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1.1 TITLE OF THE STUDY:

IMPACT OF DOMESTIC INSTITUTIONAL INVESTOR FLOWS ON

SENSEX

1.2 STATEMENT OF THE PROBLEM:

The economy of a country greatly depends on its domestic institutional investors as well
as foreign institutional investors for functioning. This project mainly focuses on the
impact of the domestic institutional investors on BSE sensex. It studies the investment
pattern of these institutions during bullish and bearish periods, faced by the economy.

1.3 OBJECTIVES OF THE STUDY:

 To analyze the impact of Domestic Institutional Investor (DII) inflows on

sensex.

 To track the trends of investments made by DIIs, when the market is

bullish or bearish.

 To make a 3 months analysis (each for bullish and bearish period),

regarding DIIs pattern of investment.

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1.4 SCOPE OF THE STUDY:

 The scope of this project is limited to the analysis of DII inflows on sensex.

 The findings and recommendations will be based only on the analysis of

the market during the 6 months period in total.

 The study would also provide with the investment pattern of DIIs during
bullish and bearish periods in the market.

1.5 RESEARCH METHODOLOGY:

RESEARCH DESIGN:

Research is a method of solving a problem in a systematic and scientific manner. It is

commonly referred to the search for knowledge.

Research design refers to the various tools and techniques that have been utilized for the
purpose of conducting the research.

Here the research conducted is on the basis of secondary data and gives an insight about
the domestic institutional investor inflows on sensex.

The source of data used in this research was basically secondary. Information was
collected from sources like:

 EBSCO

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  www.bseindia.com

 www.thehindubusinessline.com

 www.sebi.co.in

 www.karvy.com

1.6 LIMITATIONS OF THE STUDY:

 As the project is prepared for the academic purpose only, it suffers from the
limitation of time, due to which the detailed report about the topic was not
possible.

 Cost

 Geographical area

 Non availability of adequate data

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1.7 LITERATURE REVIEW

Domestic Institutional investments which include insurance companies, banks and

mutual funds are important for the Indian investment scenario. India does have foreign
money coming in the form of FII’s but in an event of pull out of funds by these FII’s,
DII’s help the market to show profitability and help in keeping the sensex ticking in the
right way. But DII’s always do not have a positive impact on the sensex.

How is it that DII’s form an important part of Sensex?

The real estate sector in India which has been gaining a lot of popularity in India is one
of the favored destinations of investors both the foreign and domestic. Global and
domestic investment houses, private equity firms and institutional investors, saw it as the
next big thing, capable of producing sky-high annual returns. According to Merril Lynch,
it expected the property sector to grow by 30% annually to be worth around US$50
billion by 2010 and as much as US$90billion by 2015. A lot of investors were of the
view that there could be a property bubble in booming cities such as Mumbai and
Bangalore. And the reasons for their prediction on the real estate sector is justified by the
increase in the number of shopping malls, high end offices and the hotel industry which
is growing at a rapid pace.

There has been tremendous flow of foreign capital into India. In spite of some stringent
rules by the Government of India, there has been an incredible flow of capital into the
market. This push by the FII’s has also made the domestic Institutional investors enter
the scene.
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The reason for this kind of a rush is due to the demand for commercial real estate,
particularly in the SEZ’s (India’s Special Economic Zones).

In line to the investments by the DII’s and FII’s, these investors are of the view that there
needs to be a regulatory body to regulate the real estate sector, which would help the
sector to be designated as an investment class.

A burgeoning middle class, largely employed by the growing IT and services sector in
Bangalore, Hyderabad and Jaipur, is driving home starts--India's planning commission
reckons it is short 22.5 million homes, and says 4.5 million houses for young middle-
class families are needed by the end of 2007. That, in turn, is driving a growing number
of Indian property firms to sell shares to investors. Parsvnath Developers in March filed a
draft offer with the Securities and Exchange Board of India to sell 33 million shares on
the Sensex, slated for May.

The upcoming June sale, of 10% of DLF's equity, values the company at US$20 billion,
giving it a price-earnings ratio of between 70 and 100 times. That's quite a valuation for a
real estate firm that only began to invest outside Delhi two years ago. Nonetheless, with
the market riding so high, investors are keen to buy into anything with bricks and mortar
in it. It's certainly grabbing the interest of other major developers around the country.
Mumbai-based bankers say any large real estate firm worth its salt, from Delhi-based
Unitech Group to Hiranandani Developers in Mumbai and DS Kulkarni Developers of
Pune, is drawing up plans to sell equity to institutional and retail investors.

With the entry of DLF, others are expected to follow suit. Within a few years 8 – 10
major Indian property groups are expected to be listed, creating a real asset class in the
country.

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Meanwhile the owner of Phonex mills’, Mr. Ruia who changed the face of Phoenix mills
cautions investors to avoid township projects and large suburban, semi – rural or rural

developments – both commercial and residential. According to him, these areas would be
the first to be dropped when the market crashes.

One way to achieve the balance is by investing directly in real estate funds--open to
institutional and larger retail investors alike.

Domestic market leaders HDFC Ventures and ICICI Ventures, private equity offshoots
of their Indian parent banks, have launched a clutch of real estate funds targeting large,
fast-growing development projects. HDFC's India Real Estate Fund aims to raise US$250
million to invest in equity and equity-linked instruments of real estate firms based in the
country's tier-one cities. Of India's 15 current real estate funds, other key players are
ICICI Ventures' US$300 million India Advantage Fund III, with a corpus of US$300
million, and DHFL's Venture Capital Fund, which plans to raise US$80 million to invest
in property in Bangalore, Pune and Delhi.

Due to the entry of big domestic players, foreign institutes like Morgan Stanley entered
the picture surprising everyone by announcing a plan to invest US$1 billion in Indian real
estate over the next 5 to 7 years in tier one cities including Mumbai, Delhi and
Bangalore.

The above developments had a positive impact on the sensex.

The trend of FII’s has gripped the Indian market. The foreign institutional investors net
buy figure of over Rs. 1800 crore on august 7th 2008 brought about a renewed confidence
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in the market among the investors. This was seen as a sign of recovery but the retail
investors needed to be very cautious as the past 18 months movement in the market
showed that the market moved in the direction of the FII’s.

Around the same time, the FII’s did heavy selling which resulted in the retail investors
and other dominant players – DII’s absorbing the selling done by the FII’s. The data also

shows that during Nov – Dec 2008, there was heavy selling by the FII’s when the market
was at its peak, while retail investors and domestic institutional investors were lapping up
the stocks before the crash. This has been the trend throughout the past corrective phases.
Part of the buying by DII’s is explained by the fact that inflows in equity MF schemes
were robust at that time and a lot of NFO’s were launched. This might have been the
reason for the domestic institutional investors to invest.

Foreign Institutional Investors and Domestic Institutional Investors are the two dominant
groups in the cash segment of the Indian stock market. Their net investment has been in
divergent directions, particularly since November 2007.

