You are on page 1of 123

SECURITIES ANALYSIS AND INVESTMENT MANAGEMENT PROJECT REPORT AT

(Session: 2011-2013)

Submitted for the partial fulfillment of the requirement of Master of Business Administration (MBA)

SUBMITTED BY Ashish kesarwani


Roll no.2011mba260 Center code:450

SUBMITTED TO prof: Tanu

External Guide: Mr. Rajesh shah Internal Guide: Mrs. TANU SHRIVASTVA

ABES ENGINEERING COLLEGE, GZB.

ACKNOWLEDGEMENT
It would be of great pleasure for me to take the opportunity of thanking nearly everybody who had been of great help in the completion of my project. My sincere gratitude goes to Mr. RAJESH SHAH (Branch manager) my organizational guide, without whose help this project would have seemed impossible. It has been of great learning to be on the job-training and doing the project simultaneously, which enriched my knowledge and developed my outlook for becoming a better professional. I feel great pleasure in submitting this project report to India Info line Securities Pvt. Ltd (Ghaziabad)

Place: GHAZIABAD

Ashish kesarwani

i . ex e

TABLE OF CONTENT
1. Objective of the study 2. Findings 3. Summary 4. Introduction A. Stock Market Basics -Stock -Stock Market -Stock Exchanges -Market Timing -Clearing and Settlements -Margin and Risk Management -Frequently used Terms B.Capital Market -Primary Market -Secondary Market Capital Market Instruments Listing Requirements 1 2 5 15 19 19 20 21 24 30 31 32 33 33 37 41 45

C. Investment Basics. D. Relationship Manager E. Comparison of indiainfoline with other Players F. Market Analysis 3

55 60 78 96

4. Research Methodology Suggestion & Recommendation 5. Conclusion 6. Questionnaire 7. Bibliography

113 115 117 118 120

SUMMARY

This summer project which is on how to create and manage portfolio, and know the investor perception about investment in capital market which is most useful for me. This project Increase my knowledge and ability to understand external forces of environment.

Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream of retiring early (or of being able to retire at all)? Do you know that you should invest, but don't know where to start?

The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.

It's actually pretty simple: investing means putting your money to work for you. Essentially, it's a different way to think about how to make money. Growing up, most of us were taught that you can earn an income only by getting a job and working. And that's exactly what most of us do. There's one big problem with this: if you want more money, you have to work more hours. However, there is a limit to how many hours a day we can work, not to mention the fact that having a bunch of money is no fun if we don't have the leisure time to enjoy it

You can't create a duplicate of yourself to increase your working time, so instead, you need to

send an extension of yourself - your money - to work. That way, while you are putting in hours for your employer, or even mowing your lawn, sleeping, reading the paper or socializing with friends, you can also be earning money elsewhere. Quite simply, making your money work for you maximizes your earning potential whether or not you receive a raise, decide to work overtime or look for a higher-paying job.

There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your
own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has positives and negatives, which we'll discuss in a later section of this tutorial. The point is that it doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept for you to understand.

The world of finance can be extremely intimidating, but we firmly believe that the stock market and greater financial world won't seem so complicated once you learn some of the language and major concepts.

INTRODUCTION
The India infoline was founded by a group of professionals in 1995, a seemingly distant past in
the Internet age. Our meticulous research was published and distributed in printed form to a client base comprising of Indian business including leading MNCs, investment banks and consulting firms. The quality of research was highly acclaimed and soon became the industry benchmark. Over the last few years, our research coverage has grown to cover practically all companies, economy and financial markets. The breadth and depth of our content is unmatched stock markets, mutual funds, personal finance, taxation and economy. We saw an opportunity to expand our client base, from a few hundreds to several millions and also to complete the value chain. In early 1999, when Internet penetration in India was at its infancy and the future unknown, we took the hard decision of killing our earlier business model and embracing the Internet. We discontinued delivery of reports in printed form and made available quality research at the click of a mouse. Thus, was born www.indiainfoline.com? The site has emerged as the most popular website on Indian business and finance. A publication, no less than Forbes has chosen us in their Best of the Web under the Asian Investing category. The India Info line group, comprising the holding company, Angel Broking Ltd and its wholly owned subsidiaries offers the entire gamut of investment products ranging from Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments. Angel Broking also owns and manages the websites, www.indiainfoline.com and www.5paisa.com. Angel Broking Ltd is a company listed on both the leading stock exchanges in India namely the Stock Exchange, Mumbai stock exchange (BSE) and the National Stock Exchange (NSE). Angel

Broking is a forerunner in the field of equity research. Angel Brokings research is acknowledged by none other than Forbes as Best of the Web and a must read for investors in Asia. India Info lines research is available not just over the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is amongst the most read Indian brokers. The Angel Broking group has a significant presence across the country owing to its 125 offices across 45 cities across India. All these offices are networked and are connected with the corporate office in Mumbai. The group has invested significantly in technology and research, the results of which are there for everyone to see. The 5paisa trading interface is one of the most advanced platforms available to retail investor in India. The group has memberships on BSE and NSE for equities trading and on MCX and NCDEX for commodities trading. It has a SEBI license for Portfolio Management under which, various schemes are offered which have been consistently beating the benchmark indices since inception. To be the premier provider of investment advisory and financial planning services in India To be a leading investment intermediary for transactions through both online and offline medium.

5PAISA PRODUCTS &CHARGES

Main Products

Investor Terminal

Trader Terminal 2005

Diet ODIN

Investor/Trader & Diet ODIN Terminal

On all the terminals, investors get facility to buy and sell Stocks in NSE and BSE and Futures and Options through NSE

Investor Terminal

Investor Terminal is recommended for infrequent investors, who fall into the "Buy and Hold" school of investing, made very popular by Warren Buffet - the Oracle of Omaha.

Its a trading interface which works behind proxy and firewalls as they access the Internet and the stock markets from their work place, where a direct connection is difficult because of corporate IT security policies.

Trader Terminal 2005

Trader Terminal is for the dedicated day traders, who churn their portfolio on minor movements in the market, sometimes several times a day. The Trader Terminal offers Lightning fast order execution Monitoring of marked to market positions on a minute-to-minute basis

Diet ODIN

The Diet ODIN terminal provides the facility to trade not only in cash as well as derivatives but also in the commodities segment in the Multi-Commodity Exchange (MCX) and the National Commodity & Derivatives Exchange (NCDEX);

Though it doesnt provide charting features, it provides a cleaner interface for faster order execution, a facet well appreciated by the true-blue trader of today.

Customer Category
Investor

10

Trader

11

Brokerage- Investor

Investor One-time registration fees Minimum Initial Margin Trading Brokerage (Cash) Delivery Brokerage F&O Brokerage Minimum Per Share(Trading) Minimum Per Share(Delivery) Rs.555 Rs.10000/0.05% 0.25% 0.05% 5Paisa 5 Paisa

Registration of Investor

Registration charge of Rs.555 is once payable and non refundable. This charge cannot be waived of under any circumstances. Account cannot be opened without the minimum initial margin of Rs. 5000 and any point of time the ledger balance of the client should be minimum Rs. 5000.

12

If the client has a debit balance then stock value minus debit has to worth a minimum Rs. 5000. Client can withdraw funds from the account but has to maintain a minimum ledger balance of Rs. 5000 If the minimum balance is not maintained then the account will be frozen and client cannot operate both trading and demat account. The account can be re-activated by payment of Rs. 50 p.m.

13

Brokerage- Trader

Quarterly Registration fees Minimum Initial Margin Trading Brokerage (Cash) Delivery Brokerage F&O Brokerage Minimum Per Share (Trading) Minimum Per Share (Delivery) Rs. 3000/Rs. 10000/0.05% 0.25% 0.05% 1paisa 5paisa

Annual Rs. 8000/Rs. 10000/0.05% 0.25% 0.05% 1paisa 5paisa

Terminals offered

An Investor and Trader can opt for any of the products we offer Investor Terminal Trader Terminal 2005 Diet ODIN

14

An Investor that has opted for TT5 can be de-activated if the brokerage earned is not sufficient. Our Audit team will keep a check on this and produce a monthly list of such customers

Under the Investor or Trader scheme a client can also choose offline trading.

