A STUDY ON

INVESTMENTS IN FINANCIAL
MARKETS

ABSTRACT

A financial market is a market in which people and entities can trade financial securities,
commodities, and other fungible items of value at low transaction costs and at prices that
reflect supply and demand. Securities include stocks and bonds, and commodities include
precious metals or agricultural goods.
The project Investment in Financial Markets gives a brief idea regarding the various
investment options that are prevailing in the financial markets in India. With lots of
investment options like banks, Fixed Deposits, Government bonds, stock market, real
estate, gold and mutual funds the common investor ends up more confused than ever. Each
and every investment option has its own merits and demerits.
Any investor before investing should take into consideration the safety, liquidity, returns,
entry/exit barriers and tax efficiency parameters. We need to evaluate each investment
option on the above-mentioned basis and then invest. Today an investor faces too much
confusion in analyzing the various investment options available and then selecting the best
suitable one. In the present project, investment options are compared on the basis of returns
as well as on the parameters like safety, liquidity, term holding etc. thus assisting the
investor as a guide for investment purpose.
This is a project about analysis of investments which is modernizing or modifying day by
day in financial markets. The sooner one starts investing the better. By investing early, you
allow your investments more time to grow, whereby the concept of compounding increases
your income, by accumulating the principal and the interest or dividend earned on it, year
after year.

1. INTRODUCTION
India is a developing country. Now days many people are interested to invest in financial
markets especially on equities to get high returns, and to save tax in honest way. Equities
are playing a major role in contribution of capital to the business from the beginning.
A financial

market is

market

in

can trade financial securities, commodities,

and

which

people

and

other fungible items

of

entities
value

at

low transaction costs and at prices that reflect supply and demand. Securities include stocks
and bonds, and commodities include precious metals or agricultural goods.
The financial markets can be divided into different subtypes:

Capital markets which consist of:

Stock markets, which provide financing through the issuance of shares

or common stock, and enable the subsequent trading thereof.

Bond markets, which provide financing through the issuance of bonds, and
enable the subsequent trading thereof.

Commodity markets, which facilitate the trading of commodities.

Money markets, which provide short term debt financing and investment.

Derivatives

markets,

which

provide

instruments

for

the

management

of financial risk.

Futures markets, which provide standardized forward contracts for trading products
at some future date; see also forward market.

Insurance markets, which facilitate the redistribution of various risks.

Foreign exchange markets, which facilitate the trading of foreign exchange.

1.1 - NEED OF THE STUDY

A study on investment in financial markets is required for the following reasons:
To Keep The Value Of Your Money From Inflation
If you think wisely and look around with as an observer, you can easily understand that the
money you have today will not have the same value tomorrow. If you try to invest your
money with high return than the rate of inflation, your money value will grow.
To Get A Good Return From Your Idle Money
When you keep your money ideally in a savings account, you wont get much benefit. For
this purpose you can invest wisely in any investment scheme which has no tax for the
income from such investment, or the investment with less taxability or an investment with
high return. If you have some idle money or the money you should not need in near future,
invest in any long term high return investments and make grow your money.
To Satisfy Your Future Financial Goals
You have to accomplish so many financial goals such as marriage of self or children,
education of self or children, buying a residential accommodation, Good medical facility to
you and your family members, good retirement income etc. etc. For satisfying
these financial goals also you have to invest money from your existing source of income.
So you must invest from your counted bread, even if it is only enough for your daily needs.
Then you should grow an investing habit which is helpful for your future financial needs.
Provide Enough Money For Meeting Uncertain Future Needs
Some financial needs cannot be predicted early such as medical treatment of any critical
illness or accident, untimely death of the bread earner of your family etc. and even life after
retirement also uncertain up to a certain extent. So you have to make enough provision for
meeting such uncertain needs. Insurance and retirement schemes will help you in this case.
The present study tries to evaluate the different alternatives available in the market and the
investors awareness and preferences towards them.

1.2 - OBJECTIVES OF THE STUDY

To do the comparative analysis of different options in financial markets.
To analyze the investment patterns of different investors
To create awareness among the customers on different investment avenues.
To create marketing awareness of the Investment products and also identify the
potential for these products.
To suggest the best investment opportunities for potential investors.

1.3 - SCOPE OF THE STUDY

The primary objective was to analysis the market and find out the potential customer and
motivate or promote them to invest their money in modern Investment plan rather than
traditional Investment plan.
The project covers the investment patters in financial markets. For better understanding,
various strategies with different situations and actions have been given. It includes the data
collected in the recent years and also the investors approach towards investment in
financial markets in the recent years.
The study is an analysis of customers perception towards their capital investment in
financial markets. This study is aimed at providing useful insights so as to give an idea on
investments in financial markets

1.4 - RESEARCH METHODOLOGY

Achieving accuracy in any research requires in depth study regarding the subject. As the
prime objective of the project is compare various Investment products available in the
market with the existing players in the market and the impact of entry of private players in
the market, the research methodology adopted was basically based on primary data via
which the most recent and accurate piece of first hand information that could be collected
from all possible source. Secondary data was used to support primary data wherever
needed.
For the purpose of study, both primary and secondary data will be collected. The
observational method and survey research method is used to collect the primary data. The
main research instruments used the required data is a well-structured questionnaire. A
detailed questionnaire has been prepared to reflect the opinions of the customers towards
investment patterns in financial markets.
The necessary data is also been collected from official records and other published sources.
The collected data is classified, tabulated, analyzed and interpreted. Finally conclusion is
draw based on the study and suggestions are offered to the company for increasing its
customer base.
Sample Design:
For ascertaining the customers opinion towards investment in financial markets, 50
customers will be randomly selected from the Hyderabad city only.
Data Collection:
There are two types of data collection
1. Primary data
2. Secondary data

Primary Data

Primary data is personally developed data and it gives latest information and offers
much greater accuracy and reliability.

There are various sources for obtaining primary data i.e., Mail survey, personal
interview,

Field survey, panel research and observation approach etc.

The study is dependent on primary data to a maximum extent, which is collected by

way of structures personal interview with customers.

Primary data was collected using the following techniques:

Questionnaire method
Direct interview method
Observation method
The main tool used was the questionnaire method. Further direct interview method, where a
face to face formal interview will be taken. Lastly observation method was used
continuously with the questionnaire method, as one continuously observes the surrounding
environment he works in.
Secondary Data
Secondary data is the published data. It is already available for using and its saves time.
The mail source of secondary data are published market surveys, government publications
advertising research report and internal source such as sales, sales records orders, customers
complaints and other business record etc. the study has also depended on secondary data to
little extent, which is collected through internal source.

Sources of Secondary Data:

These source were use to obtain information on, Banks and other institutions history,
current issues, policies, procedures etc, wherever required.
Internet
Magazines
Newspapers
Journals
For this survey personal interview method was used for collecting primary data. This
survey was conducted by face to face interview customers and found to be best suited to
collect the primary data for this project.

1.5 - LIMITATIONS
Every study has its own limitations in terms of methodology and available resources for its
conduct. This study was not an exception and was carried out under the following
limitations:
Financial Markets are dynamic in nature
The research is confined to limited investment plans
The study is limited to investments in financial markets only. Other investments are
not taken into the purview of the study
The information related to investment in financial markets is very confidential, so
the respondents are not interested to reveal all the information
The research is carried out based on the primary and secondary data
The time is also one of the hindrances in the research
Some important information may not be available due to confidentiality involved in
it.
Some of the respondents may not be interested in providing information about their
investment in financial market
Secondary data may not be authentic.
Getting appointments with the people is difficult as most of the people were busy
and it was difficult to contact them again and again.

