Financial Planning

A
Project on
Financial Planning For Individual Investors
AT KARVY STOCK BROKING LIMITED. IN PARTIAL FULLFILMENT OF MBA (MASTER OF BUSINESS ADMINISTRATION) FROM SURYADATTA INSTITUTE OF MANAGEMENT AND MASS COMMUNICATION
BY:
STUDIED
NITIN WALUNJ
ACKNOWLEDGEMENT
I would like to express my sincere thanks to my Director, Dr.S.B.Chordia for giving me the opportunity to be a part of an esteemed institution and without his support this project would not have been possible. A successful project can never be prepared by the single effort of the person to whom project is assigned, but it also demand the help and guardianship of some conversant person who helped the undersigned actively or passively in the completion of successful project . In this context as a student of Suryadatta Institute Of Management & Mass Communication (SIMIR), Pune I would first of all like to express my gratitude to Mr.Ravi Gaikwad for assigning me such a worthwhile topic FINNANCIAL PLANNING FOR INDIVIDUAL INVESTOR. During the actual project work, Mr. Ravi Gaikwad & Mr.Kuldeep Bhorker have been a source of inspiration through their constant guidance; personal interest; encouragement and help. I convey my sincere thanks to them.
Mr.RaviGaikwad,
Mr.KuldeepBhorkar,
Mr.Abhijeet,
Mr.Ninad
Raghatate, Mr.Vikrant Joshi, Mr.Vijay Singh, Ms.shweta Singh & Ms.Sonal chopra
for there invaluable guidance, keen interest cooperation inspiration, and of course moral support through my project session.
N ITIN WALUNJ
TABLE OF CONTENTS
Content
1. Executive Summary 5 2. Company Profile 6 a. Introduction 7 b. Company Alliances 8 c. Company Achievement 9 d. Karvy credo 11 e. Group companies 13 3. Need Of the Study 14 4. Financial System An Overview 18 5. Financial Instrument.
Pg.no.
23 a. Investment In Other Market 25 1.Tresury bills 26 2.Certificate of Deposits 26 3.Commercial Papers 27 4.Inter Corporate Deposit 27 5.Term Deposit 28 6.Govt. Securities 28 b. Investments in Capital Market 29 1.Bonds 30 2.Share Market 31 3.Portfolio Investments 33
4.Fixed Deposit 43 5.Insurance 44 6.Tax Planning 52 7.Mutual Fund 4
58 8.Commodity 68 6. Analysis & Interpretation 72 7. Conclusion 75 8. Recommendation 76 9. Bibliography 77
EXECUTIVES SUMMARY:-
The evaluation of financial planning has been increased through decades, which is best seen in customer rise. Now a days investment of saving has assumed great importance. According to the study of the markets, it is being observed that markets are doing well in Mutual fund & ULIP. In near future a proper financial planning is required to invest money in all type of financial product because there is good potential in market to invest. In this project the great emphasis is given to the investors mind in respect to investment in Mutual Fund & ULIP .The needs and wants of the client is taken into consideration. I hope KARVY, Pune will recognize this as well as take more references from this project report. The main objective of this project is to know the Awareness of Mutual Fund among investors and also to know the investing pattern of people in different Financial Project. IT sector has been given more emphasis for the study of the project because it is the only sector where all type of Age group, Income class and different level of people are represented. After analyzing the feedback the conclusion has been made that the Indian financial market is having lots of potential customer the only thing is to give a proper guidance to the prospective customers.
Member - National Stock Exchange (NSE), The Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the customer through varied services. Creating a plethora of opportunities for the customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal.
Stock Broking Services | Distribution of Financial Products | Depository Participants | Advisory Services | Research | Private Client Group
INTRODUCTION ABOUT COMPANY

In 1982, a group of Hyderabad-based practicing Chartered Accountants started Karvy Computer share Private Ltd., with a capital of Rs.1,50,000 offering auditing and taxation services initially. Later, it forayed into the 7
Registrar and Share Transfer activities and subsequently into financial services. All along, Karvy's strong work ethic and professional background leveraged with Information Technology enabled it to deliver quality to the individual. A decade of commitment, professional integrity and vision helped Karvy achieve a leadership position in its field when it handled the largest number of issues ever handled in the history of the Indian stock market in a year. Thereafter, Karvy made inroads into a host of capital-market services, - corporate and retail - which proved to be a sound business synergy. Today, Karvy has access to millions of Indian shareholders, besides companies, banks, financial institutions and regulatory agencies. Over the past one and half decades, Karvy has evolved as a veritable link between industry, finance and people. In January 1998, Karvy became the first Depository Participant in Andhra Pradesh. An ISO 9002 company, Karvy's commitment to quality and retail reach has made it an integrated financial services company.
COMPANYS ALLIANCES
Karvy has a strategic alliance with Jardine Fleming India Securities Limited (JFISL) - one of Asia's most prestigious investment bankers - to leverage on the latter's investment banking expertise. This would augment the retail distribution reach and provide the Indian investor access to the best global and local insights on financial markets. Jardine is a respected investment banker with a demonstrated trackrecord of delivering value to its clients spread over 43 countries. It is ranked amongst the world's TOP 3 Foreign Institutional Investors (FIIs). Karvy Computershare Private Limited is a 50:50 joint venture of Karvy Consultants Limited and Computershare Limited, Australia. Computereshare Limited is world's largest -- and only global -- share registry, and a leading financial market services provider to the global securities industry. The joint venture with Computershare, reckoned as the largest registrar in the world, servicing over 60 million shareholder accounts for over 7,000 corporations across eleven countries spread across five continents. Computershare manages more than 70 million shareholder accounts for over 13,000 corporations around the world. Karvy Computershare Private Limited, today, is India's largest Registrar and Share Transfer Agent servicing over 300 corporates and mutual funds and 16 million investors.
COMPANIES ACHEIVEMENTS
Among the top 5 stock brokers in India (4% of NSE volumes) 9
India's No. 1 Registrar & Securities Transfer Agents Among the to top 3 Depository Participants Largest Network of Branches & Business Associates ISO 9002 certified operations by DNV Among top 10 Investment bankers Largest Distributor of Financial Products Adjudged as one of the top 50 IT uses in India by MIS Asia Largest mobiliser of funds as per PRIME DATABASE
Amongst the First ISO - 9002 Certified Registrar in India Top 5 Indias #1 Stock Brokers Registrar A Category- I -Merchant banker. (4.5% market & Securities Transfer Agent share) A Category- I -Registrar to Public Issues.
Among the Top 3 Depository Participants
Ranked as " The Most Admired Registrar" by MARG. Handled the largest- ever Public Issue - IDBI Strategic tie-up with Jardine Fleming India Securities Ltd.
Largest HandledLargest over 500 Public issues as Registrars.
Amongst Top Network Independent 10 of Branches & Handling the Reliance Account Distributor for which accounts for nearly 10 million Investment account Business holders Financial Bankers Products Associates
First Depository Participant from Andhra Pradesh
Adjudged as one of The Top 50 IT Users in India by MIS Asia
ISO 9000:2000 certified operations by DNV
Full fledged IT driven operations
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KARVYS CREDO
Our Clients. Our Focus Clients are the reason for our being. 11
Personalized service, professional care; pro-activeness are the values that help us nurture enduring relationships with our clients. Respect for the individual Each and every individual is an essential building block of our organization. We are the kiln that hones individuals to perfection. Be they our employees, shareholders or investors. We do so by upholding their dignity & pride, inculcating trust and achieving a sensitive balance of their professional and personal lives. Teamwork None of us is more important than all of us. Each team member is the face of Karvy. Together we offer diverse services with speed, accuracy and quality to deliver only one product: excellence. Transparency, co-operation, invaluable individual contributions for a collective goal, and respecting individual uniqueness within a corporate whole, is how we deliver again and again. Responsible Citizenship A social balance sheet is as rewarding as a business one. As a responsible corporate citizen, our duty is to foster a better environment in the society where we live and work. Abiding by its norms, and behaving responsibly towards the environment, are some of our growing initiatives towards realizing it. Integrity Everything else is secondary. Professional and personal ethics are our bedrock. We take pride in an environment that encourages honesty and the opportunity to learn from failures than camouflage them. We insist on consistency between works and actions.
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KARVY MILESTONES
Equity Derivatives broking commenced Expanding Institutional segment clientele. Setting up of the Research desk and Private Custodial (DP$) services Distribution of investment products (mutual funds, IPOs, Bonds, etc) Commenced NSE operations
2001 2001
1997 1997
1990-95 1990-95
1990 1990
1985 1985
1982
Retail broking operations (Cash segment) commenced on the HSE**
ADTO in broking crosses Rs 4,500 mn Ranked@ no 1in IPO and in Mutual fund distribution in 2003-04 DP accounts exceed 640,000 Broking accounts exceed 220,000 (retail) WDM# membership obtained Branches 325+ Commenced commodity
Share Registry and Transfer (R&T) Business recently hived off
$ - Depository business # - Wholesale Debt Market segment on the NSE @ - by number of applications mobilised * - High Networth Individual segment ** - Hyderabad Stock Exchange
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KARVY GROUP OF COMPANIES Indias No.1 integrated financial services group
Karvy Group
Stock Broking
NSE and BSE membership Equity, Derivatives and Debt market operations 600+ terminals 220,000+ accounts Around 4.5% market share (NSE Cash)
Distribution
Depository
Commodities Commodities
Membership with 2 Membership with 2 exchanges NCDEX // exchanges NCDEX MCX MCX
Mutual Funds IPOs Equity, Bonds Debt products Loans Housing, Personal, Auto
Participant with both NSDL and CDSL 640,000+ accounts Amongst the top DPs in the country
Insurance Broking Insurance Broking