Depository Charges

Account opening charges Annual maintenance charges Custody / Holding charges Transaction Credit Transaction Debit Maximum Rs.100/-)

- Nil - Nil - Nil - Nil - 0.05% of transaction value (Minimum Rs.15/

DP charges mentioned above are the same for Investor and Trader. If the client opens only a demat account then the client will be Charged annual maintenance charge of Rs. 250

15

INTRODUCTION
India info line securities pvt ltd is a technology oriented company offering integrated Equity analysis, Stock trading, Depository & Insurance services, Margin Trading facilities back by real time risk management system and fast trade execution. India info line also provides its clients with valuable real-time information, access to breaking news and market happening along with in-depth and insightful analysis.

Some of the unique features are: Trading via branch network, telephone and internet account. Customized products for lending against shares. Automated extended margin trading facility. Integrated trading and Depository Account. Technology transforming desktops into NEAT like terminal for Internet trading. One screen for cash and derivatives trading. Facility to buy today & tomorrow itself. Real time online fund transfer & Exposure updating facility with HDFC bank. Equity research department, which studies the market and provides information. Up-to-date news, data and analysis via Indiainfoline.com Customized insurance services. 16

Equity analysis report to support your investment decisions.

Features of power India info line


Live streaming quotas Fast order entry. Tic-by-tic live charts. Technical analysis. Live news and alerts Extensive reports for real time accounting.

Benefits of trading with India info line


Personal relationship manager-24/7 Most competitive brokerage & DP charges Only one time account opening charges and no annual maintenance charges. Margin trading of 3 times the cash deposited for delivery based trade. Margin trading of 6 times the cash deposited for intra-day based trade. Margin trading of 2 times the approved category A based shares deposited for delivery based trade. 17

Margin trading of 4 times the approved category A-based shares deposited for intra-day. Buy today sell tomorrow for all securities. Management of portfolio and advises.

Charges:
Rs. 555/- one time payment for account opening for equity trading and DP-online trading. 0.5% for delivery based trading. 0.1% for intra-day trading. RS.750/- additional one time charge for the installation of PIB-optional. Equity analysis @ Rs. 500/- pm or Rs. 6000/-annual. optional.

Post registration services:


Deliver and receive chaques, securities & place orders. Obtain market information. Get access to IPO via the book building rout as well as to all the fixed price issues.

18

Documents required for account opening are:


2 passport size photographs Identity proof-photocopy of the following: a) Passport b) PAN card c) Voter ID d) Driving license e) Ration card Address proof-photocopy of any one driving license/passport/ration card/voter card/telephone bill/electricity bill/bank statement Initial chaques in favors of India info line securities Ltd. Besides this India info line also offers insurance and mutual funds to .suits your varying needs. We distributed unit linked insurance products of Birla Sun life and TATA AIG. Further we also offer a bouquet of Mutual fund of all major assets management companies.

19

STOCK MARKET BASICS

Meaning of stock

Stock is a share in the ownership of a company. It represents a claim on the company's assets and earnings

Whether you say shares, equity or stock, it all means the same thing.

If a company wants to growmaybe build more factories, hire more people or develop new productsit needs money. It could get a loan from a bank. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow. Not every company can issue stock. A business owned by one person (a proprietorship) or a few people (a partnership) cannot issue stock. Only a business corporation can issue stock. A corporation has a special legal status. Like a school, its existence does not depend on the people who run it. Under the law it is separate from the people associated with it, and has special legal rights and responsibilities as well as its own unique name.

When the price of a particular stock rises, that stock is said to be "up," meaning up in price. When the price falls, the stock is said to have gone "down. The terms "up" and "down" are also used to describe the rise and fall of the market as a whole. Stock market

20

The stock market is the market for the trading of company stock, both those securities listed on a stock exchange as well as those only traded privately. Although common, the term 'the stock market' is a somewhat abstract concept for the mechanism that enables the trading of company stocks. It is also used to describe the totality of all stocks, especially within one country. In simple words:

Place where business of buying and selling stock takes place

The stock market is not a specific place, though some people use the term "Dalaal Street

Types of stocks

Equity Preference

21

Market segments

Primary market -Channel for creation of new securities

Secondary market -The new securities issued in the primary market are traded the secondary market

Stock exchange

The Bombay Stock Exchange (BSE) National Stock Exchange of India Ltd (NSE)

Trading on BSE and NSE

To provide Transparency, Efficiency and Depth to market, BSE and NSE provide Screen Based Trading on Trading Platforms called BOLT and NEAT. These platforms provide Trading Facility to Brokers, Sub-brokers and their clients through thousands of trading terminals spread throughout the nation BSE and NSE provide trading facility on two segments which are - Cash Segment and - Derivative Segment

22

NEAT CASH

23

BOLT BOLT

24

Market timing

Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the exchange in advance).

The market timings of the equities segment are:

Normal market open : 09:55 hours Normal market close : 15:30 hours

The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and 15.50 hours in BSE

Index

Number which measures the change in a set of values over a period of time. Stock index represents the change in value of a set of stocks which constitute the index A good stock market index is one which captures the behavior of the overall equity market It has to be well diversified yet highly liquid

25

Important market index


A market index is very important for its use as

A barometer for market behavior As a benchmark portfolio performance A passive fund management in index funds An underlying for index futures and options

Types of indexes

Price weighted index Equally weighted index Market capitalization weighted index

26

Major Indices in India

S&P CNX Nifty Sensex


The SENSEX, short form of the BSE-Sensitive Index, is a "Market CapitalizationWeighted" index of 30 stocks representing a sample of large, well-established and financially sound companies. It is the oldest index in India and has acquired a unique place in the collective consciousness of investors. The index is widely used to measure the performance of the Indian stock markets. SENSEX is considered to be the pulse of the Indian stock markets as it represents the underlying universe of listed stocks at The Stock Exchange, Mumbai. Further, as the oldest index of the Indian Stock market, it provides time series data over a fairly long period of time (since 1978-79).

S&P CNX Nifty


S&P CNX Nifty is a well diversified 50 stock index accounting for 21 sectors of the economy. It is used for a variety of purposes such as benchmarking fund portfolios, index based derivatives and index funds. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialised company focused upon the index as a core product. IISL has a Marketing and licensing agreement with Standard & Poor's (S&P), who are world leaders in index services.

The traded value for the last six months of all Nifty stocks is approximately 48.15% of the traded value of all stocks on the NSE Nifty stocks represent about 59.32% of the total market capitalization as on June 30, 2008. Impact cost of the S&P CNX Nifty for a portfolio size of Rs.2 crore is 0.14% S&P CNX Nifty is professionally maintained and is ideal for derivatives trading

List of S&P CNX Nifty stocks

27

Constituents list of S&P CNX Nifty Company Name Industry


ELECTRICAL EQUIPMENT ABB Ltd. CEMENT AND CEMENT PRODUCTS ACC Ltd. CEMENT AND CEMENT PRODUCTS Ambuja Cements Ltd. Bharat Heavy ELECTRICAL EQUIPMENT Electricals Ltd. REFINERIES Bharat Petroleum Corporation Ltd. TELECOMMUNICATION - SERVICES Bharti Airtel Ltd. Cairn India Ltd. OIL EXPLORATION/PRODUCTION PHARMACEUTICALS Cipla Ltd. CONSTRUCTION DLF Ltd. PHARMACEUTICALS Dr. Reddy's Laboratories Ltd. GAIL (India) GAS Ltd. CEMENT AND CEMENT PRODUCTS Grasim Industries Ltd. COMPUTERS - SOFTWARE HCL Technologies Ltd. BANKS HDFC Bank Ltd. AUTOMOBILES - 2 AND 3 WHEELERS Hero Honda Motors Ltd. ALUMINIUM Hindalco Industries Ltd. DIVERSIFIED Hindustan Unilever Ltd. FINANCE - HOUSING Housing Development Finance Corporation Ltd. CIGARETTES I T C Ltd. ICICI Bank Ltd. BANKS
Symbol ABB ACC AMBUJACEM BHEL BPCL BHARTIARTL CAIRN CIPLA DLF DRREDDY GAIL GRASIM HCLTECH HDFCBANK HEROHONDA HINDALCO HINDUNILVR

