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I, Prakhar Srivastava, a student of SCHOOL OF MANAGEMENT STUDIES, MOTILAL NEHRU NATIONAL INSTITUTE OF TECHNOLOGY, ALLAHABAD hereby declare that this project report is a result of culmination of my sincere efforts. I declare that this submitted work is done solely by me and to the best of my knowledge; no such work has been submitted by any other person for the award of degree or diploma. I also declare that all the information collected from various secondary sources has been duly acknowledged in this project report.

_______________________ (Prakhar Srivastava)





This is to certify that MR. PRAKHAR SRIVASTAVA has satisfactorily completed the project work entitled, COMPARATIVE ANALYSIS OF INVESTMENT OPTIONS AVAILABLE IN THE MARKET AND CUSTOMER BUYING PREFERENCE under my guidance based on the declaration made by the candidate and my association as a guide for carrying out this work, I recommend that this project report is for evaluation as a partial requirement of the MBA Programme of SCHOOL OF MANAGEMENT STUDIES, MOTILAL NEHRU NATIONAL INSTITUTE OF TECHNOLOGY, ALLAHABAD.

Date: _________________________ (Project Supervisor) School of Management Studies, Motilal Nehru National Institute of Technology, Allahabad

This project is forwarded for evaluation/Vive-Voce Examination to the School of Management Studies, Motilal Nehru National Institute of Technology, Allahabad.

Date: (Dr. Peeush Ranjan Agrawal) Head, SMS, MNNIT Allahabad




To acknowledge is very great way to show your gratitude towards the persons who have contributed in your success in one or other way. I find words inadequate to express my gratitude to Mr. Abhishek Chand for providing me an opportunity to carry out my summer training at such a well reputed and leading stock broking company Karvy Stock Broking Limited (KSBL). At the very outset of the training I deem it is my pious duty to express my sincere thanks also to companys HR Manager Mr. Sankalp Verma for his continuous guidance and supervision and support during the training period. I would also like to thank to Ms. Shama, who has spared sometime and helped me out to carry on my project work successfully at the best level. I would like to thank my seniors at SMS MNNIT, my friends, and my fellow interns who have guided and helped me for my project work and provided encouragement throughout my training period. This study could not have been successful without the valuable input of the customers of Karvy.




I know that training is for the development and enhancement of the knowledge in this particular field. It can never be possible to make a mark in todays competitive era only with theoretical knowledge when industries are developing at global level, practical knowledge of administration and management of business is very important. Hence, practical study is of great importance to M.B.A. student. With a view to expand the boundaries of thinking, I have undergone Summer Internship Training at Karvy Stock Broking Limited (KSBL). I have made a deliberate to collect the required information and fulfill training objective.




For every Stock Broking Company one has to compulsorily know how the people are taking their decision regarding the investments. Herewith, I have tried to compile the COMPARATIVE ANALYSIS OF INVESTMENT OPTIONS AVAILABLE IN THE MARKET AND CUSTOMER BUYING P REFERENCE in Lucknow City. Therefore I have selected this topic in order to know the mindset of the people and how they decide with which company, they should deal with. Ive tried to find out various aspect of the investor in Lucknow City. For that I have taken the help of graphs to represent the research data in a graphical manner. This project report also gives brief information of the other companies and all the four-departmental activities of Karvy Ltd.




Savings form an important part of the economy of any nation. With the savings invested in various options available to the people, the money acts as the driver for growth of the country. Indian financial scene too presents a plethora of avenues to the investors. Though certainly not the best or deepest of markets in the world, it has reasonable options for an ordinary man to invest his savings. The money you earn is partly spent and the rest saved for meeting future expenses. Instead of keeping the savings idle you may like to use savings in order to get return on it in the future. This is called Investment. One needs to invest to and earn return on your idle resources and generate a specified sum of money for a specific goal in life and make a provision for an uncertain future One of the important reasons why one needs to invest wisely is to meet the cost of Inflation. Inflation is the rate at which the cost of living increases. The cost of living is simply what it costs to buy the goods and services you need to live. Inflation causes money to lose value because it will not buy the same amount of a good or service in the future as it does now or did in the past. The sooner one starts investing the better. By investing early you allow your investments more time to grow, whereby the concept of compounding increases your income, by accumulating the principal and the interest or dividend earned on it, year after year. The three golden rules for all investors are: Invest early Invest regularly Invest for long term and not short term This project will also help to understand the investors facet before investing in any of the investment tools and thus to scrutinize the important aspects for the investors before investing that further helped in analyzing the relation between the features of the products and the investors requirements.





The purpose of the study was to determine the saving behavior and investment preferences of customers. Customer perception will provide a way to accurately measure how the customers think about the products and services provided by the company. Todays trying economic conditions have forced difficult decisions for companies. Most are making conservative decisions that reflect a survival mode in the business operations. During these difficult times, understanding what customers on an ongoing basis is critical for survival. Executives need a 3rd party understanding on where customer loyalties stand. More than ever management needs ongoing feedback from the customers, partners and employees in order to continue to innovate and grow. The main objective of the project is to find out the needs of current and future customers. For this report, customer perception and awareness level will be measured in many important areas like: To understand all about different investment avenues available in India. To find out how the investors get information about the various financial instrument To find out how the investor wants to invest i.e. on his own or through a broker. To find out the saving habits of the different customers and the amount they invest in various financial instruments. In which type of financial instrument they like to invest. How long they prefer to keep their money invested. What is the return that they expect from the investment? What are the various factors that they consider before investing? To find out the risk profile of the investor. To give a recommendation to the investors that where they should invest. To give a suggestion to my company where our fund lacks in the market & how it should be rectified. After all as a management trainee I will try to get some valuable knowledge from my seniors in the organization as well as from my faculty guide which will help me in the future. To evaluate the consumer attitude towards saving and decision making regarding investments.



This report will help the company to strengthen customer intimacy. The report on various investment avenues available in India will help the company in many areas like. It will help the company to understand the expectations the customer have about their company from the perspective of financial performance and corporate social responsibility. It will provide fresh insights which can help their business continue to flourish. The company can identify the particular service requirements of different types of customers. The company can understand the problem areas. The company can evaluate new services initiatives. The study will help in gaining a better understanding of what an investor looks for in an investment option. It can be used by the financial sector in designing better financial instrument customized to suit the needs of the investor. It will help agents and brokers in marketing the existing instruments. It will provide knowledge to the customer about the various financial services provided by the company to their customers. It can help the company to understand what is the requirement of the different categories of customers This report will be developed in order to empower companies with detailed primary market research needed to make well informed decisions and it will provide independent measurement and validation of the health of companys relationship with their customers. These are the various advantages which will give some value addition to the company in understanding the awareness level of the customer about the various investment options and the perception of the investors with regard to the investments they want to make.



The project is based upon various financial instruments that are available in India and the perception level of the customer about these financial instruments. For which there will be the need of information from the customers about their knowledge of these financial products. The various limitations of the study are: Total number of financial instrument in the market is so large that it needs a lot of resources to analyze them all. There are various companies providing these financial instruments to the public. Handling and analyzing such a varied and diversified data needs a lot of time and resources. As the project is based on secondary data, possibility of unauthorized information cannot be avoided. Reluctance of the people to provide complete information about them can affect the validity of responses. Due to time and cost constraint study will be conducted in only selected area of Lucknow. The lack of knowledge in customers about the financial instruments can be a major limitation. The information can be biased due to use of questionnaires.



During the summer internship period i.e. from 24th Feb to 15th April I have gone through various stages of Job role. I was basically given the work to Target various Consumer Groups, Markets and Different Organizations to whom and where the company can pitch its differential financial products/services as well as to create Awareness about the company and its offerings in the regard to Promote which can create a Position in minds of the consumer. Moreover I was given some training classes about various investments available for investment which has helped me a lot in the understanding of different investment product. This project has been a great learning experience for me, at the same time it gave me enough scope to implement my analytical ability. This project as a whole can be divided into two parts: The first part gives an insight about the different investment avenues available in India and its various aspects. It is purely based on whatever I learned at KARVY STOCK BROKING. All the topics have been covered in a very systematic way. The language has been kept simple so that a layman could understand. The second part will consist of data and their analysis; will be collected through a survey done on 200 people. Hope the research findings and conclusions will be of use. It has also covered why people dont want to go in invest? The advisors can take further steps to approach more and more people and indulge them for taking their advices. METHODOLOGY: Source of Data: Primary Data Secondary Data Sample Size Sampling Technique

: : : :

Questionnaire, visiting organization Information from the Company, Websites, journals and magazines 100 Random sampling

SAMPLING METHODOLOGY: Sampling Technique: Initially, a rough draft was prepared keeping in mind the objective of the research. A pilot study was done in order to know the accuracy of the Questionnaire. The final Questionnaire was arrived only after certain important changes were done. Convenience sampling technique will be used for collecting the data from the Karvy Stock Broking customers. The consumers are selected by the convenience sampling method. The selection of units from the population based on their easy availability and accessibility to the researcher is known as convenience sampling. Convenience sampling is at its best in surveys dealing with an exploratory purpose for generating ideas and hypothesis. SAMPLING UNIT: The respondents who were asked to fill out questionnaires are the sampling units. These comprise of employees of MNCs, Govt. Employees, Self Employed and existing customers of Karvy Stock broking Ltd. SAMPLE SIZE:


The sample size was restricted to only 100, which comprised of mainly peoples from different regions of Lucknow due to time constraints. SAMPLING AREA: The area of the research was Lucknow, Uttar Pradesh. The project work can only be complete after: Analyzing the data. Referring books and gathering more relevant information from the internet. Drawing detailed and careful inferences from the analysis. DATA COLLECTION: Questioning & observing are the two basic methods of collecting primary data. Questionnaire studies are more relevant than observation studies Importance of Questionnaire When information is to be collected by asking questions to people who may have the desired data, a standardized form called questionnaire is prepared which helps to bring the data as such required for the research work. The questionnaire is a list of questions to be asked to the respondents. Each question is worded exactly as it is to be asked & the questions are listed in an established sequence. Spaces in which to record answers are provided in questionnaire. PRESENTATION OF THE DATA: The collected data will be analyzed and will be represented through various charts, graphs, pie charts, tabulations and master sheets of the surveyed data. The data will be presented to determine market shares and percentage of readers out of the total population. The same pattern will be repeated in the case of advertisers.






Indian Stock Markets are one of the oldest in Asia. Its history dates back to nearly 200 years ago. The earliest records of security dealings in India are meager and obscure. By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid development of commercial enterprise and brokerage business attracted many men into the field and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke out and cotton supply from United States of Europe was stopped; thus, the 'Share Mania' in India begun. The number of brokers increased to about 200 to 250. However, at the end of the American Civil War, in 1865, a disastrous slump began (for example, Bank of Bombay Share which had touched Rs 2850 could only be sold at Rs. 87). At the end of the American Civil War, the brokers who thrived out of Civil War in 1874, found a place in a street (now appropriately called as Dalal Street) where they would conveniently assemble and transact business. In 1887, they formally established in Bombay, the "Native Share and Stock Brokers' Association" (which is alternatively known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock Exchange at Bombay was consolidated. Thus in the same way, gradually with the passage of time number of exchanges were increased and at currently it reached to the figure of 24 stock exchanges.


An important early event in the development of the stock market in India was the formation of the Native Share and Stock Brokers Association at Bombay in 1875, the precursor of the present-day Bombay Stock Exchange. This was followed by the formation of associations /exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). IN addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to recede into oblivion during depressing times subsequently. In order to check such aberrations and promote a more orderly development of the stock market, the central government introduced a legislation called the Securities Contracts (Regulation) Act, 1956. Under this legislation, it is mandatory on the part of stock exchanges to seek government recognition. As of January 2002 there were 23 stock exchanges recognized by the central Government. They are located at Ahemdabad, Bangalore, Baroda, Bhubaneshwar, Calcutta, Chennai,(the Madras stock Exchanges ), Cochin, Coimbatore, Delhi, Guwahati, Hyderbad, Indore, Jaipur, Kanpur, Ludhiana, Mangalore, Mumbai(the National Stock Exchange or NSE), Mumbai (The Stock Exchange), popularly called the Bombay Stock Exchange, Mumbai (OTC Exchange of India), Mumbai (The Inter-connected Stock Exchange of India), Patna, Pune, and Rajkot. Of course, the principle bourses are the National Stock Exchange and The Bombay Stock Exchange, accounting for the bulk of the business done on the Indian stock market. While the recognized stock exchanges have been accorded a privileged position, they are subject to governmental supervision and control. The rules of a recognized stock exchanges relating to the managerial powers of the governing body, admission, suspension, expulsion, and re-admission of its members, appointment of authorized representatives and clerks, so on and so forth have to be approved by the government. These rules can be amended, varied or rescinded only with the prior approval of the government. The Securities Contracts (Regulation) Act vests the government with the power to make enquiries into the affairs of a recognized stock exchange and its business, withdraw the recognition the task of regulating the stock exchange to the Securities Exchanges Board of India.



The Stock Exchange, Mumbai, popularly known as "BSE" was established in 1875 as "The Native Share and Stock Brokers Association". It is the oldest one in Asia, even older than the Tokyo Stock Exchange, which was established in 1878. It is a voluntary non-profit making Association of Persons (AOP) and is currently engaged in the process of converting itself into demutualize and corporate entity. It has evolved over the years into its present status as the premier Stock Exchange in the country. It is the first Stock Exchange in the Country to have obtained permanent recognition in 1956 from the Govt. of India under the Securities Contracts (Regulation) Act, 1956. The Exchange, while providing an efficient and transparent market for trading in securities, debt and derivatives upholds the interests of the investors and ensures redresses of their grievances whether against the companies or its own member-brokers. It also strives to educate and enlighten the investors by conducting investor education program and making available to them necessary informative inputs. A Governing Board having 20 directors is the apex body, which decides the policies and regulates the affairs of the Exchange. The Governing Board consists of 9 elected directors, who are from the broking community (one third of them retire ever year by rotation), three SEBI nominees, six public representatives and an Executive Director & Chief Executive Officer and a Chief Operating Officer.



