Equity Div. MF

A PROJECT REPORT ON
COMPARATIVE ANALYSIS BETWEEN RETURNS OF EQUITY

DIVERSIFIED MUTUAL FUNDS AND NIFTY
(MAPPING MINDS VENTURE)
A Summer Training project

Submitted in partial fulfillment of the requirement for the
Award of Degree of Master of Business Administration
2014-2016
Under the Guidance of- Submitted by- ABHISHEK

MITTAL
Dr. Manju Gupta
(University Enrollment Number)
06014803914
DEPARTMENT OF MANAGEMENT
MAHARAJA AGRASEN INSTITUTE OF TECHNOLOGY
(Affiliated to G.G.S.I.P. University)
Sector 22, Rohini, Delhi -110086
An ISO 9001:2008 Certified Institute
AICTE NBA Accredited Institute
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DECLARATION
I hereby declare that the major project report, entitled Comparative analysis between
returns of equity diversified mutual funds and Nifty, is based on my original study and
has not been submitted earlier for award of any degree or diploma to any institute or
university.
The work of other authors(s), wherever used, has not been acknowledged at appropriate
place(s).
Place: New Delhi Candidate signature

Date: Name: ABHISHEK MITTAL
Enrl.no: 06014803914
Countersigned
Name: Directors Name-
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STUDENT UNDERTAKING
This is to certify that I, Abhishek Mittal, had completed the Project titled Comparative
analysis between returns of equity diversified mutual funds and Nifty in Mapping
Minds Venture under the guidance of Dr. Manju Gupta in the partial fulfillment of the
requirement for the award of degree of MBA from Maharaja Agrasen Institute of Technology
(Affiliated to G.G.S.I.P. University), New Delhi. This is an original piece of work and I had
neither copied nor submitted it earlier elsewhere.
Abhishek Mittal
MBA
Date- 09 November 2015
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CERTIFICATE FROM GUIDE
This is to certify that the project titled Comparative analysis between returns of equity
diversified mutual funds and Nifty is an academic work done by Abhishek Mittal
submitted in the partial fulfillment of the requirement for the award of the Degree of MBA
from Maharaja Agrasen Institute of Technology (Affiliated to G.G.S.I.P. University), New
Delhi under my guidance and direction. To the best of my knowledge and belief the data and
information presented by him in the project has not been submitted earlier.
Dr. Manju Gupta
Associate Professor
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ACKNOWLEDGEMENT
I would like to take this opportunity to express a deep sense of gratitude to my industry
mentor Mr. Amit Virmani, Mapping Minds Venture, for giving me proper directions from
time to time and constant words of advice.
I would also like to express my thankfulness to my Institute mentor, Dr. Manju Gupta, MAIT,
for her encouragement during the different phases of the project and sharing her thoughts
with me regarding the betterment of the project.
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EXECUTIVE SUMMARY
The research project title is Comparative analysis between returns of equity diversified
mutual funds and Nifty and it is done to analyse the returns of both the market so that
selection of a better investment option can be done.
This project is focused on studying the association between CNX Nifty and large cap equity
diversified mutual funds. It is mainly focused in trying to study the impact of returns of CNX
Nifty on large cap equity diversified mutual funds.
The whole research project is divided into six chapters and each chapter discusses about
different aspects in detail.
Chapter 1 gives overview about the mutual funds in India.

A mutual fund is nothing more than a collection of stocks and/or bonds. We can think of a
mutual fund as a company that brings together a group of people and invests their money in
stocks, bonds, and other securities. Each investor owns shares, which represent a portion of
the holdings of the fund.
Then the project talks about the history of mutual funds and its inception in India as first
mutual fund was created in 1924 when three Boston securities executives pooled their money
together, they had no idea how popular mutual funds would become.
The mutual fund industry started in India in a small way with the UTI Act creating what was
effectively a small savings division within the RBI in 1963. Over a period of 25 years this
grew fairly successfully & gave investors a good return, & therefore in 1989, as the next
logical step, public sector banks and financial institutions were allowed to float mutual funds
and their success emboldened the government to allow the private sector to foray into this
area.
The project also includes the working of mutual fund, its structure, regulation and types of
mutual funds.
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The structure of mutual fund is three tiered - sponsor (creation), trustees, and Asset
Management Company (fund management). Other than these three entities there are few
other constituents such as Registrar & Transfer Agent, Auditor and Broker.
The Mutual Funds in India are regulated by SEBI MF Regulations Act, 1996. SEBI is also the
apex regulator of capital markets.
Mutual fund types include Open ended, Closed ended and Interval funds. Open ended funds
include Debt funds, Equity funds, Money market funds and Balanced funds while Closed
ended funds include Capital protection and Fixed maturity plans. Total Assets Under
Management in various AMCs are Rs 1187312.24 crore as on September 30, 2015.
Then the project tells about key considerations, issues and current scenarios in mutual funds
industry in India. It also mentions about the some of the leading mutual fund companies in
India.
Then, it includes overview of capital markets in India, its history and types of capital markets.
Capital market is one of the types of financial market in which we can invest money as well
as raise money for a period of more than one year. Both the stock and bond markets are a part
of the capital markets. Any government or corporation requires capital (funds) to finance its
operations and to engage in its own long-term investments. Thus, both the primary and
secondary markets for stocks and bonds make up the capital markets. The capital markets are
extensively regulated in India, this regulator is the Securities and Exchange Board of India
(SEBI).
Both the primary market and secondary market are two types of capital market depending on
the issuance of securities. The primary markets deal with the trading of newly issued
securities. The secondary market is that part of the capital market that deals with the
securities that are already issued in the primary market.
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Chapter 2 discusses about the research methodology. It includes objectives of the study,
hypothesis, scope and methodology which includes research type, source of data collection
and tools of data analysis.
The objective is to study the association between CNX Nifty and large cap equity diversified
mutual funds. It is mainly focused in trying to study the impact of returns of CNX Nifty on
large cap equity diversified mutual funds.
The research type used is Descriptive, source of data used is Secondary data and the tools
used for data analysis are Correlation and Regression.
Chapter 3 includes the analytical part. The analysis is based on the returns of Nifty and five
types of mutual funds. These mutual funds are:
L&T India Large Cap Fund, JP Morgan India Equity Fund, Franklin India Bluechip Fund,
HDFC Top 200 Fund and UTI Top 100 Fund.
The analysis is based on the quarterly returns of Nifty and mutual funds for the past four
years (from 2011 to 2014) and first two quarters of 2015.
The analyses show the degree of correlation and the selected mutual funds and the impact of
Nifty on the returns of mutual funds.
Chapter 4 includes limitations of the study. Limitation is the small size of sample due to non
- availability of data.
Chapter 5 includes conclusion and recommendations.
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Table of contents
Chapter Title Page No.
No.
1 INTRODUCTION 1
1.1 MUTUAL FUNDS 1
1.1.1 HISTORY OF MUTUAL FUNDS 2
1.1.2 HISTORY OF MUTUAL FUNDS IN INDIA 3
1.1.3 MUTUAL FUND CONCEPT 7
1.1.4 WORKING OF MUTUAL FUND 9
1.1.5 STRUCTURE OF MUTUAL FUNDS 10
1.1.6 REGULATION 16
1.1.7 TYPES OF MUTUAL FUNDS 17
1.1.8 THINGS TO CONSIDER WHILE INVESTING IN 22
MUTUAL FUNDS
1.1.9 EMERGING ISSUES OF THE MUTUAL FUND 26
INDUSTRY IN INDIA
1.1.10 CURRENT SCENARIO 27
1.1.11 AN OVERVIEW OF THE MUTUAL FUND 28
COMPANIES
1.2 OVERVIEW OF CAPITAL MARKET 30
1.2.1 HISTORY OF INDIAN CAPITAL MARKETS 32
1.2.2 TYPES OF CAPITAL MARKET 35
2 RESEARCH METHODOLOGY 36
2.1 OBJECTIVES OF THE STUDY 36
2.2 HYPOTHESIS 36
2.3 SCOPE OF THE STUDY 37
2.4 METHODOLOGY 38
2.4.1 TYPE OF RESEARCH 38
2.4.2 RESESARCH DESIGN 38
2.4.3 SOURCES OF DATA COLLECTION 38
2.4.4 TOOLS OF ANALYSIS 39
3 FINDINGS AND ANALYSIS 40
4 LIMITATIONS OF THE STUDY 67
5 CONCLUSIONS 68
BIBLIOGRAPHY 69
List of Tables
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Table Title Page No.
No.
1.1 Mutual Funds Market (1992-93) 4
1.2 Mutual Funds Market (1999) 5
1.3 Asset Under Management and Folios -Category wise - aggregate - 20
as on September 30, 2015
3.1 Composition (%) of L&T India Large Cap Fund 40

3.2 Quarterly Returns 41
3.3 Correlation 43
3.4 Regression Analysis 44
3.5 Regression Statistics 44
3.6 Composition (%) of JP Morgan India Equity Fund 45
3.8 Correlation 48
3.11 Composition (%) of Franklin India Bluechip Fund 50
3.13 Correlation 53
3.16 Composition (%) of HDFC Top 200 Fund 55
3.18 Correlation 58
3.21 Composition (%) of UTI Top 100 Fund 60
3.23 Correlation 63
3.26 Overview of holdings of funds 65
List of Charts
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Figure Title Page
No. No.
1.1 Growth in Assets Under Management 6
1.2 How a mutual fund works 9
1.3 Types of mutual funds 17
3.1 Quarterly returns of L&T India Large cap fund & Nifty 42
3.2 Correlation between returns of Nifty & L&T India Large Cap Fund 43
3.3 Quarterly returns of JP Morgan India Equity Fund & Nifty 47
3.4 Correlation between returns of Nifty & JP Morgan India Equity 48
Fund
3.5 Quarterly returns of Franklin India Bluechip Fund & Nifty 52

