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EXECUTIVE SUMMARY

Anand Rathi is a leading full service investment bank founded in 1994 offering a wide range of financial services and wealth management solutions to institutions, corporations, high net worth individuals and families. The firm has rapidly expanded its footprint to over 350 locations across India with international presence in Dubai, Hong Kong & New York. Founded by Mr. Anand Rathi and Mr. Pradeep Gupta, the group today employs over 2,500 professionals throughout India and its international offices.

The firms philosophy is entirely client centric, with a clear focus on providing long term value addition to clients, while maintaining the highest standards of excellence, ethics and professionalism. The entire firm activities are divided across distinct client groups: Individuals, Private Clients, Corporates and Institutions. Anand Rathi has been named The Best Domestic Private Bank in India by Asiamoney in their Fifth Annual Private Banking Poll 2009. The firm has emerged a winner across all key segments in Asiamoneys largest survey of high net worth individuals in India.

AR analysts provide objective and decisive research that is designed to enable clients to make informed investment decisions. The team covers entire spectrum of financial markets from equities, fixed income, and commodities to currencies. They also cover the global markets, to give clients an unparalleled macro-view of the investment opportunities across the globe.

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KLES INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,HUBLI.

Their research expertise is at the core of the value proposition that we offer to their clients. Research teams across the firm continuously track various markets and products. The aim is however common - to go far deeper than others, to deliver incisive insights and ideas and be accountable for results. AR research processes incorporate quantitative areas well as qualitative analyses. This multi-pronged approach helps us to provide superior risk- adjusted returns for their clients. AR analysts provide objective and decisive research that is designed to enable clients to make informed investment decisions. The team covers entire spectrum of financial markets from equities, fixed income, and commodities to currencies. They also cover the global markets, to give clients an unparalleled macro-view of the investment opportunities across the globe.

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KLES INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,HUBLI.

Topic:
A Study On Perception Of Investors Towards Equity & Alternative Investments in Anand Rathi.

Objective of the study:


To understand the investors perception on various investment alternatives

Sub-objectives:
1. To analyze the investment pattern of people who reside in Hubli city. 2. To study the investment decisions of different social class people. 3. To study the portfolio of various investments availed at Anand Rathi. 4. To study the extent of popularity of various products offered by Anand Rathi.

Methodology of the study:


Primary Data: A questionnaire schedule was prepared and the primary data was collected. Secondary Data: 1.Company website. 2.Customer data base 3.Company report 4.Company books and records 5.Related websites

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Type of research:
This is a descriptive research where survey method is adopted to collect primary information from the investors using different scales as required and the required secondary information for the analysis.

Sampling Technique:
The sampling technique followed in this study is non-probability convenient sampling. Simple random techniques are used to select the respondent from the available database. The research work will be carried on the basis of structured questionnaire. The study is restricted to the investors of Hubli city only.

Sample Size:
The population being large the survey will be carried among 100 respondents who are the clients of Anand Rathi, They will be considered adequate to represent the characteristics of the entire population.

Tools used for data analysis:


The collected data will be analyzed by any relevant statistical tool

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1. INDUSTRY PROFILE
Financial Services Sector Overview: Financial stability is crucial for sustained economic growth but this cannot be achieved without strong financial systems. [Financial Stability Institute] The far-reaching changes in the Indian economy since liberalization in the early 1990s have had a deep impact on the Indian financial sector. The financial sector has gone through a complex and sometimes painful process of restructuring, capitalizing on new opportunities as well as responding to new challenges. During the last decade, there has been a broadening and deepening of financial markets. Several new instruments and products have been introduced. Existing sectors have been opened to new private players. This has given a strong impetus to the development and modernization of the financial sector. New players have adopted international best practices and modern technology to offer a more sophisticated range of financial services to corporate and retail customers. This process has clearly improved the range of financial services and service providers available to Indian customers. The entry of new players has led to even existing players upgrading their product offerings and distribution channels. This continued to be witnessed across key sectors like commercial banking and insurance, where private players achieved significant success. These changes have taken place against a wider systemic backdrop of easing of controls on interest rates and their realignment with market rates, gradual reduction in resource preemption by the government, relaxation of stipulations on confessional lending and removal of access to confessional resources for financial institutions. Over the past few years, the sector has also witnessed substantial progress in regulation and supervision. Financial intermediaries have gradually moved to internationally acceptable norms for income recognition, asset classification, and provisioning and capital adequacy.

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This process continued, with RBI announcing guidelines for risk-based supervision and consolidated supervision. While maintaining its soft interest rate stance, RBI cautioned banks against taking large interest rate risks, and advocated a move towards a floating rate interest rate structure. The past decade was also an eventful one for the Indian capital markets. Reforms, particularly the establishment and empowerment of securities and Exchange Board of India (SEBI), market-determined prices and allocation of resources, screen-based nation-wide trading, dematerialization and electronic transfer of securities, rolling settlement and derivatives trading have greatly improved both the regulatory framework and efficiency of trading and settlement. On account of the subdued global economic conditions and the impact on the Indian economy of the drought conditions prevailing in the country, 2002-03 was a subdued year for equity markets. Despite this, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) ranked third and sixth respectively among all exchanges in the world with respect to the number of transactions. The year also witnessed the grant of approval for setting up of a multi-commodity exchange for trading of various commodities. In the midst of these positive developments, a key issue that continues to impact the Indian financial sector adversely is that of asset quality and consequent pressure on capital. The liberalization and globalization of the Indian economy led to a process of restructuring and consolidation across several sectors of the economy. Several units that were set up in a protectionist environment became. Unviable in the new paradigm of competition in the global market place. Volatility in global commodity prices has a major impact on Indian companies. This has led to nonperforming loans and provisioning for credit losses becoming a key area of concern for the Indian financial system. The NPA problem in India, viewed in the context of comparison with other Asian economies, does not pose an insoluble systemic problem; at 8% of GDP, the NPA levels are significantly lower than the levels of 30-40% seen in other Asian economies.

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The key problems in India have been the inability of banks to quickly enforce security and access their collateral, and the capital constraints in recognizing large loan losses. Recent measures taken by the Government have attempted to address both these problems. The Securitizations and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act creates a long-overdue framework for resolving the distressed credit problem in India, by providing legal support to the resolution process and thereby encourages the flow of capital into this specialized sector. The proposal for swapping high-yield Government securities held by banks into lower-yield securities, thereby realizing mark-to-market gains and utilizing the same to make additional provisions, would also strengthen the balance sheets of banks. RBI operationalised the corporate debt restructuring forum, which has a made significant progress in building lender consensus on restructuring. The next major initiative would be the operationalisation of an asset reconstruction company, and the development of a market for distressed credit similar to those in other countries. `The increasing disintermediation in the corporate credit market, slowdown in creation of new capital assets as companies focus on improving existing capacity utilization and improving working capital efficiency of Indian corporate has led to lower demand for credit from the corporate sector in the past two years. This has been replaced by the huge retail finance opportunity. Existing low penetration levels, increasing affordability of credit and rising income levels have led to a growing demand for retail credit. This has been strengthened by the tax incentives for acquiring residential property, leading to a particularly high growth in housing finance. Going forward, the infrastructure, retail and small and medium enterprise segments would provide large growth opportunities, while the manufacturing sector is expected to continue its consolidation phase, with selective additions to capacity. However, success in these segments presents several challenges. Retail and SME banking requires extremely effective distribution systems that are capable of offering flexibility and convenience to the customer, while maintaining costefficiency for banks. At the same time, banks need to put in place high-quality credit modeling and data mining systems.