FII liquidation has been the root cause for the current bearish phase, as the net inflows
from DII’s has been healthy. But experts say that market could find stability if further
disinvestments by FII comes to a halt. The experts feel that any return of improved
liquidity from FII’s will be a strong positive sign for the Indian market.

By this we can say that DII’s still have a very meager impact on the Stock Market.

FIIs have emerged as net sellers in the cash segment of Indian stock markets since
November 2007, however, irrespective of the market direction; DIIs have been the net

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investors since October 2007. The retail investors also extended the helping hand to the
FII cash outflow by buying into the markets.

In the past few months, market movement has completely been dominated by the global
events and therefore majority of them started to liquidate their portfolios, whereas Indian
investors were in denial mode.

Another factor supporting the turnaround in FII sentiments is likely to be the SEBI Board
meeting next week, to review the FII regulations, particularly a review of the ban on

PNotes. Any positive developments on that front might turn the sentiments suddenly and
sharply. Probably the net buying of Rs 1800 crore in cash and Rs 2332 crore in Index
futures yesterday reflects their optimism from the SEBI Board meet and is a sign of
things to come,”

It is quite clear that FII’s still are playing a major role in terms of the Indian market;
DII’s still have a long way to go before they could catch with the FII’s.

During November 2007, the cumulative disinvestment by FII is $21 billion, whereas
during the same period the DII’s invested $15 billion. Sensex also disconnected from the
FII trend in November 2007, until mid – January 2008.

The 21 Jan ’08 and 22 Jan ’08 are the two most significant dates on which Sensex
cracked 1000 points in two consecutive days on its downward movement, when FIIs
withdrew $2 billion and DIIs pumped in $1.6 billion. Retail again was a net buyer to the
tune of $872 million while proprietary were net sellers for $543 million.

Market observers have always tried to point out that one of the key risks in the Indian
Stock Market is its overdependence on foreign fund flows. But that scenario might soon

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be changing, judging by the institutional inflows until august 2008, which has been very
a volatile month for equity investors across the world.

FIIs have sold Rs 8,841 crore worth of stocks so far in August as problems in the
subprime loan segment resurfaced in the US, sparking a selloff in the equity market
everywhere. The last time foreign funds had sold as aggressively was in May 2006, when
they pulled out Rs 8,247 crore in a single month.

Large inflow or outflow of foreign money continues to influence sentiment, but domestic
institutional investors — mutual funds, banks, insurance companies — are now
beginning to emerge as a strong counterbalancing force.

According to the Securities and Exchange Board of India (SEBI), MFs have been net
buyers at nearly Rs 2,900 crore, which is the highest-ever since May 2006. In fact,
August 2007 will feature among the top 10 months in terms of net inflows ever since
January 2000. In the previous month, fund houses were net sellers at Rs 900 crore.
Industry participants say that inflows are a result of money mobilized through new fund
offerings and also because many of the asset management companies were sitting on
cash.

There has been a change in the behaviour of investors and fund managers,” says Birla
Sun Life Mutual Fund CIO A Balasubramaniam. “While Indian investors have become
more resilient to volatility, the inflows in the mutual fund industry have also been good.
Most fund houses were sitting on 15-18% cash. Further, around 30% of the new fund
money was also lying idle that seems to have made to the bourses now.

Meanwhile, it is not only the fund houses that have upped the ante in the recent past.
Insurance companies and some of the public sector banks (PSBs) are also believed to be

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using the current volatility as a good buying opportunity. Incidentally, LIC is believed to
have mobilized a few thousand crore in its recently-closed unit-linked plan (ULIP) —
Money Plus. According to market buzz, agents were pushed into overdrive to garner
money in the ULIPs as it came to a close in mid-August.

Dealers have also been talking about PSBs, especially SBI, which has been buying
aggressively in the stock market. Recent instances of the Sensex shedding 400-500 points
in one single day could have been much worse, if LIC and SBI had not come to the
rescue, they said. However, this can’t be corroborated with figures as there is no data
available for insurance companies and banks separately.

BSE provides data under the heading ‘domestic institutional investors’ that includes
banks, domestic financial institutions, insurance companies and MF’s. In august 2008,
according to BSE, this group is said to have invested Rs. 8,597 crore, which was only
marginally lower than what FII’s had pulled out.

FII’s showed their confidence in the Indian Market by investing Rs. 285.39 crores in
equities on 9th of February 2009.

As per the provisional data available with the Bombay Stock Exchange, FIIs were the
gross buyer of equities worth Rs 1,290.27 crore, whereas they sold equities worth Rs
1,004.88 crore resulting in the net purchase of Rs 285.39 crore.

However, the domestic institutional investor’s participation dropped who offloaded

shares worth Rs. 45.98 crore. Brokers on the behalf of their clients and non-resident
Indians (NRIs) followed DII's trend and sold equities worth Rs 112.48 crore and 0.69
crore respectively.
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In spite of the offloading of shares by the domestic institutional investors and the brokers
representing the clients and NRI’s the sensex closed at 9583.89 points, a gain of 283.03
points or 3.04 percent. This was mainly due to the buying of equities by the foreign
institutional investors. Here again, the DII’s had no such impact on the sensex.

On the eve of the general election results, both the Foreign Institutional Investors and
Domestic Institutional Investors pumped in 1400 crores into the equities driving the
sensex 300 points on May 15th 2009.

The market was of the view that either the UPA or NDA would form the Government at
the centre without any coalition taking place. The exit polls showed that the new
Government won’t be dominated by the Left parties. The market was of the view that

whether the BJP comes to power or the Congress, both were considered to be market
friendly.

FIIs were net buyers of equities for Rs 984 crore on Friday the 15th May while domestic
institutional investors were net buyers for Rs 432 crore, the provisional data provided by
the stock exchanges showed.

On May 12th 2009, the FII’s bought a lot of equities and there were investments from the
pension funds as well, which saw the market going green after it opened in red. Sustained
buying at the end of the day saw the markets close on a positive note.

Pension funds, which were sitting on cash, entered the markets, which led the markets
during the last hours of trading. Apart from FIIs, domestic institutional investors (DII)
were net buyers in the market.

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In spite of the reduction in the industrial production from 5.5% 2.3%, it did not deter the
buyers. According to provisional BSE figures, FIIs and DIIs were net buyers of Rs
452.18 crore and Rs 177.74 crore, respectively.

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ECONOMIC SCENARIO

2.1 PEST ANALYSIS

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POLITICAL ENVIRONMENT

 Less control of Government of India on retail brokerage industry as it is

regulated by SEBI.

 Constructive decisions taken by SEBI for protecting investors and regulating

stock market.

 Right now Government of India is stable and market is also booming

 Government policies and income tax exemption can affect investors’ interest
on equity market.

ECONOMIC ENVIRONMENT

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  As the stock market is booming there is a good opportunity of growth of the
industry.

 Increasing income of Indian people encourage them to invest into stock

market.