HDFC ITC ICICIBANK

28

TELECOMMUNICATION - SERVICES Idea Cellular Ltd. COMPUTERS - SOFTWARE Infosys Technologies Ltd. ENGINEERING Larsen & Toubro Ltd. AUTOMOBILES - 4 WHEELERS Mahindra & Mahindra Ltd. Maruti Suzuki AUTOMOBILES - 4 WHEELERS India Ltd. POWER NTPC Ltd. ALUMINIUM National Aluminium Co. Ltd. Oil & Natural OIL EXPLORATION/PRODUCTION Gas Corporation Ltd. POWER Power Grid Corporation of India Ltd. Punjab National BANKS Bank PHARMACEUTICALS Ranbaxy Laboratories Ltd. TELECOMMUNICATION - SERVICES Reliance Communications Ltd. REFINERIES Reliance Industries Ltd. POWER Reliance Infrastructure Ltd. REFINERIES Reliance Petroleum Ltd. COMPUTERS - SOFTWARE Satyam Computer Services Ltd. ELECTRICAL EQUIPMENT Siemens Ltd. State Bank of BANKS India Steel Authority STEEL AND STEEL PRODUCTS of India Ltd. METALS Sterlite Industries

IDEA INFOSYSTCH LT M&M MARUTI NTPC NATIONALUM

ONGC

POWERGRID PNB RANBAXY

RCOM RELIANCE RELINFRA RPL SATYAMCOMP SIEMENS SBIN SAIL STER

29

(India) Ltd. PHARMACEUTICALS Sun Pharmaceutical Industries Ltd. Suzlon Energy ELECTRICAL EQUIPMENT Ltd. TELECOMMUNICATION - SERVICES Tata Communications Ltd. COMPUTERS - SOFTWARE Tata Consultancy Services Ltd. Tata Motors Ltd. AUTOMOBILES - 4 WHEELERS Tata Power Co. POWER Ltd. Tata Steel Ltd. STEEL AND STEEL PRODUCTS CONSTRUCTION Unitech Ltd. COMPUTERS - SOFTWARE Wipro Ltd. MEDIA & ENTERTAINMENT Zee Entertainment Enterprises Ltd.

SUNPHARMA SUZLON TATACOMM

TCS TATAMOTORS TATAPOWER TATASTEEL UNITECH WIPRO ZEEL

Legal Framework

Securities Contract (Regulation) Act,1956 Securities Contracts (Regulation) Rules,1957 SEBI Act 1992 SEBI (Stock Broker and Sub-Brokers) Rules and Regulations,1992 The Depositories Act,1996 Indian Contracts Act,1872 Indian Companies Act,1956

30

Market Segments

Rolling Settlement Limited physical market Institutional Segment Trade for Trade Segment

Clearing and Settlement

Stock Markets follow a system of settling trades on T+2 basis, which means Transactions done on Monday are to be settled by Wednesday by way of giving securities or funds.

Providing of securities or funds to Exchange / Clearing Corporation is called Pay-In.

Receiving securities or funds from Exchange / Clearing Corporation is called pay-out

Sometimes trades dont get settled because of short or bad delivery or company objection.

In such cases, trade is settled through auction of securities

31

. If a trade remains unsettled even after auction, then Exchange carries Close Out

Margins and Risk Management


It is of paramount importance that investors have faith smooth functioning of stock Markets. Exchanges achieve this by putting in place a comprehensive Risk Management system and margin requirements.

Margin Requirement
MTM- Mark to Market margin Volatility Margin Gross Exposure Margin SPAN margin

Risk Management

Capital Adequacy requirement. Additional Base Capital Intra-Day Trading and Exposure limits On-line Exposure monitoring Settlement Guarantee Fund 32

Inspection of Books Penalties

Frequently used terms

Margin Money Bull and Bear Settlement Cycle Squared transaction Delivery Transaction Positions - + (buy) & - (sell) Prices- Last traded price, closing price, opening price, average price Pay-in & pay-out Bid and offer Short selling Long position Auction Settlement Number

33

CAPITAL MARKETS

Segments of the Capital Market Primary market


-Channel for creation of new securities

Secondary market
-The new securities issued in the primary market are traded the secondary market

Primary Market
This is part of the financial market where enterprises issue their new shares and bonds. It is characterized by being the only moment when the enterprise receives money in exchange for selling its financial assets. In simple words: The primary market provides the channel for creation of new securities.

Primary market provides opportunity to issuers of securities; Government as well as corporates, to raise resources to meet their requirements of investment.

34

Classification of Issues

35

Initial Public Offer

Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities.

A follow on public offering (Further Issue) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.

Pricing of an Issue

Fixed Price Price discovery through Book Building Process

Book Building Process

Book Building is basically a process used in IPOs for efficient price discovery.

36

It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.

Rights Issue

Rights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date.

The rights are normally offered in a particular ratio to the number of securities held prior to the issue and generally issued at a price lower than the currently traded market price of the share

Preferential Issue

A Preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons which is neither a rights issue nor a public issue.

This is a faster way for a company to raise equity capital.

Private placement can be done with a maximum of 50 investors.

37

Secondary Market

The market where securities are traded after they are initially offered in the primary market. Most trading is done in the secondary market. In simple words:

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

Role of Secondary Market

For the general investor, the secondary market provides an efficient platform for trading of his securities.

For the management of the company, secondary equity markets serve as a monitoring and control conduitby facilitating value-enhancing control activities

38

Stock Exchange

The stock exchanges in India, under the overall supervision of the regulatory authority, the Securities and Exchange Board of India (SEBI),provide a trading platform, where buyers and sellers can meet to transact in Securities.

Role of Stock Exchange

Facilitate Listing of Securities Register members -Stock Brokers, sub brokers Make and enforce bye-laws Provide trading platform to investors Manage risk in securities transactions Provide indices

Leading Stock Exchanges


National Stock Exchange (NSE)

39

The Stock Exchange, Mumbai (BSE)

National Stock Exchange (NSE)

NSE, promoted by leading financial institutions, was incorporated in 1992 as a corporate entity.

Trading in Equities and Debt Market commenced in 1994.

It is the largest exchange in the country in terms of volume of trading.

It enjoys leadership position among exchanges in India.

The Stock Exchange, Mumbai (BSE)

The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association

It is the oldest stock exchange in Asia.

It has evolved over the years into its present status as the premier Stock Exchange in the country.

40

It is the first Stock Exchange in the Country to get recognition from the Govt. of India under the Securities Contracts (Regulation) Act, 1956.

41

Capital Market Instruments

Equity shares Preference shares Futures and Options Debentures/Bonds Government securities

Equity Shares

Equity shares represent proportionate ownership in a company. Investors who own equity shares in a company are entitled to ownership rights such as

Share in the profits of the company ( in the form of dividends ) Share in the residual funds after liquidation / winding up of the company Voting rights

42

Reasons for buying equities

Owning equity in a company means owning part of that company. Each part is known as a share.

If a company has issued 100 shares of stock, and you bought one, you own 1% of that company. People who own stock are called stockholders, or shareholders.

Stockholders hope the company will earn money as it grows. If a company earns money, the stockholders share the profits. Over time, people usually earn more from owning stock than from leaving money in the bank, buying bonds, or making other investments.

Preference Shares

Preferential shareholders enjoy a preferential right over equity shareholders with regards to : Receipt of dividend Receipt of residual funds after liquidation

Futures and Options

43

Future and Options are derivative products whose value is derived from the value of one or more basic variables

Underlying Asset can be Equity, Forex, commodity or any other asset.

Debentures/ Bonds

Debt instruments issued by corporate and government Debentures and bonds can have many variations depending upon redemption, charge, convertibility etc.

Government Securities

The Central Government and the State Governments issue securities periodically for the purpose of raising loans from the public. There are two main types of Government securities:

Dated Securities: These securities have a maturity period of more than 1 year

Treasury Bills: These have a maturity period of less than 1 year

44

Regulatory Framework

Main legislations governing the capital market Securities Contract (Regulations) Act,1956 Companies Act, 1956 Securities Exchange Board of India Act, 1992 Depositories Act,1996

Role of SEBI

SEBI was set up to

develop and regulate capital market protect interest of investors register various participants make rules for participants regulate stock exchanges prohibit fraudulent and unfair practices promote investors education

45

LISTING REQUIREMENTS [I] Minimum Listing Requirements for new companies (A) Minimum Capital:
1. New companies can be listed on the Exchange, if their issued & subscribed equity capital after the public issue is Rs.10 crores. In addition to this the issuer company should have a post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 crores.

2. For new companies in high technology ( i.e. information technology, internet, ecommerce, telecommunication, media including advertisement, entertainment etc.) the following criteria will be applicable regarding there hold limit:

i.

The total income/sales from the main activity, which should be in the field of information technology, internet, e-commerce, telecommunication, media including advertisement, entertainment etc. should not be less than 75% of the total income during the two immediately preceding years as certified by the Auditors of the company.

ii.

