Index-Linked Returns, With or Without Principal Protection
Debentures from Edelweiss / Nuvama whose payout is linked to the Nifty or gold. We explain each structure, its protection and issuer risk before you invest.
Moderate to High (issuer credit risk; capital loss possible in NPP structures)
Per term sheet; ticket sizes are set by the issuer and are typically high
Fixed tenure per term sheet. Listed, but secondary trading is thin — plan to hold to maturity.
- Experienced investors who understand structured products
- Investors with a view on the Nifty or gold over a fixed period
- Those who can hold to maturity with a larger investible surplus
- Investors comfortable with issuer credit risk
- Payout linked to the Nifty 50 or gold via a formula in the term sheet
- Principal-protected (PP) and non-principal-protected (NPP) structures
- Issued by Edelweiss / Nuvama group entities; listed and rated
- Fixed tenure; payoff measured on specified observation dates
- Gains on MLDs are taxed as short-term capital gains at your slab rate under Section 50AA, regardless of holding period
- Applies to gains on transfer, redemption or maturity
- No long-term capital gains rate or indexation benefit
Tax treatment as per current law and subject to change; please consult a qualified Chartered Accountant before investing.
What Is a Market Linked Debenture?
A Market Linked Debenture (MLD) is a non-convertible debenture whose return is not a fixed coupon but depends on the performance of an underlying reference, such as the Nifty 50 or gold. The issuer sets out a formula — the payoff — that decides what you receive at maturity.
Every MLD carries the credit risk of its issuer. Even a principal-protected structure depends on the issuer being able to pay at maturity. WealthBay facilitates access to MLD issues from Edelweiss / Nuvama group entities; the issuer is solely responsible for the terms and payments.
MLD Structures We Can Help You Access
Products are shown subject to a current issue being available. Exact payoff, tenure, rating and minimum are defined in each issue's term sheet.
Nifty AWE PP
A Nifty-linked structure in the AWE series that is principal protected at maturity, subject to the issuer's ability to pay. Participation in index movement and any conditions are as per the term sheet.
Nifty AWE NPP
A Nifty-linked structure in the AWE series that is not principal protected. Non-protected structures may offer different participation than protected ones, but you can lose capital if the index falls — exact terms per term sheet.
Nifty AWE +
A variant of the Nifty AWE structure. Its payoff features and any protection differ from the base versions and are defined in the term sheet.
Beta
Beta structures typically aim to offer participation linked to the movement of the underlying index, with participation, caps and any protection set out in the term sheet.
Leap Beta
Leap structures typically aim to offer enhanced participation in index gains, often up to a defined level. Enhanced upside usually comes with conditions or limits — exact terms per term sheet.
Twin Win
Twin Win structures typically aim to offer participation in both rising and falling markets within a defined range. Outside that range the payoff can change significantly — exact terms per term sheet.
All Weather Gold
A gold-linked structure whose payoff depends on gold price movement over the tenure. Such structures may aim to provide outcomes across different gold price scenarios — exact terms per term sheet.
Principal-Protected vs Non-Principal-Protected
| Aspect | Principal-Protected (PP) | Non-Principal-Protected (NPP) |
|---|---|---|
| Principal at maturity | Face value returned at maturity, subject to issuer solvency | Can be less than face value if the underlying falls |
| Upside participation | Usually lower, as part of the structure funds the protection | Can be higher, in exchange for downside risk |
| If the index falls | Principal returned at maturity (issuer permitting) | Capital loss, as per the payoff formula |
| Issuer credit risk | Yes | Yes |
| Early exit | Protection does not apply; price may be below face value | Market price may be well below face value |
| May suit | Investors who prioritise return of capital at maturity | Investors willing to risk capital for higher participation |
How PP and NPP Payoffs Can Differ
A simplified example: the principal-protected structure returns face value if the index falls and shares in part of the rise; the non-protected structure participates more on the way up but falls with the index.
| Underlying | PP payoff | NPP payoff |
|---|---|---|
| -30% | 0% | -30% |
| -20% | 0% | -20% |
| -10% | 0% | -10% |
| 0% | 0% | 0% |
| +10% | +6% | +12% |
| +20% | +12% | +24% |
| +30% | +18% | +36% |
| +40% | +24% | +48% |
Hypothetical illustration for understanding PP vs NPP structures only — not a forecast, not a specific product. Actual payoff is defined in each issue's term sheet.
How MLDs Are Taxed
Under current law (Section 50AA), gains on Market Linked Debentures are taxed as short-term capital gains at your slab rate, regardless of how long you hold them. Please consult a qualified Chartered Accountant for your situation.
Risks to Understand Before Investing in MLDs
MLDs are complex structured products and are not suitable for all investors. Read the information memorandum, term sheet, scenario analysis and rating rationale before investing.
- Returns depend on the underlying's performance and the payoff formula.
- Principal protection, where offered, applies only at maturity and depends on the issuer's ability to pay.
- Non-principal-protected MLDs can result in loss of capital.
- A credit rating is an opinion and can be downgraded.
- Liquidity is limited; early exit may be possible only at a significant discount.
How to Invest
- 1
Understand the Structure
We walk you through the term sheet: underlying, payoff formula, protection, tenure, issuer and rating.
- 2
Check Availability
We confirm whether a current issue of the structure you want is open, and its minimum ticket.
- 3
Apply & Hold
Complete the application and KYC; the MLD is credited to your demat. Plan to hold to maturity.
Have questions about Market Linked Debentures?
Speak to our team — no obligation. We'll explain the options, risks and costs.
Common Questions About MLDs
Can I lose money in a principal-protected MLD?
How is an MLD different from a regular NCD?
What do PP and NPP mean?
How are MLD gains taxed?
Disclaimer: Returns are linked to market performance and are not guaranteed. Capital protection applies only at maturity and subject to issuer solvency. Illustrations are not forecasts. Read the term sheet and information memorandum of each issue before investing.
WealthBay Private Limited — AMFI-registered Mutual Fund Distributor, ARN-29566. WealthBay acts as a distributor of third-party financial products and earns commissions from product providers. Please read all scheme / offer documents carefully before investing.
Understand an MLD Before You Commit
Talk to us about current MLD issues, how each structure pays out and the issuer risk involved.