CONTENTS

CHAPTERS TOPICS PAGE NO.

EXECUTIVE SYNOPSIS

CHAPTER 1 INDUSTRY PROOFILE

COMPANY PROFILE

CHAPTER 2 REVIEW OF LITERATURE

CHAPTER 3 RESEARCH METHODOLOGY

CHAPTER 4 CONCEPTUAL FRAMEWORK

CHAPTER 5 DATA ANALYSIS & INTERPRETATION

FINDINGS
CHAPTER 6 SUGGESTIONS
CONCLUSION

CHAPTER 7 BIBLIOGRAPHY
 DECLARATION

I hereby declare that this project report entitled “FINANCIAL PRODUCTS IN INDIA
INFOLINE” submitted by me in partial fulfillment for the award of “Master of
Business Administration” degree from JNTU and it has not been submitted previously
in part or full to any University or Institute.

Place: T.Swetha
Date: (O8Q91E0051)
 ACKNOWLEDGEMENT

I express my sincere gratitude to the management of INDIA INFOINE for permitting me

to do the project work.

I would like to convey my sincere gratitude and special thanks to MR. CHILLAIE

PAVAN KUMAR, BRANCH MANAGER for timely advice and scholarly guidance.

I am thankful to Mr. D. Rajiv Reddy, HOD, Department of Business Management for

the guidance and support extended.

PLACE: T.SUNITA.
DATE: 08Q91E0051.
EXECUTIVE SYNOPSIS
 FINANCIAL PRODUCTS

Financial products refer to those instruments that help you save, invest, get insurance or
get a mortgage. These are issued by various banks, financial institutions, stock
brokerages, insurance providers, credit card agencies and government sponsored entities.
Financial products are categorized in terms of their type or underlying asset class,
volatility, risk and return.

Financial Products: Types

The major types of financial products are:

 Shares: These represent ownership of a company. While shares are initially issued by
corporations to finance their business needs, they are subsequently bought and sold by
individuals in the share market. They are associated with high risk and high returns.
Returns on shares can be in the form of dividend payouts by the company or profits on
the sale of shares in the stock market. Shares, stocks, equities and securities are words
that are generally used interchangeably.
 Bonds: These are issued by companies to finance their business operations and by
governments to fund expenses like infrastructure and social programs. Bonds have a
fixed interest rate, making the risk associated with them lower than that with shares. The
principal or face value of bonds is recovered at the time of maturity.
 Treasury Bills: These are instruments issued by the government for financing its short
term needs. They are issued at a discount to the face value. The profit earned by the
investor is the difference between the face or maturity value and the price at which the
Treasury bill was issued.
 Options: Options are rights to buy and sell shares. An option holder does not actually
purchase shares. Instead, he purchases the rights on the shares.
 Mutual Funds: These are professionally managed financial instruments that involve
the diversification of investment into a number of financial products, such as shares,
bonds and government securities. This helps to reduce an investor’s risk exposure, while
increasing the profit potential.
 Certificate of Deposit: Certificates of deposit (or CDs) are issued by banks, thrift
institutions and credit unions. They usually have a fixed term and fixed interest rate.
 Annuities: These are contracts between investors and insurance companies, wherein
the latter makes periodic payments in exchange for financial protection in the event of an
unfortunate incident.

Mutual Funds in India

Mutual funds can be defined as the money-managing systems that are introduced to
professionally invest money collected from the public. The Asset Management
Companies (AMCs) manage different types of mutual fund schemes. The AMCs are
supported by various financial institutions or companies.

Derivatives
Derivatives are nothing but a kind of security whose price or value is determined by the
value of the underlying variables. It is more like a contract of future date in which two or
more parties are involved to alleviate future risk. Usually, derivatives enjoy high
leverage. Its value is affected by the volatility in the rates of the underlying asset.

Equity:

Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owner (the
stockholders) plus the retained earnings (or losses) is shown in liabilities side, also
referred to as “shareholder’s equity”.
 NEED FOR THE STUDY

“Financial Products” is a study of different kinds of financial products that are available
in the market. The study is done to know about the Investment industry in India.
“Financial products” cover the detailed study of the investment perspectives that are
available. The study also covers the in-depth study of different financial products like
Mutual funds, Derivatives, etc.

As the financial products have a major role to play in the financial decisions of any
organization, the study is done to know how much influence they have on
the financial position of any organization.

you should have a better grasp on how to choose the investments you need to build a
diversified portfolio, whether it’s for your child’s college fund or retirement savings.
 OBJECTIVE OF THE STUDY

The main objectives of the study are,

1. To know the trends in the financial products.

2. To understand how each financial product affects other areas of finance.

3. To get enlighten about the Indian Investment industry.

4. To study in detail about each financial product.

5. To find out the perception of investors towards various financial products

6. Study the volatility in Fidelity financial products for the period may-2010

to june-2010

7. To find out which funds is performing well.

 SCOPE OF THE STUDY

IndiaInfoline is an esteemed institution based all over India. The project research is being

carried out at one of the branches located in Hyderabad.

The study is being carried out on “Financial products” available in the

“Investment Industry”. The study is confined to a branch to assess the trends in the

financial products.
INDUSTRY PROFILE
 BSE

The Bombay Stock Exchange (BSE) (formerly, The Stock Exchange, Mumbai; popularly
called Bombay Stock Exchange, or BSE) is the oldest stock exchange in Asia and has the third
largest number of listed companies in the world, with 4900 listed as of Feb 2010. It is located
at Dalal Street,Mumbai, India. On Feb, 2010, the equity market capitalization of the companies
listed on the BSE was US$1.28 trillion, making it the largest stock exchange in South Asia and
the 12th largest in the world.

With over 4900 Indian companies listed & over 7700 scrips on the stock exchange, it has
a significant trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE
30", is a widely used market index in India and Asia. Though many other exchanges exist,
BSE and the National Stock Exchange of India account for most of the trading in shares in
India.

The hours of operation for the BSE quoted above are stated in terms of the local time (i.e.
GMT +5:30) in Mumbai (Bombay), India. BSE's normal trading sessions are on all days
of the week except Saturdays, Sundays and holidays declared by the Exchange in
advance.
History
Bombay Stock Exchange

The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the
1850s, when 4 Gujarati and 1 Parsi stockbroker would gather under banyan trees in front of
Mumbai's Town Hall. The location of these meetings changed many times, as the number of
brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875
became an official organization known as 'The Native Share & Stock Brokers Association'. In
1956, the BSE became the first stock exchange to be recognized by the Indian Government
under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE
Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In
2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts.
The development of Sensex options along with equity derivatives followed in 2001 and 2002,
expanding the BSE's trading platform. Historically an open outcry floor trading exchange, the
Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange
only fifty days to make this transition. This automated, screen-based trading platform called BSE
On-line trading (BOLT) currently has a capacity of 80 lakh orders per day. The BSE has also
introduced the world's first centralized exchange-based internet trading system, BSEWEBx.co.in
to enable investors anywhere in the world to trade on the BSE platform.

Timeline
Following is the timeline on the rise and rise of the Sensex through Indian stock market history.
1830's Business on corporate stocks and shares in Bank and Cotton presses started in Bombay.

1860-1865 Cotton price bubble as a result of the American Civil War

1870 - 90's Sharp increase in share prices of jute industries followed by a boom in tea stocks and
coal

1978-79 Base year of Sensex, defined to be 100.

1986 Sensex first compiled using a market Capitalization-Weighted methodology for 30

component stocks representing well-established companies across key sectors.

30 October 2006 The Sensex on October 30, 2006 crossed the magical figure of 13,000 and
closed at 13,024.26 points, up 117.45 points or 0.9%. It took 135 days for the Sensex to move
from 12,000 to 13,000 and 123 days to move from 12,500 to 13,000.

5 December 2006 The Sensex on December 5, 2006 crossed the 14,000-mark to touch 14,028
points. It took 36 days for the Sensex to move from 13,000 to the 14,000 mark.

6 July 2007 The Sensex on July 6, 2007 crossed the magical figure of 15,000 to touch 15,005
points in afternoon trade. It took seven months for the Sensex to move from 14,000 to 15,000
points.

19 September 2007 The Sensex scaled yet another milestone during early morning trade on
September 19, 2007. Within minutes after trading began, the Sensex crossed 16,000, rising by
450 points from the previous close. The 30-share Bombay Stock Exchange's sensitive index took
53 days to reach 16,000 from 15,000. Nifty also touched a new high at 4659, up 113 points.

The Sensex finally ended with a gain of 654 points at 16,323. The NSE Nifty gained 186 points to
close at 4,732.

26 September 2007 The Sensex scaled yet another height during early morning trade on
September 26, 2007. Within minutes after trading began, the Sensex crossed the 17,000-mark.
Some profit taking towards the end, saw the index slip into red to 16,887 - down 187 points from
the day's high. The Sensex ended with a gain of 22 points at 16,921.

9 October 2007 The BSE Sensex crossed the 18,000-mark on October 9, 2007. It took just 8
days to cross 18,000 points from the 17,000 mark. The index zoomed to a new all-time intra-day
high of 18,327. It finally gained 789 points to close at an all-time high of 18,280. The market set
several new records including the biggest single day gain of 789 points at close, as well as the
largest intra-day gains of 993 points in absolute term backed by frenzied buying after the news of
the UPA and Left meeting on October 22 put an end to the worries of an impending election.
15 October 2007 The Sensex crossed the 19,000-mark backed by revival of funds-based buying
in blue chip stocks in metal, capital goods and refinery sectors. The index gained the last 1,000
points in just four trading days. The index touched a fresh all-time intra-day high of 19,096, and
finally ended with a smart gain of 640 points at 19,059.The Nifty gained 242 points to close at
5,670.

29 October 2007 The Sensex crossed the 20,000 mark on the back of aggressive buying by
funds ahead of the US Federal Reserve meeting. The index took only 10 trading days to gain
1,000 points after the index crossed the 19,000-mark on October 15. The major drivers of today's
rally were index heavyweights Larsen and Toubro, Reliance Industries, ICICI Bank, HDFC Bank
and SBI among others. The 30-share index spurted in the last five minutes of trade to fly-past the
crucial level and scaled a new intra-day peak at 20,024.87 points before ending at its fresh
closing high of 19,977.67, a gain of 734.50 points. The NSE Nifty rose to a record high 5,922.50
points before ending at 5,905.90, showing a hefty gain of 203.60 points.

8 January 2008 The sensex peaks. It crossed the 21,000 mark in intra-day trading after 49
trading sessions. This was backed by high market confidence of increased FII investment and
strong corporate results for the third quarter. However, it later fell back due to profit booking.

13 June 2008 The sensex closed below 15,200 mark, Indian market suffer with major downfall
from January 21, 2008

25 June 2008 The sensex touched an intra day low of 13,731 during the early trades, then pulled
back and ended up at 14,220 amidst a negative sentiment generated on the Reserve Bank of
India hiking CRR by 50 bps. FII outflow continued in this week.

2 July 2008 The sensex hit an intra day low of 12,822.70 on July 2, 2008. This is the lowest that
it has ever been in the past year. Six months ago, on January 10, 2008, the market had hit an all
time high of 21206.70. This is a bad time for the Indian markets, although Reliance and Infosys
continue to lead the way with mostly positive results. Bloomberg lists them as the top two gainers
for the Sensex, closely followed by ICICI Bank and ITC Ltd.