Direct broker IRDA Direct broker IRDA registration received in registration received in Jan 2005 Jan 2005
Investment Banking
Category 1 Investment Banker registered with SEBI Among top 10 Investment bankers in India IPOs, Debt placements, Corporate restructuring etc.
NEED OF THE STUDY

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The need of the study aimed at bringing about awareness in the public about the various products and services provided by KARVY consultancy. The study was basically undertaken to understand the financial needs of the customer and to provide or suggest them products and services according to their financial needs.
The study was undertaken also to understand the investment pattern of professionals(software) and their behavioral aspects which affects their investment habits
The study was undeartaken to provide them investment solutions which are aligned to their investment objective,the investment objective could be preserving principle,generating income,childs education or it can be saving for retirement. The study was undertaken to find out whether depending upon their own investing experience do the professionals invest directly or through a broker-dealer.
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BACKGROUND NOTE: The two key aspects of any investment are time and risk. The sacrifice takes place now and is certain. The benefit is expected in future and tends to be uncertain. As an investor you have a wide range of investment avenues available to you. Sacrificing some rigour, they may be classified into the following categories: on-marketable financial assets, equity shares, bonds, money market instruments, mutual funds schemes, life insurance policies, realestate, precious objects, and financial derivatives. For evaluating an investment avenue, the following attributes are relevant: rate of return, risk, marketability, tax shelter, and convenience. Investing in a mutual fund is slightly expensive than 'direct' form of investing. However, the decision-making and procedure of investing is transferred to the mutual fund company. Insurance, as an investment vehicle, works somewhat similar to mutual fund as far as ULIPs (Unit-Linked Insurance Policies) are concerned. While traditional insurance plans invest only in debt-based products and are not market linked, ULIP invests in debt, equity as well as a combination of the two. The only difference in the case of insurance is that expenses charged by the insurance company are much higher that most other investment vehicles. PMS is usually tailor-made for your needs. Based on your financial goals, portfolio managers create an investment portfolio for you. For creating and maintaining your portfolio, the manager charges fees. Also if your portfolio earns profit beyond a certain amount, then the portfolio manager shares the profit. However, if there are losses then the same is charged to your account only. While choosing any investment vehicle keep in mind your skills, time available with you to create and maintain your investments and costs involved.
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If you have the skills and time available with you then 'direct' form of investing is ideal as it has least of costs amongst all other vehicles. On the other hand, insurance is the most expensive investment vehicle and hence it should be kept away from as far as possible. PMS works better for wealthy (high net worth) individuals. Although profits have to be shared, there is also the advantage of getting tailormade portfolio. Only catch is to ensure that portfolio created and maintained for you is tailor-made and that the PMS is not another mutual fund scheme, where all investors get the same portfolio. For small and medium investor -- who does not have the skills or the time -- mutual funds seem the best option. Currently, in India, we have mutual funds which invest in two asset classes, debt and equity. However, in the very near future there is a likelihood of having mutual funds, which will invest in gold as well as real estate Mutual fund as an investment vehicle is the most convenient vehicle for investing in various assets classes. It gives benefit of professional management, option of investing in smaller amount, quick liquidity and diversification benefit.
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WHY THIS TOPIC WAS SELECTED FOR STUDY? The topic-Financial Planning For Individual Investors was selected to find out the risk appetite and investment potential of Indian Investors to invest in these instruments and what percentage component are these instruments in an optimal portfolio. Prior to the development of portfolio theory the investors dealt with the concept of risk and return loosely. Then portfolio theory was later on developed by Harry Markovitz in 1950, it was the first attempt to quantify the risk of a portfolio and develop a methodology for determining an optimal portfolio. Shares, mutual funds, Ulip, tax planning, gold, silver etc. are all the constituents of a portfolio. My basic reason of selecting these three instruments of investment i.e. mutual funds, insurance and tax planning is that these instruments cover the most basic investment needs of an individual. Mutual funds offer the advantages of diversification, professional management, liquidity, assured allotment, tax saving, and transparency. Also insurance products have many unit linked plans (ulip) which provides both growth opportunity and risk cover at the same time. So, understanding these instruments is a must as they form the most basic and essential part of an investment portfolio. Thus , this topic was selected for the study. SPECIFIC OBJECTIVES OF THE STUDY: 1) To know investments criteria thoroughly. 2) To provide the clients the best allocation of their funds. 3) To guide them how various schemes under mutual funds, insurance and tax planning can give them the best investment solution. 4) To develop a framework and a database which can help the organization understand the goals of investment, investment potential and the risk taking capability of investors.
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5) To design a right mix of products on the basis of the financial goals of the clients.
FINANCIAL SYSTEM- AN OVERVIEW: The financial system of any country consists of specialized and nonspecialized financial institutions, organized and unorganized financial markets, financial instruments and services that facilitate flow of funds from areas of surplus funds to the areas of deficit. Financial system is a composition of various institutions, markets, regulations, law practices, money managers, analysts, etc. By making funds available, the financial system helps the growth of modern economics and the increase in the standard of living among the citizens. FINANCIAL INSTITUTIONS: Financial institutes are business organizations that act as mobilizers and depositaries of savings and as purveyors of credit or finance. Financials institutions are classified as banking and non-banking institutions, intermediaries and non-intermediaries. Banking institutions are the creators of credit, where as non-banking institutions are purveyors of credit. Banking system in India comprises of commercial and cooperative banks and non banking financial institutes are LIC, UTI, IDBI, GIC, etc. Intermediaries like banking institutions lend as well as mobilizes savings, where as non-intermediaries like NABARD gives loans but their resources are not directly obtained from savers.
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FINANCIAL MARKETS: A financial market can be defined as the market in which financial assets are created or transferred. Financial assets represents represent a claim to the payments of a sum of money sometime in the future and/or periodic payment in the form of interest or dividend. Financial Market performs an important function of mobilization of savings and channeling them into the most productive uses. The participants in the financial markets are financial institutions, agents, brokers, dealers, borrowers, lenders, savers and others who are inter-linked by the laws, contracts and communication networks. Financial markets consist of Primary and Secondary Markets. The Primary markets deal in new financial claims and securities and hence are known as new issue markets. The secondary market deals in securities already issued, existing or outstanding. Financial markets are also classified as Money and Capital Markets. Money markets deals with transactions in short-term instruments (with period of maturity one year or less, e.g. treasury bills), while capital market deals with transactions in long-term instruments (with period of maturity above one year, e.g. corporate debentures and government bonds). On the basis of the type of the financial claim, financial markets are FINANCIAL classified as Debt and Equity markets. By the timing of delivery, financial MARKET markets are classified as Cash or Spot markets and Forward or Future markets. The classification of Financial markets can be summarized as follows: MONEY FOREX CAPITAL
MARKET
o o o o
Money Market Debt Market Forex Market Capital Market
MARKET
MARKET
DEBT MARKET
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MONEY MARKETS: Money markets can be defined as a market for short term money and financial assets that are near substitutes for money (any financial assets that can be quickly converted into money with minimum transaction cost). One more important function of this market is to channel savings into short term productive investments like working capital. Money market aids banking, operates as a medium of integration between sub markets, promotes maintaining of minimum reserve in the form of cash and liquidity and controls the interest rates. Money market is a collection of market for the instruments like Call money, Treasury bills, Commercial papers, Certificate of deposits, Money Market Mutual Funds, etc. A certain degree of flexibility in the regulatory framework exists and there are constant endeavors for introducing a new instruments or innovating dealing techniques. It is a wholesale market and the volume of funds or financial assets traded are very large i.e. in crores of rupees. DEBT MARKET: Traditionally debt instruments are known for generating a predetermined income for a given period of time, other than in cases of default. Hence they are also known as fixed income instruments. The debt markets in advanced are significantly larger and deeper than equity markets. But in India, the trend is just the opposite. The development of debt market in India has not been as remarkable as in the equity market. However the debt markets in India have undergone a considerable change in the last few years. Characterized by regulated interest rates, limited players and lack of trading earlier, the markets have become more integrated and less regulated. The debt market in India is divided into two categories:
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o Government securities market consisting of Central Government and State Government securities. o Bond market consisting of FI bond, PSU bonds and Corporate bonds/debentures.
FOREIGN EXCHANGE MARKET: Every sovereign country in the world has a currency, which is a legal tender in its territory, and which does not act as money outside its boundaries. Foreign exchange or Forex market is the one where a countrys currency is traded for another. The rate at which one currency is converted to another is known as the rate of exchange. Forex market is the largest financial market in the world having a daily turn over of couple of trillion dollars. The key participants in the forex market are importers (who need foreign currency to pay off their imports), exporters (who want to convert their foreign currency receipts into domestic), traders (who make a market in the foreign currency), foreign exchange brokers (who bring together buyers and sellers), speculators (who tries to profit from exchange rate movements) and portfolio managers who buy and sell foreign currency. Speculative transactions account for more than 95% of the turnover on the Forex markets. In India, the key participants in the Forex markets are RBI, banks and business undertakings. Business undertakings can participate in the Forex market only to the extent that they need cover for the exchange exposure arising from a merchant transaction or a foreign currency borrowing and cannot resort to speculative transaction. One reason justified for the existence of the Forex market is that each nation has decided to keep their sovereign right to have control on their own currency. If every country had the same currency, then there will be no need for a foreign exchange market.
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CAPITAL MARKET Capital markets provide the resources needed by medium and large-scale industries for investment purposes unlike money markets that provide the resources for working capital needs. While money markets deal in short-term claims (with a period of maturity 1 year or less) capital market deals in long-term claims (with a period of maturity more than 1 year). Stock market and Government bond markets are example of capital markets. Capital market consists of primary and secondary markets. The primary markets create long-term instruments through which corporate entities borrow and the secondary market provides liquidity and marketability to these instruments. Companies can raise capital in the primary market through the issue of shares and debentures for which prior approval of The SEBI is required. The secondary market that operates through the medium of stock exchanges is that segment of the capital market where securities already issued are traded.
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FINANCIAL INSTRUMENTS
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INVESTMENT AVENUES Though there are various investment instruments in the market which are differently dealt in various market sectors, such as money market, debt market, capital market and forex market. Here I have discussed different instruments though I have discussed instruments of capital market differently, as my study was mainly on capital market. So to make it easy I have divided The Investment Avenues into two parts: 1. Investments in other markets, and 2. Investments in Capital markets.
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INVESTMENTS IN OTHER MARKETS
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TREASURY BILLS
Treasury bills are short-term obligations of the government that are issued by the Central Government to tide over short-term liquidity shortfalls. Treasury Bills in India constitute the main instrument of short-term borrowings by the Government. There are two types of Treasury Bills: Ordinary and Adhoc. Ordinary Treasury Bills are issued to the public and RBI but on the contrary Adhoc Bills are issued only to the RBI. They can be issued by tender (when required by the government) or by Tap (any time). They have maturities like 91-days, 182-days and 364-days and do not carry an explicit interest rate (or coupon rate). They are instead sold at a discount and redeemed at par value. Hence the implicit interest rate is a function of the size of the discount and period of maturity. Though the yield on the Treasury Bills is low and taxable. They are virtually risk free.
CERTIFICATE OF DEPOSITS
Certificate of deposit was introduced in India in 1991. It is a scheme of raising funds by commercial banks, except rural banks and is a negotiable receipt of funds. Due to their negotiable nature, they are also called Negotiable Certificate of Deposit (NCD). It may be in a registered form or a bearer form. The later is more popular as it can be transacted more readily in secondary markets. Unlike Treasury bills, this carries an explicit rate of interest. Subscribers to the Certificate of Deposits are Individuals, Corporations, Companies, Trusts, Funds and Associations etc. 27
The conventional deposits though have a fixed maturity, the depositors can withdraw them prematurely, where as in case of Certificate of Deposits the investors have to wait till they mature. Though interest on certificate of deposits is taxed, it is still a popular form of short-term investments for companies due to following reasons: o These certificates are fairly liquid. o They are generally risk free. o They offer a higher yield as compared to conventional deposits.
COMMERTIAL PAPER (CP)