3.6 Correlation between returns of Nifty & Franklin India Bluechip 53
Fund
3.7 Quarterly returns of HDFC Top 200 Fund & Nifty 57

3.8 Correlation between returns of Nifty & HDFC Top 200 Fund 58
3.9 Quarterly returns of L&T India Large cap fund & Nifty 62
3.10 Correlation between returns of Nifty & UTI Top 100 Fund 63
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CHAPTER I: INTRODUCTION
1.1 MUTUAL FUNDS

Mutual Funds have become extremely popular over the last 20 years. What was once just
another obscure financial instrument is now a part of our daily lives. More than 80 million
people, or one half of the households in America, invest in mutual funds. That means that, in
the United States alone, trillions of dollars are invested in mutual funds.
A mutual fund is nothing more than a collection of stocks and/or bonds. We can think of a
mutual fund as a company that brings together a group of people and invests their money in
stocks, bonds, and other securities. Each investor owns shares, which represent a portion of
the holdings of the fund.
We can make money from a mutual fund in three ways:
Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all
of the income it receives over the year to fund owners in the form of a distribution.
If the fund sells securities that have increased in price, the fund has a capital gain. Most
funds also pass on these gains to investors in a distribution.
If fund holdings increase in price but are not sold by the fund manager, the fund's shares
increase in price. You can then sell your mutual fund shares for a profit.
Funds will also usually give you a choice either to receive a check for distributions or to
reinvest the earnings and get more shares.
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1.1.1 HISTORY OF MUTUAL FUNDS
In 1774, a Dutch merchant invited subscriptions from investors to set up an investment trust
by the name of Eendragt Maakt Magt (translated into English, it means, Unity Creates
Strength), with the objective of providing diversification at low cost to small investors. Its
success caught on, and more investment trust were launched, with verbose and quirky names
that when translated read profitable and prudent or small maters grow by consent. The
foreign and colonial Govt. trust, formed in London in 1868, promised, start the investor of
modest means the same advantages as the large capitalist... by spreading the investment over
a number of stock.
When three Boston securities executives pooled their money together in 1924 to create the
first mutual fund, they had no idea how popular mutual funds would become. The idea of
pooling money together for investing purposes started in Europe in the mid-1800s. The first
pooled fund in the U.S. was created in 1893 for the faculty and staff of Harvard University.
On March 21st, 1924 the first official mutual fund was born. It was called the Massachusetts
Investors Trust. After one year, the Massachusetts Investors Trust grew from $50,000 in
assets in 1924 to $392,000 in assets (with around 200 shareholders). In contrast, there are
over 10,000 mutual funds in the U.S. today totaling around $7 trillion (with approximately 83
million individual investors) according to the Investment Company Institute.
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1.1.2 HISTORY OF MUTUAL FUNDS IN INDIA
The Evolution:
The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry
in the year 1963. The primary objective at that time was to attract the small investors and it
was made possible through the collective efforts of the Government of India and the Reserve
Bank of India. The history of mutual fund industry in India can be better understood divided
into following phases:
Phase 1. Establishment and Growth of Unit Trust of India - 1964-87:

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by
an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate
under the regulatory control of the RBI until the two were de-linked in 1978 and the entire
control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI
launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the
largest number of investors in any single investment scheme over the years. UTI launched
more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched
ULIP in 1971, six more schemes between 1981 & 1984, Children's Gift Growth Fund and
India Fund (India's first offshore fund) in 1986, Master share (India's first equity diversified
scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By
the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.
Phase II. Entry of Public Sector Funds - 1987-93:

The Indian mutual fund industry witnessed a number of public sector players entering the
market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India
became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by
Canbank Mutual fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual
Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of
the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the
leader with about 80% market share.
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Table: 1.1. Mutual Funds Market (1992-93)
Year Amount Assets Under Mobilisation

(1992-93) Mobilised Management (as %) of
(Rs. Crores) (Rs. Crores) Gross
Domestic
Savings
UTI 11,057 38,247 5.2%
Public Sector 1,964 8,757 0.9%
Total 13,021 47,004 6.1%
Phase III. Emergence of Private Sector Funds - 1993-96:

The permission given to private sector funds including foreign fund management companies
(most of them entering through joint ventures with Indian promoters) to enter the mutual fund
industry in 1993, provided a wide range of choice to investors and more competition in the
industry. Private funds introduced innovative products, investment techniques and investor-
servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004:

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after
the year 1996. The mobilisation of funds and the number of players operating in the industry
reached new heights as investors started showing more interest in mutual funds. Investors'
interests were safeguarded by SEBI and the Government offered tax benefits to the investors
in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI
that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted
all dividend incomes in the hands of investors from income tax. Various Investor Awareness
Programmes were launched during this phase, both by SEBI and AMFI, with an objective to
educate investors and make them informed about the mutual fund industry.
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In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status
as a trust formed by an Act of Parliament. The primary objective behind this was to bring all
mutual fund players on the same level.
UTI was re-organised into two parts:

1. The Specified Undertaking,
2. The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past
schemes (like US-64, Assured Return Schemes) are being gradually wound up. However,
UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant
growth in mobilisation of funds from investors and assets under management.
Table: 1.2. Mutual Funds Market (1999)

ASSETS UNDER MANAGEMENT (Rs. in Crores)
AS ON UTI PUBLIC PRIVATE TOTAL

SECTOR SECTOR
31/3/99 53,320 8,292 6,860 68,472
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Phase V. Growth and Consolidation - 2004 Onwards:
The industry has also witnessed several mergers and acquisitions recently, examples of which
are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual
Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international
mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc.
Fig.1.1
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1.1.3 MUTUAL FUND CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such
as equities, debentures and other securities. The income earned through these investments and
the capital appreciation realized (after deducting the expenses and profits of mutual fund
managers) is shared by its unit holders in proportion to the number of units owned by them.
Thus a Mutual Fund strives to meet the investment needs of the common man by offering
him or her opportunity to invest in a diversified, professionally managed basket of securities
at a relatively low cost. The small savings of all the investors are put together to increase the
buying power and hire a professional manager to invest and monitor the money. Anybody
with a surplus of as little as a few thousand rupees can invest in Mutual Funds.
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1.1.4 WORKING OF MUTUAL FUND
A Mutual Fund is a collection of stocks, bonds, or other securities owned by a group of

investors and managed by a professional investment company. For an individual investor to
have a diversified portfolio is difficult. But he can approach to such company and can invest
into shares. Mutual funds have become very popular since they make individual investors to
invest in equity and debt securities easy. When investors invest a particular amount in mutual
funds, he becomes the unit holder of corresponding units. In turn, mutual funds invest unit
holders money in stocks, bonds or other securities that earn interest or dividend. This money
is distributed to unit holders. If the fund gets money by selling some stocks at higher price the
unit holders also are liable to get capital gains.
Fig.1.2
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1.1.5 STRUCTURE OF MUTUAL FUNDS
The Mutual Funds in India are regulated by SEBI MF Regulations Act, 1996. Under the
regulations mutual fund is formed as a Public Trust under the Indian Trusts Act, 1882. These
regulations stipulate a three tiered structure of entities sponsor (creation), trustees, and
Asset Management Company (fund management) for carrying out different functions of a
mutual fund, but place the primary responsibility on the trustees.
1. The Fund Sponsor SEBI regulations define Sponsor as any person who either itself or
in association with another body corporate establishes a mutual fund. Sponsor sets up a
mutual fund to earn money by doing fund management through its subsidiary company
which acts as Investment manager of the fund. Largely, a sponsor can be compared with a
promoter of a company. Sponsors activities include setting up a Public Trust under Indian
Trust Act, 1882 (the mutual fund), appointing trustees to manage the trust with the
approval of SEBI, creating an Asset Management Company under Companies Act, 1956
(the Investment Manager) and getting the trust registered with SEBI.
Eligibility of Sponsor Mutual funds involve managing retail investors money and
hence, it becomes important to ensure that it is run by entities with capabilities and
professional merits. SEBI (Mutual fund) Regulations, 1996 specifies the following
eligibility criteria in this regard: (i) Sponsor is required to have financial services
business experience of at least 5 years and a positive Net worth in all the preceding
five years. (ii) Sponsors Net worth in the immediately preceding year is required to
be more than the capital contribution to AMC. (iii) Sponsor is required to be profit
making in at least three out of the last five years including the last year. (iv)Sponsor
must contribute at least 40% of the Net worth of the Asset Management Company.
Any entity, which contributes at least 40% to the Net worth of an AMC, is deemed
sponsor and therefore is required to fulfil all the requirements given in 1 to 4.
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2. Trustees The trust is created through a document called the trust deed which is
executed by the fund sponsor in favour of the trustees. Trustees manage the trust and are
responsible to the investors in the mutual funds. They are the primary guardians of the
unit-holders funds and assets. Trustees can be formed in either of the following two ways
-Board of Trustees, or a Trustee Company. The provisions of Indian Trust Act, 1882,
govern board of trustees or the Trustee Company. A trustee company is also subject to
provisions of Companies Act, 1956.
Obligations of trustees Trustees ensure that the activities of the mutual fund are in
accordance with SEBI (mutual fund) regulations, 1996. They check that the AMC has
proper systems and procedures in place. Trustees also make sure that all the other
fund constituents are appointed and that proper due diligence is exercised by the AMC
in the appointment of constituents and business associates. All schemes floated by the
AMC have to be approved by the trustees. Trustees review and ensure that the net
worth of the AMC is as per the regulatory norms. They furnish to SEBI, on a half-
yearly basis, a report on the activities of AMC.
Regulation regarding appointment of trustees Sponsor with prior approval of

