SUMMER INTERNSHIP PROJECT report

COMPETITIVE Advantage of trading in reliance money

PREPARED BY ZUNAID RAWAT

SUBMITTED TO Aparna Bhargava

SUBMITTED BY: ZUNAID RAWAT BBA(FINANCE)

CONTENTS:

serial no 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Topic Certificate by Organization Certificate by Faculty guide Acknowledgement Declaration Executive Summary Introduction and Review Of Literature Company Profile Competitors Of Reliance Money Trading Portal Research Methodology Findings Recommendations and Limitations Derivatives Conclusion Bibliography Annexure(Questionnaires)

Page no.

DECLARATION

I, MR. ZUNAID RAWAT, a student of GRAPHIC ERA UNIVERSITY, hereby declare that the project titled COMPETITIVE ADVANTAGE OF TRADING IN RELIANCE MONEY is an original work and has not been submitted to any other academic institution for award of any degree or diploma in full or part by me.

ZUNAID RAWAT

DECLARATION

I, MR.ZUNAID RAWAT, a student of GRAPHIC ERA UNIVERSITY , hereby declare that the project titled COMPETITIVE ADVANTAGE OF TRADING IN RELIANCE MONEY is an original work and has not been submitted to any other academic institution for award of any degree or diploma in full or part by me.

ZUNAID RAWAT

ACKNOWLEDGEMENT

I am indeed very happy to acknowledge the numerous personalities involved in lending their help to make my summer project a successful one. Firstly, I would like to thank Reliance Money Ltd. for providing me the opportunity to work on this project. I would like to thank my corporate guide Mr.YOGESH GARG and all other staff of Reliance Money for helping me in learning the lessons of professional management. His able guidance and valuable inputs have helped me a lot in successfully completing this project. I express my sincere gratitude to my institute guide APARNA BHARGAVA who took a lot of personal interest in supervising this project and guiding me. She has been a great source of inspiration in the task of completion of this project work. Her profound advice, timely guidance has been of immense value to me. This acknowledgement would not be completed without extending my thanks to my friends, who did their summer internship along with me at Reliance Money Ltd, who helped me clear any doubts that arose during my internship and for extending their support to me during my period of internship.

Introduction

Whether its retiring early, saving for childrens education, paying off a loan or to live a secured and satisfied life everyone has dreams they can achieve by investing their savings. However, the question that arises is that, should one leave his money tucked away in the bank or plough it into the stock market where the potential for higher returns is greater but the chances of losing money is higher? Deciding where to invest depends on one`s attitude towards risk (one`s capacity to take risk and one`s tolerance towards risk) and the investment horizon and non-availability of guaranteed-return investment products. In such a scenario, investing in equity, which offers returns that are higher than the inflation rate, help to build wealth and to improve the standard of living. India is a developing economy. Its prospering in all spheres. Share market is a compelling determinant of the economy and the financial situation of a country. Ever since the liberalization, privatization and globalization, the foreign investment in our country is booming. Share market is a clear indicator of the developing trend prevailing in our country. Statistics reveal that the trade volume has been increasing continuously, coupled with the ups and downs which is a nature of share trading. We are living in an interlinked world. With the growing volume of trade, it has become a necessity that people are aware of the intricacies of the web world. SENSEX the benchmark indicator of share trading has more than tripled ever since on line share trading commenced. It has become imperative to be a participant of this mode of trading.

Recently, the crisis in the financial market resulted in global inflation. The share market was a clear indicator of the prevailing prices. Share trading is a way of faster earning and losing money. In the recent years, a volatile market could be witnessed. In the desire to earn money in a quick manner, more and more people have ventured out into share trading. Lack of awareness of many investors has made them loose laths of money in the stock market. Wise plays by many others have made them earn in crores. Where the American NASDAQ is in the commanding position, hongkong, Tokyo etc are some of the Asian exchanges being quoted repeatedly when it comes to news about the share market. SENSEX is not far behind. Indian bourses are also often quoted. Electronic trading or online trading eliminates the need for physical trading floors. Brokers can trade from their offices, using fully automated screen based processes. Their workstations are connected to a stock exchanges central computer via satellite using Very Small Aperture Terminus (VSATs). The orders placed by brokers reach the exchanges central computer and are matched electronically.

Stock exchange A stock exchange , share market or bourse is a corporation or mutual also provide facilities capital

organization which

provides facilities for stock brokers and traders , to trade

company stocks and other securities .Stock exchanges

for the issue redemption, as well as, other financial instruments and

events including the payment of income and dividends . The securities traded on a stock exchange include: shares issued by companies ,unit trusts and other pooled investment products and bonds .To be able to trade a security on a certain stock exchange, it has to be listed . Usually there is a central Location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by definition done in the primary market and subsequent trading is done in the secondary market. Supply and demand in stock markets is driven by various factors which, as in free markets, affect the price of stocks(see stock valuation).There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such counter.This is the trading is said to be off exchange or over-theusually way that bonds are traded. Increasingly more and

more stock exchanges are part of a global market for securities. A.] The role of the stock exchange Raising capital for businessess The stock exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public.