Commercial papers was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and to provide as additional instruments to investors. Commercial paper is a short-term unsecured promissory note issued to financially strong and high credit rating companies at a discount to face value by well-known. They are issued in multiples of Rupees 5 Lakhs and for maturities between a minimum of 15 days and a maximum up to one year from the date of issue. They have a buyback facility and no prior approval of RBI is needed for the issue of Commercial Paper. The main advantage of investing in Commercial Paper is that it offers return as per the prevailing market rate. But they are not liquid and are taxed, hence not a very lucrative investment avenue.
INTER-CORPORATE DEPOSIT (ICD)

A deposit made by one company with another, normally for a period of up to six months is referred to as an Inter-Corporate Deposit. The cost of funds for a corporate is much higher than a bank. Hence the rates in this market are higher than those in the other markets. Inter-Corporate Deposits are unsecured, and hence the risk inherent is
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high. The Inter-Corporate Deposit market is not well organized with very little information available publicly about transaction details. Also the interests from these are taxed.
TERM DEPOSIT
Banks accept term deposits for periods ranging from 7 to 5 years. The interest rates on the Term Deposits vary from 3.5% (on deposit for 7 days) to 5.75% (on deposits of 5 years). The interest rate rises sharply as the period of deposits increases from 30 days to 180 days. Most banks currently offer about 5.5% for a one year deposit. Beyond one year the interest rate tapers off. Investing in Term Deposits provides security of Principal along with assured returns. But, with the declining interest rates they are less attractive. Also, the post tax returns are also low.
GOVERNMENT SECURITIES
The Government securities comprise securities issued by the Government of India and the State Governments. These are the lowest risk category instruments in the economy. These securities are issued through auctions conducted by The RBI, where the Central Bank decides the coupon rate based on the response received. Most of these securities are issued as fixed interest bearing securities, though the government sometimes issues zero coupon instruments and floating rate securities also.
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The main advantage of investing in G-secs is that they guarantee the security of principal along with assured returns as per the coupon rate of the underlying security. Also, they are highly liquid and there is no Tax deducted at source. But, trading in G-secs requires an SGL account. Also, it requires constant tracking of the price vis--vis yield to maximize returns.
INVESTMENTS IN CAPITAL
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MARKET
BONDS
The corporate bond market consists of issues of three different categories- government owned financial institutions, government owned public sector units and private corporate. The financial institutions that do not have access to retail deposits like banks, depends on bond issue for raising funds. They are highly rated and hence quote the lowest rate of funds. Next in line are public sector units, due to their poor financial conditions, only the better managed public sector units approach the markets to raise the funds. The public sector units are also given advantage in terms of tax breaks for the investors on investments in specified public sector unit bonds. These bonds referred to as, tax-free bonds get traded at lower yields. Investments in rest of public unit bonds are taxed like any other bonds. Private corporate also accesses the bond market to raise funds. The rates in these markets differ from different issuer categories. While top rated private corporate and public sector units are treated on par, financial institutions pay fewer coupons on their issues.
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The advantage of bonds is that, even though over the long run Stocks outperform bonds, bonds perform well when stocks lag, hence diversifying the portfolio helps keep returns high during bad times. Also, bonds provide a secure and predictable income. Contrary to popular belief, bonds do appreciate, which helps to make money above the interest. The trading price of a bond is its par value. As the outlook on interest rates change, the par value fluctuates on a daily basis. If rates decline, bonds will increase in value, and they can be sold at a premium. But, if interest rates rise, the bond loses value.
SHARE MARKET
As it is well known about the share market that it is very complicated and moreover it is unpredictable. Infect one afternoon while I was trying to convince a customer to invest in the shares, unaware about what happened to the Sensex that day, it was him who said, The Sensex has dipped mare than 1000 points and is closed for the day. After this he started walking and I was unable to stop him and explain further, he was not willing to invest in the share market. So to be more precise about share market here I will just explain that the market consists of two sectors: o PRIMARY MARKET. o SECONDARY MARKET.
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Stock Market Indian stock market marks to be one of the oldest stock market in Asia. Stock Market which is a market where the trading of company stock, both listed company securities and unlisted takes place. It is different from stock exchange because it also put all stock indices and stock index movements on the same platform. For example, we use the term, "the stock market was up today" or "the stock market bubble."
Indian Stock Market (Stock Indices)