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This is essential to appropriately assess and price risk and allocate capital in a manner that would optimize risk-adjusted returns. The Indian financial system would also witness greater activity in the debt markets, as originators of credit increasingly seek to proactively manage their portfolios by structuring and selling down loan portfolios to entities that have capital to deploy but lack the origination and structuring capabilities. India has made considerable progress in the post-1991 period. The countrys macroeconomic fundamentals have improved and external vulnerability has been sharply reduced. Reforms in the financial sector have appropriately addressed the pre-1991 weaknesses in the sector and improved its competitive strength domestically as well as globally. Individual players now need to adopt proactive competitive strategies that will enable them to capture the emerging opportunities. Exposure to global practices has made the Indian customer more discerning and demanding. There has been a clear shift towards those entities that are able to offer products and services in the most innovative and cost efficient manner. The financial sector will need to adopt a customer-centric business focus. It will also have to create value for its shareholders as well as its customers, competing for the capital necessary to fund growth as well as for customer market share. This indeed will be the challenge in the coming years.

Challenges Ahead:
The Financial Services industry is undergoing metamorphosis. There is lately an overwhelming demand for aggregation of services and enhanced customer service. The business paradigms are changing faster in this industry than elsewhere. Financial Services firms have to continually expand their service offerings to satisfy the increasingly demanding and savvy customer. 1) Banking. 2) Insurance. 3) Capital Markets

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1) Banking:
Rapid consolidation, intensifying competition and increased customer awareness pose significant challenges for banks as products and services are easily and quickly duplicated across the industry. In this scenario, banks have moved rapidly from product-centric business models to customer centric business models.

2) Insurance:
In the last few years the global Insurance industry has been witnessing significant changes with the arena getting more competitive and complex. Consolidation and convergence in the financial services sector, overhaul in social security systems, emergence of alternative distribution channels, and increasing competition from other investment options are driving sweeping changes in the insurance industry. These changes have brought challenges of managing mergers, managing customer expectations, and rationalizing the systems to support different products and distribution channels.

3) Capital Markets:Mergers & acquisitions, rising costs of regulatory compliance, business continuity issues, inherent operational inefficiencies, competitive pressures, unstable stock markets, and increasing risks are compelling the financial services firms to be more innovative and agile. The internet 'revolution' has given way to mature and more sophisticated use of the medium's power, throwing up fresh challenges along with opportunities. Corporate governance and transparency have suddenly become hygiene factors. All these issues mandate accurate and timely information, product innovation, and sleek marketing strategies along with strong technological support.

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Investing in various types of assets is an interesting activity that attracts people from all walks of life irrespective of their occupation, economic status, education and family background. When a person has more money than he requires for current consumption, he would be coined as a potential investor. The investor who is having extra cash could invest it in securities or in any other assets like gold or real estate or could simply deposit it in his bank account. The companies that have extra income may like to invest their money in the extension of the existing firm or undertake new venture. All of these activities in a broader sense mean investment.

Investment:

Investment is the employment of funds on assets with the aim of earning income or capital appreciation. Investment has two attributes namely time and risk. Present consumption is sacrificed to get a return in the future. The sacrifice that has to be borne is certain but the return in the future may be uncertain. This attribute of investment indicates the risk factor. The risk is undertaken with a view to reap some return from the investment. For a layman, investment means monetary commitment. A persons commitment to buy a flat or house for his personal use may be an investment from his point of view. This cannot be considered as an actual investment as it involves sacrifice but does not yield any financial return. To the economist, investment is the net addition made to the nations capital stock that consists of goods and services that are used in the production process. A net addition to the stock means an increase in the buildings, equipments or inventories. These capital stocks are used to produce other goods and services.

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KLES INSTITUTE OF MANAGEMENT STUDIES AND RESEARCH,HUBLI.

Financial investment is the allocation of money to assets that are expected to yield some gain over a period of time. It is an exchange of financial claims such as stock and bonds for money. They are expected to yield returns and experience capital growth over the years.The financial and economic meanings are related to each other because the savings of the individual flow into the capital market as financial investments, to be economic investment. Even though they are related to each other, we are concerned only about the financial investment made on securities.

Investment Objectives:
The main investment objectives are increasing the rate of return and reducing the risk. Other objectives like safety, liquidity and hedge against inflation can be considered as subsidiary objectives.

1) Return:
Investors always expect a good rate of return from their investments. Rate of return could be defined as the total income the investor receives during the holding period stated ass a percentage of the purchasing price at the beginning of the holding period. Rate of return is stated semi-annually or annually to help comparison among the different investment alternatives. If it is a stock, the investor gets the dividend as well as the capital appreciation as returns. Market return of the stock indicates the price appreciation for the particular stock.

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2) Risk:
Risk of holding securities is related with the probability of actual return becoming less than the expected return. The word risk is synonymous with the phrase variability of return. Investments risk is just as important as measuring its expected rate of return because minimizing risk and maximizing the rate of return are interrelated objectives in the investment management. An investment whose rate of return varies widely from period to period is risky than whose return that does not change much. Every investor likes to reduce the risk of his investment by proper combination of different securities.

3) Liquidity:
Marketability of the investment provides liquidity to the investment. The liquidity depends upon the marketing and trading facility. If a portion of the investment could be converted into cash without much loss of time, it would help the investor meet the emergencies. Stocks are liquid only if they command good market by providing adequate return through dividends and capital appreciation.

4) Hedge against inflation:


Since there is inflation in almost all the economy, the rate of return should ensure a cover against the inflation. The return rate should be higher than the rate of inflation else the investor will have loss in real terms.Growth stocks would appreciate in their values overtime and provide a protection against inflation. The return thus earned should assure the safety of the principal amount, regular flow of income and be a hedge against inflation.

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5) Safety:
The selected investment avenue should be under the legal and regulatory frame work. If it is not under the legal frame work, it is difficult to represent the grievances, if any. Approval of the law itself adds a flavour of safety. Even though approved by law, the safety of the principal differs from one mode of investment to another. Investments done with the government assure more safety than with the private party. From the safety point of view investments can be ranked as follows: bank deposits, government bonds, UTI units, non-convertible debentures, convertible debentures, equity shares, and deposits with the non-banking financial companies.

The Investment Process:


There are five main steps in investment management: Setting investment objectives. Establishing investment policy. Selecting the portfolio strategy. Selecting the assets. Measuring and evaluating performance.

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1. Setting Investment Objectives:


The first main step in the investment management process is setting investment objectives. For institutions such as pension funds and life insurance companies, these objectives may be a cash flow specification to satisfy a liability due at some future date or a series of liabilities due at different future dates. A guaranteed investment contract (GIC) sold by a life insurance company is an example of the former; the projected benefit payout to beneficiaries of a pension plan and an annuity policy sold by a life insurance company are examples of multiple liabilities. For institutions such as banks and thrifts, the objective may be to lock-in a minimum interest rate spread over the cost of their funds. For others, such as mutual funds and some trust accounts, the investment objective may be to maximize return.

2. Establishing Investment Policy: The second main step is establishing policy guidelines to satisfy the objectives. Setting policy begins with asset allocation among the major asset classes-the products of the capital market. The major asset classes include equities, fixed income securities, real estate, and foreign securities. Client and regulatory constraints must be considered in establishing an investment policy. For example, state regulators of insurance companies (life insurance companies and property and casualty insurance companies) may restrict the amount of funds allocated to certain major asset classes. Even the amount allocated within a major asset class may be restricted based on the characteristics of the particular asset. So too must tax and financial reporting implications be considered in adopting investment policies. For example, life insurance companies have certain tax advantages that make investing in tax-exempt municipal securities generally unappealing. Since pension funds are exempt from taxes, they too would not usually be interested in tax-exempt municipal securities. Property and casualty insurance companies will vary their ownership of tax-exempt municipal securities depending on projected profits from underwriting operations. Commercial banks at one time were major buyers of municipal securities; however, the 1986 tax act made investing in municipal bonds somewhat less attractive to commercial banks. Financial reporting requirements, in particular Statement of Financial Accounting Board Nos. 87 and 88 and the Omnibus Budget Reconciliation Act of 1987 (a legislative initiative which reinforce es the FASB 87 interpretation of liabilities), affect the way in which pension funds establish investment policies. Unfortunately, sometimes financial reporting considerations force institutions to establish investment policies that may not be in the best interest of the institution in the long run.

