Contents 2. Industry profile....................................................................................................................... 2 2.1. Mutual fund industry........................................................................................................... 3 2.1.1 History of mutual funds .................................................................................................... 3 2.2.1.

Indian mutual fund ........................................................................................................... 6 2.2.2. Growth of mutual fund industry in India ......................................................................... 6 2.2.3. Recent trends in mutual fund industry ............................................................................. 6 2.2.4 Impact of technology ........................................................................................................ 7 2.3. Legal and Political Environment Association of Mutual Funds in India ............................ 7 2.4. SEBI (Security and Exchange Board of India) ................................................................... 8 2.4.1. Registration of Mutual Funds .......................................................................................... 8 2.4.2. Characteristics of Mutual Funds ...................................................................................... 8 3. Banking industry .................................................................................................................... 8 3.1. Nationalisation .................................................................................................................... 8 3.2. Liberalisation ...................................................................................................................... 8 3.3. Current situation.................................................................................................................. 8 4. Introduction of the company .................................................................................................. 8

Introduction Mutual fund is the trust pool of saving of number of investors who share the common financial goal. This pool of money is invested in accordance with a started objective. The money collected and invests in capital market such as shares, bonds and debentures etc.... A mutual fund investment is the small investors access to well diversified portfolio. The mutual fund industry is growing at a tremendous pace. Large number of plans has come up from deferent financial resources with the stock market soaring the investors are attracted toward the scheme. In India a small segments of investor still in mutual fund. The mutual fund investment started in India UTI. Mutual fund is the most suitable invest for the common man its offers an opportunity of investment in relatively low costs. The mutual fund investment in securities as spread wide range of industries and sectors and thus the risk is reduced. The diversification reduces the risk because all stocks may not move in the same direction the same proportion at the same time. Mutual fund issues unit to investors in accordance with some of money invested by them. Investors of mutual funds are known as unit holder. This diversification of portfolio reduces the risk because seldom does all stock decline at the same time and in the same proportion. As the mutual funds provide the service of experienced and skill professionals backed by dedicated investment research teams that analysis performance and prospects of companies and selects suitable investments to achieve the objects of the scheme Mutual fund is the most suitable investment for the common mans its offers an opportunity of investment in diversified, professionally managed basket of securities at relatively low costs. The mutual fund investment in securities are spread wide range of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction and same proportion at the same time. Mutual fund issues units to the investors in accordance with some of money invested by them. Investors of mutual funds are known as unit holder.

2. Industry profile One of the major economic developments of this decade has been the recent takeoff of India, with growth rates averaging in excess of 8% for the last four years, a stock Market that has risen over three-fold in as many years with a rising inflow of foreign Investment. Liberalization and globalization have breathed new life into the foreign exchange markets while simultaneously besetting them with new challenges. Commodity trading, particularly trade in commodity futures, have practically started from scratch to attain scale and attention. The banking industry has moved from an era of rigid controls and government interference to a more market-governed system. New private banks have made their presence felt in a very strong way and several foreign banks have entered the country

2.1. Mutual fund industry When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAVs defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors ADVANTAGES OF MUTUAL FUND Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency DISADVANTAGE OF MUTUAL FUND No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme 2.1.1 History of mutual funds The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen amending phase; the Assets under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aim to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under.

First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory andadministrative control in place of RBI. The first scheme launched by UTI was Unit. Second Phase (1987to 1993)