Prev Close MARKET OPEN 26TH JULY
Wednesday, July 26, 2006 1:30:00 PM
Indices Indices SENSEX BSE100 BSE500 BSEPSU BSEMIDCAP BSESMLCAP BSEBANKEX Points +-Pt +-% 10,545.04 129.43 1.24 5,314.11 71.18 1.36 3,935.75 54.49 1.40 4,813.64 45.96 0.96 4,161.59 66.21 1.62 4,942.47 88.31 1.82 4,587.42 18.12 0.40
World Market (World Stock Indices) INDEX NYSE COMPOSITE NASDAQ COMPOSITE DOW JONES I.A. S&P 500 NIKKEI 225 CURRE NT 8076.6 5 2080.7 1 11011. 42 1259.8 1 14946. 84 PREV. 7898.3 6 2043.2 2 10799. 23 1236.8 6 14500. 26 % CHANGE 2.26% 1.83% 1.96% 1.86% 3.08% 33
PRIMARY MARKET: Primary market bring together buyers and sellers either directly or through intermediaries by providing an arena in which sellers investment proposition can be priced, brought to the market place and sold to the buyers. In this context, the seller is called the issuer and the price of what is sold is called the issue price. It is the initial market for any item or service. It also signifies an initial market for a new stock issued. The jargon also means a firm, trading market held in a security by a trader who performs the activity of a specialist by being ready to execute orders in that stock. SECONDARY MARKET:
Secondary markets are the stock exchanges and the-over-the market. Securities are first issued as the primary offering to the public. When the securities are traded from that first holder to another, the issues are traded in these secondary markets.
PORTFOLIO INVESTMENTS
Portfolio is a combination of assets, the outcome of which cannot be defined with certainty. These assets could be physical assets, real estate, lands, buildings, gold, etc. or financial assets like stocks, equity, debentures, deposits etc. When investors have established their overall financial plan and are interested in managing and enhancing their wealth by investing in an optimal combination of financial assets. Wealth should be evaluated and managed within the context of a portfolio, which consists of the assets holding of an investor. For e.g. if a person holds 17 stocks, some municipal bonds, some certificates of deposits (CDs), for him it is the portfolio of financial assets. People are objectives: interested in portfolio investments due to following
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Safety of Fund, Liquidity, Reasonable returns, Appreciation in Capital, Tax planning, etc. Meaning Of Portfolio: As mentioned in the Rule(2), clause(d) of SEBI (portfolio management ) as per the Rules established in 1993 defines the term Portfolio as total holding of securities belonging to any person. As a matter of fact, portfolio is a combination of assets, the outcome of which cannot be defined with certainty. These assets could be physical assets, real estate, land, building, gold etc or financial assets like stocks, equity, debenture, deposits etc. my concern is this project is to discuss the topic with reference to financial assets only. Portfolio management refers to managing efficiently the investments in the security held by professionals for others. Portfolio managers render the service of portfolio management with a view to ensure maximum return by investments with minimum risk of loss on return on the money invested in securities held by their clients. When investors have established their overall financial plan and are interested in managing and enhancing their wealth by investing in an optimal combination of financial assets. The idea of an optimal combination is important because of our wealth which we hold in various assets , should be evaluated and managed as a unified whole. Wealth should be evaluated and managed within the context of a
Portfolio, which consists of the assets holding of an investor. For e.g. if you own four and three mutual funds, that is your portfolio. For e.g. if a person holds 17 stocks, some municipal bonds, some certificates of deposits (CDs), for that is their portfolio of financial assets. Portfolio management: The major component of the decision process is portfolio management. After securities have been evaluated, a portfolio should be selected. It involves managing group of assets (i.e. a portfolio) as a unit. Portfolio must be managed regardless of whether an investor is active or passive. Passive investment strategy:-
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It involves determining the desired investment proportions and assets in a portfolio and maintaining these proportions and assets making few changes. Active investment strategy:It involves specific decisions to change the investment proportions chosen, or the assets in a particular category, based on the belief that an investor an profit by doing so. Objectives of Portfolio Management:1 . Safety Of Fund:The investment should be preserved, not be lost and remain in the returnable position in cash or kind. 2. Liquidity:Portfolio must consists of such securities which could be en cashed without any difficulty or involvement of time to meet urgent need for funds. 3. Reasonable return:The investment should earn a reasonable return to up keep the declining value of money and must be compatible with opportunity cost of money in terms of current income in the form of interest or dividend. 4. Appreciation in Capital:The money invested in portfolio must grow and result into capital gains.
5. Tax planning:Efficiently portfolio management is concerned with composite tax planning covering income tax, capital gains tax , wealth tax, and gift tax. 6. Minimize risk:Risk avoidance and minimization are important are most important objectives of portfolio management. Portfolio managers must ensure these objectives by effective investment planning and periodical review of market, economy etc. 7. Marketability:36
The investment made in securities made in securities should be marketable that means , the securities must be listed and traded in stock exchange so as to avoid risk and difficult in their encashment . Marketability ensures liquidity to the portfolio. CONCEPTS OF RETURN AND RISK: We all know that risk and returns are directly related. Higher the risk, higher will be the returns. As a portfolio manager one must understand the concept of risk and return, because determining a portfolio of a particular client it is necessary to know how much risk he can bear and how much returns he is expecting. COMPONENTS OF RETURNS: Return on typical portfolio consist of two components 1. Yield:It is the income composed of a securitys return. 2. Capital Gains:Change or appreciation of a price of a security over a period of time is called capital gains. Returns = yield + capital gains ( price change ) Therefore returns = ( Any cash payments received ) + (price changes over a period)/ ( price at which assets is purchased) 3. Risk :The chance that the actual return on an investment will be different from expected return is known as risk. It can also be defined as uncertainty of future outcomes or probability of an adverse outcome.
SOURCES OF RISK:What makes financial asset risky? It is the various sources of risk. The following are the modern portfolio sources of risk. a. Interest rate risk:-
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The risk which arises due to variability in securities returns resulting from changes in interest rate. This type affects bonds more directly than common stocks but affects both. b. Market risk:The variability in returns resulting from fluctuations in the over all market i.e. the aggregate stock market is referred to as market risk. All securities are exposed to market risk , although it has major impact on common stocks. c. Inflation risk:A factor which affects all components of a portfolio is purchasing power risk, or the chance that the purchasing of invested dollars will decline with uncertain inflation the real (inflationadjusted) returns involves risk even if nominal return is safe. d. Business risk:The risk of doing business in a particular industry or environment is called business risk. e. Financial risk:Financial risk is associated with the use of debt financing by companies. Financial risk involves the concept of financial leverage. f. Liquidity risk:Liquidity risk is the risk associated with particular secondary market in which a security trades. The more uncertainty about the time element and the price concession, the greater the liquidity risks. g. Exchange rate risk:It refers to the variability in returns due to currency fluctuations.
h. Country risk:Country risk is also referred to as political risk. With more investors investing internationally, both directly and indirectly, the economic stability and reliability is to be considered. TYPES OF RISK 1. SYSTEMATIC RISK:38
It is the risk attributable to a road macro- factors affecting all securities. 2. NON SYSTEMATIC: Risk attributable to factors unique to the security. Total risk Systematic risk + Non Systematic risk For minimizing the risk it is necessary to diversify over investments. For measuring portfolio risk is measured by the variance ( or standard deviation) of its return. Although the expected return on portfolio is the weighted average of the expected returns on individual securities in the portfolio, portfolio risk( measured by the variance or standard deviation) is not the weighted average of the risks of individual securities in the portfolio ( except when the returns from the securities are uncorrelated) In symbols: E (Rp) = Wi E ( Ri )
Variance ( ) =
2
[ Ri - E(Ri) ]2 Pi
i=1
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Types of Portfolios: Aggressive Portfolio: Objective: Growth. This strategy might be appropriate for who seek High growth and who can tolerate wide
investors
fluctuations in market values, over the short term.
Growth Portfolio: Objective: Growth. This strategy might be appropriate for investors who have a preference for growth and who can withstand significant fluctuations in market value.
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Balanced Portfolio: Objective: Capital appreciation and income. This strategy might be appropriate for investors who want the potential for capital appreciation and some growth, and who can withstand moderate fluctuations in market values
Conservative Portfolio: Objective: Income and capital appreciation. This strategy may be appropriate for investors who want to preserve their capital and minimize fluctuations in market value.
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INTERRELATIONSHIP AMONG VARIOUS PHASES OF PORTFOLIO
SPECIFICATION OF INVESTMENT OBJECTIVES AND CONSTRAINT CHIOCE OF MIX ASSETS FORMUATION OF PORTFOLIO STRATEGY SELECTION OF SECURITES
PORTFOLIO EXECUTION
PORTFOLIO REVISION
PORTFOLIO EVALUATION
Advantages of Portfolio Management services Individually managed accounts: Provides a flexible format for optimizing returns through effective fund management Customized portfolios: Tailor-made investment strategies to suit individual requirements Individually managed accounts: Provides a flexible format for optimizing returns through better information support/client servicing: Regular investment disclosures makes the investor feel comfortable and in control of his money
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Supportive tax structure: Tax changes support rise in equity There is a cut in Capital gains tax on listed equities: NIL for holdings > 12mths 10% (from 30%) for holding <12mths SEBI regulated: A Regulated industry makes the investor feel comfortable with the investment techniques adopted to optimize returns
Investment Strategy in PMS: Focus on select/clear stock opportunities: Investments in stocks where there is a clear earnings visibility Relatively concentrated portfolio: A Portfolio composition of not more than 25-30 stocks of what there are compelling opportunities Usage of Derivatives as a tool: One must have a selective use of derivatives in various options to enhance returns / portfolio protection Flexible cash allocation strategy: We have an efficient allocation among assets with a flexibility to sit on 100% cash
Product offering in PMS: Absolute Freedom Option: A highly flexible investment option that exploits investment opportunities across the broad spectrum of large cap, mid cap and small cap stocks. Large-cap Option: A protective investment option with predominant investments in large cap stocks that ensures liquidity and lower impact costs Mid/Small-cap Option:
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An aggressive option that harnesses potential of companies in the mid cap/small cap segment Components of a portfolio: Bonds Mutual Funds Insurance Tax Planning Commodities Stocks
A long-term investment strategy requires more than a passive investandforget" approach. Once youve created an investment strategy and built your portfolio, youve taken the first steps toward reaching your financial goals. As time passes, you will need to review your portfolio regularly to make sure you stay on track.
FIXED DEPOSITS
As the name suggests, it is the deposit of money for a fixed period with a specific interest rate. In this the amount of money deposited cannot be withdrawn before the period of maturity and if in case the amount or the part of amount is withdrawn before the period of maturity then a specific fees is deducted from the total amount and the rest amount is handed over to the depositor. In the context of investment, it is considered to be the safe investment as the return is assured but the rate of return is a bit low. Moreover less people are attracted towards Fixed Deposits as they cant withdraw the 44
money before the maturity period and because of low rate of interest as compared to other investments.
INSURANCE
People buy insurance policies for the safety of their family members and their products. Insurance is necessary to ensure that the basic necessities of life, comfort and pleasure derived by all of us from our living continue to be available for us. People buy life insurance policy because they realize the need of protection for their families after their death or of a reserve for emergencies and of additional income for later years.
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Life insurance protects against loss of income of an individual. Life insurance does not protect the asset. It also does not prevent its loss. So it can be said that insurance covers the risk of ones life and property. Insurance A fundamental principle of insurance is to put you in the same financial condition after the loss or injury as you were before it. The aim of all insurance is to compensate the owner against loss arising from a variety of risks, which he anticipates, to his life, property and business. All insurance contracts are based on the information provided by the insured in the proposal form. Types Of Insurance Available :
Auto Insurance o Two Wheeler Insurance o Car Insurance o Commercial Vehicle Insurance
Commercial Inurance o Agriculture Insurance o Fire Insurance o Industrial Insurance o Marine Insurance o Shop Insurance
Home Insurance Life Insurance