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3. Selecting a Portfolio Strategy: Selecting a portfolio strategy that is consistent with the objectives and policy guidelines of the client or institution is the third step in the investment management process. Portfolio strategies can be classified as either active strategies or passive strategies. Essential to all active strategies are expectations about the factors that are expected to influence the performance of an asset class. For example, with active equity strategies this may include forecasts of futures earnings, dividends or price-earnings ratios. With active fixed income Portfolios this may involve forecasts of future interest rates, future interest rate volatility or future yield spreads. Active portfolio strategies involving foreign securities will require forecasts of future exchange rates. Passive strategies involve minimal expectation input. The most popular type of passive strategy is indexing. The objective in indexing is to replicate the performance of a predetermined index. While indexing has been employed extensively in the management of equity portfolios, the use of indexing for managing fixed income portfolios is a relatively new practice. Between these extremes of active and passive strategies have sprung strategies that have elements of both. For example, the core of a portfolio may be indexed with the balance managed actively. Or a portfolio may be primarily indexed but employ low risk strategies to enhance the indexed return. This strategy is commonly referred to as enhanced indexing or indexing plus. In the fixed income area, several strategies classified as structured portfolio strategies have been commonly used. A structured portfolio strategy is one in which a portfolio is designed so as to achieve the performance of some predetermined benchmark. These strategies are frequently used in funding liabilities. When the predetermined benchmark is to have sufficient funds to satisfy a single liability regardless of the course of future interest rates, a strategy known as immunization is used. When the predetermined benchmark is multiple future liabilities that must be funded regardless of how interest rates change, the strategy that can be used is immunization or cash flow matching. Even within the immunization and cash flow matching strategies, low risk active management strategies can be employed. One immunization strategy, contingent immunization, allows the portfolio manager to actively manage a portfolio until Certain parameters are realized. If those parameters are realized, the portfolio is then immunized. Indexing can be considered a structured portfolio strategy where the benchmark is to achieve the performance of some predetermined index. Portfolio insurance strategies, where the objective is to ensure that the value of the portfolio does not fall below a predetermined amount is also viewed as a structured portfolio strategy.
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4. Selecting Assets: Once a portfolio is selected, the next main step is the selection of the specific assets to be included in the portfolio. It is in this phase that financial theory tells us the investment manager attempts to construct an optimal or efficient portfolio. An optimal or efficient portfolio is one that provides the greatest expected return for a given level of risk, or equivalently, the lowest risk for a given expected return.

5. Measuring and Evaluating Performance: The measurement and evaluation of investment performance is the last step in the investment management process. (Actually, it is improper to say that it is the last step since investment management is an ongoing process.) This step involves measuring the performance and then evaluating that performance relative to some realistic benchmark. While the performance of a portfolio manager when compared to some benchmark may demonstrate superior performance, this does not necessarily mean that the portfolio satisfied its investment objective. For example, suppose that a life insurance company establishes as its objective maximization of Portfolio returns and allocates 75% of the fund to stocks and the balance to bonds. Suppose further that the portfolio manager responsible for the equity portfolio of this pension fund earns a return over a one year horizon that is 4% higher than the Standard & Poors 500 stock index (a benchmark used to evaluate equity performance). Assuming that the risk of the portfolio was similar to that of the S&P 500, it would appear that the portfolio manager performed well. However, suppose in spite of this performance the life insurance company cannot meet its liabilities. The failure was in establishing the investment objectives and setting policy, not with the manager responsible for managing the portfolio.

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Types Of Investment Avenues: 1. Life Insurance:


Life insurance is a contract for payment of a sum of money to the person assured (or to the person entitled to receive the same) on the happenings of event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or if unfortunate death occurs. Among other things, the contracts also provide for the payment of premium periodically to the corporation by the policy holders. Life insurance eliminates risk. The major advantages of life insurance are given below: Protection: Saving through life insurance guarantees full protection against risk of death of the saver. The full assured sum is paid, whereas in other schemes only the amount saved is paid. Easy payments: For the salaried people the salary savings schemes are introduced. Further, there is an easy installment facility method of payment through monthly, quarterly, half yearly or yearly mode. Liquidity: Loans can be raised on the security of the policy. Tax relief: Tax relief in Income Tax and Wealth Tax is available for amounts paid by way of premium for life insurance subject to the tax rates in force.

2. Mutual Funds:
Investment companies or investment trusts obtain funds from large number of investors through sale of units. The funds collected from the investors are placed under professional management for the benefit of the investors. The mutual funds are broadly classified into openended scheme and close-ended scheme.

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Open-ended scheme:

The open-ended scheme offers its units on a continuous basis and accepts funds from investors continuously. Repurchase is carried out on a continuing basis thus, helping the investors to withdraw their money at any time. In other words, there is an uninterrupted entry and exit into the funds. The open-end scheme has no maturity period and they are not listed in the stock exchanges. Investor can deal directly with the mutual fund for investment as well as redemption. The open-ended fund provides liquidity to the investors since the repurchase facility is available. Repurchase price is fixed on the basis of net asset value of the unit. In 1998 the open-ended schemes have crossed 80 in number. Closed-ended funds:

The close-ended funds have a fixed maturity period. The first time investments are made when the close end scheme is kept open for a limited period. Once closed, the units are listed on a stock exchange. Investors can buy and sell their units only through stock exchanges. The demand and supply factors influence the prices of the units. The investors expectation also affects unit prices. The market price may not be the same as the net asset value. Sometimes mutual funds with the features of close-ended and open-ended schemes have been launched, known as interval funds. They can be listed in the stock exchange or may be available for repurchase during specific periods at net asset value or relative prices.

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3. Equity Shares:
Equity shares are commonly referred to common stock or ordinary shares. Even though the words shares and stocks are interchangeably used, there is difference between them. Share capital of a company is divided into a no. of small units of equal value called shares. The term stock is the aggregate of a members fully paid up shares of equal value merged into one fund. It is a set of shares put together in a bundle. The stock is expressed in terms of money and not as many shares. Stock can be divided into fractions of any amount and such fractions may be transferred like shares.

Equity shares have the following rights according to section 85(2) of the companies act 1956. 1. Right to vote at the general body meetings of the company. 2. Right to control the management of the company. 3. Right to share in the profits in the firm of dividends and bonus shares. 4. Right to claim on the residual after repayment of all the claims in the case of winding of the company. 5. Right of pre-emption in the matter of issue of new capital. 6. Right to apply to court if there is any discrepancy in the rights set aside. 7. Right to receive a copy of the statutory report, copies of annual accounts along with audited report. 8. Right to apply the central government to call an annual when a company fails to call such a meeting. 9. Right to apply the Company Law Board for calling an extraordinary general meeting.

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In a limited company the equity shareholders are liable to pay the companys debit only to the extent of their share in the paid up capital. The equity shares have certain advantages. The main advantages are

Capital Appreciation Limited liability Free tradability Tax advantages (in certain cases) and Hedge against inflation.

4. Bonds:
Bond is a long term debt instrument that promises to pay a fixed annual sum as interest for specified period of time.

The basic features of the bond are given below. 1) Bonds have face value. The face value is called par value. The bonds may be issued at par value or at discount. 2) The interest rate is fixed sometimes it may be variable at as in the case of floating rate bond. Interest is paid semi-annually or annually. The interest rate is known as coupon rate. The interest rate is specified in the certificate. 3) The maturity date of the bond is usually specified at the issue time except in the case of perpetual bonds. 4) The redemption value is also stated in the bonds. The redemption value may at par value or at premium. 5) Bonds are traded in the stock market. When they are traded the market value may be at par or at premium or at discount. The market value and redemption value need not be the same.

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The different bonds are:


Secured bonds and unsecured bonds Perpetual bonds and redeemable bonds Fixed interest rate bonds and floating interest bonds Zero coupon bonds Deep discount bonds Capital indexed bonds

Debentures: According to Companies Act 1956 debenture includes debenture stock, bonds and any other securities of company, whether constituting a charge on the assets of the company or not. Debentures are generally issued by the private sector companies as a long-term promissory note fro raising loan capital. The company promises to pay interest and principal as stipulated. Bond is an alternative form of debenture in India. Public sector companies and financial institutions issue bonds. Some of the characteristic features of debentures are from it is given in the form of certificate of indebtedness by the company specifying the date of redemption and interest rate. Interest: The rate of interest is fixed at the time of issue itself which is known as contractual or coupon rate of interest. Interest is paid as a percentage of the par.