SEBI appoints trustees. There should be at least four members in the board of trustees
with at least 2/3rd independent. A trustee of one mutual fund cannot be trustee of
another mutual fund, unless he is an independent trustee in both cases and has the
approval of both the boards. The trustees are appointed by executing and registering a
trust deed under the provisions of Indian registration Act. This trust deed is also
registered with SEBI.
Responsibilities of trustees The Trustees are required to fulfill several duties and
obligations in accordance with SEBI (Mutual Funds) Regulations, 1996 and the Trust
Deed constituting the Mutual Fund. These include 1. The Trustee and the Asset
Management Company enter into an Investment Management Agreement (IMA) with
the approval from SEBI. 2. The Investment Management Agreement shall contain
such clauses as are mentioned in the Fourth Schedule of the SEBI (MFs) Regulations,
1996 and other such clauses as are necessary for making investments. 3. The Trustees
shall have a right to obtain from the Asset Management Company such information as
is considered necessary by the Trustees. 4.
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The Trustee shall ensure before the launch of any scheme that the Asset Management
Company possesses/has done the following: a. Systems in place for its back office,
dealing room and accounting; b. Appointed all key personnel including fund manager(s)
for the Scheme(s) and submitted their bio-data which shall contain the educational
qualifications, past experience in the securities market to SEBI, within 15 days of their
appointment; c. Appointed Auditors to audit its accounts; d. Appointed a Compliance
Officer to comply with regulatory requirement and to redress investor grievances; e.
Appointed Registrars and laid down parameters for their supervision; f. Prepared a
compliance manual and designed internal control mechanisms including internal audit
systems; and g. Specified norms for empanelment of brokers and marketing agents
3. Asset Management Company The Asset Management Company (AMC) is the

investment Manager of the Trust. The sponsor, or the trustees is so authorized by the trust
deed, appoints the AMC as the Investment Manager of the trust (Mutual Fund) via an
agreement called as Investment Management Agreement. An asset management
company is a company registered under the Companies Act, 1956. Sponsor creates the
asset management company and this is the entity, which manages the funds of the mutual
fund (trust). The mutual fund pays a small fee to the AMC for management of its fund.
The AMC acts under the supervision of Trustees and is subject to the regulations of SEBI
too.
Role of AMC The AMC is an operational arm of the mutual fund .AMC is
responsible for all carrying out all functions related to management of the assets of the
trust. The AMC structures various schemes, launches the scheme and mobilizes initial
amount, manages the funds and give services to the investors .In fact, AMC is the first
major constituent appointed .Later on AMC solicits the services of other constituents
like Registrar, Bankers, Brokers, Auditors, Lawyers etc and works in close co-
ordination with them.
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Restrictions on business activities of the Asset ManagementCompany In India,
regulator has ensured that an AMC focuses just on its core business and that the
activities of AMCs are not in conflict of each other. These are ensured through the
following restrictions on the business activities of an AMC. a. An AMC shall not
undertake any business activity except in the nature of portfolio management services,
management and advisory services to offshore funds etc, provided these activities are
not in conflict with the activities of the mutual fund. b. An AMC cannot invest in any
of its own schemes unless full disclosure of its intention to invest has been made in
the offer document c. An AMC shall not act as a trustee of any mutual fund
4. Custodian Though the securities are bought and held in the name of trustees, they are
not kept with them. The responsibility of safe keeping the securities is on the custodian.
Securities, which are in material form, are kept in safe custody of a custodian and
securities, which are in De-Materialized form, are kept with a Depository participant,
who acts on the advice of custodian. Custodian performs a very important back office
operation. They ensure that delivery has been taken of the securities, which are bought,
and that they are transferred in the name of the mutual fund. They also ensure that funds
are paid out when securities are bought. Custodians keep the investment account of the
mutual fund. They collect and account for the dividends and interest receivables on
mutual fund investments. They also keep track of various corporate actions like bonus
issue, rights issue, and stock split; buy back offers, open offer etc and act on these as per
instructions of the Investment manager. 3.4.1. Responsibility of custodian Following are
the responsibilities of a custodian: (i) Provide post-trading and custodial services to the
Mutual Fund; (ii) Keep securities and other instruments belonging to the Scheme in safe
custody; (iii) Ensure smooth inflow/outflow of securities and such other instruments as
and when necessary, in the best interests of the unit holders; (iv) Ensure that the benefits
due to the holdings of the Mutual Fund are recovered; and (v) Be responsible for loss of
or damage to the securities due to negligence on its part or on the part of its approved
agents. The Custodian normally charge portfolio fee, transaction fee and out-of -pocket
expenses in accordance with the terms of the Custody Agreement and as per any
modification made thereof from time to time.
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5. Other constituents Regulation imposes responsibility on the trustees to ensure that the
AMC has proper system and procedures in place and has appointed key personnel and
other constituents like R&T agents, brokers etc.
Registrar and transfer agent A mutual fund manages money of many unit-holders
across cities and towns of the country. Investor servicing not only becomes important
but challenging as well. This would typically include processing investors
application, recording the details of investors, sending them account statements and
other reports on periodical basis, processing dividend payouts, making changes in
investor details and keeping investor records updated by adding details of new
investors and by removing details of investors who withdraw their funds from the
mutual funds. It is very impractical and expensive for any mutual fund to have
adequate workforce all over India for this purpose. Instead, they use entities called as
Registrars and transfer agents, which generally provide services to many mutual
funds. This ensures quality services across all location and keeps the costs lower for
the unit-holders.
Auditor Investor money is held by the trustees in trust. Regulation has ensured
proper accounting norms to ensure fair and responsible record keeping of investors
money. Separate books of account are maintained for each scheme of the mutual fund
and individual annual report is prepared. The books of accounts and the annual reports
of the scheme are audited by auditors. The AMC is a company under companies act,
1956 and therefore is required to get its accounts audited as per the provisions of the
companies act. In order to maintain high standards of integrity and transparency
regulations stipulate that the auditor of the mutual fund schemes and the auditor of the
AMC will have to be different.
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Brokers Brokers are registered members of the stock exchange whose services are
utilized by AMCs to buy and sells securities on the stock exchanges. Many brokers
also provide the Investment Manager (AMC) with research reports on the
performance of various companies, sector and market outlook, investment
recommendations etc. Regulations have imposes restrictions on the involvement of
brokers in the investment process of any mutual fund in the following ways- a. If a
broker is related to the sponsor or its associate, then the AMC shall not purchase or
sell securities through that broker in excess of 5% of the aggregate of purchase and
sale of securities made by the mutual fund in all its schemes. b. For transactions
through any other broker the AMC can exceed the limit of 5% provided it has
recorded justification in writing and report of such exceeding has been sent to the
trustee on a quarterly basis
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1.1.6 REGULATION
Securities and Exchange Board of India (SEBI) is the primary regulator of mutual funds in
India. SEBI is also apex regulator of capital markets. Issuance and trading of capital market
instruments and the regulation of capital market intermediaries is under the purview of SEBI.
Apart from SEBI, mutual funds follow the regulations of other regulators in limited manner.
RBI RBI acts as regulator of sponsors of bank-sponsored mutual funds, especially

