baljit kaur b34

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A

PROJECT REPORT

ON

INVESTDIRECT (INDIA) LTD

CHANDIGARH

On The Topic

“Analyzing the financial products of HSBC Invest direct (India) Ltd”

SUBMITTED TO

LOVELY PROFESIONAL UNIVERSITY

In Partial Fulfillment of the Requirements for the Award of Degree Of

MASTER OF BUSINESS ADMINISTRATION

SUBMITTED BY:

Baljit Kaur

MBA

Reg.No. - 11000066

DEPARTMENT OF MANAGEMENT

LOVELY PROFESSIONAL UNIVERSITY

JALANDHAR NEW DELHI GT ROAD

PHAGWARA, PUNJAB

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ACKNOWLEDGEMENT

It is often said that journey of a thousand miles begins with the first, uncertain if we may add,

step. My journey was not too different. It involved the help, support and contribution of

several people.

It is difficult to ascertain the starting point for such thanks giving, and yet one usually starts

with the most significant contributor. In my case let us begin with the people who strictly

confined themselves to behind the scenes before I move on to the persons who directly

affected the course and scope of events.

I would like to extend our sincerest gratitude to PROF. DEEPIKA DHALL for her

unrelenting support and an uncanny habit of pointing out the flaws in the scheme of things at

the most crucial juncture, hence causing several opportunities for learning. I do not think it

would be just to end such thanks giving without thanking our respondents for co operating

with us.

I also express my sincere gratitude towards Ms. SAKSHI VATS my guide. My increased

spectrum of knowledge in the mutual funds and ULIPs and other product is the result of her

constant supervision and direction that has helped me absorbs relevant and high quality

information.

Beside the mixed experience that I had during the course of my study and analysis; also

helped me to learn a lot regarding the actual working of a company. It also taught me how to

take every experience in right spirit and earn from each ones.

Finally I also extend my heartiest thanks to all my friends and well wishers for being with me

and extending encouragement throughout the project.

BALJIT KAUR

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CERTIFICATE

This is to certify that MS BALJIT KAUR of Lovely Institute of Management, Phagwara has

successfully completed the project work titled “ANALYZING THE FINANCIAL

PRODUCTS OF HSBC”in partial fulfillment of requirement for the award of POST

GRADUATION DEGREE IN BUSINESS MANAGEMENT prescribed by the Lovely

Professional University. This project is the record of authentic work carried out during the

academic year (2010 – 2012).

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To Whom It May Concern

It is to certify that Baljit Kaur, Registration No. 11000066 has satisfactorily completed the

project work, analyzing the financial products of HSBC Invest direct (India) Ltd for the

partial fulfillment of the award of the degree of “Master of Business Administration” by

Lovely Professional University.

Sign of Academic Head

( )

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TABLE OF CONTENTS

S.NO PARTICULARS PAGE.NO

1. EXECUTIVE SUMMERY

CHAPTER 1

INTRODUTION

1.1 Industrial Profile

1.2 Company Profile

1.3 The HSBC Group In India

1.4 Division Of The Company

1.5 Key Executives

1.6 The Competitors

7

8 – 14

2. Chapter 2

Objective, Scope of study

16

3. Chapter 3

Review of Literature & Methodology

3.1 Review of literature

3.2 Research Methodology

3.3 Data sources:

- Primary data

-Secondary data

3.4 Type OF RESEARCH

3.5 Sampling Technique

3.6 Sampling Unit

3.7 Sample Size

3.8 Statistical tools used

3.9 Instrumentation Technique

18 – 22

4. Chapter 4 24 – 33

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Analysis of products and services of HSBC

5. Chapter 5

Data Analysis and Interpretation

35- 49

6. Chapter 6

Limitations Suggestions & Conclusion

51- 53

7. Chapter 7

References, Bibliography

55 -56

8. Questionnaires 58 -60

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Executive Summary

In today's complex financial environment, investors have unique needs which are derived

from their risk appetite and financial goals. But regardless of this, every investor seeks to

maximize his returns on investments without capital erosion.

The art and science of making decisions about investment mix and policy, matching

investments to objectives, asset allocation for individuals and institutions, and balancing risk

against performance. These are the basic activities done by the broking firms.

HSB (India) Limited, a financial services company, provides customized financial

management solutions to individual and corporate customers in India. The company offers

various retail broking service offerings comprising equities, derivatives, mutual funds, and

insurance products, as well as NRI, online trading, and branch trading services. It also

provides wealth management products and services, including investments; IPO advisory and

distribution services; various risk management solutions for corporate and individual

customers; and portfolio management services..

These options depend on the financial requirements of the investors and constructed

according to that only, but with time these requirements changes, so all products need some

up gradations. This project will also concentrate on this area.

Project will also compare and analyze products of major competitors of HIDL.

It will help in making financial products of HSBC Invest Direct Limited more superior and

beneficial to customers.

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Chapter 1

Introduction

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Industry Profile

Finance and Investment Industry is a fairly broad ranging group of institutions that provide

various financial services. Examples of such institutions include commercial banks, merchant

(or investment) banks, insurance companies, brokerage firms, asset managers, and an

assortment of other institutions. Services provided range from money management for private

individuals, to debt and equity underwriting for corporations to issuance of insurance

policies, and many other services. In today’s global markets, this industry is the engine of the

global economy, enabling corporations and the government to grow and expand.

In 2009-10, the Indian economy is estimated to have grown by 7.2 per cent. According to the

latest Central Statistical Organization (CSO) data, financial services and real estate sector

rose by 7.8 per cent in the third quarter of 2009-10. The sectors including banking and

insurance and mutual funds are beginning to reap the benefits of a good closure of 2009-

2010.

Financial services organizations are striving to achieve increasingly ambitious profit and

growth targets against a background of heightened risk, regulation and market pressures.