Redemption As earlier the redemption date would be specified in the issue itself. The maturity period may range from 5 years to 10 years in India. They may be redeemed in installments. Redemption is done through a creation of sinking fund by the company. A trustee In charge of the fund buys the debentures either from the market or owners. Creation of the sinking fund eliminates the risk of facing financial difficulty at the time of redemption because redemption requires huge sum.

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Buy back provisions help the company to redeem the debentures at a special price before the maturity date. Usually the special price is higher than the par value of the debenture.

Indenture It is a trust deed between the company issuing debenture and the debenture trustee who represents the debenture holders. The trustee takes the responsibility of protecting the interest of the debenture holders and ensures that the company fulfills the contractual obligations. Financial institutions, banks, insurance companies or firm attorneies act s trustees to the investors. In the indenture the terms of the agreement, description of debentures, rights if the debenture holders, rights of the issuing company and the responsibilities of the company are specified clearly. Debentures are classified on the basis of the security and convertibility as 1) Secured or unsecured 2) Fully convertible debenture 3) Partly convertible debenture 4) Non-convertible debenture

5. Real Estate:
The real estate market offers a high return to the investors. The word real estate means land and buildings. There is a normal notion that the price of the real estate has increased by more than 12 percent over the past ten years. The population growth and the exodus of people towards the urban cities have made the prices to increase manifold. Recently, the recession in the economy has affected the real estate. Prices marked a substantial fall in 1998 from the 1997 prices. Reasons for investing in real estate are given below: High capital appreciation compared to gold or silver particularly in the urban area. Availability of loans for the construction of houses. The 1999-2000 budget provides huge incentives to the middle class to avail of housing loans. Scheduled banks now have to disburse 3 percent of their incremental deposits in housing finance.

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Tax rebate is given to the interest paid on the housing loans. Further Rs.75, 000 tax rebate on a loan upto Rs.5 lakhs which is availed of after April 1999. If an investor invests in a house for about Rs.6-7lakh, he provides a seed capital of about Rs.1-2 lakh. The Rs.5 lakh loan, which draws an interest rate of 15 percent, will work out to be less than 9.6 percent because of the Rs.75,000 exempted from tax annually. In assessing the wealth tax, the value of the residential home is estimated at its historical cost and not on its present market value. The possession of a house gives an investor a psychologically secure feeling and a standing among his friends and relatives.

Apart from making investment in the residential houses, the people in the higher income bracket invest their money in time share plans of the holiday resorts and land situated near the city limit with the anticipation of a capital appreciation. Farm houses and plantations also fall in the line. In spite of the fast capital appreciation investors generally do not invest in the real estate apart in the real estate apart from owning one or two houses. The reasons are:

Requirement of huge capital: To purchase a land or house in the urban area, the investor needs money in lakhs whereas he can buy equity, gold or other from of investment by investing thousands of rupees. Malpractices: often-gullible investors become cheated in the purchase of land. The properties already sold are resold to the investors. The investor has to lose the hardearned money. Restriction of the purchase: The land ceiling Act restricts the purchase of agriculture land beyond a limit. Lack of liquidity: If the investor wants to sell the property, he cannot immediately realize the money. The waiting period may be months or years.

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The points to be taken care of while purchasing the real estate are: The plots should be approved by the local authority because on the un approved layout construction of a house is not permitted. Possibility of capital appreciation. It depends upon the locality and facilities of the site. Originality of title deeds. The site should be free from encumbrance. Encumbrance certificate for a minimum period of latest 15 years should be got from the registrars office. Plinth area should be verified.

Earliest records of securities trading in India are available from the end of eighteenth century. Before 1850 there was business conducted in Mumbai in the share of bank and the securities of east India Company, which were consider as securities for buying, selling and exchange. The share of commercial bank, mercantile bank and bank of Bombay were some of the prominent shares traded. The business was conducted under a sprawling banyan tree in front of the town hall, which is known as horniman Circle Park.In 1850, the companies act was passed and that heralded the commencement of join stock companies in India.

It was the American civil war that helped Indians to established broking business. The leading broker, Shri Premchand Roichand designed and developed a procedure to be followed while dealing in shares. In 1874 the dalal street became the prominent place for meeting of the brokers to conduct business. The broker organized an association on 9th July 1875 known as native share and stock broker association to protect the character, status of the native brokers. That was the foundation of the stock exchange, Mumbai.

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The exchange was established with 318 members. The stock exchange, Mumbai did not have to look back as it started raiding high ladder of growth. The stock exchange is a market place, like any other centralize market where buyers and sellers can transact business in securities at given point of a time in a convenient and competitive manner at the fairest possible prizes. In Jan 1899, Mr. James M Mac Len, MP inaugurated the brokers hall. After the first world war the stock exchange was housed properly at an old building near the Town hall in1928, the present premises where acquired surrounded by Dalal street, Mumbai samachar marg and hamam street. A new building a present location was constructed and was occupied on 1st Dec 1930.In 1950 the regulation of business in securities and stock exchange became an exclusively central Government sub following adaptation of constitution of India. In 1956, the security contract act was passed by the parliament of India. to regulate the securities market, SEBI was initial established on Oct 12 1988 as an interim board under control of ministry of finance, Government of India. In 1992, SEBI act was passed through which the SEBI came into existence.

Hence SEBI acquired statutory status on 30th Jan 1992 by passing an ordinance, which was subsequently converted into an act passed by the parliament on April 4th 1992. The main objective of SEBI is to protect the interest of investor, regulate and promote the capital market by creating an environment, which would facilitate mobilization of resources through efficient allocation and to generate confidents among the investor.

As such SEBI is responsible for regulating stock exchanges and other intermediaries who may be associated with capital market and the process of the public companies rising capital by issuing instrument that will be traded on capital market. SEBI has been empowered by the central government to develop and regulate capital markets in India and there by protect the interest of investors.In 1992, OTCI (Over the counter exchange of India) came in to existent where equities of small companies are listed.
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In 1994, NSE(national stock exchange) came into existent which brought an and to the open but cry system of trading securities which was in vogue for 150 years, and

introduced screen based trading system. BSE (Bombay stock exchange) online trading system was launched on March 14th 1995. Online trading can be done who are authorized by the stock exchange. In screen based trading, investor place there buy and sale orders with brokers whose enter the orders in the automated trading system. When buy and sale order matches, a trade is generated and trade details are given to respective brokers. After a trade has taken place, the buyer as to pay money and seller has to deliver the securities. On the stock exchange hundred & thousands of trades take place every day. Buyers and sellers are spread over a large geographical area. Due to these problems completing a trade by paying cash to the seller & securities to buyer immediately on execution of trades on an individually basis is virtually impossible. So the exchange allows trading to take place for a specified period which is called trading cycle. A unique settlement number identifies each trading cycle. Once the trading period is over, buyer broker pays money and seller broker delivers securities to the CC/CH on a predefined day. This process is called as pay in, after pay in securities are given to the buyer brokers and money is given to seller brokers by the CC/CH, this process is called as pay out. This process of pay in & pay out is called settlement.

Initially the trading cycle was of one fortnight, which was reduced to one week. The transactions entered during this period, of a fortnight or one week, were used to be settled either by payment for purchase or by delivery of shares certificates sold on notified days one fortnight or one week of expiry of the trading. The settlement schedules are made known to the members of the exchange in advance.

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The weekly settlement period was reduced by daily settlement popularly known as rolling settlement, in which each day is separate trading day. With effect from December 2001, t+% rolling settlement cycle was introduced for all equities where T is the trading day and pay in & pay out for the settlement was done on the 5th business day after the trade day. For e.g. If T was Monday, the pay-in & pay-out were done o next Monday as Saturday & Sunday are not counted as business days. T+5 cycles were further shortened to T+3 settlement cycle from April 1st 2002 and T+2 from April 2003.