The minimum post-issue paid-up equity capital should be Rs.5 Crores.

iii.

The minimum market capitalization should be Rs.50 Crores. (The capitalization will be calculated by multiplying the post issue subscribed number of equity shares with the Issue price).

46

iv.

Post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 Crores.

(B) Minimum Public offers:


As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of a company can be listed on a Stock Exchange only when at least 25% of each class or kind of securities is offered to the public for subscription. In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the securities issued by the company may be offered to the public subject to the following:

Minimum 20 lakhs securities are offered to the public (excluding reservation, firm allotment and promoters contribution)

The size of the offer to the public is minimum 50 crores.

For this purpose, the term "offered to the public" means only the portion offered to the public and does not include reservations of securities on firm or competitive basis. SEBI may, however, relax this condition on the basis of recommendations of stock exchange(s), only in respect of a Government company defined under Section 617 of the Companies Act, 1956.

47

[II] Minimum Listing Requirements for companies listed on other stock exchanges
1. The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on others The Company should have minimum issued and paid up equity capital of Rs. 3 crores. 2. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of nonrecurring nature should be excluded while calculating distributable profits. 3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). 4. Minimum market capitalization of the listed capital should be at least two times of the paid up capital. 5. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. 6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians. 7. The company should sign an agreement with CDSL & NSDL for demat trading.

48

[III] Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange
The companies delisted by this Exchange and seeking relisting are required to make a fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial public offerings.

[IV] Permission to use the name of the Exchange in an Issuer Company's prospectus
The Exchange follows a procedure in terms of which companies desiring to list their securities offered through public issues are required to obtain its prior permission to use the name of the Exchange in their prospectus or offer for sale documents before filing the same with the concerned office of the Registrar of Companies. The Exchange has since last three years formed a "Listing Committee" to analyse draft prospectus/offer documents of the companies in respect of their forthcoming public issues of securities and decide upon the matter of granting them permission to use the name of "Bombay Stock Exchange Limited" in their prospectus/offer documents. The committee evaluates the promoters, company, project and several other factors before taking decision in this regard.

[V] Submission of Letter of Application


As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies.

49

[VI] Allotment of Securities


As per Listing Agreement, a company is required to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval of the basis of allotment. In case of Book Building issue, Allotment shall be made not later than 15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to the investors.

[VII] Trading Permission


As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days of finalization of Basis of Allotment. A company should scrupulously adhere to the time limit for allotment of all securities and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the listing permissions of all the Exchanges whose names are stated in its prospectus or offer documents. In the event of listing permission to a company being denied by any Stock Exchange where it had applied for listing of its securities, it cannot proceed with the allotment of shares. However, the company may file an appeal before the Securities and Exchange Board of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.

[VIII] Requirement of 1% Security


The companies making public/rights issues are required to deposit 1% of issue amount with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in

50

the event of the company not resolving the complaints of investors regarding delay in sending refund orders/share certificates, non-payment of commission to underwriters, brokers, etc.

[IX] Payment of Listing Fees


All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time. The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board of the Exchange and approved by the Securities and Exchange Board of India is given hereunder tock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect.

51

[X] Compliance with Listing Agreement


The companies desirous of getting their securities listed are required to enter into an agreement with the Exchange called the Listing Agreement and they are required to make certain disclosures and perform certain acts. As such, the agreement is of great importance and is executed under the common seal of a company. Under the Listing Agreement, a company undertakes, amongst other things, to provide facilities for prompt transfer, registration, subdivision and consolidation of securities; to give proper notice of closure of transfer books and record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely to materially affect the financial performance of the Company and its stock prices, to comply with the conditions of Corporate Governance, etc. The Listing Department of the Exchange monitors the compliance of the companies with the provisions of the Listing Agreement, especially with regard to timely payment of annual listing fees, submission of quarterly results, requirement of minimum number of shareholders, etc. and takes penal action against the defaulting companies.

[XI] "Z" Group


The Exchange has introduced a new category called "Z Group" from July 1999 for companies who have not complied with and are in breach of provisions of the Listing Agreement. The number of companies placed under this group as at the end of May, 2001

52

New Direct listing norms


The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect. 1. The company should have minimum issued and paid up equity capital of Rs. 3 crores. 2. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of nonrecurring nature should be excluded while calculating distributable profits. 3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). 4. Minimum market capitalization of the listed capital should be at least two times of the paid up capital. 5. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. 6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians.

53

7. The company should have at least two years listing record with any of the Regional Stock Exchange. 8. The company should sign an agreement with CDSL & NSDL for demat trading. 9. The company should have minimum issued and paid up equity capital of Rs. 3 crores. 10. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of nonrecurring nature should be excluded while calculating distributable profits. 11. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). 12. Minimum market capitalization of the listed capital should be at least two times of the paid up capital. 13. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%.

[XII] Cash Management Services (CMS) - Collection of Listing Fees


As a further step towards simplifying the system of payment of listing fees, the Exchange has entered into an arrangement with HDFC Bank for collection of listing fees, from 141 locations, situated all over India. Details of the HDFC Bank branches, are available on our website site www.bseindia.com as well as on the HDFC Bank website www.hdfcbank.com The above facility is being provided free of cost to the Companies.

54

TYPES OF SECURITIES TRADED IN COMPANY

Shares Commodities Mutual fund Life insurance

SHARES Meaning: - A share or stock is a document issued by a company, which entitles its holder to
be one of the owners of the company. A share is issued by a company or can be purchased from the stock market. By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price.

55

Procedure for doing trading in shares:


Every transaction in the stock exchange is carried out through licensed members called brokers. To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders. The general investors should identify a sub-broker for regular trading in shares and place his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it .

56

Derivatives Introduction
A derivative is a contract/product that has no independent value i.e.: it derives its value from the underlying asset. Underlying asset can be securities, commodities, bullion, currency, live stock or anything else. A derivative is a financial instrument whose value depends on other, more basic, underlying variables. The variables underlying could be prices of traded securities and stock, prices of gold or copper, prices of oranges to even the amount of snow that falls on a ski resort. Derivatives have become increasingly important in the field of finance. Options and futures are traded actively on many exchanges. Forward contracts, swaps and different types of options are regularly traded outside exchanges by financial institutions, banks and their corporate clients in what are termed as over-the-counter markets i.e. there is no single market place or an organized exchange In other words, derivatives means forward, futures, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of specified real or financial asset or to index of securities. In the international market, various derivatives products are traded. To start with, we need to understand three products, namely forward, futures and options.

57

Concept

Derivative is a product whose value is derived from the value of one or more basic variables.

Underlying Asset can be Equity, Forex, commodity or any other asset.

Types of Derivatives

Forwards

Futures

Options

SWAPS

Forwards

A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Forward contract is a one to one bipartite contract, which is to be performed in future at the terms decided today.

58

Forward contracts are being used in India on large scale in the foreign exchange market to cover the currency risk.

Forward contracts being negotiated by the parties on one to one basis, offer the tremendous flexibility to them to articulate the contract in terms of price, quantity, quality, delivery time and place. However, forward contracts suffer from poor liquidity and default risk

Futures

Future contracts are the organized/standardized contracts in terms of quantity, quality, delivery time and place for settlement on any date in future. These contracts are traded on exchanges. Futures trading entail liquid investments that allow investors to purchase or sell assets at specified prices or at later dates. Based upon the anticipated price of the future, futures contracts can be drawn up for various markets. In simple words:

A future is contracting to buy or sell an underlying asset at a specified future date, at a specified price. These contracts are traded and settled on exchanges. Future contracts can be on individual scrips or indices.

Reasons for buying Futures contracts

59

Reasons contracts Hedgers

for

BUYING

futures

Reasons for SELLING futures contracts To lock in a price and thereby obtain protection against declining prices To profit from declining prices

To lock in a price and thereby obtain protection against rising prices

Speculators

To profit from rising prices

Procedure for work in future

Futures trading occur on exchange, allowing investors the right and obligation to buy and sell. The contracts are regulated so the investors can turn their investments into money right away. Some standard conditions include guaranteeing the delivery month and location, the quantity and quality of the commodities, as well as the last day to trade. In order to end the futures contract, the holder must either sell the long position or purchase back the short position. Cash settlement, expiry, and physical delivery are three ways to complete the transaction of a futures contract.