NSE was incorporated in 1992 and was given recognition as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments. NSE has been able to take the stock market to the doorsteps of the investors. The technology has been harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access to investors irrespective of geographical location. The high level of information dissemination through on-line system has helped in integrating retail investors on a nation-wide basis. The standards set by the exchange in terms of market practices, Products , technology and service standards have become industry benchmarks and are being replicated by other market participants. Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service.



NCDEX started working on 15th December, 2003. This exchange provides facilities to their trading and clearing member at different 130 centers for contract. In commodity market the main participants are speculators, hedgers and arbitrageurs. Promoters of NCDEX are, National Stock Exchange(NSE) ICICI bank Life Insurance Corporation(LIC) National Bank for Agricultural and Rural Development (NABARD) IFFICO Punjab National Bank (PNB) CRISIL WHY NCDX? NCDEX is nationalized screen based system which is providing transparent, private and easy services. NCDEX is one of the traditional media which gives online information NCDEX is one of the Indian commodity exchange, constructed on the basis of the current national institutes the exchange has been established with the coloration of leading institutes like NABARD, LIC, NSI ETC. In India NCDEX has maximum settlement guarantee fund. NCDEX has appointed two exports for checking quality at the time of delivery

FACILITIES PROVIDED BY NCDEX: NCDEX has developed facility for checking of commodity and also provides a wear house facility By collaborating with industrial partners, industrial companies, news agencies, banks and developers of kiosk network NCDEX is able to provide current rates and contracts rate. To prepare guidelines related to special products of securitization NCDEX works with bank. To avail farmers from risk of fluctuation in prices NCDEX provides special services for agricultural. NCDEX is working with tax officer to make clear different types of sales and service taxes. NCDEX is providing attractive products like weather derivatives




MULTI COMMODITY EXCHANGE of India limited is a new order exchange with a mandate for setting up a nationwide, online multi-commodity market place, offering unlimited growth opportunities to commodities market participants. As a true neutral market, MCX has taken several initiatives for users in a new generation commodities futures market in the process, become the countrys premier exchange. MCX, an independent and a de-mutualized exchange since inception, is all set up to introduce a state of the art, online digital exchange for commodities futures trading in the country and has accordingly initiated several steps to translate this vision into reality.



The market watch window is used to view the market details for a particular or group of contracts and for a particular instrument type. This window displays the following details: Symbol, Expiry, price quotation unit, buy qty., buy price, sell price, sell qty., last traded price, D.P.R, volume (in 000s), value (in lack), % change, average trade price, high, low, open, close & open interest.



What are corporations?
Companies are started by individuals or may be a small circle of people. They pool their money or obtain loans, raising funds to launch the business. A choice is made to organize the business as a sole proprietorship where one person or a married couple owns everything, or as a partnership with others who may wish to invest money. Later they may choose to "incorporate". As a corporation, the owners are not personally responsible or liable for any debts of the company if the company doesn't succeed. Corporations issue official-looking sheets of paper that represent ownership of the company. These are called stock certificates, and each certificate represents a set number of shares. The total number of shares will vary from one company to another, as each makes its own choice about how many pieces of ownership to divide the corporation into. One corporation may have only 2,500 shares, while another, such as IBM or the Ford Motor Company, may issue over a billion shares. Companies sell stock (pieces of ownership) to raise money and provide funding for the expansion and growth of the business. The business founders give up part of their ownership in exchange for this needed cash. The expectation is that even though the owners have surrendered a portion of the company to the public, their remaining share of stock will become increasingly valuable as the business grows. Corporations are not allowed to sell shares of stock on the open stock market without the approval of the Securities and Exchange Commission (SEC). This transition from a privately held corporation to a publicly traded one is called going public, and this first sale of stock to the public is called an initial public offering, or IPO.

Why do people invest in the stock market?

When you buy stock in a corporation, you own part of that company. This gives you a vote at annual shareholder meetings, and a right to a share of future profits. When a company pays out profits to the shareholder, the money received is called a "Dividend". The corporation's board of directors choose when to declare a dividend and how much to pay. Most older and larger companies pay a regular dividend, most newer and smaller companies do not. The average investor buys stock hoping that the stock's price will rise, so the shares can be sold at a profit. This will happen if more investors want to buy stock in a company than wish to sell. The potential of a small dividend check is of little concern. What is usually responsible for increased interest in a company's stock is the prospect of the company's sales and profits going up. A company who is a leader in a hot industry will usually see its share price rise dramatically. Investors take the risk of the price falling because they hope to make more money in the market than they can with safe investments such as bank CD's or government bonds.

What is a stock market index?

In the stock market world, you need a way to compare the movement of the market, up and down, from day to day, and from year to year. An index is just a benchmark or yardstick expressed as a number that makes it possible to do this comparison. For e.g. S&P CNX Nifty is the index of NSE and SENSEX is the index of BSE.


What is Market Cap?

As you become familiar with stock and mutual fund investing, you will encounter the term "Cap", as in Small-Cap, Mid-Cap, and Large-Cap. Cap is short for capitalization. As a stock market term, the capitalization of a company is calculated by multiplying the total number of shares by the current price per share. If a company has 500 million shares trading at $20 a share, its market cap is $10 billion (500,000,000 x $20). This is the total value of the company's stock, the value that the world of stock market investors has placed on the company (at least for today, investors are quick to change their minds). Much of this perceived value is due to the expectations of a company's future prospects. Market cap is not dictated by how "big" a company is. Today, we define a large-cap company as one whose stock is valued at over $10 billion (some still say over $5 billion), a mid-cap from $1 to $10 billion, a small-cap from $250 million to $1 billion, and a company whose stock value is under $250 million as a micro-cap. Depending on whom you listen to or how old your reference book is, these definitions will vary. A related point - don't think a company is big just because it has a high stock price, or that it is small just because its stock price is low. For example, Disney trading at $23 is not smaller than Barnes & Noble trading at $33, since Disney has 2,048,690,000 shares outstanding (called the "float") and B&N has just 68,585,000 shares. That's a $4.7 billion market cap for Disney versus only $226 million for Barnes & Noble. The price per share, like the market cap, has nothing to do with how big a company is.

The Securities Market consists of two segments, viz. Primary market and Secondary market. Primary market is the place where issuers create and issue equity, debt or hybrid instruments for subscription by the public; the Secondary market enables the holders of securities to trade them. Secondary market essentially comprises of stock exchanges, which provide platform for purchase and sale of securities by investors. In India, apart from the Regional Stock Exchanges established in different centers, there are exchanges like the National Stock Exchange (NSE) and the Over the Counter Exchange of India (OTCEI), who provide nationwide trading facilities


with terminals all over the country. The trading platform of stock exchanges is accessible only through brokers and trading of securities is confined only to stock exchanges. Thus, the securities market has two independent, inseparable segments, the new issues (primary) market and the stock (secondary) market. The primary market provides channel for sale of new securities while the secondary market deals in securities previously issued. The issuer of securities sells the securities to the primary market to raise funds for investment and/or to discharge some obligations. The secondary market enables them who hold securities to adjust their holdings in response to change in their assessment of risk and return. They also sell securities for cash to meet their liquidity needs. The corporate securities market dates back to the 18 century when the securities of the East India Company were traded in Mumbai and Kolkata. The brokers used to gather under a banyan tree in Mumbai and under a neem tree in Kolkata for the purpose. However, the real beginning came in the 1850s with the introduction of the joint stock companies with limited liability. The 1860s witnessed beverish dealings in securities and securities speculation. This brought brokers to Bombay together in July 1875 to boom the first organized stock exchange in the country, viz. The Stock Exchange, Mumbai, Ahmedabad Stock Exchange in 1894 and 22 others followed with 20 century. The Stock Exchanges are the exclusive centers for trading in equities and the trading platform of an exchange is accessible only to brokers. The regulatory framework heavily favors the recognized stock exchanges by almost banning trading activity outside the stock exchanges. The securities are divided into two parts viz. Corporate securities and Government Securities Corporate Securities: The no of stock exchanges increased from 11 in 1990 to 23 now. All the exchanges are fully computerized and offer 100% on-line trading. 9644 companies were available for trading on stock exchanges at the end of March 2002. The trading platform of the stock exchanges was accessible to 9687 members from over 400 cities on the same date. The sectoral distribution of turnover has undergone significant change over last few Years. The share of manufacturing companies in turnover of top '50' companies, which was nearly 80% in 1995-96, declined sharply to about 6% in 201-02. During the same period the share of IT companies in turnover increased sharply from nil in 1995-96 to 67% in 2001-02. Government Securities: The aggregate turnover in central and state government dated securities, including treasury bills, through SGL transactions increased 31 times between 1994-95 and 2001-02. During 2001-02 it reached a level of Rs. 1,573,893 core, higher than combined trading volumes in equity segments of all the exchanges in the country, reflecting deepening of the market. The share of outright transactions in government securities increased from 23.2% in 1995-96 to 77% in 2001-02. The share of repo transactions declined correspondingly from 76.8% in 1995-96 to 23% in 2001-02. The Share of dated securities in turnover of government securities increased from 69% in 1996-97 to 94% in 2001-02. The T-bills accounted for remaining SGL turnover. Derivatives Market: Derivatives trading commenced in India in June 2000. The total exchange traded derivatives witnessed a volume of Rs. 442,343 crore during 2002-03 as against Rs. 4018 crore during the preceding year. While NSE accounted for about 99.5% of total turnover, BSE accounted for about 0.5% in 2002-03. The market witnessed higher volumes from June 2001 with introduction of index options, and still higher volumes


with introduction of stock options in July 2001. There was a spurt in volumes in November 2001 when stock futures were introduced. It is believed that India is the largest market in the world for stock futures. The stock market or secondary market ensures free marketability, negotiability and price discharge. For these reasons the stock market is referred to as the nerve center of the capital market, reflecting the economic trend as well as the hopes, aspirations and apprehensions of the investors. Stock Market is also called the barometer of the economy. The broad structure of the secondary market as on March 31, 2000 is presented below: Stock Exchanges 24 Exchanges with Screen Based Trading system 24 Exchanges having Trade/Settlement Guarantee Fund 16 Exchanges with Internet Trading 1 Registered Members (brokers) 9192 Registered Foreign Brokers 38 Registered Corporate Members 3136 Registered Sub-Brokers 5675 Registered FIIS 506 Listed Companies 9871 Market Capitalization Rs. 1192630 crore Turnover during 1999-2000 Rs. 2067031 crore Supply and Demand: A stock's price movement up and down until the end of the trading day, is strictly a result of supply and demand. The SUPPLY is the number of shares offered for sale at anyone one moment. The DEMAND is the number of shares investors wish to buy at exactly that same time. What a share of a company is worth on anyone day or at any one minute, is determined by all investors voting with their money. If investors want a stock and are willing to pay more, the price will go up. If investors are selling a stock and there aren't enough buyers, the price will go down. How does one buy stocks? Buying stocks is not as simple as walking into a stockbroker's office and buying shares like you would a pair of shoes from a store. You are required to open an account with the brokerage, like opening an account at a bank. Some brokers will allow you to open an account with very little money. The firm will then hold this money in an interest earning cash account, awaiting your orders to buy or sell stock, or other securities such as bonds or mutual funds. When you buy or sell, you pay a commission, which is deducted, from your account. When a stock is purchased, the ownership of the shares may be listed in one of two ways. "Listed" means how the corporation tracks the ownership of their stock. If you choose to have the stock listed in your name, you will receive the actual stock certificates. Most investors choose to have the ownership listed in the broker's name, called "held in street name", with the broker keeping track of whose trading account the stock actually belongs to. The benefits are reduced paperwork, consolidated portfolio statements, no concerns about storing and processing the paper certificates, and the ability to instantly sell and transfer the shares. Either way, any dividends are credited to your account. Stocks held in street name are insured up to $500,000 by the federal government against fraud or financial failure of the brokerage company. Why do people sell their stock?


The reasons people sell their stock are more complex. A person may just need the money. He or she may have watched the price go up, and have a hunch this is a good time to lock in their profit and sell some or all their shares. Bad news concerning a company or its industry, or a disappointing earnings report is sure to prompt heavy selling. An investor may see better opportunities in another company, and so sell his stocks that arent moving up. But usually, investors sell because theyve watched the price fall, and just want to get out before they lose even more. Secondary Market Intermediaries Stock brokers, sub-brokers, portfolio managers, custodians, share transfer agents constitute the important intermediaries in the Secondary Market. A stock broker plays a very important role in the secondary market helping both the seller and the buyer of the securities to enter into a transaction. The buyer and seller may be either a broker or a client. The transaction entered cannot be annulled except in the case of fraud, willful misrepresentation or upon prima-facie evidence of a material mistake in the transaction, in the judgment of the existing authorities. If a member of the stock exchange (broker) has orders to buy and to sell the same kind of securities, he may complete the transaction between his clients concerned. When executing an order the stock may on behalf of his client buy or sell securities from his account i.e. as principal or act as an agent. For each transaction he has to issue necessary contract note indicating whether he as principal or as an agent for another has entered into the transaction. While buying pr selling securities as a principal, the stock broker has to obtain the consent of his client and the prices charged should be fair and justified by the conditions of the market. A sub-broker is one who works along with the main broker and is not directly registered with the stock exchange as a member. He acts on behalf of the stockbroker as an agent or otherwise for assisting the investors in buying, selling or dealing in securities through such stockbrokers. No stockbrokers or sub-brokers shall buy, sell or deal in securities unless he holds a certificate of registration granted by SEBI under the Regulations made by SEBI ion relation to them. The Central Government has notified SEBI (Stock Brokers & Sub-Brokers) Rules, 1992 in exercise of the powers conferred by section 29 of SEBI Act, 1992. These rules came into effect on 20th August, 1992. Ten Golden rules for Investment: Warren Buffet has suggested ten golden rules for investing which proves to be immense use to the investors who want a better investment in stock market, Karvy follows these rules which are as described below: 1. Never invest in a business you cannot understand. 2. Concentrating on a few holdings can reduce risk. 3. Stop trying to predict the direction of the stock market, the economy, interest rates, or elections. 4. Buy companies with strong histories of profitability and with a dominant business franchisee. 5. Be fearful when others are greedy and greedy when others are fearful. 6. Unless you can watch your stock holding decline by 50% without becoming panic-stricken, you should not be in the stock market. 7. Do not take yearly results too seriously. Instead, focus on four or five year averages. 8. Focus on return on equity, not earnings per share (EPS).