6 October 2008 The sensex closed at 11801.70 hitting the lowest in the past 2 years.

10 October 2008 The Sensex today closed at 10527,800.51 points down from the previous day
having seen an intraday fall of as large as 1063 points. Thus, this week turned out to be the week
with largest percentage fall in the Sensex

18 May 2009 After the result of 15th Indian general election Sensex gained 2110.79
points from the previous close of 12173.42, a record one-day gain. In the opening trade
itself the Sensex evinced a 15% gain over the previous close which led to a two-hour
suspension in trading. After trading resumed, the Sensex surged again, leading to a full
day suspension of trading.

BSE indices

Bombay Stock Exchange

For the premier stock exchange that pioneered the securities transaction business in India, over a
century of experience is a proud achievement. A lot has changed since 1875 when 318 persons
by paying a then princely amount of Re. 1, became members of what today is called Bombay
Stock Exchange Limited (BSE).
Over the decades, the stock market in the country has passed through good and bad periods.
The journey in the 20th century has not been an easy one. Till the decade of eighties, there was
no measure or scale that could precisely measure the various ups and downs in the Indian stock
market. BSE, in 1986, came out with a Stock Index-SENSEX- that subsequently became the
barometer of the Indian stock market.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE
National Index (Base: 1983-84 = 100). It comprised 100 stocks listed at five major stock
exchanges in India - Mumbai, Calcutta, Delhi, Ahmedabad and Madras. The BSE National Index
was renamed BSE-100 Index from October 14, 1996 and since then, it is being calculated taking
into consideration only the prices of stocks listed at BSE. BSE launched the dollar-linked version
of BSE-100 index on May 22, 2006.

With a view to provide a better representation of the increasing number of listed companies,
larger market capitalization and the new industry sectors, BSE launched on 27th May, 1994 two
new index series viz., the 'BSE-200' and the 'DOLLEX-200'. Since then, BSE has come a long
way in attuning itself to the varied needs of investors and market participants. In order to fulfill the
need for still broader, segment-specific and sector-specific indices, BSE has continuously been
increasing the range of its indices. BSE-500 Index and 5 sectoral indices were launched in 1999.
In 2001, BSE launched BSE-PSU Index, DOLLEX-30 and the country's first free-float based index
- the BSE TECk Index. Over the years, BSE shifted all its indices to the free-float methodology
(except BSE-PSU index).

BSE disseminates information on the Price-Earnings Ratio, the Price to Book Value Ratio and the
Dividend Yield Percentage on day-to-day basis of all its major indices.

The values of all BSE indices are updated on real time basis during market hours and displayed
through the BOLT system, BSE website and news wire agencies.

All BSE Indices are reviewed periodically by the BSE Index Committee. This Committee which
comprises eminent independent finance professionals frames the broad policy guidelines for the
development and maintenance of all BSE indices. The BSE Index Cell carries out the day-to-day
maintenance of all indices and conducts research on development of new indices.
 NSE
The National Stock Exchange (NSE) is stock exchange located at Mumbai, India. It is the
largest stock exchange in India in terms of daily turnover and number of trades, for both equities
and derivative trading. NSE has a market capitalization of around Rs 47,01,923 crore (7 August
2009) and is expected to become the biggest stock exchange in India in terms of market
capitalization by 2009 end. Though a number of other exchanges exist, NSE and the Bombay
Stock Exchange are the two most significant stock exchanges in India, and between them are
responsible for the vast majority of share transactions. The NSE's key index is the S&P CNX
Nifty, known as the Nifty, an index of fifty major stocks weighted by market capitalisation.

NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and
other financial intermediaries in India but its ownership and management operate as separate
entities. There are at least 2 foreign investors NYSE Euro next and Goldman Sachs who have
taken a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover more than
1500 cities across India . In October 2007, the equity market capitalization of the companies
listed on the NSE was US$ 1.46 trillion, making it the second largest stock exchange in South
Asia. NSE is the third largest Stock Exchange in the world in terms of the number of trades in
equities. It is the second fastest growing stock exchange in the world with a recorded growth of
16.6%.

Origins
The National Stock Exchange of India was promoted by leading financial institutions at the behest
of the Government of India, and was incorporated in November 1992 as a tax-paying company. In
April 1993, it was recognized as a stock exchange under the Securities Contracts (Regulation)
Act, 1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994. The Capital market (Equities) segment of the NSE commenced operations in November
1994, while operations in the Derivatives segment commenced in June 2000.

Innovations

NSE has remained in the forefront of modernization of India's capital and financial markets, and
its pioneering efforts include:

 Being the first national, anonymous, electronic limit order book (LOB) exchange to trade
securities in India. Since the success of the NSE, existent market and new market structures
have followed the "NSE" model.
 Setting up the first clearing corporation "National Securities Clearing Corporation Ltd." in
India. NSCCL was a landmark in providing innovation on all spot equity market (and later,
derivatives) trades in India.
 Co-promoting and setting up of National Securities Depository Limited, first depository in
India.
 Setting up of S&P CNX Nifty.
 NSE pioneered commencement of Internet Trading in February 2000, which led to the
wide popularization of the NSE in the broker community.
 Being the first exchange that, in 1996, proposed exchange traded derivatives, particularly
on an equity index, in India. After four years of policy and regulatory debate and formulation,
the NSE was permitted to start trading equity derivatives
 Being the first and the only exchange to trade GOLD ETFs (exchange traded funds) in
India.
 NSE has also launched the NSE-CNBC-TV18 media centre in association with CNBC-
TV18.
 NSE.IT Limited, setup in 1999, is a 100% subsidiary of the National Stock Exchange of
India. A Vertical Specialist Enterprise, NSE.IT offers end-to-end Information Technology (IT)
products, solutions and services.

Markets
  Equity
 Futures and Options
 Retail Debt Market
 Wholesale Debt Market
 Currency futures
 MUTUAL FUND
 STOCKS LENDING & BROWING

August 2008 Currency derivatives were introduced in India with the launch of Currency Futures in
USD INR by NSE. Currently it has also launched currency futures in EURO, POUND & YEN.
Interest Rate Futures was introduced for the first time in India by NSE on 31st August 2009,
exactly after one year of the launch of Currency Futures.

NSE became the first stock exchange to get approval for Interest rate futures as recommended
by SEBI-RBI committee, on 31 August,2009, a futures contract based on 7% 10 Year GOI bond
(NOTIONAL) was launched with quarterly maturities.

Hours
NSE's normal trading sessions are conducted from 9:00 am India Time to 3:30 pm India Time on
all days of the week except Saturdays, Sundays and Official Holidays declared by the Exchange
(or by the Government of India) in advance. The exchange, in association with BSE (Bombay
Stock Exchange Ltd.), is thinking of revising its timings from 9.00 am India Time to 5.00 pm India
Time.

There were System Testing going on and opinions, suggestions or feedback on the New
Proposed Timings are being invited from the brokers across India. And finally on Nov 18, 2009
regulator decided to drop their ambitious goal of longest Asia Trading Hours due to strong
opposition from its members.

On Dec 16, 2009, NSE announced that it would pre-pone the market opening at 9am from Dec
18, 2009. So NSE trading hours will be from 9:00 am till 3:30 pm India Time.

However, on Dec 17, 2009, after strong protests from brokers, the Exchange decided to postpone
the change in trading hours till Jan 04, 2010.
NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India Time
NSE Milestones

 November 1992 Incorporation

 April 1993 Recognition as a stock exchange
 May 1993 Formulation of business plan
 June 1994 Wholesale Debt Market segment goes live
 November 1994 Capital Market (Equities) segment goes live
 March 1995 Establishment of Investor Grievance Cell
 April 1995 Establishment of NSCCL, the first Clearing Corporation
 June 1995 Introduction of centralised insurance cover for all trading members
 July 1995 Establishment of Investor Protection Fund
 October 1995 Became largest stock exchange in the country
 April 1996 Commencement of clearing and settlement by NSCCL
 April 1996 Launch of S&P CNX Nifty
 June 1996 Establishment of Settlement Guarantee Fund
 November 1996 Setting up of National Securities Depository Limited, first depository in
India, co-promoted by NSE
 November 1996 Best IT Usage award by Computer Society of India
 December 1996 Commencement of trading/settlement in dematerialised securities
 December 1996 Dataquest award for Top IT User
 December 1996 Launch of CNX Nifty Junior
 February 1997 Regional clearing facility goes live
 November 1997 Best IT Usage award by Computer Society of India
 May 1998 Promotion of joint venture, India Index Services & Products Limited (IISL)
 May 1998 Launch of NSE's Web-site: www.nse.co.in
 July 1998 Launch of NSE's Certification Programme in Financial Market
 August 1998 CYBER CORPORATE OF THE YEAR 1998 award
 February 1999 Launch of Automated Lending and Borrowing Mechanism
 April 1999 CHIP Web Award by CHIP magazine
 October 1999 Setting up of NSE.IT
 January 2000 Launch of NSE Research Initiative
 February 2000 Commencement of Internet Trading
 June 2000 Commencement of Derivatives Trading (Index Futures)
 September 2000 Launch of 'Zero Coupon Yield Curve'
 November 2000 Launch of Broker Plaza by Dotex International, a joint venture between
NSE.IT Ltd. and i-flex Solutions Ltd.
 December 2000 Commencement of WAP trading
 June 2001 Commencement of trading in Index Options
 July 2001 Commencement of trading in Options on Individual Securities
 November 2001 Commencement of trading in Futures on Individual Securities
 December 2001 Launch of NSE VaR for Government Securities
 January 2002 Launch of Exchange Traded Funds (ETFs)
 May 2002 NSE wins the Wharton-Infosys Business Transformation Award in the
Organization-wide Transformation category
 October 2002 Launch of NSE Government Securities Index
 January 2003 Commencement of trading in Retail Debt Market
 June 2003 Launch of Interest Rate Futures
 August 2003 Launch of Futures & options in CNXIT Index
 June 2004 Launch of STP Interoperability
 August 2004 Launch of NSE’s electronic interface for listed companies
 March 2005 ‘India Innovation Award’ by EMPI Business School, New Delhi
 June 2005 Launch of Futures & options in BANK Nifty Index
 December 2006 'Derivative Exchange of the Year', by Asia Risk magazine
 January 2007 Launch of NSE – CNBC TV 18 media centre
 March 2007 NSE, CRISIL announce launch of IndiaBondWatch.com
 June 2007 NSE launches derivatives on Nifty Junior & CNX 100
 October 2007 NSE launches derivatives on Nifty Midcap 50
 January 2008 Introduction of Mini Nifty derivative contracts on 1st January 2008
 March 2008 Introduction of long term option contracts on S&P CNX Nifty Index
 April 2008 Launch of India VIX
 April 2008 Launch of Securities Lending & Borrowing Scheme
 August 2008 Launch of Currency Derivatives
 August 2009 Launch of Interest Rate Futures
 November 2009 Launch of Mutual Fund Service System
 December 2009 Commencement of settlement of corporate bonds
 February 2010 Launch of Currency Futures on additional currenc
 Stock Market
The market in which shares are issued and traded either through exchange or over-the-
counter market. Also known as the equity market, it is one of the moat vital of a market
economy as it provides companies with access to capital and investors with a slice of
ownership in the company and the potential of gains based on the company’s future
performance.