in case of funds offering guaranteed/assured returns. No mutual fund is allowed to
bring out a guaranteed returns scheme without taking approval from RBI
Companies Act, 1956 Asset Management Company and Trustee Company will be
subject to the provisions of the Companies Act, 1956.
Stock Exchange Closed-end funds might list their units on a stock exchange. In
such a case, the listings are subject to the listing regulation of stock exchanges.
Mutual funds have to sign the listing agreement and abide by its provisions, which
primarily deal with periodic notifications and disclosure of information that may
impact the trading of listed units.
Indian Trusts Act, 1882 Recall that mutual funds are formed and registered as a
public trusts under the Indian trusts Act, 1882. Hence, they have to follow the
provisions of the Indian Trusts Act, 1882.
Ministry of Finance (MoF) The finance ministry is the supervisor of both the RBI
and SEBI. The MoF is also the appellate authority under SEBI regulations. Aggrieved
parties can make appeals to the MoF on the SEBI rulings relating to mutual funds.
27
1.1.7 TYPES OF MUTUAL FUNDS
The mutual fund industry of India is continuously evolving. Along the way, several industry
bodies are also investing towards investor education. Yet, according to a report by Boston
Analytics, less than 10% of our households consider mutual funds as an investment avenue. It
is still considered as a high-risk option. In fact, a basic inquiry about the types of mutual
funds reveals that these are perhaps one of the most flexible, comprehensive and hassle free
modes of investments that can accommodate various types of investor needs.
Various types of mutual funds categories are designed to allow investors to choose a scheme
based on the risk they are willing to take, the investable amount, their goals, the investment
term, etc.
Fig:1.3
28
Some important mutual fund schemes under the following three categories based on
maturity period of investment:
Open-Ended - This scheme allows investors to buy or sell units at any point in time. This
does not have a fixed maturity date.
Debt/ Income - In a debt/income scheme, a major part of the investable fund are
channelized towards debentures, government securities, and other debt instruments.
Although capital appreciation is low (compared to the equity mutual funds), this is a
relatively low risk-low return investment avenue which is ideal for investors seeing a
steady income.
Money Market/ Liquid - This is ideal for investors looking to utilize their surplus
funds in short term instruments while awaiting better options. These schemes invest in
short-term debt instruments and seek to provide reasonable returns for the investors.
Equity/ Growth - Equities are a popular mutual fund category amongst retail
investors. Although it could be a high-risk investment in the short term, investors can
expect capital appreciation in the long run. If you are at your prime earning stage and
looking for long-term benefits, growth schemes could be an ideal investment.
Index Scheme - Index schemes is a widely popular concept in the west. These follow
a passive investment strategy where your investments replicate the movements of
benchmark indices like Nifty, Sensex, etc.
Sectoral Scheme - Sectoral funds are invested in a specific sector like infrastructure,
IT, pharmaceuticals, etc. or segments of the capital market like large caps, mid caps,
etc. This scheme provides a relatively high risk-high return opportunity within the
equity space.
Tax Saving - As the name suggests, this scheme offers tax benefits to its investors.
The funds are invested in equities thereby offering long-term growth opportunities.
Tax saving mutual funds (called Equity Linked Savings Schemes) has a 3-year lock-in
period.
29
Balanced - This scheme allows investors to enjoy growth and income at regular
intervals. Funds are invested in both equities and fixed income securities; the
proportion is pre-determined and disclosed in the scheme related offer document.
These are ideal for the cautiously aggressive investors.
Closed-Ended - In India, this type of scheme has a stipulated maturity period and investors
can invest only during the initial launch period known as the NFO (New Fund Offer) period.
Capital Protection - The primary objective of this scheme is to safeguard the principal
amount while trying to deliver reasonable returns. These invest in high-quality fixed
income securities with marginal exposure to equities and mature along with the maturity
period of the scheme.
Fixed Maturity Plans (FMPs) - FMPs, as the name suggests, are mutual fund schemes
with a defined maturity period. These schemes normally comprise of debt instruments
which mature in line with the maturity of the scheme, thereby earning through the interest
component (also called coupons) of the securities in the portfolio. FMPs are normally
passively managed, i.e. there is no active trading of debt instruments in the portfolio. The
expenses which are charged to the scheme are hence, generally lower than actively
managed schemes.
Interval - Operating as a combination of open and closed ended schemes, it allows investors
to trade units at pre-defined intervals.
Table: 1.3 Asset Under Management and Folios -Category wise - aggregate - as on
September 30, 2015
Investor No of % to
Types of Schemes AUM (Rs. Cr) % to Total
Classification Folios Total
Liquid/Money
Corporates 148988.63 83.46 27186 8.05
Market
Banks/FIs 7700.6 4.31 758 0.22
FIIs 541.25 0.3 48 0.01
High Networth
18866.28 10.57 57461 17.01
Individuals*
30
Retail 2409.51 1.35 252429 74.71
Total 178506.28 100.00 337882 100.00
Gilt Corporates 10935.4 62.63 4722 6.91
Banks/FIs 184.66 1.06 74 0.11
FIIs 518.72 2.97 13 0.02
High Networth
5289.4 30.3 9586 14.03
Individuals*
Retail 531.35 3.04 53907 78.92
Total 17459.53 100.00 68302 100.00
Debt Oriented Corporates 320424.13 58.15 109503 1.53
Banks/FIs 9173.72 1.66 1427 0.02
FIIs 8510.81 1.54 58 0
High Networth
174958.25 31.75 640744 8.98
Individuals*
Retail 37977.48 6.89 6384547 89.47
Total 551044.39 100.00 7136279 100.00
Equity Oriented Corporates 57659.92 14.92 235911 0.7
Banks/FIs 1838.9 0.48 849 0
FIIs 4521.54 1.17 102 0
High Networth
123721.45 32.01 807784 2.39
Individuals*
Retail 198774.48 51.43 32796335 96.91
Total 386516.28 100.00 33840981 100.00
Balanced Corporates 6491.08 17.72 21474 0.97
Banks/FIs 235.49 0.64 85 0
FIIs 35.23 0.1 2 0
High Networth
16820.04 45.91 98760 4.45
Individuals*
Retail 13051.16 35.63 2099348 94.58
Total 36632.99 100.00 2219669 100.00
Gold ETF Corporates 3057.4 49.19 3314 0.73
Banks/FIs 2.73 0.04 6 0
FIIs 2.9 0.05 4 0
High Networth
1019.72 16.41 7216 1.59
Individuals*
Retail 2132.46 34.31 442019 97.67
Total 6215.22 100.00 452559 100.00
ETFs(other than
Corporates 5311.13 59.54 6415 2.54
Gold)
Banks/FIs 1819.35 20.4 31 0.01
FIIs 153.93 1.73 22 0.01
High Networth
947.9 10.63 4060 1.61
Individuals*
Retail 688.05 7.71 241883 95.83
Total 8920.35 100.00 252411 100.00
Fund of Funds
Corporates 399.19 19.79 1020 0.75
investing Overseas
Banks/FIs 0.01 0 1 0
FIIs 0 0 0 0
High Networth 1113.79 55.21 7646 5.64
31
Individuals*
Retail 504.21 25 126937 93.61
Total 2017.2 100.00 135604 100.00
Grand Total 1187312.24 44443687
32
1.1.8 THINGS TO CONSIDER WHILE INVESTING IN MUTUAL
FUNDS
Don't just look at the NAV, also look at the risk:

Alliance Buy India and Alliance Equity both have 3 stars. That does mean their NAV is
identical. In fact, the NAV of Alliance Equity is 91.66 while that of Buy India is 16.05.
However, Alliance Buy India took an average risk and delivered an average return, while
Alliance Equity took an above average risk to get the above average returns. Hence their stars
are identical, despite one having a higher NAV.
NAV = Total market value of assets, or securities in the portfolio, of the fund - Liabilities
Number of funds units (shares) outstanding
Higher rating does not mean better returns:

A fund with more stars does not indicate a higher return when compared with the rest. All it
means is that you will get a good return without putting your money at too much risk.
Birla Equity Plan has a 4-star rating while Alliance Tax Relief '96 has a 2-star rating.
However, the fund with the 2-star rating has a higher NAV (131.96) than the one with the 4-
star rating (39.37).
Higher rating does not mean more risk:

Birla Advantage has an NAV of 67.09 while Franklin India Prima has an NAV of 122.92. This
does not necessarily mean that Franklin India Prima is offering a higher risk since the return
is higher. In fact, according to our ratings, Franklin India Prima is a 5-star fund while (risk is
below average) while Birla Advantage is a 2-star fund (risk is above average).
On a final note:
When you decide to invest in a mutual fund, you must look at risk and return.
Always ask yourself one question: What are the chances of my losing money?
Do not get misled by high returns. You could also end up losing a substantial part of your
savings.
33
Costs involved in Mutual Funds
Mutual funds expenses are the charges levied by the Fund Houses and incurred by the
investors who hold mutual fund schemes. Before investing in mutual funds, it is very vital on
the part of the investors to know about these expenses as they can substantially reduce an
investor's earnings.
Expenses that mutual funds charge to investors

Asset management companies (AMCs) manage the assets of the mutual funds and take the
investment decisions. AMCs charge investors for professional fund management and regular
operational costs which include investment management and advisory fees, sales/agent
commissions and ongoing service fees, legal and audit fees, registrar and transfer agent fees,
fund administration expenses, and marketing and selling expenses.
All these expenses charged to an investor are together called the 'Total Expense Ratio' (TER);
it is an annual charge on AUM in percentage terms. According to the Securities and Exchange
Board of India's (SEBI's) guidelines, TER needs to be lower as AUM increases. The net asset
value (NAV) of a mutual fund scheme is net of all liabilities including TER, and hence a
lower TER results in higher returns and vice versa. In a recent circular, SEBI has included
service tax under 'cost to investors' (earlier paid by AMCs).
Recent changes introduced by SEBI under TER

SEBI has recently come out with a circular that AMCs would be allowed to charge an
additional 30 bps of TER on the condition that the new inflows from beyond top 15 cities are
at least 30% of gross new inflows in the scheme or 15% of the scheme's AUM (year-to-date),
whichever is higher. In other words, TER may go up to 2.8% instead of 2.5% for equity
schemes. However, the additional TER will be clawed back if inflows from beyond top 15
cities are redeemed within a period of one year from the date of investment. The circular also
stated that mutual funds shall annually set apart at least 2 bps on daily net assets within
maximum limit of TER for investor education / awareness initiatives
34
Total Expense Ratio
Total Expense Ratio (TER) is calculated as follows, TER = (Total expenses during an
accounting period) * 100 / Total net assets of the fund.
Mutual fund loads

Loads are one time charges which are levied either at the time of investing in or at the time of
exiting a mutual fund scheme. These are over and above the TER.
Entry load: It is a front-end charge deducted from the NAV at the time of investing
in a mutual fund scheme. SEBI abolished entry loads in August 2009. These charges
were as high as 2.25% for equity funds prior to the abolition.
Transaction charge: Starting August 2011, SEBI has allowed AMCs to collect a
nominal amount as a one-time transaction fee. It ruled that for a first time investor,
AMCs can collect Rs 150 as a fee if the investment is more than Rs 10000 while the
fee for an existing investor would be Rs.100; no fee can be charged for any amount
less than Rs.10000. In the case of Systematic Investment Plans (SIPs), where the total
commitment towards the SIP is more than Rs. 10000, a transaction charge of Rs. 100
will be levied payable in four equal installments starting from the second to the fifth
installment.
Exit Load: It is a charge levied when an investor redeems / sells his units in a short
span of time since he made the investment. Mutual funds charge exit loads to deter
investors from leaving mutual fund schemes before holding them for a sufficient
period. Various categories charge exit loads depending on pre-defined holding period
cutoffs. For instance, in a liquid fund, most schemes do not charge an exit load as
investors invest in these funds for a shorter duration. For most other categories, the
exit load ranges between 1-3% depending on the exit time frame specified by the
fund.
35
Other costs that need to be borne by mutual fund investors
There are also some indirect costs which an investor has to bear throughout the investment
tenure. For instance, in exchange traded funds (ETFs), an investor has to pay for opening a
demat account, for maintenance of the account, and brokerage charges. Mutual funds are
required to pay a security transaction tax while buying and selling stocks, which is ultimately
borne by investors.
Mutual funds structure for expense ratio