9. Calculate "owner earnings" to get a with high profit margins. 10. Always invest for the long term. prospects?

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Online stock trading is very old concept for big institutions who trade thru private networks owned by Reuter's "Instinet" and a system called "Posit" since 1969. But it becomes internet based for laymen only in late 90s. Funny, that actually idea was first time used by a company making Beer called "WIT beer" to help its shareholders trade its shares. Thats how "WIT Capital" was born which is considered pioneer of this concept. It was made mainstream and household name by an offshoot of Charles Schwab & Co called eSchwab which is used by millions of people in USA. Lots of NRI's play in US stock market even when they come to India for holidays, via website of eSchwab. There are other serious players like E*trade, DATEK online etc. All this companies ask you to start account with US $5000 and you can buy and sell stock using these funds. They also issue you a check book which you can use to make payments from this account. Or use their ATM card to withdraw cash from your stock trading account. Today practically every big name brokerage firm offers online stock trading as it reduces their costs. Earlier they had army of brokers on phone with clients executing trade, which is done by computers accepting orders from clients directly. This firm now offers human access to high net worth accounts, and to rest at charge per trade.



You have some money to dabble with. Trading shares on BSE/NSE has always been your dream. When will you ever find the time? And besides, the hassle of finding a broker is not easy. Realizing there is untapped market of investors who want to be able to execute their own trades when it suits them, brokers have taken their trading rooms to the Internet. Known as online brokers, they allow you to buy and sell shares via Internet. There are 2 types of online trading service: 1. Discount brokers and 2. Full service online broker. Discount online brokers allow you to trade via Internet at reduced rates. Some provide quality research, other dont. Full service online brokerage is linked to existing brokerages. These brokers allow their clients to place online orders with the option of talking/ chatting to brokers if advice is needed. Brokerage rates here are higher. 5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Karvy.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of the online broking sites in India. With Net trading in securities and rapid consolidation between multiple stock exchanges, the international securities marketplace is fast becoming a "global village" through the creation of a universal virtual equity market. Compared to the Western countries, online trading is still in its infancy in India. With trading turnover at around Rs. 10 crore per day from online trading compared to a combined gross turnover of around Rs. 9000-10,000 crore handled by the BSE and NSE together, online trading has a long way to go.



In the past, investors had no option but to contact their broker to get real time access to market data. The Net brings data to the investor on line and net broking enables him to trade on a click. Now information has become easily accessible to both retail as well as big investors. The development of broking in India can be categorized in 3 phases: 1. Stock brokers offering on their sites features such as live portfolio manager, live quotes, market research and news to attract more investors. 2. Brokers offering on line broking and relationship management by providing and offering analysis and information to investors during broking and non-broking hours based on their profile and needs, that is, customized services. 3. Brokers (now e-brokers) will offer value management or services such as initial public offerings on line, asset allocation, portfolio management, financial planning, tax planning, insurance services and enable the investors to take better and well-considered decisions. In the US, 82 per cent of the deals are done on line. The European on line broking market is expected to be of $8 billions and is likely to raise five fold by 2002. In India, presently Internet trading can take place through the order routing system, which will route client orders to exchanges trading systems for execution of trades on stock exchanges (NSE and BSE). This will also require interface with banks to facilitate instant cash debit or credit and the depository system for debit or credit of securities.



Increase transparency in the markets. Enhance market quality through improved liquidity, by increasing quote continuity and market depth. Reduce settlement risks due to open trades, by elimination of mismatches. Provide management information system (MIS). Introduce flexibility in system, to handle growing volumes easily and to support nationwide expansion of market activity. Besides, through Internet trading three fundamental objectives of securities regulation can be easily achieved, these are: Investor protection, creation of a fair and efficient market and, reduction of the systematic risks.



Step-1: Those investors interested in doing the trading over internet system, that is, NEAT-ISX, should approach the brokers and register with the Stock Broker. Step-2: After registration, the broker will provide to them a login name, password and a personal identification number (PIN). Step-3: Actual placement of an order. An order can then be placed by using the place order window as under: o First by entering the symbol and series of stock and other parameters such as quantity and price of the scrip on the place order window. o Second, fill in the symbol, series and the default quantity. Step-4: It is the process of review. Thus, the investor has to review the order placed by clicking the review option. He may also re-set to clear the values. Step-5: After the review has been satisfactory; the order has to be sent by clicking on the send option. Step-6: The investor will receive an Order Confirmation message along with the order number and the value of the order. Step-7: In case the order is rejected by the Broker or the Stock Exchange for certain reasons such as invalid price limit, an appropriate message will appear at the bottom of the screen. At present, a time lag of about ten seconds is there in executing the trade. Step-8: It is regarding charging payment, for which there are different modes. Some brokers will take some advance payment from the investors and will fix their trading limits. When the trade is executed, the broker will ask the investor for transfer of funds by the investor to his account.


The above figure shows how the internet trading procedure. Trading Through Brokers / Traditional Method of Share Trading :Trading in the stock exchange can be conducted only through member broker in securities that are listed on the respective exchange. Investor intending to buy/sell securities in the exchange has to do so only through a SEBI registered broker/sub-broker. This is very popular concept in India for Share Trading before the facilities like on line trading introduce. Both the exchange have switched over from the open outcry trading system to fully automated computerized mode of trading know as Bolt and Neat. In this system, the broker trade with each other through the computer network. Buyers and sellers place their orders specifying the limits for quality and price. Those that are not matched remain on the screen and is opened for future matching during the day / settlement. After the advent of computerized trading the speed of trading has increased multi-fold and a fuller view of the market is available to the investors. To start dealing with broker you have to fill a form with the broker. After fill all the formalities the firm gives you a User Id no like a bank a/c no. through which you can enter in the transaction with broker. Broker will gives all the which one investor needed. What is stock Broker? A stock broker is one who invests other peoples money until its all gone. -Woody Allen, American Film Maker


A stock broker is a person or a firm that trades on its clients behalf, you tell them what you want to invest in and they will issue the buy or sell order. Some stock brokers also give out financial advice that you a charged for. It wasnt too long ago and investing was very expensive because you had to go through a full service broker which would give you advice on what to do and would charge you a hefty fee for it. There are three different types of stock brokers. 1. Full Service Broker- A full-service broker can provide a bunch of services such as investment research advice, tax planning and retirement planning. 2. Discount Broker- A discount broker lets you buy and sell stocks at a low rate but doesnt provide any investment advice. 3. Direct-Access Broker- A direct access broker lets you trade directly with the electronic communication networks (ECNs) so you can trade faster. Active traders such as day traders tend to use Direct Access Brokers. No. of stock broker in India 9368:- Total no of share broker in the country 12687:- The no. of sub-broker. 46%:- The share of trades accounted for by NSE broker 90%: The share of online trades clocked by segments top five companies Types Of Order :There are various types of orders, which can be placed on the exchange: Limit Order:The orders refer to a buy or sell order with a limit price. Suppose, you check the quote of Reliance Industries Ltd. (RIL) as Rs. 251 (Ask). You place a buy order for RIL with a limit price of Rs. 250. This puts a cap on your purchase price. In this case as the current price is greater than your limit price, order will remain pending and will be executed as soon as the price falls to Rs. 250 or below. In case the actual price of RIL on the exchange was Rs 248, your order will be executed at the best price offered on the exchange, say Rs 249. Thus you may get an execution below your limit price but in no case will exceed the limit buy price. Similarly for a limit sell order in no case the execution price will be below the limit sell price. Market Order:Generally investors, who expect the price of share to move sharply and are yet, keen on buying and selling the share regardless of price, use a market order. Suppose, the last quote of RIL is Rs 251 and you place a market buy order. The execution will be at the best offer price on the exchange, which could be above Rs 251 or below Rs 251. The risk is that the execution price could be substantially different from the last quote you saw. Please refer to important Fact for Online Investors. Stop Loss Order:A stop loss order allows the trading member to place an order which gets activated only when the last traded price (LTP) of the share is reached or crosses threshold price called as the trigger price. The trigger price will be as on the price mark that you want it to be. For example, you have a sold position in Reliance Ltd. Booked at Rs 345. Later in case the market goes against you i.e. go up, you would not like to buy the scrip for more than Rs. 353. Then you would put a SL Buy order with a Limit price of Rs. 353. You may choose to give a trigger price of Rs.351.50 in which case the order will get triggered into the


market when the last traded price hits Rs.351.50 or above. The execution will then be immediate and will be at the best price between 351.50 and 353. However stock movement can be so violent at times. The prices can fluctuate from the current level to over and above the SL limit price, you had quoted, at one shot i.e. the LTP can move from 350351 and directly to 353.50. At this moment your order will immediately be routed to the Exchange because the LTp has crossed the trigger price specified by you. However, the trade will not be executed because of the LTP being over and above the limit price that you had specified. In such a case you will not be able to square your position. Again as the market falls, say if the script falls to 353 or below, your order will be booked on the SL limit price that you have specified i.e. Rs.353. Even if the script falls from 353.50 to 352 your buy order will be booked at Rs. 353 only. Some seller, somewhere will book a profit in this case from your buy order execution. Hence, an investor will have to understand that one of the foremost parameters in specifying on a stop loss and a trigger price will have to be its chances of execution ability as and when the situation arises. A two-rupee bandwidth between the trigger and stop loss might be sufficient for execution for say a script like Infosys or Wipro. These vital parameters of volatility bands of scripts will always have to be kept in mind while the Stop loss concept. Generally there are two types of trading have been done in India which is given below: On line Trading / E Broking / Modern Method Trading through Brokers / Traditional method of Share trading. Trading Through Brokers / Traditional Method of Share Trading :Trading in the stock exchange can be conducted only through member broker in securities that are listed on the respective exchange. Investors intending to buy/sell securities in the exchange have to do so only through a SEBi registered broker/sub-broker. This is very popular concept in India for Share Trading before the facilities like on line trading introduce. Both the exchange has switched over from the open outcry trading system to fully automated computerized mode of trading knows as Bolt and Neat. In this system, the broker trade with each other through the computer network. Buyers and sellers place their orders specifying the limits for quality and price. Those that are not matched remain on the screen and is opened for future matching during the day / settlement. After the advent of computerized trading the speed of trading has increased multi-fold and a fuller view of the market is available to the investors. To start dealing with broker you have to fill a form with the broker. After fill all the formalities the firm gives you a User Id no like a bank a/c no. through which you can enter in the transaction with broker. Broker will gives all the which one investor needed.




KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the who is who of Corporate India. KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs, among others. Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments.


The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company. Karvy Consultants Limited. Started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 1985. Since then, Karvy used its experience and superlative expertise to go from strength to strength, to better services, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one of Indias premier integrated financial service enterprise. Thus over the last 20 years Karvy has traveled the success route, towards building a reputation as an integrated financial services provider, offering a wide spectrum of services. And have made this journey by taking the route of quality service, path breaking innovations in service, versatility in service and finally totality in service. KARVY highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. Values and vision of attaining total competence in servicing has served as the building block for creating a great financial enterprise, which stands solid on our fortresses of financial strength - various companies. With the experience of years of holistic financial servicing and years of complete expertise in the industry to look forward to, Karvy now emerged as a premier integrated financial services provider. As the flagship company of the Karvy Group, Karvy Consultants Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress.

Inception Corporate Registry services Stock Broking & ISCs Financial Product Distribution Corporate Finance Depository Services 1979 1985 1990 1993 1995 1997


ITES & BPO Services Personal Finance Advisory Services Secondary Debt & WDM Services Joint Venture with Computer Share ComTrade

2000 2001 2003 2004 2004


Karvy Consultants Limited Karvy Stock Broking Limited Karvy Investors Services Limited Karvy Computershare Pvt. Limited Karvy Global Services Limited Karvy Comtrade Limited Karvy Insurance Broking Private Limited

Among the top 5 stock brokers in India (4% of NSE volumes) India's No. 1 Registrar & Securities Transfer Agents Among the 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 Fully Fledged IT driven operations


Having emerged as a leader in the registry business, the first of the businesses that ventured into, Karvy transferred this business into a joint venture with Computershare Limited of Australia, the worlds largest registrar. With the advent of depositories in the Indian capital market and the relationships that have created in the registry business, believing they were best positioned to venture into this activity as a Depository Participant. Karvy is the early entrants registered as Depository Participant with NSDL (National Securities Depository Limited), the first Depository in the country and then with CDSL (Central Depository Services limited). Today, service over 6 lakh customer accounts in this business spread across over 250 cities/towns in India and are ranked amongst the largest Depository Participants in the country. With a growing secondary market presence, we have transferred this business to Karvy Stock Broking Limited (KSBL), associate and a member of NSE, BSE and HSE. IT enabled services:Technology Services division forms the ideal platform to unleash technology initiatives and make our presence felt on the Internet. Past achievements include many quality websites designed, developed and deployed by it. Karvy also possess own web hosting facilities with dedicated bandwidth and a state-ofthe-art server farm (data center) with services functioning on a variety of operating platforms such as Windows, Solaris, Linux and Unix. The corporate website of the company, www.karvy.com, gives access to in-depth information on financial matters including Mutual Funds, IPOs, Fixed Income Schemes, Insurance, Stock Market and much more. A link called Resource Center, devoted solely to research conducted by our team of experts on various financial aspects like Sector Research, deals exclusively with in-depth analysis of the key sectors of the Indian economy. Besides, a host of other links like My Portfolio which acts as a personalized and customized financial measure, makes this site extremely informative about investment options, market trends, news as also about our company and each of the services offered here.


