Where to buy/sell Equity Linked Notes in India?

Bonds
1

I recently came across ELN(Equity Linked Notes) and I am searching to find ELNs that are pegged to NIFTY 50.

Are there any institutions that provide these ELNs?

2

What specific aspects of ELNs are you looking to achieve by purchasing them (and on which which equities) ?

(i believe various aspects of ELNs can be manually achieved
by a combination of investing in a liquid fund, purchasing stocks, and purchasing options.)

3

In India, term used is MLD, market Linked debentures.
This was a rage some time back as these bonds were giving debt like returns with equity like taxation. Mainly these were for HNI, but some platforms like wintwealth started this for Retail too

However, 2023 budget removed the tax advantage this product had, and after that I think market has dried down.
Capitalmind had a great explainer on this

I am not sure what exactly you are looking for, but such products are not pegged to an index. It is just an arbitrary level something like, you will get 8% per year return if nifty 50 remains above 15,000 level but if goes below 15K, you only get your principal back.
There is no pegging. If you want a pegged product, Nifty 50 etf or index fund is right choice.

4

I don’t know how it can be achieved with liquid funds, stocks & options.

AFAIK, ELN are principle-protected and have varying interests.

For example, if we invest 1,00,000 (in NIFTY 50 linked note) in ELN for 1 year. At the end of the year, you will get 1,00,000 for sure. In addition to that, you will get % of returns based on NIFTY. If nifty gains 5%, we will get 5% of the principal invested.

5

But, based on my understanding of ELNs and Options,
The approach is something like this…

Say one has 100 INR today

  • From that, one uses INR 5

    • one purchases a call option for NIFTY50@19000 that matures in a year.
    • if NIFTY > 19000 in one year
      • one execrcises the option and obtains the NIFTY-linked profit (difference between 19000 and future LTP of NIFTY.
    • if NIFTY <= 19000 in one year
      • one lets the option expire and gains/loses nothing more.

  • From that, one uses INR 95

    • one purchases a government bond (eg. a TBILL) maturing in 1 year.
    • these will provide 100 on maturity.
      • this is the basis for your “principal protection”
        (upon maturity, you receive your 100 INR back no matter what NIFTY does)

NOTE: Above example uses single-digit INR for simplicity.
The minimal amount required to setup a properly balanced sceanrio above,
will be determined by the lot sizes of the NIFTY call-option (50 units).

A similar approach / financial instrument was discussed in this thread.

1 Like
6

Looks like there are various types of ELNs.

I am looking for PGN(Principal Guaranteed Note) ELN.