Customer needs and expectations are evolving in the face of increasing personal wealth, more

private funding of pensions and health care and the desire for ever more accessible and

personalized financial products and services. In turn, intense competition has squeezed

industry margins and forced organizations to cut costs while still seeking to enhance the

quality of client choice and service. The battle for talent is also heating up as companies seek

to enhance innovation, customer loyalty and investment returns

The corollary of this market evolution is increasing risk as products become more complex,

organizations more diffuse and the business environment ever more uncertain. Regulation is

also tightening in the wake of public and government pressure for improved governance and

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transparency.

In this environment, the winners will be companies that can turn the challenges into

opportunities to build stronger and more enduring customer relationships; sharpen process

efficiency; unlock talent and creativity; use improved risk management processes to deliver

more sustainable returns; and use new regulatory demands as a catalyst for strengthening the

business and enhancing market confidence.

The government has taken a number of steps to revive the economy, including slashing

interest rates, lowering factory levies and more than doubling the limit on foreign investment

in corporate bonds. The financial services space is a rapidly growing one in India. The

country received US$ 45 billion in foreign currency remittances from non-resident Indians in

2008, the highest in the world.

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COMPANY PROFILE:-

HSBC

Company History:

The HSBC Group is named after its founding member, The

Hongkong and Shanghai Banking Corporation Limited,

which was established in 1865 to finance the growing trade

between Europe, India and China.

The inspiration behind the founding of the bank was

Thomas Sutherland, a Scot who was then working for the

Peninsular and Oriental Steam Navigation Company. He

realized that there was considerable demand for local

banking facilities in Hong Kong and on the China coast and he helped to establish the bank,

which opened in Hong Kong in March 1865 and in Shanghai a month later.

Soon after its formation the bank opened agencies and branches around the world. Although

that network reached as far as Europe and North America, the emphasis was on building up

representation in China and the rest of the Asia-Pacific region. HSBC was a pioneer of

modern banking practices in a number of countries. In Japan, where a branch was established

in 1866, the bank acted as adviser to the government on banking and currency. In 1888, it

was the first bank to be established in Thailand, where it printed the country’s first banknotes.

From the outset trade finance was a strong feature of the local and international business of

the bank, an expertise that has been recognized throughout its history. Bullion, exchange,

merchant banking and note issuing also played an important part. By the 1880s, the bank was

acting as banker to the Hong Kong government and also participated in the management of

British government accounts in China, Japan, Penang and Singapore. In 1874 the bank

handled China’s first public loan and thereafter issued most of China’s public loans.

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What is HSBC?

We are the world’s local bank.

Headquarters in London, HSBC is one of the largest banking & financial services

organization in the world. HSBC’s international network comprises over 9500 offices in 76

countries & territories in Europe, the Asia-Pacific region, the Americas, the Middle East &

Africa.

With listings on the London, Hongkong, New York, Paris & Bermuda stock exchange shares

in HSBC holdings places are held by nearly 200,000 shareholders in some 100 countries &

territories. The shares are traded on the New York stock exchange in the form of American

Depository Receipts.

Through an international network linked by advertisement techniques, including a rapidly

growing e-commerce capability, HSBC provides a comprehensive range of financial services

like-

Personal financial services

Commercial Banking

Corporate Banking

Investment Banking

THE HSBC GROUP IN INDIA

Year of commencement of operations in India

The Mercantile Bank of India, China & London : 1853

The Hongkong & Shanghai Banking Corporation Limited (HBAP) : 1867

HSBC Securities & Capital Markets (India) Private Limited (HBAP) : 1995

HSBC Private Equity Management (Mauritius) Limited

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(India liaison Office) (PEIN) : 1995

HSBC Electronic Data Processing India Private Limited (HDPI) : 2000

HSBC Primary Dealership (India) Private Limited (HCPD) : 2001

HSBC Professional Services (India) Private Limited (HPSI) : 2001

HSBC Software Development (India) Private Limited (HSDI) : 2002

HSBC Asset Management (India) Private Limited (ISIN) : 2002

HSBC Insurance Brokers (India) Private Limited (ININ) : 2003

HSBC Operations & processing enterprise(India) Pvt. Ltd. (HOPE) : 2003

Canara HSBC Oriental bank of commerce Life insurance co. Ltd. : 2008

HSBC Invest Direct (India) Limited, a financial services company, provides

customized financial management solutions to individual and corporate customers in India.

The company offers various retail broking service offerings comprising equities, derivatives,

mutual funds, and insurance products, as well as NRI, online trading, and branch trading

services. It also provides wealth management products and services, including investments;

IPO advisory and distribution services; various risk management solutions for corporate and

individual customers; and portfolio management services. In addition, the company offers

various institutional offerings, such as investment banking services for equity related

products and instruments; and institutional equity broking services. Further, HSBC

InvestDirect (India) Limited provides various advisory services and investment tools. It was

formerly known as IL&FS Investsmart Limited and changed its name to HSBC InvestDirect

(India) Limited in August 2009. The company was founded in 1997 and is based in Mumbai,

India. HSBC InvestDirect (India) Limited is a subsidiary of HSBC Securities & Capital

Markets (India) Private Limited. It is listed in both exchanges, NSE and BSE.

DIVISIONS OF THE COMPANY

The following are the divisions of HIDL Limited:

The Investment Advisory and Broking Division

Merchant Banking Division

The Project Syndication Division

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Institutional Equity Broking Division

Institutional Debt Broking division

Key Executives

Chairman

Hardeep Singh

Director

Ajay Dua

Managing Director & CEO

Manasije Mishra

Director

TarunKataria

Sonal Dave

Additional Director

Naina Lal Kidwai

Company Secretary

Kashmira Mathew

THE COMPETITOR

The existing major players in the stock broking industry besides HSBC invest direct are.

1. ICICIDirect

2. HDFC Securities

3. Standard Chartered -STCI

4. IDBI Paisa Builder

5. AXIS Bank

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Chapter 2

Objective and Scope of study

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OBJECTIVE OF THE STUDY

The main objective of this study is to understand the rationale behind an individual’s

investment decision or financial planning, considering whether or not factors like age, no. of

dependents, income level, risk appetite, etc. influence his/her investment/financial planning

decision. This will help in creating the financial products which are framed according to the

investor’s risk appetite and rationale behind investment.