This market can be split into two main sections: the primary and secondary market.
The primary market is where new issues are first offered, with any subsequent trading
going on in the secondary market.

Capital/securities market

1. Primary Market 2. Secondary market

1. Primary Market: The new issue market represents the primary market where
new securities, i.e., share or bonds that have never been previously issued, are
offered. The main function of new issue market is to facilitate the transfer of
 resource from savers to entrepreneurs. The securities issued by companies for the
first time are designated as initial issue or initial public offer (IPO). The new issue
market activities were regulated by controller of capital issue (CCI) under the
provisions of the capital issues (control) act 1947. After the abolition of the office
if the CCI in 1992 the protection of the interest of the investors in securities
market and promotion of the development and regulation of the market/activity
became the responsibility of SEBI.

Players in the primary market:

• Merchant Banker / Book Building Lead Management.
• Register and transfer agent.
• Collecting and coordinating bankers.
• Advisor to the issue.
• Underwriters / Broker to the issue.
• Depository participant.
• Printers, Advertising Agencies, Mailing Agencies etc.

Initial public offerings (IPO’s)

Corporate may raise capital in the primary market by way of an initial public offer, rights
issue or private placement. An initial public offer (IPO) is the selling of securities to the
public in the primary market. This initial public offering can be made through the fixed
price method or a combination of both

In case the issuer chooses to issue securities through the book- building route
then as per SEBI guidelines, an issuer company can issue securities in the following
manner:
a) 100% of the net offer to the public through the book-building route,
b) 75% of the offer to the public through the book building process and 25%
through the fixed price portion.
 c) Under the 90% scheme, this percentage would be 90 and 10 respectively.
Issue Mechanism: the following are the methods by which new issue/Initial public
offering (IPO) is made
1. Public issue through prospectus.
2. offer for sale
3. Placement method
4. Right Issue and
5. Book Building

1. Public Issue through prospectus:

Under this method, the issuing companies themselves offer directly to the
general public a fixed number of shares at a stated price, which in the case of new
companies is invariably the face value of the securities, and in case of existing
companies, it may include a premium amount if any
The contents of prospectus are as follows.
• Name and registered office of the issuing company
• Board of Directors.
• Authorized, subscribed and proposed issue of capital to public
• Dates of opening and closing of subscription list.
• Name of Broker, Underwriters, and other from whom application forms
along with copies of prospectus can be obtained etc.

2. Offer for sale :

Another method by which securities can be issued is by means of an offer for
sale. Under this method, instead of the issuing company itself offering its shares
directly to the public, it offers through the intermediary of Issue houses/Merchants
Banks/Investment Banks (or) firms of stock Brokers.
The advantage of this method is that the issuing company is saved from the cost
and trouble of selling the shares to the public.
3. Placement Method:
Sale by an issue house or brokers to their own client of securities, which have
been previously purchased or subscribed. Under this method securities, are acquired
by the issue houses, as in offer for sale method, but instead of being subsequently
offered to the public, they are placed with the clients of the issue houses, each issue
house has a list of large private and institutional investors who are always prepared to
subscribe to any securities which are issued in this manner.

4. Right Issue:
In this case if companies whose shares are already listed and widely held, shares
can be offered by the existing shareholder. This is called Right Issue. Under this
method, the existing shareholders are offered the right to subscribe to share in
proportion to the number of shares they already hold

5. Book Building
Booking Building is basically a capital issuance process used in Initial public
offer (IPO), which aids price and demand discovery. It is a process used for
marketing a public offer of equity shares of a company. It is a mechanism where,
during the period for which the book for the IPO is open, bids are collected from
investors at various prices, which are above or equal to the floor price. The process
aims at tapping both wholesale and retail investors.
The offer/issue price is then determined after the bid closing date based on
certain evaluation criteria.

The Process :
• The issuer who is planning an IPO nominates a lead merchant banker as a
‘book runner’
• The issuer specifier the number of securities to be issued and the price band
for order.
 • The issuer also appoints syndicate member with whom order can be placed by
the investors.
• Investors place their order with a syndicate member who inputs the orders into
the ‘electronic book’. This process is called ‘bidding’ and to open auction.
• A book should remain open for a minimum of 5 days.
• Bids cannot be entered less than the floor price.
• Bids can be revised by the bidder before the issue closes.
• On the close of the book building period the book runner evaluates the bids on
the basis of the evaluation criteria which may include-
1. price aggression
2. investor quality
3. Earliness of bids, etc.

• The book runner and the company conclude the final price at which it is willing to
issue the stock and allocation of securities.
• Generally, the numbers of shares are fixed; the issue size gets frozen based on the
price per share discovered through the book building process.
• Allocation of securities is made to the successful bidders.
• Book building is a good concept and represents a capital market, which is in the
process of maturing.

Underwriting:
Underwriting means guaranteeing purchase of a stipulated amount of a new issue.
Underwriting is a financial service, which ensures the success of new issue. But mostly it
is undertaken on a commission basis knows as underwriter’s commission.

Merchant Banking:
Merchant banker is any person who is engaged in the business of issue management
either by making arrangement regarding selling, buying, or subscribing to the securities
as a manager, consultant advisor, or rendering corporate advisory service in relation to
such issue management.

Functions of Merchant Banks:

• The basic function of these banks is marketing corporate and other securities i.e.,
guaranteeing sales and distribution of securities.
• They guarantee the success of issues by underwriting them.
• They also provide all types of services related to receiving application, allotment,
collecting money, sending share and debenture certificates and so on.

SEBI GUIDELINES
Securities and Exchange Board of India (SEBI) was initially established as a non-
statutory body in April 1998. For
a. Dealing with all matters relating to the development and regulation
b. Providing investors protection

SEBI was authorized to

1. To regulate all merchant bank on issue activity.
2. To lay guidelines, and supervise and regulate the working of mutual
funds and
3. To oversee the working of stock exchange in India

Responsibilities of SEBI:
• Regulating the business in stock exchange and other securities markets.
• Registering and regulating the working of stockbroker, sub-brokers, share transfer
agents, bankers to an issue, trustee of trust deal, underwriters, merchant bankers,
 portfolio managers, and other intermediaries associated with the securities
markets.
• Registering and regulating of collective investment schemes including mutual
funds.
• Promoting and regulating the working of self-regulatory organizations.
• Prohibiting fraudulent and unfair trade practices relating to securities markets.
• Promoting investor’s education and training of intermediaries of securities
market.
• Prohibiting insiders trading in securities, and
• Regulating substantial acquisition of shares and takeover of companies.

2. Secondary market :
In secondary market the securities (share and debentures) already issued or
existing are traded. It is a market in which previously issued credit instrument are
bought and sold.

Stock exchange:
Stock exchange is a market where stocks, shares and other securities are bought and
sold. It is market where the owners of securities can dispose them of as and when
desire. Stock exchange has primary and secondary functions.
There are present 23 stock exchanges in the country, which are recognized by the
government under the securities contract (regulation) Act, 1956.21 of them are
regional ones. Two other exchanges are set up in the reforms era they are
1. National stock exchange (NSE)
2. over the counter exchange of India (OTCET)
Bombay stock exchange (BSE) is the country’s leading exchange. All stock
exchanges are managed by governing body, which consists of elected broker
director, public representatives, and government/SEBI.

Role and functions of stock exchange:

A well-organized stock exchange performs a numbers of useful functions they are as
follows:
• An organized stock exchange operating operating under the well-defined rules
and regulations minimizes the dangers of speculative dealings and price
manipulations.
• Stock exchange provides a ready; market for trading securities and this helps in
mobilization of capital
• Stock exchange helps in determining the price of securities.
• Stock exchange facilitates the mobilization of savings of the surplus units.
• Stock exchange increases the credit worthiness of the business enterprises.
 COMPANY PROFILE

COMPANY PROFILE

The India Info line group, comprising the holding company, India info line limited and its
wholly-owned subsidiaries, straddle the entire financial services space with offerings
ranging from equity research, equities and derivatives trading, commodities trading,
portfolio management services, mutual funds, life insurance, fixed deposits, go bonds and
other small savings instruments to loan products and investment banking.
The company has a network of over 2100 business locations (branches and sub-brokers)
spread across more than 450 cities and towns. the group caters to approximately a million
customers.
India Infoline Group subsidiaries:

• India Infoline Media and Research Services Limited

• India Infoline Commodities Limited
• India Infoline Marketing & Services
• India Infoline Investment Services Limited
• IIFL (Asia) Pvt Limited

Our Global Presence:

USA, Dubai, Singapore

History
We were founded in 1995 by Mr. Nirmal Jain (Chairman and Managing Director) as an
independent business research and information provider. We gradually evolved into a
one-stop financial services solutions provider. Our strong management team comprises
competent and dedicated professionals We are a pan-India financial services organization
across 1,361 business locations and a presence in 428 cities. Our global footprint extends
across geographies with offices in New York, Singapore and Dubai. We are listed on the
Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). We offer a
wide range of services and products comprising broking (retail and institutional equities
and commodities), wealth management, credit and finance, insurance, asset management
and investment banking. We are registered with the BSE and the NSE for securities
trading, MCX, NCDEX and DGCX for commodities trading, CDSL and NSDL as
depository participants. We are registered as a Category I merchant banker and are a
SEBI registered portfolio manager. We also received the FII license in IIFL Inc. IIFL
Securities Pte Ltd received approval from the Monetary Authority of Singapore to carry
out corporate advisory and dealing in securities operations. Two subsidiaries – India
Infoline Investment Services and Moneyline Credit Limited – are registered with RBI as
non-deposit taking non-banking financial services companies. India infoline Housing
Finance Ltd, the housing finance arm, is registered with the National Housing Bank.

Milestones
1995- Incorporated as an equity research and consulting firm with a client base that
included leading FIIs, banks, consulting firms and corporates. 1999- Restructured the
business model to embrace the internet; launched archives.indiainfoline.com mobilised
capital from reputed private equity investors. 2000- Commenced the distribution of
personal financial products; launched online equity trading; entered life insurance
distribution as a corporate agent. Acknowledged by Forbes as ‘Best of the Web’ and
‘...must read for investors’. 2004- Acquired commodities broking license; launched
Portfolio Management Service. 2005- Listed on the Indian stock markets. 2006- Acquired
membership of DGCX; launched investment banking services. 2007- Launched a
proprietary trading platform; inducted an institutional equities team; formed a Singapore
subsidiary; raised over USD 300 mn in the group; launched consumer finance business
under the ‘Moneyline’ brand. 2008- Launched wealth management services under the
‘IIFL Wealth’ brand; set up India Infoline Private Equity fund; received the Insurance
broking license from IRDA; received the venture capital license; received inprinciple
approval to sponsor a mutual fund; received ‘Best broker- India’ award from
FinanceAsia; ‘Most Improved Brokerage- India’ award from Asiamoney. 2009- Received
registration for a housing finance company from the National Housing Bank; received
‘Fastest growing Equity Broking House - Large firms’ in India by Dun & Bradstreet.