Futures terminology
60

Spot Price Futures Price Expiry Date Contract Cycle -One month -Two month -Three month

Options
An option is a contract, which gives the buyer (holder) the right, but not the obligation, to buy or sell specified quantity of the underlying assets, at a specific (strike) price on or before a specified time (expiration date). The underlying may be physical commodities like wheat/ rice/ cotton/ gold/ oil or financial instruments like equity stocks/ stock index/ bonds etc. In simple words:

Options are derivative instruments where one party has a right to buy/sell the underlying while the other party has an obligation to buy/sell

The person with the right is called the buyer of the option. The person with the obligation is called the writer of the option.

61

Risks in Options

The risk/ loss of an option buyer is limited to the premium that he has paid. An option holder who neither sells his option in the secondary market nor exercises it prior to its expiration loses his entire investment (Premium), in the option. The risk of an Options Writer however is unlimited where his gains are limited to the Premiums earned. The writer of an uncovered call is in an extremely risky position and may incur large losses if the value of the underlying asset increases above the exercise price. The potential loss is unlimited for the writer of an uncovered call. When a physical delivery uncovered call is assigned an exercise, the writer will have to purchase the underlying asset to meet his call obligation and his loss will be the excess of the purchase price over the exercise price of the call reduced by the premium received for writing the call. (In the case of a cash-settled option, the loss will be the cash settlement amount reduced by the premium.) As with writing uncovered calls, the risk of writing put options is substantial. The writer of a put option bears a risk of loss if the value of the underlying asset declines below the exercise price, and such loss could be substantial if the decline is significant. The writer of a put bears the risk of a decline in the price of the underlying interest-potentially to zero. Since the leverage inherent in an option can cause the impact of price changes in the underlying asset to be magnified in the price of the option, a writer of an option that is uncovered and unhedged may have a significantly greater risk than a short seller of the underlying interest.

62

Types of Options

Based on the right:


Call option Put option

Call Option: A call option gives the holder (buyer/ one who is long call), the right to
buy specified quantity of the underlying asset at a specified price on or before a specified time. The seller (one who is short call ) however, has the obligation to sell the underlying asset if the buyer of the call option decides to exercise his option to buy. The buyer of a call option acquires the right but not the obligation to purchase a particular futures contract at a stated price on or before a particular date.

Put Option: A Put option gives the holder (buyer/ one who is long Put), the right to
sell specified quantity of the underlying asset at a specified price on or before a specified time. The seller (one who is short Put) however, has the obligation to buy the underlying asset if the buyer of the put option decides to exercise his option to sell.

63

CALL OPTIONS Option buyer or option holder

PUT OPTIONS

Buys the right to buy the Buys the right to sell the underlying asset at the specified underlying asset at the specified price price

Option seller or option writer

Has the obligation to sell the Has the obligation to buy the underlying asset (to the option underlying asset (to the option holder) at the specified price holder) at the specified price.

Based on the exercise:


American ( Individual Securities) European (S&P CNX Nifty)

64

Procedure for using Options


If you anticipate a certain directional movement in the price of a stock, the right to buy or sell that stock at a predetermined price, for a specific duration of time can offer an attractive investment opportunity. The decision as to what type of option to buy is dependent on whether your outlook for the respective security is positive (bullish) or negative (bearish). If your outlook is positive, buying a call option creates the opportunity to share in the upside potential of a stock without having to risk more than a fraction of its market value. Conversely, if you anticipate downward movement, buying a put option will enable you to protect against downside risk without limiting profit potential. Purchasing options offer you the ability to position yourself accordingly with your market expectations in a manner such that you can both profit and protect with limited risk. Once you have purchased an option contract, you can do one of the following: You can sell an option of the same series as the one you had bought & close out your position in that option at any time, or; You can exercise the option on the expiration day in case of European Option or on or before the expiration day in case of an American option.

65

ITM/ATM/OTM:
CALL OPTION In-the-money PUT OPTION

Strike price < Spot price of Strike price > Spot price of underlying asset underlying asset

At-the-money

Strike price = Spot price of Strike price = Spot price of underlying asset underlying asset

Out-of-the-money

Strike price > Spot price of Strike price < Spot price of underlying asset underlying asset

Futures V/s Options

66

The major differences in Futures and Options are as under: Futures Options

Futures are agreements/contracts to buy or sell Unlike futures, the buyer in case of options specified quantity of the underlying assets at a enjoys the right & not obligation, to buy or sell price agreed upon by the buyer & seller, on or the underlying asset. before a specified time. The buyer is obligated to buy/sell the underlying asset. Futures contracts are highly leveraged positions In case of options, for a buyer (or holder of the with unlimited risk for both the buyer as well as option), the downside is limited to the premium the seller. (option price) he has paid while the profits may be unlimited. For a seller or writer of an option, however, the downside is unlimited while profits are limited to the premium he has originally received from the buyer. The Futures contracts prices are affected only by The prices of options are however; affected by the prices of the underlying asset. prices of the underlying asset, time remaining for expiry of the contract & volatility of the underlying asset. There is a cost of entering into an options contract, termed as Premium.

It costs nothing to enter into a futures contract.

Benefits of trading in F&O

Transfer of risk

67

Incentive to make profit with minimal amount of risk capital Lower transaction costs Liquidity, price discovery Eliminates security specific risks Power to leverage

Margin

SPAN Margin -Initial margin -Mark to market margin

Exchange requires customer to maintain margin with broker.

68

69

Meaning of commodities

Commodities are broadly defined as natural resources, chemicals and physical products you can touch, taste, smell, grow, mine, consume or deliver. In simple words:

Commodity includes all kinds of goods. FCRA defines "goods" as "every kind of movable property Other than actionable claims, money and securities". Goods with commercial value traded widely in bulk; usually a raw material or primary produce, for processing; Agricultural commodities: food grains, fibers, oilseeds complex, sugar, plantation crops, horticulture crops; Non-agro commodities: Base metals, precious metals; industrial products: crude;

70

Concept of Derivatives

Derivative is a product whose value is derived from the value of one or more basic variables.

Underlying Asset can be Equity, Forex, commodity or any other asset.

Commodity & Financial derivatives

In Financial derivatives all contracts are cash settled

In Commodities derivatives the seller has the option to give physical delivery at an accredited warehouse

In Financial derivatives the concept of varying quality of asset does not exist

In Commodities derivatives the quality of the asset of the underlying can vary largely.

Indian Commodity Market


- An Overview

71

History

The futures markets were developed initially to help agricultural producers and consumers manage the price risks they faced harvesting, marketing and processing food crops each year. The modern futures industry still serves those markets. In simple words:

Organized

commodities

trading

started

in

1875

Bombay

Cotton

Trade Association The government had banned futures trading in 1975, saying Excessive speculation had driven prices up. It allowed trading to resume three years later but restricted it To a few commodities. Trading in some other commodities Resumed only in 1997 In 2004, Government of India allowed the Multi Commodity Exchange and the National Commodity and Derivatives Exchange Ltd. to set up new bourses with a national reach and Launch online trading in a range of commodities.

Facts - India
Agriculture - 26% of GDP

72

Agro commodities thriving Huge domestic consumption market One of the Worlds largest importer of gold, edible oils Third largest producer of cotton Leading coffee / tea / sugar producer

73

Marketstructure

Ministry of Consumer Affairs, Food & Public Distribution

Forward Market Commission

Online

Exchanges

Outcry Exchanges

MCX Mumbai

NCDEX Mumbai

74

NMCE
Ahmedabad

NBOT Indore

List of Commodities

Energy Products Crude Oil Furnace Oil

Bullion Metals Products Gold Silver Copper Tin Nickel Steel Agricultural Products Arabica & Robusta Coffee, Wheat, Chana, Sugar, Rice, Guar Seed, Jute Sacking,

Pepper, Castor Seed, Guar Gum, Raw Jute, Urad, Yellow Peas, Crude Turmeric, Palm Oil, Soymeal Cotton,

Mustard Seed, Mustard Oil Soybean, Refined Soy Oilgur, Maize, Raw Silk, Cocoon, Jeera, Chilly, Cashew,

Cottonseed Oilcake, Sesame Seed, Tur, Metha Oil, Kapas.

Market participants

Traders - Speculators, Hedgers, Arbitrageurs, Investors

Producers - Farmers, Manufacturers

75

Consumers - Jewelers, Textile Mills, etc

Market Timings

Bullion/ Metals Trading: 10.00am to 12.00pm

Agro Commodities: 10.00am to 5.00pm

MCX

MCX an independent and de-mutulised multi commodity exchange inaugurated in the year November 2003, has permanent recognition from Government of India for facilitating online trading, clearing and settlement operations for commodity futures markets across the country.