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National Stock Exchange (NSE)


With the liberalization of the Indian economy, it was found inevitable to lift the Indian stock market trading system on par with the international standards. On the basis of the recommendations of high powered Pherwani Committee, the National Stock Exchange was incorporated in 1992 by Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India, all Insurance Corporations, selected commercial banks and others.

Trading at NSE can be classified under two broad categories: (a) Wholesale debt market and (b) Capital market. Wholesale debt market operations are similar to money market operations - institutions and corporate bodies enter into high value transactions in financial instruments such as government securities, treasury bills, public sector unit bonds, commercial paper, certificate of deposit, etc. There are two kinds of players in NSE: (a) Trading members and (b) Participants. Recognized members of NSE are called trading members who trade on behalf of themselves and their clients. Participants include trading members and large players like banks who take direct settlement responsibility.

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Trading at NSE takes place through a fully automated screen-based trading mechanism which adopts the principle of an order-driven market. Trading members can stay at their offices and execute the trading, since they are linked through a communication network. The prices at which the buyer and seller are willing to transact will appear on the screen. When the prices match the transaction will be completed and a confirmation slip will be printed at the office of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as follows:

NSE brings an integrated stock market trading network across the nation. Investors can trade at the same price from anywhere in the country since inter-market operations are streamlined coupled with the countrywide access to the securities.

Delays in communication, late payments and the malpractices prevailing in the traditional trading mechanism can be done away with greater operational efficiency and informational transparency in the stock market operations, with the support of total computerized network.

Unless stock markets provide professionalized service, small investors and foreign investors will not be interested in capital market operations. And capital market being one of the major sources of long-term finance for industrial projects, India cannot afford to damage the capital market path. In this regard NSE gains vital importance in the Indian capital market system.

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The Organization The National Stock Exchange of India Limited has genesis in the report of the High Powered Study Group on Establishment of New Stock Exchanges, which recommended promotion of a National Stock Exchange by financial institutions (FIs) to provide access to investors from all across the country on an equal footing. Based on the recommendations, NSE was promoted by leading Financial Institutions at the behest of the Government of India and was incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. The Capital Market (Equities) segment commenced operations in November 1994 and operations in Derivatives segment commenced in June 2000.

NIFTY: The Nifty is relatively a new comer in the Indian market. S&P CNX Nifty is a 50 stock
index accounting for 23 sectors of the economy. It is used for purposes such as benchmarking fund portfolios, index based derivatives and index funds. The base period selected for Nifty is the close of prices on November 3, 1995, which marked the completion of one-year of operations of NSEs capital market segment. The base value of index was set at 1000. S&P CNX Nifty is owned and managed by India Index Services and Products Ltd. (IISL), which is a joint venture between NSE and CRISIL. IISL is a specialized company focused upon the index as a core product. IISL have a consulting and licensing agreement with Standard & Poors (S&P), who are world leaders in index services.

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BSE (Bombay Stock Exchange)


The Bombay Stock Exchange, is the oldest stock exchange in Asia, was established in 1875 as the Native Share and Stock Brokers Association at Dalal Street in Mumbai. A lot has changed since then when 318 persons became members upon paying Re 1. In 1956, the BSE obtained recognition from the Government of India- the first stock exchange to do sounder the Securities Contracts (Regulation) Act, 1956.The Sensex, first compiled in 1986, is a Market Capitalization- Weighted Index of 30 component stocks representing a sample of large and financially sound companies. The BSE- Sensex is the benchmark index of the Indian capital markets.The BSE Sensex comprises these 30 stocks: ACC, Bajaj Auto, Bharti Tele, BHEL, Cipla, Dr Reddys, Gujarat Ambuja, Grasim, HDFC, HDFC Bank, Hero Honda, Hindalco, HLL, ICICI Bank, Infosys, ITC, L&T, Maruti, NTPC, ONGC, Ranbaxy, Reliance, Reliance Energy, Satyam, SBI, Tata Motors, Tata Power, TCS and Wipro. Heres a timeline on the rise of the SENSEX through Indian stock market history.

SENSEX - THE BAROMETER OF INDIAN CAPITAL MARKETS Introduction: For the premier Stock Exchange that pioneered the stock broking activity in India, 128 years of experience seems to be a proud milestone. A lot has changed since 1875 when 318 persons became members of what today is called "The Stock Exchange, Mumbai" by paying a princely amount of Re1. Since then, the country's capital markets have passed through both good and bad periods. The journey in the 20th century has not been an easy one. Till the decade of eighties, there was no scale to measure the ups and downs in the Indian stock market. The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently became the barometer of the Indian stock market.

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SENSEX is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media.

The Index was initially calculated based on the "Full Market Capitalization" methodology but was shifted to the free-float methodology with effect from September 1, 2003. The "Free-float Market Capitalization" methodology of index construction is regarded as an industry best practice globally. All major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology.Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country.The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through SENSEX.

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2.COMPANY PROFILE
Anand Rathi is a leading full service investment bank founded in 1994 offering a wide range of financial services and wealth management solutions to institutions, corporations, high net worth individuals and families. The firm has rapidly expanded its footprint to over 350 locations across India with international presence in Dubai, Hong Kong & New York. Founded by Mr. Anand Rathi and Mr. Pradeep Gupta, the group today employs over 2,500 professionals throughout India and its international offices. The firms philosophy is entirely client centric, with a clear focus on providing long term value addition to clients, while maintaining the highest standards of excellence, ethics and professionalism. The entire firm activities are divided across distinct client groups: Individuals, Private Clients, Corporates and Institutions. Anand Rathi has been named The Best Domestic Private Bank in India by Asiamoney in their Fifth Annual Private Banking Poll 2009. The firm has emerged a winner across all key segments in Asiamoneys largest survey of high net worth individuals in India. In year 2007 Citigroup Venture Capital International joined the group as a financial partner.Their research expertise is at the core of the value proposition that they offer to their clients. Research teams across the firm continuously track various markets and products. The aim is however common - to go far deeper than others, to deliver incisive insights and ideas and be accountable for results. AR research processes incorporate quantitative areas well as qualitative analyses. This multi-pronged approach helps them to provide superior risk- adjusted returns for their clients. AR analysts provide objective and decisive research that is designed to enable clients to make informed investment decisions. The team covers entire spectrum of financial markets from equities, fixed income, and commodities to currencies. They also cover the global markets, to give clients an unparalleled macro-view of the investment opportunities across the globe.

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Their research expertise is at the core of the value proposition that we offer to their clients. Research teams across the firm continuously track various markets and products. The aim is however common - to go far deeper than others, to deliver incisive insights and ideas and be accountable for results. AR research processes incorporate quantitative areas well as qualitative analyses. This multi-pronged approach helps us to provide superior risk- adjusted returns for their clients. AR analysts provide objective and decisive research that is designed to enable clients to make informed investment decisions. The team covers entire spectrum of financial markets from equities, fixed income, and commodities to currencies. They also cover the global markets, to give clients an unparalleled macro-view of the investment opportunities across the globe.

Vision:
To be a shining example as a leader in innovation and the first choice for clients and employees

Mission statement:
Anand Rathi is a premier consultancy firm launched with the belief in Team Work aimed with the following missions;

To be amongst the top 5 service providers of financial services. Adding tangible value to clients. Serving clients with the highest standards of excellence, ethics and professionalism.

Milestones
1994: * Started activities in consulting and Institutional equity sales with staff of 15.