Company Structure
India Infoline Limited is listed on both the leading stock exchanges in India, viz. the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a
member of both the exchanges. It is engaged in the businesses of Equities broking,
Wealth Advisory Services and Portfolio Management Services. It offers broking services
in the Cash and Derivatives segments of the NSE as well as the Cash segment of the
BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a
one-stop solution for clients trading in the equities market. It has recently launched its
Investment banking and Institutional Broking business.
A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients.
These services are offered to clients as different schemes, which are based on differing
investment strategies made to reflect the varied risk-return preferences of clients

India Infoline Media and Research Services Limited

The content services represent a strong support that drives the broking, commodities,
mutual fund and portfolio management services businesses. Revenue generation is
through the sale of content to financial and media houses, Indian as well as global
It undertakes equities research which is acknowledged by none other than Forbes as 'Best
of the Web' and '…a must read for investors in Asia'. India Infoline's 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 India Infoline is amongst the
most read Indian brokers.

India Infoline Commodities Limited

India Infoline Commodities Pvt Limited is engaged in the business of commodities
broking. Our experience in securities broking empowered us with the requisite skills and
technologies to allow us offer commodities broking as a contra-cyclical alternative to
equities broking. We enjoy memberships with the MCX and NCDEX, two leading Indian
commodities exchanges, and recently acquired membership of DGCX. We have a multi-
channel delivery model, making it among the select few to offer online as well as offline
trading facilities.
India Infoline Marketing & Services
India Infoline Marketing and Services Limited is the holding company of India Infoline
Insurance Services Limited and India Infoline Insurance Brokers Limited.
(a) India Infoline Insurance Services Limited is a registered Corporate Agent with the
Insurance Regulatory and Development Authority (IRDA). It is the largest
Corporate Agent for ICICI Prudential Life Insurance Co Limited, which is India's
largest private Life Insurance Company. India Infoline was the first corporate
agent to get licensed by IRDA in early 2001.
(b) India Infoline Insurance Brokers Limited is a newly formed subsidiary which will
carry out the business of Insurance broking. We have applied to IRDA for the
insurance broking licence and the clearance for the same is awaited. Post the grant
of license, we propose to also commence the general insurance distribution
business.

India Infoline Investment Services Limited

 Consolidated shareholdings of all the subsidiary companies engaged in loans and
financing activities under one subsidiary. Recently, Orient Global, a Singapore-based
investment institution invested USD 76.7 million for a 22.5% stake in India Infoline
Investment Services. This will help focused expansion and capital raising in the said
subsidiaries for various lending businesses like loans against securities, SME
financing, distribution of retail loan products, consumer finance business and housing
finance business. India Infoline Investment Services Private Limited consists of the
following step-down subsidiaries.
(a) India Infoline Distribution Company Limited (distribution of retail loan products)
(b) Moneyline Credit Limited (consumer finance)
(c) India Infoline Housing Finance Limited (housing finance)

IIFL (Asia) Pte Limited

IIFL (Asia) Pte Limited is wholly owned subsidiary which has been incorporated in
Singapore to pursue financial sector activities in other Asian markets. Further to
obtaining the necessary regulatory approvals, the company has been initially capitalized
at 1 million Singapore dollars.

Board of Directors: As per Articles of Association, Board shall consist of not less than
three and not more than twelve directors. They are as follows:

S.NO Name Designation Directorships in other

 Companies
1 Mr. Nirmal Jain Chairman and Managing 1. Indian Infoline secure
Director Pvt. Ltd
2. Indian Infoline
Insurance services Ltd.
3. Indian Infoline
Commodities Pvt. Ltd
2 Mr. R. Executive Director 1. India Infoline
Venkataraman Insurance Services
Ltd
2. India Infoline.com
Distribution Company
Ltd.
3 Mr. Sat Pal Khattar Non-Executive Director 1. AB Hotels Ltd.
2. GTL Ltd.
3. Prime Vetcare Pvt. Ltd
4 Mr. sanjiv Ahuja Non-Executive 1. Pagro Foods Ltd.
Independent Director 2. India Infoline
Insurance Services
Ltd.
5 Mr. Kranti Sinha Non-Executive 1. Hindustan Motors Ltd.
Independent Director 2. Larsen and Turbo Ltd.
6 Mr. Nilesh Shivji Non-Executive 1. Alpha Garments Pvt.
Vikamsey Independent Director Ltd.
2. Miloni Consultants
Pvt. Ltd.

Business

India Infoline Limited

Content related service – Equity research & online Media property

↓
India Infoline securities Pvt. Ltd
 • Equities & Derivative broking.
• Depository services.
• Portfolio management services.

↓
India Infoline.com Distribution company Ltd.
• Mutual funds
• RBI Bonds
• Fixed Deposits etc.

↓
India Info line Insurance services Ltd.
• Corporates Agents for ICICI Prudential Life Insurance company Ltd

↓
India Infoline Commodities Pvt. Ltd.
• Commodities Broking.

↓
India Infoline Investement services Pvt. Ltd.
• Margin funding & financing

PRODUCTS AND SERVICES

Overview
Equities

Indiainfoline 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 Indiainfoline. Indiainfoline leveraged technology to bring the convenience of
trading to the investor’s location of preference (residence or office) through computerized
access. Indiainfoline made it possible for clients to view transaction costs and ledger
updates in real time.

APPLY IN IPO’s
You could also invest in Initial Public Offers (IPO’s) online without going through the
hassles of filling ANY application form/ paperwork.

PMS

Our Portfolio Management Service is a product wherein an equity investment portfolio

is created to suit the investment objectives of a client. We at Indiainfoline invest your
resources into stocks from different sectors, depending on your risk-return profile. This
service is particularly advisable for investors who cannot afford to give time or don't have
that expertise for day-to-day management of their equity portfolio.

Research

Sound investment decisions depend upon reliable fundamental data and stock selection
techniques. Indiainfoline Equity Research is proud of its reputation for, and we want you
to find the facts that you need. Equity investment professionals routinely use our research
and models as integral tools in their work they choose Ford Equity Research when they
can clear your doubts

Commodities

Indiainfoline’s extension into commodities trading reconciles its strategic intent to

emerge as a one-stop solutions financial intermediary. Its experience in securities broking
has empowered it with requisite skills and technologies. The Company’s commodities
business provides a contra-cyclical alternative to equities broking. The Company was
among the first to offer the facility of commodities trading in India’s young commodities
market (the MCX commenced operations only in 2003). Average monthly turnover on
the commodity exchanges increased from Rs 0.34 bn to Rs 20.02 bn. The commodities
market has several products with different and non-correlated cycles. On the whole, the
business is fairly insulated against cyclical gyrations in the business.

Mortgages

During the year under review, Indiainfoline acquired a 75% stake in Moneytree
Consultancy Services to mark its foray into the business of mortgages and other loan
products distribution. The business is still in the investing phase and at the time of the
acquisition was present only in the cities of Mumbai and Pune. The Company brings on
board expertise in the loans business coupled with existing relationships across a number
of principals in the mortgage and personal loans businesses. Indiainfoline now has plans
to roll the business out across its pan-Indian network to provide it with a truly national
scale in operations.

Insurance
An entry into this segment helped complete the client’s product basket; concurrently, it
graduated the Company into a one-stop retail financial solutions provider. To ensure
maximum reach to customers across India, we have employed a multi pronged approach
and reach out to customers via our Network, Direct and Affiliate channels. Following the
opening of the sector in 1999-2000, a number of private sector insurance service
providers commenced operations aggressively and helped grow the market.

The Company’s entry into the insurance sector derisked the Company from a
predominant dependence on broking and equity-linked revenues. The annuity based
income generated from insurance intermediation result in solid core revenues across the
tenure of the policy. Wealth Management Service Imagine a financial firm with the
heart and soul of a two-person organization. A world-leading wealth management
company that sits down with you to understand your needs and goals. We offer you a
dedicated group for giving you the most personal attention at every level.
Newsletters The Daily Market Strategy is your morning dose on the health of the
markets. Five intra-day ideas, unless the markets are really choppy coupled with a brief
on the global markets and any other cues, which could impact the market. Occasionally
an investment idea from the research team and a crisp round up of the previous day's top
stories. That's not all. As a subscriber to the Daily Market Strategy, you even get research
reports of Indiainfoline research team on a priority basis.
The Indiainfoline Weekly Newsletter is your flashback for the week gone by. A weekly
outlook coupled with the best of the web stories from Indiainfoline and links to important
investment ideas, Leader Speak and features is delivered in your inbox every Friday
evening.
 REVIEW OF
LITERATURE

Review Literature:

Circa 1995. A group of professional formed a company called probity research &
services pvt ltd. The name was later changed to India info line ltd. The objective was to
provide unbiased and independent information to market intermediaries and investors. In
a span of 2 to 3 years the client list read like the who’s who of Indian financial market.
The list included consulting firms like Mckinsey, companies like Hindustan lever, Bank
like Citibank, Rating agencies like CRISIL,D&B,FI’S,FIIS, foreign brokers as well as
leading Indian brokers. In early 1999, a colleague had a idea that if the company made all
the research available free on the web, the number of users may well jump from 250 to
2.5 million! To make it true, the business required a reincarnation. It meant that the
company put up all the information free on the website and let go of all the revenues and
profits. Worse, if the new avatar failed there would be ‘no comebacks’. The idea was too
compelling to worry about the consequences. The new avatar business model took off.
Venture capitalists and private equity investors lined up to sign term sheets without even
looking at the balance sheet. India info line raised US$ 1 million in the first round and
completed the second round at the peak of dotcom euphoria around March 2000 and
raised US$5 million.

Circa 2001. The internet bubble started bursting faster than anybody could have
imagined. The dot com suffix, which was the sexiest tail to the business name, suddenly
became the worst stigma to have. Funding disappeared completely, regardless of
valuation, business model or management depth. The company also had a crash landing
and was forced to jettison a number of plans including one to set up a TV channel. India
info line decided to narrow its focus on businesses where I could leverage its core
competencies to the maximum. The key business lines that emerged were mutual funds,
life insurance and e-broking.

The company became heavily dependent on its e-broking business for survival. The
odds were against them. There was no money available from the private equity investors
at any valuation. All competitors were backed by institutions or had abundant capital.
The core promoters of the company had little experience of broking. To add to it, the
market was hit by a scam. They also had their share of price to pay and lessons to learn. It
was difficult to retain people. Although devastating for morale. But not surprising, most
market observers had written them off.
In India, investment advisory is a sunrise industry, with tremendous long term
promise. The young ‘earning’ and ‘saving’ class of population is growing very rapidly.
Falling interest rates are compelling people to look around for advised investment. The
industry is consolidating as smaller players find it difficult to meet strict compliance
standards and service customers with research and technology. Understandably,
competition is intense. The business susceptible to cyclical gyrations. India info line ltd.
Along with its subsidiaries is a unique one stop investment shop which offers everything
from information and advice to execution and services to the retail customers for the also
entire gamut of investment products from risk-free RBI Bonds to high-risk, high-reward
equities and also mutual funds and life insurance. They also forayed into portfolio
management services and commodities broking, again leveraging upon their core
competencies in research and technology. In the last years, India info line has faced
numerous up and downs, but has never compromised on integrity. They continue to
ensure highest standards of corporate governance.