In 1987 the marked the entry of non- UTI mutual fund set up public sector banks and life insurance companies of India general insurance corporation of India SBI mutual fund was the non- UTI mutual fund established in June 1987. Third Phase (1993 2003) With the entry of private sector in 1993 a new area started in the India mutual fund industry giving the Indian investors a wider choice of fund families In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 corers as at the end of January2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. Consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 corers under 421 schemes. Classification of mutual funds Based on the structure Open ended Close ended Open ended Investors can buy and sell the units from the fund at any point of time Close ended A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange. Also known as a "closed-end investment" or "closedend mutual fund.". The former raises a prescribed amount of capital only once through an IPO by issuing a fixed number of shares, which are purchased by investors in the closed-end fund as stock. Unlike regular stocks, closed-end fund stock represents an interest in a specialized portfolio of securities that is actively managed by an investment advisor and which typically concentrates on a specific industry, geographic market, or sector. The stock prices of a closed-end fund fluctuate according to market forces (supply and demand) as well as the changing values of the securities in the fund's holdings. Based on the investment objective i. Equity funds: A mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Also known as a "stock fund". Stock mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography Size is determined by a company's market capitalization, while the investment style, reflected in the fund's stock holdings, is also used to categorize equity mutual funds. ii) Index funds In this case a key stock market index, like BSE Sensex or Nifty istracked. Their portfolio mirrors the benchmark index both in terms of compositionand individual stock weight ages. ii) Equity diversified funds-

100% of the capital is invested in equities spreading across different sectors and stocks. iii|) Dividend yield fundsIt is similar to the equity diversified funds except that they invest in companies offering high dividend yields. iv) Thematic fundsInvest 100% of the assets in sectors which are related through some theme.e.g. -An infrastructure fund invests in power, construction, cements sectors etc. v) Sector fundsInvest 100% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. vi) ELSS Equity Linked Saving Scheme provides tax benefit to the investors. Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: I) Debt-oriented funds Investment below 65% in equities. ii) Equity-oriented funds Invest at least 65% in equities, remaining in debt Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixedincome instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. I) Liquid fundsThese funds invest 100% in money market instruments, a large portion being invested in call money market. ii) Gilt funds STThey invest 100% of their portfolio in government securities of and-bills. iii) Floating rate funds Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate.

IV) Arbitrage fundThey generate income through arbitrage opportunities due to miss- pricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. v) Gilt funds LTThey invest 100% of their portfolio in long-term government securities vi) Income funds LTTypically, such funds invest a major portion of the portfolio in long-term debt papers. vii) MIPsMonthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-30% to equities.

viii) FMPsFixed monthly plans invest in debt papers whose maturity is in line with that of the fund. INVESTMENT STRATEGIES 1. Systematic Investment Plan: Under this a fixed sum is invested each month on affixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: Under this an investor invests in debt oriented fund and gives instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: If someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month. 2.2.1. Indian mutual fund

2.2.2. Growth of mutual fund industry in India While the Indian mutual fund industry has grown in size about the 320% from March. In 1993 to December 2004 in terms of AUM, the AUM of the sector excluding UTI has grown over 8 times from Rs 152 billion in March 1999 to $148 billion as at March 2008. Thought India is minor player in mutual fund industry.

Some facts for the growth of Mutual Funds in India 100% growth in last 6 years Number of foreign AMCs is in the queue to enter in Indian market Our saving rate is over 23% highest in the world. Only channelizing these savings in mutual funds fund sector is required We have approximately 29 mutual fund which is much less than US having more than 800 there is a big scope for expansion SEBI allowing MF to launch commodity mutual fund Emphasis on better corporate governance Trying to curb the late trading practices Introduction of financial planners who can provide need based advises

2.2.3. Recent trends in mutual fund industry The most important trend in mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by the nationalized banks and smaller private sector players. Many nationalized banks got in to the mutual fund business in the early nineties and go off to start due to the stock market boom

were prevailing. The performance of the most of the scheme floated by this fund was not good. Some scheme have offered guarantee returns and their parent organisation had to bail out of AMCs by paying large amount of money as different between the guaranteed and actual returns. The service level was also very bad most of these AMCs have not been able to retain staff, float new scheme etc... 2.2.4 Impact of technology Let's grade the impact of technology on mutual funds today:

Investment technology: innovative financial instruments, A+; liquidity, A+; cornucopia of funds, A+; soundness of new funds, C; investment behaviour of managers, D. Information technology: availability of data, A+; completeness and scope, A+; meaningful knowledge, C; contribution in effectiveness in selecting funds for future performance, D; investment behaviour of shareholders, E. Transaction technology: ease and facility, A+; implicit encouragement to trade funds, A+; efficiency and expense savings, A+; flowing-through lowered costs to fund shareholders, E. This balance sheet would say that the contribution of technology to information is A+, to knowledge is C, and to wisdom is, if not E, then surely in the nether regions. In all, good grades for the technology, bad grades for the users. (Bogle, 1997) 2.3. Legal and Political Environment Association of Mutual Funds in India AMFI, the apex body of all the registered Asset Management Companies, was incorporated on August 22, 1995, as a non-profit organisation. As of now, all the 44 Asset Management Companies that are registered with SEBI are its members. Objectives of AMFI:

To define and maintain high professional and ethical standards in all areas of operation of mutual fund industry

To recommend and promote best business practices and code of conduct to be followed by members and others engaged in the activities of mutual fund and asset management including agencies connected or involved in the field of capital markets and financial services. To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI on all matters concerning the mutual fund industry. To represent to the Government, Reserve Bank of India and other bodies on all matters relating to the Mutual Fund Industry. To develop a cadre of well trained Agent distributors and to implement a programme of training and certification for all intermediaries and other engaged in the industry. To undertake nationwide investor awareness programme so as to promote proper understanding of the concept and working of mutual funds. To disseminate information on Mutual Fund Industry and to undertake studies and research directly and/or in association with other bodies (AMFI, 2012)

2.4. SEBI (Security and Exchange Board of India) The Securities and Exchange Board of India was established on April 12, 1992 in accordance with the provisions of the Securities and Exchange Board of India Act, 1992. The Preamble of the Securities and Exchange Board of India describes the basic functions of the Securities and Exchange Board of India as "...to protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto". (SEBI, 2012) Powers of SEBI: For the discharge of its functions efficiently, SEBI has been invested with the necessary powers which are: 1. To approve bylaws of stock exchanges. 2. To require the stock exchange to amend their bylaws. 3. Inspect the books of accounts and call for periodical returns from recognized stock exchanges. 4. Inspect the books of accounts of financial intermediaries. 5. Compel certain companies to list their shares in one or more stock exchanges. 6. Levy fees and other charges on the intermediaries for performing its functions. 7. Grant license to any person for the purpose of dealing in certain areas. 8. Delegate powers exercisable by it. 9. Prosecute and judge directly the violation of certain provisions of the companies Act. 10. Power to impose monetary penalties. (sebi, 2013) 2.4.1. Registration of Mutual Funds

2.4.2. Characteristics of Mutual Funds 3. Banking industry 3.1. Nationalisation

3.2. Liberalisation 3.3. Current situation 4. Company profile

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Currency Trading Currency derivatives can be described as contracts between the sellers and buyers, whose values are to be derived from the underlying assets, the currency amounts. These are basically risk management tools in force and money markets used for hedging risks and act as insurance against unforeseen and unpredictable currency and interest rate movements. Any individual or corporate expecting to receive or pay certain amounts in foreign currencies at future date can use these products to opt for a fixed rate- at which the currencies can exchanged now itself. Currency derivatives serve the purpose of financial risk management encompassing various market risks. An upfront premium is payable for buying a derivative. Currency futures will bring in more transparency and efficiency in price discovery, eliminate counterparty credit risk, provide access to all types of market participants, offer standardized products and provide transparent trading platform. Competitors Geojit BNP Paribas JRG Securities Religare Karvy Stock Brokers Muthoot Securities Share wealth Motilal Oswald Anandrathi Functional departments Client relation Department The client relation department assists the client or customer to open an account in Hedge equities. This department is also known as the front office. A client has to open two types of accounts to trade and own securities in the NSE & BSE. They are: Finance Department Thus a department, to organize financial activities may be created under the direct control of the board of directors. Finance manager will decide the major financial policy methods. Lower levels can delegate the other routine activities. Marketing Department The major functions of marketing department are:

a) Business associate development: the company takes up the marketing activities of the various branches. It ensures an efficient marketing arena at its various branches. The company encourages better relations in its branches and promotes for the development of various marketing strategies. b) Brand promotion: An important function of marketing department is to promote the name of the company. Hedge equities do it through the different promotional activities. The name of Hedge equities as a stock broking firm is made known to the outside world. c) Investment promotion: The main clients of Hedge equities were its investors. Hence the marketing department tries to capture as many as possible to encourage them to invest.

Delivery promotion: Intraday trading is not always profitable and might involve a lot of risk hence Hedge equities promotes for delivery where the shares are kept to be sold for a later date after analyzing the profitability factors. Systems Department The systems department is playing a vital role in the day to day operations of the company. It is through the systems department that the clients can avail the facilities of Internet trading. Optic fibre cables and high bandwidth connections from the Hedge equities office to the ISP, a dedicated server and back-up ISDN connections were maintained directly by the systems department. For the purpose of trading they have made use of two software namely ODIN (Open Dealers Integrated Network) Human resource Department Human resource is often considered as the back of an organization even in this age of advanced automation & mechanization. Since virtual organizations are not very much popular in our part of the world, it is very important to any organization to have a HR department. The presence of an excellent HR department increases the efficiency of an organization considerably. Human resource management is defined as asset of practices, policies and programmes designed to maximize both personal and organizational goals. a) Training & Induction The selected employees will undergo three days continuous induction. During this period, he will undergo training with all the department of Hedge equities. There will also be classroom induction also within three months. b) Wages and Salary Administration The wages and salaries of the employees were fixed and granted by the HR department with consent of the finance department c) Performance appraisal It was human resources department which gives the promotions to all employees, making transfers and taking disciplinary actions if needed. D) Grievance Handling The grievances of the employees were received only through proper channels i.e., through the particular department heads. The HR department will make as per the rules and regulations of the company. Trading Department The department deals with the trading related activities of the company. The trading refers to the buying & selling of shares. This department is the most important part of the Organization. There are two types of trading. They are: A) Online Trading These are the trading terminal of the organization. The each computer of the department is termed as trading terminal. The each terminal is assigned with NCFM certified dealers, who is in charge of each portal will do the trade according to the client request. The terminal is managed by either NEAT (National Exchange for automated trading) software or

ODIN (Open Dealers Integrated Network) software. The client can also place his through written request or through the telephone, in this the order will be placed by the dealer. b) Internet Trading The internet trading is a facility provides by the company in order to trade the securities from his convenient place like his office, home etc, the order will be placed by the client itself, and he can make changes before the trade is done for changing the price, cancellation of the order. Delivery & Depository Department Delivery refers to the shares that bought on a particular day are not sold on that day itself and holding of the shares for an appreciation in the value of the security and to trade it on a future date. Deliver instruction slip: it is a slip the client should fill and gave to the dealer regarding the purchase of the share. There are two procedures to move the shares namely, A) Power of attorney This is which the client signs at the time of opening a trading account and depository participant account. If the client has given the power of attorney, HEDGE EQUITIES (P) LTD will have the power to transact the clients stocks without pay-in slips. b) Easiest It is secured internet enabled service which means Electronic Access to Securities information and Execution of Secured Transaction. This is facility where in the clients can give delivery instructions via internet. Easiest is a facility provided by CDSL. The activities related with the depository department. Depository function Dematerialization Pledging Equity Research Department The function of the department is to study the details regarding the share or security and to make predictions regarding the future performance of the company. The types of approaches done in the department a) Fundamental analysis b) Equity Analysis