2. REVIEW OF LITERATURE
Literature suggests that major research in the area of investors behavior has been done by
behavioral scientists such as Weber, Shiller and Shefrin. Shiller who strongly advocated
that stock market is governed by the market information which directly affects the behavior
of the investors. Several studies have brought out the relationship between the
demographics such as Gender, Age and risk tolerance level of individuals. Of this the
relationship between Age and risk tolerance level has attracted much attention.
Horvath and Zuckerman suggested that ones biological, demographic and socioeconomic
characteristics; to get with his/her psychological makeup affects ones risk tolerance level.
Milkier suggested that an individuals risk tolerance is related to his/her household
situations, lifecycle stage and subjective factors.
Mittra discussed factors that were related to individual risk tolerance, which included years
until retirement, knowledge sophisticating, income and net worth Guiso, Jappelli and
Terlizzese, Bajtelsmit and venDerhei powell and Ansic, Jianakoplos and Bernasek,
Hariharan, Chapaman and Domain, Hortog, Ferrer-l-carbonell and jonke concluded that
males are more risk tolerant than females.
Wallach and kogan were perhaps tha first to study the relationship between risk tolerance
and age. Cohn, Lewellen et.al found risky asset fraction of the portfolio to be positively
correlated with income and age and negatively correlated with marital status. Morin and
Suarez found evidence of increasing risk aversion with age although the household appear
to become less risk averse as ther wealth increases. YOO found that the change in the risky
asset holdings were not uniform. He found individuals to increase their investments in risky
assets throughout their working life time, and decrease their risk exposure once they retire.

10

Lewellen et.al while identifying the systematic patterns of investment behavior exhibited by
individuals found age and expressed risk taking propensities to be inversely related with
major shifts taking place at age 55 and beyond. Indian studies on individual investors were
mostly confined to studies on share ownership, except a few.
The RBIs survey of ownership of shares and L.C. Guptas enquiry into the ownership
pattern of industrial Shares in India were a few in this direction. The NCAERs studies
brought out the frequent form of savings of individuals and the components of financial
investments of rural households. The Indian shareowners survey brought out a volley of
information on shareowners. Rajarajan V classified investors on the basis of their
demographics.
He has also brought out the investors characteristics on the basis of their investment size.
He found that the percentage of risky assets to total financial investments had declined as
the investor moves up through various stages in life cycle. Also investors lifestyles based
characteristics has been identified. The above discussion presents a detailed picture about
the various facets of risk studies that have taken place in the past. In the past. In the resent
study, the findings of many of these studies are verified.

11

2.1 - Theoretical Perspective

Investment:
The money you earn is partly spent and the rest saved for meeting future expenses. Instead
of keeping the savings idle you may like to use savings in order to get return on it in the
future which helps to your unplanned expenses.
Need of Investments:
We need to invest to generate a specified sum of money for a specific goal in life and its
make a provision for an uncertain future. One of the important reasons why we need to
invest wisely is to meet the cost of Inflation. Inflation is the rate by which the cost of living
increases. The cost of living is simply what it costs to buy the goods and services you need
to live. Inflation causes money to lose value because it will not buy the same amount of a
good or a service in the future as it does now or did in the past.
For example, if there was a 6% inflation rate for the next 20 years, a Rs. 100 purchase
today would cost Rs. 321 in 20 years. This is why it is important to consider inflation as a
factor in any long-term investment strategy. Remember to look at an investment's 'real' rate
of return, which is the return after inflation. The aim of investments should be to provide a
return above the inflation rate to ensure that the investment does not decrease in value.
When to start Investing:
The sooner one starts investing the better. By investing early you allow your investments
more time to grow, whereby the concept of compounding (as we shall see later) increases
your income, by accumulating the principal and the interest or dividend earned on it, year
after year. The three golden rules for all investors are:
1) Invest early
2) Invest regularly and
3) Invest for long term and not short term

12

Steps to Investing:
Before making any investment, one must ensure to:
1. Obtain written documents explaining the investment
2. Read and understand such documents
3. Verify the legitimacy of the investment
4. Find out the costs and benefits associated with the investment
5. Assess the risk-return profile of the investment
6. Know the liquidity and safety aspects of the investment
7. Ascertain if it is appropriate for your specific goals
8. Compare these details with other investment opportunities available
9. Examine if it fits in with other investments you are considering
10. Deal only through an authorized intermediary
11. See all clarifications about the intermediary and the investment
12. Explore the options available to you if something were to go

Interest: When we borrow money, we are expected to pay for using it this is known as
Interest. Interest is an amount charged to the borrower for the privilege of using the lenders
money. Interest is usually calculated as a percentage of the principal balance (the amount of
money borrowed). The percentage rate may be fixed for the life of the loan, or it may be
variable, depending on the terms of the loan.
Factors Determining Interest Rates: When we talk of interest rates, there are different
types of interest rates - rates that banks offer to their depositors, rates that they lend to their
borrowers, the rate at which the Government borrows in the 8 Bond/Government Securities
market, rates offered to investors in small savings schemes like NSC, PPF, rates at which
companies issue fixed deposits etc.

13

The factors which govern these interest rates are mostly economy related and are
commonly referred to as macroeconomic factors. Some of these factors are:

Demand for money

Level of Government borrowings

Supply of money

Inflation rate

The Reserve Bank of India and the Government policies which determine some of the
variables mentioned above.
Options Available for Investment:
One may invest in:

Physical assets like real estate, gold/jewelry, commodities etc. and/or

Financial assets such as fixed deposits with banks, small saving instruments with
post offices, insurance/provident/pension fund etc. or securities market related
instruments like shares, bonds, debentures etc.

Investment Plan in the Past Scenario:

1. Bank Fixed Deposits
2. Saving Bank Account
3. Post Office Savings
4. NSC (National Savings Certificates)
5. Kisan Vikas Patra
1. Bank Fixed Deposits:
Bank Fixed Deposits are also known as Term Deposits. In a Fixed Deposit Account, a
certain sum of money is deposited in the bank for a specified time period with a fixed rate
of interest. The rate of interest for Bank Fixed Deposits depends on the maturity period. It
is higher in case of longer maturity period. There is great flexibility in maturity period and

14

it ranges from 7days to 10 years. The interest is compounded annually and is added to the
principal amount.
2. Savings Bank Account:
Savings Bank Account is often the first banking product people use, which offers low
interest (4%-5% p.a.), making them only marginally better than fixed deposits.
3. Post Office Savings:
Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed
through any post office. It provides an interest rate of 8% per annum, which is paid
monthly. Minimum amount, which can be invested, is Rs. 1,000/- and additional investment
in multiples of 1,000/-. Maximum amount is Rs. 3,00,000/- (if Single) or Rs. 6,00,000/- (if
held Jointly) during a year. It has a maturity period of 6 years. A bonus of 10% is paid at the
time of maturity. Premature withdrawal is permitted if deposit is more than one year old. A
deduction of 5% is levied from the principal amount if withdrawn prematurely; the 10%
bonus is also denied.
4. National Savings Certificates:
National Savings Certificates (NSC) are certificates issued by Department of post,
Government of India and are available at all post office counters in the country. It is a long
term safe savings option for the investor. The scheme combines growth in money with
reductions in tax liability as per the provisions of the Income Tax Act, 1961. The duration
of a NSC scheme is 6 years.
5. Kisan Vikas Patra:
Kisan Vikas Patra (KVP) is a saving instrument that provides interest income similar to
bonds. Amount invested in Kisan Vikas Patra doubles on maturity after 8 years & 7 months.
Kisan Vikas Patra can be purchased by the following:

An adult in his own name, or on behalf of a minor,

A minor,

A Trust,

Two adults jointly

15

Kisan Vikas Patra are available in the denominations of Rs100, Rs500, Rs1,000, Rs5,000,
Rs10,000 & Rs50,000. There is no maximum limit on purchase of KVPs. Premature
encashment of the certificate is not permissible except at a discount in the case of death of
the holder(s), forfeiture by a pledgee and when ordered by a court of law.
Investment Plan in the Present Scenario:
1. Shares
2. Mutual Fund
3. ULIP
4. Provident Funds
5. Bonds
6. Commodities
7. Currencies
8. Real Estate
1. Shares:
A share is a unit of account for various financial instruments including stocks, mutual
funds, limited partnerships, and REIT's. 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.
A company's stock price reflects what investors think about the stock, not necessarily what
the company is "worth." For example, companies that are growing quickly often trade at a
higher price than the company might currently be "worth." Stock prices are also affected by
all forms of company and market news. Publicly traded companies are required to report
quarterly on their financial status and earnings. Market forces and general investor opinions
can also affect share price.