 The retail brokerage industry has given employment to a large no of people.

SOCIAL ENVIRONMENT

 Increasing awareness among Indian population in equity investment options.

 Corporate frauds like Satyam and Harshadh Mehta scam may discourage
people from investing in stock market.

TECHNOLOGICAL ENVIRONMENT

 User friendly software for doing online trading.

 Technological change - creates opportunities for new products and product

improvements and of course new marketing techniques

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3.1 INDUSTRY PROFILE

The Indian broking industry is one of the oldest trading industries that has been around
even before the establishment of the BSE in 1875. Despite passing through a number of
changes in the post liberalisation period, the industry has found its way towards
sustainable growth. With the purpose of gaining a deeper understanding about the role of
the Indian stock broking industry in the country’s economy, we present in this section
some of the industry insights gleaned from analysis of data received through primary
research.

For the broking industry, we started with an initial database of over 1,800 broking firms
that were contacted, from which 464 responses were received. The list was further short
listed based on the number of terminals and the top 210 were selected for profiling. 394
responses, that provided more than 85% of the information sought have been included
for this analysis presented here as insights. All the data for the study was collected
through responses received directly from the broking firms. The insights have been
arrived at through an analysis on various parameters, pertinent to the equity broking
industry, such as region, terminal, market, branches, sub brokers, products and growth
areas.

Moreover the Indian retail brokerage industry taking into account the health of the
capital markets and the intensity of competition among the brokerage companies

Though the Indian brokerage industry has been consolidating steadily over the last 10
years, the share of the top 10 brokers has risen to only around one-fourth of the total
industry revenues. In this fragmented market, leading players like ICICI Direct, Kotak
Securities, Indiabulls, Sharekhan, and 5 Paisa, apart from many small players, compete
on the basis of low brokerage fees and customer service

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Some key characteristics of the sample 394 firms are:

 On the basis of geographical concentration, the West region has the maximum
representation of 52%. Around 24% firms are located in the North, 13% in the
South and 10% in the East

 3% firms started broking operations before 1950, 65% between 1950-1995 and
32% post
1995

 On the basis of terminals, 40% are located at Mumbai, 12% in Delhi, 8% in

Ahmedabad, 7% in Kolkata, 4% in Chennai and 29% are from other cities

 From this study, we find that almost 36% firms trade in cash and derivatives
and 27% are into cash markets alone. Around 20% trade in cash, derivatives
and commodities

 In the cash market, around 34% firms trade at NSE, 14% at BSE and 52%
trade at both exchanges. In the derivative segment, 48% trade at NSE, 7% at
BSE and 45% at both, whereas in the debt market, 31% trade at NSE, 26% at
BSE and 43% at both exchanges

 Majority of branches are located in the North, i.e. around 40%. West has 31%,
24% are located in South and 5% in East

 In terms of sub-brokers, around 55% are located in the South, 29% in West,
11% in North and 4% in East

 Trading, IPOs and Mututal Funds are the top three products offered with 90%
firms offering trading, 67% IPOs and 53% firms offering mutual fund
transactions
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  In terms of various areas of growth, 84% firms have expressed interest in
expanding their institutional clients, 66% firms intend to increase FII clients
and 43% are interested in setting up JV in India and abroad

 In terms of IT penetration, 62% firms have provided their website and around
94% firms have email facility

Terminals

Almost 52% of the terminals in the sample are based in the Western region of India,
followed by 25% in the North, 13% in the South and 10% in the East. Mumbai has got
the maximum representation from the West, Chennai from the South, New Delhi from
the North and Kolkata from the East.

Mumbai also has got the maximum representation in having the highest number of
terminals. 40% terminals are located in Mumbai while 12% are from Delhi, 8% from
Ahmedabad, 7% from Kolkata, 4% from Chennai and 29% are from other cities in
India.

Branches & Sub-Brokers

The maximum concentration of branches is in the North, with as many as 40% of all
branches located there, followed by the Western region, with 31% branches. Around
24% branches are located in the South and East constitutes for 5% of the total branches
of the total sample.

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In case of sub-brokers, almost 55% of them are based in the South. West and North
follow, with 30% and 11% sub-brokers respectively, whereas East has around 4% of
total sub-brokers.

Financial Markets

The financial markets have been classified as cash market, derivatives market, debt
market and commodities market. Cash market, also known as spot market, is the most
sought after amongst investors. Majority of the sample broking firms are dealing in the
cash market, followed by derivative and commodities. 27% firms are dealing only in the
cash market, whereas 35% are into cash and derivatives. Almost 20% firms trade in
cash, derivatives and commodities market. Firms that are into cash, derivatives and debt
are 7%. On the other hand, firms into cash and commodities are 3%, cash & debt market
and commodities alone are 2%. 4% firms trade in all the markets.

In the cash market, around 34% firms trade at NSE, 14% at BSE and 52% trade at both
exchanges. In the equity derivative market, 48% of the sampled broking houses are
members of NSE and 7% trade at BSE, while 45% of the sample operate in both stock
exchanges. Around 43% of the broking houses operating in the debt market, trade at
both exchanges with 31% and 26% firms uniquely at NSE and BSE respectively.

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Of the brokers operating in the commodities market, 57% firms operate at NCDEX and
MCX. Around 20% and 21% firms are solely in NCDEX and MCX respectively,
whereas 2% firms trade in NCDEX, MCX and NMCE

3.2 PORTER’S 5 FORCE ANALYSIS

Buyer Power:

 Lack of Expertise reduce Bargaining Power

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  Retail investors often lack the knowledge and expertise in the financial sector
that calls them to approach the broking houses.

 Low Product Differentiation Proves Beneficial

The retail broking service provided by the various companies is homogeneous with
very low product differentiation. This allows customers to enjoy a greater bargaining
power.

 Increasing investment preferences in equity market among Indian population.

To tap this opportunity company should come out with more product features
and benefits.

 HNI/high volume traders are the major sources of revenue for the company
and they should provide competitive brokerage to them.

Supplier Power:

 Increased Dependence on IPOs/FPOs

 There is a growing dependence of corporate on broking houses with the rising

number of IPO’s coming to the market.

Intensity of Rivalry:

 Move towards consolidation

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 Lot of brokerage companies are moving towards consolidation with the smaller ones
becoming either franchisees for the larger brokers or closing operations.

 Increased Focus of Banks in Retail Broking

 Various foreign banks like ABN Amro and others are planning to enter the
Indian retail brokerage industry.

 Online Trading Competes with Traditional Brokerage

 There is an increasing demand for online trading due to consumer’s growing

preference for internet as compared to approaching the brokers.

Threat of New Entrants:

 Entry of Foreign Players

New forms of trading including T+2 settlement system, dematerialization etc are
strengthening the retail brokerage market and attracting foreign companies to enter
the Indian industry.

 Entry of financial institution.

Threat of Substitutes:

 Alternative Investment Options

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 Various alternative forms of investment including fixed deposits with banks and post
offices etc act as substitutes to retail broking products and services.