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:Karvy offer services that are beyond just a medium for buying and selling stocks and shares. Instead we provide services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country. It offers trading on a vast platform National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange. More importantly, they make trading safe to the maximum possible extent, by accounting for several risk factors and planning accordingly. Highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to customers, through daily reports delivered thrice daily; The Pre-session Report, where market scenario for the day is predicted, The Mid-session Report, timed to arrive during lunch break, where the market forecast for the rest of the day is given and The Post-session Report, the final report for the day, where the market and the report itself is reviewed. Karvy also offer special portfolio analysis packages that provide daily technical advice on scrips for successful portfolio management and provide customized advisory services to help you make the right financial moves that are specifically suited to customer portfolio. Karvy Stock Broking services are widely networked across India, with the number of trading terminals providing retail stock broking facilities, services have increasingly offered customer oriented convenience, which provide to a spectrum of investors, high-net worth or otherwise, with equal dedication and competence. To empower the investor further we have made serious efforts to ensure that research calls are disseminated systematically to all our stock broking clients through various delivery channels like email, chat, SMS, phone calls etc. Depository Participants:The onset of the technology revolution in financial services Industry saw the emergence of Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, a powerful medium for trading and settlement of dematerialized shares. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled us to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues.


To further tap the immense growth potential in the capital markets we enhanced the scope of our retail brand, Karvy the Finapolis, thereby providing planning and advisory services to the mass affluent. Here understanding the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will necessarily help in creating wealth. Judicious planning that is customized to meet the future needs of the customer deliver a service that is exemplary. The market-savvy and the ignorant investors, both find this service very satisfactory. The edge that has over competition is portfolio of offerings and professional expertise. The investment planning for each customer is done with an unbiased attitude so that the service is truly customized. Monthly magazine, Finapolis, provides up-dated market information on market trends, investment options, opinions etc. Thus empowering the investor to base every financial move on rational thought and prudent analysis and embark on the path to wealth creation. Advisory Services:Under retail brand Karvy the Finapolis, delivers advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. This is made possible by the expertise that has gained in the business over the years.


Merchant Banking:Recognized as a leading merchant banker in the country, registered with SEBI as category one merchant banker. This reputation was built by capitalizing on opportunities in corporate consolidations, mergers and acquisitions and corporate restructuring, which have earned the reputation of a merchant banker. Raising resources for corporate or Government Undertaking successfully over the past two decades have given us the confidence to renew focus in this sector. Quality professional team and work-oriented dedication have propelled to offer value-added corporate financial services and act as a professional navigator for long term growth of our clients, who include leading corporate, State Governments, foreign institutional investors, public and private sector companies and banks, in Indian and global markets. Karvy also emerged as a trailblazer in the arena of relationships, both at the customer and trade levels because of unshakable integrity, seamless service and innovative solutions that are tuned to meet varied needs. Team of committed industry specialists, having extensive experience in capital markets, further nurtures this relationship. Financial advice and assistance in restructuring, divestitures, acquisitions, demergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated relationship with the client to one based on unshakable trust and confidence.


Karvy has traversed wide spaces to tie up with the worlds largest transfer agent, the leading Australian company, Computershare Limited. The company that services more than 75 million shareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint venture with us. With management team completely transferred to this new entity, we will aim to enrich the financial services industry than before. The future holds new arenas of client servicing and contemporary and relevant technologies as we are geared to deliver better value and foster bigger investments in the business. The worldwide network of Computershare will hold in good stead as expect to adopt international standards in addition to leveraging the best of technologies from around the world. Excellence has to be the order of the day when two companies with such similar ideologies of growth, vision and competence, get together. Mutual Fund Services:Karvy attained a position of immense strength as a provider of across-the-board transfer agency services to AMCs, Distributors and Investors. Nearly 40% of the top-notch AMCs including prestigious clients like Deutsche AMC and UTI swear by the quality and range of services that we offer. Besides providing the entire back office processing, providing the link between various Mutual Funds and the investor, including services to the distributor, the prime channel in this operation. Carrying the limitless' ideology forward, Karvy have explored new dimensions in every aspect of Mutual Fund servicing right from volume management, cost effective pricing, delivery in the least turnaround time, efficient back-office and front-office operations to customized service. They have been with the AMCs every step of the way, helping them serve their investors better by offering them a diverse and customized range of services. Service enhancements such as Karvy Converz' a full-fledged call center, a top-line website (www.karvymfs.com), the m-investor' and many more, creating a galaxy of customer advantages. Issue Registry:In voyage towards becoming the largest transaction-processing house in the Indian Corporate segment, Karvy have mobilized funds for numerous corporate, Karvy has emerged as the largest transactionprocessing house for the Indian Corporate sector. With an experience of handling over 700 issues, Karvy today, has the ability to execute voluminous transactions and hard-core expertise in technology applications have gained us the No.1 slot in the business. Karvy is the first Registry Company to receive ISO 9002 certification in India that stands testimony to its stature Karvy has the backing of skilled human resources complemented by requisite technological packages to ensure a faster processing capability. Karvy has the benefit of a good synergy between depositories and registry that enables faster resolution to related customer queries. Apart from its unique investor servicing presence in all the phases of a public Issue, it is actively coordinating with both the main depositories to develop special models to enable the customer to access depository (NSDL, CDSL) services during an IPO. Karvy trust-worthy reputation, competent manpower and high-end technology and infrastructure are the solid foundations on which success is built. Corporate Shareholder Services:Karvy has been a customer centric company since its inception. Karvy offers a single platform servicing multiple financial instruments in its bid to offer complete financial solutions to the varying needs of both


corporate and retail investors where an extensive range of services are provided with great volumemanagement capability. Today, Karvy is recognized as a company that can exceed customer expectations which is the reason for the loyalty of customers towards Karvy for all his financial needs. An opinion poll commissioned by The Merchant Banker Update and conducted by the reputed market research agency, MARG revealed that Karvy was considered the Most Admired in the registrar category among financial services companies. Karvy have grown from being a pure transaction processing business, to one of complete shareholder solutions. Website: http://karisma.karvy.com


KGSL is the specialist Business Process Outsourcing unit of the Karvy Group. The legacy of expertise and experience in financial services of the Karvy Group serves well as enter the global arena with the confidence of being able to deliver and deliver well. Here it offers several delivery models on the understanding that business needs are unique and therefore only a customized service could possibly fit the bill. Service matrix has permutations and combinations that create several options to choose from. Be it in re-engineering and managing processes or delivering new efficiencies, service meets up to the most stringent of international standards , outsourcing models are designed for the global customer and are backed by sound corporate and operations philosophies, and domain expertise. Providing productivity improvements, operational cost control, cost savings, improved accountability and a whole gamut of other advantages. Karvy operate in the core market segments that have emerging requirements for specialized services, wide vertical market coverage includes Banking, Financial and Insurance Services (BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare. Karvy horizontal offerings do justice to our stance as a comprehensive BPO unit and include a variety of services in Finance and Accounting Outsourcing Operations, Human Resource Outsourcing Operations, Research and Analytics outsourcing Operations and Insurance Back Office Outsourcing Operations. Website: www.karvyglobal.com


At Karvy Commodities, focused on taking commodities trading to new dimensions of reliability and profitability. Karvy have made commodities trading, an essentially age-old practice, into a sophisticated and scientific investment option .Here it enable trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil, pulses and cotton through a well systematized trading platform, technological and infrastructural strengths and especially street-smart skills make an ideal broker. Service matrix is holistic with a gamut of advantages, the first and foremost being legacy of human resources, technology and infrastructure that comes from being part of the Karvy Group. Karvy wide national network, spanning the length and breadth of India, further supports these advantages. Regular trading workshops and seminars are conducted to hone trading strategies to perfection. Every move made is a calculated one, based on reliable research that is converted into valuable information through daily, weekly and monthly newsletters, calls and intraday alerts. Further, personalized service is provided here by a dedicated team committed to giving hassle-free service while the brokerage rates offered are extremely competitive. Commitment to excel in this sector stems from the immense importance that commodity broking has to a cross-section of investors & farmers, exporters, importers, manufacturers and the Government of India itself. Website: www.karvycomtrade.com


At Karvy Insurance Broking Pvt. Ltd. provide both life and non-life insurance products to retail individuals, high net-worth clients and corporate. With the opening up of the insurance sector and with a large number of private players in the business, they are in a position to provide tailor made policies for different segments of customers. In journey to emerge as a personal finance advisor, it will be better positioned to leverage relationships with the product providers and place the requirements of customers appropriately with the product providers. With Indian markets seeing a sea change, both in terms of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as an investment product. Karvys wide national network, spanning the length and breadth of India, further supports these advantages. Further, personalized service is provided here by a dedicated team committed in giving hassle-free service to the clients.




MUTUAL FUND:Mutual fund is a pool of money collected from investors and is invested according to stated investment objectives Mutual fund investors are like shareholders and they own the fund. Mutual fund investors are not lenders or deposit holders in a mutual fund. Everybody else associated with a mutual fund is a service provider, who earns a fee. The money in the mutual fund belongs to the investors and nobody else. Mutual funds invest in marketable securities according to the investment objective. The value of the investments can go up or down, changing the value of the investors holdings. NAV of a mutual fund fluctuates with market price movements. The market value of the investors funds is also called as net assets. Investors hold a proportionate share of the fund in the mutual fund. New investors come in and old investors can exit, at prices related to net asset value per unit. Emergence of Mutual Funds:Mutual Funds now represent perhaps the most appropriate investment opportunity for most small investors. As financial markets become more sophisticated and complex, investor need a financial intermediary who provides the required knowledge and professional expertise on successful investing. It is no wonder then that in the birthplace of mutual funds-the U.S.A.-the fund industry has already overtaken the banking industry, with more money under Mutual Fund management than deposited with banks. The Indian Mutual Fund industry has already opened up many exciting investment opportunities to Indian investors. Despite the expected continuing growth in the industry, Mutual Fund is a still new financial intermediary in India. History of Mutual Funds:In the second half of 19th century, investor in UK considered the stock market is good for the investment. But for small investor it is not possible to operate in the market effectively. This led to establishment of an investment company which led to the small investor to invest in equity market. The first investment company was the Scottish-American Investment Company, set up in London in 1860. Mutual Fund Industry in India:Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of investors operating through a fund manager own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously. In 1963, the government of India took the initiative by passing the UTI act, under which the Unit Trust of India (UTI) was set-up as a statutory body. The designated role of UTI was to set up a Mutual Fund. UTIs first scheme, called. In 1987 the other public sector institutions set up their Mutual Funds. In 1992, government allowed the private sector players to set-up their funds. In 1994 the foreign Mutual Funds arrives in Indian market. In 2001 there is a crisis in UTI and in 2003 UTI splits up into UTI 1and UTI 2.


Benefits of Investing in Mutual Funds Professional Management: Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme. Diversification: Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own. Convenient Administration: Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient. Return Potential: Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities. Low Costs: Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. Liquidity: In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund. Transparency: You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook. Flexibility: Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Affordability: Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy. Choice of Schemes: Mutual Funds offer a family of schemes to suit your varying needs over a lifetime. Well Regulated: All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI. Disadvantages of Investing Mutual Funds: Professional Management: - Some funds doesnt perform in neither the market, as their management is not dynamic enough to explore the available opportunity in the market, thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself, for picking up stocks.


Costs: The biggest source of AMC income is generally from the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon. Dilution: - Because funds have small holdings across different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. Taxes: - When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability. Types of Mutual Funds Mutual fund schemes may be classified on the basis of its structure and its objective:By Structure:Open-ended 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-ended 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 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. 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. Load Funds:A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds:A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.


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, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000.



Equity Funds: Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds:AGGRESSIVE GROWTH FUNDS:In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds. GROWTH FUNDS: Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future. SPECIALTY FUNDS: Specialty Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some specialty funds could be to invest/not to invest in particular regions/companies. Specialty funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of specialty funds: Sector Funds:Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors. Foreign Securities Funds:Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk. Mid-Cap or Small-Cap Funds:Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crore but more than Rs. 500 crore) and SmallCap companies have market capitalization of less than Rs. 500 crore. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky. Option Income Funds:While not yet available in India, Option Income Funds write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a


risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors. DIVERSIFIED EQUITY FUNDS: Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. Equity Index Funds: Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky. VALUE FUNDS:Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to Earnings Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced. EQUITY INCOME OR DIVIDEND YIELD FUNDS: The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds. DEBT / INCOME FUNDS:Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt


funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds:Diversified Debt Funds: Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. Focused Debt Funds: Unlike diversified debt funds, focused debt funds are narrow focus funds that are confined to investments in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation, focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India, these funds are conceivable and may be offered to investors very soon. High Yield Debt funds: As we now understand that risk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors. Assured Return Funds: Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a lowrisk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible. Fixed Term Plan Series: Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period. GILT FUNDS:-


Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction. MONEY MARKET / LIQUID FUNDS:Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). HYBRID FUNDS:As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India: Balanced Funds: The portfolio of balanced funds includes assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. Growth-and-Income Funds: Funds that combine features of growth funds and income funds are known as Growth-andIncome Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds. ASSET ALLOCATION FUNDS: Mutual funds may invest in financial assets like equity, debt, money market or non-financial (physical) assets like real estate, commodities etc.. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at any time depending upon their outlook for specific markets. In other words, fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets, and therefore, the success of these funds depends upon the skill of a fund manager in anticipating market trends. COMMODITY FUNDS:Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified


commodity fund and bears less risk than a specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds. REAL ESTATE FUNDS:Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation. EXCHANGE TRADED FUNDS (ETF):Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad. FUND OF FUNDS:Mutual funds that do not invest in financial or physical assets, but do invest in other Mutual Fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes. FUND STRUCTURE AND CONSTITUENTS:Mutual funds in India have a 3-tier structure of Sponsor-Trustee-AMC .Sponsor is the promoter of the fund. Sponsor creates the AMC and the trustee company and appoints the Boards of both these companies, with SEBI approval. A mutual fund is constituted as a Trust. A trust deed is signed by trustees and registered under the Indian Trust Act. The mutual fund is formed as trust in India, and supervised by the Board of Trustees. The trustees appoint the asset management company (AMC) to actually manage the investors money. The AMCs capital is contributed by the sponsor. The AMC is the business face of the mutual fund. Investors money is held in the Trust (the mutual fund). The AMC gets a fee for managing the funds, according to the mandate of the investors. The trustees make sure that the funds are managed according to the investors mandate. Sponsor should have atleast 5-year track record in the financial services business and should have made profit in atleast 3 out of the 5 years. Sponsor should contribute atleast 40% of the capital of the AMC. Trustees are appointed by the sponsor with SEBI approval. Atleast 50% of trustees should be independent. Atleast 50% of the AMCs Board should be of independent members. An AMC cannot engage in any business other than portfolio advisory and management. An AMC of one fund cannot be Trustee of another fund.AMC should have a net worth of at least Rs. 10 crore at all times. AMC should be registered with SEBI AMC signs an investment management agreement with the trustees. Trustee Company and AMC are usually private limited companies. Trustees oversee the AMC and seek regular reports and information from them. Trustees are required to meet atleast 4 times a year to review the AMC the investors funds and the investments are held by the custodian. Sponsor and the custodian cannot be the same entity. R&T agents manage the sale and repurchase of units and keep the unit holder accounts. If the schemes of one fund are taken over by


another fund, it is called as scheme take over. This requires SEBI and trustee approval. If two AMCs merge, the stakes of sponsors changes and the schemes of both funds come together. High court, SEBI and Trustee approval needed. If one AMC or sponsor buys out the entire stake of another sponsor in an AMC, there is a takeover of AMC. The sponsor, who has sold out, exits the AMC. This needs high court approval as well as SEBI and Trustee approval. Investors can choose to exit at NAV if they do not approve of the transfer. They have a right to be informed. No approval is required, in the case of openended funds. For close-ended funds the investor approval is required for all cases of merger and takes over.