o
Accident Insurance NRI Accident Insurance Personal Accident Insurance
Health Care Insurance Medical Insurance 46
Critical Illness Insurance
Travel Insurance Life Insurance Life Insurance policy is the most popular and taken my the most number of people. Many of us buy life insurance policies, because we want to make sure our loved ones remain financially secure after we die. Insurance companies offer both individual as well as group insurance policies. Calculation of Life Insurance Amount/Premium: Individuals getting a life insurance cover have to pay the monthly/quarterly/half yearly/yearly premium/life insurance rate, which depends on the amount insured. The premium amount also increases or decreases with different life insurance plans, age of the individual etc. The company pays the full insurance amount either on the death of the individual or the expiry of the policy which ever is earlier. Life insurance policy can be renewed after the expiry. Some insurance companies offer a discount while renewing the policies of existing clients. The insurance is done after a medical examination of the individual being insured. Benefits of Life Insurance Policy:

Life insurance Policy can be used to avail loans from banks. Individuals/ groups can also avail tax benefit by investing in it. Life insurance policy also acts a good saving to meet with the future needs.
Life Insurance Claim Procedure: The insured can notify the company that the payment is due under the terms of the policy. This can be done at the expiry of the life insurance policy. In case of the death of the person insures, the beneficiary, receives the amount of life insurance. In case of death of insured, insurance companies can repudiate the claim. This is done to ensure the protection of the client. The procedure generally takes from 7-15 days.
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Insurance Companies: Life Insurance LIC ICICI Prudential HDFC Standard Life Tata Life Om Kotak AMP Sanmar MetLife India AVIVA ING Vysaya Max New York Role of Life Insurance Role 1: Life insurance as Investment Role 2: Life insurance as Risk cover Role 3: Life insurance as Tax planning AIG Birla Sun Non-Life Insurance The New Assurance Tata AIG Royal Sundaram Cholamandalam Reliance
India
UNIT LINK INSURANCE POLICIES (ULIPs):Most insurers in the year 2004 have started offering at least a few unit-linked plans. Unit-linked life insurance products are those where the benefits are expressed in terms of number of units and unit price. They can be viewed as a combination of insurance and mutual funds. The number of units, which the customer would get, would depend on the unit price when he pays his premium. The daily unit price is based on the
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market value of the underlying assets (equities, bonds, government securities etc.) and computed from the net asset value. The advantages of Unit linked plans are that they are simple, clear, and easy to understand. Being transparent the policyholder gets the entire upside on the performance of his fund. Besides all the advantages they offer to the customers, unit-linked plans also lead to an efficient utilization of capital. According to the IRDA, a company offering unit linked plans must give the investor an option to choose among debt, balanced and equity funds. If you opt for a unit-linked endowment policy, you can choose to invest your premiums in debt, Balanced or equity plans. If you choose a debt plan, the majority of your premiums will get invested in debt securities like gilts and bonds. If you choose equity, then a Major portion of your premiums will be invested in the equity market. The plan you choose would depend on your risk profile and your investment need. The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This is especially so if one also believes that current market values (stock valuations) are relatively low. So if you are opting for a plan that invests primarily in equity, the buzzing market could lead to windfall returns. However, should the buzz die down, investors could be left stung. If one invests in a unit-linked pension plan early on, say 25, one can afford to take the risk associated with equities, at least in the plan's initial stages. However, as one approaches retirement the quantum of returns should be subordinated to capital preservation. At this stage, investing in a plan that has an equity tilt may not be a good idea. Onside ring that unit-linked plans are relatively new launches, their short history does not permit an assessment of how they will perform in different phases of the stock market. Even if one views insurance as a long-term commitment, investments based on performance over such a short time span may not be appropriate.
Working of ULIP:
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The unit-linked plans work as under: The premium paid by the client, less any charges to be deducted, is used to buy units in the fund selected by the client at the days unit price. So, more units are added to the clients account each time he pays a premium. If he unit price on that day is relatively high, the client gets less number of units and if the unit price is relatively low, then he gets more number of units. In order to pay the regular monthly costs an equivalent numbers of units are cancelled and are computed as cost to be deducted divided by unit price on that day. The value of the fund depends on the unit price, which in turn is determined from the market value of the underlying assets as seen earlier. Thus, Fund Value = Unit Price x Number of units The ideal time to buy a unit-linked plan is when one can expect long-term growth ahead. This especially so if one also believes that current market values (stock valuations) are relatively low. BSLI has given superior returns on all its investment funds.
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Advantages of unit-linked plans vis--vis traditional plans: Unit-linked plans enjoy several advantages as under: 1. Simple, clear and easy to understand. 2. Transparent and visible for customers to take decisions 3. Flexible and adaptable 4. Puts the policyholder in control 5. Policyholder gets the entire upside on the performance of his fund ULIPs: DOES THE MARRIAGE WORK? Unit-linked insurance plans (ULIPs) have become something of a rage with their 'promise' of market-linked returns combined with the dual benefit of insuring your life from eventualities. To put it simply, ULIPs attempt to fulfill investment needs of an investor with protection/insurance needs of an insurance seeker. ULIPs work on the premise that there is class of investors who regularly invest their savings in products like fixed deposits (FDs), coupon-bearing bonds, debt funds, diversified equity funds and stocks. There is another class of individuals who take insurance to provide for their family in case of an eventuality. So typically both these categories of individuals (which also overlap to a large extent) have a portfolio of investments as well as life insurance. ULIP as a product combines both these products (investments and life insurance) into a single product. This saves the investor/insurance-seeker the hassles of managing and tracking a portfolio of products. Novel and noble as it appears, investor/insurance-seekers rarely understand the cost implications of the marriage between investments and life insurance. To be sure, it is intricate and not everyone is able to unravel it. Abhishek Bhatia (Head Marketing ICICI Prudential Life Insurance) explains, Unit-linked products are designed to put control in the hands of the customer. While some customers are comfortable with this, there are others who require some more explanation about the features. This is provided by the insurance agent. All the charges are clearly disclosed in the product
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brochures that are given to customers. Moreover, customers get a benefit illustration, which clearly illustrates the up-front, investment and mortality charges that are levied on the premium, and shows how the monies will grow over time, under a certain set of assumptions. In this backdrop lets understand the costs of owning a ULIP. For illustration purpose, we have taken ULIPs of ICICI Prudential and HDFC Standard Life, two leading private insurers. Investors need to understand that this should only give them an indicative idea about the costs associated with a ULIP as different insurers have varying cost structures. We will start with the investment costs. Since ULIPs manage a portfolio of investments for clients, they incur a cost known as the fund management cost. This is similar to a mutual fund that incurs costs on managing the equity and debt portfolio for investors. In this regard, ICICI Prudential ULIP has a three-tier cost structure.
SO INVESTORS OPT FOR ULIPs? First and foremost, investors need to understand that a ULIP is a bundled product of their investments and their insurance proceeds. So if you have a ULIP invested in equities, you are exposing your life insurance monies as well as your investible surplus to the vagaries of equity markets. While it is fine and even sensible to let your investible assets get an equity flavor, the same cannot be said about your life insurance monies, which to a large extent should be sacred. The volatility in equity markets can disturb the calmest of minds and the last thing you want to see is your nest egg being eroded by the latest slide in equity markets. Abhishek Bhatia elaborates, A ULIP policyholder has the option to invest in a variety of funds, depending on his risk profile. If one does not have the appetite to invest in equity, they can choose a debt or balanced fund. However, the structure of a ULIP takes care of quite a bit of the uncertainty in the markets. Insurance companies understand the need to give insurance-seekers the flexibility to rethink their investment strategy 52
in view of market histrionics. There is an option for the insurance-seeker to switch to another plan with a lower or zero equity component to stem the loss in a falling equity market. Abhishek points out, the switch
option allows customers to switch between fund options, thereby making adjustments to any perceived risks. ICICI Pru allows policyholders to make this switch four times a year at no cost, with Rs 100 at every additional switch after that. HDFC Standard Life allows policyholders to make as many switches as they like. However, for investors to make the right switch they need to track markets actively and be well informed, which is actually the job of the investment advisor/consultant. ULIPs are suitable for individuals who are already adequately insured and are reasonably well-informed and savvy to take active investment decisions by using the switch option that is provided to a ULIP policyholder. Also policyholders with regular endowment plans who are not satisfied with the 4-6% returns can consider taking a ULIP with a lower equity component. It is best if insurance-seekers tread the middle path and choose balanced plans (with about 50-60% equity component). Ideally they need to avoid taking the aggressive 100% equity ULIP, which could needlessly expose their assets to market volatility. So if insurances-seekers/investors play their cards right, they can make this marriage work.
AWARENESS OF THE RISK IN ULIPs Unit Linked Insurance Plans (ULIPs) all of sudden became a popular investment vehicle with investors in the past one year. The reason: perhaps the bull phase or the lure of market-linked returns that insurance companies have been advertising. But with the markets now having corrected significantly, many investors are wondering whether they should have opted for a ULIP in the first place. A single cornerstone advantage ULIPs offer is that they leave the asset allocation decision in the hands of investors themselves. You are in control of how you want to distribute your money across the broad asset classes and how and when you want to reallocate. You can withdraw from these plans (after the initial lock in period) without any tax implication as
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withdrawals and death claim proceeds under ULIPs qualify for (capital gains) tax exemption under Section 10 (10D) of the Income Tax Act. But such flexibility can be a big disadvantage if you are not an expert. You could choose to be more in equities (like you probably did late last year or early this year), when the time is probably right to go into low risk debt. Or vice versa. The impact of such incorrect decisions could be significant.
TAX PLANNING
Tax Saving Schemes National Savings Certificates (NSC) Public Provident Fund (PPF) Kisan Vikas Patra (KVP) Post Office Scheme (POS) Special Schemes For Retiring Person Postal Life Insurance National Savings Certificates (NSC) National Saving Schemes (NSC) is one of the popular Income Tax Saving schemes which is available throughout the year. It can be operated by single, joint, or minor with his/her parent or guardian. There is a return on this scheme at interest rate of 8%. The minimum investment limitaion of the scheme is Rs.100/- and with no upper limit. Other investments can be done in multiple of Rs. 100/-. This scheme has a mturity period of 6 years. It is transferable and also there is a provision of loan on the basis of this scheme. Under section 88 of the Income Tax Act, 1961 any person can take benefit in income tax on amount invested in this scheme and under section 80L of Income Tax Act, 1961 there is a provision of benefit on interests coming from scheme. 54
Public Provident Fund (PPF) Under this scheme, there is a return at the interest rate of 8% p.a. The minimum investment limit is Rs. 500/- and maximum limitation is Rs. 70,000/-. It can be opened any time throughout the year. It can be operated either single or jointly. In case of minor, with parent/guardian. There is also a facility of nomination in this scheme. This scheme has a maturity period of 15 years. The first loan can be taken in the third
financial year from the date of opening of the account, or upto 25% of the amount at credit at the end of the first financial year. Loan amount can be returned in maximum of 36 installments. A person can withdraw an amount (not more than 50% of the balance) every year. Under Section 88 of Income Tax Act, 1961 there is a provison of tax benefit by investing in this scheme. Interest on this schme is tax free. Kisan Vikas Patra (KVP) Money invested in this scheme doubles in 8 years. There is a minimum investment limitation of Rs.100/- with no upper limit. This scheme is available throughout the year. It can be operated either single or jointly. In case of minor, with perent/ guardian. Facility for nomination is also available under this scheme. Currently there is no tax benefit on investment under this scheme. Post Office Scheme (POS) It is one of the best Income Tax Saving Scheme. It can be operated by either single or jointly. In case of minor, with parent/ guardian. It is available throughout the year. There are several types of post office schemes depending upon the type of investment and maturity period. Post office schemes can be dividen into following catagories:

Monthly Deposit Saving Deposit Time Deposit Recurring Deposit
Special Schemes For Retiring Person
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Government Employees : There is a return at the rate of 8% per annum. The minimum investment is Rs.1000/- and maximum, amount equal to the total retirement benefit. Maturity period of this scheme is 3 years. According to Income Tax Act, 1961 interest onthis scheme is tax free. Public Sector Employees: Under this scheme there is a return of 9.5% payable half-yearly on 30th June and 31st December respectively. There is a minimum investment limitation of Rs.1000/- and the maximum limitaion is the amount equal to total retirement benefit. It can be operated by retired PSU employees in his/her own name or with the spouse, jointly. In this scheme, there is a facility of premature encashment.
Entire balance or part thereof can be withdrawn after the expiry of three years from the date of deposit. Maturity period of this scheme is 3 years. According to Income Tax Act, 1961 interest on this scheme is tax free. Dividend According to Income Tax Act,1961 there is a provision benefit in Income Tax if assessee has an income as a dividend on investment in any of the following:

Shares Mutual Funds Unit of UTI
TAX SLABS Income Tax - Income Tax Rates/ Slab 2005-06:The Income Tax slabs announced by our honorable Finance Minister, Mr. P. Chidambaram on 28th February' 05 in his Union Budget for the Financial Year 2005 - 06 are as under:
For the year 2005-06 Taxable income slab (Rs.) Rate (%) 1,00,000 1,35,000 (for women) NIL 1,85,000 (for senior citizens)
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1,00,001 - 1,50,000 1,50,001 - 2,50,000 2,50,001 upwards 10,00,000 upwards
10% 20% 30% 30%*
* A surcharge of 10% on income tax is levied where taxable income exceeds Rs. 1 million which makes it effective 33% including surcharge Note :
Surcharge of 10% for those whose taxable income is Rs 10 lakhs or more. A surcharge of 10% on income tax is levied where taxable income exceeds Rs. 1 million which makes it effective 33% including surcharge. Tax exemption on interest in Non-Resident (external) Account and on interest payable by a scheduled bank to Non-Resident Indians (NRI's). Tax exemption on the interest payable by a scheduled bank to a non-resident or a person who is not ordinarily resident on deposits in foreign currency where the acceptance of such deposits by the bank is approved by the RBI. Standard deductions, as well as Section 88 and 80L have been abolished.
The number of tax saving options on offer not only serve the purpose of saving tax but also offer other benefits such as risk
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coverage, capital appreciation, retirement savings etc. In this section, we have attempted to give a comparison of the various taxsaving investments, which should help you make an informed and intelligent decision regarding your tax investments. The comparison is done in a group of two on the parameters of safety, returns, tenure and tax benefits. The argument behind grouping of those avenues is not very complicated; we just want to address the dilemma of much talked groups. For instance, one can ask whether investment in NSC is better when compared to Infrastructure bond. The grouping has not been addressed. In this section, we suggest those readers to compare in their own for these kind of grouping after taking a look at the arguments of the available grouping.
Important features of all the tax saving schemes at a glance Investment avnues Safety Returns Tenure Tax benefits Tax rebate on a maximum investment of Rs.60,000/-, u/s 88. Interest is totally exempt from tax and there is no TDS on interest.
PPF
Safe
9% p.a. 15 compounde years d annually
NSC
Safe
Tax rebate on a maximum 9% p.a. investment of Rs.60,000/-, u/s compounde 6 years 88. No TDS on interest. d halfInterest amount reinvested is yearly eligible for Section 88 benfit.
Infrastruct Safety Varies from 3 years A tax rebate u/s 88 on a ure bonds indicated 9.00% to maximum investment of by credit 9.5% p.a. Rs.80,000/-. 58
rating. Life insurance polices Safe Premiums paid on life 20 25 insurance policies, upto a Around 10% years maximum of Rs.60,000/qualifies for tax rebate u/s 88. Depends on the Tax rebate u/s 88 on a performanc 3 years maximum investment of e of the Rs.10,000/-. stock market 3 years Tax rebate u/s 88 on a to age maximum investment of of 58 Rs.60,000/-. years.
ELSS schemes
Carry risk as they invest in stock market. Carry risk as they invest in a combinatio n of debt and equity
Pension plans of mutual funds
Some of the strategies you could adopt are
Sell the investment that exceeds its recommended percentage
and invest the proceeds in other investments. Any investments which have been performing badly and which have no potential to recover should be sold.
You can use these losses to offset any gains that may be
generated and ease your tax bill. Add money to investments that are below their recommended percentage. Investment in RBI Relief Bonds will grow to (Rs.) 21,600 Investment in other avenues giving taxable returns will grow to (Rs.) 21,400
Time after (yrs) 1
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5 10 15 20
29,386.56 43,178.49 63,443.38 93,219.14
28,051.03 39,343.02 55,180.63 77,393.68
How much can you save in a year after the recent Budget.
MUTUAL FUND
History of Mutual Funds in India and role of SEBI in mutual funds industry? Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market. 60
As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type. It may be mentioned here that Unit Trust of India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002).
India (UTI) is not registered with SEBI as a mutual fund (as on January 15, 2002). What do you mean by mutual fund? Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. Investments in securities are spread across a wide cross-section of industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unitholders. A mutual fund, also called an investment company, is an investment vehicle which pools the money of many investors. The fund's manager uses the money collected to purchase securities such as stocks and bonds. The securities purchased are referred to as the fund's portfolio.
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When you give your money to a mutual fund, you receive shares of the fund in return. Each share represents an interest in the fund's portfolio. The value of your mutual fund shares will rise and fall depending upon the performance of the securi ties in the portfolio. Like a shareholder in a corporation, you will receive a proportional share of income and interest gener ated by the portfolio. You can receive these distributions either in cash or as additional shares of the fund. As a shareholder, you also have certain shareholder voting rights. A mutual fund's portfolio is managed by a professional money manager. The manager's business is to choose securities which are best suited for the portfolio. Be aware, however, that even a profes sional money manager cannot insure against a loss of principal. The mutual fund manager will invest in many different securities. This diversification of portfolio assets means that you as an investor have not pinned all your hopes on one company's success. Also, because the portfolio holds many securities, the negative impact that any one company may have on the fund is diminished. While diversification is a benefit of mutual fund investing, a mutual fund is still impacted, either favorably or unfavorably, by the ups and downs of the market in general.
Mutual funds provide a relatively easy way to invest. Most funds have a minimum investment of $1000. In addition, a mutual fund stands ready to buy back, or redeem, your shares at any time. This liquidity allows you to get your money when needed. There is no guarantee, however, that your shares at the time of redemption will not have decreased in value.
What is Net Asset Value (NAV) of a scheme? The performance of a particular scheme of a mutual fund is denoted by Net Asset Value (NAV). Mutual funds invest the money collected from the investors in securities markets. In simple words, Net Asset Value is the market value of the securities held by the scheme. Since market value of securities changes every day, NAV of a scheme also varies on day to day basis. The NAV per unit is the market value of securities of a scheme divided by the total number of units of the scheme on any particular date. For example, if the market value of securities of a mutual fund scheme is Rs 200 lakhs and 62
the mutual fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per unit of the fund is Rs.20. NAV is required to be disclosed by the mutual funds on a regular basis - daily or weekly depending on the type of scheme.