Mobilizing savings for investment When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed, or kept in idle deposits with banks are mobilized and redirected to promote business activity with benefits for several economic growth and higher productivity levels. Facilitate company growth Companies view acquisitions as an opportunity to expand product lines,

increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways to company growing by acquisition or fusion. Redistribution of wealth By giving a wide spectrum of people a chance to buy shares and therefore become part-owners (shareholders) of profitable enterprises the stock market helps to reduce large income inequalities .Both casual and professional stock investors through stock price rise and dividends get achance to share in the profits of promising business that were set up by other people. Corporate governanceBy having a wide and varied scope of owners , companies generally tend to improve on their demands of management standards and efficiency in order to satisfy the these shareholders and the more stringent rules for public

corporations by public stock exchange and the government . Consequently , it is alleged that public companies (companies that are owned by shareholders who are

members of the general public and trade shares on public exchange) tend to have better management records than privately-held companies or their families and heirs , or otherwise by (those companies where shares are not publicly traded ,often owned by the company founders and / a small group of investors) . However , some well-documented cases are known where it is alleged that their has been considerable slippage in corporate governance on the part of some public companies . Creates investment opportunities for small investors As opposed to their businesses that require huge capital outlay , investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford . Therefore the Stock Exchange provides an extra source of income to small savers. Government raises capital for development projects

Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds .These bonds can be raised through the Stock Exchange whereby members of the public buy them , thus loaning money to the government . The issuance of such municipal bonds can obviate the need to directly tax the citizens in order to finance development , although by securing such bonds with the full faith and credit of the government instead of with collateral , the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature.

Barometer of the economy At the stock exchange , share prices rise and fall depending , largely , on market forces. Share prices rise tend to rise or remain stable when companies and the economy in general show signs of stability and growth .An economic recession , depression , or financial crisis could eventually lead to a stock market crash . Therefore the movement of the general tend in the economy .The listing requirements are the set of conditions imposed by a given stock exchange upon companies that want to be listed on that exchange .Such conditions sometimes include minimum number of shares outstanding , minimum market capitalization , and minimum annual income.

COMPANY PROFILE

Reliance ADA Group

About Reliance Money in brief

RELIANCE CAPITAL

Reliance

Reliance General Insurance

Reliance

Reliance

Reliance Consumer Finance

Life Insurance Money

Reliance money is a part of the reliance Anil Dhirubhai Ambani Group and is promoted by Reliance capital, the fastest growing private sector financial services company in India, ranked amongst the top 3 private sector financial companies in terms of net worth. Reliance money is a comprehensive financial solution provider that enables you to carry out trading and investment activities in a secure, cost-effective and convenient manner. Through reliance money, you can invest in a wide range of asset classes from Equity, Equity and commodity Derivatives, Mutual Funds, insurance products, IPOs to availing services of Money Transfer & Money changing.

Reliance Money offers the convenience of on-line and offline transactions through a variety of means, including its Portal, Call & Transact, Transaction Kiosks and at its network of affiliates.

Some key steps of the company that are as.. Success is a journey, not a destination . If we look for examples to prove this quote then we can find many but there is none like that of Reliance Money. The company which is today known as the largest financial service provider of India.

Success sutras of Reliance Money: The success story of the company is driven by 9 success sutras adopted by it namely Trust, Integrity, Dedication, Commitment, Enterprise, Hard work, Home work, Team work play, Learning and Innovation, Empathy and Humility and last but not the least its the Network . These are the values that bind success with Reliance Money. Vision of Reliance Money To achieve & sustain market leadership, Reliance Money shall aim for complete customer satisfaction, by combining its human and technological resources, to

provide world class quality services. In the process Reliance Money shall strive to meet and exceed customer's satisfaction and set industry standards. Mission statement: Our mission is to be a leading and preferred service provider to our customers, and we aim to achieve this leadership position by building an innovative, enterprising , and technology driven organization which will set the highest standards of service and business ethics.

Equity Reliance Money offers its clients competitively priced Equity broking, PMS and Portfolio Advisory Services. Trading execution assistance provided to clients. In addition Reliance Money provides independent and unbiased view on markets along with trading strategies and entry / exit points for taking an informed decision. Mutual Funds A mutual fund is a professionally managed fund of collective investments that collects money from many investors and puts it in stocks, bonds, short-term money market instruments, and/or other securities. Reliance Money offers dedicated research & expert advice on Mutual Funds. Mutual funds are considered to have low risk factors owing to diversification of assets into various sectors and scripts or instruments within. A mutual fund is a common pool of money into which investors place their contributions that are to be invested in acoordance with a stated objective.Then the ownership of the fund is just joint and mutual; the fund belongs to all investors.

Insurance

Life-Insurance Reliance Money assists its clients in choosing a customized plan which will secure the familys future and their expenses post-retirement. Clients can choose from different plans of almost all Insurance Companies where they can invest their money. Clients can choose from products and services that channelise their savings and protect their needs while guaranteeing security and returns for life. A team of experts will suggest the best Insurance scheme which suits the clients requirement.

General Insurance

General Insurance is all about protecting against all kind of insurable risks. Reliance Money assists you in areas of Health insurance, Travel insurance, Home insurance and Motor insurance.

Commodities A single platform to trade on both the major commodity exchanges i.e. NCDEX and MCX. In addition In-house research desk shall provide research reports on all major commodities which shall enable in getting views for trading and diversify clients holdings. Trade Execution assistance is also provided to clients.

Structured Products, Art Investments Structured Products is a new class of financial products for investors apprehensive of increased volatility in stock markets. Specially designed products could include Equity, Index-linked in nature, Real Estate Funds, Art Funds, Overseas Investments and Infrastructure Investments.

Tax Planning With a view to provide complete wealth management solutions, Reliance Moneys wealthmanagement offerings include tax related services like: Tax Planning & advisory

Filing Tax returns for individuals

Real Estate Advisory Services Broking Model for lease/rent and buy/sell of property Property Valuation Real-estate Consulting Corporate earnings model, Lease rentals, etc.

Offshore Investments Reliance Money provides a unique opportunity to invest in international financial markets through the online platform which includes different product ranges.