16

2. Mutual Fund:
Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down
and are generally below the inflation rate. Therefore, keeping large amounts of money in
bank is not a wise option, as in real terms the value of money decreases over a period of
time. One of the options is to invest the money in stock market. But a common investor is
not informed and competent enough to understand the intricacies of stock market. This is
where mutual funds come to the rescue.
A mutual fund is a group of investors operating through a fund manager to purchase a
diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to
invest in. By pooling money together in a mutual fund, investors can purchase stocks or
bonds with much lower trading costs than if they tried to do it on their own. Also, one
doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of
mutual funds is diversification.
3. ULIP:
Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of
protection and flexibility in investment. The investment is denoted as units and is
represented by the value that it has attained called as Net Asset Value (NAV). The policy
value at any time varies according to the value of the underlying assets at the time.
ULIP provides multiple benefits to the consumer. The benefits include:
Life protection
Investment and Savings
Flexibility
Adjustable Life Cover
Investment Options
Transparency
Options to take additional cover against
Death due to accident
17

 Disability
Critical Illness
Surgeries
Liquidity
Tax Planning
4. Provident Fund
Employee Provident Fund [also know as EPF] is one of the main platforms of savings in
India for nearly all people working in Government & Public sector Organizations. It is
important for every working individual to understand the importance of EPF and how it can
benefit him or her. The Employees' Provident Fund Organisation, is a statutory body of
the Government of India under the Ministry of Labour and Employment. It administers a
compulsory contributory Provident Fund Scheme, Pension Scheme and an Insurance
Scheme. It is one of the largest social security organisations in the world in terms of the
number of covered beneficiaries and the volume of financial transactions undertaken. It is
mandatory for every organization who have more than 20 employees on the payroll. If you
are working in an organization who have more than 20 employees, and the employer is not
giving you EPF benefit, you can official complaint to EPF organization.
Employee Provident Fund Benefits
EPF scheme benefits employees in following essential needs:

Retirement

Medical Care

Housing

Family obligation

Education of Children

Financing of Insurance Polices

18

How EPF works?

Under the EPF Scheme both the employees and employer contribute equally to the
Employee Provident fund at the rate of 12% of the basic wages, dearness allowance and
retaining allowance, if any, payable to employees per month.
The rate of is fixed at 10% in the case of following establishments:

Any establishment with less then 20 employees.

Any sick industrial company and which has been declared as such by the Board for
Industrial and Financial Reconstruction

Any establishment which has at the end of any financial year accumulated losses
equal to or exceeding its entire net worth and

Any establishment engaged in manufacturing of (a) jute (b) Breed (d) coir and (e)
Guar gum Industries/ Factories.

5. Corporate & Government Bonds

The Bond Market in India with the liberalization has been transformed completely. The
opening up of the financial market at present has influenced several foreign investors
holding upto 30% of the financial in form of fixed income to invest in the bond market in
India. The bond market in India has diversified to a large extent and that is a huge
contributor to the stable growth of the economy. The bond market has immense potential in
raising funds to support the infrastructural development undertaken by the government and
expansion plans of the companies.
Sometimes the unavailability of funds become one of the major problems for the large
organization. The bond market in India plays an important role in fund raising for
developmental ventures. Bonds are issued and sold to the public for funds.
Bonds are interest bearing debt certificates. Bonds under the bond market in India may be
issued by the large private organizations and government company.

19

The bond market in India has huge opportunities for the market is still quite shallow. The
equity market is more popular than the bond market in India. At present the bond market
has emerged into an important financial sector.
The different types of bond market in India

Corporate Bond Market

Municipal Bond Market

Government and Agency Bond Market

Funding Bond Market

Mortgage Backed and Collateral Debt Obligation Bond Market

You can lend money to the government or a corporation and receive some interest. When
the stock market goes south, investors turn to bonds as a good diversification from the stock
market.

6. Commodities
A commodity-linked security refers to a security whose return is dependent to a certain
extent on the price level of a commodity, such as crude oil, gold, or silver, at maturity. For
example, the principal of a commodity-linked bond is indexed to movements of a
commodity index such as precious metal or oil. Commodity derivatives include both
exchange-traded and over-the-counter commodity derivatives such as swaps, futures and
forwards. They are used to hedge risk and to take advantage of arbitrage opportunities.
Commodities offer investors a number of benefits:

Hedge Against Inflation: Commodity cash prices may benefit from periods of
unexpected inflation, whereas stocks and bonds may suffer. Commodities are "real
assets", unlike stocks and bonds, which are "financial assets". Commodities,
therefore, tend to react to changing economic fundamentals in ways that are
different from traditional financial assets, particularly with respect to inflation.

20

Commodity prices usually rise when inflation is accelerating, so investing in

commodities can give portfolios a hedge against inflation. Conversely, stocks and bonds
tend to perform better when the rate of inflation is stable or slowing. Faster inflation
lowers the value of future cash flows paid by stocks and bonds because those future
dollars will be able to buy fewer goods and services than they would today.
However, this inflation advantage is captured more efficiently by direct investment in
commodities than, for example, investment in commodity-related equities whose prices
also reflect the financial prospects of the issuer or actively managed commodity futures
accounts, which tend to reflect the manager's skills at selecting the right commodities.

Performance/Return: Investor interest in commodities has soared in recent years

as the asset class has outperformed traditional assets such as stocks and bonds.

Enhanced Diversification: Portfolio diversification is the primary benefit of

holding commodities. The reason for that is the commodity investor is exposed to
commodity futures prices. Changes in those prices reflect changing expectations
about future supply and demand for commodities.

7. Currencies
Investing in foreign currency sounds like an exotic and risky venture. In fact, the foreign
exchange (or "forex") market used to be largely dominated by banks and institutional
investors. But now, online brokerages have changed all of that by enabling investors to
make trades with the click of a mouse.
Benefits and Risks of Investing in Foreign Currency
There are many benefits and risks to consider before deciding to invest in foreign currency.
While it's the largest and most liquid market in the world, investors should be cognizant of
the many risks that set it apart from traditional equity markets. Notably, the high leverage
used when investing in foreign currency can result in high volatility greater risk of loss.

21

The key benefits of investing in foreign currency include:

Large & Liquid Market: The foreign exchange market is the largest and most
liquid market in the world with average daily volume in excess of US$4 trillion.

Diversification: The foreign exchange market offers investors a way to diversify

away from potential risks associated with the U.S. dollar as an asset class.

The key risks of investing in foreign currency include:

High Leverage: The foreign exchange market moves in very small increments,
which makes high leverage (via margin) a necessity and risk for those directly
investing.

High Volatility: The foreign exchange market is known for high levels of volatility
due to economic reports, central bank interventions and other factors.

Investors should carefully consider risk management techniques to help mitigate these risks
and improve their long-term returns.
Easily Invest in Foreign Currency with ETFs
Exchange-traded funds (ETFs) represent one of the easiest ways to invest in foreign
currency. These funds purchase and manage a portfolio of currencies on behalf of investors.
The benefits are that investors do not have as much leverage-related risk and the purchase
itself can usually be done through a traditional stock broker rather than a foreign exchange
broker.
Investors should carefully read the ETFs' prospectus before investing in order to quantify
any fees charged and learn about other important information.