Other objective for the study is analyzing the product and services offered by major

competitor of HSBC Invest direct.

Scope of study:-

The scope of Financial Product is highly vast and with private sector banks mushrooming,

there is a large number of Financial Product in the market to choose from. Thus, the project

would cover

To compare and analyze the products of major competitors of HSBC Invest Direct

(India) Limited (HIDL).

It will help in making financial products of HSBC Invest Direct Limited more

superior and beneficial to customers.

Risk appetite of investors will be measured by doing the survey through the

questionnaire. This will help in preparing and offering the suitable options to the

customers.

This Study will also help to understand the customer’s satisfaction and perception

about HSBC’s services and products.

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Chapter 3

Review of Literature&

Methodology

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REVIEW OF LITRATURE

Bruce A. Huhmann et.al (2005) Examine that the consumers require information about the

risk-return trade-off credibility information to relieve principal-agent conflict concerns, and

transaction cost information – for investment decisions. This paper aims to investigate

whether or not such information is present in advertisements for one investment vehicle –

mutual funds. Mutual fund advertisements are not providing the information necessary for

optimal investment decisions. Mutual funds use techniques known to increase the likelihood

that their advertisements are noticed, but they also use techniques known to decrease the

readership of their advertisements.

David E. Allen (2006) analyzed that mutual fund investors' response to mergers of

Australian mutual fund companies. The mergers are not accompanied by increased money

flows. Instead investors withdraw from the target funds prior to and after the merger. Funds

belonging to specialist mutual fund companies record more gains in assets under management

than declines following mergers, and that money inflow gains at competing funds induce

reductions of management expense ratios at target funds.

Kerstin Drachter et.al (2007) Examine the performance of actively managed mutual funds

is largely dependent upon the investment decisions of the fund managers. The purpose of this

study is to examine the decision processes in German fund companies and their impact on

fund performance. it is possible to conduct a high quality survey study even though

managers know that their answers will be linked to their performance and secondly, that the

behavior of managers depends heavily on the characteristics of the funds and the

characteristics of the fund company

Timo Korkeamaki et.al (2007) examine the effect of advertising on mutual fund cash flows

in the Finnish fund market and his findings shows that the past year's performance nor

advertising alone is sufficient to produce increased cash flows. However, advertising together

with past performance is found to significantly affect cash flows. The positive effect of

advertising is limited to the use of non-perishable advertising media. Additionally, it is found

that fund families spending proportionately more on advertising receive higher asset flows.

http://www.emeraldinsight.com/search.htm?ct=all&st1=Timo+Korkeamaki&fd1=aut

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Cheng-Ru Wu et.al (2008) it is found that how investors evaluate mutual fund performance,

not only based on both quantitative but also qualitative criteria and his findings shows that

most important criteria of mutual fund performance should be “mutual fund style,” following

is “market investment environment.” This result indicates investors' focus when they evaluate

the mutual fund performance.

Rob Jans, et.al (2008) examine the tournament hypothesis in the UK mutual fund market.

Based on a previous US study, fund managers were expected to alter risk-taking behavior in

response to their performance relative to competing fund managers and his findings show that

the entire 1989-2003 sample period no consistent evidence for tournament behavior is found.

This is robust to the effects of survivorship bias and window dressing. Second, splitting the

sample period into two sub-periods reveals an interesting pattern. During the first part of the

sample period, 1989-1996, significant evidence for tournament behavior is found. During the

second part of the sample period, 1997-2003, significant support for strategic behavior, as

described theoretically by Taylor has been documented.

Laurens Swinkels (2009) The purpose of this paper is to empirically assess the investment

performance of mutual fund managers who operate in the Polish market. For each of the three

categories, equity, balanced, and bond funds, the paper positive, but insignificant selectivity

skill of the mutual fund managers. No evidence is found of bond or equity market timing

skills in the sample.

Yurij Lukashin (2009) describe development of Russian mutual fund (MF) market, to

suggest and apply methodology of statistical analysis of management quality, to evaluate

profitability and risks of the market and his findings shows that the Russian mutual market is

growing both in number and in aggregate value of net assets. Profitability and risks of the

market are high.

Tajudeen Olalekan Yusuf, (2010) Examine how insurance brokers control opportunism at

the postcontractual stage of insurance contract in the Nigerian insurance market. The

involvement of the insurance brokers from the claim notification stage, claim auditing to

actual settlement and dispute mediation are instances of control over customers' opportunistic

tendencies. Also, it is found that fear of reputation damage and brokers' professional way of

handling clients' over-exaggeration and suspicious claiming might considerably control

insurance opportunism.

http://www.emeraldinsight.com/search.htm?ct=all&st1=Cheng-Ru+Wu&fd1=aut

http://www.emeraldinsight.com/search.htm?ct=all&st1=Rob+Jans&fd1=aut

http://www.emeraldinsight.com/search.htm?ct=all&st1=Yurij+Lukashin&fd1=aut

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Dag Einar Sommervoll, et.al (2011) study to what extent an insurance based on a house

price index provides equity protection for homeowners and It is found that the payout

efficiency is surprisingly stable (around 50 percent) for all temporal spatial aggregations. A

neighborhood index outperforms the metropolitan index with respect to target efficiency (the

probability of payout given a loss). The introduction of maturity times, say legitimate claim

five years after purchase, does improve efficiency somewhat. However, the idiosyncratic

component of housing market transactions remains high, and the insurance probably

unattractive from a homeowner perspective.

http://www.emeraldinsight.com/search.htm?ct=all&st1=Dag+Einar+Sommervoll&fd1=aut

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RESEARCH METHODOLOGY

The Research Methodology will be used by me for the purpose of this project is as follows:-

TYPE OF RESEARCH

The research design comprise of the plan and structure of investigation conceived so as to

arrive at the responses to the research queries. The research design will be used here for this

project is a descriptive research designs.