Investors should note that different funds have different expense ratios.
Passively managed funds like index funds or exchange traded funds (ETFs) have lower
expense ratio than actively managed funds. This is because passively managed funds track
the underlying index and do not require a fund manager to take active investment calls. SEBI
recently asked mutual funds to launch schemes under a single plan and ensure that all new
investors are subject to a single expense structure. Currently, TER varies according to the
investment amount (which depends on the plan - retail, institutional and super-institutional).
SEBI also asked mutual funds to provide a separate plan for direct investments (investments
not routed through a distributor) in existing as well as new schemes. These separate plans
shall have a lower expense ratio excluding distribution expenses and commission, and no
commission shall be paid from such plans.
Costs affect returns on mutual fund

Lower costs reflect the operational efficiency of a mutual fund house. All other factors
remaining the same, an investor should ideally invest in a scheme which charges a lower TER
compared to peers as higher expenses reduce returns of the fund.
36
1.1.9 EMERGING ISSUES OF THE MUTUAL FUND INDUSTRY IN
INDIA
By end of JUNE 2010, Indian mutual fund industry reached more than Rs. 6,40,000 crore.
The number of foreign AMC's is in the queue to enter the Indian markets.
Our saving rate is over 23%, highest in the world. Only channelizing these savings in mutual
funds sector is required.
We have over 1000 mutual funds schemes which are much less than US having more than
8000. There is a big scope for expansion.
'B' and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating
on the 'A' class cities. Soon they will find scope in the growing cities.
Mutual fund can penetrate rural like the Indian insurance industry with simple and limited
products.
SEBI allowing the MF's to launch commodity mutual funds.
Emphasis on better corporate governance.
Trying to curb the late trading practices.
1.1.10 CURRENT SCENARIO
37
The Indian Mutual fund industry has witnessed considerable growth since its inception in
1963. The Indian mutual fund industry's month-end assets rose by around 8% or Rs 47,700 cr
to Rs 6.59 lakh cr in January 2012 primarily due to inflows in money market funds and mark-
to-market gains in equity funds.
The impressive growth in the Indian Mutual fund industry in recent years can largely be
attributed to various factors such as rising household savings, comprehensive regulatory
framework, favourable tax policies, introduction of several new products, investor education
campaign and role of distributors.
Among major losers, income funds (including Ultra short-term debt funds) saw outflows of
Rs 2,900 cr in January, the third consecutive month of outflows for the category.
In the secondary equity market, Mutual funds sold equities worth Rs 1,900 cr in January
against buying of Rs 580 cr in December while on the debt front, they were net buyers to the
tune of Rs 13,242 cr in January compared to net buying of Rs 50,979 cr in the previous
month.
Among major regulatory developments, SEBI decided to have mark-to-market valuation in
debt schemes of mutual funds where the balance period is 60 days or more as compared to
the earlier requirement of valuation for 91 days and beyond.
SEBI also decided to liberalise the advertisement code for asset management companies.
SEBI planned to allow mutual funds and insurance firms to subscribe to preferential issues of
companies even if they have traded the shares of the issuing corporates in the past six
months, to boost liquidity in the market and make it easier for firms to raise funds.
Mutual fund houses adopted a common know-your-customer application form from January
1, 2012.
There are currently (1 November 2015) 44 Asset Management Companies in India.
1.1.11 AN OVERVIEW OF THE MUTUAL FUND COMPANIES
UTI Asset Management Company Ltd.

UTI Mutual Fund has a track record of managing a variety of schemes catering to the needs
of every class of citizens. It has a nationwide network consisting 149 UTI Financial Centres
(UFCs) and UTI International offices in London, Dubai and Singapore.
38
UTIAMC has a well-qualified, professional fund management team, which has been fully
empowered to manage funds with greater efficiency and accountability in the sole interest of
the unit holders.
SBI Funds Management Ltd.

SBI Funds Management has emerged as one of the largest player in India advising various
financial institutions, pension funds, and local and international asset management
companies.
SBI Funds Management has been successfully managing and advising India's dedicated
offshore funds since 1988. SBI Funds Management was the 1st bank sponsored asset
management company fund to launch an offshore fund called 'SBI Resurgent India
Opportunities Fund' with an objective to provide their investors with opportunities for long-
term growth in capital, through well-researched investments in a diversified basket of stocks
of Indian Companies.
L&T Investment Management Ltd.

L&T - one of the most widely-held listed companies with an uninterrupted dividend paying
record since 1946 - is both a household name in the country and a global infrastructure giant.
It is one of the largest and most respected companies in India's private sector and is among
the top 20 companies in India based on market capitalisation.
JPMorgan Asset Management (I) Pvt. Ltd.

J.P. Morgan Asset Management is a global asset management leader providing world-class
investment solutions to clients. With about US$1.7 trillion in assets under management (the
Asset Management client funds of J.P. Morgan Chase & Co. as at 31 December 2014) and
offices in 38 countries around the world, J.P. Morgan Asset Management offers global
coverage with a strong local market presence, and leadership positions in most asset classes.
39
Franklin Templeton Asset Management India Private Ltd.
Franklin Templeton Investments, global investment management major, started their India
operations in 1996 as Templeton Asset Management India Pvt. Limited. It flagged off the
mutual fund business with the launch of Templeton India Growth Fund in September 1996.
Over the years, Franklin Templeton has emerged as one of the largest and renowned mutual
funds in the country.
Birla Sun Life Asset Management Company Ltd.

Birla Sunlife Mutual Fund is one of India's leading mutual funds. Birla Sun Life Asset
Management Company Limited, the investment manager of Birla Sunlife Mutual Fund, is a
joint venture between the Aditya Birla Group and Sun Life Financial Services, leading
international financial services organization.
HDFC Asset Management Company Ltd.