Our key Milestones:

• Incorporated on October 18, 1995 as probity Research & services.
• Launched internet portal www.indiainfoline.com in May 1999.
 • Commenced distribution of personal financial products like mutual funds and
RBL Bonds in April 2000.
• Started life insurance agency business in December 2000 as a corporate Agent of
ICICI prudential life insurance.
• Become a depository participant of NSDL in September 2001.
• Launched stock messaging services in May 2003.
• Acquired commodities broking license in March 2004.
• Launched portfolio management services in august 2004.
• Listed on NSE and BSE on May 17, 2005.
• Acquired NBFC license in May 2005.
• Acquired 75% stake holding in Money tree consultancy services, which is a
distributor of Mortgages and other Loan products, in October 2005.
• Acquired 100% equity of Marchmont capital Advisors Pvt Ltd in December 2005
through which we have ventured into Merchant Banking.
• DSP Merrill Lynch capital subscribed to convertible bonds aggregating Rs. 80
crores in December 2005.
• Bennett Coleman & co Ltd (BCCL) invested Rs. 20 Crores in India info line by
way of preferential allotment in December 2005.
• Merger of India info line Securities Private Limited with India info line Limited
in January 2007.
• Entered into an alliance with bank of Baroda for Baroda e-trading in February
2007.
• CLSA institutional equities team joined us in 2007.
• Formed Singapore subsidiary IIFL ( Asia) Pte Ltd in 2007.
• Mr. Arun K Purvar joined as independent director in March 2008.
• Received ‘Best Broker in India’ award by Finance Asia in June 2008.
• Received Venture capital license from SEBI in September 2008.
• Received in-principle approval from SEBI for sponsoring Mutual Fund in
November 2008.
• Received insurance broking license from IRDA in December 2008.
• Received registration for Housing Finance Company from NHB in February
2009.
• Entered into a strategic agreement with interactive brokers, LLC (USA) to
provide our clients direct market access to over 80 global exchanges in 18
countries in July 2009.

Our management Team

o Mr. Nirmal Jain(Chairman and Managing Director)

o Mr. R. Venkataraman (Executive Director)

The Board of Directors
o Mr. Sat Pal Khattar (Non Executive Director)

o Mr. Nilesh Vikamsey (Independent Director)

o Mr. Kranti Sinha (Independent Director)

o Mr. Arun K Purvar (Independent Director)

LITERATURE

Index
• An index is a number which measures the changes in a set of values over a period
of time
• The index represents the changes 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.

Importance of a market index

A market index is very important for its use as
• A barometer for market behavior
• As a benchmark portfolio performance
• An underlying for index futures and options

Major indices in India

 • S&P CNX Nifty
• Sensex

Circuit breakers

The index-based market-wide circuit breaker system applies at 3 stages of the index
movement, either way viz. at 10%, 15%, 20%. These circuit breakers when triggered
bring about a coordinated trading halt in all equity and equity derivatives markets
nationwide.
• In case of a 10% movement of either of these indices,there would be a one-hour
market halt if the movement takes place before 1:00 p.m. in case the movement
takes places at or after 1:00 p.m. but before 2:30p.m. There would be trading halt
for ½ hour. In case movement takes place at or after 2:30p.m. There will be no
trading halt at the 10% level and market shall continue trading.
• In case of a 15% movement of either index, there shall be a two-hour halt if the
movement takes place before 1 p.m. if the 15% trigger is reached on or after 1:00
p.m., there shall be a one-hour halt. If the 15% trigger is reached on or after 2:00
p.m. the trading shall halt for remainder of the day.
• In case of a 20%movement of the index, trading shall be halted for the remainder
of the day.
• These percentages are translated into absolute points of index variations on a
quarterly basis. At the end of each quarter, these absolute of index variations are
revised for applicability for the next quarter. The absolute points are calculated
based on closing level of index on the last day of the trading in a quarter and
rounded off to the nearest 10 points in case of S&P CNX Nifty.

Price Bands
Daily price bands are applicable on securities as below:
• Daily price bands of 2 %( either way) on securities as specified by the
exchange.
• Daily price bands of 5 %( either way) on securities as specified by the
exchange.
• Daily price bands of 10 %( either way) on securities as specified by the
exchange.
• No price bands are applicable on:
- scrips on which derivative products are available or
- Scrips included in indices on which derivative products are available.
• Price bands of 20%(either way) on all remaining scrips (including debentures,
warrants, preference shares etc)

Insider trading
• Insider trading is illegal in India. It concerns information, which is sensitive
and may influence the price of a scrip. When such information is procured
or/and used from sources other than the normal course of information output,
 with the intention of manipulating volatility or for personal profits, it is called
as insider trading.
• Insider trading refers to transactions in securities of some company executed
by a company insider. Although an insider might theoretically be anyone who
knows material financial information about the company before it becomes
public, in practice, the list of company insiders (on whom newspapers print
information) is normally restricted to a moderate-sized list of company
officers and other senior executives.
• Most companies warn employees about insider trading. SEBI has strict rules
in place that dictates when company insiders may execute transactions in
their company’s securities. All transactions that do not conform to these rules
are, in general, prosecutable offenses under the relevant law.

Market timings
• Trading on the equities segment takes place on all days of the week (except
Saturday and Sunday and holidays declared by the exchange in advance)
The market timings of the equities segment are
Normal market timings (NSE and BSE): 09:00 a.m. to 03:30 p.m.
Post closing Timings (NSE): 3.50 p.m. to 4.00 p.m.
Post closing Timings (BSE): 3.40 p.m. to 4.00 p.m.

• After market closes, NSE and BSE both have introduced post closing session.
During this session a customer can place an order in the system at the day’s
closing prices. The exchanges have specified certain scripts on which post
closing is allowed.

Trading platform
• Traditionally trading took placed in a ring based system where shares were
sheets of paper bids were shouted and trades scribbled. In this system there
was no transparency, efficiency or depth.
• To provide transparency, efficiency and depth in the market, BSE and NSE
provide screen based Trading on Trading platform called ‘BOLT’ and
‘NEAT’
• National exchange for automated trading (NEAT) is software provided by
NSE
• BSE Online Trading (BOLT) is the software provided by BSE.

Order management
• Order management consists of entering order, order modification, order
cancellation
 • All orders that you place in the system; if not executed can be cancelled
or modified i.e. you can modify the price and the quantity.

Active order/passive order

• When any order enters the trading system, it is an active order. It tries to
find a match on the other side of the books. If it finds a match, a trade is
generated. If it does not find a match, the order becomes a passive order
and goes and sits in the order book.

Order book
• as and when valid orders are entered or received by the trading system,
they are first numbered, time stamped and then scanned for a potential
match. This means that each order has a distinctive order number and a
unique time stamp on it. If a match is not found, then the orders are
stored in the order book.

symbol
• Every stock has a symbol for e.g. the NSE symbol for Tata Iron and
Steel is TATASTEEL

Types of order conditions

There are 3 types of conditions that you can to an order
1. Time conditions
2. Price conditions
3. Quantity condition

1. Time conditions
There are two types of time conditions,
• Day order: A day order, as the name suggests is an order that is valid
for the day on which it is entered. If the order is not executed during the
day, the system cancels the order automatically at the end of the day. By
default, the system assumes that all orders entered are Day order.

• Loc (Immediate or cancel): A day order, as the name suggests is an

order that is valid for the day on which it is entered. If the order is not
executed during the day, the system cancels the order automatically at
the end of the day. By default, the system assumes that all order entered
are orders.
 2. Price condition
• Limit price: Limit price/order is an order where you specify a
particular price at which the order should get executed. For
example let’s the current market price of a particular scripts is
Rs.100 and you place an order to buy the same script at Rs.90. this
order is called a limit price.
• Market price: Market orders are order for which price is
specified as ‘MKT’ at the time the order is entered. For such
orders, the system determines the price.
• Stop loss price: this facility allows the user to release an order
into the system, after the market price of the security reaches or
crosses a threshold price called trigger price.
Trigger price: price at which an order gets triggered from the stop
loss book.
Limit price: Price of the order after triggering from stop loss book.

3. Quantity condition
• Disclosed quantity: An order with a condition of Disclosed
Quantity (DQ) allows the user to disclose only a portion of the order
quantity to market. For example if the order quantity is 100000 and
the disclosed quantity is 10000 then only 100000 is released to the
market. After this quantity is fully matched, a subsequent quantity of
10000 is disclosed. Thus, totally ten disclosures with the same order
number are shown one after the other in the market. This feature is
very useful when you want to buy or sell a large quantity and don’t
want it to influence the market price too quickly. The rule for
disclosed quantity is that the minimum disclosed quantity has to be
10% of the quantity or more.

Clearing and settlement

• Stock markets follow a system of settling trades on T+2 basis i.e.
trading + 2 working days, which means transactions done on
Monday, are to be settled by Wednesday by way of giving securities
or funds.
• Providing securities or funds to Exchange/ Clearing Corporation is
called ‘pay-in’. pay-in day is the day when the securities sold are
delivered to the exchange by the sellers and funds for the securities
purchased are made available to the exchange by the buyers
( through the brokers)
• Receiving securities or funds from Exchange / Clearing Corporation
is called ‘pay-out’. Pay-out day is the day the securities purchased
are delivered to the buyers and the funds for the securities sold are
given to the sellers by the exchange (through the brokers).
 Auction
• When the seller fails to give delivery of shares sold before pay-in, in
such a situation the exchange conducts an auction. In an auction the
exchange purchases the share from the market. The price it pays to buy
the shares is debited to the sellers account and the shares get transferred
to the buyer.

Close out
• If the trade remains unsettled even after an auction due to illiquidity, the
exchange carries out a close out. This means that the buyer gets back the
money plus a little premium which can be as high as 20% and this
premium has to be paid by the seller.
Before the introduction of the Depositories Act 1996, everyone
had share in the physical form. There were many risks associated with
holding physical certificates. They could get torn, mutilated, duplicated or
even stolen. Moreover, transfer of shares from one person to another was
not only a very long process but would also attract a lot of charges. The
introduction of the Depositories Act 1996 revolutionized the entire capital
market.

Depository
• A depository is an organization where the securities of an investor are
held in electronic form, at the request of the investor through the
medium of a Depository Participant.
• If an investor wants to utilize the services offered by a depository, he has
to open an account with the depository through its Depository
participant.

Depository participant
• A depository participant (DP) is an agent of the depository and is
authorized to offer depository services to investors.
• According to SEBI guidelines, financial institutions, bank, custodians,
stockbrokers, etc. can become DP with a depository.

DP: Bank – an analogy

Bank Depository
Hold funds Hold securities
Safe keeping of money Safe keeping of securities
Cheque book Delivery instruction booklet
Pass book Account holding statement
Facilitates transfer of funds between bank Facilitates transfer of securities between
account demat accounts
Transfer of funds without physical Transfer of stocks without physical
handling of cash handling of shares
Types of demat accounts
There are two types of account in the depository

• Beneficiary account
Accounts opened for the use of individuals, Corporates, HUFs etc are ownership
accounts and are called Beneficiary accounts.

• Pool account
The pool account is a commercial account that is opened by the broker to transfer
the shares to and form the exchange.

Dematerialization

• Its is the process of converting securities from physical form to electronic form

How can shares be dematerialized?

To dematerialize the share, the customer has to fill a form called or the Demat
Requisition form.

The dematerialization process is as follows:

• Client submits DRF and physical certificates to DP.
• DP intimates depository and sends certificates with DRF to R&T agent.
• R&T agent confirms dematerialization to depository.
• Depository credits securities to beneficial owner.