MY WORK AT RELIANCE MONEY

At RELIANCE MONEY , initially we were imparted process and product knowledge. We were given sufficient time to know about the products and also about sales and distribution channel. We had to work with the sales representatives of the Distributor and think of ways of improving the sales and distribution channel and implementing them. The main aim was to increase sales and for this different ways were tried and implemented. We were provided with database and had to make calls from the data. Company activity was also one of the major sources for generating business. Initially they even accompanied sales representatives to the clients place. Main objective was to know the need of the customer and how to fulfill that in the best way. The project dealt with various fields like:

1. Demat account 2. Mutual funds 3. Life insurance This experience helped me to understand the basic functioning of the Reliance Money as a Broking House and I came to know the products of Reliance Money. The Training Sessions were held by different persons from different organization like from TATA-AIG, ICICI PRUDENTIAL and BIRLA SUN LIFE. We were assigned targets to sell the Life Insurance of TATA-AIG and ICICI PRUDENTIAL, mutual fund of BIRLA SUN LIFE along with Demat A/c of Reliance Money. The training for Life Insurance was conducted by Mr. Sibashish Mohanty from Tata-Aig and Mr. Rakesh Kumar from ICICI PRUDENTIAL and that of Mutual Funds was conducted by Mr. Rishabh Jain and Ashish Kumar of Birla Sun Life. The training for De-mat was conducted by Mr. Sudhanshu Parida of Reliance Money. These training gave me an insight into the products that Reliance Money deals in. The best learning experience was that I started from the very basics of getting to that position and not from the position itself. This helped me get useful insight and understanding of various financial products, the market details about them and the benefits provided by them to the customers.

Our task was divided in 4 phases : 1. Product knowledge: This included the theoretical knowledge about the field and products which needed to be marketed. 2. Pitching in retail sector: This included the implementation of the knowledge imparted to us and the test of our marketing skills. Initially

we were accompanied by other sales executive so that we can learn how to deal with the customers and understand their need. This also enhanced our interpersonal skills and confidence level. 3. Implementation in retail sector and pitching in corporate: By the start of this phase we were confident enough about the pitching and fulfilling the needs of the customer in the retail sector. This also included of the ways we should pitch the corporate. 4. Implementation at corporate levels: This included the implementation of the all the knowledge and ways learnt for the pitching and extracting business out of the corporate. With the end of 8 weeks every phase was completed and it gave us the real experience of retail as well as corporate world.

COMPETITORS OF RELIANCE MONEY: Reliance Money serves a vast range of all financial products like advisory services, Mutual funds, Demat Accounts, Insurances, Gold etc, so all the companies who offer these services are the competitors of the Reliance Money. There are many competitors for Reliance Money on this basis and almost all of them offer the services which Reliance Money offers. Few Major competitors are: India bulls

 Anand Rathi securities ICICI Securities. Sharekhan Kotak Securities India Infoline India Infoline Ltd: India Infoline Ltd is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE). The India Infoline group, comprising the holding company, India Infoline Ltd and its subsidiaries, straddles the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites. India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business.

India Infoline Securities Pvt Ltd: India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline Ltd, which is engaged in the businesses of Equities broking and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash segment of the BSE.

Fig (4) Sharekhan Securities: Sharekhan was created when SSKI Investor Services Pvt. Ltd., a company in the securities and equities segment decided to harness the power of the Internet and offer services to its customers through an online stock trading portal. Sharekhan brings and provides a user-friendly online trading facility. They also have an extensive all-India ground network of franchisees across the country.

The company offers its services through a combination of online and offline channels. The online model comprises a portal, chat facilities, and 'speed trade' terminals. And the offline model uses a combination of an IVR infrastructure and a team of customer agents to receive orders over the telephone. (www.sharekhan.com) ICICI Securities; ICICI Securities, A subsidiary of ICICI Bank, was set up in February 1993 to provide investment-banking services to investors in India. As on date ICICI Bank holds 99.9% of the share capital of ICICI Securities. ICICI Securities Limited is Indias leading full service investment bank with a dominant position in all segments of its operations Corporate Finance Fixed Income and Equities. Kotak Securities: Kotak Securities Limited, a 100% subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of the Kotak Mahindra Group. Kotak Mahindra is one of India's leading financial institutions, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporate. Kotak also offers stock broking through the branch and Internet, Investments in IPO, Mutual funds and Portfolio management service. (www.icicisecurities.com)

The Kotak Mahindra Group;

Kotak Mahindra is one of India's leading financial conglomerates, offering complete financial solutions that encompass every sphere of life. From commercial banking, to stock broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of individuals and corporates. The group has a net worth of over Rs. 5,609 crore, employs around 17,100 people in its various businesses and has a distribution network of branches, franchisees, representative offices and satellite offices across 344 cities and towns in India and offices in New York, London, Dubai, Mauritius and Singapore. The Group services around 3.6 million customer accounts. Kotak Securities has 195 branches servicing more than 2, 20,000 customers and coverage of 231 Cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet Broking services and also online IPO and Mutual Fund Investments. Indiabulls: Indiabulls is Indias leading Financial Services and Real Estate Company having over 640 branches all over India. Indiabulls serves the financial needs of more than 4,50,000 customers with its wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay Stock Exchange. PRODUCT

Companies Type of product

Reliance

ICICI Direct

Religare

Kotak Securities

Motilal Oswal

India Bulls

Online Services Delivery

Equity Cash Cash Cash Cash Cash Cash

Cash Intraday

NSE BSE

Y Y

Y N

Y N

Y Y

Y N

Y N

Intraday

Margin

5 times

5 times Margin Plus -10 to 12 times Y Y Y N N

upo 20 times (conditions applied)