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4.1 COMPANY PROFILE

KARVY, is a premier integrated financial services provider, and ranked among the top
five in the country in all its business segments, services over 16 million individual
investors in various capacities, and provides investor services to over 300 corporates,
comprising the who is who of Corporate India. KARVY covers the entire spectrum of
financial services such as Stock broking, Depository Participants, Distribution of
financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking,

Commodities Broking, Personal Finance Advisory Services, Merchant Banking &

Corporate Finance, placement of equity, IPO’s, among others. We appreciate that karvy
is the one of the main registrar for IPO’s registration. Big companies like Infosys, wipro,
Acc, GMR-infra and other companies are registered under karvy only.

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 Karvy has a professional management team and ranks among the best in technology,
operations and research of various industrial segments.

Karvy Stock Broking:

KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows
freely towards attaining diverse goals of the customer through varied services. It creates a
plethora of opportunities for the customer by opening up investment vistas backed by
research-based advisory services. Here, growth knows no limits and success recognizes

no boundaries. Helping the customer create waves in his portfolio and empowering the
investor completely is the ultimate goal. KARVY Stock Broking Limited is a member of:

 National Stock Exchange (NSE)

 Bombay Stock Exchange (BSE)

 Hyderabad Stock Exchange (HSE)

Demat Services:

Karvy is a depository participant with the National Securities Depository Limited

(NSDL) for trading and settlement of dematerialized shares.
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Depository Participants (DPs) are described as an agent of the depository. They are
intermediaries between the depository and the investors. The relationship between the
DPs and the depository is governed by an agreement made between the two under
Depositories Act.

A DP can offer depository-related services only after obtaining a certificate of

registration from SEBI.

Since Karvy is also in the broking business, investors who use Karvy’s depository
services get a dual benefit. They can use Karvy’s brokerage services to execute
transactions and Karvy’s depository services to settle them.

Business Model

 Karvy Stock Broking Limited

KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows
freely towards attaining diverse goals of the customer through varied services. It creates a
plethora of opportunities for the customer by opening up investment vistas backed by
research-based advisory services. Here, growth knows no limits and success recognizes
no boundaries. Helping the customer create waves in his portfolio and empowering the
investor completely is the ultimate goal. KARVY Stock Broking Limited is a member of:

• National Stock Exchange (NSE)

• Bombay Stock Exchange (BSE)
• Hyderabad Stock Exchange (HSE)
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  Karvy Comtrade Limited

Commodities market, contrary to the beliefs of many people, has been in existence in
India through the ages. However the recent attempt by the Government to permit Multi-
commodity National levels exchanges has indeed given it, a shot in the arm. As a result
two exchanges Multi Commodity Exchange (MCX) and National Commodity and
derivatives Exchange (NCDEX) have come into being. These exchanges, by virtue of
their high profile promoters and stakeholders, bundle in themselves, online trading
facilities, robust surveillance measures and a hassle-free settlement system. The futures
contracts available on a wide spectrum of commodities like Gold, Silver, Cotton, Steel,
Soya oil, Soya beans, Wheat, Sugar, Chana etc., provide excellent opportunities for
hedging the risks of the farmers, importers, exporters, traders and large scale consumers.

They also make open an avenue for quality investments in precious metals. The
commodities market, as it is not affected by the movements of the stock market or debt
market provides tremendous opportunities for better diversification of risk. Realizing this
fact, even mutual funds are contemplating of entering into this market.

Karvy Comtrade Limited is another venture of the prestigious Karvy group. With their
well established presence in the multifarious facets of the modern Financial services
industry from stock broking to registry services, it is indeed a pleasure for them to make
foray into the commodities derivatives market which opens yet another door for them to
deliver their service to their customers and the investor public at large.

With the high quality infrastructure already in place and a committed Government

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providing continuous impetus, it is the responsibility of the intermediaries to deliver
these benefits at the door-steps of their esteemed customers. With their expertise in
financial services, existence across the lengths and breadths of the country and an
enviable technological edge, they are all set to bring to the customers, the pleasure of
investing in this burgeoning market, which can touch upon the lives of a vast majority of
the population from the farmer to the corporate alike. They are confident that the
commodity futures can be a good value addition to the customer’s portfolio.

The company provides investment, advisory and brokerage services in Indian

Commodities Markets. And most importantly, they offer a wide reach through their
branch network of over 225 branches located across 180 cities.

 Karvy Insurance Broking Limited

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

 Karvy Investor Services Limited

Deepening of the Financial Markets and an ever-increasing sophistication in corporate

transactions, has made the role of Investment Bankers indispensable to organizations
seeking professional expertise and counselling, in raising financial resources through
capital market apart from Capital and Corporate Restructuring, Mergers & Acquisitions,
Project Advisory and the entire gamut of Financial Market activities.

Karvy Investor Services Limited (‘KISL’), a SEBI registered Merchant Banker has
emerged as a leading Investment Banking entity in the country with over a decade of
experience. KISL has built its reputation by capitalizing on its qualified professionals,
who have successfully executed a large number of complex and unique transactions.

their quality professional team and work-oriented dedication have propelled them to
offer value-added corporate financial services and act as a professional navigator for long
term growth of their clients, who include leading corporates, State Governments, Foreign
Institutional Investors, public and private sector companies and banks, in Indian and
global markets. They have also emerged as a trailblazer in the arena of relationships, both

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at the customer and trade levels because of their unshakable integrity, seamless service
and innovative solutions that are tuned to meet varied needs. Their team of committed
industry specialists, having extensive experience in capital markets, further nurtures this
relationship.

Credentials

• Emerging as a leading Investment Banker with a strong support from its Group
entities in Research, Stock Broking, Institutional Sales and Retail Distribution.
• Strong team of more than 25 qualified professionals operating from six cities;
Hyderabad, Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two
overseas offices at New York (USA) and Dubai.
• One of the largest retail distribution networks with over 584 branches in over 389
cities/towns.
• Excellent Institutional Sales Desk.

 Karvy Realty (India) Limited

Karvy Realty (India) Limited (KRIL) is promoted by the Karvy Group, India’s largest
financial services group. The group carries forward its legacy of trust and excellence in
investor and customer services delivered with passion and the highest level of quality that
align with global standards.

Karvy Realty (India) Limited is engaged in the business of real estate and property
services offering:

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 • Buying/ selling/ renting of properties
• Identifying valuable investments opportunities in the real estate sector
• Facilitating financial support for real estate and investments in properties
• Real estate portfolio advisory services.

KRIL is a personal real estate advisor guiding and hand holding the client through real
estate transactions and offering valuable investment opportunities.

Building on the KARVY brand as a leading industry benchmark for world class customer
servicing and quality standards, KRIL brings to investors a reputation of reliability,
dependability and honesty. Their understanding of the needs and preferences of their
clients and our teams of qualified realty professionals help us to establish fruitful
relationships with buyers and sellers of properties alike.