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1995: * Set up a research desk and empanelled with major institutional investors. 1997: *Introduced investment banking businesses * Retail brokerage services launched 1999: *Lead managed first IPO and executed first M & A deal 2001: *Initiated Wealth Management Services 2002: *Retail business expansion recommences with ownership model 2003: * Wealth Management assets cross Rs1600 crores * Insurance broking launched * Launch of Wealth Management services in Dubai * Retail Branch network exceeds 50 2004: * Commodities brokerage and real estate services introduced * Wealth Management assets cross Rs3000crores * Institutional equities business relaunched and senior research team put in place * Retail Branch network expands across 100 locations within India 2005: * Real Estate Private Equity Fund Launched * Retail Branch network expands across 200 locations within India

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2006-07: * AR Middle East, WOS acquires membership of Dubai Gold & Commodity Exchange (DGCX)

* Ranked amongst South Asia's top 5 wealth managers for the ultra-rich by Asia Money 2007poll * Ranked 6th in FY2006 for All India Broker Performance in equity distribution in the High Net worth Individuals (HNI) Category * Ranked 9th in the Retail Category having more than 5% market share * Completes its presence in all States across the country with offices at 300+ locations within India. 2008-09 * Citigroup Venture Capital International picks up 19.9% equity stake * Retail customer base crosses 100 thousand * Establishes presence in over 350 locations.

CORE STRENGTHS Single-mindedly research driven. Distinguished for transparency in execution and settlement practices Professional to the core. A comprehensive range of services that are aimed at building robust relationships.

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COMPANY AT A GLANCE Name of the company: Anandrathi Financial Services Limited. Branch manager: Mr Bakhtiyarkhan M Pachapur Company Address: 103 108, A Block Kundagol Complex, Court circle, Hubli - 589929 Telephone No: +91 836 425 9200 Website: www.anandrathi.com Man Power: 15 People. Working Hours: 8.30am to 7pm. Weekly Holiday: Sunday. Achievements & Awards: business HAWK award broking(equity and commodities)

COMPETITORS
Kotak Securities Indiabulls Sherkhan Share Brokers Karvy securities JRG Motilal Oswal ICICI Direct.com HDFC Investments Religare

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Products and Services


A product for every need Anandrathi is the company, which allows you to invest in Shares, Mutual funds, Derivatives (Futures and Options) and other financial products. The company offers a product for every investment, the customers need.

1. Trading in shares: Anandrathi offers you various options while trading in shares. Cash Trading: This is a delivery based trading system, which is generally done with the intention of taking delivery of shares or monies.

Margin Trading: Customers can also do an intra-settlement trading up to 3 to 4 times of their available funds, wherein customers take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle.

Margin PLUS Trading: Through Margin PLUS customers can do an intra-settlement trading up to 25 times of their available funds, wherein customers take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle. Margin PLUS will give a much higher leverage in customers account against their limits.

Spot Trading: This facility can be used only for selling the demat stocks which already exist in the customers demat account. When customers are looking at an immediate liquidity option, 'Cash on Spot' may work the best, On selling shares through "cash on spot", money is credited to customers bank a/c the same evening & not on the exchange payout date.

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BTST: Buy Today Sell Tomorrow (BTST) is a facility that allows the customers to sell shares even on 1st and 2nd day after the buy order date, without having them to wait for the receipt of shares into their Demat account.

Trading on NSE/BSE: Through Anandrathi, customers can trade on NSE as well as BSE.

Market Order: Customers could trade by placing market orders during market hours that allows them to trade at the best obtainable price in the market at the time of execution of the order.

Limit Order: Allow customers to place a buy/sell order at a price defined by them. The execution can happen at a price more favorable than the price, which is defined by them, limit orders can be placed by customers during holidays & non-market hours too.

2. TRADE IN DERIVATIVES:

FUTURES: Through Anandrathi, customers can now trade in index and stock futures on the NSE. In futures trading, customers take buy/sell positions in index or stock(s) contracts having a longer contract period of up to 3 months. Trading in FUTURES is simple! If, during the course of the contract life, the price moves in your favor (i.e. rises in case you have a buy position or falls in case you have a sell position), you make a profit. Presently only selected stocks, which meet the criteria on liquidity and volume, have been enabled for futures trading.

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OPTIONS: An option is a contract, which gives the buyer the right to buy or sell shares at a specific price, on or before a specific date. For this, the buyer has to pay to the seller some money, which is called premium. There is no obligation on the buyer to complete the transaction if the price is not favorable to himTo take the buy/sell position on index/stock options, customers have to place certain % of order value as margin. With options trading, they can leverage on their trading limit by taking buy/sell positions much more than what they could have taken in cash segment.

The Buyer of a Call Option has the Right but not the Obligation to Purchase the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Call has the obligation of selling the Underlying Asset at the specified Strike price.

The Buyer of a Put Option has the Right but not the Obligation to Sell the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Put has the obligation of buying the Underlying Asset at the specified Strike price.

By paying lesser amount of premium, customers can create positions under OPTIONS and take advantage of more trading opportunities.

3. Investing in Mutual funds: Anand Rathi offer lump sum investment plans as well as systematic investment plans of all Mutual Fund ouses to our customers Lump sum Investment:

4. IPOs and Bonds Online:


Customers could also invest in Initial Public Offers (IPOs) and Bonds online without going through the hassles of filling ANY application form/ paperwork. Get in-depth analyses of new IPOs issues (Initial Public Offerings), which are about to hit the market and analysis on these. IPO calendar, recent IPO listings, prospectus/offer documents, and IPO analysis are few of the features, which help you, keep on top of the IPO markets.

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5. Insurance:
Anand Rathi also offers various insurance products of the companies like birla sun life insurance, ICICI prudential, kotak life insurance and many more. These insurance products offer the customers tax benefit, life coverage and also good returns. The products are sold as per analyzing the needs of the customers.

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3 EQUITY MARKET
Introduction: Investing in equity, which offers returns that are higher than the inflation rate, helps you build wealth and improve your standard of living. The risk involved with investing in equity can be moderated by careful stock selection and close monitoring. What is equity? Acquiring equity shares of a company signifies ownership in that company to the extent of shares that you have acquired. Equity Shares: Equity shares are commonly referred to common stock or ordinary shares. Even though the words shares and stocks are interchangeably used, there is difference between them. Share capital of a company is divided into a no. of small units of equal value called shares. The term stock is the aggregate of a members fully paid up shares of equal value merged into one fund. It is a set of shares put together in a bundle. The stock is expressed in terms of money and not as many shares. Stock can be divided into fractions of any amount and such fractions may be transferred like shares. Income from equity investing: Capital appreciation: Equity shares of companies are listed and traded on a stock exchange ( BSE or NSE). The market prices of these shares are continuously moving up or down depending on the interest in the companys stock, its business potential, etc Bonus shares: Company declares a bonus in the ratio of 1:2 (this means it will issue one share for every two shares you hold) and if you hold 100 shares, you will be entitled to 50 shares as a bonus.

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Rights shares: Company will offer fresh equity shares to its existing shareholders at a price, which is lower than the current market price of the share. For instance, if the current market price of the companys share is Rs 35, it will offer shares at below this price, say Rs 25 . Investor: Investor is a person or an organization that invest money in various investment sources for specific objective. Attitude of investment is different in each alternative. E.g. financial market have different attitude towards risk and return. Some investors are risk avers, while some have an affinity of risk. The risk bearing capacity of investor is a function of personal, economical, environment, and situational factors such as income, family size, expenditure pattern, and age. A person with higher income is assumed to have higher risk-bearing capacity. Thus investor can be classified as risk skiers, risk avoiders, or risk bearers

Before making any investment, one must ensure to: Obtain written documents explaining the investment Read and understand such documents Verify the legitimacy of the investment Find out the costs and benefits associated with the investment Assess the risk-return profile of the investment Know the liquidity and safety aspects of the investment Ascertain if it is appropriate for your specific goals Compare these details with other investment opportunities available Examine if it fits in with other investments you are considering or you have already made Deal only through an authorized intermediary Seek all clarifications about the intermediary and the investment Explore the options available to you if something were to go wrong, and then, if satisfied, make the investment.

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Sources of study for investors:


A look out for new investment opportunities helps investors to beat the market. There are many sources from which investors can gather the required information. Such as;

(i) Financial institutions:


Corporate house, government bodies and mutual funds are the main source of investment information. Many of these enterprises have their own website and post investment related information on their websites.