EQUITY SHARES ABOUT SHARES:At the most basic level, stock (often referred to as shares) is ownership, or equity, in a company. Investors buy stock in the form of shares, which represent a portion of a company's assets (capital) and earnings (dividends). As a shareholder, the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available For example, if you buy 1000 shares of stock in a company that has issued a total of 100,000 shares, you own one per cent of the company. While one per cent seems like a small holding, very few private investors are able to accumulate a shareholding of that size in publicly quoted companies, many of which have a market value running into billions of pounds. Your stake may authorize you to vote at the company's annual general meeting, where shareholders usually receive one vote per share. In theory, every stockholder, no matter how small their stake, can exercise some influence over company management at the annual general meeting. In reality, however, most private investors' stakes are insignificant. Management policy is far more likely to be influenced by the votes of large institutional investors such as pension funds. a) STOCKS SYMBOLS:A stock symbol, or 'Epic' symbol, is the standard abbreviation of a stock's name. You can find stock symbols wherever stock performance information is published - for example, newspaper stock listings and investment websites. Company names also have abbreviations called ticker symbols. However, it's worth remembering that these may vary at the different exchanges where the company is quoted. b) PERFORMANCE INDICATORS:Here is a list of the standard performance indicators Performance Indicator Definition Closing price The last price at which the stock was bought or sold High and low The highest and lowest price of the stock from the previous trading day 52 week range The highest and lowest price over the previous 52 weeks Volume The amount of shares traded during the previous trading day Net change The difference between the closing price on the last trading day and the closing price on the trading day prior to the last THE STOCK EXCHANGES:A marketplace in which to buy or sell something makes life a lot easier. The same applies to stocks. A stock exchange is an organization that provides a marketplace in which investors and borrowers trade stocks. Firstly, the stock exchange is a market for issuers who want to raise equity capital by selling shares to investors in an Initial Public Offering (IPO). The stock exchange is also a market for investors who can buy and sell shares at any time. a) Trading shares on the stock exchange: As an investor in the INDIA, you can't buy or sell shares on a stock exchange yourself. You need to place your order with a stock exchange member firm (a stockbroker) who will then execute the order on your behalf. The NSE AND BSE are the leading stock exchange in the INDIA. Trading is done through computerized systems. b) The trading process:-


If you decide to buy or sell your shares, you need to contact a stockbroker who will buy or sell the shares on your behalf. After receiving your order, the stockbroker will input the order on the SETS or SEAQ system to match your order with that of another buyer or seller. Details of the trade are transmitted electronically to the stockbroker who is responsible for settling the trade. You will then receive confirmation of the deal. c) Types of shares available on the stock exchange:You cannot trade all stocks on the stock exchange. To be listed on a stock exchange, a stock must meet the listing requirements laid down by that exchange in its approval process. Each exchange has its own listing requirements, and some exchanges are more particular than others. It is possible for a stock to be listed on more than one exchange. This is known as a dual listing.


INSURANCE People need insurance in the first place. An insurance policy is primarily meant to protect the income of the familys bread earners. The idea is if any one or both die their dependents continue to live comfortably. The circle of life begins at birth follower by education, marriage and eventually after a lifetime of work we look forward to life of retirement. Our finances too tend to change as we go through the various phases of life. In the first twenty of our life, we are financially and emotionally dependents on our parents and there are no financial commitments to be met. In the next twenty years we gain financial independence and provide financial independence to our families. This is also the stage when our income may be unable to meet the growing expenses of a young household. In the next twenty as we see our investments grow after our children grow and become financially independent. Insurance is a provision for the distribution of risks that is to say it is a financial provision against loss from unavoidable disasters. The protection which it affords takes form of a guarantee to indemnify the insured if certain specified losses occur. The principle of insurance so far as the undertaking of the obligation is concerned is that for the payment of a certain sum the guarantee will be given to reimburse the insured. The insurer in accepting the risks so distributes them that the total of all the amounts is paid for this insurance protection will be sufficient to meet the losses that occur. Insurance then provide divided responsibility. This principle is introduced in most stores where a division is made between the sales clerk and the cashiers department the arrangement dividing the risks of loss. The insurance principle is similarly applied in any other cases of divided responsibility. As a business however insurance is usually recognized as some form of securing a promise of indemnity by the payment of premium and the fulfillment of certain other stipulations Types of insurance Term insurance plans Term insurance is the cheapest form of life insurance available. Since a term insurance contract only pays in the event of eventuality the life cover comes at low premium rates . Term insurance is a usefu tool to purchase against risk of early death and protection of an asset. Endowment plans Endowment plans are savins and protection plans that provide a dual benifit of protection as well as savings. Endowment plans pay a death benifit in the event of an eventuality should the customer survive the benifit period a maturity benifit is paid to the life insured. Whole of life plans A whole of life plan provides life insurance cover to an individua upto a specified age . A whole of life plan is suitable for an individual who is looking for an extended life insurance cover and /or wants to pay premium over as long as tenure as possible to reduce the amount of upfront premium payment. Pension plans Pension plans allow an individual to save in a tax deffered manner. An individual can either contribute through regular premiums or make a single premium investments. Savings accumulate over the deferment period. Once the contract reaches the vesting age , the individual has the option of choosing an annuity plan from a life insurance company. An annuity is paid till the life the lifetime of the insured or a predetermined period depending upon the annuity option chosen by the life insured. Unit Linked Insurance Plans Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of risk protection and flexibility in investment. The investment is denoted as units and is represented by the value


that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time. In a ULIP, the invested amount of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund. A Unit is the component of the Fund in a Unit Linked Insurance Policy. The returns in a ULIP depend upon the performance of the fund in the capital market. ULIP investors have the option of investing across various schemes, i.e, diversified equity funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the investment risk is generally borne by the investor. In a ULIP, investors have the choice of investing in a lump sum (single premium) or making premium payments on an annual, half-yearly, quarterly or monthly basis. Investors also have the flexibility to alter the premium amounts during the policy's tenure. For example, if an individual has surplus funds, he can enhance the contribution in ULIP. Conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). ULIP investors can shift their investments across various plans/asset classes (diversified equity funds, balanced funds, debt funds) either at a nominal or no cost. Expenses Charged in a ULIP Premium Allocation Charge: A percentage of the premium is appropriated towards charges initial and renewal expenses apart from commission expenses before allocating the units under the policy. Mortality Charges: These are charges for the cost of insurance coverage and depend on number of factors such as age, amount of coverage, state of health etc. Fund Management Fees: Fees levied for management of the fund and is deducted before arriving at the NAV. Administration Charges: This is the charge for administration of the plan and is levied by cancellation of units. Surrender Charges: Deducted for premature partial or full encashment of units. Fund Switching Charge: Usually a limited number of fund switches are allowed each year without charge, with subsequent switches, subject to a charge. Service Tax Deductions: Service tax is deducted from the risk portion of the premium. GOVERNMENT SECURITIES Government securities(G-secs) are sovereign securities which are issued by the Reserve Bank of India on behalf of Government of India,in lieu of the Central Government's market borrowing programme. The term Government Securities includes: Central Government Securities. State Government Securities Treasury bills The Central Government borrows funds to finance its fiscal deficit. The market borrowing of the Central Government is raised through the issue of dated securities and 364 days treasury bills either by auction or by floatation of loans. In addition to the above, treasury bills of 91 days are issued for managing the temporary cash mismatches of the Government. These do not form part of the borrowing programme of the Central Government Types of Government Securities


Government Securities are of the following types: Dated Securities; are generally fixed maturity and fixed coupon securities usually carrying semi-annual coupon. These are called dated securities because these are identified by their date of maturity and the coupon, e.g., 11.03% GOI 2012 is a Central Government security maturing in 2012, which carries a coupon of 11.03% payable half yearly. The key features of these securities are: They are issued at face value. Coupon or interest rate is fixed at the time of issuance, and remains constant till redemption of the security. The tenor of the security is also fixed. Interest /Coupon payment is made on a half yearly basis on its face value. The security is redeemed at par (face value) on its maturity date. Zero Coupon bonds are bonds issued at discount to face value and redeemed at par. These were issued first on January 19, 1994 and were followed by two subsequent issues in 1994-95 and 1995-96 respectively. The key features of these securities are: They are issued at a discount to the face value. The tenor of the security is fixed. The securities do not carry any coupon or interest rate. The difference between the issue price (discounted price) and face value is the return on this security. The security is redeemed at par (face value) on its maturity date. Partly Paid Stock is stock where payment of principal amount is made in installments over a given time frame. It meets the needs of investors with regular flow of funds and the need of Government when it does not need funds immediately. The first issue of such stock of eight year maturity was made on November 15, 1994 for Rs. 2000 crore. Such stocks have been issued a few more times thereafter. The key features of these securities are: They are issued at face value, but this amount is paid in installments over a specified period. Coupon or interest rate is fixed at the time of issuance, and remains constant till redemption of the security. The tenor of the security is also fixed. Interest /Coupon payment is made on a half yearly basis on its face value. The security is redeemed at par (face value) on its maturity date. Floating Rate Bonds are bonds with variable interest rate with a fixed percentage over a benchmark rate. There may be a cap and a floor rate attached thereby fixing a maximum and minimum interest rate payable on it. Floating rate bonds of four year maturity were first issued on September 29, 1995, followed by another issue on December 5, 1995. Recently RBI issued a floating rate bond, the coupon of which is benchmarked against average yield on 364 Days Treasury Bills for last six months. The coupon is reset every six months. The key features of these securities are:


They are issued at face value. Coupon or interest rate is fixed as a percentage over a predefined benchmark rate at the time of issuance. The benchmark rate may be Treasury bill rate, bank rate etc. Though the benchmark does not change, the rate of interest may vary according to the change in the benchmark rate till redemption of the security. The tenor of the security is also fixed. Interest /Coupon payment is made on a half yearly basis on its face value. The security is redeemed at par (face value) on its maturity date. Bonds with Call/Put Option: First time in the history of Government Securities market RBI issued a bond with call and put option this year. This bond is due for redemption in 2012 and carries a coupon of 6.72%. However the bond has call and put option after five years i.e. in year 2007. In other words it means that holder of bond can sell back (put option) bond to Government in 2007 or Government can buy back (call option) bond from holder in 2007. This bond has been priced in line with 5 year bonds. Capital indexed Bonds are bonds where interest rate is a fixed percentage over the wholesale price index. These provide investors with an effective hedge against inflation. These bonds were floated on December 29, 1997 on tap basis. They were of five year maturity with a coupon rate of 6 per cent over the wholesale price index. The principal redemption is linked to the Wholesale Price Index. The key features of these securities are: They are issued at face value. Coupon or interest rate is fixed as a percentage over the wholesale price index at the time of issuance. Therefore the actual amount of interest paid varies according to the change in the Wholesale Price Index. The tenor of the security is fixed. Interest /Coupon payment is made on a half yearly basis on its face value. The principal redemption is linked to the Wholesale Price Index.


Features of Government Securities Nomenclature The coupon rate and year of maturity identifies the government security. Example: 12.25% GOI 2008 indicates the following: 12.25% is the coupon rate, GOI denotes Government of India, which is the borrower 2008 is the year of maturity. Eligibility All entities registered in India like banks, financial institutions, Primary Dealers, firms, companies, corporate bodies, partnership firms, institutions, mutual funds, Foreign Institutional Investors, State Governments, Provident Funds, trusts, research organisations, Nepal Rashtra bank and even individuals are eligible to purchase Government Securities. Availability Government securities are highly liquid instruments available both in the primary and secondary market. They can be purchased from Primary Dealers. PNB Gilts Ltd., is a leading Primary Dealer in the government securities market, and is actively involved in the trading of government securities. Forms of Issuance of Government Securities Banks, Primary Dealers and Financial Institutions have been allowed to hold these securities with the Public Debt Office of Reserve Bank of India in dematerialized form in accounts known as Subsidiary General Ledger (SGL) Accounts. Entities having a Gilt Account with Banks or Primary Dealers can hold these securities with them in dematerialized form. In addition government securities can also be held in dematerialized form in demat accounts maintained with the Depository Participants of NSDL. Minimum Amount In terms of RBI regulations, government dated securities can be purchased for a minimum amount of Rs. 10,000/-only.Treasury bills can be purchased for a minimum amount of Rs 25000/- only and in multiples thereof. State Government Securities can be purchased for a minimum amount of Rs 1,000/- only. Repayment Government securities are repaid at par on the expiry of their tenor. The different repayment methods are as follows: For SGL account holders, the maturity proceeds would be credited to their current accounts with the Reserve Bank of India. For Gilt Account Holders, the Bank/Primary Dealers, would receive the maturity proceeds and they would pay the Gilt Account Holders. For entities having a demat acount with NSDL,the maturity proceeds would be collected by their DP's and they in turn would pay the demat Account Holders.