A single stop shop for realty services offering:

• Transacting Options: Choose to buy, sell or rent properties (residential and

commercial)
•

• Investing Options: Give your investments a good opportunity with properties

marketed by KRIL.
• Financing Options: Get unmatched deals for financing your investment
• Research Options: they undertake valuation and feasibility studies, area analysis
and customized analysis on behalf of clients.

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KRIL has ongoing relations with builders and developers across the country which will
help the client place your investments in the most genuine properties for a good value
appreciation at the right place and at the right price.

KRIL is committed to the guiding principles of quality, timely service delivery, fair
pricing, transparency and integrity

 Karvy Computershare (P) Limited

Karvy Computershare Private Limited is a joint venture between

Computershare, Australia and Karvy Consultants Limited, India in the registry
management services industry.

Computershare, Australia is the world’s largest and only global share registry
providing financial market services and technology to the global securities
industry.

Karvy Corporate and Mutual Fund Share Registry and Investor Services business,
India's No. 1 Registrar and Transfer Agent and rated as India's "Most Admired

Registrar" for its overall excellence in volume management, quality processes and
technology driven services.

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Karvy Computershare came into existence with the coming together of two stalwarts –
Computershare on the global scale and Karvy in the Indian domestic markets. The 50:50
ventures would bring together global capabilities and local expertise in carrying forward
the legacy of comprehensive registry management services in India and across the globe.

Computershare has over 6000 experienced professionals, Computershare operates in five

continents, providing services and solutions to listed companies, investors, employees,
exchanges and other financial institutions while Karvy has handled over 675 issues as
Registrar to Issues servicing over 16 million investors from multiple locations across
India.

Karvy Computershare is all geared up to establish a new paradigm in service delivery

driven by benchmark operations management practices, the highest quality standards and
state-of-the-art technology to service its clients and the investor community at large. The
rapid developments in the Indian securities market infrastructure, regulatory environment
and internationalization of the Indian economy provides outstanding opportunities for
them to leverage on each others capabilities to provide cross border transactions and a
larger service portfolio to their foreign multinational as well as Indian multinational
clients.

The combination of local knowledge and global expertise with technological innovations

is going to mark the emergence of a fully integrated services provider with cross border
capabilities.

 Karvy Global Services Limited

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They have a simple approach to doing business.

"Our clients are our business partners. Our goal is to help them succeed".

The key values that transcend the organization are:

• Integrity in all business functions

• Transparency in the organization
• Performance based culture

They are guided by their mission that outlines the premise for their values and what they
each can do to thrive and grow. It is an ingrained focus that keeps them moving in the
right direction on their journey to build a responsive company.

Their customers form an important part of their mission that inspires, empowers and it
makes them accountable to one another.

Swings in commodity prices that used to take years are happening in days, equity
markets are roller coasters, and BRIC economies have gone from being the next big thing
to dead in the water to, potentially, the next big thing.

It is hard to stay in front.

Karvy Global Services is a knowledge services company. They provide specialist

resources to extend in house analyst teams in driving clear business results. They serve
investment banks, insurance providers, brokerages, hedge funds, research agencies, and

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life settlement providers across the United States, Middle East, and Europe. Their clients
have found their cost advantage, ability to scale efforts, and specialist knowledge
regarding emerging markets to be a strong advantage in the new, fast, and unpredictable
world.

Their areas of focus include equity and industry research, commodity research, credit
analytics, technology-based workflow solutions, insurance policy and portfolio valuation,
and other specialized services.

Incorporated in 2004, they are backed by over 25 years of experience through India’s
largest financial services company, the Karvy Group. They are headquartered in New
York and have their primary delivery center in Hyderabad, India.

They encourage their clients to contact them to evaluate their research or outsourcing
needs.

Our clients are our business partners. Our goal is to help them succeed".

The key values that transcend the organization are:

• Integrity in all business functions

• Transparency in the organization
• Performance based culture

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They are guided by our mission that outlines the premise for their values and what they
each can do to thrive and grow. It is an ingrained focus that keeps them moving in the
right direction on their journey to build a responsive company.

Their customers form an important part of their mission that inspires, empowers and it
makes them accountable to one another

 Karvy Data Management Services Limited

Since its inception in 1982, Karvy has demonstrated a dedication coupled with
dynamism that has inspired trust from various segments, corporates, government
bodies and individuals. Karvy has since been performing a pivotal role as the
interface between these players.

Their ability to mass customize and offer a diverse range of products for a diverse
range of customers has helped corporates to uniquely position themselves in the
market place. This diverse range of services cut across multiple delivery channels,
service centers, web, and mobile phones, call center and has brought home the
benefits of technology to customers, middle men and corporates.

Going forward, they will create new products and services, which would address the
needs of the end customer. their single minded focus in delivering products for
customers has given them the distinguished position of being the preferred provider
of financial services in the country.

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Our Clients Our Focus –

Clients are the reason for their being personalized service, professional care, pro-
activeness are the values that help them nurture enduring relationships with their clients.

Respect for the individual –

Each and every individual is an essential building block of their organization they are the
kiln that hones individuals to perfection. Be they the employees, shareholders or
investors. They do so by upholding their dignity & pride, inculcating trust and achieving
a sensitive balance of their professional and personal lives.

Teamwork - None of them is more important than all

Each team member is the face of Karvy. Together they offer diverse services with speed,
accuracy and quality to deliver only one product: excellence. Transparency, co-operation,
invaluable individual contributions for a collective goal, and respecting individual
uniqueness within a corporate whole, are how they deliver again and again.

Responsible Citizenship - A social balance sheet is as rewarding as a business one

As a responsible corporate citizen, their duty is to foster a better environment in the

society where they live and work. Abiding by its norms, and behaving responsibly
towards the environment, are some of their growing initiatives towards realizing it.

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Integrity - Everything else is secondary

Professional and personal ethics are their bedrock. they take pride in an environment that
encourages honesty and the opportunity to learn from failures than camouflage them.
they insist on consistency between works and actions.

 Karvy Consultants Limited

As the flagship company of the KARVY Group, KARVY Consultants Limited has
always remained at the helm of organizational affairs, pioneering business policies,
work ethic and channels of progress. Having emerged as a leader in the registry
business, the first of the businesses that they ventured into, they have now transferred
this business into a joint venture with Computershare Limited of Australia, the
world’s largest registrar. With the advent of depositories in the Indian capital market
and the relationships that they have created in the registry business, they believe that
they were best positioned to venture into this activity as a Depository Participant. they
were one of the early entrants registered as Depository Participant with NSDL
(National Securities Depository Limited), the first Depository in the country and then
with CDSL (Central Depository Services Limited). Today, they service over seven
lakh customer accounts in this business spread across over 540 cities/towns in India
and are ranked amongst the largest Depository Participants in the country. With a
growing secondary market presence, they have transferred this business to KARVY
Stock Broking Limited (KSBL), our associate and a member of NSE, BSE and HSE.