22

How to Invest in Foreign Currency Directly

Investors can also directly buy and sell individual currencies on margin through a foreign
exchange brokerage. With an initial deposit as low as $300 to $500, investors can purchase
currency with margin levels that range from 50:1 to more than 10,000:1. Of course, greater
leverage obtained through margin also translates to increased volatility and risk of
loss.Investors looking for an easy way to invest in foreign currency should consider ETFs.
These funds are easier to trade with traditional stock brokers and have fewer leveragerelated risks. However, those seeking more direct exposure to foreign currency can also
open a foreign exchange brokerage account and purchase the currencies directly using
margin.
8. Real Estate
Historically, real estate has been a very popular alternative investment. Of course, the 2008
crash in the U.S. real estate market made many nervous about investing in real estate. But
with prices still extremely low, real estate can be a good investment opportunity. The three
most accessible ways to invest in real estate are to buy rental property as an individual, to
join a real estate investment group or to buy shares in a real estate investment trust (REIT).
Buying rental property can usually provide steady, reliable income if you find the right
tenants. However, there are also expenses like property taxes and general upkeep that can
limit profits, as well as huge investments of time and effort.
Real estate investment groups offer a more hands-off, low-risk method of investing in
real estate. A group of individual investors contributes money to a company that purchases
a property. The company manages the property in exchange for a portion of the monthly
rent. Another option is the real estate investment trust (REIT). They provide extremely
accessible ways for individuals to invest in real estate. An REIT is a group that invests in
various real estate properties, and receives preferential tax treatment from the IRS in
exchange for paying most of its income to shareholders. Investors can purchase shares of
REITs on public exchanges, making them one of the more liquid alternative investments.
Another upside is that, like stocks, shares in REITs pay out regular dividends

23

3. COMPANY PROFILE
INVESTLEAF MANAGEMENT SOLUTIONS PVT LTD
Investleaf Management Solutions incorporated as Private Limited company has
established itself as one of the Premier Investment Consultancy Firms, known for making
investing simpler, more understandable and profitable for the investors. The company
directly and through its affiliate programs offers a wide range of products & services viz:
Equity, Derivatives, Currency Futures, Commodities Trading, IPO's, Mutual Funds,
Insurance, Real Estate, Portfolio Management Services & Depository Services all under
one roof, for the convenience and benefit of its customers.

Equities
Investleaf offers you the best 3-IN-1 online trading accounts from different online trading
firms, blending the best of technology with traditional broking. Investleaf offers Equity
Trading through its business partner Investleaf Management Solutions Ltd. Investleaf
Management Solutions provided the prospect of researched investing to its clients, which
was hitherto restricted only to the institutions. Research for the retail investor did not exist
prior to Investleaf Management Solutions.

Mutual Funds
Investleaf has a dedicated team of research analysts specializing in mutual funds. This is a
unique feature not found in many other firms. The team comprises analysts from different
fields such as economics, statistics and finance among others. This diverse background
helps us to analyze funds and performance on a variety of parameters both conventional as
well as unconventional. We have developed a proprietary ranking of mutual funds which is
a combination of quantitative and qualitative factors. The team is equipped to serve both
institutional and retail clients. Our research includes independent objective analysis as well
as interactions with fund managers and asset management companies.

24

Commodities
Investleaf has a dedicated team of analysts specializing in commodities and commodities
trading. The team comprises analysts from different fields such as economics, agriculture
science, statistics, and finance among others. This diverse manpower mix helps us to do a
multi perspective analysis of all commodities and filter the information as per the duration
of the trading call. The team is equipped to serve both institutional and retail clients. Our
research, well recognized in the industry is based on primary surveys, interactions with
physical markets players, fundamental, derivatives, technical and statistical analysis, giving
it a sense of completeness.
Analysts have access to the latest market data, charts, market intelligence etc. constantly
analyzing the data to facilitate your trading decisions. Our research is aimed not only at the
long-term traders & investors, but also caters to the needs of short term / intra day traders.
The research calls are disseminated to clients through SMS Alerts, RM calls and email.

Real Estate
Investleaf brings together a range of services under a single roof.

New Projects aggregated across builders and pass our stringent project and builder
selection criteria and could be Commercial, Industrial or Residential properties.

Facilities

Management

for

Commercial

and

Residential

Complexes

for

housekeeping, building management and office support solutions.

Finance for Commercial and Residential Properties that call for specialist expertise.

Property Insurance Advisory on the right Insurance solutions.

25

Investment Research
Investleaf offers the most comprehensive deal coverage that covers Indias investment ecosystem. Investleaf offers information and reports on M&A, Project Financing, Initial Public
Offerings, Private Placements, Private Equity and Venture Capital transactions including
transaction terms, structures, deal amounts and valuations. It also contains entity
information on all companies involved in these transactions including target companies,
investors and advisors. The hosted platform provides information on demand and helps
reduce research time, allowing users to spend more time on analysis.
Investleaf uses advanced web tools to provide information in an intuitive and user-friendly
format. Investleaf also provides information in spreadsheet & pdf formats to make life of a
financial researcher easy. Investleaf is supported by a team of highly skilled analysts and
journalists who understand the information needs of clients. Users associated with private
equity, venture capital, investment banking, corporate law, finance and consulting or
anyone else with an interest in the Indian deal landscape will find Investleaf as an
indispensable resource.
Corporate Information:
Investleaf Management Solutions was formed as a partnership firm in 2007 and later
incorporated a private limited company in 2010. The company has around 120
employees. Its corporate office is located in Hyderabad, while the company also
marketing teams in US and UK. Investleaf Management Solutions is a fully integrated
management services company that employs the most advanced and prudent principles
for its working.
VISION
Investleaf Management Solutions' Vision is to build brand Value by innovating to deliver
consumer value and customer leadership faster, better and more completely than our
competition. This Vision is supported by two fundamental principles that provide the
foundation for all of our activities: Organizational Excellence and Core Values.

26

Attaining this Vision requires superior and continually improving performance in every
area and at every level of the organization. Investleaf's performance will be guided by a
clear and concise strategic statement for each business unit and by an ongoing Quest for
Excellence within all operational and staff functions. This Quest for Excellence requires
hiring, developing and retaining a diverse workforce of the highest caliber. To support this
Quest, each function employs metrics to define, and implements processes to achieve,
world-class status.
MISSION
The mission of Investleaf Management Solutions is to provide results-oriented advertising,
public relations, and marketing designed to meet our client's objectives by providing strong
marketing concepts and excelling at customer service. We seek to establish a long lasting
partnership with our clients. We desire to measure success for our clients through
awareness, increased service, or other criteria mutually agreed upon between the agency
and the clients. We are committed to maintaining a rewarding environment in which we can
accomplish our mission.
Management Team
Investleaf Management Solutions was founded by Srinivas Gattupalli and Vamshi Battini.
Investleaf believes in successfully delivering value for its customers, partners and
shareholders by way of superior products, services and timely execution.
Srinivas Gattupalli
An MBA Graduate & Financial Research Expert over 12 years of proven skill-sets in
leading Research & Financial services companies and currently pioneering his
entrepreneurial venture Investleaf Management Solutions. His areas of expertise include
Initial Public Offerings, Mergers & Acquisitions, Private Equity and Venture Capital.

27

Mr. Gattupalli is competent in leading functional teams by effectively mentoring and

guiding individual members, recruiting personnel, and training new recruits for successfully
developing new products. A committed financial expert desirous of assuming wider & more
challenging roles for spearheading organizational growth & profitability by utilizing vast
domain knowledge & functional abilities.
His other areas of business interest include web site designing, knowledge dissemination
through web portals, internet and digital marketing, and content development services. Mr.
Gattupalli joined as Research Associate with CapitalIQ in the year 2000 and gradually
moved on to work for leading research companies including Factset Research Systems,
R.R. Donnelley & Sons Company and GlobalData.
Vamshi B
An MCA graduate and co-promoter of Investleaf Management Solutions, Mr. Vamshi is
efficient in providing guidance and quality technology services to the organization. Mr.
Vamshi is based out in U.S from where he leads the marketing efforts of the organization.
His 10 years stint in the industry and his association with major companies has offered him
complex challenges which he handled efficiently.

