating Against Price Increases

When traders want to short a stock and sell a call option, they will typically use a short call. A short call is the sale of a call option before posting any shares of the underlying security. A typical option seller collects a premium from the buyer and hopes the underlying stock or security does not increase above the agreed upon price or strike price until the expiry date of the option. If the underlying stock price at expiry date is below the strike price, the short call will expire worthless, and the trader keeps the entire premium as profit.

When using this approach, the trader assumes the underlying stock price will not exceed the strike price. Therefore, if the stock price increases above the strike price, the trader could be obligated to sell the stock at the strike price. If the stock price continues to rise, the trader could have theoretically unlimited losses. For this reason, a short call is a high risk strategy that should be avoided by beginning traders.

Example:

You sell a call option for XYZ stock at a strike price of ₹500 for a ₹20 premium. If the price at expiration is at ₹500 or below you keep the ₹20 premium as profit. If the price has increased to ₹550 at expiration you will have lost ₹30 (i.e., price of ₹550 – strike price of ₹500 – premium of ₹20) times lot size.

This type of trading works best if you have a neutral or slightly bearish market posture and you have reasonable assurance the underlying stock will remain below the agreed upon price or strike price.

Long Put: Profit When Price Moves Down

The long-put approach involves buying a put option giving the trader the right (but not the obligation) to sell the underlying security at a pre-established price before expiry. The trader pays a premium to purchase the right. The justification is to have the stock price decrease below the strike price.

The value of the put option increases as the underlying price drops. The trader may either sell the put for a profit or exercise the put option to sell the underlying and realize a profit on the underlying price based on the value of the strike price minus the new price of the stock (as they will receive the exercise price of the put option). The maximum risk for this option will be the premium paid, which is a relatively conservative option for many traders.

Example:

You have a put option on stock ABC with a strike price of ₹600 and the option premium for that option was ₹25.

If the stock price drops to ₹550, that option would be worth ₹50, thereby realizing a net profit of ₹25 (₹50 – ₹25).

If the stock price stays above ₹600, you will have realized a loss of the premium only (₹25).

Long puts have good opportunity in very strong bearish markets where there is a clear expectation the stock price will sharply drop.

Key Differences at a Glance:

Understanding Theta in Short Call Strategies 

Theta is a measure of time decay. Specifically, it is the rate of decay of an option premium. This occurs when an option’s expiration date approaches (and the other market conditions remain the same).

Theta is favourable when you are on the seller side of a short call position. That is, the passage of time (particularly when close to the option expiration date) will slowly erode the premium value of the option. If the underlying asset stays below the strike price, the premium erosion will provide the seller a better opportunity to exit the position at breakeven or profit if they hold the position until expiration or liquidate the position before expiration.

Time decay is highest for at-the-money options, and it accelerates when you approach expiration. This is why sellers of short-term options can take advantage of the Theta effect when they anticipate little or no price movement. Although the Theta in the short call option strategies is positive, it cannot offset any short or sudden upward price movements in the underlying asset.

In summary, Theta is advantageous for short call option sellers; however, even though Theta is positive for these sellers, they must consider Theta against the effects of all of the other influences with which sellers must deal if they are going to manage risk, especially volatility and market direction.

Key Points to Know Before Selling Call Options

Before you sell a call option, there are a few very important things you need to consider.

Use in Neutral or Bearish Markets: You will only want to use this strategy if you are reasonably confident that the asset will not significantly exceed the strike price.

Limited Profit and Unlimited Risk: You get to keep the premium, but if the price rises dramatically over the strike price it could be an infinite loss.

Low margin: Some brokers will have a high margin because there is open-ended risk.

Risk Management: Take steps to protect your capital such as a stop-loss order or hedging.

Avoid in Volatile Events: Earnings events or news releases can create massive price movement and be unpredictable, it is best to avoid selling calls altogether.

Time Variables: In general, time can help you with your position given options usually decay in value with the passage of time. If you have a rapid price point, time does little for your options position.

This strategy is much better suited for more disciplined traders that understand their risk.

Conclusion

The short call strategy can perform well in neutral to mildly bearish environments and can provide consistent income through thoroughly researching premium collection opportunities. 

That said, as there is limited profit with unlimited risk, this strategy “short call” is only advisable if you have a strong conviction for the trade and a firm understanding of risk management.

This strategy may be employed best by traders who understand options pricing and have indirect and direct opportunities to monitor their position. When used judiciously, this strategy can be a useful addition to broader trading strategy.

FAQs

Is there risk associated with selling a call option?

Yes, selling a call option (particularly if not owning the underlying (naked call)) carries an unlimited amount of risk on the upside if the price exceeds the strike price. Risk should be managed for this type of trade.

Is the short call strategy for beginners?

The short call strategy isn’t discussed more broadly because of the potential risks, especially in terms of margin. Also, if you are considering using this strategy, you should be familiar with options and have solid risk management methods in place.

When should a short call strategy be assessed?

A short call strategy is best used in a directional market that is moving sideways or slightly bearish and the trader believes the underlying will remain below a certain price level (the strike price) before expiration.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.