Key shareholders of MCX include Financial Technologies (I) Ltd., State Bank of India & associates, Fidelity International, National Stock Exchange of India Ltd., National Bank for Agriculture and Rural Development, HDFC Bank, SBI Life Insurance Co. Ltd., Union Bank of India, Canara Bank, Bank of India, Bank of Baroda and Corporation Bank.

NCDEX

76

NCDEX is a public limited company incorporated on April 23, 2003 NCDEX is a nationlevel, technology driven de-mutualized on-line commodity exchange with an independent Board of Directors and professionals not having any vested interest in commodity markets

Key promoted of NCDEX includes ICICI Bank Limited (ICICI Bank), Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Limited (NSE). Punjab National Bank (PNB), CRISIL Limited (formerly the Credit Rating Information Services of India Limited), Indian Farmers Fertilizer Cooperative Limited (IFFCO) and Canara Bank

Procedure for Trading in Commodities

Futures

A future is contracting to buy or sell an underlying asset at a specified future date, at a specified price. These contracts are traded and settled on exchanges. Future contracts can be on individual scrips or indices.

Products Offered

77

Online Trading
Diet Odin for customer

Offline Trading
Branch/Franchise/RM places order using Dealer Odin

Clients can trade on both on MCX and NCDEX

Brokerage Structure

ONLINE Registration fees Rs.500

OFFLINE Rs.500

Minimum Initial Margin

Rs. 25000

Rs.25000

Trading Brokerage

0.05%

0.10%

Delivery Brokerage

0.25%

0.50%

Other Charges

78

Exchange Charges: Rs.4 per lac

Stamp Duty:Rs.1 per lac

Service Tax: 10.2%

Reasons for trade in commodities

Driven by demand and supply True reflector of economic activity Impervious to intangibles like management quality or sentiments Not impacted by statements Physical settlement Internationally driven market

Comparison of India Asset Market

79

80

MUTUAL FUND History of Mutual Fund in India

Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. UTI has an extensive marketing network of over 40,000 agents all over the country. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market. In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpired maturity up to one year. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no

81

distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type.

MEANING
Mutual fund is Investment Company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end mutual funds continuously offer new shares to investors. Also known as an openend investment company, to differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current net asset value: total fund assets divided by shares outstanding. In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. The profits or losses are shared by the investors in proportion to their 82

investments. The mutual funds normally come out with a number of schemes with different investment objectives which are launched from time to time. In India, A mutual fund is required to be registered with Securities and Exchange Board of India (SEBI) which regulates securities markets before it can collect funds from the public. In Short, a mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc . Mutual Fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

Many people may also want to consider mutual funds which have specific social agendas, in addition to making a profit. A number of environmentally-friendly mutual funds exist which only invest in companies that meet certain best-practices criteria. Mutual funds based on other social views, political slants, and religious inclinations also exist.

A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. There are myriad kinds of mutual funds, each with its own goals and methodologies. Whether or not a mutual fund is a good investment is a matter of much public debate, with many claiming they are excellent for the average person, and others saying they are simply a poor way to invest.

83

A mutual fund may be either an actively managed fund or an indexed mutual fund. Actively managed funds are changed on a regular basis by a fund manager in the attempt to maximize their profitability. They fund manager looks at the market and the sectors a fund invests in and redistributes the fund accordingly. An indexed fund simply takes one of the major indexes and buys according to that index. Indexed funds change much less frequently than actively managed funds, but in theory an active fund has more potential for profit. Many critics of mutual funds point out that scarcely over 20% of mutual funds outperform the Standard and Poor's 500 Index. This means that nearly 80% of the time, an investor would have been more profitable by simply buying equal shares in all 500 of the companies currently on the S&P 500. Supporters point out that for most people the complications involved in traditional investment are simply not worth the effort. A mutual fund offers an easy way to invest in something with a higher return than, say, interest earned at the bank, while keeping funds somewhat fluid. It also eliminates the need to track the market oneself.

84

There are more types of mutual fund available than there are publicly traded stocks, making the process of choosing one a somewhat daunting prospect for most people. In general, it is good to look at a few types of mutual fund that catch your eye and investigate them to see if they fit your needs. The length of time you want to remain invested, associated costs, tax status, and whether a fund is closed- or open-ended may all prove important. The sector of investment for a mutual fund may also be something you want to look at. Many sector funds exist, and they are most often the top-performing mutual funds in a given year. The problem, of course, is guessing which sector will next see uniform growth, and avoiding sectors that can be hard-hit by single eventsIn other words A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

85

ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund.

86

Types of Mutual Fund


Schemes According To Maturity period Schemes According To Investment Objective

Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period. Open-ended Fund: An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of open-end schemes is liquidity. Close-ended Fund: A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

87

Schemes according to Investment Objective :


A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: Growth / Equity Oriented Scheme : The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds

88

are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Points should be kept in mind before investing in Mutual Funds


Mutual Fund investment decisions require consistent effort on the part of the investor. Before investing in Mutual Funds, the following steps must be given due weightage to decide on the right type of scheme: (A) Identifying the Investment Objective (B) Selecting the right Scheme Category (C) Selecting the right Mutual Fund (D) Evaluating the Portfolio

A) Identifying the Investment Objective


your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses, among many other factors. Therefore, the first step is to assess you needs on the basis of following points: Needs of an investor to invest

To a regular income To finance a wedding He need to educate my children or A combination of all the above

89

Risk potential of an Investor willing to take


The risk-taking capacities of investors vary depending on various factors. Based on their risk bearing capacity, investors can be classified as:

Very conservative Conservative Moderate Aggressive Very Aggressive Cash flow requirements

For example, you may require:

A regular Cash Flow A lump sum after a fixed period of time for some specific need in the future Or, you may have no need for cash, but you may want to create fixed assets for future the

90

B) Selecting the scheme category


The next step is to select a scheme category that matches your investment objectives:

For Capital Appreciation go for equity sectoral funds, equity diversified funds or balanced funds.

For Regular Income and Stability you should opt for income funds/MIPS For Short-Term Parking of Funds go for liquid funds, floating rate funds,

C) Selecting the right Mutual fund


Once you have a clear strategy in mind, you now have to choose which Mutual fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some important factors to evaluate before choosing a particular Mutual Fund are:

The track record of performance over that last few years in relation to the appropriate yardstick and similar funds in the same category.

How well the Mutual Fund is organized to provide efficient, prompt and personalized service.

The degree of transparency as reflected in frequency and quality of their communications.

91

D) Evaluation of portfolio Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio, fund managers style of investment, portfolio diversification, fund managers experience. Good equity fund should provide consistent returns over a period of time. Also expense ratio should be within the prescribed limits. These days fund house charge around 2.50% as management fees. Evaluation of bond funds involve it's assets allocation analysis, return's consistency, its rating profile, maturity profile, and its performance over a period of time. The bond fund with ideal mix of corporate debt and gilt fund should be selected.

DIFFERENT TYPES OF INVESTMENT


The following are brief descriptions for beginning investors to familiarize themselves with different kinds of investment options:

401K Plans
the easiest and most popular kind of investment is a 401K plan. This is due to the fact that most jobs offer this savings program where the money can be automatically deducted from your payroll check and you never realize it is missing

Life Insurance
Life Insurance policies are another kind of investment that is fairly popular. It is a way to ensure income for your family when you die. It allows you a sense of security and provides a valuable tax deduction.

92

Stocks
Stocks are a unique kind of investment because they allow you to take partial ownership in a company. Because of this, the returns are potentially bigger and they have a history of being a wise way to invest your money.

Bonds
a bond is basically a promise note from the government or a private company. You agree to give them a set amount of money as a loan and they keep it for a set number of years with a predetermined amount of interest. This is typically a safe bet and one that is a good investment for a first time investor because there is little risk of losing your money.

Mutual Funds
Mutual funds are a kind of investment that are based on the gains and losses of a shareholder. Basically one person manages the money of several or many investors and invests in a list of various stocks to lessen the effect of any losses that may occur.

Money Market Funds


a good short-term investment is a Money Market Fund. With this kind of investment you can earn interest as an independent shareholder.

93

Annuities
if you are interested in tax-deferred income, then annuities may be the right kind of investment for you. This is an agreement between you and the insurer. It works to produce income for you and protect your earning potential.

