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A
PROJECT REPORT
ON
SECURITY ANALYSIS AND INVESTMENT MANAGEMENT ININDIA INFOLINE
SUBMITTED TO
M.M.INSTITUTE OF MANAGEMENTMAHARISHI MARKANDESHWAR UNIVERSITY
MULLANA-AMBALA 133207www.mmumullana.org
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INDEX
Table Of Content
Chap. No. Title Page
No.Declaration
Certificate
Acknowledgement
Executive Summary
1. Introduction
1.1 Introduction To The Topic
1.2 Introduction To The Industry
1.3 Introduction To The Company
2. Review of litrature
3. Research Methodology
3.1 Objectives Of The study
3.2 Nature Of The Study
3.3 Sampling Procedure and design
3.4 Methods Of data collection
3.5 Scope Of The Study
3.6 Sampling Method
3.7 Significance Of The Study
3.8 Limitations Of The Study
4. Major Findings And Conclusion
A
5. Suggestions And Recommendations
Annexure
Sample Questionnaire
Bibliography
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DECLARATION
I hereby declare that this project report titled SECURITY ANAYLISIS AND
INVESTMENTMENT MANAGEMENT has been submitted by me for the award of Post
Graduate Diploma in Management, as partial fulfillment of the requirement for the course.
This is the result of the original work carried out by me. This report has not been submitted
anywhere else for the award of any other degree or diploma.
Date: 30th Aug 2012
VARSHA RANI
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CERTIFICATE
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ACKNOWLEDGEMENT
The success behind the completion of job is the support and joint teameffort of a number of people. The satisfaction of the successful completion
of any task wouldnt be complete without the expression of gratitude to the
people who made it possible.
It was a great opportunity for me to work with India Infoline Ltd., pioneers in
the field of Finance Industry. I am extremely grateful to all those who have
shared their expertise and knowledge with me and without whom the
completion of this project would have been virtually impossible.
My deepest sense of gratitude, profound respect and sincere thanks to Mr.
Virander Kashyap, Branch Manager-Sales, my company guide, for his
valuable assistance, keen interest and constant motivation at each step of
the project. He always had the answers to my queries, be it regarding any
concept related to stock trading and De-mat account. His warm support,
practical guidance and easy explanations regarding the project matter addto the success of my project.
I would also like to thank my guide Mr. Ankur Aggarwal for all their
time-to time assistance.
Last but not the least I would like to thank God because without his divine
grace nothing would have been possible.
VARSHA RANI
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EXECUTIVE SUMMARY
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1.INTRODUCTION
This summer project which is on how to create and manage portfolio, and know investor
perception about investment in capital market which is most useful for me. This project
Increase my knowledge and ability to understand external forces of environment.
Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream
of retiring early (or of being able to retire at all)? Do you know that you should invest, but don't
know where to start?
. There are many different ways you can go about making an investment. This includes putting
money into stocks,bonds, mutual funds, or real estate (among many other things), or starting
your own business. Sometimes people refer to these options as "investment vehicles," which is
just another way of saying "a way to invest." Each of these vehicles has positives and
negatives, which we'll discuss in a later section of this tutorial. The point is that it doesn't
matter which method you choose for investing your money, the goal is always to put your
money to work so it earns you an additional profit. Even though this is a simple idea, it's the
most important concept for you to understand.
The world of finance can be extremely intimidating, but we firmly believe that the stock market
and greater financial world won't seem so complicated once you learn some of the language
and major concepts.
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INDUSTRY PROFILE
The Indian broking industry is one of the oldest trading industries that have been around even
before the establishment of the BSE in 1875. Despite passing through number of changes in the
post liberalization period, the industry has found its way onwards sustainable growth. With the
purpose of gaining a deeper understanding about the role of the Indian stock broking industry
in the countrys economy, we present in this section some of the industry insights gleaned from
analysis of data received through primary research.
For the broking industry, we started with an initial database of over 1,800 broking firms that
were contacted, from which 464 responses were received. The list was further short listed based
on the number of terminals and the top 210 were selected for profiling. 394 responses, that
provided more than 85% of the information sought have been included for this analysis
presented here as insights.
All the data for the study was collected through responses received directly from the customers
and employees of broking firms. The insights have been arrived at through an analysis on
various parameters, pertinent to the equity broking industry, such as region, terminal, market,
branches, sub brokers, products and growth areas.
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2.COMPANY PROFILE
The India infoline was founded by a group of professionals in 1995, a seemingly distant past
in the Internet age. Our meticulous research was published and distributed in printed form to a
client base comprising the who's who of Indian business including leading MNCs, investment
banks and consulting firms. The quality of research was highly acclaimed and soon became the
industry benchmark. Over the last few years, our research coverage has grown to cover
practically all companies, economy and financial markets. The breadth and depth of our content
is unmatched - stock markets, mutual funds, personal finance, taxation and economy.