DATA SOURCE:-

Primary Data:

The primary data are which are collected afresh and for the first time, and thus happen to be

original in character. A primary survey was conducted at Chandigarh city. The survey was

carried out at various levels & the target group was retail investors, business men,

industrialists, exporters, etc. Questionnaires were used as an instrument to collect the primary

data.

Secondary Data:

Secondary data is collect about various researches done earlier on this topic. Data are

collected from various sites about the investment patterns.

SAMPLING TECHNIQUE

The sampling technique adopted for the study is Random sampling technique according to

the convenience of the researcher.

SAMPLE SIZE

Sample size is 50 respondents.

SAMPLE UNIT

Chandigarh

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STATISTICAL TOOLS USED

Statistical tools like Tabulation, Factor analysis, Bar Graph Representations, and percentage

analysis are used in the compilation and computation of data.

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Chapter 4

Analysis of product and

services of HSBC

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Analysis of product and services of HSBC

PRODUCTS AND SERVICES:-

Personal financial services

Commercial Banking

Corporate Banking

Investment Banking

1) Fixed Deposits

2) Mutual funds

3) SIP

4) Insurance

5) Ulip

PERSONAL FINANCIAL SERVICES (PFS)

HSBC India offers a wide range of competitively priced services & products to over 1.75

million individual resident Indians as well a Non-resident Indian customers across India,

USA, UK, Middle East & South East Asia. HSBC’s 150 year presence in India allows it to

enjoy the advantage of deep rooted knowledge of local markets & customs. This has lead to

development of products & services, which are attuned to the financial needs of Indians in the

cities where HSBC operatives. The HSBC brand is associated with core values such as

transparency, trust & honesty. These factors enable HSBC India to remain highly competitive

& at the leading edge of the retail & commercial banking market in the country.

The distribution network in India consists of 47 branches in 26 cities supported by 170 ATMs

at 142 locations. In addition, self service banking channels, such as Internet Banking & a 24

hour centralized all India Call Centre provide a strong backbone to the distribution

capabilities. A second load balancing Call Centre became operational in January 2005 at

HSBC Operations & Processing Enterprise (India) Private Limited, Chennai. Customers can

apply for all products & services online at www.hsbc.co.in

The bank offers a complete suite of products & services including HSBC Premier

International, HSBC Premier, Power Vantage, Savings & Current Accounts, International

http://www.hsbc.co.in/

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Debit Cards & Term Deposits in addition to consumer loan products like International Credit

Cards, Mortgage, Personal Loans, Educational loans & Overdrafts. HSBC is the 6th

largest

Credit Card issuer in India with over 1.3 million cards in force.

Premier & mid market customers have access to comprehensive Financial Planning & HSBC

is a market leader in the provision of Wealth Management services. In 2005,HSBC was the

largest distributor of Retail Mutual Funds in India, & the biggest sales channel for Banc

assurance partner TATA AIG.

Non-Resident Indians (NRI’s) constitute 56% of the Bank’s deposit base. The banking a

needs of NRIs are fulfilled from branches in India & 11 NRI centres abroad. We have over

84,000 NRI Customers, & have started referring customers to Financial Planning Managers

& the Private Bank in the host countries, to address their needs for investment products. A

free remittance service is offered between accounts held by NRIs with HSBC

overseas & onshore. In 2006, an International Banking Centre was established facilitate

cross border business referrals.

COMMERCIAL BANKING

HSBC is a leading provider of financial services to small, medium-sized and middle-market

enterprises. The Group has over 43,000 such customers in India, including sole proprietors,

clubs and associations, incorporated businesses and publicly quoted companies. Commercial

Banking provides a full range of banking services to these customers including multi-

currency business accounts, payment and cash management, trade services, factoring and a

range of borrowing solutions.

In India, Commercial Banking has a presence in 47 branches covering 26 key cities and for

the convenience of our customers, a multi channel service including Internet and Phone

banking. For SME customers, HSBC offers the complete range of transaction baking services

as well as unsecured loans and loans for and against property. The services are supported by a

large Sales and Relationship Management team in key locations across the country. India is

the first country in the HSBC Group where Commercial Banking lends to Microfinance

Institutions, thus providing indirect funding to hundreds of small business owned and run by

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members of underprivileged sections of society. A dedicated unit has been formed to focus

on Microfinance and other Priority Sector institutions, with a view to further reach out to the

marginalized and under banked.

CORPORATE AND INSTITUTIONAL BANKING

Corporate Banking (CB) is an integral part of the Global Banking structure, which focuses on

offering a full range of service to multinationals, large domestic corporate and institutional

clients.

Provides a wide range of banking and financial services provided to domestic and

international operations of large local corporate and local operations of multinationals

corporations. Services include access to commercial banking products, including working

capital facilities such as domestic and international trade operations and funding,

channel/distributor financing, and overdrafts, as well as domestic and international

collections and payments, INR and Foreign currency term loans (external commercial

borrowing in foreign currency), letters of guarantee etc.

Institutional Banking drives the Group’s relationship with banks, financial institutions,

securities houses, insurance companies, and asset management companies and other non-

banking companies, non-government and development organizations operating in India.

Market leadership position based on strong relationships with major financial institutions.

Investment Banking and Markets brings together the advisory and financing, equity

Securities, equity linked transactions, asset management, treasury and capital markets, and

private equity activities of the Groups to complete the Global Banking structure and provide a

complete range of financial products to our clients.

Clients are serviced by sector based client service teams that combine relationship managers,

product specialists and industry specialists to develop customized financial solutions. These

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form the relationship team along with the Investment Banking structure and provide a

complete range of financial products to our clients.

INVESTMENT BANKING

1) HSBC FIXED DEPOSITS

When it comes to assured returns, choosing the right type of savings scheme makes all the

difference. HSBC Fixed Deposits let you make the most of value-added benefits as you

create wealth at low risk.