4 times Super Multiple -10 times exposure in Cash Y Y Y Y Y Y Y N

5 4 to 7

Margin with Stop Loss order Other Product Commodity IPO Mutual Funds Gold Forex

N Y Y Y N N

Y Y Y

N N Y N N N

NRI Trading

Equity Derivative

Y Y

Y Y

Y Y

Y N

N N

Offline Service

PCG Forex

Y Y

Y N

Y N

Y N

Y N

N N

Companies

Reliance

ICICI Direct

Religare

Kotak Securities

Motilal Oswal

Sources of Business

Franchisee Remissars BDE Branch Webworld

Franchisee Agents Sales Manager Branch Bank Branches

Mode of Trading

Web Kiosk Call Center Branch Channel Partner Relationship Manager

Y Y Y N Franchisee N

Y N Y Y Franchisee

Y N Y

Y N Y N

Y N Y N N Y

Mode of Customer Handling

Branch Call Center Relationship Manager Mapped Other

Y Y

Y Y

Y Y Y Y

Mode of Communication Email

Reliance separate mail ID

Posts

Cheque

Companies Retail Online Trading Portal

Reliance

ICICI Direct

Religare

Kotak Securities

Motilal Oswal

Equity

Easy Trade

Web based

R-ACE Pro (Basic)Activation Charge Rs299 R-ACE Pro (Advanced) Activation charge - Rs 499 R-ACE Pro (Professional) Activation Charge - Rs 999

Fastlane KEAT - Kotak Securities E trading access Terminal. KEAT - Premium (Coustomised to need) Y

EASY Account with static Quotes - Refresh option SpectrumLive streaming Quotes

Insta Trade

Direct Link

Fast Trade Charting Recognia Recognia

SMS Send sms after Trade Execution Mobile Sevices

Y Y

Y Y - View

Y N

Chat Services

TRADING PORTAL Online trading refers to buying and selling of the

shares/stocks/contracts/bonds with the use of internet. In this shares are not issued in physical form rather they are transferred in the dematerialized form in the Demat account directly. DEMAT ACCOUNT In India, a Demat account , the abbreviation for dematerialized account , is a type of banking account which dematerializes paperbased physical stock shares. The dematerialized account is used to avoid holding physical shares: the shares are bought and sold through a broker. This account is popular in India. The Securities and Exchange Board of India (SEBI) mandates a Demat account for share trading above 500 shares. As of April 2006, it became mandatory that any person holding a Demat account should posses a Permanent Account Number (PAN), and the deadline for submission of PAN details to the depository lapsed on January 2007. What are the benefits of opening a Demat account? Demat account has become a necessity for all categories of investors for the following reasons/ benefits: SEBI has made it compulsory for trades in almost all scrips to be settled in Demat mode. Although, trades up to 500 shares can be settled in physical form, physical settlement is virtually not taking place for the apprehension of bad delivery on

account of mismatch of signatures, forgery of signatures, fake certificates, etc. It is a safe and convenient way to hold securities compared to holding securities in physical form.. No stamp duty is levied on transfer of securities held in Demat form. Instantaneous transfer of securities enhances liquidity. It eliminates delays, thefts, interceptions and subsequent misuse of certificates. Change of name, address, registration of power of attorney, deletion of deceased's name, etc. - can be effected across companies by one single instruction to the DP. Each share is a market lot for the purpose of transactions - so no odd lot problem. Any number of securities can be transferred/delivered with one delivery order. Therefore, paperwork and signing of multiple transfer forms is done away with. It facilitates taking advances against securities on low margin/low interest.

DEMAT ACCOUNT
There are many broking houses doing business in India and they charge a brokerage on every transaction made online or offline. (Buying and Selling are treated as separate transaction). Reliance

Moneys advantage over others is that its charging the lowest brokerage in the market which is just 1 paisa on every executive trade irrespective of the volume traded. Reliance Money, the brokerage and distribution arm of Reliance ADA Group, aims to tap investors in the smaller towns and cities through a flat fee structure. The current leaders in the retail broking segment like ICICI Direct, India Infoline and Indiabulls offer a pay per use model where the customer pays a percentage of the amount transacted by him. Reliance Moneys brokerage rates are quite competitive. The new wonder is Reliance Money's pre-paid card for stock market brokerage. Reliance Money, the financial services division of Anil Dhirubhai Ambani Group-promoted Reliance Capital, is bringing to the market pre-paid cards in denominations of Rs500, Rs1000,Rs 2500,Rs 5000,Rs 10000. These cards would offer brokerage at one-third of the rate being charged by institutional and individual brokerage houses. Sample this. For a pre-paid card worth Rs500, an investor can trade up to Rs2 lakh in both non delivery and delivery option. The Rs1000 worth pre-paid card, total trading limit would reach Rs 1 crore, of which Rs 90lakhs is for the non delivery segment and Rs10 lakh for delivery-based activities. For Rs2500 pre-paid card, total trading limit is fixed at Rs3 crore,of which Rs2.70crore is for the non delivery option and Rs 30 lakhs for delivery option.

For the Rs 5000 pre-paid card, the total trading limit is Rs 7 crore,out of which Rs 6.30crore is for non delivery option and Rs 70 lakhs for delivery option. For the Rs.10000 pre paid card,the total trading limit is Rs 20crore,out of which Rs 18 crore is for non delivery option and Rs 2 crore for delivery option.

Reliance Money offers most competitive brokerage rates - 0.01paise for intraday trades and 0.05paise for delivery trades. Target low level of retail penetration in India - less than 3 per cent of household financing savings makes it into equity markets Reliance Money consumers can trade in equities, commodities and offshore Investments , IPOs, Mutual Funds, Insurance, Money transfer and Money Changing - all through single window, both offline and online. Reliance Money has already tied-up with CMC Capital Plc UK to offer offshore Investment products to Indian consumers as per guidelines. RESEARCH METHEDOLOGY

Objective of research;

 The main objective of this project is concerned with getting the opinion of people regarding demat account, Mutual Funds, Life Insurance and other financial products, to target them and create awareness while with the generation of leads.

I have tried to explore the general opinion about the products and services provided by Reliance Money.It also covers why/ why not investors are availing the services of financial advisors.