Brokered Certificates of Deposit (CDs)


CDs are a kind of investment where you deposit money for a set amount of time. The good thing about CDs is that you can take the money out at any time without paying a penalty fee. We all know life isn't predictable, so this is a nice feature to have in your option.

Real Estate
Real Estate is a tangible kind of investment. It includes your land and anything permanently attached to your piece of property. This may include your home, rental properties, your company or empty pieces of land. Real estate is typically a smart and can make you a lot of money over time

94

ON LINE TRADING PLATEFORM

When you place your orders electronically through our revolutionary on-line order entry system, you can route your orders DIRECTLY to hand-held devices in the trading pit. Your order is sent directly to the filling broker in the trading pit without any interruption of any kind. Compare this execution to that of other brokerage firms where your execution may involve up to six steps: You call your broker and place the order Your broker calls his central order desk The central order desk calls the exchange order desk The exchange order desk hands your order to a runner The runner takes your order to a trader in the pit Your order is finally executed At Farr Financial, your orders are executed like this: You enter the order on-line over the Internet or place it with the professional trade desk. The order is instantly received by the filling broker in the pit who immediately executes it

Investment process

95

The investment process involves a service of activity leading to purchase of securities or there investments alternatives. The investment can be divided in to five stages. I. Framing of investment policy II. Investment analysis III. Valuation IV. Portfolio contributes V. Portfolio evolution

96

Investment Process

Invt. Policy

Analysis

Valuation

Portfolio Construction

Portfolio Evaluation

- Investable Fund - Objectives -Knowledge

- Market - Industries - Company

- Intrinsic Value - Future Value -

-Diversification -Selection & Allocation

- Appraisal - Revision

97

MARKET ANALYSIS
Market analysis may take two distinct forms. In the first, it is a method used by investors to look at the market and try to determine whether it is going up or down, in order to make investment decisions. In the second, it is a field used by marketers to analyze the target market of their clients and determine the best courses of action to take to improve sales and profitability. Market analysis as used by investors involves looking at numerical data and attempting to discern patterns or determine probable future movement based on that data. Investors using market analysis will look at how prices within their specific sector are moving, how the market as a whole is tending, and what individual events might affect the prices of stocks and commodities they are trading in. When performing a market analysis, an investor must also consider events such as announced mergers, profit predictions for a coming quarter, and new technological discoveries. Some investors take a primarily mathematical approach to market analysis, looking at reams of historical market data and crunching every number at their disposal through their own algorithms in an attempt to predict the market's future path. Other investors take a more 'gut' approach to market analysis, relying on news sources and rumors surrounding companies' activities to sketch a rough picture of possible market tendency. From a marketer's perspective, marketing analysis consists of looking at every angle of a market to determine policies that will help a company capture more of a market share and make the share they already control more profitable. The market analysis of customer desire and satisfaction is a large part of marketing. Logit analysis, for example, surveys consumers and looks at needs that have not yet been met to predict how an untried product may perform in a fresh market. For companies innovating a new market, this is a crucial part of market analysis,

98

because producing too many units of a product results in a massive loss, while producing too few results in a loss of customer satisfaction and opens the door to competitors. Market analysis may also look at the share a company owns of a particular market, with the aim of determining how to acquire a larger share. Unlike logit analysis, this type of market analysis, known as market share analysis, is geared more towards entrenched product lines. The goal of market share analysis is not to determine whether a customer would purchase a product, but rather to examine customer loyalty levels, brand perception, and the overall competitive edge, and to come up with a strategy to draw market share away from competitors and increase one's own share. A number of software packages exist for many types of market analysis, usually taking the form of spreadsheets with fields for a wide array of data which is then processed and used to give a general analysis. Most marketing firms also include market analysis as part of their core package, with different degrees of depth available determining on the size and needs of the company.

99

Steps towards Building a Strong Financial Future


Financial planning assumes great importance in our lives as it helps in accumulating greater wealth as well as helps in gaining financial security. It is never too early or too late to start financial planning and saving. The key is to make a continuous effort to put away small amounts on a consistent basis. No matter how little you make or how high your expenses may seem, it is nearly always possible to put away at least some money for the future. While most of us do randomly save and invest in an array of financial instruments it is always a good idea to do the same in a planned and systematic way for best results. Here are six simple steps to help you plan better and help you towards building a stronger financial future.

1. Define your goals


Goals differ from person to person. Every personal wish and dream is a goal and we strive hard all our lives to achieve them. Buying a dream house, giving children a great education, marriages in the family, yearning for an early retirement, long deserved holidays in the Alps and the list goes on. Each of these goals also has a cost to it; a financial implication and commitment. It is important to define these goals and priorities them first. The next step is to calculate how much money you would need to realize most of them. Financial professionals often counsel investors to write down their goals. Their intention is not to make you ponder over the meaning of life, but to help you create the best plan to reach those goals along the way.

100

2. Estimate your present financial position


Having arrived at a ballpark kind of a figure of what is the likely requirement and the time frame for each of the goals it is now important to take stock of your present financial position. You need to estimate both your net worth and your net income/expenses. Your net worth, what accountants call a balance sheet, compares your assets (what you own) with your liabilities (what you owe). It's a snapshot of your financial condition at a specific time. Your net income/expenses help you see your monthly disposable income - the income you have left over after paying all necessary expenses. And that tells you how much you can afford to contribute to your financial goals each month.

3. Choose your investments according to your life stage


Ability and capacity to take risk varies and horizon for investments changes depending on the life stage one is in. The type of instrument best suited for an individual depends upon the life stage he or she is in. If you are between 20-40 years: People in their twenties and early thirties are in the beginning of their careers. The type of financial planning they do is often influenced by the work sector of their employment. Many are married and either thinking about having children or already have young ones around the home. People in their thirties and forties are established in their jobs and in the midst of raising a family. They are concerned about their children's future while perhaps equally concerned about elderly parents. Twenty to forty years stage is one where responsibilities are relatively less and hence risk taking capacity is at its highest. Apart from investing in tax-saving instruments,

101

investing a sizeable portion of your invest-able surplus in stocks-either directly or through a mutual fund makes imminent sense. This is the time to maximize the growth of your investments. You can consider 70-80% exposure in Equity & balance in Debt instruments If you are between 40-50 years: This is the age when one has to plan for expenses like kids higher education, their marriage, etc. In this stage, capacity to take risks is lower than in the earlier stage. Aggressive investing in stocks is not the done thing. In order to balance out the portfolio one should look at some conservative instruments like income funds, bonds and other fixed income instruments. One may consider reduction in exposure to equities to 40-60%. If you are between 50- 60 years: Retirement thoughts have now started and the larger expenditures such as childs marriage are lined up. At this stage, preservation of accumulated wealth should be your prime concern; hence growth takes a back seat. The portfolio requires churning to reallocate risks and a considerable portion of your wealth will need to be park in lower-risk, fixed income instruments. Liquidity is also a priority at this stage. A portion of your financial assets should be kept liquid and readily accessible for day-to-day needs and any kind of emergency. A mix of 30-40% in equity and balance in debt & other instruments is recommended.

102

Retirement:
Planning and accumulation for retirement is generally the most important accumulation goal which one addresses in his or her personal financial planning. Risk Management planning and asset allocation into different baskets helps in addressing many of the possible risks one encounters on the way to achieving financial goals. However the risk of living too long or outliving your income is the biggest risk during this period. One has to ensure that all the planning and investing pays-off now and the dividends and/or interest earned on lifelong investments form a steady stream of income sufficient for a decent living.

4. Invest Across Asset Classes to Diversify Risk


Risk Management is the cornerstone of any financial planning effort. One of the basic principles of portfolio building is diversification. As the old saying goes, "Don't put all your eggs in one basket." One can reduce the risk of investing over the long term by spreading out the investments and diversifying into different classes of assets like equities or stocks, bonds and fixed deposits, mutual funds and real estate. Within each category further diversification is also possible for e.g. buying equities or stocks of companies that are involved in different businesses.

5. Decide How Active You want to be and Implement Your Plan


Managing one's savings or investments, whether they are in stocks, bonds, mutual funds or real estate requires a good understanding of the markets. It may be worthwhile to invest some time in learning about these markets and investment options. In the absence of this, one could probably start out by investing in a Systematic Investment Plan of any good Mutual Fund.

6. Budgets for your Investments


103

Once all the planning is done, start investing. The best way is to keep aside a fixed sum of money every month for your Investment Budget. This way the expenses remain in control and you will be ensuring that you are moving towards your target. Ideally the amount should reflect your goals and your planning. It doesnt matter even if its as small an amount as Rs. 1000 per month.