(ii) Financial market:


Stock exchange and regulated bodies also provide useful information to investor to make there investment decisions. With respect to secondary market, the Securities and Exchange Board of India uses various modes to promote investors education and takes great effort to achieve an investor friendly secondary market in India. The Reserve Bank of India also provide useful information relating to the prevent interest rates and non-banking financial intermediaries that mobiles money through deposit schemes.

(iii) Financial service intermediaries:


These are intermediaries who promote securities among the public. Many of these intermediaries are the agencies of specific instruments especially tax saving instruments. These intermediaries offer to share their commission from there concerned organization with the individual investor thus investor get additional advantages while investing through intermediaries.

iv) Media:
Press sources such as financial news papers, financial magazine, business news channel, websites etc. provide information related to investment to the public. Besides information on securities, these sources also provide analysis of information and in certain instance suggest suitable investment decisions to be made by investor

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Fundamental analysis of various Company:


Before investing in various investment alternatives fundamental analysis is very necessary. A fundamental analysis believes that analyzing the economy, strength, management, production, financial status and other related information will help to choose investment avenues that will outperform the market and provide consistent gain to the investor Fundamental analysis is the examination of the underlying forces that affect the interests of the economy, industrial sectors, and companies. It tries to forecast the future movement of capital market using signals from the economy, industry, company. Fundamental analysis requires an examination of the market from broader prospective. It also examines the economic environment, industrial performance, and company performance before taking an investment decision.

(i) Economic Analysis:


The economic analysis aims at determining if the economic climate is conductive and is capable of encouraging the growth of business sector, especially the capital market. When the economy expands, most industry groups and companies are expected to benefit and grow and when the economy declines, most sectors and companies usually face survival problems. Hence, to predict scrip prices, an investor has to spend time exploring the forces operating in the overall economy. Economic analysis implies the examination of GDP, government financing, government borrowings, consumer durable goods market, non-durable goods and capital goods market, saving and investment pattern, interest rates, inflation rates, tax structure, foreign direct investment, and money supply.

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The most used tools for performing economic analysis are: Gross Domestic Product Monetary policy and liquidity Inflation Interest rate International influences Consumer behaviors

(ii) Industry Analysis:


It is very important to see how the industry to which the company belongs is faring. Specifics like effect of Government policy, future demand of its products etc. need to be checked. At times prospects of an industry may change drastically by any alterations in business environment. For instance, devaluation of rupee may brighten prospects of all export oriented companies. Investment analysts call this as Industry Analysis. Companies producing similar products are subset (form a part) of an Industry/Sector. For example, National Hydroelectric Power Company (NHPC) Ltd., National Thermal Power.Company (NTPC) Ltd., Tata Power Company (TPC) Ltd. etc. belong to the Power Sector/Industry of India.

Tools for industry analysis: Cross study of performance of the industry. Industry performance over times Differences in industry risk Prediction about market behaviors, and Competition over the industry life cycle

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(iii) Company Analysis: Company analysis involved choice of investment opportunities within a specific industry that consists of several individual companies. How has the company been faring over the past few years? Seek information on its current operations, managerial capabilities, growth plans, its past performance vis--vis its competitors etc.

(iv) Financial Analysis:


If performance of an industry as well as of the company seems good, then check, if at the current price, the share is a good to buy or not. For this, look at the financial performance of the company and certain key financial parameters Like Earnings per Share (EPS), P/E ratio, current size of equity etc. for arriving at the estimated future price. This is termed as Financial Analysis. For that you need to understand financial statements of a company i.e. Balance Sheet and Profit and Loss Account contained in the Annual Report of a company.

Methodology: Primary Data:


A questionnaire schedule was prepared and the primary data was collected.

Secondary Data: Company website Customer data base Company report Company Books and Records Related websites

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Type of research:
This is a descriptive research where survey method is adopted to collect the primary information from the investors using different scales as required and the required secondary information for the analysis. Sampling Technique: The sampling technique followed in this study is non-probability convenient sampling. Simple random techniques are used to select the respondent from the available database. The research work will be carried on the basis of structured questionnaire. The study is restricted to the investors of Hubli city only. Sample Size: The population being large the survey will be carried among 100 respondents who are the clients of Anand Rathi. They will be considered adequate to represent the characteristics of the entire population.

Tools used for data analysis: The analysis of data collection is completed and presented systematically with the use of Microsoft Excel and SPSS:-

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4 DATA ANALYSIS: 1. Relationship between income level and investment Annual income Frequency Percent Valid Below 150000 150001 to 300000 300001 to 450000 450001 and above Total 40 30 26 4 100 40.0 30.0 26.0 4.0 100.0 Valid Percent 40.0 30.0 26.0 4.0 100.0 Cumulative Percent 40.0 70.0 96.0 100.0

Annual income Percent


Annual income Percent

40 30 26 4 Below 150000 150001 to 300000 300001 to 450000 450001 and above

INTERPRETATION: From above table we can come to know that the investor whose income is below 150000 has invested more then compare to the other income level.

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2. Are you short term investor or long term investor? Short term investment Both Are you short term investor or long term investor? Frequency Percent short term investment long term investment Both Total 16 32 52 100 16.0 32.0 52.0 100.0 Valid Percent 16.0 32.0 52.0 100.0 Cumulative Percent 16.0 48.0 100.0 Long term investment

INTERPRETATION:The survey reveals that 16% investors invest for short term period. And 32% investors invest in long term securities. And remaining 52% invest in both . The survey has shown that most of the investors are investing for both i.e. short and long term.

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3. What is your investment per annum? Below 25000 25001 to 50000 50001 to 100000 100001 and above

What isyour investment per annum? Cumulative Frequency Percent Valid Percent Percent Below 25000 25001 to 50000 50001 to 100000 Total 38 33 29 100 38.0 33.0 29.0 100.0 38.0 33.0 29.0 100.0 38.0 71.0 100.0

INTERPRETATION:The survey reveals that 38%investors invest below 25000pa, 33%investors invest between 25001 to 50000 and 29% investors invest between 50001 to 100000pa. The survey has shown that most of the people invest below 25000pa compare to other investment level.

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4.How frequently do you invest? Daily Quarterly Weekly Half yearly Monthly yearly

How frequently do you invest? Frequency Daily Weekly Monthly Quarterly Half yearly Yearly Total 2 16 28 26 16 12 100 Percent 2.0 16.0 28.0 26.0 16.0 12.0 100.0 Valid Percent 2.0 16.0 28.0 26.0 16.0 12.0 100.0 Cumulative Percent 2.0 18.0 46.0 72.0 88.0 100.0

INTERPRETATION: From the above graph we come to know that 2% of investors are investing daily. 16% investors are investing weekly, 28% investors are investing monthly, 26% are investing quartely, 16% investors are investing half yearly and 12% investors investing yearly. It shows most of investors are investing money either monthly or quarterly ie 28% & 26%.
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5. Do you personally follow the stock market? Yes No Do you personally follow the stock market? Cumulative Frequency Percent Valid Percent Percent Valid Yes No Total 56 44 100 56.0 44.0 100.0 56.0 44.0 100.0 56.0 100.0

INTERPRETATION: From the above graph we come to know that 56% of investors personally follow the market and 44% of investors doesnt follow market personally.