Along with it a brief introduction to Indias largest financial intermediary, RELIANCE MONEY has been given and it is shown that what are demat a/c, mutual funds and life insurance and how they work.

Scope of the study: The research was carried out in Cuttack city only. I have visited people randomly nearby my locality, different shopping malls, small retailers etc. Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites and some special publications of R-MONEY.

Sampling: Sampling procedure: The sample is selected in a random way, irrespective of them being investor or not or availing the services or not. It was collected through mails and personal visits to the known persons, by formal and informal talks and through filling up the questionnaire prepared. Sample size: The sample size of my project is limited to 100 only. Sample design: Data has been presented with the help of pie charts. . 1. Preference of Investment

Fig.1

Result

of

Preference

of

Investment

Interpretation: This shows that although the mutual funds market is on the rise yet, the most favored investment continues to be in the Share Market. So, with a more transparent system, investment in the Stock Market can definitely be increased.

2. Awareness on Online Share Trading

Fig. 2 Result of Awareness of Online Share Trading

Interpretation: With the increase in cyber education, the awareness towards online share trading has increased by leaps and bounds. This awareness is expected to increase further with the increase in Internet education.

3. Preference of investing in stock market

I NTERPRETATION: The study shows that most of the people prefer to invest in stock market because of high risk and high return whereas some other try to capture the short term gain from investment. But a very few section of people invest because of the benefits they gain in tax.

4. Awareness of Reliance Money as a Brand

Fig.3 Result of Awareness of Reliance money as a Brand

Interpretation: This pie-chart shows that reliance money has a reasonable amount of Brand awareness in terms of a premier Retail stock broking company. This brand image should be further leveraged by the company to increase its market share over its competitors. 5. Awareness of Reliance Money Facilities

Fig .4 Result of Awareness of Reliance money Facilities

Interpretation: Although there is sufficiently high brand equity among the target audience yet, it is to be noted that the customers are not aware of the facilities provided by the company meaning thereby, that, the company should concentrate more towards promotional tools and increase its focus on product awareness rather than brand awareness.

5. Customers having Demat account in companies

7. Satisfaction Level among Customers with current broker

Fig7.5 Result of satisfaction level among customers with current

Interpretation: This pie-chart corroborate the fact that Strategic marketing, today, has gone beyond only meeting Sales targets and generating profit volumes. It shows that all the competitors are striving hard not only to woo the customers but also to make them Brand loyal by generating customer satisfaction. 8. Frequency of Trading

Fig7.6 Result of Frequency of Trading

Interpretation: Inspite of the huge returns that the share market promises, we see that there is still a dearth of active traders and investors. This is because of the non transparent structure of the Indian share market and the skepticism of the target audience that is generated by the volatility of the stock market. It requires efficient bureaucratic intervention on the part of the Government. 9.Percentage of earnings invested in Share Trading

Fig7.7 Result of percentage of earning invested in share trading

Interpretation: This shows that people invest only upto 10% of their earnings in the stock market, again reiterating the volatile and non-transparent structure of the Indian stock market. Hence, effective and efficient steps should be undertaken to woo the customers to invest more in the lucrative stock market

10.Rating of share trading companies

60 50 40 30 20 10 0 10 Reliance money 10 40 50 kotak mahindra 30 30 40

Medium High

50 40 40 40 30 20

50 40

10

ICICI dirct 20 40 40
lower

others 50 40 10

lower Medium High

11.Problems

faced

during

trading

INTERPRETATION: The most common problem faced by people during trading is the information related problem i.e, they dont get the required information about trading either online or offline.Whereas some other problems are also there like network

problem,inmanual operating problem and service provider problem.

12. Describe yourself as a

18% 44% 26% 12%

Risks taker Variety seeker Price conscious Quality conscious

INTERPRETATION: From the above graph I found that most of customer are mostly risk taker and price conscious and least number of customer are quality conscious and variety seeker. It suggests that the customer are ready to invest money in equity and commodity market which is more risky than mutual fund.

13.Rating of products of Reliance M oney

INTERPRETATION:About 20% of the people rated the products of reliance money as excellent whereas 50% rated it as good. While some others rated it as average and a very small portion of people rated it as poor.

14.Suggestions

INTERPRETATION:Most of the people suggested reliance money to broaden their network so that it will be available to a large number of people. Some others suggested on improving the customer service whereas others laid emphasis on technical improvement. 15. Customer status

16% 14% 10% 60%

Businessman Student Service holder Ex-serviceman

INTERPRETATION: serviceman.

Most

of

the

people

who

were

surveyed

are

businessman,10% are students,14% are service holder and rest 16% are ex-

RECOMMENDATION The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. After sales services and follow up calls are important for getting new references so trained telesales should be appointed for this purpose whose sole work should be to make feedback calls.

 Reliance is having too many financial products right from Demat account to General Insurance and not all the salespeople are familiar with each and every product so the work force should be segregated each group dealing in a specific product and the sales target should be given likewise. While interacting with the investors I found that most of the customers are unaware about the Mutual fund. Some of the people look upon mutual funds and equity trading as gambling. Thus a mutual fund awareness program can help to increase the penetration of mutual funds in the market. Reliance should declare in black ink that they will charge just 1 paisa per transaction. People tend to think that there must be some hidden charges. Rs750 account opening charges are too high when targeting a corporate so the company should be flexible on this amount. Reliance should provide periodic training for updating the product knowledge of various financial advisors. Company should have a scheme of rewards and recognition to employees and the field persons to boost their motivation. There must be proper advertisement of the company by various media like Exhibition, Press releases, Newspaper, and Television etc. There should be a good research team who has to survey the market and know about the clients satisfaction level and also found out the potential customer. There must be a good infrastructure of the company to get the attention of the public and the office should be at residential area so that customer get the service easily.