Benefits of Mutual Funds
Universal Benefits Affordability A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Diversification
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The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might underperform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives. Variety Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme.
Professional Management Qualified investment professionals who seek to maximise returns and minimise risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional who has experience in making investment decisions. It is the Fund Manager's job to (a) find the best securities for the fund, given the fund's stated investment objectives; and (b) keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required. Tax Benefits
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Any income distributed after March 31, 2002 will be subject to tax in the assessment of all Unit holders. However, as a measure of concession to Unit holders of open-ended equity-oriented funds, income distributions for the year ending March 31, 2003, will be taxed at a concessional rate of 10.5%. In case of Individuals and Hindu Undivided Families a deduction upto Rs. 9,000 from the Total Income will be admissible in respect of income from investments specified in Section 80L, including income from Units of the Mutual Fund. Units of the schemes are not subject to Wealth-Tax and Gift-Tax. Regulations Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors. Types of Mutual Fund Scheme Mutual fund schemes may be classified on the basis of its structure and its investment objective.
By Structure Open-end Funds An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity. Closed-end Funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the 65
initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor. Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices. By Investment Objective Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. It has been proved that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long term outlook seeking growth over a period of time. Income Funds The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income.
Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth.
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Money Market Funds The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods. Other Schemes Tax Saving Schemes These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. Special Schemes
Industry Specific Schemes
Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like Infotech, FMCG, Pharmaceuticals etc.
Index Schemes
Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE 50
Sectoral Schemes
Sectoral Funds are those which invest exclusively in a specified sector. This could be an industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.
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How to invest in Mutual Fund Step One - Identify your Investment needs Step Two - Choose the right Mutual Fund Step Three - Select the ideal mix of Schemes Step Four - Invest regularly Step Five- Start early Step Six - The final step THE RISK RETURN GRAPH FOR VARIOUS FUNDS.
Sector Funds R E T U R N S Equity Funds Balanced Funds Income Funds Liquid Funds RISKS
NFO Report Card The Performance of equity diversified schemes launched during the quarter. SCHEME SINCE INCEPTION INCEPTION DATE RETURNS
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ABN AMRO Future Leaders Fund-Growth -21.86% Fedility -8.29% Stand. 1.2% India Chart Special Enterprise Situations Equity Fund-Growth
7 th 26th 16th
Apr.06 Apr.06 May06
Fund-Growth
Sundaram Rural India Fund- Growth -1.35% Templeton -4.8% Average -7.02% In The Eye Of The Storm India Equity Income Fund-Grow
19 th Apr.06 20th Apr.06
Returns in all fund categories were hit this quarter by the market crash. Income & liquid funds held up best while tax-savers funds tanked the worst. SCHEME RETURNS EQUITY DIVERSIFIED Prudential 3.04 Principal -0. 76 Sundaram -1.04 ICICI Global Blended Plan-Option A-Growth Fund-Growth Midcap-Growth
Opportunities Select
69
INCOME DBS 3.11 Benchmark 2.70 Prudential 1.91 ELSS Franklin -8.27 SBI -10.81 HDFC -10.90 BALANCED Reliance 6.20 Can -3.01 JM -5.03 Assets Leaders The big 5 in respect of total assets under management (AUM) Prudential 31,150.95 ICICI Mutual Fund Balanced Balanced RSF-Hybrid-Growth II -Growth India Magnum Tax Index Gain Tax Scheme Fund 93 Chola Income Derivative ICICI Plus-Growth Fund-Growth LTP-Cumulative
Taxsaver-Growth
70
UTI 30,551.02 Reliance 27,914.93 HDFC 23,649.75 Franklin Templeton Investments
Mutual Mutual Mutual
Fund Fund Fund 22,359.90
Figures in Rs. Crores as on May 31, 2006
COMMODITIES
Commodity Futures are contracts to buy specific quantity of a particular commodity at a future date. It is similar to the Index futures and Stock Futures but the underlying happens to be commodities instead of Stocks and Indices. Major Commodity Exchanges The Government of India permitted establishment of National-level MultiCommodity exchanges in the year 2002 and accordingly three exchanges come in picture. They are: Multi-Commodity Exchange in India Ltd, Mumbai ( MCX ). National Commodity and Derivative Exchange of India, Mumbai ( NCDEX ). National Multi Commodity Exchange, Ahemdabad (NMCE).
71
However there are regional commodities exchanges functioning all over the country. Karvy Commodities Broking Pvt Ltd, has got membership of both the premier commodity exchanges i.e. MCX and NCDEX. Some Basics Of Commodity Trading:1. FCRA ( Forward Contracts Regulation Act,1952 ) recognizes all agricultural, mineral & fossil products as goods allowed for commodity trading. 2.List includes metals, cereals, pulses, cotton, rubber, jute, oils, potatotes, onions, sugar, coffee, tea, spices, etc. 3.Commodities are traded through special exchanges called commodity exchanges. There are 3 national multi-commodity exchanges in India which made commodity trading more accessible to average investors.
At international level there are major commodity exchanges in USA, Japan and UK. Major commodities traded in Most popular Exchanges of the world are: Exchange New York Mercantile Exchange (NYMEX) Chicago Board of Trade(CBOT) London Metals Exchange (LME) Chicago Board Option Exchange (CBOE) Tokyo Commodity Exchange Major Commodities Traded Crude Oil, Heating Oil Soy Oil, Soy Beans, Corn Aluminum, Copper, Tin, Lead Options on Energy, Interest Rate Silver, Gold, Crude Oil,
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(TCE) Malaysian Derivatives Exchange (Mdex) Commodity Exchange (COMEX)
Rubber Rubber, Soy Oil, Palm Oil Gold ,Silver, Platinum
Who regulates the Commodity Exchanges: Commodity exchanges are regulated by forward Market Commission ( FMC ); Forward market Commission works under the purview of the ministry of food, Agriculture and Public Distribution.
ADVANTAGES in dealing commodities futures are : If you are an Investor, commodities futures represent a good form of investment because of the following reasons. Diversification : The returns from commodities market are free from the direct influence of the equity and debt market, which means that they are capable of being used as effective hedging instruments providing better diversification. Less Manipulations : Commoditries markets, as they are governed by international price movements are less prone to rigging or price manipulations by individuals. High Leverage : The margins in the commodity futures market are less than the F & O section of the Equity market.
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How risky are these markets compared to stock & bond markets ? Commodity prices are generally less volatile than the stocks and this has been statistically proven. Therefore its relatively safer to trade in commodities.
Also the regulatory authorities ensure through continuous vigil that the commodity prices are market- driven and free from manipulations
Trading Places
A list of the 10 most frequently traded commodities, which shows when the contracts usually terminate & an indication of ruling prices.
COMMODITY Crude Oil (Rs/barrel) Wheat (Rs/quint.) Aluminum (Rs/kg) Copper (Rs/kg) Steel
FREQUENCY Monthly Monthly Monthly 2,4,6,8,11,12 Monthly
ESXPIRY 15 20 Last day Last day 20
52-WEEK HIGH/LOW (RS.) 3,426/2,454 976/753.40 151.45/84.25 397.85/141 20,800/15,55
CURRENT PRICE**(RS.) 3,408 834 120.35 342.05 17,350 74
(Rs/tonne) Gold 2,4,6,8,10,12 (Rs/10gm) Zinc (Rs/kg) Monthly Silver (Rs/kg) 1,3,5,7,9,12 Soya bin Oil(Rs/10kg) Sugar (Rs/quint.) Monthly Monthly
5 Last day 5 20 20
0 1,763/5,994 180.90/118 23,148/10,14 6 426.50/337.3 0 2,110/1,785
9,334 150.50 16,950 405 1,906
ANALYSIES & INTERPRETATION