RELATIONSHIP MANAGEMENT

104

Job Profile of an RM

To offer personalized service based on needs and requirements of each client One point contact for the client He is a Financial Advisor will advise the client not only on equity but MF,PMS,Insurance, Acquire and Retain clients

The Goal.

CUSTOMER FOR LIFE

Skills required

P - Polite, patience, perseverance E - Emotions...Managing Hope, Fear, Greed O - Openness and honesty P - Proactive, prepared, professional L - Listen and learn E Efficient

105

Working of HNI desk

Induct and Train RMs Activation List - RMs Meeting clients Welcome note Special Conditions to be kept confidential CMR based on profile References to build client list Rules to be adhered from Checklist Error free

Check List
First Meeting with Client- Fill Client Profile Sheet and make meeting Report Offline and Online client Attend morning meeting and inform clients accordingly Know your clients position Monitor position of clients Dealing errors Special Conditions Maintain MIS on weekly basis

106

Acquire new customers acquired from

Natural social circle Databases and telemarketing leads References of existing customers

Role of an RM

Research Offers Investment Story

RM
Offers Information Relationship Execution Consistency

Client
Demands Cost Speed Convenience Confidentiality

107

Role of an RM

RM
Consistency Information

Closing the deal

Relationship

108

Customer services in broking business


Commoditized business Quality as differentiator

Top Quality Customer services


Retaining a customer is relatively cheaper Customer was king, now he is emperor A bad service experience rankles for long time in memory

A bad service experience can prompt a customer to switch loyalty

The Challenge
How does Company provide top quality customer service?

Basic Principles Of Customer Services


Principle One Do onto others what you want others to do onto you Place yourself in customers shoes How do you feel when provided with poor Customer service? Principle Two Dont make customer run from pillar to post 109

Recall your experience in rationing office. One single phone call from customer should Solve his problem. Principle Three Under promise and over deliver Principle Four Mere smile is not enough, you must deliver solutions.

COMPARISON CHART OF INDIA INFOLINE VISA-VIS OTHER PLAYERS


Company name Brokerage exposure A/C opening charges AMC Tradingwith other Demat A/c India Info line ID:0.05 % one side Del:0.5 %Total India bulls ID:0.05 % one side ID-Cash: 6T Rs.700 Shs:4T DelCash:3T (500 for Trading Nil Yes Assigned to every client Yes ID- 10T Del-3T Rs.555 (Both trading & demat) Nil Yes Assigned to every client Yes Relationship manager Off trading line

110

Del:0.5 %Total Kotak ID:0.10 % one side Del:0.6 %Total Icici direct ID:0.05 % one side Del:0.75 Total Share khan ID:0.10 % one side Del:0.5 %Total

Shs:2T

only)

ID-4T del-4T

Rs.550

Rs.260

N.A

N.A

N.A

ID-4T del-Nil

Rs.750

Rs.350

N.A

N.A

Yes

ID-4T del-4T

Rs.750

Rs300

N.A

N.A

Yes

111

COMMON TRADING MISTAKES Lack of Knowledge and No Plan


It amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course. The stock market is not the place for the ill informed. But learning what you need is straightforward you just need someone to show you the way. The opposite extreme of this is those traders who spend their life looking for the Holy Grail of trading! Been there, done that! The truth is, there is no Holy Grail. But the good news is that you don't need it. Our trading system is highly successful, easy to learn and low risk.

Unrealistic Expectations
Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write out their resignation letter before they have even placed their first trade! Now, don't get us wrong. The stock market can be a great way to replace your current income and for creating wealth but it does require time. Not a lot, but some. So doesnt tell your boss where to put his job, just yet! Other beginners think that trading can be 100% accurate all the time. Of course this is unrealistic. But the best thing is that with our methods you only need to get 50-60% of your trades "right" to be successful and highly profitable. 112

Listening to Others
When traders first start out they often feel like they know nothing and that everyone else have the answers. So they listen to all the news reports and so called "experts" and get totally confused. And they take "tips" from their buddy, who got it from some cab driver We will show you how you can get to know everything you need to know and so never have to listen to anyone else, ever again!

Getting in the Way


By this we mean letting your ego or your emotions get in the way of doing what you know you need to do. When you first start to trade it is very difficult to control your emotions. Fear and greed can be overwhelming. Lack of discipline; lack of patience and over confidence are just some of the other problems that we all face. It is critical you understand how to control this side of trading. There is also one other key that almost no one seems to talk about. But more on this another time!

Poor Money Management


It never ceases to amaze us how many traders don't understand the critical nature of money management and the related area of risk management. This is a critical aspect of trading. If you don't get this right you not only won't be successful, you won't survive!

113

Fortunately, it is not complex to address and the simple steps we can show you will ensure that you don't "blow up" and that you get to keep your profits.

Only Trading Market in One Direction


Most new traders only learn how to trade a rising market. And very few traders know really good strategies for trading in a falling market. If you don't learn to trade "both" sides of the market, you are drastically limiting the number of trades you can take. And this limits the amount of money you can make.

114

RESEARCH METHODOLOGY

Research in Common parlance refers to the search for knowledge. One can also define research as a Scientific and Systematic search for pertinent information of a specific topic, it is the pursuit of truth with the help of study , observation , comparison and experiment.

RESEARCH DESIGN

Research design is actually the blue print of the research project and when implemented must bring out the information required for solving the identified problem. The research design indicates the method of research (i.e method of information gathering , the instruments of research, the method of sampling etc.). The Choice of research design depends upon the depth and extent of data required the cost benefits of research, the urgency of work and the time available for Completing it.

RESEARCH OBJECTIVE

The purpose of research is to acquire knowledge about the financial products of India Infoline.

115

DATA COLLECTION

The data used for the project can be divided into two major forms: 1) Primary Data 2) Secondary Data

Primary Data was collected by getting the feedback forms filled by the people we met in the organizations visited. We also used to write our daily reports based on our experiences of that particular day and maintained a record of the companys reaction on the product, as well as the presentation.

Secondary Data was collected by going through several websites of the companies on the Internet like www.nseindia.com,www.5paisa.com,www.indiainfoline.com etc. Information about the companies and the industry was also collected by going through financial papers and magazines like Economic Times,Business World,Business Today.etc.

116

SUGGESTION & RECOMMANDATIONS


After working out the strategy in the organization it was found out that many clients were demanding for: Improved services. Easy accessibility. Technical guidance . Timely receivability of statement of holdings and financial transaction. Door-to-door services . Communication should be proper way. Increase the response time.

SUGGESTIONS
1. Differentiate your service from competitors by introducing some new features. 2. Take continuous feedback from customer to improve the quality of services. 3. All the complimentary services should available under one roof.

117

4. Time-to-time proper incentives should be provided to the marketing executives, so that they put their best. 5. Focus on quality clients. As well as small clients also. 6. Every person in the organization must have the knowledge about the product and services so that he should be able to handle the customers all queries. 7. Employees should be behave in proper manner with the customer and should be accordingly dressed, it will present an impressive environment to the clients. 8. Every employee must posses the required certification like NCFM. 9. Communication between departments and with outside clients should be done through electronic media like E-mail.

118

CONCLUSION:
On the basis of analysis one could easily find that India Infoline Pvt Ltd is suited for big investors. The cost free demat scheme of India Infoline Pvt ltd could be said to be the scheme which any company has services provided by India InfoLine Pvt Ltd are unique which places it as a financial sure market.

119

QUESATIONNAIRE

The format of Questionnaire given to people is as follows:

Name of Person:

Contact Number:

E-mail Id

Are you interested in Share Market?

Yes

No

Do you invest in Share market?

Yes

No

Are you aware of India infoline?

Yes

No

Do you have a Demat Account?

Yes

No

Do you invest in IPO online?

Yes

No

Do you invest in Equities online?

Yes 120

No

Do you invest in Mutual Funds online? Are you aware of any Stock broking company? SHERKHAN MOTILAL OSWAL ICICI DIRECT HDFC INDIABULLS KOTAK ANY OTHER DONT KNOW ANY ONE

Yes

No

Presently in which security are you trading? Signature

121

BIBLIOGRAPHY

Company manuals Discussion with guide www investopedia.com www Indiainfoline.com www.karvy.com www.traderji.com www.motilaloswal.com www.kotaksecurities.com www.sharekhan.com www.icicisecurities.com www 5paisa.com

122

You might also like