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 Having emerged as a leader in the registry business, the first of the businesses that
they ventured into, they have now transferred this business into a joint venture with
Computershare Limited of Australia, the world’s largest registrar. With the advent of
depositories in the Indian capital market and the relationships that they have created
in the registry business, they believe that they were best positioned to venture into this
activity as a Depository Participant. They were one of the early entrants registered as
Depository Participant with NSDL (National Securities Depository Limited), the first
Depository in the country and then with CDSL (Central Depository Services
Limited). Today, they service over 6 lakhs customer accounts in this business spread
across over 250 cities/towns in India and are ranked amongst the largest Depository
Participants in the country. With a growing secondary market presence, they have
transferred this business to Karvy Stock Broking Limited (KSBL), their associate and
a member of NSE, BSE and HSE.

IT enabled services

Their Technology Services division forms the ideal platform to unleash their
technology initiatives and make their presence felt on the Internet. Their past
achievements include many quality websites designed, developed and deployed by
them. They also possess their own web hosting facilities with dedicated bandwidth
and a state-of-the-art server farm (data center) with services functioning on a variety
of operating platforms such as Windows, Solaris, Linux and Unix.

The corporate website of the company, “www.karvy.com”, gives access to in-depth

information on financial matters including Mutual Funds, IPOs, Fixed Income
Schemes, Insurance, Stock Market and much more. A link called ‘Resource Center’,
devoted solely to research conducted by their team of experts on various financial
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 aspects like ‘Sector Research’, deals exclusively with in-depth analysis of the key
sectors of the Indian economy. Besides, a host of other links like ‘My Portfolio’
which acts as a personalized and customized financial measure, makes this site
extremely informative about investment options, market trends, news as also about
their company and each of the services offered here.

4.2 PRODUCTS & SERVICES:

Retail Services

 Equities and Derivatives

 Commodities

 Mutual Fund Services

 Depository Services

 Insurance Broking Services

 Bonds and Deposits

 Realty Services

 Portfolio Management Services

Institutional Services

 Registrar and Transfer Agency

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  Mutual Fund Registry

 Investment Banking

 Corporate finance

 Institutional Broking

 Debt Market Services

 BPO and KPO Services

 Corporate Advisor

Online stock broking services:

Product Features

 Web / Executable Version – Absolutely free

 Online trading for BSE Cash, NSE cash & NSE F&O.

 Online Market watch for BSE Cash, NSE cash & NSE F&O.

 Index Price graphs are available.

 Online Risk/Exposure calculations.

 Market to Market P/L alerts.

 Receivables & payables statements for stock & cash.

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  Intraday & delivery Alerts.

 Digital Contract notes.

 Recommendations – Pop up facility.

 Call centre Service.

 Balance Statement.

 Order Entry.

 Order Confirmation.

 Trade Confirmation.

 Margin Computations.

 Statements(Margin&Limits,Cash,Stock,Networth)

 Online interface with HDFC/IDBI/UTI/ICIC

4.3 HISTORY:

The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise
of a small group of practicing Chartered Accountants who founded the flagship company.
Karvy Consultants Limited. It started with consulting and financial accounting
automation, and carved inroads into the field of registry and share accounting by 1985.
Since then, it have utilized its experience and superlative expertise to go from strength to

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strength, to better its services, to provide new ones, to innovate, diversify and in the
process, evolved Karvy as one of India’s premier integrated financial service enterprise.

Thus over the last 20 years Karvy has traveled the success route, towards building a
reputation as an integrated financial services provider, offering a wide spectrum of
services. And Karvy have made this journey by taking the route of quality service, path
breaking innovations in service, versatility in service and finally. Now it is totality in the
service segment.

Its highly qualified manpower, cutting-edge technology, comprehensive

infrastructure and total customer-focus has secured for them the position of an emerging
financial services giant enjoying the confidence and support of an enviable clientele
across diverse fields in the financial world.

Its values and vision of attaining total competence in its servicing has served as the
building block for creating a great financial enterprise, which stands solid on its
fortresses of financial strength – its various companies. With the experience of years of
holistic financial servicing behind it and years of complete expertise in the industry to
look forward to, Karvy have now emerged as a premier integrated financial services
provider. And today, Karvy can look with pride at the fruits of its mastery and experience
– comprehensive financial services that are competently segregated to service and
manage a diverse range of customer requirements.

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About The KARVY Group

 Formed in 1983 at Hyderabad, India

 Karvy Computershare Limited is India’s largest Registrar and Transfer Agent

with a client base of nearly 500 blue chip corporates, managing over 2 crore
accounts.

 Karvy Stock Brokers Limited, member of National Stock Exchange of India

and the Bombay Stock Exchange, ranks among the top 5 stock brokers in
India. With over 6,00,000 active accounts, it ranks among the top 5 Depositary
Participant in India, registered with NSDL and CDSL.

 Karvy Insurance Brokers is registered as a Broker with IRDA and ranks

among the top 5 insurance agent in the country

 Registered with AMFI as a corporate Agent, Karvy is also among the top
Mutual Fund mobilizer with over Rs. 5,000 crores under management.

 Karvy Realty Services, which started in 2006, has quickly established itself as
a broker who adds value, in the realty sector.

 Karvy Global offers niche off shoring services to clients in the US.

 Karvy has 575 offices over 375 locations across India and overseas at Dubai
and New York. Over 9,000 highly qualified people staff Karvy.

Achievements

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  Among the top 5 stock brokers in India (4% of NSE volumes).

 India's No. 1 Registrar & Securities Transfer Agents.

 Among the to top 3 Depository Participants.

 Largest Network of Branches & Business Associates.

 ISO 9002 certified operations by DNV.

 Among top 10 Investment bankers.

 Largest Distributor of Financial Products.

 Adjudged as one of the top 50 IT uses in India by MIS Asia.

 Full Fledged IT driven operations.

Business Objective

Comprehensive Investor centric wealth management Information Seamless integration

with other diversified systems for cross product aggregation Real time processing
capabilities for collecting and aggregating financial information

Key People:

Board of Directors - Karvy Computershare Private Limited

William Stuart Crosby- Chairman

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C Parthasarathy -Managing Director

M Yugandhar -Managing Director

M S Ramakrishna- Director

Chandra Balaraman- Director

James Wong- Director

4.4 SWOT ANALYSIS

Strengths:

 Employees are highly aggressive and knowledgeable.

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  Good co-operation between employees.

 Good brand image-

 Number 1 Registrar and Transfer agent in India.

 Number 1 dealer of Investment Products in India.

 Largest Distributor of Financial Products

 Among the top 5 stock brokers in India

 User friendly software for doing online trading.

 Company can able to offer competitive brokerage charges by reducing its

operational charges.

Weaknesses:

 Higher initial/entry charges.

 Lack of effective communication network.

Opportunity:

 Booming stock market and stable government.

 Marketing at rural and semi-urban areas.

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  Increasing awareness among Indian population in equity investment options.