HDFC formed this Mutual fund company with Standard Life Investments and holds approx.
60% of its shares. It manages 44 schemes comprising debt, equity, exchange traded fund and
fund of fund schemes.[4] Average assets under management (AUM) as at the end of
September 2013 were INR 1.07 trillion.[4] It is ranked first in the industry in India on the
basis of Average Assets under management.
1.2 OVERVIEW OF CAPITAL MARKET
Capital market is one of the types of financial market in which we can invest money as well
as raise money for a period of more than one year. Both the stock and bond markets are a part
of the capital markets. Any government or corporation requires capital (funds) to finance its
operations and to engage in its own long-term investments. Thus, both the primary and
40
secondary markets for stocks and bonds make up the capital markets. The capital markets are
extensively regulated in India, this regulator is the Securities and Exchange Board of India
(SEBI).
Both the stock and bond markets are a part of the capital markets. Any government or
corporation requires capital (funds) to finance its operations and to engage in its own long-
term investments. To acquire these funds, a company raises money through the sale of
securities - stocks and bonds in the company's name. For example, when a company conducts
an initial public offering (IPO), it is tapping the investing public for capital and is therefore
using the capital markets. When a country's government issues Treasury bonds in the bond
market to fund its spending initiatives, it is also using the capital markets.
When companies and governments sell securities, they do so in the primary market. When
investors trade these securities on exchanges and over the counter, it's called the secondary
market. Thus, both the primary and secondary markets for stocks and bonds make up the
capital markets. The capital markets are extensively regulated in India, this regulator is the
Securities and Exchange Board of India (SEBI).
NIFTY
Nifty is a major stock index in India introduced by the National stock exchange. The CNX
Nifty, also called the Nifty 50 or simply the Nifty, is National Stock Exchange of India's
benchmark stock market index for Indian equity market. Nifty is owned and managed by
India Index Services and Products Limited (IISL), which is a wholly owned subsidiary of the
NSE Strategic Investment Corporation Limited. IISL had a marketing and licensing
41
agreement with Standard & Poor's for co-branding equity indices until 2013. The 'CNX' in
the name stands for 'CRISIL NSE Index'.
NIFTY was coined from the two words National and FIFTY. The word fifty is used
because; the index consists of 50 actively traded stocks from various sectors.
So the nifty index is a bit broader than the Sensex which is constructed using 30 actively
traded stocks in the BSE.
Nifty is calculated using the same methodology adopted by the BSE in calculating the Sensex
but with three differences. They are:
The base year is taken as 1995
The base value is set to 1000
Nifty is calculated on 50 stocks actively traded in the NSE
50 top stocks are selected from 24 sectors.
42
1.2.1 HISTORY OF INDIAN CAPITAL MARKETS
The history of the Indian capital markets and the stock market, in particular can be traced
back to 1861 when the American Civil War began. The opening of the Suez Canal during the
1860s led to a tremendous increase in exports to the United Kingdom and United States.
Several companies were formed during this period and many banks came to the fore to
handle the finances relating to these trades. With many of these registered under the British
Companies Act, the Stock Exchange, Mumbai, came into existence in 1875.
It was an unincorporated body of stockbrokers, which started doing business in the city under
a banyan tree. Business was essentially confined to company owners and brokers, with very
little interest evinced by the general public. There had been much fluctuation in the stock
market on account of the American war and the battles in Europe. Sir Premchand Roychand
remained a kingpin for many years.
Sir Phiroze Jeejeebhoy was another who dominated the stock market scene from 1946 to
1980. His word was law and he had a great deal of influence over both brokers and the
government. He was a good regulator and many crises were averted due to his wisdom and
practicality. The BSE building, icon of the Indian capital markets, is called P.J. Tower in his
memory. The planning process started in India in 1951, with importance being given to the
formation of institutions and markets TheSecurities Contract Regulation Act 1956 became the
parent regulation after the Indian Contract Act 1872, a basic law to be followed by security
markets in India. To regulate the issue of share prices, the Controller of Capital Issues Act
(CCI) was passed in1947.
The stock markets have had many turbulent times in the last 140 years of their existence. The
imposition of wealth and expenditure tax in 1957 by Mr. T.T. Krishnamachari, the then
finance minister, led to a huge fall in the markets.
The dividend freeze and tax on bonus issues in 1958-59 also had a negative impact. War with
China in 1962 was another memorably bad year, with the resultant shortages increasing
prices all round. This led to a ban on forward trading in commodity markets in 1966, which
was again a very bad period, together with the introduction of the Gold Control Act in 1963.
43
The markets have witnessed several golden times too. Retail investors began participating in
the stock markets in a small way with the dilution of the FERA in 1978. Multinational
companies, with operations in India, were forced to reduce foreign share holdings to below a
certain percentage, which led to a compulsory sale of shares or issuance of fresh stock. Indian
investors, who applied for these shares, encountered a real lottery because those were the
days when the CCI decided the price at which the shares could be issued. There was no free
pricing and their formula was very conservative.
The next big boom and mass participation by retail investors happened in 1980, with the
entry of Mr. Dhirubhai Ambani. Dhirubhai can be said to be the father of modern capital
markets. The Reliance public issue and subsequent issues on various Reliance companies
generated huge interest. The general public was so unfamiliar with share certificates that
Dhirubhai is rumoured to have distributed them to educate people. Mr. V.P. Singhs fiscal
budget in 1984 was path breaking for it started the era of liberalization. The removal of estate
duty and reduction of taxes led to a swell in the new issue market and there was a deluge of
companies in 1985. Mr. Manmohan Singh as Finance Minister came with a reform agenda in
1991 and this led to a resurgence of interest in the capital markets, only to be punctured by
the Harshad Mehta scam in 1992.
The mid-1990s saw a rise in leasing company shares, and hundreds of companies, mainly
listed in Gujarat, and got listed in the BSE. The end-1990s saw the emergence of Ketan
Parekh and the information, communication and entertainment companies came into the
limelight. This period also coincided with the dotcom bubble in the US, with software
companies being the most favoured stocks.
There was a meltdown in software stock in early 2000. Mr. P Chidambaram continued the
liberalization and reform process, opening up of the companies, lifting taxes on long-term
gains and introducing short-term turnover tax. The markets have recovered since then and we
have witnessed a sustained rally that has taken the index over 13000.
44
Several systemic changes have taken place during the short history of modern capital
markets. The setting up of the Securities and Exchange Board (SEBI) in 1992 was a landmark
development. It got its act together, obtained the requisite powers and became effective in
early 2000. The setting up of the National Stock Exchange in 1984, the introduction of online
trading in1995, the establishment of the depository in 1996, trade guarantee funds and
derivatives trading in 2000, have made the markets safer. The introduction of the Fraudulent
Trade Practices Act, Prevention of Insider Trading Act, Takeover Code and Corporate
Governance Norms, are major developments in the capital markets over the last few years
that has made the markets attractive to foreign institutional investors.
This history shows us that retail investors are yet to play a substantial role in the market as
long-term investors. Retail participation in India is very limited considering the overall
savings of households. Investors who hold shares in limited companies and mutual fund units
are about 20-30 million. Those who participated in secondary markets are 2-3 million. Capital
markets will change completely if they grow beyond the cities and stock exchange centers
reach the Indian villages. Both SEBI and retail participants should be active in spreading
market wisdom and empowering investors in planning their finances and understanding the
markets.
45
1.2.2 TYPES OF CAPITAL MARKET
Both the primary market and secondary market are two types of capital market depending on
the issuance of securities.
Primary Market
The primary markets deal with the trading of newly issued securities. The corporations,
governments and companies issue securities like stocks and bonds when they need to raise
capital. The investors can purchase the stocks or bonds issued by the companies.
Money thus earned from the selling of securities goes directly to the issuing company. The
primary markets are also called New Issue Market (NIM). Initial Public Offering is a typical
method of issuing security in the primary market. The functioning of the primary market is
crucial for both the capital market and economy as it is the place where the capital formation
takes place.
Secondary Market
The secondary market is that part of the capital market that deals with the securities that are
already issued in the primary market.
The investors who purchase the newly issued securities in the primary market sell them in the
secondary market. The secondary market needs to be transparent and highly liquid in nature
as it deals with the already issued securities. In the secondary market, the value of a particular
stock also varies from that of the face value. The resale value of the securities in the
secondary market is dependant on the fluctuating interest rates.
46
CHAPTER II: RESEARCH METHODOLOGY
Research is a process of steps used to collect and analyze information to increase our
understanding of a topic or issue. The goal of the research process is to produce new
knowledge or deepen understanding of a topic or issue.
2.1 OBJECTIVES OF THE STUDY
The specific objectives are as follows:
To study the association between CNX Nifty and large cap equity diversified mutual funds.
To study the impact of returns of CNX Nifty on large cap equity diversified mutual funds.
2.2 HYPOTHESIS
Null Hypothesis (H0): There is no impact of CNX Nifty on large cap equity diversified
mutual funds.
Alternative Hypothesis (HA): There is impact of CNX Nifty on large cap equity diversified
mutual funds.
2.3 SCOPE OF THE STUDY

47
The scope of a subject refers to everything that is studied as part of that subject.
This study focuses on the returns of Nifty and five selected large cap equity diversified
mutual funds. The funds are:
1. Franklin India Bluechip Fund
2. L&T India Large Cap Fund
3. JP Morgan India Equity Fund
4. UTI Top 100 Fund
5. HDFC Top 200 Fund
These particular funds are selected because these funds have equity diversified securities that
is, the funds are growth funds & the composition contains only large cap securities.
The details about these funds are mentioned in the Analysis part.
The study also includes the returns of Nifty which are compared with the returns of mutual
funds.
All the returns are quarterly over a period of 4 years from 2011 to first two quarters of 2015.
48
2.4 METHODOLOGY
2.4.1 TYPE OF RESEARCH

The type of research is DESCRIPTIVE.
Descriptive research is used to describe characteristics of a population or phenomenon being
studied. It does not answer questions about how/when/why the characteristics occurred.
Rather it addresses the "what" question (what are the characteristics of the population or
situation being studied?). The characteristics used to describe the situation or population are
usually some kind of categorical scheme also known as descriptive categories.
2.4.2 RESESARCH DESIGN

The research design refers to the overall strategy that you choose to integrate the different
components of the study in a coherent and logical way, thereby, ensuring you will effectively
address the research problem; it constitutes the blueprint for the collection, measurement, and
analysis of data.
2.4.3 SOURCES OF DATA COLLECTION

In this research, the data used is:
Secondary Data
49
2.4.4 TOOLS OF ANALYSIS
Various tools used in the analysis of returns of large cap equity diversified mutual funds and
Nifty are:
Correlation is used to find the degree of relationship and strength between the returns of
Nifty and growth type mutual funds.
Regression analysis attempts to establish the nature of relationship between variables- that
is, to study the functional relationship between the variables & thereby provides a mechanism
between for prediction, or forecasting.
A mathematical equation that allows to predict value of one variable from known
values of one or more other variables is called a regression equation.
The variable whose value is to be predicted is called the dependent variable or
explained variable.
The variables which are used to predict the values of a dependent variable are called
independent variables or explanatory variables.
CHAPTER III: FINDINGS AND ANALYSIS
1) L&T India Large Cap Fund
It is a mutual fund under the L&T Investment Management Limited. It is an open ended
large cap equity fund launched on September, 2007.
50
Its Net Assets are Rs 381.3 crore as on August 31, 2015 and NAV Rs 19.67 as on September
4, 2015.
Table: 3.1
Composition & Characteristics
Equity (%) 97.39

Debt (%) 0.13
Cash (%) 2.48
Total stocks 49
Average Market Cap 68675
(Rs. Cr)
Table: 3.2
Quarterly Returns
Year Quarters Nifty Nifty L&T India
Index
Return (%) Large Cap Fund
Return (%)
2011 1 5833.75 -5.26 -4.32
2 5647.4 -3.07 -2.38
3 4943.25 -12.15 -8.12
4 4624.3 -4.64 -8.15
2012 1 5295.55 11.30 13.16
2 5278.9 -0.73 -1.46
3 5703.3 8.05 7.75
4 5905.1 3.26 2.87
2013 1 5682.55 -5.18 -5.15
2 5842.2 2.42 2.65
51
3 5735.3 -2.77 0.61
4 6304 9.06 9.68
2014 1 6704.2 7.76 6.1
2 7611.35 13.25 18.94
3 7964.8 4.32 5.98
4 8282.7 4.24 8.1
2015 1 8491 1.14 5.22
2 8368.5 -2.54 -1.01
Fig. 3.1
Interpretation: This figure shows that the returns on L&T India Large Cap Fund was above
the return on the Nifty index in 12 of the past 18 quarters from 2011 to 2015. It means the
performance of the actively managed mutual fund shows pleasing results than that of the
Nifty index.
52
Correlation between returns of Nifty & L&T India Large Cap Fund
Table: 3.3
L&T India Large Cap Fund Nifty 50
L&T India Large Cap Fund 1
Nifty 50 0.949408 1
Fig. 3.2
53
Interpretation: The correlation coefficient (r) between returns of Nifty & L&T India Large
Cap Fund is 0.9494 which shows positive, direct & high degree of correlation. It means Nifty
and L&T India Large Cap Fund move in same direction and also have strong relationship.
Regression Analysis
Table: 3.4
Coefficients Standard Error t Stat P-value
Intercept 1.167584 0.57499 2.030615 0.059256
Nifty 50 1.034908 0.085582 12.09263 1.84E-09
Interpretation: Regression equation,