At India Info line, three copies are collected; out of which one copy is given back to the
customer, one is retained by the DP and the third copy alone with original share
certificate is sent to the R&T agent for dematerialization.

Types of trades
There are basically two types of trades.

• Market trade
A market trade is one that is settled through participation of a Clearing
corporation. Basically, all trades that are executed through a broker of the
exchange are settled through a market trade. When a customer sells shares
through the broker and those shares are lying in his demat account, he needs to
transfer the shares to the pool account of the broker through a market transfer.

• Off market trade

 Any trade that is cleared and settled without the participation of a clearing
corporation is called off-market trade. Transfer from one beneficiary account to
another due to a trade between them is called off-market transaction.

For transferring shares from one demat accounts to another, whether through a
Market trade or an off market trade, a slip called as a Delivery instruction
Slip (DIS) has to be filled.

Who can open a demat account?

Individuals, NRIs, Minors, HUFs, Registered Trusts and Corporates can open a
demat account.
Partnership firms and proprietorship firms cannot open demat accounts in the
name of the firms. But there is no restriction that these parties cannot open trading
accounts.
At India infoline it is compulsory for every customer who opens a trading account
to also open a demat account. Hence in the case of a proprietary firm, we will
opens a demat account in the name of the proprietor and a trading accounts will
be opened in the name of the firm. In case of partnership firms, we can open the
demat account in the name of one or more partners.

Basic documentation
• Registration form.
• Photograph(s) with signatures across it.
• PAN card.
• Proof of residence-passport, voter’s ID card, driving license, ratio card.
• Proof of identity-passport, voter’s ID card, driving license, PAN card.
• Bank account proof-bank statement, cancelled cheque.

Other terminologies
• Margin money
Margin money is the deposit that a customer maintains with the broker to avail of
trading/exposure limits. Margin can be taken in the form of a cheque payment or
in the form of liquid stocks or both.

• Bulls
Bulls are those people who are optimistic about the market. A bull always feels
positive about the market.

• Bears
Bears on the other hand are pessimistic about the market.

• Squared transaction
 A squared transaction is an intra day trade. When a customer buys and sells the
shares the same day it is called intra day trading. When you buy shares, to square
up, you have to sell and when you sell, to square up you need to buy back.

• Delivery transaction
A delivery transaction is when the customer either buys or sells a particular stock
and does not square up the trade the same day.

• Last traded price

Last traded price is the price at which the trade took place at the exchange. This
does not mean that LTP is the price at 3.30 p.m. it simply means that when we
look at the screen, the price at which the last trade took place is called the last
traded price.

• Closing price
Closing price is the weighted average of the last half an hour’s trades, it is the
weighted average of the trades from 3.00 p.m. to 3.30 p.m.

• Opening price
Opening price is the price at which the first trade took place after the market
opened.

• Average price
Average price is the average of the day’s trades.

• Settlement number
Every trade has to be settled and every trading day has a unique settlement
number.
 LIMITATIONS OF THE STUDY

 The time taken for the study is 30 days to gather the information
from the organization.

 The data collected is through secondary source only.

 The analysis is being carried out through selective tools only.

 The study is made with in the geographical boundaries of Hyderabad

only.

 The time period taken for doing the data analysis has been taken

as a shorter period.
 RESEARCH PROCESS:

Research design or research methodology is the procedure of collecting, analyzing and

interpreting the data to diagnose the problem and react to the opportunity in such a way
where the costs can be minimized and the desired level of accuracy can be achieved to
arrive at a particular conclusion.

The methodology used in the study for the completion of the project and the
fulfillment of the project objectives, is as follows:

Collection of Data:
Data can be collected on two types
1. Primary data
Primary source includes the data that is collected from INDIA INFOLINE

2. Secondary data.
In secondary source data is collected from the performance reports of the funds,
company profile, Industry profile, fund fact sheets, journals, and some information
through internet.
  Company’s website.
 Textbooks published on FINANCIAL MANAGEMANT.

FINANCIAL PRODUCTS

Financial products refer to those instruments that help you save, invest, get insurance or
get a mortgage. These are issued by various banks, financial institutions, stock
brokerages, insurance providers, credit card agencies and government sponsored entities.
Financial products are categorized in terms of their type or underlying asset class,
volatility, risk and return.

Financial Products: Types

The major types of financial products are:

 Shares: These represent ownership of a company. While shares are initially issued by
corporations to finance their business needs, they are subsequently bought and sold by
individuals in the share market. They are associated with high risk and high returns.
Returns on shares can be in the form of dividend payouts by the company or profits on
the sale of shares in the stock market. Shares, stocks, equities and securities are words
that are generally used interchangeably.
 Bonds: These are issued by companies to finance their business operations and by
governments to fund expenses like infrastructure and social programs. Bonds have a
fixed interest rate, making the risk associated with them lower than that with shares. The
principal or face value of bonds is recovered at the time of maturity.
 Treasury Bills: These are instruments issued by the government for financing its
short term needs. They are issued at a discount to the face value. The profit earned by the
investor is the difference between the face or maturity value and the price at which the
Treasury Bill was issued.
 Options: Options are rights to buy and sell shares. An option holder does not actually
purchase shares. Instead, he purchases the rights on the shares.
 Mutual Funds: These are professionally managed financial instruments that involve
the diversification of investment into a number of financial products, such as shares,
bonds and government securities. This helps to reduce an investor’s risk exposure, while
increasing the profit potential.
 Certificate of Deposit: Certificates of deposit (or CDs) are issued by banks, thrift
institutions and credit unions. They usually have a fixed term and fixed interest rate.
 Annuities: These are contracts between investors and insurance companies, wherein
the latter makes periodic payments in exchange for financial protection in the event of an
unfortunate incident.

Complex Financial Products

There are certain financial products that are highly complex in nature. Among these are:

1. Credit Default Swaps (CDS): Credit default swaps are highly leveraged
contracts that are privately negotiated between two parties. These swaps insure
against losses on securities in case of a default. Since the government does not
regulate CDS related activities, there is no specific central reporting mechanism
that determines the value of these contracts.
2. Collateralized Debt Obligations (CDO): These are securities that are created
by collateralizing various similar debt obligations such as bonds and loans. CDOs
can be bought and sold. The buyer gains the right to a part of the debt pool’s
principal and interest income.CDS and CDO products have played a major role in
the Financial Crisis of 2008 onwards. During these troubled times, CDO ratings
 reflected incorrect information on the credit worthiness of borrowers, concealing
the underlying risk in mortgage investments. Meanwhile, the size of the CDS
market far exceeded that of the mortgage market in mid-2007. Thus, when the
defaults began to unfold during the Financial Crisis, the banks were not in a
position to bear the loss. One of the most significant factors to consider while
choosing financial products is your risk appetite. Risky investments are usually
associated with higher returns than are safe ones. According to empirical data,
shares usually outperform all other investments over the long term. However, in
the short term, stocks can be extremely risky.

Mutual Funds in India

Mutual funds can be defined as the money-managing systems that are introduced to
professionally invest money collected from the public. The Asset Management
Companies (AMCs) manage different types of mutual fund schemes. The AMCs are
supported by various financial institutions or companies.

Investment in mutual funds in India means pooling money in bonds, short-term money
market, financial institutions, stocks and securities and dishing out returns as dividends.
In India, Fund Managers manage the mutual funds. They are also referred to as portfolio
managers. The mutual funds in India are regulated by the Securities Exchange Board of
India.

Types of Mutual Funds

Mutual funds have different structure and aims, which in turn enable us to classify
them into various major categories. These categories are:

1. Closed-end funds: A closed-end mutual fund bears a number of shares which are
issued to the public by an initial public offering (IPO).
2. Open-end funds: Open end funds are managed by mutual fund houses for raising
money from shareholders and they invest in a group of assets.
3. Large cap funds: Large cap funds are those mutual funds, which look for capital
appreciation by way of investing in blue chip stocks.
 4. Mid-cap funds: Mid cap funds invest in small/medium sized companies, but with
no proper definition of classifying a company.
5. Equity funds: Equity mutual funds, also known as stock mutual funds invest
pooled amounts of money in public company stocks.
6. Balanced funds: Balanced funds are also known as hybrid fund, buying a
combination of common stock, preferred stock, bonds, and short-term bonds.
7. Growth funds: Growth funds are mutual funds that target at capital appreciation
by investing in growth stocks.
8. Exchange traded funds: Exchange Traded Funds (ETFs) are a basket of securities
being traded on an exchange, just similar to that of a stock. They are not like the
conventional mutual funds.
9. Sector funds: These funds are funds that restrict the investments to a specific
segment or sector.
10. Index funds: An index fund aims to replicate the actions of an index of a specific
financial market.

Benefits of Mutual Funds

Mutual funds are preferred for their cost-effectiveness and easy investment process. By
investing all the money in a mutual fund, investors can buy stocks or bonds at lower
trading charges. This is indeed one of the main benefits, which is not available otherwise.
You don't need to see which stock or bond would be better to buy. Another advantage is
diversification. Diversification stands for diffusing money across various different
categories of investments. There is every possibility that when one investment is down,
the other can be up. In simple terms, this is helpful in reducing risk
Transparency, flexibility, professional investment management, variety and liquidity are
some of the other benefits of the mutual funds, which are not found in case of other
investments to such an extent.

Risk versus Reward

Volatility in the market activity can be referred to as the risk in the mutual fund
investment. The sudden upward and downward sentiments of the markets and individual
issues can be attributed to several key factors. These factors comprise:

• Inflation
• Interest rate changes
• General economic scenario

The aforementioned factors are the main cause of worry amongst the investors. Most
of the investors fear that the value of the stock they have invested will fall
considerably. However, it is here one can notice its reward angle. It is this element of
volatility that can also bring them substantial long-term return in comparison to a
savings account.

Derivatives
Derivatives are nothing but a kind of security whose price or value is determined by the
value of the underlying variables. It is more like a contract of future date in which two or
more parties are involved to alleviate future risk. Usually, derivatives enjoy high
leverage. Its value is affected by the volatility in the rates of the underlying asset. Some
of the widely known underlying assets are:

• Indexes (consumer price index (CPI), stock market index, weather conditions or
inflation)

• Bonds
• Currencies
• Interest rates
• Exchange rates
• Commodities
• Stocks (equities)
Types of Derivatives

The range of derivatives is really wide. But some of the most commonly known
derivatives are:

Forwards-This is a tailor-made contract between two parties. In case of this contract, a

settlement is done on a scheduled future date at today's pre-decided rate.

Futures-When two entities decide to purchase or sell an asset at a given time in the
future at a given price, it is called futures contract. Futures contracts can be said to be a
special kind of forward contracts, as they are customized exchange-traded agreements.

Options-It is of two different kinds such as calls and puts. Those who take calls option,
they are not obligated to purchase given quantity of the underlying variable, at a
mentioned price on or prior to a scheduled future date. On the other hand, buyers in case
of puts option may not necessarily sell a mentioned quantity of the underlying variable at
a mentioned price on or prior to a given date.

Swaps-These are private contracts between two entities to deal in cash flows in the future
following a pre-decided formula. They are somewhat like forward contracts' portfolios.
Swaps are also of two types such as interest rate swaps and currency swaps.

Interest rate swaps-in this case, only interest related cash flows can be exchanged
between the entities in one currency.

