Risk Disclosure — Investments in Securities are Subject to Market Risk

Investing is one of the best ways to grow your money over time. But it comes with real risks — and we don't want anyone walking in without knowing that. At Finoda, we believe informed investors make better decisions. So before you put a single rupee to work, we want you to read this page carefully.

This is not fine print. It's plain-language disclosure — written clearly, so you actually understand what you're getting into.

Markets go up. Markets come down. Sometimes they do both in the same week. Whatever you invest in — stocks, mutual funds, derivatives, currencies, or commodities — there's a real chance you could lose part or all of your money. No return is guaranteed. No advisor, no platform, no tool can promise you profits.

We operate under the guidelines set by the Securities and Exchange Board of India (SEBI). These guidelines exist to protect you. But they don't eliminate risk — nothing does. Read on to understand the specific risks for each asset class we offer.

Mandatory Risk Disclosure — What Every Investor in India Must Know

This section covers the core risks that apply to all securities-based investments. It's required reading — both by regulation and by common sense.

When you invest in the Indian securities market, the value of your investment can rise or fall depending on dozens of factors. Some of those factors are company-specific — poor earnings, management changes, product failures. Some are sector-wide — a regulatory shift, an industry slowdown. And some are macroeconomic — inflation, interest rate changes, geopolitical events.

Here's what we've found in our experience working with investors across Bangalore and beyond: most people understand that risk exists. What they often don't understand is how that risk plays out in practice. So let me be direct.

Market risk means the price of your investments can drop for reasons entirely outside your control. Liquidity risk means you may not always be able to sell what you hold at a price you're happy with. Concentration risk means putting too much into one stock or sector amplifies both gains and losses. Regulatory risk means new laws or rule changes can affect market valuations overnight.

Moreover, past performance — of a stock, a fund, a strategy — does not in any way guarantee future results. That phrase isn't a legal formality. It reflects a genuine truth about how markets work.

We also want you to know: Finoda does not hold your money. Your securities sit with CDSL or NSDL — India's official depositories. Your cash stays in your own linked bank account. We are a guidance and access platform. But guidance cannot prevent losses. Please invest only what you can genuinely afford to lose.

Equity Trading Risks

Buying stocks feels straightforward. You pick a company, you buy shares, you wait. But equity investing carries a set of risks that every stock market participant should understand before placing their first order.

Price volatility is the most obvious one. Share prices can swing sharply within a single trading session, let alone over weeks or months. A company's stock can drop 20–40% in days if quarterly results disappoint, or if broader market sentiment turns negative. We've seen this happen repeatedly, and it can happen to good companies too.

Intraday trading amplifies this significantly. When you trade within the same day, you're exposed to short-term price swings without the buffer that comes with holding over time. Leverage — using borrowed margin to take larger positions — multiplies both your potential gains and your potential losses. If the trade goes against you, losses can exceed your initial capital.

Delivery-based trading carries longer-term risks like company fundamentals deteriorating, sector underperformance, or macroeconomic headwinds eating into valuations over months or years.

Furthermore, securities listed on NSE and BSE are subject to circuit filters that can halt trading when prices move beyond a threshold. This can prevent you from exiting a position at your intended price — a phenomenon called gap risk.

We always recommend proper position sizing, stop-loss discipline, and diversification. But ultimately, the decision and the risk rest with you.

F&O Derivatives — High-Risk Warning

Futures and Options are not for everyone. That's not us being cautious — that's a fact backed by SEBI's own research. Studies have consistently found that a large majority of individual F&O traders lose money, especially in the short term. If you're new to derivatives, please read this section twice.

Futures contracts obligate you to buy or sell an asset at a pre-agreed price on a future date. If the market moves against your position, your losses are potentially unlimited. And unlike stocks, futures positions carry daily mark-to-market obligations — meaning losses get debited from your account each day.

Options trading involves paying a premium for the right (but not obligation) to buy or sell. While the maximum loss on an options buyer is the premium paid, selling (writing) options carries substantially higher risk. A naked options seller can face losses that far exceed the premium collected.