Y = a + bX
Y = 1.16 + 1.03X
Where X = Nifty index and
Y = value of L&T India Large Cap Fund
It indicates that if there is 1% change in Nifty index then the value of L&T India Large Cap
Fund will be increased by 1.03%.
Impact of Nifty on L&T India Large Cap Fund which is represented by R

square (Coefficient of determination)
Table: 3.5
Regression Statistics
Multiple R 0.949408
R Square 0.901376
Adjusted R Square 0.895212
Standard Error 2.370963
Observations 18
54
Interpretation: R square is 0.9013 which indicates that the impact of Nifty index on L&T
India Large Cap Fund is to the extent of 90.13%. The rest 9.87% impact is of firm specific
factors.
Also, the P-value is lower than 0.05, which is the significance level. Therefore, in this case,
we have to reject Null hypothesis (H0).
In other words, L&T India Large Cap Fund returns are affected by Nifty index.
2) JP Morgan India Equity Fund
It is a mutual fund under the JPMorgan Asset Management (I) Pvt. Ltd. It is an open ended
large cap equity fund launched on May, 2007.
Its Net Assets are Rs 401.7 crore as on July 31, 2015 and NAV Rs 21.51 as on September 4,
2015.
Table: 3.6
Equity (%) 93.49

Debt (%) 9.58
Cash (%) -3.07
Total Stocks 48
Average Market 77154
Cap (Rs. Cr)
55
Table: 3.7
Quarterly Returns
Year Quarters Nifty Nifty JP Morgan India
Index
Return Equity Fund
(%) Return (%)
2011 1 5833.75 -5.26 -6.48
2 5647.4 -3.07 -0.24
3 4943.25 -12.15 -9.72
4 4624.3 -4.64 -8.11
2012 1 5295.55 11.30 12.82
2 5278.9 -0.73 0.40
3 5703.3 8.05 7.71
4 5905.1 3.26 3.88
2013 1 5682.55 -5.18 -6.00
2 5842.2 2.42 2.86
3 5735.3 -2.77 -1.43
4 6304 9.06 10.49
2014 1 6704.2 7.76 6.91
2 7611.35 13.25 18.43
3 7964.8 4.32 5.66
4 8282.7 4.24 8.18
2015 1 8491 1.14 6.63
2 8368.5 -2.54 -1.76
56
Fig. 3.3
Interpretation: This figure shows that the returns on JP Morgan India Equity Fund was
above the return on the Nifty index in 13 of the past 18 quarters from 2011 to 2015. It means
the performance of the actively managed mutual fund shows pleasing results than that of the
Nifty index.
57
Correlation between returns of Nifty & JP Morgan India Equity Fund
Table: 3.8
Nifty JP Morgan India Equity Fund
Nifty 1
JP Morgan India Equity Fund 0.959975489 1
Fig. 3.4
Interpretation: The correlation coefficient (r) between returns of Nifty & JP Morgan India
Equity Fund is 0.9599 which shows positive, direct & a very strong degree of correlation. It
means Nifty and JP Morgan India Equity Fund move in same direction and strength of their
relationship is also very strong.
Regression Analysis
58
Table: 3.9
Intercept 1.067534428 0.540058692 1.97670071 0.065573358
Nifty 1.089753349 0.080382541 13.55709 3.44694E-10

Y = a + bX
Y = 1.06 + 1.08X
Y = value of JP Morgan India Equity Fund
It indicates that if there is 1% change in Nifty index then the value of JP Morgan India Equity
Impact of Nifty on & JP Morgan India Equity Fund which is represented

by R square (Coefficient of determination)
Table: 3.10
Multiple R 0.959975489
R Square 0.921552939
Observations 17
Interpretation: R square is 0.9215 which indicates that the impact of Nifty index on JP
Morgan India Equity Fund is to the extent of 92.15%.
In other words, JP Morgan India Equity Fund returns are affected by Nifty index.
3) Franklin India Bluechip Fund
It is a mutual fund under the Franklin Templeton Asset Management India Private Ltd. It is an
open ended large cap equity fund launched on November, 1993.
Its Net Assets are Rs 6622.4 crore as on July 31, 2015 and NAV Rs 335.40 as on September
4, 2015.
59
Table: 3.11
Equity (%) 93.22

Debt (%) 0..00
Cash (%) 6.78
Total Stocks 38
Value (Rs. Cr)
Table: 3.12
Quarterly Returns
Year Quarters Nifty Nifty Franklin India
Index
Return Bluechip Fund
(%) Return (%)
2011 1 5833.75 -5.26 -4.04
60
2 5647.4 -3.07 -1.15
3 4943.25 -12.15 -8.05
4 4624.3 -4.64 -6.27
2012 1 5295.55 11.30 14.25
2 5278.9 -0.73 -1.76
3 5703.3 8.05 6.72
4 5905.1 3.26 5.84
2013 1 5682.55 -5.18 -4.79
2 5842.2 2.42 1.03
3 5735.3 -2.77 -2.38
4 6304 9.06 10.83
2014 1 6704.2 7.76 5.91
2 7611.35 13.25 14.32
3 7964.8 4.32 5.39
4 8282.7 4.24 7.54
2015 1 8491 1.14 5.18
2 8368.5 -2.54 0.05
Fig. 3.5
61
Interpretation: This figure shows that the returns on Franklin India Bluechip Fund was
above the return on the Nifty index in 13 of the past 18 quarters from 2011 to 2015. It means
the performance of the actively managed mutual fund shows pleasing results than that of the
Nifty index.
Correlation between returns of Nifty & Franklin India Bluechip Fund
Table: 3.13
Nifty Franklin Bluechip
Nifty 1
Franklin Bluechip 0.957725263 1
Fig. 3.6
62
Interpretation: The correlation coefficient (r) between returns of Nifty & Franklin India
Bluechip Fund is 0.1544 which shows positive, direct & a very strong degree of correlation.
It means Nifty & Franklin India Bluechip Fund move in same direction and the strength of
their relationship is also high.
Regression Analysis
Table: 3.14
Standard
Coefficients Error t Stat P-value
Intercept 1.178943023 0.485729908 2.427157569 0.02739545
Nifty 0.962720506 0.072296225 13.31633169 4.49123E-10

Y = a + bX
Y = 1.178 + 0.96X
63
Y = value of Franklin India Bluechip Fund
It indicates that if there is 1% change in Nifty index then the value of Franklin India Bluechip
Impact of Nifty on Franklin India Bluechip Fund which is represented by

R square (Coefficient of determination)
Table: 3.15
R Square 0.917237679
Observations 18
Interpretation: R square is 0.91 which indicates that the impact of Nifty index on Franklin
India Bluechip Fund is to the extent of 91.72%.
Also, the P-value is lower than 0.05, which is the significance level. Therefore, in this case
we have to reject the Null hypothesis (H0).
In other words, Franklin India Bluechip Fund returns are affected by Nifty index.
4) HDFC Top 200 Fund
It is a mutual fund under the HDFC Asset Management Company Ltd .It is an open ended
large cap equity fund launched on September 1996.
Its Net Assets are Rs 12725.9 crore as on September 30, 2015 and NAV Rs 337.46 as on
October 16, 2015.
Table: 3.16
Equity (%) 99.13

Debt (%) 1.02
Cash (%) -0.15
Total Stocks 66
Value (Rs. Cr)
64
Table: 3.17
Quarterly Returns
Year Quarters Nifty Nifty HDFC Top 200
Index Fund Return (%)
Return (%)
2011 1 5833.75 -5.26 -4.62
2 5647.4 -3.07 -1.41
3 4943.25 -12.15 -11.61
4 4624.3 -4.64 -8.92
2012 1 5295.55 11.30 17.88
2 5278.9 -0.73 -0.9
3 5703.3 8.05 7.38
4 5905.1 3.26 5.57
2013 1 5682.55 -5.18 -6.96
2 5842.2 2.42 0.12
3 5735.3 -2.77 -4.15
4 6304 9.06 16.53
2014 1 6704.2 7.76 7.74
2 7611.35 13.25 23.77
65
3 7964.8 4.32 2.98
4 8282.7 4.24 6.69
2015 1 8491 1.14 -0.65
2 8368.5 -2.54 -1.66
Fig. 3.7
Interpretation: This figure shows that the returns on HDFC Top 200 Fund was above the
return on the Nifty index in 9 of the past 18 quarters from 2011 to 2015. It means the
performance of the actively managed mutual fund and than that of the Nifty index is at par.
66
Correlation between returns of Nifty & HDFC Top 200 Fund
Table: 3.18
HDFC Top 200
Nifty Fund
Nifty 1
HDFC Top 200
Fund 0.952145853 1
Fig. 3.8
Interpretation: The correlation coefficient (r) between returns of Nifty & HDFC Top 200
Fund is 0.9521 which shows positive, direct & high degree of correlation. It means Nifty &
HDFC Top 200 Fund generally move in the same direction.
67
Regression Analysis
Table: 3.19
Intercept 0.111445303 0.780880849 0.142717424 0.888412776
Nifty 1.287447329 0.106707828 12.0651629 4.01419E-09

Y = a + bX
Y = 0.11 + 1.28X

Y = value of HDFC Top 200 Fund
It indicates that if there is 1% change in Nifty index then the value of HDFC Top 200 Fund
will be increased by 1.28%.
Impact of Nifty on & L&T India Large Cap Fund which is represented by
R square (Coefficient of determination)
Table: 3.20
R Square 0.906581726
Adjusted R
Square 0.900353841
Observations 17
Interpretation: R square is 0.9065 which indicates that the impact of Nifty index on HDFC
Top 200 Fund is to the extent of 90%.
In other words, HDFC Top 200 Fund returns are affected by Nifty index.
5) UTI Top 100 Fund
It is a mutual fund under the UTI Asset Management Company Ltd.It is an open ended large
cap equity fund launched on May 2009.
68
Its Net Assets are Rs 905.0 crore as on July 31, 2015 and NAV Rs 46.77 as on September 4,
2015.
Table: 3.21
Equity (%) 92.63