INDUSTRY PROFILE
Financial Markets:
Finance is the pre-requisite for modern business and financial institutions play a vital role
in the economic system. It is through financial markets and institutions that the financial
system of an economy works. Financial markets refer to the institutional arrangements for
dealing in financial assets and credit instruments of different types such as currency,
cheques, bank deposits, bills, bonds, equities, etc.
Financial market is a broad term describing any marketplace where buyers and sellers
participate in the trade of assets such as equities, bonds, currencies and derivatives. They

28

are typically defined by having transparent pricing, basic regulations on trading, costs and
fees and market forces determining the prices of securities that trade.
Generally, there is no specific place or location to indicate a financial market. Wherever a
financial transaction takes place, it is deemed to have taken place in the financial market.
Hence financial markets are pervasive in nature since financial transactions are themselves
very pervasive throughout the economic system. For instance, issue of equity shares,
granting of loan by term lending institutions, deposit of money into a bank, purchase of
debentures, sale of shares and so on.
In a nutshell, financial markets are the credit markets catering to the various needs of the
individuals, firms and institutions by facilitating buying and selling of financial assets,
claims and services.
Classification of Financial Markets:
Financial markets

Organized markets

Unorganized markets

Capital Markets

Money Markets

Industrial Securities
Market

Money Lenders,
Indigenuos Bankers

Call Money Market

Primary Market

Commercial Bill Market

Secondary market

Treasury Bill Market

Government Securities
Market

Long-term loan market

Fig-1

29

CAPITAL MARKET:
The capital market is a market for financial assets which have a long or indefinite maturity.
Generally, it deals with long term securities which have a period of above one year. In the
widest sense, it consists of a series of channels through which the savings of the community
are made available for industrial and commercial enterprises and public authorities. As a
whole, capital market facilitates raising of capital.
The major functions performed by a capital market are:
1. Mobilization of financial resources on a nation-wide scale.
2. Securing the foreign capital and know-how to fill up deficit in the required
resources for economic growth at a faster rate.
3. Effective allocation of the mobilized financial resources, by directing the same to
projects yielding highest yield or to the projects needed to promote balanced
economic development.
Capital market consists of primary market and secondary market.
[ i ] Primary market:
Primary market is a market for new issues or new financial claims. Hence it is also called as
New Issue Market. It basically deals with those securities which are issued to the public for
the first time. The market, therefore, makes available a new block of securities for public
subscription. In other words, it deals with raising of fresh capital by companies either for
cash or for consideration other than cash. The best example could be Initial Public Offering
(IPO) where a firm offers shares to the public for the first time.
[ ii ] Secondary market:
Secondary market is a market where existing securities are traded. In other words,
securities which have already passed through new issue market are traded in this market.
Generally, such securities are quoted in the stock exchange and it provides a continuous and
regular market for buying and selling of securities. This market consists of all stock
exchanges recognized by the government of India.
30

MONEY MARKET:
Money markets are the markets for short-term, highly liquid debt securities. Money market
securities are generally very safe investments which return relatively low interest rate that
is most appropriate for temporary cash storage or short term time needs. It consists of a
number of sub-markets which collectively constitute the money market namely call money
market, commercial bills market, acceptance market, and Treasury bill market.
DERIVATIVES MARKET:
The derivatives market is the financial market for derivatives, financial instruments like
futures contracts or options, which are derived from other forms of assets. A derivative is
a security whose price is dependent upon or derived from one or more underlying
assets. The derivative itself is merely a contract between two or more parties. Its value is
determined by fluctuations in the underlying asset. The most common underlying assets
include stocks, bonds, commodities, currencies, interest rates and market indexes. The
important financial derivatives are the following:

Forwards: Forwards are the oldest of all the derivatives. A forward contract refers
to an agreement between two parties to exchange an agreed quantity of an asset for
cash at a certain date in future at a predetermined price specified in that agreement.
The promised asset may be currency, commodity, instrument etc.

Futures: Future contract is very similar to a forward contract in all respects

excepting the fact that it is completely a standardized one. It is nothing but a
standardized forward contract which is legally enforceable and always traded on an
organized exchange.

Options: A financial derivative that represents a contract sold by one party (option
writer) to another party (option holder). The contract offers the buyer the right, but
not the obligation, to buy (call) or sell (put) a security or other financial asset at an
agreed-upon price (the strike price) during a certain period of time or on a specific
date (exercise date). Call options give the option to buy at certain price, so the buyer

31

would want the stock to go up. Put options give the option to sell at a certain price,
so the buyer would want the stock to go down.

Swaps: It is yet another exciting trading instrument. Infact, it is the combination of

forwards by two counterparties. It is arranged to reap the benefits arising from the
fluctuations in the market either currency market or interest rate market or any
other market for that matter.

FOREIGN EXCHANGE MARKET:

It is a market in which participants are able to buy, sell, exchange and speculate on
currencies. Foreign exchange markets are made up of banks, commercial companies,
central banks, investment management firms, hedge funds, and retail forex brokers and
investors. The Forex market is considered to be the largest financial market in the world. It
is a worldwide decentralized over-the-counter financial market for the trading of currencies.
Because the currency markets are large and liquid, they are believed to be the most efficient
financial markets. It is important to realize that the foreign exchange market is not a
single exchange, but is constructed of a global network of computers that connects
participants from all parts of the world.
COMMODITIES MARKET:
It is a physical or virtual marketplace for buying, selling and trading raw or primary
products. For investors' purposes there are currently about 50 major commodity markets
worldwide

that

facilitate

investment

trade

in

nearly

100

primary

commodities. Commodities are split into two types: hard and soft commodities. Hard
commodities are typically natural resources that must be mined or extracted (gold, rubber,
oil, etc.), whereas soft commodities are agricultural products or livestock (corn, wheat,
coffee, sugar, soybeans, pork, etc.)
INDIAN FINANCIAL MARKETS:
India Financial market is one of the oldest in the world and is considered to be the fastest
growing and best among all the markets of the emerging economies.
The history of Indian capital markets dates back 200 years toward the end of the 18th
century when India was under the rule of the East India Company. The development of the
32

capital market in India concentrated around Mumbai where no less than 200 to 250
securities brokers were active during the second half of the 19th century.
The financial market in India today is more developed than many other sectors because it
was organized long before with the securities exchanges of Mumbai, Ahmadabad and
Kolkata were established as early as the 19th century.
By the early 1960s the total number of securities exchanges in India rose to eight, including
Mumbai, Ahmadabad and Kolkata apart from Madras, Kanpur, Delhi, Bangalore and Pune.
Today there are 21 regional securities exchanges in India in addition to the centralized NSE
(National Stock Exchange) and OTCEI (Over the Counter Exchange of India).
However the stock markets in India remained stagnant due to stringent controls on the
market economy that allowed only a handful of monopolies to dominate their respective
sectors. The corporate sector wasn't allowed into many industry segments, which were
dominated by the state controlled public sector resulting in stagnation of the economy right
up to the early 1990s. Thereafter when the Indian economy began liberalizing and the
controls began to be dismantled or eased out; the securities markets witnessed a flurry of
IPOs that were launched. This resulted in many new companies across different industry
segments to come up with newer products and services.
A remarkable feature of the growth of the Indian economy in recent years has been the role
played by its securities markets in assisting and fuelling that growth with money rose
within the economy. This was in marked contrast to the initial phase of growth in many of
the fast growing economies of East Asia that witnessed huge doses of FDI (Foreign Direct
Investment) spurring growth in their initial days of market decontrol. During this phase in
India much of the organized sector has been affected by high growth as the financial
markets played an all-inclusive role in sustaining financial resource mobilization. Many
PSUs (Public Sector Undertakings) that decided to offload part of their equity were also
helped by the well-organized securities market in India.
The launch of the NSE (National Stock Exchange) and the OTCEI (Over the Counter
Exchange of India) during the mid 1990s by the government of India was meant to usher in
an easier and more transparent form of trading in securities. The NSE was conceived as the
market for trading in the securities of companies from the large-scale sector and the OTCEI
33

for those from the small-scale sector. While the NSE has not just done well to grow and
evolve into the virtual backbone of capital markets in India the OTCEI struggled and is yet
to show any sign of growth and development. The integration of IT into the capital market
infrastructure has been particularly smooth in India due to the countrys world class IT
industry. This has pushed up the operational efficiency of the Indian stock market to global
standards and as a result the country has been able to capitalize on its high growth and
attract foreign capital like never before.
The regulating authority for capital markets in India is the SEBI (Securities and Exchange
Board of India). SEBI came into prominence in the 1990s after the capital markets
experienced some turbulence. It had to take drastic measures to plug many loopholes that
were exploited by certain market forces to advance their vested interests. After this initial
phase of struggle SEBI has grown in strength as the regulator of Indias capital markets and
as one of the countrys most important institutions.