Day Count For government dated securities and state government securities the day count is taken as 360 days for a year and 30 days for every completed month. However for Treasury bills it is 365 days for a year. Example : A client purchases 7.40% GOI 2012 for face value of Rs. 10 lacs.@ Rs.101.80, i.e. the client pays Rs.101.80 for every unit of government security having a face value of Rs. 100/- The settlement is due on October 3, 2002. What is the amount to be paid by the client? The security is 7.40% GOI 2012 for which the interest payment dates are 3rd May, and 3 rd November every year. The last interest payment date for the current year is 3rd May 2002. The calculation would be made as follows: Face value of Rs. 10 lacs.@ Rs.101.80%. Therefore the principal amount payable is Rs.10 lacs X 101.80% =10,18,000 Last interest payment date was May 3, 2002 and settlement date is October 3, 2002. Therefore the interest has to be paid for 150 days (including 3rd May, and excluding October 3, 2002) (28 days of May, including 3rd May, up to 30th May + 30 days of June, July, August and September + 2 days of October). Since the settlement is on October 3, 2002, that date is excluded. Interest payable = 10 lacs X 7.40% X 150 = Rs. 30833.33. 360 X 100 Total amount payable by client =10,18,000+30833.33=Rs. 10,48,833.33 Benefits of Investing in Government Securities No tax deducted at source Additional Income Tax benefit u/s 80L of the Income Tax Act for Individuals Qualifies for SLR purpose Zero default risk being sovereign paper Highly liquid. Transparency in transactions and simplified settlement procedures through CSGL/NSDL various methods, which are as follows:

Methods of Issuance of Government Securities Government securities are issued by

Auctions: Auctions for government securities are either yield based or price based. In a yield based auction, the Reserve Bank of India announces the issue size (or notified amount) and the tenor of the paper to be auctioned. The bidders submit bids in terms of the yield at which they are ready to buy the security. In a price based auction, the Reserve Bank of India announces the issue size (or notified amount), the tenor of the paper to be auctioned, as well as the coupon rate. The bidders submit bids in terms of the price. This method of auction is normally used in case of reissue of existing government securities. The basic features of the auctions are given below: Method of auction: There are two methods of auction which are followed-


Uniform price Based or Dutch Auction procedure is used in auctions of dated government securities. The bids are accepted at the same prices as decided in the cut off. Multiple/variable Price Based or French Auction procedure is used in auctions of Government dated securities and treasury bills. Bids are accepted at different prices / yields quoted in the individual bids. Bids: Bids are to be submitted in terms of yields to maturity/prices as announced at the time of auction. Cut off yield: is the rate at which bids are accepted. Bids at yields higher than the cut-off yield is rejected and those lower than the cut-off are accepted. The cut-off yield is set as the coupon rate for the security. Bidders who have bid at lower than the cut-off yield pay a premium on the security, since the auction is a multiple price auction. Cut off price: It is the minimum price accepted for the security. Bids at prices lower than the cut-off are rejected and at higher than the cut-off are accepted. Coupon rate for the security remains unchanged. Bidders who have bid at higher than the cut-off price pay a premium on the security, thereby getting a lower yield. Price based auctions lead to finer price discovery than yield based auctions. Notified amount: The amount of security to be issued is notified prior to the auction date, for information of the public. The Reserve Bank of India (RBI) may participate as a noncompetitor in the auctions. The unsubscribed portion devolves on RBI or on the Primary Dealers if the auction has been underwritten by PDs. The devolvement is at the cut-off price/yield. Underwriting in Auctions For the purpose of auctions, bids are invited from the Primary Dealers one day before the auction wherein they indicate the amount to be underwritten by them and the underwriting fee expected by them. The auction committee of Reserve Bank of India examines the bids and based on the market conditions, takes a decision in respect of the amount to be underwritten and the fee to be paid to the underwriters. Underwriting fee is paid at the rates bid by PDs , for the underwriting which has been accepted. In case of the auction being fully subscribed, the underwriters do not have to subscribe to the issue necessarily unless they have bid for it. If there is a devolvement, the successful bids put in by the Primary Dealers are set-off against the amount underwritten by them while deciding the amount of devolvement. On-tap issue This is a reissue of existing Government securities having pre-determined yields/prices by Reserve Bank of India. After the initial primary auction of a security, the issue remains open to further subscription by the investors as and when considered appropriate by RBI. The period for which the issue is kept open may be time specific or volume specific. The coupon rate, the interest dates and the date of maturity remain the same as determined in the initial primary auction. Reserve Bank of India may sell government securities through on tap issue at lower or higher prices than the prevailing market prices. Such an action on the part of the Reserve Bank of India leads to a realignment of the market prices of government


securities. Tap stock provides an opportunity to unsuccessful bidders in auctions to acquire the security at the market determined rate. Fixed coupon issue Government Securities may also be issued for a notified amount at a fixed coupon. Most State Development Loans or State Government Securities are issued on this basis. Private Placement The Central Government may also privately place government securities with Reserve Bank of India. This is usually done when the Ways and Means Advance (WMA) is near the sanctioned limit and the market conditions are not conducive to an issue. The issue is priced at market related yields. Reserve Bank of India may later offload these securities to the market through Open Market Operations (OMO). After having auctioned a loan whereby the coupon rate has been arrived at and if still the government feels the need for funds for similar tenure, it may privately place an amount with the Reserve Bank of India. RBI in turn may decide upon further selling of the security so purchased under the Open Market Operations window albeit at a different yield. Open Market Operations (OMO) Government securities that are privately placed with the Reserve Bank of India are sold in the market through open market operations of the Reserve Bank of India. The yield at which these securities are sold may differ from the yield at which they were privately placed with Reserve Bank of India. Open market operations are used by the Reserve Bank of India to infuse or suck liquidity from the system. Whenever the Reserve Bank of India wishes to infuse the liquidity in the system, it purchases government securities from the market, and whenever it wishes to suck out the liquidity from the system, it sells government securities in the market. National Savings Certificate National Savings Certificate, popularly known as NSC, is a time-tested tax saving instrument that combines adequate returns with high safety. NSCs are an instrument for facilitating long-term savings. A large chunk of middle class families use NSCs for saving on their tax, getting double benefits. They not only save tax on their hard-earned income but also make an investment which are sure to give good and safe returns. How to Invest National Savings Certificates are available at all post-offices. The application can be made either in person or through an agent. Post office agents are active in nooks and corners of the country. Following types of NSC are issued: Single Holder Type Certificate: This can be issued to: (a) An adult for himself or on behalf of a minor (b) A Trust. Joint 'A' Type Certificate: Issued jointly to two adults payable to both holders jointly or to the survivor. Joint 'B' Type Certificate: Issued jointly to two adults payable to either of the holders or to the survivor. Who can Invest An adult in his own name or on behalf of a minor A trust Two adults jointly Denomiations and Limit National Savings Certificates are available in the denominations of Rs. 100 Rs 500, Rs. 1000, Rs. 5000, &


Rs. 10,000. There is no maximum limit on the purchase of the certificates. So it is for you to decide how much you want to put in the NSCs. This is of course a huge benefit for you can decide as much as your budget allows. Maturity Period of maturity of a certificate is six years. Presently interest paid is 8 % per annum half yearly compounded. Maturity value of a certificate of any other denomination is at proportionate rate. Premature encashment of the certificate is not permissible except at a discount in the case of death of the holder(s), forfeiture by a pledgee and when ordered by a court of law. Tax Benefits Interest accrued on the certificates every year is liable to income tax but deemed to have been reinvested. Income Tax rebate is available on the amount invested and interest accruing under Section 88 of Income Tax Act, as amended from time to time. Income tax relief is also available on the interest earned as per limits fixed vide section 80L of Income Tax, as amended from time to time. Public Provident Fund Public Provident Fund, popularly known as PPF, is a savings cum tax saving instrument. It also serves as a retirement planning tool for many of those who do not have any structured pension plan covering them. The balances in PPF account cannot be attached by any authority normally. How to Open Account Public Provident Fund account can be opened at designated post offices throughout the country and at designated branches of Public Sector Banks throughout the country. Who can Open Account The account can be opened by an individual in his own name, on behalf of a minor of whom he is a guardian. Tabs on Investment Minimum deposit required in a PPF account is Rs. 500 in a financial year. Maximum deposit limit is Rs. 70,000 in a financial year. Maximum number of deposits is twelve in a financial year. Maturity The maturity period of the account is 15 years. Rate of interest is 8% compounded annually. One deposit with a minimum amount of Rs.500/- is mandatory in each financial year. The amount of deposit can be varied to suit the convenience of the account holders. The account holder can retain the account after maturity for any period without making any further deposits. In this case the account will continue to earn interest at normal rate as admissible till the account is closed. The account holder also has an option to extend the PPF account for any period in a block of 5 years at each time, after the maturity period of 15 years.


Lapse in Deposits If deposits are not made in a PPF account in any financial year, the account will be treated as discontinued. The discontinued account can be activated by payment of the minimum deposit of Rs.500/with default fee of Rs.50/for each defaulted year. Premature Closure or Withdrawl Premature closure of a PPF Account is not permissible except in case of death. Nominee/legal heir of PPF Account holder cannot continue the account after the death. Premature withdrawal is permissible in the 7th year of the account subject, to a limit of 50% of the amount at credit preceding three year balance. Thereafter one withdrawal in every year is permissible. Account Transfer The Account is transferable from one post Office / bank to another and from post Office to bank or from a bank to a post office. Tax Benefits Deposits in PPF are eligible for rebate under section 80-C of Income Tax Act. The interest on deposits is totally tax free. Deposits are exempt from wealth tax.


BONDS A bond is a debt security, in which the authorized issuer owes the holders a debt and, depending on the terms of the bond, is obliged to pay interest (the coupon) and/or to repay the principal at a later date, termed maturity. It is a formal contract to repay borrowed money with interest at fixed intervals.[1] Thus a bond is like a loan: the issuer is the borrower, the bond holder is the lender, and the coupon is the interest. Bonds provide the borrower with external funds to finance long-term investments, or, in the case of government bonds, to finance current expenditure. Certificates of deposit (CDs) or commercial paper are considered to be money market instruments and not bonds. Bonds must be repaid at fixed intervals over a period of time Bonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets. The most common process of issuing bonds is through underwriting. In underwriting, one or more securities firms or banks, forming a syndicate, buy an entire issue of bonds from an issuer and re-sell them to investors. The security firm takes the risk of being unable to sell on the issue to end investors. However government bonds are instead typically auction. The most important features of a bond are: Nominal, principal or face amount the amount on which the issuer pays interest, and which has to be repaid at the end. Issue price The price at which investors buy the bonds when they are first issued, which will typically be approximately equal to the nominal amount. The net proceeds that the issuer receives are thus the issue price, less issuance fees. Maturity date The date on which the issuer has to repay the nominal amount. As long as all payments have been made, the issuer has no more obligations to the bond holders after the maturity date. The length of time until the maturity date is often referred to as the term or tenor or maturity of a bond. The maturity can be any length of time, although debt securities with a term of less than one year are generally designated money market instruments rather than bonds. Most bonds have a term of up to thirty years. Some bonds have been issued with maturities of up to one hundred years, and some even do not mature at all. In early 2005, a market developed in euros for bonds with a maturity of fifty years. In the market for U.S. Treasury securities, there are three groups of bond maturities: short term (bills): maturities up to one year; medium term (notes): maturities between one and ten years; long term (bonds): maturities greater than ten years. Coupon The interest rate that the issuer pays to the bond holders. Usually this rate is fixed throughout the life of the bond. It can also vary with a money market index, such as LIBOR, or it can be even more exotic. The name coupon originates from the fact that in the past, physical bonds were issued which had coupons attached to them. On coupon dates the bond holder would give the coupon to a bank in exchange for the interest payment. The quality of the issue, which influences the probability that the bondholders will receive the amounts promised, at the due dates. This will depend on a whole range of factors. Indentures and Covenants An indenture is a formal debt agreement that establishes the terms of a bond issue, while covenants are the clauses of such an agreement. Covenants specify the rights of bondholders and the duties of issuers, such as actions that the issuer is obligated to perform or is prohibited from performing. In the U.S., federal and state securities and commercial laws apply to the enforcement of


these agreements, which are construed by courts as contracts between issuers and bondholders. The terms may be changed only with great difficulty while the bonds are outstanding, with amendments to the governing document generally requiring approval by a majority (or super-majority) vote of the bondholders. High yield bonds are bonds that are rated below investment grade by the credit rating agencies. As these bonds are more risky than investment grade bonds, investors expect to earn a higher yield. These bonds are also called junk bonds. coupon dates the dates on which the issuer pays the coupon to the bond holders. In the U.S. and also in the U.K. and Europe, most bonds are semi-annual, which means that they pay a coupon every six months. Optionality: Occasionally a bond may contain an embedded option; that is, it grants option-like features to the holder or the issuer: Callability Some bonds give the issuer the right to repay the bond before the maturity date on the call dates; see call option. These bonds are referred to as callable bonds. Most callable bonds allow the issuer to repay the bond at par. With some bonds, the issuer has to pay a premium, the so called call premium. This is mainly the case for high-yield bonds. These have very strict covenants, restricting the issuer in its operations. To be free from these covenants, the issuer can repay the bonds early, but only at a high cost. Putability Some bonds give the holder the right to force the issuer to repay the bond before the maturity date on the put dates; see put option. (Note: "Putable" denotes an embedded put option; "Puttable" denotes that it may be putted.) call dates and put datesthe dates on which callable and putable bonds can be redeemed early. There are four main categories. A Bermudan callable has several call dates, usually coinciding with coupon dates. A European callable has only one call date. This is a special case of a Bermudan callable. An American callable can be called at any time until the maturity date. A death put is an optional redemption feature on a debt instrument allowing the beneficiary of the estate of the deceased to put (sell) the bond (back to the issuer) in the event of the beneficiary's death or legal incapacitation. Also known as a "survivor's option". sinking fund provision of the corporate bond indenture requires a certain portion of the issue to be retired periodically. The entire bond issue can be liquidated by the maturity date. If that is not the case, then the remainder is called balloon maturity. Issuers may either pay to trustees, which in turn call randomly selected bonds in the issue, or, alternatively, purchase bonds in open market, then return them to trustees. convertible bond lets a bondholder exchange a bond to a number of shares of the issuer's common stock. exchangeable bond allows for exchange to shares of a corporation other than the issuer. Fixed rate bonds have a coupon that remains constant throughout the life of the bond. Floating rate notes (FRNs) have a coupon that is linked to an index. Common indices include: money market indices, such as LIBOR or Euribor, and CPI (the Consumer Price Index). Coupon examples: three month USD LIBOR + 0.20%, or twelve month CPI + 1.50%. FRN coupons reset periodically, typically every one or three months. In theory, any Index could be used as the basis for the coupon of an FRN, so long as the issuer and the buyer can agree to terms. Zero-coupon bonds don't pay any interest. They are issued at a substantial discount to par value. The bond holder receives the full principal amount on the redemption date. An example of zero coupon bonds are Series E savings bonds issued by the U.S. government. Zero-coupon bonds may be created from fixed rate bonds by a financial institutions separating "stripping off" the coupons from the principal. In other