Debt (%) 0.49
Cash (%) 6.88
Total Stocks 51
Cap (Rs. Cr)
Table: 3.22
Quarterly Returns
Year Quarters Nifty Nifty UTI Top 100
Index Fund Return (%)
Return (%)
2011 1 5833.75 -5.26 -3.95
69
2 5647.4 -3.07 -1.85
3 4943.25 -12.15 -6.95
4 4624.3 -4.64 -4.43
2012 1 5295.55 11.30 10.8
2 5278.9 -0.73 -1.91
3 5703.3 8.05 10.22
4 5905.1 3.26 2.36
2013 1 5682.55 -5.18 -5.87
2 5842.2 2.42 3.4
3 5735.3 -2.77 -0.65
4 6304 9.06 9.9
2014 1 6704.2 7.76 6.17
2 7611.35 13.25 14.93
3 7964.8 4.32 8.34
4 8282.7 4.24 7.18
2015 1 8491 1.14 7.02
2 8368.5 -2.54 -3.3
Fig. 3.9
70
Interpretation: This figure shows that the returns on UTI Top 100 Fund was above the
return on the Nifty index in 12 of the past 18 quarters from 2011 to 2015. It means the
performance of the actively managed mutual fund shows pleasing results than that of the
Nifty index.
Correlation between returns of Nifty & UTI Top 100 Fund
Table: 3.23
Nifty UTI Top 100 Fund
Nifty 1
UTI Top 100 Fund 0.942060381 1
Fig. 3.10
71
Interpretation: The correlation coefficient (r) between returns of Nifty & UTI Top 100 Fund
is 0.9420 which shows positive, direct & high degree of correlation. It means Nifty & UTI
Top 100 Fund generally move in the same direction.
Regression Analysis
Table: 3.24
Intercept 1.316336115 0.589034062 2.234736835 0.041073654
Nifty 0.875501924 0.080491852 10.87690128 1.63562E-08

Y = a + bX
Y = 1.31 + 0.87X

Y = value of UTI Top 100 Fund
It indicates that if there is 1% change in Nifty index then the value of UTI Top 100 Fund will
be increased by 0.87%.
Impact of Nifty on & UTI Top 100 Fund which is represented by R square
(Coefficient of determination)
Table: 3.25
R Square 0.887477761
Adjusted R
Square 0.879976279
Observations 17
72
Interpretation: R square is 0.8874 which indicates that the impact of Nifty index on UTI
Top 100 Fund is to the extent of 88%.
we have to reject the Null hypothesis (H0).
In other words, UTI Top 100 Fund returns are affected by Nifty index.
FINDINGS
Table: 3.26 Overview of holdings of funds

Mutual Funds (MF) Total Holdings MFs holdings in % of Nifty holdings
Nifty
Franklin India 38 26 68.42
Bluechip Fund
HDFC Top 200 Fund 66 36 54.55

L&T India Large Cap 49 26 53.06
Fund
UTI Top 100 Fund 51 23 45.10
JP Morgan India 48 20 41.67

Equity Fund
The holdings of L&T India Large Cap Fund and HDFC Top 200 Fund that form part of
Nifty holdings constitute 53% and 54.5% respectively. Franklin India Bluechip Fund
constitutes around 68% in Nifty holdings and UTI Top 100 Fund and JP Morgan India
Equity Fund constitute around 45% & 42% respectively in Nifty holdings.
Thus, we can say that correlation of all the mutual funds with Nifty is strong because they
have higher percentage in Niftys holdings.
We can also infer that impact of Nifty is higher on the returns of all the selected mutual
funds returns because of higher percentage of Nifty holdings form part of the mutual
funds portfolio.
73
Top 5 companies in NSE Nifty by market capitalization namely TCS, Reliance, HDFC
Bank, ITC and Infosys also form part of portfolio of all the selected mutual fund schemes
and ONGC which is at 6th position in Nifty by market cap forms part of all the selected
mutual funds except UTI Top 100 Fund (45%) and JP Morgan India Equity Fund (42%).
As these companies have higher impact on Nifty because of their higher market cap in
comparison to others, this can also be the reason for high correlation and high impact of
Nifty on the mutual funds.
As L&T India Large Cap Fund, Franklin India Bluechip Fund, JP Morgan India Equity
Fund and UTI Top 100 Fund have outperformed Nifty atleast 12 of the past 18 quarters,
we can infer that the remaining stocks (40% - 50%) in the portfolio of the mutual funds
that do not form part of Nifty have played an important role in diversifying the risk so
that fund can give better returns than the returns of Nifty even when Nifty falls.
74
CHAPTER IV: LIMITATIONS OF THE STUDY
Limitations of Study:
SMALL SIZE OF SAMPLE

The study is based on the quarterly results of only past four years. Also the study is
limited to the selected mutual fund schemes.
LACK OF INFORMATION SOURCES

The lack of information sources for the analysis part.
TIME LIMITATION
The portfolio composition of the selected mutual funds shows composition as on
September 2015. Therefore, due to time limitation we could not track the composition of
the mutual funds in different time periods.
CHAPTER V: CONCLUSIONS
75
Mutual funds are specifically designed as well as diversified investment portfolios.
Professional money managers who ensure rigorous investment discipline manage these funds.
The fund managers are generally able to devote more time and resources to monitoring
investments, than an individual could, and tend to react less to short term investor sentiment.
From the study, we found that top equity diversified mutual funds have outperformed Nifty
most of the times in past four years, so we can conclude that equity mutual funds offer the
best option for retail investors to participate in equities. With a robust institutional and
regulatory framework in place, we expect that equity mutual funds will continue to maintain
this position in the coming years.
BIBLIOGRAPHY
Book:
Zvi Bodie, Alex Kane, Alan J Marcus & Pitabas Mohanthy (2012), Investments, 8th
Edition, Tata Mcgraw Hill Education.
Chandra. Prasanna.(2009). Investment Analysis and Portfolio

Management, 3rd Edition, Tata McGraw Hill, New Delhi.
Rustagi. R. P. (2008). Investment Analysis and Portfolio Management,

2nd Edition, Sultan Chand & Sons.
76
Dr. J K Thukral (2010). Business Mathematics and Statistics, 3rd Edition, Mayur
Paperbacks.
Websites:
www.amfiindia.com
www.moneycontrol.com
Finance.yahoo.com
77

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A PROJECT REPORT ON

COMPARATIVE ANALYSIS BETWEEN RETURNS OF EQUITY

(MAPPING MINDS VENTURE)

A Summer Training project

Under the Guidance of- Submitted by- ABHISHEK

Place: New Delhi Candidate signature

Date- 09 November 2015

Dr. Manju Gupta

Chapter 1 gives overview about the mutual funds in India.

Chapter 5 includes conclusion and recommendations.

3.1 Composition (%) of L&T India Large Cap Fund 40

3.5 Quarterly returns of Franklin India Bluechip Fund & Nifty 52

3.7 Quarterly returns of HDFC Top 200 Fund & Nifty 57

1.1 MUTUAL FUNDS

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87:

Phase II. Entry of Public Sector Funds - 1987-93:

Year Amount Assets Under Mobilisation

Phase III. Emergence of Private Sector Funds - 1993-96:

Phase IV. Growth and SEBI Regulation - 1996-2004:

UTI was re-organised into two parts:

Table: 1.2. Mutual Funds Market (1999)

AS ON UTI PUBLIC PRIVATE TOTAL

31/3/99 53,320 8,292 6,860 68,472

A Mutual Fund is a collection of stocks, bonds, or other securities owned by a group of

Regulation regarding appointment of trustees Sponsor with prior approval of

3. Asset Management Company The Asset Management Company (AMC) is the

RBI RBI acts as regulator of sponsors of bank-sponsored mutual funds, especially

Don't just look at the NAV, also look at the risk:

Higher rating does not mean better returns:

Higher rating does not mean more risk:

Expenses that mutual funds charge to investors

Recent changes introduced by SEBI under TER

Mutual fund loads

Mutual funds structure for expense ratio

Costs affect returns on mutual fund

1.1.10 CURRENT SCENARIO

1.1.11 AN OVERVIEW OF THE MUTUAL FUND COMPANIES

UTI Asset Management Company Ltd.

SBI Funds Management Ltd.

L&T Investment Management Ltd.

JPMorgan Asset Management (I) Pvt. Ltd.

Birla Sun Life Asset Management Company Ltd.

HDFC Asset Management Company Ltd.

1.2 OVERVIEW OF CAPITAL MARKET

2.1 OBJECTIVES OF THE STUDY

The specific objectives are as follows:

2.3 SCOPE OF THE STUDY

2.4.1 TYPE OF RESEARCH

2.4.2 RESESARCH DESIGN

2.4.3 SOURCES OF DATA COLLECTION

CHAPTER III: FINDINGS AND ANALYSIS

1) L&T India Large Cap Fund

Equity (%) 97.39

Interpretation: Regression equation,

Impact of Nifty on L&T India Large Cap Fund which is represented by R

2) JP Morgan India Equity Fund

Equity (%) 93.49

Interpretation: Regression equation,

Impact of Nifty on & JP Morgan India Equity Fund which is represented

3) Franklin India Bluechip Fund

Equity (%) 93.22

Correlation between returns of Nifty & Franklin India Bluechip Fund

Interpretation: Regression equation,