Features & Benefits

The superior Fixed Deposit to invest in, for a secure future

You can now open a Fixed Deposit with Rs. 10,000 only

Enjoy high rate of returns on your HSBC Fixed Deposits

Choose from a wide range of tenors as per your

convenience

Avail of our special rates for select tenors

Interest Rates

Fixed Deposit Period

Citizen’s Interest

Interest Rate

(% p.a.)

Senior

Rate**

(% p.a.)

7 days 3.00 3.25

8 to 14 days 3.00 3.25

15 to 29 days 3.50 3.75

30 to 59 days 4.25 4.50

60 to 89 days 5.25 5.50

90 to 179 days 5.25 5.50

180 to 269 days 5.50 5.75

270 to 12 months 8.00 8.25

366 to 399 days 8.00 8.25

400 days 8.75 9.00

401 to less than 18 months 7.25 7.50

18 months to 730 days 7.50 7.75

731 days 7.50 7.75

732 to less than 36 months 7.50 7.75

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Certificate of Deposit

Earn interest for funds invested from 15 days to one year, with HSBC’s Certificate of

Deposit (CDs). CDs can be availed by individuals (other than minors), corporations,

banks, companies, trusts, funds, associations etc. Non-Resident Indians (NRIs) may also

subscribe to CDs on a non-repairable basis only.

2 ) Mutual Fund

It is a type of investment where a number of investors money is pooled together & used

by the fund manager(referred to as the Asset Management Company or AMC) to invest in

underline securities inline with the objectives of the scheme.

By this method you can achieve a much wider spread of investments than if you were

investing directly in the underlying investments. It is generally accepted that by spreading

your investment you are spreading your risk, therefore investing in mutual funds is

considered to be lower risk than direct investment.

When you invest in mutual funds you do not own the underlying investments but have a

claim to a number of units in the fund representing the size of your investment. The value

of each unit of the mutual fund scheme, calculated based on the market value of the

underlying investments after deducting expenses and liabilities, is referred to as the ’Net

Asset Value’ or NAV.

The first time a mutual fund scheme is available for purchase is referred to as a New Fund

Offering or NFO.

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1- A mutual fund actually belongs to the investors who have pooled their funds

is in the hands of the investors.

2- Investment professionals and other service providers, who earn a free for their

services, from the fund, manage a mutual fund.

3- The pool of funds invested in a portfolio of marketable investments. The value

of the portfolio is updated every day.

4- The investor’s share in the fund is denominated by “units”. The value of the

units changes in the portfolio’s value, every day. The value of one unit of

investment is called as the net asset value of NAV.

5- The investment portfolio of the mutual fund is created according to the stated

investment objectives of the fund.

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3. SYSTEMATIC INVESTMENT PLAN (SIP)

What is SIP?

An SIP is a regular investment plan for purchasing units of a mutual fund scheme. Offered by

mutual funds to help you save regularly.When investing in mutual funds, you would normally

identify a scheme & invest a predetermined amount in it at its prevailing net asset value

(NAV). If you invest a sum of Rs.10,000 at an NAV of Rs.10, you will receive 1,000 units.

The timings of your investment in such a case may turn out to be favourable or unfavourable.

Under SIP, however, your investment is staggered over a period. Instead of investing

Rs.10,000 at one go, you might consider investing specified amounts in a scheme at pr-

specified intervals. For instance, you could spread out the Rs.10,000 investment over 10

months, with Rs.1,000 being invested each month. The number of units that accrue to you on

each periodic investment would depend on the NAV of the scheme prevailing at the time of

your purchase. By doing this, you would have done away with the need to time the market.

SIP’s also in calculate some much needed discipline into your investing habits. .

It is just like a recurring deposit with the post office or bank where you put in every month.

The difference here is that the amount is invested in a mutual fund.

The minimum amount to be invested can be as small as Rs.500 & the frequent investment is

usually monthly or quarterly.

How an SIP works?

An SIP allows you to take part in the stock market without trying to second guess

movements. An SIP means you to commit yourself to investing a fixed amount every month.

Let Rs.1000 When the NAV is high, you will get fewer units. When it drops, you will get

more

Date

NAV

Approx number of units you will get

at Rs.1000

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Jan 1 10 100

Feb 1 10.5 95.23

Mar 1 11 90.90

Apr 1 9.5 105.26

May 1 9 111.11

Jun 1 11.5 86.95

Within six months, you would have 5,894 units by investing just Rs.1000 every month.

4. INSURANCE

Insurance, in law and economies, is a form of risk management primarily used to hedge

against the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk

of a potential loss, from one entity to another, in exchange for a premium. Insurer, in

economics, is the company that sells the insurance. Insurance rate is a factor used to

determine the amount, called the Premium, to be charged for a certain amount of insurance

coverage. Risk management, the practice of appraising and controlling risk, has evolved as a

discrete field of study and practice.

5) ULIPS

A unit linked insurance policy is one in which the customer is provided with a life insurance

cover and the premium paid is invested in either debt or equity products or a combination of

the two. In other words, it enables the buyer to secure some protection for his family in the

event of his untimely death and at the same time provides him an opportunity to earn a return

on his premium paid. In the event of the insured person's untimely death, his nominees would

normally receive an amount that is the higher of the sum assured (insurance cover) or the

value of the units (investments).However, there are some schemes in which the policyholder

receives the sum assured plus the value of the investments.

Page | 32

Every insurance company has four to five ULIPs with varying investment options, charges

and conditions for withdrawals and surrender. Moreover, schemes have been tailored to suit

different customer profiles and, in that sense, offer a great deal of choice.

The advantage of ULIP is that since the investments are made for long periods, the chances

of earning a decent return are high.

Just as in the case of mutual funds, buyers who are risk averse can buy into debt schemes

while those who have an appetite for risk can opt for balanced or equity schemes. However,

the charges paid in these schemes in terms of the entry load, administrative fees, underwriting

fees, buying and selling charges and asset management charges are fairly high and vary from

insurer to insurer in the quantum as also in the manner in which they are charged.