Currency swaps-in this case of swapping, principal and interest can be exchanged in one
currency for the same in other form of currency.

Importance of Derivatives

Financial transactions are fraught with several risk factors. Derivatives are instrumental
in alienating those risk factors from traditional instruments and shifting risks to those
entities that are ready to take them. Some of the basic risk components in derivatives
business are:

• Credit Risk: When one of the two parties fails to perform its role as per the
agreement, this is called the credit risk. It can also be referred to as default or
counterparty risk. It varies with different sources.
• Market Risk: This is a kind of financial loss that takes place due to the adverse
price movements of the underlying variable or instrument.
• Liquidity Risk: When a firm is unable to devise a transaction at current market
rates, it can be referred to as liquidity risk. There are two kinds of liquidity risks
involved in the scenario. First is concerned with the liquidity of separate items
and second is related to supporting the activities of the organization with funds
comprising derivatives.
• Legal Risk: Legal issues related with the agreement need to be scrutinized well,
as one can deal in derivatives across the different judicial boundaries.

Derivatives Markets in India

India had started with a controlled economic system and from there it moved on to
become a destination that witnesses constant fluctuation in prices on a daily basis now.
Persistent efforts of Reserve Bank of India (RBI) in building currency forward market
and liberalization process provided the risk management agencies their much needed
momentum. Derivatives are the indispensable components of liberalization process to
handle risk. With National Stock Exchange (NSE) measuring the market demands, the
process of launching derivative markets in India got started. In the year 1999, derivatives
trading took place in India.
Indian derivatives markets can be divided into two types including 1) the transaction
which depends on the exchange, and 2) the transaction which takes place 'over the
counter' in one-to-one scenario. They can thus be referred to as:

• Exchange Traded Derivatives

• Over the Counter (OTC) Derivatives
 • Over the Counter (OTC) Equity Derivatives
• Operators in the Derivatives Market

There are different kinds of traders in the derivatives market. These include:

• Hedgers-traders who are interested in transferring a risk element of their

portfolio.
• Speculators-traders who deliberately go for risk components from hedgers in
look out for profit.
• Arbitrators-traders who work in various markets at the same time in order to
gain profit and do away with miss-pricing.

Current Investment Scenario in India:

Globalization and Foreign Direct Investment form an integral part of all the developed as
well as developing economies. In fact, the growth of the underdeveloped economies is
also dependant on these key factors. These components equip any nation with new skills,
new items and provide smooth access to markets and technology. Today, every nation
across the globe is looking for foreign and overseas investors. Whether it's India or
China, everyone wants foreign investments. According to recent trends, India is only
second to China in the league of favorite investment destinations.

In the report issued by Department of Industrial Policy and Promotion, the fund inflow to
India reached US$ 27.3 billion in the period 2008-09, considered from the month of April
2008 to the month of March 2009. Last quarter of 2008-09 alone witnessed an inflow of
approx. US$ 6.2 billion.

In the reports issued by Reserve Bank of India for outward investment from India, a
growth of 29.6% to US$17.4 billion has been seen in the period 2007-08. The figures do
not include individuals and banks. India is considered the 2nd highest foreign employer
in the United Kingdom after the United States.
Equity:

Stock or any other security representing an ownership interest.

On the balance sheet, the amount of the funds contributed by the owner (the
stockholders) plus the retained earnings (or losses) is shown in liabilities side, also
referred to as “shareholder’s equity”.
Equity is a term whose meaning depends very much on the context. In general, you
can think of equity as ownership in any asset after all debts associated with that asset are
paid off. Stocks are equity because they represent ownership of a company, whereas
bonds are classified as debt because they represent an obligation to pay and not
ownership of assets.

Equity Income:
Income that is earned through an investment in equity. A shareholder receives equity
income usually through dividends or capital gain. This type of investment strategy
attempts to provide a stable income for investors by choosing securities that will provide
both capital appreciation and consistent dividends.

Dividend:
Distribution of a portion of a company’s earning, decided by the board of directors,
to a class of its shareholders. The dividend is most often quoted in terms of the dollar
amount each share receive (i.e. dividends per share or DPS). It can also be quoted in
terms of a percent of the current market price, referred to as dividend yield.
Dividends may be in the form of cash, stock or property. Most secure and stable
companies offer dividends to their stockholders. Their share price might not move much,
but the dividend attempts to make up for this.

Dividend Payout Ratio:

The percentage of earning paid to shareholders in dividends.
Calculated as:
 Yearly Dividend per share
Earnings per share

Or equivalently
Dividends
Net Income

The payout ration provides and idea of how well earnings support the dividend payments.
More mature companies tend to have a higher payout ratio.
In the U.K. there is a similar ratio, which is known as dividend cover. It is
calculated as earnings per share dividend by dividend per share.

Earnings per share-EPS:

The portion of a company’s profit allocated to each outstanding share of common
stock. EPS serves as an indicator of a company’s profitability.
Calculated as:

Net profit after tax-preference Dividend

No. of Equity share
In the EPS calculation, it is more accurate to use a weighted-average number of shares
outstanding over the reporting term, because the number of share outstanding can change
over time. However, data source sometimes simplify the calculation by using the number
of shares outstanding at the end of the period. Earning per share is generally considered
to be the single most important variable in determining a share’s price. It is also a major
component of the price-to-earnings valuation ratio. Equity market capitalization.
A measure of that total market value of an equity market. The measure is calculated
by taking the market capitalization of all companies in the equity market and adding them
together to arrive at the capitalization for the market as a whole.
The measure is used to compare the increase or decrease in the size of the market as
a whole. The measure is also used to compare the value of the equity market to other
segment of the economy, such as the value of the real estate market.
Share capital:
The portion of a corporation’s equity obtained from issuing share in return for cash
or other considerations. This is also called financing.
Equity financing:
The act of raising money for company activities by selling common or preferred
stock to individual or institutional investors. In return for the money paid, shareholder
receive ownership interest in the corporation, this is when a company raises money by
issuing stock. The other way to raise money is through debt financing, which is when the
company borrows money.

Equity fund:
A mutual fund that invests in a board, well-diversified group of stock. An equity funds
typically won’t invest in any bonds or notes. The invested funds will either be in cash or
stock.

Return on shareholder’s Investment-ROI:

Return on shareholder’s investment, popularly known as ROI or return on share
holder/proprietors’ funds the relationship between net profit (after interest and tax) and
the proprietors’ funds thus,
Calculated as

Net profit (after interest &tax)

Shareholder’s funds
The ratio is generally calculated as a percentage by multiplying the above with 100
• Shareholder’s investment includes Equity share capital + preference share capital
+ Reserves & surplus – (accumulated losses, if any)
• Net profit includes net profit after payment of interest and taxes

Return on capital Employed-ROCE:

 Return on capital employed establishes the relationship between profits and the capital
employed. If is the primary ration and is most widely used to measure the overall
profitability and efficiency of a business

Calculated as
Net profit
Capital employed

Shareholder’s Equity:
A firm’s total assets minus its total liabilities. Equivalently, it is share capital
plus retained earning minus treasury shares. Shareholder’s equity is the amount by which
a company is financed through common and preferred shares.
Also known as “share capital”, “net worth”, or “stockholder’s equity”
shareholder’s equity comes from two main source. The first and original source is the
money that was originally invested in the company along with any additional investment
made therafter. The second comes from retained earnings that the company is able to
achieve over time through its operations.

Stockholder’s equity:
The portion of the balance sheet that includes capital received from investors in
exchange for stock (paid-in capital), donated capital, and retained earning. This is equal
to total assets minus liabilities, preferred stock and intangible assets.
Stockholer’s equity is often referred to as the book value of the company

Types of shares:
Stock is ownership in a company. In the financial world ownership is called equty.
There are two primary classes of stock. Namely 1.preferred stock 2. common stock

1. Preferred stock: preferred stock promises guaranteed dividends and a

claim on a company’s assets that us above that of common shareholder.
 The tradeoff may be that preferred shareholder cannot vote or share other
specified right. Preferred stock pays a fixed dividend that is specified and
set down in advance. Unless the stock is retired or called back, it will
continue paying dividends forever.

Limited voting rights

• When the company want to merge with another.
• When the company wants to liquidate a large portion of its assets.
• When the company want to issue new bonds or preferred stock.

2. Common stock: common stock represents ownership in a corporation. Common stock

dividends may be paid in cash, stock or property. The most common payment method is a
cash dividend. The board of directors determines whether or not to pay dividends to
common stock holder. Common stock holder will receive the assets but only after all
other creditors; bondholders and preferred stockholder receive them first.

Investors may purchase stock on the primary or secondary market. A company sells
its stock to the public on the primary market through its initial public offering. Investors
may sell their shares through brokers to other investors on the secondary market.
 DATA
ANALYSIS
ANALYSIS OF RELIANCE INDUSTRY
IN DERIVATIVES
FIRST WEEK:

Low Close Total Traded Turnover No. Of

HIGH Price Price quantity contracts
Date PRICE
24-5- 1,048.9 1,016.4 1,022.65 5652017 58,247.03 57214
10 5 5
25-5- 1,025.0 982.75 985.65 5770796 57,480.61 55896
10 0
26-5- 1,010.0 991.00 1,008.05 3137663 31,464.42 41524
10 0
27-5- 1,027.7 1,001.6 1,022.25 6264345 63,767.32 63650
10 0 0
28-5- 1,039.0 1,014.5 1,036.65 4008272 41,330.61 24885
10 0 0

Opening value = 995.55

Higher value = 1048.95

Lower value = 982.75

Closing value = 1036.65

Calculation of BEP

BEP = Highest price + lowest price

2

= 1048.95 + 982.75
2
= 1015.85

1060

1040

1020

1000

980

960

940
OPEN HIGHER LOWER CLOSED

INTERPRETATION
The opening value is 995.55 and the closing value is 1036.65 as observed from the above
graph. The highest and the lowest values are 1048.95 and 982.75 respectively. It can also
be observed that the opening value is slightly higher than the lower value of the week.
And also the higher and the closing values of the week have slight difference between the
two.