Threats:

 Increasing number of local players.

 Past image of Mutual Fund.

 Market fluctuation.

 Entry of Banks in retail broking.

Page 50 of 73
5.1 ANALYSIS AND INTERPRETATION

GRAPH 1: SHOWING THE INVESTMENTS MADE BY THE DII’S FOR THE

MONTH OF JANUARY 2008

Page 51 of 73
TABLE 1: TABLE SHOWING THE INVESTMENTS BY DII FOR THE MONTH
OF JANUARY 2008

Date Buy Sales Net

31/1/08 3,145.68 985.33 2,160.36
30/1/08 1,432.25 709.14 723.11
29/1/08 762.03 663.21 98.82
28/1/08 1,155.28 557.34 597.94
25/1/08 1,475.88 1,227.53 248.36
24/1/08 2,140.83 1,023.80 1,117.03
23/1/08 2,669.63 1,377.87 1,291.76
22/1/08 4,375.64 1,596.93 2,778.71

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21/1/08 4,430.29 1,031.09 3,399.21
18/1/08 2,031.66 1,336.10 695.55
17/1/08 2,039.72 1,304.97 734.75
16/1/08 1,864.99 1,676.02 188.97
15/1/08 1,229.36 1,319.10 -89.74
14/1/08 1,319.73 1,513.28 -193.55
11/1/2008 1,298.51 1,296.59 1.92
10/1/2008 1,751.98 1,363.25 388.74
9/1/2008 1,206.00 1,120.49 85.51
8/1/2008 1,630.66 1,538.58 92.07

7/1/2008 1,806.64 1,479.00 327.64

4/1/2008 1,952.45 1,445.60 506.85
3/1/2008 2,024.50 1,497.85 526.65
2/1/2008 1,610.49 1,183.38 427.11
1/1/2008 1,284.38 977.44 306.94
Analysis

From the above data we can see that the DIIs started of the month by buying 1284 crores
and continued to infuse funds into the market. They withdrew more than what they
bought for some period of time. The maximum that they bought was on the 21 st of Jan
where they invested 4430 crores into the market.

There was heavy selling by the DIIs during the month of Jan and the maximum they sold
was on the 16th, where they sold equities to the tune of 1676 crores.

Though the DIIs bought equities worth 1284 crores on the 1 st of the month, it couldn’t
avoid the sensex from cashing, as the FIIs pulled out 1350 crores. This led the market

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down by 25 points. The Sensex which had opened at 20325 points ended the day at
20300 points.

The market for the month end January crashed inspite of some buying by the DIIs to the
extent of 3145 crores. Inspite of this the market crashed.

GRAPH 2: SHOWING THE INVESTMENTS MADE BY THE DII’S FOR THE

MONTH OF FEBRUARY 2008

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TABLE 2: TABLE SHOWING THE INVESTMENTS BY DII FOR THE MONTH
OF FEBRUARY 2008

Date Buy Sales Net

29/2/08 1,719.28 976.49 742.78
28/2/08 2,096.11 1,363.73 732.38
27/2/08 1,365.24 1,023.89 341.35
26/2/08 1,250.15 738.82 511.33
25/2/08 986.13 1,302.62 -316.49
22/2/08 679.11 573.62 105.49
21/2/08 748.8 889.48 -140.69
20/2/08 994.98 738.8 256.18

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19/2/08 1,023.41 1,071.70 -48.29
18/2/08 640.96 775.12 -134.17
15/2/08 948.85 810.19 138.66
14/2/08 1,115.45 910.42 205.03
13/2/08 778.74 755.15 23.59
12/2/2008 1,202.97 851.81 351.16
11/2/2008 1,350.58 1,372.85 -22.27
8/2/2008 1,106.60 913.62 192.98
7/2/2008 994.01 763.31 230.7
6/2/2008 1,368.00 1,010.68 357.32

5/2/2008 829.99 965.15 -135.17

4/2/2008 1,644.83 913 731.83
1/2/2008 1,220.80 1,336.20 -115.4

Analysis

The DIIs started of the month by buying equities worth Rs. 1220 crores. The least
investment done by them was on the 18th of Jan. They ended the month on a high by
buying equities worth 2096 crores on 28th. On the same day they sold equities worth 1363
crores.

The downfall in the stock market continued taking forward the trend of the month of
January. The Sensex at the month end closed on a negative note by falling 201 points.
The DIIs bought equities worth 1719 crores and sold equities worth 976.49 crores.

Page 56 of 73
GRAPH 3: SHOWING THE INVESTMENTS MADE BY THE DII’S FOR THE
MONTH OF MARCH 2008

Page 57 of 73
TABLE 3: TABLE SHOWING THE INVESTMENTS BY DII FOR THE MONTH
OF MARCH 2008

31/3/08 1,880.72 1,314.69 566.03

28/3/08 1,643.62 914.12 729.5
27/3/08 1,785.81 1,445.97 339.85
26/3/08 1,063.92 1,172.57 -108.65
25/3/08 1,413.70 1,013.73 399.98
24/3/08 836.61 1,089.88 -253.28
19/3/08 1,629.04 1,486.85 142.19
18/3/08 1,116.35 939.02 177.33
17/3/08 1,127.88 916.4 211.47

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14/3/08 1,105.08 1,004.75 100.33
13/3/08 1,173.42 1,116.98 56.44
12/3/2008 752.32 1,280.38 -528.07
11/3/2008 1,433.67 1,130.31 303.36
10/3/2008 1,878.29 1,119.50 758.79
7/3/2008 1,293.36 1,360.15 -66.8
5/3/2008 1,043.63 1,175.31 -131.68
4/3/2008 1,145.71 975.48 170.23
3/3/2008 1,283.30 1,202.83 80.47

Analysis

During the month of March the DIIs started the month by investing 1283 crores. They
ended the month on a high by buying equities worth 1880 crores.

There was heavy selling by the DIIs to the tune of 1486 crores on the 19th.

The Sensex ended on a negative of15644 points for the month ended March as against its
opening of 16226 points on the same day.

GRAPH 4: GRAPH SHOWING THE INVESTMENTS BY DII FOR THE

MONTH OF APRIL 2007:

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TABLE 4: TABLE SHOWING THE INVESTMENTS BY DII FOR THE MONTH
OF APRIL 2007:

Trade Date Buy Sales Net

30-04-2007 884.86 684.21 200.65
27-04-2007 793.2 617.23 175.97
26-04-2007 1,196.60 1,374.63 -178.03
25-04-2007 1,060.12 973.73 86.4
24-04-2007 1,313.67 1,129.38 184.29
23-04-2007 771.77 514.05 257.72
20-04-2007 907.47 777.6 129.87
19-04-2007 810.9 537.14 273.76
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18-04-2007 887.82 868.38 19.44
17-04-2007 729.55 1,039.74 -310.19
16-04-2007 781.77 763.98 17.8
13-04-2007 -- -- --
12-04-2007 -- -- --
11-04-2007 -- -- --
10-04-2007 -- -- --
09-04-2007 -- -- --
05-04-2007 -- -- --
04-04-2007 -- -- --

03-04-2007 -- -- --
02-04-2007 -- -- --

Analysis

There was no movement from the DIIs for the few days of trading. They became
operational from the 16th of april by investing 781 crores. They bought equities worth
1313 crores on 24th which was the highest for the month by the DIIs.