Tax benefits

The premiums paid for ULIPs are eligible for tax rebates under section 80 which allows a a

maximum of Rs. 1,00,000 premiums paid for taxable income below Rs 8,50,000 and

Proceeds from ULIPs are tax-free under section 10(10D) unlike those from a mutual fund

which attract short term capital gains tax.

Key features

Premiums paid can be single, regular or variable. The payment period too can be regular or

variable. The risk cover (insurance cover) can be increased or decreased.As in all insurance

policies, the risk charge (mortality rate) varies with age. However, for an individual the risk

charge is always based on the age of the policyholder in the year of commencement of the

policy. These charges are normally deducted on a monthly basis from the unit value. For

instance, if there is an increase in the value of units due to market conditions, the sum at risk

(sum assured less the value of investments) reduces and so the risk charges are lower. The

maturity benefit is not typically a fixed amount and the maturity period can be advanced

(early withdrawal) or extended.

Investments can be made in gilt funds (government securities), balanced funds (part debt, part

equity), money-market funds; growth funds (equities) or bonds (corporate bonds).

Page | 33

The policyholder can switch between schemes (for instance, balanced to debt or gilt to

equity). The investment risk is transferred to the policyholder.The maturity benefit is the net

asset value of the units. The value would be high or low depending on the market conditions

during the period of the policy and the performance of the fund manager.

Thus there is no capital protection on maturity unless the scheme specially provides for it.

There could be policies that allow the policyholder to remain invested beyond the maturity

period in the event of the maturity value not being satisfactory.

Page | 34

Chapter 5

Data Analysis &

Interpretation

Page | 35

TABLE 4.1

Gender:

Frequency Percent Valid Percent

Cumulative

Percent

Valid Male 30 60.0 60.0 60.0

Female 20 40.0 40.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This bar graph shows that out of 50 respondents, 60% of the respondents are male and rest

40% of the respondents are female who are invest their money into the market.

Page | 36

TABLE 4.2

Age:


Cumulative

Percent

Valid 20-30 13 26.0 26.0 26.0

30-50 26 52.0 52.0 78.0

above 50 11 22.0 22.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This bar chart shows that majority of the sample respondents were in the age group of 30-50

year i.e 52%, 26%of the respondents were in the age group of 20-30 year and 22% of them

were 20-30 year.

Page | 37

TABLE 4.3

Profession


Cumulative

Percent

Valid Entrepreneur 2 4.0 4.0 4.0

Private Job 20 40.0 40.0 44.0

Government Job 16 32.0 32.0 76.0

Student 10 20.0 20.0 96.0

Industrialist 2 4.0 4.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This bar chart shows that majority of the respondents were doing private job i.e. 40%. 30% of

the respondents were doing 32% and 20% of the respondents were students.

Page | 38

TABLE 4.4

Income Level:


Cumulative

Percent

Valid 60,000 – 1, 00,000 4 8.0 8.0 8.0

1, 00,000 – 2, 00,000 14 28.0 28.0 36.0

2, 00,000 – 3, 00,000 18 36.0 36.0 72.0

above 3,00,000 14 28.0 28.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This bar chart shows that 36% of the respondents get salary 2-3 lakh,28% of the respondents

are get a salary 1-2 lakh, again 28% of the respondents get a salary above 3 lakh and 8% of

them get less than 1 lakh.

Page | 39

TABLE 4.5

Have you ever invested in the market?


Cumulative

Percent

Valid Yes 28 56.0 56.0 56.0

No 22 44.0 44.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This graph shows that 56% of the respondents are invested in the market and rest of 44% are

never invest their money into the market.

Page | 40

TABLE 4.6

Are you aware of various HSBC’s investment schemes?


Cumulative

Percent

Valid Nil 16 32.0 32.0 32.0

average 26 52.0 52.0 84.0

Fully 8 16.0 16.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This bar graph chart shows that, out of the 50 respondents 52% investors are average aware

about the investment schemes, 32% respondent are not aware and rest 16% are fully aware of

the various investment schemes of hsbc.

Page | 41

TABLE4. 7

Have you ever invested in HSBC?


Cumulative

Percent

Valid Yes 32 64.0 64.0 64.0

No 18 36.0 36.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This graph shows that 64% of the respondents are ever invested in the hsbc and 36% are

those respondents who never invested in the hsbc.

Page | 42

TABLE 4.8

How long you are investing in market?


Cumulative

Percent

Valid 1-5 years 23 46.0 46.0 46.0

5-10 years 19 38.0 38.0 84.0

Above 10 years 8 16.0 16.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

From the sample of 50 respondents, 46% of the respondent invest in the market from the

period of 1-5 year, 36% respondents are invest from 5-10 year and remaining 16%

respondents are invest in the market from above 10 year.

Page | 43

TABLE 4.9

You made invested through:


Cumulative

Percent

Valid Your own 14 28.0 28.0 28.0

Through Distribution house 16 32.0 32.0 60.0

Through broker 15 30.0 30.0 90.0

Others 5 10.0 10.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

This bar chart shows that 32% of the respondent are invested through the distribution house,

30% are invested through the broker, 28% are invested own and remaining 10% are invested

through others.

Page | 44

TABLE 4.10

What would you take into account while investing?


Cumulative

Percent

Valid Safety principle 16 32.0 32.0 32.0

Earning high returns 29 58.0 58.0 90.0

Earning return above

inflation rate 5 10.0 10.0 100.0

Total 50 100.0 100.0

INTERPRETATION:-

From the sample of 50 respondents, 32 % of the respondent invest their money for safety,

58% of the respondents are invest their money to get a high return and 10% respondents are

Invest due to earning return above inflation rate.

Page | 45

TABLE 4.11

INTERPRETATION:-

The KMO measures the sampling adequacy which should be greater than 0.5 for a

satisfactory factor analysis to proceed. We have applied KMO and Bartlett’s test to check the

adequacy of data and defined KMO measure is.608 which is more than standard value of

KMO 0.5 hence data is adequate for my research.