SECOND WEEK:
Date High price Low price Close Total Turnover No. of
price traded contracts
quantity
31-5-10 1,048.50 1,028.75 1,045.60 3782780 39,371.56 18964
1-6-10 1,045.00 1,004.10 1,010.55 4449630 45,307.08 31131
2-6-10 1,021.00 1,003.35 1,011.05 4509546 45,677.61 23462
3-6-10 1,038.00 1,019.90 1,030.80 3910363 40,313.18 24052
4-6-10 1,036.00 1,022.45 1,031.20 3220285 33,182.01 15218

Opening value = 1036.65

Higher value = 1048.50
Lower value = 1003.35
Closing value = 1031.20

Calculation of BEP

BEP = Higher value + Lower value

2

= 1048.50 + 1003.35
 2

= 1025.925

1050
1040
1030
1020
1010
1000
990
980
OPEN HIGHER LOWER CLOSER

INTERPRETATION
From the above graph it can be observed that the opening value is 1036.65 and the
closing value is 1031.20.The higher value is 1048.50 and the lower value is 1003.35.The
opening and the higher values of the week have slight difference between the two.
THIRD WEEK:

Date High Low price Close Total Turnover No. of

price price Traded contracts
quantity
7-6-10 1,015.00 1,000.00 1,007.75 3086645 31,092.07 20174
8-6-10 1,012.70 995.10 996.40 3480569 34,928.26 27870
9-6-10 1,015.00 1,000.00 1,007.05 3484176 35,119.64 26684
10-6-10 1,017.45 1,007.15 1,015.35 3191686 32,343.31 20817
11-6-10 1,050.85 1,021.00 1,046.40 5327604 55,431.96 56329

Opening value = 1031.20

Higher value = 1050.85
Lower value = 995.10
Closing value = 1046.40

Calculation of BEP:

BEP = Higher value + Lower value

2

= 1050.85 + 995.10
2

= 1022.975
 1060
1050
1040
1030
1020
1010
1000
990
980
970
960
OPEN HIGHER LOWER CLOSED

INTERPRETATION:
It can be interpreted from the above graph that the opening value is 1031.20
and the closing value is 1046.40.The higher value is 1050.85 and the lower value is
995.10.There is a huge difference between the higher and lower values. It can also be
observed that the higher and the closing values have only slight difference between them.
Fourth week:

Date High Low Close Total Turnover No. of

price price price traded contracts
quantity
14-6-10 1,070.00 1,049.10 1,063.50 3632863 38,535.03 37436
15-6-10 1,069.90 1,050.10 1,066.10 4341443 46,100.73 44538
16-6-10 1,072.65 1,055.10 1,057.95 2704841 28,716.88 30788
17-6-10 1,077.00 1,058.30 1,071.40 4811174 51,410.68 56950
18-6-10 1,089.80 1,050.55 1,054.35 8749692 93,647.42 91787

Opening value = 1046.40

Higher value = 1089.80
Lower value = 1049.10
Closing value = 1054.35

Calculation of BEP:

BEP = Higher value + Lower value

2

= 1089.80 + 1049.10
2
 = 1069.45

1090

1080

1070

1060

1050

1040

1030

1020
OPEN HIGHER LOWER CLOSED

INTREPRETATION
From the graph it can be observed that the opening value is 1046.40 and the
closing value is 1054.34.The higher value is 1089.80 and the lower value is1049.10.It can
be seen that there is a huge difference between the high and the low values.
Fifth week:

Date High Low price Close Total Turnover No. of

price price traded contracts
quantity
21-6-10 1,071.70 1,061.00 1,065.65 2695660 28,765.73 37119
22-6-10 1,074.80 1,056.95 1,063.80 2950749 31,409.02 52501
23-6-10 1,067.50 1,054.00 1,058.70 2665095 28,252.06 39267
24-6-10 1,065.80 1,047.30 1,052.05 4298567 45,444.15 69908
25-6-10 1,068.00 1,043.00 1,062.95 4646050 48,990.86 50636

Opening value = 1054.35

Higher value = 1074.80
Lower value = 1043.00
Closing value = 1062.95

Calculation of BEP:

BEP = Higher value + Lower value

2

= 1074.80 + 1043.00
2
 = 1058.9

1075
1070
1065
1060
1055
1050
1045
1040
1035
1030
1025
OPEN HIGHER LOWER CLOSING

INTERPRETATION
From the above graph it can be understood that opening value is 1054.35
and the closing value is 1062.95.There were fluctuations in the values, which can be
termed as High value and Low value, which are1074.80 and 1043.00 respectively.
ANALYIS OF EQUITIES IN MAHINDRA AND
MAHINDRA FINANCIAL SERVICES LTD
DATES OPEN CLOSE RETURNS AVERA DEVIATION SQ OF
GE S DEV
th MAY
24 419.70 416.20 -0.0083 -0.01324 -0.02154 0.000463
25th MAY 4160.. 407.15 -0.0021 -0.01324 -0.01534 0.000235
26th MAY 414.40 408.40 -0.0144 -0.01324 -0.02764 0.000763
27th MAY 402.00 411.10 0.0226 -0.01324 0.00936 0.000087
6
28thMAY 420.00 410.30 -0.0230 -0.01324 -0.03624 0.001313
31th MAY 412.95 417.95 0.0121 -0.01324 -0.00114 0.000001
299
St
1 JUN 415.00 420.00 0.0120 -0.01324 -0.00124 0.000001
53
nd
2 JUN 423.00 420.35 -0.0062 -0.01324 -0.01944 0.000377
3rd JUN 424.00 429.00 0.0117 -0.01324 -0.00154 0.000002
37
th
4 JUN 431.00 437.65 0.0154 -0.01324 0.00216 0.000004
665
TH
7 JUN 433.90 431.65 -0.0051 -0.01324 -0.01834 0.000336
8TH JUN 430.00 469.30 0.0091 -0.01324 -0.00414 0.000017
9TH JUN 468.00 456.55 -0.0244 -0.01324 -0.03764 0.001416
10TH JUN 460.00 466.35 0.0138 -0.01324 0.00056 0.000000
3136
TH
11 JUN 474.00 459.30 -0.0310 -0.01324 -0.04424 0.001957
14TH JUN 458.00 461.80 0.0082 -0.01324 -0.00504 0.000025
15THJUN 463.70 465.45 0.0037 -0.01324 -0.00954 0.000091
16TH JUN 465.00 466.10 0.0023 -0.01324 -0.01094 0.000119
17TH JUN 461.05 472.20 0.0241 -0.01324 0.01086 0.000117
18TH JUN 472.20 454.60 -0.0372 -0.01324 0.02396 0.000574
21TH JUN 462.00 459.10 -0.0062 -0.01324 -0.01944 0.000377
22TH JUN 459.00 454.20 -0.0104 -0.01324 -0.02364 0.00055
23TH JUN 452.00 454.95 0.0065 -0.01324 -0.00674 0.000045
24TH JUN 456.55 454.85 -0.0037 -0.01324 -0.01694 0.000286
25TH JUN 458.00 456.80 -0.0026 -0.01324 -0.01584 0.000250
TOTAL -0.0331

RETURN = -0.0331
AVERAGE = -0.01324

0.03

0.02

0.01

0 RETURNS
-0.01

-0.02

-0.03

-0.04
24thMay 3rdJune 15thJune 25thjune

INTERPRETATION:
The above table n graphs show the value of Mahindra and Mahindra financial
services ltd, for the month of May n June (2010). This shows the changes of the daily
returns, first marketed started in negative.
 After changes to posiive value is, Returns (-0.0331) and average returns is (-
0.01324). The investing strategy was changed as compared to the earlier period, In the
may month ending was negative and positive proformance.

ANALYIS OF MUTUAL FUND IN DSPROCKS

S.NO DATE NAV RETURNS(X) (X-x) (X-x)2
1 24THMAY 46.039 -0.0325 -5.42293 29.408
2 25THMAY 44.988 -2.282 -3.10843 9.6623
3 26THMAY 45.462 1.0536 -4.33683 18.8080
4 27THMAY 45.915 0.9964 -4.39403 19.3074
5 28THMAY 46.532 1.3437 -4.04673 16.376
 6 31THMAY 46.849 0.6812 -4.70923 22.1768
7 1STJUNE 46.258 -1.2614 -6.65183 44.2468
8 2NDJUNE 46.458 0.4323 -4.962 24.6214
9 3RDJUNE 46.986 1.1365 -4.25393 18.0625
10 4THJUNE 47.116 0.2766 -5.11383 26.1121
11 7THJUNE 46.378 -1.5663 -6.95673 48.3025
12 8THJUNE 46.23 -0.3191 -5.70953 32.592
13 9THJUNE 46.384 0.3331 -5.05733 25.573
14 10THJUNE 46.802 0.9011 -4.48933 20.1511
15 11THJUNE 47.038 0.50172 -4.8387 23.413
16 14HJUNE 47.485 0.9502 -4.44023 19.7136
17 15THJUNE 47.625 0.2948 -5.0956 25.959
18 16THJUNE 47.782 0.3296 -5.06083 25.6036
19 17THJUNE 48.042 0.5441 -4.8463 23.483
20 18THJUNE 47.959 -0.1727 -5.56313 30.947
21 21THNE 48.518 1.1655 -4.22493 17.842
22 22THJUNE 48.546 0.05771 -5.33272 28.430
23 23THJUNE 48.742 0.4037 -4.98743 24.870
24 24THJUNE 48.752 0.0205 -5.36993 28.826
25 25THJUNE 48.558 -0.3979 -5.78833 33.500
MEAN 5.39043 -127.759 VARAINCE

AVERAGE RETURNS (x) = 5.39043

VARIANCE (σ2) = -127.759
STANDARD DREVIATION (σ) = 63.8795
 1.5
1
0.5
0
RETURNS
-0.5
-1
-1.5
-2
-2.5
24THMAY 7THJUNE 21THJUNE

INTERPRETATION:
The above table and graph shows that daily returns of the DSPROCKS
equity funds for the month of may n june. This shows changes of the daily returns, first
market stated negatively.
After changed to positive values, Mean is (5.39) its in positive price variance is
-127.759 and risk factor is 63.839. Mean is in positive.
 FINIDINGS

FINDINGS

 Most people do not know about the financial products in India.

 In Reliance industry, v have done on derivatives. V saw there was

many higher values in week wise

 In first week v found tat opening value is slightly higher than the

lower value. And also the higher and the closing value of the week

have slight different between the two

 in second week we can see that the opening and higher value are

slight different between the two. Compare to all the four lower

value is less then all.

 in third week there is a slight different between higher value and

closing value. In this week also lower value is less than other.

 in fourth week we tat opening value, lower value and closing value

has slight difference between them.

 In fifth value there is fluctuations in the values , which can be

termed as higher value and lower value

 Equities in Mahindra and Mahindra financial services ltd. In this

we can see that returns are in negative and average returns is also

in negative.

 In this equities we took whole 30 days n calculated. Where first

few days market started in negative.

 mutual funds are done on DSPROCKS company. Where in this

also calculation are done on 30 days., with compering it in a week

wise.
 In this also market started in negative, on the next day there was a

hug loss to company

SUGGESTIONS

SUGGESTIONS
 The investor must select the right advisory body which is has sound knowledge

about the product which they are offering.

 The company should try to satisfy customers’ requirements who look forward

for returns, reduction of risk and liquidity

 They need to create more awareness about mutual funds through indoor and

outdoor media like television, newspaper, journals and magazines.

 More aggressive marketing strategies need to be adopted too make customers

aware of the various products.

 The minimum investment size should be reduced so as to attract customers to

invest in large numbers.

 They should attract the people by explaining about the benefits of investing in

different financial products.

 All the investor need to be explained about the risk and return that exists with

the investment plan.

 Relationship Managers (RM) should concentrate more on motivating and

updating sub brokers regularly on new products of the company.

 Sub brokers should be properly trained on products of the company and required
selling and marketing skills.

 Move people to long-term investments.

 CONCLUSION

CONCLUSION

From the analysis of financial products in India infoline. To minimize the

risk bearing the company adopted sharpe and the Treynor’s ration.
 BIBLIOGRAPHY

BIBLIOGRAPHY

Books
Security Analysis & Portfolio Management - Fishers & Jordon
Financial Management – M.Y. Khan
Financial Management – Prasanna Chandra

News Papers
Business Line
Times of India
India Today

Websites
www.google.com
www.indiinfoline.com
www.relianceindustry.com
www.mahindraandmahindrafinancialservicesltd.com
www.dsprocks.com
www.nseindia.com
www.bseindia.com
www.amfiindia.com