They sold equities worth 1374 crores on the 26th which was the highest selling by the
DIIs for the month ending April 2007.

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GRAPH 5: GRAPH SHOWING THE INVESTMENTS BY DII FOR THE

MONTH OF MAY 2007

Page 62 of 73
Page 63 of 73
TABLE 5: TABLE SHOWING THE INVESTMENTS BY DII FOR THE MONTH
OF MAY 2007:

Trade Date Buy Sales Net

31-05-2007 1,340.53 1,308.34 32.19
30-05-2007 1,349.85 787.98 561.87
29-05-2007 848.24 972.38 -124.14
28-05-2007 1,077.57 1,002.83 74.73
25-05-2007 836.96 665.47 171.49
24-05-2007 889.29 1,025.59 -136.31
23-05-2007 1,034.78 946.84 87.94
22-05-2007 1,196.79 1,324.61 -127.82
21-05-2007 1,330.32 1,072.39 257.93
18-05-2007 798.98 740.93 58.05
17-05-2007 1,626.50 991.84 634.66
16-05-2007 1,360.92 957.43 403.49
15-05-2007 800.19 860.09 -59.9
14-05-2007 769.03 767.24 1.79
11-05-2007 925.82 485.77 440.06
10-05-2007 918.11 531.67 386.44
09-05-2007 779.03 892.14 -113.1

08-05-2007 964.75 1,089.29 -124.54

07-05-2007 900.11 756.53 143.58
04-05-2007 695.99 396.89 299.1

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03-05-2007 769.99 583.59 186.4

Analysis

The DIIs started of the month by buying equities worth 769 cores on the 3 rd of May. On
the backdrop of the DIIs being net buyers the sensex closed on a positive by ending the
day at 14078 points as against its opening of 13987 points. They bought equities worth
1626 crores on the 17th which stood be the highest buying by the DIIs for the month.
Inspite of some heavy buying by the DIIs, the sensex closed just a few points up. The
sensex closed 72 points up.

The DIIs sold equities worth 1324 crores on the 22nd which was the highest selling by
them for the month of May. The sensex ended the day in a negative by going down 6
points.

GRAPH 6: GRAPH SHOWING THE INVESTMENTS BY DII FOR THE

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MONTH OF JUNE 2007:

Page 66 of 73
TABLE 6: TABLE SHOWING THE INVESTMENTS BY DII FOR THE MONTH
OF JUNE 2007:

Trade Date Buy Sales Net

29-06-2007 1,119.86 958.2 161.67
28-06-2007 1,145.29 1,071.78 73.51
27-06-2007 748.75 504.65 244.1
26-06-2007 885.6 686.11 199.49
25-06-2007 737.57 558.34 179.23
22-06-2007 1,314.72 802.42 512.29
21-06-2007 1,005.19 857.48 147.71
20-06-2007 894.26 790.13 104.13
19-06-2007 769.13 802.11 -32.98
18-06-2007 778.67 408.67 370
15-06-2007 865.58 501.72 363.86
14-06-2007 527.4 494.83 32.57
13-06-2007 863.21 531.73 331.48
12-06-2007 702.49 783.35 -80.86
11-06-2007 820.99 583.87 237.11
08-06-2007 1,334.84 595.84 739
07-06-2007 1,037.22 753.41 283.81
06-06-2007 1,126.64 771.2 355.43

05-06-2007 786.84 739.05 47.79

04-06-2007 788.4 817.34 -28.94
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01-06-2007 1,122.01 802.17 319.84

Analysis

The domestic institutional investors bought equities worth 1122 crores during the
beginning of the month. The month of june saw the sensex going down by 40points on
the first day itself. The DIIs bought equities worth 1334 crores on 8th which was the
highest for the month of June by the DIIs. The market remained table on 8th of june.

The DIIs ended the month by becoming net sellers. They sold equities worth 1071 crores
on the 28th. At the end of the month the sensex went up marginally.

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6.1 FINDINGS
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 • From the analysis we can see that the DIIs are very important to the health of the
economy. They make huge investments into the market which keeps the sensex
ticking.

• The DIIs have invested huge amounts into the market which has kept the stock
market on a positive note. Whenever the FIIs have pulled out money from the
market, the DIIs have come to the rescue by becoming net buyers.

• Many a times the market was unable to show a positive trend inspite of the
investments made by the DIIs.

• During the month of April, the DIIs did no selling or buying. They were inactive
for the first few days of the month. The highest investment done by the DIIs for
the month was 1313 crores which was very less in comparison to the investments
done by the DIIs during the 6 months analysed.

• The research carried out highlights the importance of the real estate sector which
was the most favoured destination by the DIIs.

• There have been suggestions by the DIIs that there is a need for a regulatory body
to be set up in order to control the wild fluctuations that take place in the real
estate sector.

• The increasing middle class is attracting the investors as the country is still short
of 22.5 million homes. This is driving a number of Indian property firms to sell
their shares to investors.

• The DIIs invested $15 billion during November 2007. The sensex disconnected
from the FII trend during this period until January 2008.

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 • The retail which has been one of the largest employment generator is now
becoming the most favoured destination for investors.

• Corporate scams like that of Satyam and Harshad Mehta may deter the investors
from investing.

• There is an increasing awareness about the equity investments which would be a

great factor in attracting DIIs to invest more into the market.

• Online trading has attracted more number of people entering the Stock market.
But there is a risk of the traditional form of broking losing out.

• Increased dependence on brokerage houses. The trader is unable to take a call and
depends upon the brokerage houses for his/her investment decisions.

• Threat from local players. There is an increase in the number of local players.

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6.2 CONCLUSION

India does have foreign money coming in the form of FII’s but in an event of pull out of
funds by these FII’s, DII’s help the market to show profitability and help in keeping the
sensex ticking in the right way. But DII’s always do not have a positive impact on the
sensex. There has been tremendous flow of foreign capital into India. In spite of some
stringent rules by the Government of India, there has been an incredible flow of capital
into the market

It can thus be concluded that DIIs are more active in their investments when the FIIs
withdraw their money from the market. They basically do a balancing activity, trying to
protect the market from undue risks. Domestic institutional investors thus, are a great
support for the economy in bringing revenues and also to protect it from market hazards.
Thus the impact of DIIs on sensex companies depends on the bullish and bearish trends
that the market faces at that point of time.

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BIBLIOGRAPHY

o sebi.gov.in

o www.karvy.com

o www.bseindia.com

o economictimes.indiatimes.com

o www.thehindubusinessline.com

o www.business-standard.com

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