words, the separated coupons and the final principal payment of the bond are allowed to trade independently. See IO (Interest Only) and PO (Principal Only). Inflation linked bonds, in which the principal amount and the interest payments are indexed to inflation. The interest rate is normally lower than for fixed rate bonds with a comparable maturity (this position briefly reversed itself for short-term UK bonds in December 2008). However, as the principal amount grows, the payments increase with inflation. The government of the United Kingdom was the first to issue inflation linked Gilts in the 1980s. Treasury Inflation-Protected Securities (TIPS) and I-bonds are examples of inflation linked bonds issued by the U.S. government. Other indexed bonds, for example equity-linked notes and bonds indexed on a business indicator (income, added value) or on a country's GDP. Asset-backed securities are bonds whose interest and principal payments are backed by underlying cash flows from other assets. Examples of asset-backed securities are mortgage-backed securities (MBS's), collateralized mortgage obligations (CMOs) and collateralized debt obligations (CDOs). Subordinated bonds are those that have a lower priority than other bonds of the issuer in case of liquidation. In case of bankruptcy, there is a hierarchy of creditors. First the liquidator is paid, then government taxes, etc. The first bond holders in line to be paid are those holding what is called senior bonds. After they have been paid, the subordinated bond holders are paid. As a result, the risk is higher. Therefore, subordinated bonds usually have a lower credit rating than senior bonds. The main examples of subordinated bonds can be found in bonds issued by banks, and asset-backed securities. The latter are often issued in tranches. The senior tranches get paid back first, the subordinated tranches later. Perpetual bonds are also often called perpetuities. They have no maturity date. The most famous of these are the UK Consols, which are also known as Treasury Annuities or Undated Treasuries. Some of these were issued back in 1888 and still trade today, although the amounts are now insignificant. Some ultra long-term bonds (sometimes a bond can last centuries: West Shore Railroad issued a bond which matures in 2361 (i.e. 24th century)) are virtually perpetuities from a financial point of view, with the current value of principal near zero. Bearer bond is an official certificate issued without a named holder. In other words, the person who has the paper certificate can claim the value of the bond. Often they are registered by a number to prevent counterfeiting, but may be traded like cash. Bearer bonds are very risky because they can be lost or stolen. Especially after federal income tax began in the United States, bearer bonds were seen as an opportunity to conceal income or assets.[2] U.S. corporations stopped issuing bearer bonds in the 1960s, the U.S. Treasury stopped in 1982, and state and local tax-exempt bearer bonds were prohibited in 1983.[3] Registered bond is a bond whose ownership (and any subsequent purchaser) is recorded by the issuer, or by a transfer agent. It is the alternative to a Bearer bond. Interest payments, and the principal upon maturity, are sent to the registered owner. Municipal bond is a bond issued by a state, U.S. Territory, city, local government, or their agencies. Interest income received by holders of municipal bonds is often exempt from the federal income tax and from the income tax of the state in which they are issued, although municipal bonds issued for certain purposes may not be tax exempt. Book-entry bond is a bond that does not have a paper certificate. As physically processing paper bonds and interest coupons became more expensive, issuers (and banks that used to collect coupon interest for depositors) have tried to discourage their use. Some book-entry bond issues do not offer the option of a paper certificate, even to investors who prefer them.[4]


Lottery bond is a bond issued by a state, usually a European state. Interest is paid like a traditional fixed rate bond, but the issuer will redeem randomly selected individual bonds within the issue according to a schedule. Some of these redemptions will be for a higher value than the face value of the bond. War bond is a bond issued by a country to fund a war. Serial bond is a bond that matures in installments over a period of time. In effect, a $100,000, 5-year serial bond would mature in a $20,000 annuity over a 5-year interval. Revenue bond is a special type of municipal bond distinguished by its guarantee of repayment solely from revenues generated by a specified revenue-generating entity associated with the purpose of the bonds. Revenue bonds are typically "non-recourse," meaning that in the event of default, the bond holder has no recourse to other governmental assets or revenues. Investing in bonds Bonds are bought and traded mostly by institutions like pension funds, insurance companies and banks. Most individuals who want to own bonds do so through bond funds. Still, in the U.S., nearly 10% of all bonds outstanding are held directly by households. Sometimes, bond markets rise (while yields fall) when stock markets fall. More relevantly, the volatility of bonds (especially short and medium dated bonds) is lower than that of shares. Thus bonds are generally viewed as safer investments than stocks, but this perception is only partially correct. Bonds do suffer from less day-to-day volatility than stocks, and bonds' interest payments are often higher than the general level of dividend payments. Bonds are liquid it is fairly easy to sell one's bond investments, though not nearly as easy as it is to sell stocks and the comparative certainty of a fixed interest payment twice per year is attractive. Bondholders also enjoy a measure of legal protection: under the law of most countries, if a company goes bankrupt, its bondholders will often receive some money back (the recovery amount), whereas the company's stock often ends up valueless. However, bonds can also be risky: Fixed rate bonds are subject to interest rate risk, meaning that their market prices will decrease in value when the generally prevailing interest rates rise. Since the payments are fixed, a decrease in the market price of the bond means an increase in its yield. When the market interest rate rises, the market price of bonds will fall, reflecting investors' ability to get a higher interest rate on their money elsewhere perhaps by purchasing a newly issued bond that already features the newly higher interest rate. Note that this drop in the bond's market price does not affect the interest payments to the bondholder at all, so longterm investors who want a specific amount at the maturity date need not worry about price swings in their bonds and do not suffer from interest rate risk. Price changes in a bond will also immediately affect mutual funds that hold these bonds. If the value of the bonds held in a trading portfolio has fallen over the day, the value of the portfolio will also have fallen. This can be damaging for professional investors such as banks, insurance companies, pension funds and asset managers (irrespective of whether the value is immediately "marked to market" or not). If there is any chance a holder of individual bonds may need to sell his bonds and "cash out", interest rate risk could become a real problem. (Conversely, bonds' market prices would increase if the prevailing interest rate were to drop, as it did from 2001 through 2003.) One way to quantify the interest rate risk on a bond is in terms of its duration. Efforts to control this risk are called immunization or hedging. Bond prices can become volatile depending on the credit rating of the issuer - for instance if the credit rating agencies like Standard & Poor's and Moody's upgrade or downgrade the credit rating of the issuer. A downgrade will cause the market price of the bond to fall. As with interest rate risk, this risk does not affect the bond's interest payments (provided the issuer does not actually default), but puts at risk the


market price, which affects mutual funds holding these bonds, and holders of individual bonds who may have to sell them. A company's bond holders may lose much or all their money if the company goes bankrupt. Under the laws of many countries (including the United States and Canada), bondholders are in line to receive the proceeds of the sale of the assets of a liquidated company ahead of some other creditors. Bank lenders, deposit holders (in the case of a deposit taking institution such as a bank) and trade creditors may take precedence. There is no guarantee of how much money will remain to repay bondholders. As an example, after an accounting scandal and a Chapter 11 bankruptcy at the giant telecommunications company World com, in 2004 its bondholders ended up being paid 35.7 cents on the dollar. In a bankruptcy involving reorganization or recapitalization, as opposed to liquidation, bondholders may end up having the value of their bonds reduced, often through an exchange for a smaller number of newly issued bonds. Some bonds are callable, meaning that even though the company has agreed to make payments plus interest towards the debt for a certain period of time, the company can choose to pay off the bond early. This creates reinvestment risk, meaning the investor is forced to find a new place for his money, and the investor might not be able to find as good a deal, especially because this usually happens when interest rates are falling. COMMODITIES A commodity is a normal physical product used by everyday people during the course of their lives, or metals that are used in production or as a traditional store of wealth and a hedge against inflation. For example, these commodities include grains such as wheat, corn and rice or metals such as copper, gold and silver. The full list of commodity markets is numerous and too detailed. The best way to trade the commodity markets is by buying and selling futures contracts on local and international exchanges. Trading futures is easy, and can be accessed by using the services of any full or on-line futures brokerage service. Traditionally, there is an expectation when trading commodity futures of achieving higher returns compared to shares or real estate, so successful investors can expect much higher returns compared to more conventional investment products. The process of trading commodities, as mentioned above, must be facilitated by the use of trading liquid, exchangeable, and standardized futures contracts, as it is not practical to trade the physical commodities. Futures contracts give the investor ease of use and the ability to buy or sell without delay. A futures contract is used to buy or sell a fixed quantity and quality of an underlying commodity, at a fixed date and price in the future. Futures contracts can be broken by simply offsetting the transaction. For example, if you buy one futures contract to open then you sell one futures contract to close that market position. The execution method of trading futures contracts is similar to trading physical shares, but futures contracts have an expiry date and are deliverable.Futures contracts have an expiry date and need to be occasionally rolled over from the current contract month to the following contract month. The reason is because the biggest advantage to trading commodity futures, for the private investor is the opportunity to legally short-sell these markets. Short-selling is the ability to sell commodity futures creating an open position in the expectation to buy-back at a later time to profit from a fall in the market. If you wish to trade the up-side of commodity futures, then it will simply be a buy-to-open and sell-toclose set of transactions similar to share trading.


The commodity markets will always produce rising of falling trends, and with the abundance of information and trading opportunities available there is no reason for any investor to exclusively trade the share market when there is potential profits from trading commodity futures. The increased use of commodity trading vehicles in investment management has led practitioners to create investable commodity indices and products that offer unique performance opportunities for investors in physical commodities. As is true for stock and bond performance, as well as investment in managed futures and hedge fund products, commodity-based products have a variety of uses. Besides being a source of information on cash commodity and futures commodity market trends, they are used as performance benchmarks for evaluation of commodity trading advisors and provide a historical track record useful in developing asset allocation strategies. However, the investor benefits of commodity or commodity-based products lie primarily in their ability to offer risk and return trade-offs that cannot be easily replicated through other investment alternatives. Previous research that direct stock and bond investment offers little evidence of providing returns consistent with direct commodity investment. commodity-based firms may not be exposed to the risk of commodity price movement. Thus for investors, direct commodity investment may be the principal means by which one can obtain exposure to commodity price movements. The commodities that are traded in the market Gold Copper Silver Sugar Wheat Zeera Guar




DEFINITION: It refers to the steps undertaken for the completion of this project and these steps are divided into four parts: First part is concerned with the determination of projects objective and its title; Second part is concerned with the collection of data from primary as well as secondary data sources; Third part is concerned with analysis of data collected for the purpose of preparation of project; The fourth part is concerned with preparation of report after the assimilation and evaluation of data DEFINITION OF RESEARCH DESIGN: Research design is the blueprint of the project report prepared by me. The aim of this evaluation study is to gather information and critically analyze the Investment Options available in the market and customer buying behavior. RESEARCH OBJECTIVE: The main objective of the study is to analysis the COMPARATIVE ANALYSIS OF INVESTMENT OPTIONS AVAILABLE IN THE MARKET AND CUSTOMER BUYING PREFERENCE and their potential market among the people of Lucknow City. SOURCES OF DATA: Sources of data can be divided into two parts:1. Primary data; 2. Secondary data. Primary data: Means the data is collected for the specifically for the investigation at hand and this Information is obtained directly from first-hand sources by means of surveys, observation or experimentation. Secondary data: Means the data is not gathered for the immediate study at hand but for some other purpose. The secondary sources of data used for this study include the website of the company. The data taken from these sources is used for compilation of company facts in the project . SAMPLING DESIGN: Sampling design is one of the most important aspects where the design must be appropriate in order to have the desired result. Sampling design includes various aspect and they are as follows:

Sampling Area Sample Population Sample Size

: : :

Lucknow city above 15,000 100


METHODS: The method used in the research (survey) is of probability type as we are unaware about the results. It can be either of the side. It is area of Lucknow city under which we have to conduct the research. The research is based on Convenience Method s. and the take the sample from to various stock broking company. ERRORS: Some of the respondents were not giving the proper attention on the questioner and they were marking without reading the questions. So from these respondents we were not able to get the proper and accurate data. Although to minimize the error effect we have removed such type of respondents responds and not taken them in calculations. Some questions are related to each other so some error may occur due to the diversification of the meaning. To minimize the error we made the questionnaire as simple as possible and avoid multiple questions. Fear of consequences: To minimize the error we ensure them to keep their identity in confidential.

RESEARCH DESIGN: Research Data Source Research Method Research Technique Type of Questionnaire Type of Questions No of Questions Place DATA COLLECTION: The research is conducted with the help of questionnaire therefore the main source of information is the response of the respondents and this can be considered as a primary method of collecting the data. LIMITATIONS: Analyst Ability: Analysis is totally depending on surveyors and analyst ability. So the personal bias or inability may affect the result of the survey. Area: The area was limited to Lucknow City only, so we cannot know the degree of the literacy outside the city. : : : : : : : : Descriptive & Objective Primary data Survey Method Questionnaire Structured Closed & Open ended Questions 15 Lucknow city




Ques 1. Do you know about the following Financial Instrument?

100 90 80 Response Rate 70 60 50 40 30 20

92 76



62 54


0 Series1

Mutual Funds Bonds/IPO's Series1 92 76

Insurance 76

Fixed Deposits 54

Govt. Securities 54

Real Estate 62

Commodities 56

Analysis: It can be seen in the following survey that select respondents had maximum knowledge about mutual funds as in comparison to fixed deposits, Govt. securities, or commodities.