TABLE 4.12

Communalities

Initial Extraction

Investments are made in financial products because of

capital growth 1.000 .558


investment for excess money 1.000 .714


global brand name 1.000 .732


high returns 1.000 .802


tax benefits 1.000 .768

Kaiser-Meyer-Olkin Measure of Sampling

Adequacy. .608

Bartlett's Test of

Sphericity

Approx. Chi-Square 131.103

Df 28

Sig. .000

Page | 46


awareness 1.000 .544


growth rate 1.000 .602


safety 1.000 .681

Extraction Method: Principal Component Analysis.

INTERPRETATION:-

As we have looked the communalities table which is showing 8 factors from which all factors

are very strong because all factors lies between0.5 to 1.but there is no any factors which is

less than 0.5 all factors are playing very important role in my research.

TABLE4.13

Total Variance Explained

Com

pon

ent

Initial Eigenvalues

Extraction Sums of Squared

Loadings

Rotation Sums of Squared

Loadings

Total

% of

Variance

Cumulati

ve % Total

% of

Variance

Cumulative

% Total

% of

Variance

Cumulative

%

1 2.024 25.294 25.294 2.024 25.294 25.294 1.683 21.041 21.041

2 1.336 16.699 41.994 1.336 16.699 41.994 1.599 19.992 41.033

3 1.029 12.865 54.858 1.029 12.865 54.858 1.066 13.324 54.357

4 1.013 12.665 67.523 1.013 12.665 67.523 1.053 13.166 67.523

5 .954 11.923 79.446

6 .756 9.444 88.890

7 .636 7.947 96.838

8 .253 3.162 100.000

.

INTERPRETATION:-

Page | 47

In during my research I have taken 50 respondents or sample size and analyzed the data

according to sample size analyzed the data. The 67.52% data is accurate in my research from

100%, but 33% data is lost. It is good sign because it is above from standardizing value

which is 55%.

TABLE 14

INTERPRETATION:-

This is Scree plot. It plots the eigenvalues on a bicoordinate plane. It derives its name from

the scree that is deposited at the base of a landside. The scree plot is sometimes used to select

how many factors to rotate to a final solution. The traditional construct for interpretation is

that the scree should be ignored and that only factor on the steep portion of the graph should

be selected and rotated. The SPSS default is to select and rotate any factor with an Eigen

value greater then 1.0.sience the on this case four factor are selected for rotation based on the

scree.

Page | 48

TABLE 4.15.

Rotated Component Matrixa

Component

1 2 3 4


capital growth -.082 .735 -.096 .038


investment for excess money -.052 .324 .050 .777


global brand name .201 -.135 .797 .196


high returns .804 -.385 .073 .034


tax benefits .871 .013 .084 -.052


awareness .439 .409 -.124 -.411


growth rate -.108 .743 .120 .156


safety .155 -.262 -.614 .460

INTERPRETATION:-

In case of rotate component matrix have chose the 4 component,

In First component there are three variable which value is greater than 0.50 these

variable is suitable for my research. These are:

1. Investments are made in financial products because of high returns.

2. Investments are made in financial products because of tax benefits.

3. Investments are made in financial products because of safety.

In Second component there are two variable which value is greater than 0.50 these


1. Investments are made in financial products because of capital growth.

Page | 49

2. Investments are made in financial products because of growth rate.

In Third component there are two variable which value is greater than 0.50 these


1. Investments are made in financial products because of high returns.

2. Investments are made in financial products because of tax benefits.

Name of variables:-

The first component (ads were high returns, tax benefits ansd safety) and I have give a name

for these variables is the money pay services. Second component ( capital growth and growth

rate) is denoted security for future.

Page | 50

Chapter 6

Limitations, Suggestions &

Conclusion

Page | 51

LIMITATIONS

UNCERTAINITY OF MARKET:-

HSBC’s securities investments are subject to market risks and there is no assurance or

guarantee that the objectives of the Scheme will be achieved.

As with any investment in securities, the NAV of the units issued under the Scheme can go

up or down depending on the factors and forces affecting the capital markets.

LACK OF PUBLIC AWARENESS:-

In chandigarh, HSBC has just completed 3 years & is in infantry stage so people are unaware

of it. So people are afraid to invest & they only trust of some govt. funds like UTI, SBI, Govt.

securities. Which give assured returns?

HIGH COMPETITION:-

Due to the existence of large number of AMC’s & banks the competition is high. Investors

are confused that where they have to invest and where not. Other banks also offers the same

type of product/schemes which diversified the investors.

RIGID AND TRADITIONAL STRUCTURE:-

The people believe investing in Bank FD’s and Post Office saving and are reluctant to invest

in Mutual Fund. People like to secure money in terms of lending to the people on high

interest they meant their amount is safe, or further to invest in their own business which will

give them high return obviously.

Page | 52

RECOMMENDATIONS

1. The investors above the age of 50 years must be taken into consideration as they are

having great potential regarding investment.

2. HSBC must lay down some sound strategies to trap more customers by giving them

more commission in comparison to other investment centers.

3. HSBC must use marketing tools like point of purchase, advertisement through Mass

Media like loading Newspapers, Magazines, Television, Exhibition, Fairs, SMS on

Mobiles, advertisement on the internet.

4. The organization is lacking on the parameters of motivation. It is recommended that

the organization must adopt the concept of motivation.

5. HSBC should organize programs for customer awareness in developing areas and

establish a confidence and belief among the customers residing there.

Page | 53

CONCLUSION

From the study I got to know that the investment pattern of an individual is largely influenced

by its risk taking ability.

It is also determined that income of an individual does not have a significant impact on a

person’s investment decision, as the outcome of the study pointed to the fact that college

going student, who do not have any income source except from their parents and investment

income, tend to invest in the same kind off investment instruments as a high earning

individual. But the liability to be written of each year has much impact on an individual’s

investment decision. Investment objectives also have some impact on investment pattern of

individual.