 Though majority of the customer were satisfied with the existing function but the organization should use some marketing strategies such as discount scheme on amount of transaction made in a month by the regular customer. So it will enable the customer to retain in the organization and to attract new customer. There should be regular training programme like Workshops, Seminars, and Meetings etc. for the sake of development of the organization and also for the development of the employees performance simultaneously. Limitations: The project has been subject to the following limitations: The study was restricted to Reliance Money Limited to only in Cuttack district. The study is conducted with the data available and the analysis was made accordingly. It was tough to get all relevant facts from the personnel and employees concerned due to some secret document not provided by the business organization, which is inherent in an industry. Time factor was a limitation as only a stipulated period had been ascertained to me while the personnel had little time to my queries due to their daily busy schedule. It is not feasible to compare all the products of various brokerage firm.

Derivatives

The origin of derivatives can be traced back to the need of farmers to protect themselves against fluctuations in the price of their crop. From the time it was sown to the time it was ready for harvest, farmers would face price uncertainty. Through the use of simple derivative products, it was possible for the farmer to partially or fully transfer price risks by locking-in asset prices. These were simple contracts developed to meet the needs of farmers and were basically a means of reducing risk.

A farmer who sowed his crop in June faced uncertainty over the price he would receive for his harvest in September. In years of scarcity, he would probably obtain attractive prices. However, during times of oversupply, he would have to dispose off his harvest at a very low price. Clearly this meant that the farmer and his family were exposed to a high risk of price uncertainty.

On the other hand, a merchant with an ongoing requirement of grains too would face a price risk that of having to pay exorbitant prices during dearth, although favorable prices could be obtained during periods of oversupply. Under such circumstances, it clearly made sense for the farmer and the merchant to come together and enter into contract whereby the price of the grain to be delivered in September could be decided earlier. What they would then negotiate happened to be futures-

type contract, which would enable both parties to eliminate the price risk.

In 1848, the Chicago Board Of Trade, or CBOT, was established to bring farmers and merchants together. A group of traders got together and created the to-arrive contract that permitted farmers to lock into price upfront and deliver the grain later. These to-arrive contracts proved useful as a device for hedging and speculation on price charges. These were eventually standardized, and in 1925 the first futures clearing house came into existence.

Today derivatives contracts exist on variety of commodities such as corn, pepper, cotton, wheat, silver etc. Besides commodities, derivatives contracts also exist on a lot of financial underlying like stocks, interest rate, exchange rate, etc.

Derivatives Defined
A derivative is a product whose value is derived from the value of one or more underlying variables or assets in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. In our earlier discussion, we saw that wheat farmers may wish to sell their harvest at a future date to

eliminate the risk of change in price by that date. Such a transaction is an example of a derivative. The price of this derivative is driven by the spot price of wheat which is the underlying in this case.

The Forwards Contracts (Regulation) Act, 1952, regulates the forward/futures contracts in commodities all over India. As per this the Forward Markets Commission (FMC) continues to have jurisdiction over commodity futures contracts. However when derivatives trading in securities was introduced in 2001, the term security in the Securities Contracts (Regulation) Act, 1956 (SCRA), was amended to include derivative contracts in securities. Consequently, regulation of derivatives came under the purview of Securities Exchange Board of India (SEBI). We thus have separate regulatory authorities for securities and commodity derivative markets.

Derivatives are securities under the SCRA and hence the trading of derivatives is governed by the regulatory framework under the SCRA. The Securities Contracts (Regulation) Act, 1956 defines derivative to include-

A security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract differences or any other form of security.

A contract which derives its value from the prices, or index of prices, of underlying securities.

Products, Participants and Functions

Derivative contacts are of different types. The most common ones are forwards, futures, options and swaps. Participants who trade in the derivatives market can be classified under the following three broad categories- hedgers, speculators, and arbitragers.

Hedgers The farmers example discussed in the introduction was a case of hedging. Hedgers face risk associated with the price of an asset. They use the futures or options markets to reduce or eliminate this risk.

Speculators Speculators are participants who wish to bet on future movements in the price of an asset. Futures and options contracts can give them leverage; that is, by putting in small amounts of money upfront, they can take large positions on the market. As a result of this leveraged speculative position, they increase the potential for large gains as well as large losses.

Arbitragers Arbitragers work at making profits by taking advantage of discrepancy between prices of the same product across different markets. If, for example, they see the future price of an asset getting out of line with the cash price, they would take offsetting positions in the two markets to lock in the profit.

Whether the underlying asset is a commodity or a financial asset, derivative markets performs a number of economic functions.

Prices in an organized derivatives market reflect the perception of market participants about the future and lead the prices of underlying to the perceived future level. The prices of derivatives converge with the prices of the underlying at the expiration of derivative contract. Thus derivatives help in discovery of future as well as current prices.

The derivatives market helps to transfer risks from those who have them but may not like them to those who have an appetite for them.

Derivatives, due to their inherent nature, are linked to the underlying cash markets. With the introduction of derivatives, the underlying market witnesses higher trading volumes because of participation by more players who would not otherwise participate for lack of an arrangement to transfer risk.

Speculative traders shift to a more controlled environment of the derivatives market. In the absence of an organized derivatives market, speculators trade in the underlying cash markets. Margining, monitoring and surveillance of the activities of various participants become extremely difficult in these kinds of mixed markets.

An important incidental benefit that flows derivatives trading is that it acts as a catalyst for new entrepreneurial activity. Derivatives have a history of attracting many bright, creative, well-educated people with an entrepreneurial attitude. They often energize others to create new businesses, new products and new employment opportunities, the benefit of which are immense.

Derivatives markets help increase savings and investment in the long run. The transfer of risk enables market participants to expand their volume of activity.