Ques 2. How do you get information regarding these Financial Instruments?

60 50 Response Rate 40 30 20 10 0 Advertisement Company Sales force Friends / Relatives Magazines /Newspaper Series1


Advertisement 52

Company Sales force 44

Friends / Relatives 36

Magazines /Newspaper 50

Analysis: It is seen that the sample respondents extract maximum information from the flyers and advertisements or newspapers, some from company sales forces, and least from friends or relatives.


Ques 3. Ratings of Investment options as per the customer's preference

3 Scale of preference



Mutual Funds 3

Bonds 2

Govt. Securities 2

Insurance 3

FD 2

Real Estate 1


Commodities 1

Analysis: If we look at individual analysis of the responses; Mutual Funds were mostly preferred Bonds were moderately preferred Commodities were least preferred Government securities were moderately preferred Insurance was mostly preferred Fixed deposits were moderately preferred Real Estate is least preferred, while IPOs are moderately preferred


Ques 4. Do you invest in Financial Instruments?

80 70 Response Rate

50 40 30 20 10 0 Series1 Yes No


Yes 87

No 13

Analysis: It was collected that most number of people in our sample invested in financial instruments.


Ques 5. Where do you invest your savings?

80 70 60 Response Rate 50

30 20 10 0



Fixed Deposits 74

Equity 26

Mutual Funds 36

Post Office Commodities Insurance 40 46 48

Derivatives 16

Others 26

Analysis: The analysis showed that maximum number of respondents invested in fixed deposits, and then in the insurance sector with the least amount of investments in derivatives.


Ques 6. What are the factors which you consider while investing in any Financial Instrument?

70 60 50 Response Rate 40

20 10

Return (capital appreciation) Tax saving Liquidity Series1 Safety

Regular income flow


Return (capital appreciation) Series1 70

Tax saving 52

Liquidity 28

Regular income flow 16

Safety 44

Risk 26

Analysis: It was analyzed that the biggest factor that influenced investment decisions was Returns and the least influential factor was Regular Income flow.


Ques 7. On what basis you will invest in any particular Financial Instrument?

50 45 40 35 30 25 Response Rate

15 10 5 0


Past Performance Series1 38

Portfolio 50

Fund Manager 10

Fundamental/Techni Market Sentiment cal Analysis 40 44

Analysis: As we can see that the portfolio of any financial instrument is the biggest basis according to which an investor chooses to invest in such a financial instrument.


Ques 8. How will you invest your money in any Financial Instrument?



40 Response Rate




0 Yourself Sub broker / Agents Through banks Series1


Yourself 56

Sub broker / Agents 60

Through banks 30

Analysis: It can be seen that any particular investor chooses to invest his savings primarily through a subbroker or agent.


Ques 9. How long you prefer to keep your money in any Financial Instrument?

50 45 40 35 Response Rate 30 25 20 15 10 5 0 Less than 6 months 6 months to 1 year Series1

1 year to 3 year
More than 3 years


Less than 6 months 12

6 months to 1 year 46

1 year to 3 year 32

More than 3 years 10

Analysis: It has been deeply analyzed from the responses that an investor tries to keep his savings in financial instruments mostly for 6 months to 1 year and somewhat for 1 year to 3 years.


Ques 10. If you select a broker or agent then which broker company would you select?

60 50 40 30 20 10 0

Response Rate


Share Khan Series1


Kotak HDFC ICICI Marwad Motilal Indiabull Angel Just Karvy Securitie Religare Securitie Direct i Oswal s Broking Trade s s 60 20 14 50 20 20 28 14 8 10


Analysis: It has been analyzed that most investors opt to go for their investing needs and the least number of investors turned up for HDFC securities.


Ques 11. What influences you to invest your amount?

90 80 70 60 Response Rate 50 40 30 20




News Papers

Series1 Internet Tax Consultant


Independently 10

Broker/Agent 84

News Papers 34

Internet 2

Tax Consultant 14

Analysis: It can be seen that the individual investor is most influenced by the broker/Agent through whom he is doing his investment in financial instruments.


Ques 12. Which of these would you like to be trading in?



50 Response Rate





0 Equity Series1



Equity 62

Derivatives 68

Commodities 10

Analysis: Most number of respondents likes to be trading in derivatives as in comparison to equity or commodities.


Ques 13. Which are the constraints that you might consider while investing?



50 Response Rate


30 20 10 0 Risk Taking ability Fund Facility Series1 Time Duration Company Investment position

Return on Investment

Risk Taking ability Series1 30

Fund Facility 62

Return on Investment 30

Time Duration 18

Company Investment position 10

Analysis: The biggest constraint that is considered while investing turned out to be the fund facility, with risk taking ability and return on investment coming in next.


Ques 14. How much return you expect from any Financial Instrument?

50 45 40 35 Response Rate 30 25

15 10 5 0 10% to 20% 20% to 30% Series1

30% to 50%
More than 50%


10% to 20% 10

20% to 30% 22

30% to 50% 50

More than 50% 18

Analysis: The return that is expected by the investors from the financial instruments is mostly 30% - 50%


Ques 15. Will you invest your money for saving the Tax in any Financial Instrument?

80 70 60 Response Rate 50 40 30 20 10 0 Series1 Yes No


Yes 80

No 20

Analysis: When asked if they would consider investing in a financial instrument just to save taxes, almost 80% of the respondents answered in the affirmative.




This is probably the most important question of the questionnaire; the result of this question is that most of the people think of (RISK TAKING ABILITY) because it is the most crucial constraint. Next comes is the facilities given to them under the funds and also the ROI (return on investment). There are other factors also like time duration of their investment and Company reputation in the market.




As we saw it in the results that most of the people see How much of risk involve if they do investment in any of the market. So the company must do activities which yields maximum return so that they take more risk and which cab balance the uncertainty. They must provide all the possible facilities to its customer so that they remain with the company only and also help in expanding their business. Now a days people want services also and therefore it must be the main focus of the company because if not provided to the people, they are surely going to leave the company. Recommendation for this category is company must follow up these high potential customers, they can be offered Equity shares because this group of people have a high risk profile and they can afford to takes risks which is usually associated with equity shares. This group of customers can also be offerd Mutual funds because in that also the exposure is in equities. ULIPS can also be offered to this group.The ULIP has a 20%-22% return which good enough for investment. The main focus should be to reach to the customer, these customers are aware of ULIPs and aware of other product. Company should try to reach them and tap the investor. Mutual Funds can also be offered as they have high risk profile. Company should take initiative to get demat account of these customers. The age group of 31-40 years, investors are with Moderate risk profile, most of the investors are from the 10,000-15,000 Rs per month disposible income. Company will get a good investor with diluted risk profile. Company can offer them ULIPs,and Fixed Deposits as investment instrument. Mutual funds can be an option but that must be a debt fund to invest. The age group of 41-50 years, investors are from the 15,000-20,000 Rs disposible income group. Investor in this group are invested in Insurance sector, the primary focus of these investors are retirement and time horizon is likely to be 6-9 years. This is also good potential group for the retirement plan in ULIPs. Fixed deposits can be a good option for them. For the age group of above 50 years, the rish profile would be low moderate,as the term is not more than 3 years. Investors have invested in insurance sector but in this age insurance would not be a good option for investor. Company should try to minimise the risk tolerence by offering Fixed deposits. In the survey there were lot of people who were in the age group of above 60. For this group of people the company can target Fixed deposits which gives continues return like monthly interests so that they can keep on getting returns.


If we see the survey data it will seen that respondents are majorly Service peopole and Business Class. Depending upon the data I conclude that the service class has a time horizon of 3-5 years and risk tolerence Low- Moderate. They invested in FDs, Equity shares, Mutual Fund and ULIPs. Recommendation company should tap these class by innovative marketing strategies as they already invested, and offer FDs, ULIPs. Mutual fund can be a lucrative offer if the Fund is any moderate fund or debt fund. For the business class, the risk profile is high-very high. Most investor are with negative return acceptability and time horizon is < 3 years. Company should offer Mutual funds with risk profile High to very high thus investor can get a high return. Apart from this company should offer to open demat account with them. Disposible Income The disposible income bracket less than Rs.5000 per month are basically safe investors and have not and do not prefer investing in mutual funds and ULIP. Thus positioning of these products should be such that people are attracted towards this scheme. Emphasis on marketing of the products should be given. Respondents under disposible income bracket Rs.5,000-Rs.10,000 have mainly invested in insurance and real estate. But when survey was done and their preferences was asked these respondents strongly preferred investing in these strategies. Disposible Income Bracket of Rs.15,000-Rs.20,000 are the strong contenders for investing their money and these people have invested in real estate, insurance and fixed deposits. Moreover there is mixed preferences for their investments thus proper segmentation of the sample should be done accordingly marketing strategies should be adopted. Though there is a small percentage of respondents in disposible income bracket above Rs.20,000 who least prefer investing in mutual fund. But this is the segment which can be well targeted and their portfolio should be such that gives them more returns. The case of ULIP is different as people strongly prefer investing in this investment strategy. Thus emphasis for selling ULIP in this income bracket.





Finally overall suggestion was asked to the respondents to know what they want and if they are already with Karvy then what changes are to be made and whether they are satisfied with the services of the company?

The response got from them reveals following points: Return on Investment is must but the risk also should be minimizing at the same time. No one loves to lose his hard earned money therefore it should be invested in safer place. Services are must for them and therefore the company must also concentrate on this aspect. Good advisory services, secrecy of the data given to the company as well as every people must treated as they all are equal i.e. no biasness. Charges of the services provided to them should be reasonable and viable.

Finally, last but not the least the company should maintain good relations with the people to have deal for a longer period.




Karvy has enough number of branches all over India and therefore it is a great advantage for the company and the company also planning to expand its network. Karvy also provides the facility of trading in almost all the exchanges and therefore whatever the customer demands the company has in its package. The company also has a very good research team at its Head Office and this is meant for the better working as well as for the customer of Karvy only. The company also has the advantage of the existing customers where their level of faith and their view about the company to the outside world will be a helping hand for the company to expand its business. Karvy has various products and services in its portfolio, so for the people they have variety of options to choose from, therefore it should market its product in such a manner that more and more people come to Karvy and deal with the company. From the research conducted, that the customer are satisfied with the company services and there is a competition from the Share khan therefore the company should regularly check its various departments and make continuous changes required. The overall project is depending up on the finding that has been explained previously. All my survey findings are correlated and being explains in the above graphs. After completing the survey and watching the analysis I come to this conclusion that the before investment investors do have focus on Tax savings, Income, Capital preservation etc. They also have a predetermination of the time period of investment. According to my view the age group of 21-30 can be great potential investors for the company as it has high risk profile, more disposable income, and the time horizon is perfect 3-5 years.





(n.d.). Business Today. (n.d.). The Economic Times. (n.d.). The Mint. (n.d.). Karvy Finapolis. Aswathapa, K. (n.d.). 3rd edition "Human Resource and Personnel Management". New Delhi: Tata McGraw-Hill Publishing Company Ltd. Cooper. (n.d.). 8th Edition "Business Research Methods". New Delhi: Tata McGraw-Hill Publishing Company Ltd. Kotler, P. (n.d.). The Millenium Edition "Marketing Management". New Delhi: Prentice Hall of India Pvt. Ltd. www.karvy/about.asp. (n.d.). www.bseindia/about.asp (n.d.). www.nseindia.com (n.d.). www.mcx.com (n.d.). www.ncdex.com (n.d.). www.karvy.com (n.d.). www.icicidirect.com (n.d.). www.mutualfundsindia.com (n.d.). www.nseindia.com (n.d.). www.bseindia.com (n.d.). www.scribd.com (n.d.). www.mcx.com (n.d.). www.equitymaster.com (n.d.).




We assure you that all the information that will be collected from you will remain fully confidential and it is used for study purpose only.




Q.4 Q.5




Do you know about the following Financial Instrument? Mutual Funds Yes No Bond/IPOs Yes No Insurance Yes No Fixed Deposits Yes No Govt. Securities Yes No Real Estate Yes No Commodities Yes No If any other please specify. How do you get information regarding these Financial Instruments? Advertisement Company Sales force Friends / Relatives Magazines /Newspaper If any other please specify Please rate the Financial Instruments as per your Preference. More preferred Moderate Less preferred Mutual funds Insurance Bonds Fixed Deposits Govt.securities Real estate IPOs Commodities Do you invest in Financial Instruments? Yes No If Yes, where do you invest your savings? Fixed Deposits Equity Mutual Funds Post office Commodities Others Insurance Derivative What are the factors which you consider while investing in any Financial Instrument? Return (capital appreciation) Tax Saving Liquidity Regular income flow Safety Risk If any other please specify On what basis you will invest in any particular Financial Instrument? Past Performance Portfolio Fund Manager Fundamental/Technical Analysis Market Sentiment If any other please specify How will you invest your money in any Financial Instrument?


Yourself Sub broker/ Agents Through Banks Through any stock broking company. Please specify name.. If any other please specify.. Q.9 How long you prefer to keep your money in any Financial Instrument? Less than 6 months 6 months to 1 year 1 year to 3 year More than 3 years Q.10 If you select a broker or agent then which broker company would you select? Share Khan Karvy Kotak Securities ICICI Direct Marwadi Motilal Oswal Indiabulls Angel Broking Religare HDFC Securities Just Trade Others Q.11 What influences you to invest your amount? Independently Broker/Agent News Papers Internet Tax Consultant Why______________________________________________________________ Q.12 Which of these would you like to be trading in? Equity Derivatives Commodity Q.13 Which are the constraints that you might consider while investing? Risk Taking ability Fund Facility Return on Investment Time Duration Company Investment position Q.14 How much return you expect from any Financial Instrument? 10% to 20% 20% to 30% 30% to 50% More than 50% If any other please specify Q.15 Will you invest your money for saving the Tax in any Financial Instrument? Yes No Suggestions: _______________________________________________________ _______________________________________________________ _______________________________________________________ _______________________________________________________ _______________________________________________________

Personal Details
Name: ________________________________________________________________ Gender: Male Female Age group: 21-35 36-50 51-65 Above 66 Income: 50000-100000 100000-200000 200000 & above Occupation: Professional Businessmen Govt. Employee Pvt. Firm Other