Stock Exchanges in India:

Stock Exchanges are an organized marketplace, either corporation or mutual organization,
where members of the organization gather to trade company stocks or other securities. The
members may act either as agents for their customers, or as principals for their own
accounts.
As per the Securities Contracts Regulation Act, 1956 a stock exchange is an association,
organization or body of individuals whether incorporated or not, established for the purpose
of assisting, regulating and controlling business in buying, selling and dealing in securities.
Stock exchanges facilitate for the issue and redemption of securities and other financial
instruments including the payment of income and dividends. The record keeping is central
but trade is linked to such physical place because modern markets are computerized. The
trade on an exchange is only by members and stock broker do have a seat on the exchange.

34

List of Stock Exchanges in India

1. National Stock Exchange
2. OTC Exchange of India

Regional Stock Exchanges

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Ahmedabad
Bangalore
Bhubaneswar
Calcutta
Cochin
Coimbatore
Delhi
Guwahati
Hyderabad
Jaipur
Ludhiana
MadhyaPradesh
Madras
Magadh
Mangalore
Table-1

35

4. DATA ANALYSIS & INTERPRETATIONS

4.1 - HISTORICAL RETURNS
Savings Bank Account
Since 2003 the interest rate for deposits in savings bank account was 3.5 %. In 2010, banks
were asked to calculate interest on deposits in savings bank account on a daily basis. In
May 2011, the rate was increased to 4 % and then from Aug 2011, RBI deregulated the
savings bank interest rate. It means that banks have no minimum or maximum cap on the
savings bank interest rate. As on March 2012, the savings bank interest rates in some banks
have been tabulated below.

Name

of Under Rs. Over Rs. 1

the bank

1 lakh

lakh

Yes Bank*

6.0%

7.0%

Ind 5.5%

6.0%

Zen

5.5%

6.0%

Karnataka

5.0%

5.0%

Indus
Bank

Bank
Table-2
Fixed Deposits
The best fixed deposits rates as on March 2012 are listed in the table below:
Institution
Co-Operative Banks
Bharat Co-operative Bank

Interest % p.a

Bharat Co-operative Bank

10.65

Period

10.75

Investment (rs)

333 Rs. 15 lakh and above

days
500 Rs. 15 lakh and above
days
Above
Above Rs. 25 lakh
12
months
to
24
months

10.5
Thane Janata Sahakari Bank

36

10.3

Above
Upto Rs. 25 lakh
12
months
to
24
months
2 years Less than Rs. 15 lakh
only

Thane Janata Sahakari Bank

Bombay Mercantile
operative Bank

Co- 10.25

Foreign Banks
Abu
Bank

Dhabi

Commercial 9.5
9.25

Abu Dhabi Commercial

Bank
Standard Chartered Bank
9.25
9.25
Abu Dhabi Commercial
Bank
HSBC
9
Indian
Banks

Private

500 days

Less than Rs. 1 cr

2 years
to
less
than
3
years
187 days
1 year to
less than
499 days
365 days

Less than Rs. 1 cr

1 year to
less than
2 years
1 year to
less than
2 years
375 days
to
990
days

Min. Amt - Rs. 100, Max. Amt

- No limit

1 year to
less than
2 years
300 days
12
months
only
1 year to

Less than Rs. 15 lakh

Less than Rs. 15 lakh

Less than Rs. 1 cr
Less than Rs. 15 lakh

Sector
10.5

Lakshmi Vilas Bank

10.25
Tamilnad Mercantile Bank
10.1
Catholic Syrian Bank

Less than Rs. 1 cr

Less than Rs. 15 lakh

Public Sector/Nationalized
banks
9.75
Oriental Bank of Commerce
Punjab and Sind Bank
Corporation Bank
Punjab and Sind Bank

9.75
9.65
9.6
37

Upto Rs. 15 lakh

Less than Rs. 15 lakh
Upto Rs. 15 lakh

2 years
211 days Less than Rs. 5 cr
to
269
days
1 year to Above Rs. 25 lakh to less than
less than Rs. 50 lakh
2 years

9.55
Syndicate Bank
9.5
Indian Overseas Bank
Company Deposits
12.5
Jaypee Infratech Ltd.
12.25
Jindal Cotex Ltd.
12
Ind Swift Ltd.
11.75
Jaypee Infratech Ltd.
11.5
Damodar Threads Ltd.

36
Months
24
Months
36
Months
12
Months
24
Months
Table-3

Minimum Investment
20,000
25,000
10,000
20,000
5,000

Public Provident Fund

Interest rate has been increased to 8.6% per annum w.e.f. 01.12.2011.
Post Office Savings Schemes
From 01.12.2011, Interest rate has been increased to 8.2% per annum payable monthly.
RETURNS FROM G-SECS
During the last 12 months, India government bond yield for 10 year notes advanced 0.79
percent. From 1998 until 2011 India's Government Bond Yield for 10 Year Notes averaged
7.92 percent reaching an historical high of 12.26 percent in February of 1999 and a record
low of 4.95 percent in October of 2003.

38

Fig-2

Fig-3

39

RETURNS FROM MUTUAL FUNDS

The annualized returns of mutual funds are given below:

Equity Large cap

2yr

UTI
Opportunities
Fund (G)
10
HDFC Top 200 Fund
(G)
6.7
DSP-BR Top
Equity - RP (G)

3yr

5 yr

36.2

18.1

36

15.7

100
6.7

28.4
Table- 4

14.1

Fig- 4
Balanced funds

2yr

3yr

5 yr

HDFC Balanced

12.6

34.9

15.7

25.5

8.7

23.3
Table - 5

8.2

ICICI Pru Balanced

Fund (G)
9.8
ICICI Pru E & DVolatility Adv. (G)
8.4

40

Fig-5
RETURNS FROM COMMODITY TRADING
The data for Copper and Brent Crude oil are considered.
COPPER:
Year
2006
2007
2008
2009
2010
2011
2012

Price(in Rs /10 kg)

3327.502
2961.739
2803.52
2525.555
3432.389
4079.531
4174.489
Table-6

Fig-6
BRENT CRUDE OIL:
41

YoY %
-10.99%
-5.34%
-9.91%
35.91%
18.85%
2.33%

Year

Price(in Rs /10 BBL)

2006

29267.03

2007

28449.33

-2.79%

2008

43233.33

0.519661

2009

35999.74

-0.16732

2010

50784.74

0.410698

2011

57822.81
Table-7

0.138586

Fig-7

RETURNS FROM PRECIOUS METALS:

42

YoY %

The historical year wise average prices of the three precious metals, gold , silver and
platinum are given below.
Year

Gold
Price

Platinum
YoY %

(In Rs /10
2006
2007
2008
2009
2010
2011
2012

gm)
9002
9464
12227
15232
18243
24867
28001

5.13%
29.19%
24.58%
19.77%
36.31%
12.60%

Price

Silver
YoY %

Price

YoY %

(In Rs /10 gm)

(In Rs /10

27312.73

gm)
1775.97
1871.81
2138.86

5.40%
14.27%

2391.1
3237.22
5569.15
5607.97

11.79%
35.39%
72.03%
0.70%

18932.67
23569.41
25244.95
25300
Table-8

Fig-8

LINE GRAPH: GOLD

43

30.68%
24.49%
7.11%
0.22%

Fig-9
LINE GRAPH : PLATINUM

Fig-10

LINE GRAPH: SILVER

44

Fig-11

RETURNS FROM CURRENCY TRADING

Comparison of Indian Rupee with Top 5 foreign Currencies (by value)

INR / EUR INR / USD

INR / GBP

INR / CAD INR / AUD

2011

0.0152

0.0212

0.0132

0.021

0.0206

2010

0.0164

0.0218

0.0141

0.0224

0.0237

2009

0.0147

0.0205

0.0131

0.0233

0.0262

2008

0.0156

0.023

0.0124

0.0244

0.0272

Table-9

45

Fig-12
Comparison of Indian Rupee with Top 5 foreign Currencies (by yoy %)