Derivative Markets Derivative markets can broadly be classified as commodity derivative market and financial derivative markets. As the name suggests, commodity markets trade contracts for which the underlying asset is a commodity. It can be agricultural commodity like wheat, soybeans, cotton, rapeseed, etc or precious metals like gold, silver, etc. financial derivatives markets trade contracts that have a financial asset or variable as the underlying. The more popular financial derivatives are those which have equity, interest rates and exchange rates as the underlying. The most commonly used derivatives contracts are forwards, futures and options.

Emergence Of financial derivative products Financial derivatives came into spotlight in the post 1970 period due to growing instability in the financial markets. However, since their emergence, these products have become very popular and by 1990s, they accounted for about two-thirds of total transactions in derivative products. In recent years, the market for financial derivatives has grown tremendously in terms of variety of instruments available, their complexity and also turnover. In the class of equity derivatives the world over, futures and options on stock indices have gained more popularity than on individual stocks, especially among institutional investors, who are major users of index-linked derivatives. Even small investors find these useful due to high correlation of the popular indexes with various portfolios and ease of use. The lower costs associated with index derivatives vis--vis derivative products based on individual securities is another reason for their growing use.

Emergence of Commodity Derivatives Derivatives as a tool for managing risks first originated in the commodities market. They were then found useful as the hedging tool in the financial markets as well. In India trading in commodity futures has been in existence from the 19 th century with

organized trading in cotton through the establishments of Cotton Trade Association in 1875. Over a period of time, other commodities were permitted to be traded in futures exchanges. A regulatory constraint in 1960s resulted in virtual dismantling of the commodities future markets. It is only in the last decade that commodity futures exchanges have been actively encouraged.

Commonly Used Derivatives Here we define some of the more popularly used derivative contracts. Some of these, namely futures and options will be discussed in more details at a later stage.

Forwards A forward contract is an agreement between two entities to

buy or sell the underlying asset at a future date, at todays preagreed price.

Futures A futures contract is an agreement between two parties to buy

or sell the underlying asset at a future date at todays future price. Futures contracts differ from forward contracts in the sense that they are standardized and exchange traded.

Options There are two types of options- calls and puts. Calls give the

buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.

Warrants Options generally have lives of up to one year; the majority of

options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter.

Baskets

Basket options are options on portfolios of underlying assets. The underlying asset is usually a weighted average of a basket of assets. Equity index options are a form of basket options.

Swaps Swaps are private agreements between two parties to

exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are:

Interest rate swaps These entail swapping only the interest related cash flows

between the parties in the same currency.

Currency swaps These entail swapping both principal and interest between

the parties, with the cash flows in one direction being in a different currency than those in the opposite direction.

Swaptions Swaptions are options to buy or sell a swap that will become

operative at the expiry of the options. Thus a swaption is an option on a forward swap.

Introduction to Commodity Markets

Rapid economic growth in recent years with more than 6 percent GDP growth rate has made India one of the fastest growing economies of the world. With higher income giving significant purchasing power to over a billion strong population, demand for all kinds of goods and services is set to grow rapidly.

With liberalization measures in place, commodity markets in India are likely to make an overwhelming impact on the global commodity markets. Indian corporate entities are now in a position to hedge their price risk in the domestic and international commodity exchanges. Online trading at the three nationwide multi-commodity futures exchanges allow domestic hedging, while some of the established commodity-specific exchanges are gearing up to meet the needs of the expanding market. There is no doubt that the commodities market in India is definitely in for a

big spert offering enormous opportunities of growth to investors, speculators, arbitragers and even big corporations in manufacturing sector. Study of commodity market and trading mechanism and opportunities offered by them has thus become essential for everyone who has some interest in the Indian economy in general and in commodity trading in particular.

Markets

Markets have existed for centuries in India and abroad for selling and buying of good and services. The concept of market started with agricultural products and hence it is as old as the agro products or the business of farming itself. Traditionally, the farmers used to bring their produce to a central place (called Mandi/Bazar) in a town/village where grain merchant/traders would also come and buy the produce and transport, distribute it to other markets.

In a traditional market, agriculture produce would be brought and kept in the market and the potential buyers would come and see the quality of the produce and negotiate with the farmers directly for a price that they would be willing to pay and the quantity that they would like to buy. The deals were then stuck once mutual agreement was reached on the price and the quantity to be bought/sold.

In the system of traditional markets, shortages of a commodity in a given season would lead to increase in price for the commodity or oversupply on even a single day (due to heavy arrivals) could result into decline in prices sometimes below the cost of production to the farers. Neither the farmers nor the food grain

merchants were happy with this situation since they could not predict what the prices would be on a given day or in a given season. As a result, any times the farmers were required to return from the market with their produce since it did not fetch reasonable price and since there were no storage facilities available near the market place. It was in this context that farmers and food grain merchants in Chicago started negotiating for future supplies of grains in exchange of cash at a mutually agreeable price. This type of agreement was acceptable to both parties since the farmer would know how much he would be paid for his produce, and the dealer would know his cost of procurement in advance. This effectively started the system of organized commodity market and forward contracts, which subsequently evolved the futures market.

Commodity

A Commodity is a product having commercial value, which can be produced, bought, sold and consumed. Commodities are basically the products of primary sector of an economy. Primary sector of an economy is that part of the economy, which is concerned with agriculture and extraction of raw materials. In order to qualify as a commodity, an article or a product has to meet some basic characteristics, these are listed below:

The product has not gone through any complicated manufacturing activity, though simple processing (like mining, cropping, etc.) is not ruled out. In other words, the product must be in a basic raw, unprocessed state. (For instance wheat is a commodity; but wheat flour and bread are not commodities).