Both instruments use leverage, which is why small market moves can result in disproportionately large gains or losses. Additionally, time decay (theta) constantly erodes the value of options as expiry approaches.

We offer access to Derivatives — F&O trading on our platform. But we strongly urge you to get properly educated before you trade. Start with small positions. Understand your maximum risk before placing any order. And never trade F&O with money you can't afford to lose entirely.

One more thing: F&O gains are taxed as business income in India, not as capital gains. This changes your tax obligations significantly — please consult a tax advisor.

Mutual Fund Risk Disclosure

Mutual funds are often marketed as a "safe" way to invest. They're safer than direct equity for many people — but they carry risks too, and those risks vary by fund type.

Equity mutual funds invest in the stock market. Their NAV (Net Asset Value) moves with the market. During a bear phase, an equity fund can lose 30–50% of its value. SIP investing reduces this risk through rupee cost averaging, but it doesn't eliminate it.

Debt mutual funds carry credit risk (the risk that a bond issuer defaults), interest rate risk (bond prices fall when interest rates rise), and liquidity risk. The 2019–2020 credit events in the Indian debt market — including the Franklin Templeton episode — showed that even debt funds can be impacted severely under certain conditions.

Hybrid funds and balanced advantage funds mix equity and debt but carry both sets of risks.

Key things to know:

• Mutual fund returns are not guaranteed. Even funds with strong 5-year track records can underperform or deliver negative returns in any given year.
• The rating of a fund (1-star, 5-star) reflects past performance. It's not a predictor of future returns.
• Exit loads apply on early redemption for many funds. Read the scheme information document before investing.
• AMFI's standard disclaimer applies: Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Currency & Commodity Trading Risks

Currency and commodity markets are highly volatile and can be particularly challenging for retail investors. Here's what you need to understand before you trade.

Currency trading (Forex) on Indian exchanges — NSE and BSE — is regulated and involves trading currency pairs like USD/INR, EUR/INR, GBP/INR, and JPY/INR. Exchange rates can shift sharply due to RBI policy decisions, US Federal Reserve actions, geopolitical events, or global macroeconomic data. The leverage involved in currency derivatives amplifies these moves significantly.

Commodity trading — covering metals (gold, silver, copper), energy (crude oil, natural gas), and agricultural commodities — is traded on MCX and NCDEX. Commodity prices are influenced by global supply-demand dynamics, weather patterns, political instability in producing nations, and currency fluctuations. These can result in sudden, large price swings that may catch even experienced traders off guard.

In our experience, both currency and commodity markets require active monitoring. You can't set it and forget it the way you might with a long-term equity SIP. Both markets also carry basis risk — meaning the price you see may differ from the price at which you're actually able to execute.

We offer Currency Trading & Forex and Commodity Trading services on our platform. These are suitable only for investors who fully understand the risks involved and have experience with leveraged instruments.

SEBI Investor Grievance Mechanism

If you have a complaint — about a trade, about service, about anything related to your account — you have clear, regulated channels to raise it.

SCORES (SEBI Complaint Redressal System): SEBI operates SCORES at scores.sebi.gov.in — a dedicated platform where investors can file and track complaints against market intermediaries. Any complaint on SCORES is escalated if not resolved within 30 days.

At Finoda: We have an internal Grievance Redressal process. You can reach us at info@finoda.in or call 9035294343. Our team will acknowledge your grievance within 24 hours and work to resolve it within the timelines mandated by SEBI.

SEBI's SMART ODR Portal: For disputes involving amounts below ₹25 lakh, investors can also use the Online Dispute Resolution (ODR) platform introduced by SEBI in 2023 — a faster, technology-enabled way to resolve securities market disputes without going to court.

Your rights as an investor are protected. But the first line of defence is being informed — which is exactly what this page is for.

Ready to Invest — the Right Way?

Now that you've read the risks, you're already ahead of most retail investors. That's a good thing. Informed investing is smarter investing. If you're ready to get started, open your free Demat account with Finoda today. There are no account opening charges, and you'll have access to equity, mutual funds, SIP, IPO, F&O, currency, and commodity markets — all in one place.

Have questions? Talk to our team →

Frequently Asked Questions about Risk Disclosure in India