2011
2010
2009

INR / EUR

INR / USD

INR / GBP

INR / CAD INR / AUD

-2.49%

-7.68%

6.48%

-13.91%

-24.43%

5.05%

-5.34%

13.41%

-7.95%

-12.80%

-5.91%

-10.93%

5.52%

-4.22%

-3.86%

Table-10

46

Fig-13
LIFE INSURANCE RETURNS
Insurance is an attractive option for investment. While most people recognize the risk
hedging and tax saving potential of insurance, many are not a aware of its advantages as an
investment option as well. Insurance products yield more compared to regular investment
options and this is besides the added incentives (bonuses) offered by insurers. You cannot
compare an insurance product with other investment schemes for the simple reason that it
offers financial protection from risks something that is missing in non-insurance products.
In fact, the premium you pay for an insurance policy is an investment against risk. Thus,
before comparing with other schemes, you must accept that a part of the total amount
invested in life insurance goes towards providing for the risk cover, while the rest is used
for savings. In life insurance except for term insurance, unlike non-life products you get
maturity benefits on survival at the end of the term. In other words, if you take a life
insurance policy for 20 years and survive and survive the term, the amount invested as
premium in the policy will come back to you with added returns. In the unfortunate event
of death within the tenure of the policy the family of the deceased will receive the sum
assured.

47

Now let us compare insurance as an investment options. If you invest INR 10000 in PPF,
your money grows to Rs.10950 at 9.5% interest over a year. But in this case, the access to
your funds will be limited. One can withdraw 50% of the initial deposit only after 4 years.
The same amount of Rs.10000 can give you an insurance cover of up to approximately
Rs.5 11 lakh (depending upon the plan, age and medical condition of the life insured etc)
and this amount can become immediately available to the nominee of the policyholder on
death. Thus insurance is a unique investment avenue that delivers sound returns in addition
to protection.
LIFE INSURANCE AS TAX PLANNING
Insurance serves as an excellent tax saving mechanism too. The Government of India has
offered tax incentives to life insurance products in order to facilitate the flow of funds into
productive assets. Under section 88 of income tax act 1961, an individual is entitled to a
rebate of 20% other annual premium payable on his/her and life of his/her children or adult
children.

RETURNS FROM REAL ESTATE

The CAGR return of Real Estate in different cities

Table-11

48

RETURNS FROM THE STOCK MARKET

BSE SENSEX

Fig-14

YEAR

CLOSE

YoY %

2006

13,786.91

2007

20,286.99

47.15%

2008

9,647.31

-52.44%

2009

17,464.81

81.03%

2010

20,509.09

17.43%

2011

15,454.92

-24.64%

2012

17,636.99

14.11%

2013

19458.15

10.32%
Table-12

49

INVESTOR PREFERENCES TOWARDS FINANCIAL MARKETS

1.

Age of the Respondent

Table 1:

Respondents Age

S.No.

Age

No. of Respondents

Percentage (%)

<=24

16%

25-28

18

36%

29-32

22

44%

>33

4%

50

100%

Total
Source: Primary Data

Table-13
Figure 1: Respondents Age

Source: Primary Data

Fig-15
Interpretation
The above graph illustrates that majority of the respondents i.e. people are in the age group of
29-32 years. Eight respondents in the survey are less than or equal to 24; 18 persons are in the
age between 25-28 years; and only 2 persons are aged about 33 years.

50

2.

Profession
Table 2:

Profession Of The Respondents

S. No.

Option

No. of Respondents

Percentage (%)

Businessman

11

22%

Private Employed

18

36%

Government Employed

16

32%

Others

10%

50

100%

Total
Source: Primary Data

Table-14
Figure 2: Profession Of The Respondents

Source: Primary Data

Fig-16
Interpretation
Of the 50 sample chosen for the survey, 36% of the respondents, representing 18 people, are
privately employed. 32% of the respondents are government employed, while 22% are
businessman, representing 11 people.

51

3.

Marital Status
Table 3:

Marital Status

S. No.

Option

No. of Respondents

Percentage (%)

Married

36

72%

Single

14

28%

50

100%

Total
Source: Primary Data

Table-15
Figure 3: Marital Status

Source: Primary Data

Fig-17
Interpretation
Out of the total 50 sample chosen, 36 respondents are married and 14 people are not married.
The marital status of a person has much of importance while making investments, as people
tend to invest more money, keeping in mind of the future of their children.

52

4.

Income Level Of The Respondents

Table 2:

Respondents Income Levels

S.No. Reasons

No. of Respondents Percentage (%)

<5,000 Rs

0%

5,000 10,000

19

38%

10,000 20,000

30

60%

Above 20,000

2%

50

100%

Total
Source: Primary Data
Table-16
Figure 4: Respondents Income Levels

Source: Primary Data

Fig-18
Interpretation
The above table shows that over 60% of the respondents are in the higher income group of more
than Rs. 10,000 income per month.

53

5.

Preferred Sector For Investing Money

Table 5:

Customer Preferred Investment Sector

S.No.

No. of Respondents

Percentage (%)

Option
Private Sector

28

56%

Government Sector

22

44%

50

100%

Total
Source: Primary Data

Table-17
Figure 5: Customer Preferred Investment Sector

Source: Primary Data

Fig-19
Interpretation
The above graph depicts that 28 of the total 50 respondents prefer to invest their money in
private sector, while 22 people prefer to invest in government sector.

54

6.

Preferred Investment Plan

Table 6:

Individuals Preferred Investment Plan

S.No.

Type of Investment

No. of Respondents

Percentage (%)

Bank FD

16%

ULIP

13

26%

Mutual Funds

10

20%

Stock Market

11

22%

SIP

16%

50

100%

Total
Source: Primary Data

Table-18
Figure 6: Individuals Preferred Investment Plan

Source: Primary Data

Fig-20
Interpretation
The above graph indicates that 26% of the respondents, representing 13 people, prefer to invest
in ULIPs, 11 people preferred investing in stocks, and 10 people preferred investing in mutual
funds.

55

7.

How much term of Investment Plans do you like most?

Table 7:

Customers Choice On Term Period For Investment Plan

S.No.

Option

No. of Respondents

Percentage (%)

0-3 Years

14

28%

3-6 Years

21

42%

6-10 Years

10

20%

Above 10 Years

10%

50

100%

Total
Source: Primary Data
Table-19

Figure 7: Customers Choice On Term Period For Investment Plan

Source: Primary Data

Fig-21
Interpretation
The above graph indicates that 21 of the respondents preferred 3-6 years investment plans,
while 10% people preferred 6-10 years investment plans. 14 people, representing 28% of the
sample, preferred the plans where the term period ranges between 0-3 years.

56

8.

Factors Influencing Investment Plans

Table 8:

Factors Influencing Investment Plans

S.No. Option

No. of Respondents

Percentage (%)

Growth

12

24%

Risk Cover

20

40%

Tax Benefit

16%

All of the Above

10

20%

50

100%

Total
Source: Primary Data

Table-20
Figure 8: Factors Influencing Investment Plans

Source: Primary Data

Fig-22
Interpretation
The above graph illustrates that majority of the people (40%) feel that risk cover is the primary
attribute for making investments in the financial markets. 24% of the respondents said that
growth of wealth is the factor for their investments, while 20% said all of the above factors.

57

9.

Risk Preference In Investment Plans

Table 9:

Customers Risk Preference While Taking Decision On Investments

S.No.

Option

No. of Respondents

Percentage (%)

High Risk

10

20%

Moderate Risk

15

30%

Low Risk

25

50%

Total
Source: Primary Data

50

100%

Table-21
Figure 9: Customers Risk Preference While Taking Decision On Investments

Source: Primary Data

Fig-23
Interpretation
The above graph indicates that 50% of the people preferred low risk, whereas 30% of the
respondents preferred moderate risk. High risk sample was low with 20%. It has been observed
in the survey that people who are of below 30 have willingness to achieve high growth for fulfill
their dreams and therefore, they want to invest their money in pure equity market rather then
debt or money market.

58

10.

Have You Ever Used Mutual Fund As An Investment Before?

Table 10: Usage Of Mutual Funds As An Investment By Investors

S.No.