The product has to be fairly standardized to facilitate writing of contracts on products of uniform quality. (e.g. Rice is rice though different varieties of rice can be treated as different commodities and hence traded as separate contracts)

Major consideration while buying a particular commodity is its price (since there is hardly any difference in quality from seller to seller). Prices of the products are determined by market forces, demand and supply and they undergo rapid changes/fluctuations (price must fluctuate enough to create uncertainty, which means both risk and potential profit / loss for buyers and sellers)

Product should also be available in large volume.

Usually there should be many competing sellers and buyers of the product in the market to facilitate price discovery.

The product should

have adequate shelf life so that

delivery of a future contract can be deferred.

Commodity Market

Market is a place where buyers and sellers meet to transact a business i.e. for exchange of goods or services for a consideration, which is usually money. In todays world, markets need not exist in physical form as long as the exchange of goods or services takes place for a consideration.

Commodity

market

is

therefore

logically

market

where

commodities or Commodity derivatives are bought or sold for a consideration. It is an important constituent of the financial system for any country. Thus, it is a platform where a wide range of product like precious metals (gold and silver), base metals like aluminum, copper, zinc, crude oil, energy and other commodities like soy oil, palm oil, coffee, food grain such as rice and wheat, pulses, pepper are traded

Existence of a vibrant, active and liquid commodity market is normally considered as a healthy sign of development of any economy. Commodity markets quite often have their centers in developed countries.

Commodity futures in particular help price discovery and assist investors in hedging their risk by taking positions in commodities and exploiting arbitrage opportunities in the market. They also help producers to know what price their products could fetch in future. Assured prices and transparency are thus major hallmarks of commodity markets.

Types of commodity markets

Basically, there are three types of regulatory commodity markets:

Over the Counter/Spot Market: Direct purchases and sales are achieved in spot markets normally for immediate consumption. Buyers and sellers meet face to face and deals are struck. This is akin to over the counter (OTC) market where there is no need

for

an

organization

like

commodity

exchange.

These

are

traditional markets. Classic example of a spot market is mandi where food grains are sold in bulk. Traders would purchase the produce on the spot and settle the deal in cash.

Forward and Future Markets: in this case, the agreements are normally made to pay now and receive the goods at a later date in future. Forwards and futures contracts reduce the risk by allowing trader to decide a price today for the goods to be delivered in future. Forward markets are cash market where delivery takes place sometime in future, unlike spot markets that call for immediate delivery. These advance sales help both buyer and seller with long term planning. Forward contracts laid the groundwork for futures contracts. The main difference between these two contracts is the way in which they are negotiated.

For forward contract, terms like quantity, quality, delivery date and price and discussed in person between the buyer and the seller. Each contract is thus unique and not standardized since it takes into account the needs of particular seller and a particular buyer only.

In the case of futures contracts, all terms like quantity, quality and delivery date, are standardized except price, which is

discovered through the interaction of supply and demand in a centralized market place or exchange. Forward contracting helped in arranging long-term transaction between buyers and sellers but could not deal with the financial risk that occurred with unforeseen price changes.

Major commodities listed and traded on a given commodity exchange would normally depend on the demand and supply situation for that commodity in the region in which the exchange is located. For instance, commodity exchange in Jaipur will trade ore in guar and guar products while commodity exchanges in Indore would be predominantly dealing with soybeans or soy as products.

There are many regulated or deregulated commodity exchanges worldwide. They deal in many commodities. In India there are 25 commodity exchanges and three national level commodity exchanges which deal in around 80 commodities.

Benefits of trading in Commodities

Benefits to investor

 High financial leverage is possible in commodity market e.g. trading in gold calls for only 3.5% initial margin. Thus if the gold contract (1kg) is valued for 600,000/-, the investor is expected to put in margin of only Rs. 21000/- to be able to trade. If the price of gold goes up by even 5%, investor would make profit of Rs 30,000/- on an investment of Rs 21000/- before the expiry of the contract.

Investors can effectively hedge the risk in price fluctuations of a commodity. Investor can also hedge his risk on investment in stock and debt markets since commodities provide a safer choice and provide one more alternative avenue in the investment portfolio. It may be mentioned here that the commodities are less volatile as compared to G-secs.

Commodity markets are extremely transparent in the sense that the manipulation of prices of a Commodity is extremely difficult.

Business involves just you and market. One does not have to manufacture or acquire a product; allocate financial resources to advertise market and sell the product, etc.

 With the rapid spread of derivatives trading in Commodities, this route too has become an option for high net worth and savvy investors to consider in their overall asset allocation.

The fact that the stock indices and commodity indices are not correlated implies that the commodity markets can be used as an effective diversification tool, where investors can park their money. A look at the performance of the commodities markets during the last year shows that the positive movement was witnessed during most parts of the years.

Benefits to producers

It is useful to the producer because he can get an idea of the price likely to prevail at a future point of time and therefore can decide between various competing commodities, the best that suits him.

Farmers for instance, can get assured prices, decide on the crop that they want to take and since there is transparency in prices, he can decide when and where to sell.

Benefits to consumer/user

It is useful for consumer because he gets an idea of the price at which the commodity would be available at a future point of time. Corporate entities in particular can be benefited by hedging their risk if they are using some of the commodities as their raw material. Future trading is very useful to the exporters as it provides an advance indication of the price likely to prevail and thereby help the exporter in quoting a realistic price and thereby secure export contract in a competitive market.

Benefits to economy

As the constituents of the commodity market system get benefited Indian economy in turn is also expected to gain a lot. Growth in the commodity markets implies that there could be tremendous benefits to the Indian economy in terms of business generation and employment opportunities.

Bibliography Books
Market Research ( Naresh Malhotra) Marketing Management ( Philip Kotler)

Websites:
o o o o o o o www.reliancemoney.com www.nseindia.com www.bseindia.com www.moneycontrol.com www.indiabulls.com www.investopedia.com www.scribd.com