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6. If yes, then how frequently do you watch market? Daily Twice a week weekly

If yes, then how frequently do you watch market? Frequency Daily Twice week Weekly Total System Missing Total 100 100.0 41 11 6 58 42 Percent 41.0 11.0 6.0 58.0 42.0 Valid Percent 70.7 19.0 10.3 100.0 Cumulative Percent 70.7 89.7 100.0

INTERPRETATION: From the above graph we come to know that 41% of investors personally follow the market daily and 11% of investors twise a week follow the market and 6% investors follow the market weekly and 42% investors doesnt follow market personally.
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7. What are your various investment alternatives? Equity Real Estat PPF Mutual Fund Debentures/Bonds Gold/Silver Bank Deposits Insurance What are your various investment alternatives? Frequency
Equity Real estate Gold/silver Bank Deposits Mutual Fund Insurance Total

Percent 52.0 8.0 10.0 22.0 2.0 6.0 100.0

Valid Percent 52.0 8.0 10.0 22.0 2.0 6.0 100.0

Cumulative Percent 52.0 60.0 70.0 92.0 94.0 100.0

52 8 10 22 2 6 100

INTERPRETATION:From the above table it is analyzed that equity is the most preferred investment avenue among all investment options. Second most preferred investment avenue among various alternatives are bank deposits. 8. What are the Basis of Investment do you prefer?
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Self Analysis Brokers Advice Charted Accountant Advice

Financial Advice Friends/Relatives Advice

What are the basis of investment do you prefer? Frequency Valid


Self analysis Financial advise Brokers advise Friends/Relatives advise Chartered accountant Total

Percent 24.0 18.0 36.0 20.0 2.0 100.0

Valid Percent 24.0 18.0 36.0 20.0 2.0 100.0

Cumulative Percent 24.0 42.0 78.0 98.0 100.0

24 18 36 20 2 100

INTERPRETATION: From this we can come to know 36% investors go through brokres advise and 24% of investors are self analysis the stocks andn 20% investors take advice from friends/relatives and 18% investors take from financial advisers suggestions and rest from others like chartered accountants. 9. What are the Source of study do you prefer?
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Business Channels Business Magazines Self study

Business Papers Internet

What are the Source of study do you prefer? Frequency


Business channels Business papers Business magazines Internet Self study Total 32 14 12 40 2 100

Percent
32.0 14.0 12.0 40.0 2.0 100.0

Valid Percent
32.0 14.0 12.0 40.0 2.0 100.0

Cumulative Percent
32.0 46.0 58.0 98.0 100.0

INTERPRETATION :From the graph we can observe that source of information for majority of investors is internet and business channels, But, business magazine and business papars are also important sources of study. 10. How do you choose your various investment alternatives, Please rank the alternatives?
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(1 for Very Important, 2 for Important, 3 for Average, 4 for Not Important) How do you choose your various investment alternatives, pls rank the alternatives Frequency
Risk involved Return that you get Future growth Past performancd Total

Percent 42.0 38.0 12.0 8.0 100.0

Valid Percent 42.0 38.0 12.0 8.0 100.0

Cumulative Percent 42.0 80.0 92.0 100.0

42 38 12 8 100

INTERPRETATION: From the chart we can see that for 42% of investors the most important factor considered for investment decision is risk involved, second important factor is return that you get and then future growth. For 8% of investors important factor considered for investment is past performance.

11. How do you choose your equity investments (based on) :


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Performance Bonus/Right issue Firm expansion

Dividend record Growth rate of a firm Past record of a firm

How do you choose your equity investment(based on) Frequency


Performance Dividend record Bonus/Right issue Growth rate of a firm Past record of a firm Total

Percent 16.0 24.0 16.0 24.0 20.0 100.0

Valid Percent 16.0 24.0 16.0 24.0 20.0 100.0

Cumulative Percent 16.0 40.0 56.0 80.0 100.0

16 24 16 24 20 100

INTERPRETATION: By seeing above table and chart we come to know that the most important factor considered for choice of equity investment is dividend record and growth rate of the firm. And other important factors are past record of the firm & its performance.

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12. Does the market movement affect your investment pattern? Yes No

Does the market movement affect your investment? Cumulative Frequency Percent Valid Percent Percent Valid Yes NO Total 58 42 100 58.0 42.0 100.0 58.0 42.0 100.0 58.0 100.0

INTERPRETATION: From the chart we can come to know that for 58% investors investment pattern will affected on market if there are changes in market movement (BSE index, Nifty etc), and 42% investors investment pattern will affect on market. Market movement is very important factor for changing in investment pattern.

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5 FINDINGS
The investor whose income is below 150000 those are invested more then other income level. 16% of investors prefer to invest in short term avenues where as 32% of investors prefer to invest in long term and remaining 58% invest in both the avenues. 38% investors invest below 25000pa, 33%investors invest between 25001 to 50000 and 29% investors invest between 50001 to 100000pa. 54% of the investors prefer to investing in either monthly or quarterly, and 2% investors investing daily basis and 16% in weekly. 56% investors are personally follow the market and 44% investors are not personally follow the market. Investors various investment alternatives are equity, band deposits,gold and silver, real estate and insurance. What basis of investment investors prefer is brokers advice, self analysis and friends/relatives advise. Internet and business channels are important source of study for investors. Dividend record, growth rate of a firm, past record of the firm and performance of firms are important for those who are interested to invest in equity. Generally those investors who are invested in equity, are personally follow the stock market frequently i.e. in daily basis.

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6 SUGGETIONS OR RECOMMENDATIONS

Client awareness program like INVESTOR MEET has to be conducted by Anand Rathi for Stock Brokering Services, because most of the clients are unaware about the stock market Since the intent and web based communication is getting popular so Anand Rathi should update web site frequently and provide information up to date. Since the investors expect better services from Anand Rathi, it should provide more value added services to its customers. As investors investment decision is based on the study of different sources, Anand Rathi should start giving advertisement in business newspaper and in business magazine. Anand Rathi should expand its business by setting up of new branches in various locations

SUGGESTIONS FOR INVESTORS:


Investor should follow the regular price movements of stocks, and should be regularly updated of stock market. Investor should also study the source of investments such as business channels and business papers for keeping updated himself about stock market. Growth rate of the firm, performance, past record of the firm are the important factor for which investor should consider before investing in equity.

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LIMITATIONS

The study is conducted by taking a limited number of sample sizes which is stated earlier. And this study reflects the perceptions of those investors who are residing in Hubli. There might be a chance that the perceptions of the investors of different cities are varied due to diversity in social life, living pattern, income level etc.

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8. ANNEXURE

Questionnaire
Dear Respondent, I am Sadashiv a Management Student from KLESs Institute of Management Studies and Research undertaking my Major Concurrent Project at "ANAND RATHI" I am conducting a "A Study on Perceptions Of Investors Towards Equity & Alternative Investments in ANAND RATHI,at Hubli I request you to spare your valuable time and provide information. I ensure that information furnished by you is used for academic purpose only. Name of investor Address Age Occupation : : : :

1. Annual income (Please tick) Below 150000 300001 to 450000 150001 to 300000 450001 and above

2. Are you short term investor or long term investor? Short term investment Both 3. What is your investment per annum? Below 25000 25001 to 50000 50001 to 100000 100001 and above Long term investment

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4. How frequently do you invest? Daily Monthly Half yearly Weekly Quarterly Yearly

5. Do you personally follow the stock market? Yes No

If NO Why... . 6. If yes, then how frequently do you watch market? Daily Twice a week Weekly

7. What are your various investment alternatives? Equity Real Estate PPF Mutual Fund Debentures/Bonds Gold/Silver Bank Deposits Insurance

9. What are the Basis of Investment do you prefer? Self Analysis Brokers Advice Financial Advice Friends/Relatives Advice

Charted Accountant Advice

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9. What are the Source of study do you prefer? Business Channels Business Magazines Self study 10. How do you choose your various investment alternatives, Please rank the alternatives? (1 for Very Important, 2 for Important, 3 for Average, 4 for Not Important) Risk Involved Returns That You Get Future Growth Past Performance Business Papers Internet

12. How do you choose your equity investments (based on) : Performance Bonus/Right issue Firm expansion Dividend record Growth rate of a firm Past record of a firm

13. Does the market movement affect your investment pattern? Yes No

If YES How..
THANK YOU

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9. BIBLIOGRAPHY

Books:
o o o o Financial Management, PRASANNA CHANDRA, 6th edition Financial Management, KHAN & JAIN, 3rd edition Security Analysis and Portfolio Management , FISCHER & JORDAN Research Methodology, David .R. Cooper and Schindler

Websites:
o o www.anandrathi.com www.nseindia.com

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