No. of Respondents

Percentage (%)

Option
Yes

14

28%

No

36

72%

Total
Source: Primary Data

50

100%
Table-22

Figure 10: Usage Of Mutual Funds As An Investment By Investors

Source: Primary Data

Fig-24
Interpretation
The above graph indicates that 36 respondents never invest their money in mutual funds while
14 respondents said that they invest their money in mutual funds, anticipating low risk and good
returns.

59

11.

Do You Consider Inflation As A Significant Risk Before Making Investments?

Table 11: Investors Consideration On Inflation Before Making Investment Decisions

S.No.

No. of Respondents

Percentage (%)

Attribute
Yes

32

64%

No

18

36%

50

100%

Total
Source: Primary Data

Table-23
Figure 11: Investors Consideration On Inflation Before Making Investment Decisions

Source: Primary Data

Fig-25
Interpretation
The above graph illustrates 64% of the respondents said that they consider the inflation rates
before making investment decisions, aniticipating the higher the inflation rate, the lesser the
return on investments. 36% of the respondents, representing 18 people said that they would not
take into account the inflation rate when making investment plans.

60

12.

Is A Down Period In The Stock Market A Buying Opportunity?

Table 3:
S.No.

Customers Perception On Buying When The Stock Market Is Down

No. of Respondents

Percentage (%)

Option
Yes

42

84%

No

16%

50

100%

Total
Source: Primary Data

Table-24
Figure 1: Customers Perception On Buying When The Stock Market Is Down

Source: Primary Data

Fig-26
Interpretation
The above graph indicates that 84% of respondents believe that a down period of stock market
is a good opportunity for buying companies stocks, because they can buy more shares at a
lesser price. 16% of the respondents said that a down trend in share market will not influence
much in their investments plans.

61

13.

Is Life Insurance Reliable For Investment?

Table 4:
S.No.

Customers Preference Of Life Insurance As An Investment

No. of Respondents

Percentage (%)

Option
Yes

45

90%

No

10%

50

100%

Total
Source: Primary Data

Table-25
Figure 2: Customers Preference Of Life Insurance As An Investment

Source: Primary Data

Fig-27
Interpretation
The above graph indicates that 90% of respondents prefer life insurance as the most reliable
investment plan. Only 10% of the people said that life insurance is not the most reliable
investment plan.

62

14.

Preferred Company For Insuring Life

Table 5:

Preferred Company For Insuring Life

S.No.

No. of Respondents

Percentage (%)

Option
LIC

30

60%

Bajaj Alliance

16%

ICICI

16%

HDFC Standard Life

8%

50

100%

Total
Source: Primary Data

Table-26
Figure 3: Preferred Company For Insuring Life

Source: Primary Data

Fig-28
Interpretation
The above graph indicates that 60% of respondents prefer LIC as the most reliable company for
life insurance. Only 8% of the people preferred HDFC for life insurance.

63

15.

Do you advise your friends to invest in financial markets?

Table 6:
S.No.

Advise Friends To Invest In Financial Markets

No. of Respondents

Percentage (%)

Option
Yes

43

80%

No

20%

Total
Source: Primary Data

50

100%
Table-27

Figure 4: Advise Friends To Invest In Financial Markets

Source: Primary Data

Fig-29
Interpretation
The above graph indicates that 43 people representing 86% said that they would advise their
friends in investing in financial markets, while only 7 people said they would not advise their
friends in investing in financial markets.

64

5. FINDINGS & SUGGESTIONS

FINDINGS
36% of the respondents, representing 18 people, are privately employed. 32% of the
respondents are government employed, while 22% are businessman, representing 11
people
28 of the total 50 respondents prefer to invest their money in private sector, while
22 people prefer to invest in government sector
26% of the respondents, representing 13 people, prefer to invest in ULIPs, 11
people preferred investing in stocks, and 10 people preferred investing in mutual
funds
21 of the respondents preferred 3-6 years investment plans, while 10% people
preferred 6-10 years investment plans. 14 people, representing 28% of the sample,
preferred the plans where the term period ranges between 0-3 years
40% of the respondents feel that risk cover is the primary attribute for making
investments in the financial markets
50% of the people preferred low risk, whereas 30% of the respondents preferred
moderate risk while investing in financial markets
Due to political uncertainty, the stock market is highly volatile hence people were
very scared for investment
Company is getting its most of business in investments from ULIPs and share
market
Many of respondents agreed that down stock period is a good buying opportunity.

65

SUGGESTIONS
The creation of awareness about the need and importance of modern Investments is
vital
New product innovation, low money investment plans and better service is crucial
for the company to increase its market share
Majority of the respondents are not much aware on the returns if invested in mutual
funds. So necessary measures should be taken by creating awareness about the low
risk involved in investing in this product
Become more creative in capturing a wider range of customerS by using multiple
distribution channels

66

6. CONCLUSION
Change is very important and one whose goes which the changing environment always
succeeds, that is what I have learnt from the study. The competition has grown too much in
the Investment Sector with the opening of the sector.
On the basis of the project I can conclude that today, the market scenario is totally change
because people becoming more aware about new Investment plans which provides better
growth and more tax benefit. In earlier we invested our money in like FD, Kisan Vikas
Patra, Providend fund, Saving account and etc. but after some time of globalization we
want to invest our money in modern investment plans like Stock market, ULIP, MFs, SIP,
Commodities, Real Estate and etc. So people are moved gradually into that financial market
because it is more attractive.
when I joined the Summer Internship project that time market in the declined scenario and
inflation rate was going up everyday so I had to face some difficulties for convinced to
people for taking Investment because people were scared to invest their money in financial
market The another factor is most of the people invested their money in march due to tax
saving and some of the people were not aware to ULIP and MFs.
However, it was a great experience for me because where I could learn more about the
banking culture and how the employees are working and achieving the goal.

67

BIBLIOGRAPHY
REFERENCE BOOKS
Marketing Management

Philip Kotlar

Research And Methodology

C.K. Kothari

Direct Taxes

Dr. Vinod K. Singhania , Dr. Kapil Singhania

NEWSPAPERS:
Times of India
Business Standard

WEBSITES:
http://en.wikipedia.org/wiki/Financial_market
www.iciciprulife.com
www.stockmaster.com
www.greekshares.com
SEARCH ENGINE:
www.google.com
www.wikipedia.com

68

ANNEXURE
Name.
Occupation
Contact No....
1. Profession
a. Businessman

[ ]

b. Private Employed

[ ]

c. Government Employed

[ ]

d. Others

[ ]

2. Marital Status
a. Married

[ ]

b. Single

[ ]

3. Preferred Sector For Investing Money

a. Private Sector

[ ]

b. Government Sector

[ ]

4. Preferred Investment Plan

a. Bank FD

[ ]

b. ULIP

[ ]

c. Mutual Funds

[ ]

d. Stock Market

[ ]

5. How much term of Investment Plans do you like most?

a. 0-3 years

[ ]

b. 3-6 years

[ ]

c. 6-10 years

[ ]

d. Above 10 years

[ ]
69

6. Factors Influencing Investment Plans

a. Growth

[ ]

b. Risk Cover

[ ]

c. Tax Benefit

[ ]

d. All of the above

[ ]

7. Risk Preference In Investment Plans

a. High Risk

[ ]

b. Moderate Risk

[ ]

c. Low Risk

[ ]

8. Have You Ever Used Mutual Fund As An Investment Before?

a. Yes

[ ]

b. No

[ ]

9. Do You Consider Inflation As A Significant Risk Before Making Investments?

a. Yes

[ ]

b. No

[ ]

10. Is A Down Period In The Stock Market A Buying Opportunity?

a. Yes

[ ]

b. No

[ ]

11. Is Life Insurance Reliable For Investment?

c. Yes

[ ]

d. No

[ ]

70

12.

13.

Preferred Company For Insuring Life

a. LIC

[ ]

b. Bajaj Alliance

[ ]

c. ICICI

[ ]

d. HDFC

[ ]

Do you advise your friends to invest in financial markets?

a. Yes
[ ]
b. No

[ ]

71