From the above analysis we are now aware of the investment pattern of investors which is

highly influenced by his age. This research will help in developing financial products

according to the choice and need of investors. This Questionnaire Research gives the

investment behavior information of the investors of chandigarh which can help to gain

competitive edge over its competitors.

Page | 54

Chapter - 7

References and Bibliography

Page | 55

REFERENCES

1. Bruce A. Huhmann, Nalinaksha Bhattacharyya, (2005) "Does mutual fund advertising

provide necessary investment information?", International Journal of Bank Marketing,

Vol. (23) Iss: 4, pp.296 – 316

2. David E. Allen, Jerry T. Parwada, (2006) "Investors' response to mutual fund

company mergers", International Journal of Managerial Finance, Vol. (2) Iss: 2,

pp.121 - 135

3. Kerstin Drachter, Alexander Kempf, Michael Wagner, (2007) "Decision processes in

German mutual fund companies: evidence from a telephone survey", International

Journal of Managerial Finance, Vol. (3) Iss: 1, pp.49 – 69

4. Timo Korkeamaki, Vesa Puttonen, Tom Smythe, (2007) "Advertising and mutual

fund asset flows", International Journal of Bank Marketing, Vol. (25) Iss: 7, pp.434 –

451

5. Cheng-Ru Wu, Hsin-Yuan Chang, Li-Syuan Wu, (2008) "A framework of assessable

mutual fund performance", Journal of Modelling in Management, Vol. (3) Iss: 2,

pp.125 – 139

6. Rob Jans, Rogér Otten, (2008) "Tournaments in the UK mutual fund industry",

Managerial Finance, Vol. (34) Iss: 11, pp.786 – 798

7. Laurens Swinkels, Pawel Rzezniczak, (2009) "Performance evaluation of Polish

mutual fund managers", International Journal of Emerging Markets, Vol. (4) Iss: 1,

pp.26 – 42

8. Yurij Lukashin, Ivan Lukashin, (2009) "The development of mutual fund market in

Russia", Management Research News, Vol. 32 Iss: 2, pp.132 – 144

9. Tajudeen Olalekan Yusuf, (2010) "Brokers and the control of postcontractual

opportunism in the Nigerian insurance market", Journal of Financial Crime, Vol. 17

Iss: 2, pp.223 – 239

Page | 56

10. Dag Einar Sommervoll, Gavin Wood, (2011) "Home equity insurance", Journal of

Financial Economic Policy, Vol. 3 Iss: 1, pp.66 – 85

Bibliography

WED LINK

• http://www.hsbc.com/1/2/investor-relations

• http://www.hsbc.com/1/2/corporate-and-institutional

• www.hsbc.co.in/1/2/personal/financial-planning/product-

• www.sjgrand.cn/hsbc-launches-rmb-products

• www.hsbc.com/1/2/personal-banking

• http://capitalmind.in/2006/10/ulip-nav-comparison-table/

• http://en.wikipedia.org/wiki/The_Hongkong_and_Shanghai_Banking_Corporation

• http://www.hsbc.com/1/PA_1_1_S5/content/assets/about_hsbc/100601_brief_history.pdf

BOOKS

• QFINANCE: The Ultimate Financial Resource (2nd

edition)

• An Introduction to Trading in the Financial Markets

by WILLIAMS

• Journal of International Financial Management & Accounting

Published in association with New York University's Stern School of Business,

Salomon Center

• Financial Management by Kotl

http://www.hsbc.com/1/2/investor-relations

http://www.hsbc.com/1/2/corporate-and-institutional

http://www.hsbc.co.in/1/2/personal/financial-planning/product-

http://www.hsbc.com/1/2/personal-banking

http://capitalmind.in/2006/10/ulip-nav-comparison-table/

http://en.wikipedia.org/wiki/The_Hongkong_and_Shanghai_Banking_Corporation

http://www.hsbc.com/1/PA_1_1_S5/content/assets/about_hsbc/100601_brief_history.pdf

http://www.sterlingbookhouse.com/proddetail.asp?prod=70864

http://www.stern.nyu.edu/

http://www.stern.nyu.edu/

Page | 57

Chapter 8

QUESTIONNAIRE

Page | 58

QUESTIONNAIRE

1) Gender: a) Male b) Female

2) Age:

a) 20-30 b) 30-50 c) above 50

3) Profession

a) Entrepreneur b) Private Job c) Government Job

d) Student e) industrialist

4) Income Level:

a) 60,000 – 1, 00,000 b) 1, 00,000 – 2, 00,000

c) 2, 00,000 – 3, 00,000 d) above 3, 00,000

5) Have you ever invested in the market?

a) Yes b) No

If Yes, What is your Portfolio?

a) Mutual Fund

b) Insurance

c) Shares

6) Are you aware of various HSBC’s investment schemes?

a) Nil b) Average c) Fully

7) Have you ever invested in HSBC?

a) Yes b) No

If yes, you’re Diversification (Mention your preferences)

Page | 59

a) Equity:

b) Debt:

c) Cash:

8) How long you are investing in market?

a) 1-5 years b) 5-10 years c) Above 10 years

9) You made invested through:

a) Your own b) Through Distribution house

c) Through broker d) others

10) Rate the following factor on a scale of 1-5 (1strongly agree, 2agree, 3 neutral, 4disagree,

5 strongly disagree).

Factors 1 2 3 4 5

Investments are made in financial products because of capital

growth

Investments are made in financial products because of investment

for excess money

Investments are made in financial products because of global

brand name

Investments are made in financial products because of high

returns

Investments are made in financial products because of tax benefit

Investments are made in financial products because of awareness

Investments are made in financial products because of variety of

products

Investments are made in financial products because of safety

Page | 60

11) What would you take into account while investing?

a) Safety high returns b) Earning high returns

c) Earning return above inflation rate

baljit kaur b34

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