POPULATION- According to the data collection method adopted the size of the population is 450. Thus, N = 450. After collecting the data the following facts were found out:Out of the 450 people the following percentage composition were interested in following products:MUTUAL FUNDS -35% SHARE MARKET- 20% BONDS/DEBENTURES-3% INSURANCE-18% 75
REAL ESTATE-6% COMMODITIES-8% NSC (NATIONAL SAVING SCHEME)-8% OTHERS-2%
MUTUAL FUNDS SHARES BONDS/DEBENT URES INSURANCE REAL ESTATE COMMODITIES NSC OTHERS
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F c rsC n id redF r B n s a to os e o od
7% 0 6% 0 5% 0 4% 0 3% 0 2% 0 1% 0 0 % T x S vin a a g C p l B ild g a ita u in 5% 8 4% 3
Factors Considered For Insurance Sector

80% 60% 40% 20% 0% Tax S aving S afety High Returns 30% 7% 63%
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F a c to r s C o n s id e r e d F o r T a x P la n n in g
80% 60% 40% 20% 0% T a x S a v in g S a fe ty 25% 75%
CONCLUSION
Instead of concluding anything, I would like to show the comparisons of the various investments opportunities concerning their safety, interest rate, liquidity, etc. through following table: INSTRUMENTS STOCKS BONDS RETURN HI MOD SAFETY LO HI VOLATILITY HI MOD LIQUIDITY HI / LO MOD
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FIXED DEPOSITS MUTUAL FUNDS
LO
HI
LO
HI
HI
HI
MOD
HI
Where; HI= High, LO= Low, MOD= Moderate. Now it depends from person to person what they predict from the above table and what are their likings
RECOMMENDATIONS
Mutual funds could provide better advice to their investors through the Net and through the traditional investment routes where there is an additional channel to deal with the Brokers. Direct dealing with the fund could help the investor with their financial planning.
In India , brokers could get more Net savvy than investors and could help the investors with the knowledge through get from the Net.
New investors would prefer online : Mutual funds can target investors who are young individuals and who are Net savvy, since servicing them would be easier on the Net.
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India has around 1.6 million net users who are prime target for these funds and this could just be the beginning. The Internet users are going to increase dramatically and mutual funds are going to be the best beneficiary. With smaller administrative costs more funds would be mobilized .A fund manager must be ready to tackle the volatility and will have to maintain sufficient amount of investments which are high liquidity and low yielding investments to honor redemption.
Net based advertisements: There will be more sites involved in ads and promotion of mutual funds. In the U.S. sites like AOL offer detailed research and financial details about the functioning of different funds and their performance statistics. a is witnessing a genesis in this area . There are many sites such as indiafn.com that are doing something similar and providing advice to investors regarding their investments.
BIBLIOGRAPHY
BOOKS REFERED: INVESTMENT ANALYSIS AND PORTFOLIO MANAGEMENT BY:- PRASANNA CHANDRA RESEARCH METHODOLOGY BY:- C.K.KOTHARI WEBSITES REFERED www.mutualfundsindia.com www.indiacapital.com www.moneypore.com www.valueresearchonline.com www.amfi.com www.indiafn.com
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Financial Planning

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Financial Planning For Individual Investors

4.Fixed Deposit 43 5.Insurance 44 6.Tax Planning 52 7.Mutual Fund 4

58 8.Commodity 68 6. Analysis & Interpretation 72 7. Conclusion 75 8. Recommendation 76 9. Bibliography 77

INTRODUCTION ABOUT COMPANY

Among the Top 3 Depository Participants

Largest HandledLargest over 500 Public issues as Registrars.

Adjudged as one of The Top 50 IT Users in India by MIS Asia

ISO 9000:2000 certified operations by DNV

Full fledged IT driven operations

Retail broking operations (Cash segment) commenced on the HSE**

Share Registry and Transfer (R&T) Business recently hived off

KARVY GROUP OF COMPANIES Indias No.1 integrated financial services group

Insurance Broking Insurance Broking

NEED OF THE STUDY

Money Market Debt Market Forex Market Capital Market

INVESTMENTS IN OTHER MARKETS

COMMERTIAL PAPER (CP)

INTER-CORPORATE DEPOSIT (ICD)

Indian Stock Market (Stock Indices)

Wednesday, July 26, 2006 1:30:00 PM

fluctuations in market values, over the short term.

INTERRELATIONSHIP AMONG VARIOUS PHASES OF PORTFOLIO

Home Insurance Life Insurance

Accident Insurance NRI Accident Insurance Personal Accident Insurance

Health Care Insurance Medical Insurance 46

Critical Illness Insurance

Monthly Deposit Saving Deposit Time Deposit Recurring Deposit

Special Schemes For Retiring Person

Shares Mutual Funds Unit of UTI

1,00,001 - 1,50,000 1,50,001 - 2,50,000 2,50,001 upwards 10,00,000 upwards

10% 20% 30% 30%*

9% p.a. 15 compounde years d annually

Pension plans of mutual funds

Some of the strategies you could adopt are

Sell the investment that exceeds its recommended percentage

Time after (yrs) 1

29,386.56 43,178.49 63,443.38 93,219.14

28,051.03 39,343.02 55,180.63 77,393.68

Benefits of Mutual Funds

Industry Specific Schemes

Apr.06 Apr.06 May06

19 th Apr.06 20th Apr.06

UTI 30,551.02 Reliance 27,914.93 HDFC 23,649.75 Franklin Templeton Investments

Mutual Mutual Mutual

Fund Fund Fund 22,359.90

Figures in Rs. Crores as on May 31, 2006

(TCE) Malaysian Derivatives Exchange (Mdex) Commodity Exchange (COMEX)

Rubber Rubber, Soy Oil, Palm Oil Gold ,Silver, Platinum

FREQUENCY Monthly Monthly Monthly 2,4,6,8,11,12 Monthly

ESXPIRY 15 20 Last day Last day 20

52-WEEK HIGH/LOW (RS.) 3,426/2,454 976/753.40 151.45/84.25 397.85/141 20,800/15,55

CURRENT PRICE**(RS.) 3,408 834 120.35 342.05 17,350 74

0 1,763/5,994 180.90/118 23,148/10,14 6 426.50/337.3 0 2,110/1,785

9,334 150.50 16,950 405 1,906

ANALYSIES & INTERPRETATION

REAL ESTATE-6% COMMODITIES-8% NSC (NATIONAL SAVING SCHEME)-8% OTHERS-2%

Factors Considered For Insurance Sector

FIXED DEPOSITS MUTUAL FUNDS

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