We saw an opportunity to expand our client base, from a few hundreds to several
millions and also to complete the value chain. In early 1999, when Internet penetration in India
was at its infancy and the future unknown, we took the hard decision of killing our earlier
business model and embracing the Internet. We discontinued delivery of reports in printed form
and made available quality research at the click of a mouse. Thus, was born
www.indiainfoline.com? The site has emerged as the most popular website on Indian business
and finance. A publication, no less than Forbes has chosen us in theirBest of the Web under
the Asian Investing category.
The India Info line group, comprising the holding company, Angel Broking Ltd and its
wholly owned subsidiaries offers the entire gamut of investment products ranging fromEquities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual
Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments. Angel
Broking also owns and manages the websites, www.indiainfoline.com and www.5paisa.com.
Angel Broking Ltd is a company listed on both the leading stock exchanges in India namely the
Stock Exchange, Mumbai stock exchange (BSE) and the National Stock Exchange (NSE).
Angel Broking is a forerunner in the field of equity research. Angel Brokings research is
acknowledged by none other than Forbes as Best of the Web and a must read for investors
in Asia.
India Info lines research is available not just over the internet but also on international wire
services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is
amongst the most read Indian brokers. The Angel Broking group has a significant presence
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across the country owing to its 125 offices across 45 cities across India. All these offices are
networked and are connected with the corporate office in Mumbai. The group has invested
significantly in technology and research, the results of which are there for everyone to see. The
5paisa trading interface is one of the most advanced platforms available to retail investor in
India.
The group has memberships on BSE and NSE for equities trading and on MCX and
NCDEX for commodities trading. It has a SEBI license for Portfolio Management under which,
various schemes are offered which have been consistently beating the benchmark indices since
inception. Angel Broking is the one-stop shop for all investment needs for the Indian retail
investor, from advice to execution, from east to west, online or offline.
To be the premier provider of investment advisory and financial planning services in
India
To be a leading investment intermediary for transactions through both online and offline
medium.
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REVIEW OF LITERATURE
21st century the digital revolution has transformed the economy in to a new economy which
empowered the customer with new set of capabilities such as:
1. Access to greater amount of information;
2. Wider variety of available good and services
3. Greater ease of interacting with the service provider.
This new capability in the new economy led the customer to market the marketing and plays a
very vital role in the growth of the market. It is essential in the service industry in particular,
place greater emphasis on the enablers leading to customer satisfaction and customer retention.It is in this context is very important to understand the customer requirements to provide value-
(QSP - Quality, Service and Price) and track and manage the customer satisfaction for retention
and creation of new customers.
In Service industry it is not enough if the product meets the functional requirements of the
customer, it should also meet certain other customer expectations like the behaviours /attitude
of the person who provides service. The customer satisfaction is the combination of both
technical features & human behavioural aspects. The quality management only addresses the
systems and processes; service addresses the customer service independently. In todays new
economy, it is essential to address the enablers for customer satisfaction for business growth
with utmost importance as they are interdependent in nature.
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NATURE OF STUDY
Investment management is the professional management of various securities (shares, bonds
and other securities) andassets (e.g., real estate) in order to meet specified investment goals forthe benefit of the investors. Investors may be institutions (insurance companies, pension
funds, corporations, charities, educational establishments etc.) or private investors (both
directly via investment contracts and more commonly via collective investment schemese.g.
mutual funds orexchange-traded The business of investment has several facets, the
employment of professional fund managers, research (of individual assets and asset classes),
dealing, settlement, marketing, internal auditing, and the preparation of reports for clients. The
largest financial fund managers are firms that exhibit all the complexity their size demands.
Apart from the people who bring in the money (marketers) and the people who direct
investment (the fund managers), there are compliance staff (to ensure accord with legislative
and regulatory constraints), internal auditors of various kinds (to examine internal systems and
controls), financial controllers (to account for the institutions' own money and costs), computer
experts, and "back office" employees (to track and record transactions funds).
The term asset management is often used to refer to the investment management ofcollective
investments, while the more generic fund management may refer to all forms of institutional
investment as well as investment management for private investors. Investment managers who
specialize in advisory ordiscretionary management on behalf of (normally wealthy) private
investors may often refer to their services as wealth management or portfolio management
often within the context of so-called "private banking".
The provision of investment management services includes elements offinancial statement
analysis, asset selection, stock selection, plan implementation and ongoing monitoring of
investments. Coming under the remit offinancial services many of the world's largest
companies are at least in part investment managers and employ millions of staff.
Fund manager (orinvestment adviserin the United States) refers to both a firm that provides
investment management services and an individual who directs fund management decisions
and fund valuations for up to thousand s of clincts per institution.)
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STOCK MARKET BASICS
Meaning of stock
Stock is a share in the ownership of a company. It represents a claim on the
company's assets and earnings. Whether you say shares, equity or stock, it all means the same thing.
If a company wants to growmaybe build more factories, hire more people or develop
new productsit needs money. It could get a loan from a bank. By issuing stock, a company
can raise money without going into debt. People who buy the stock are giving the company the
money it needs to grow. Not every company can issue stock. A business owned by one person
(a proprietorship) or a few people (a partnership) cannot issue stock. Only a business
corporation can issue stock. A corporation has a special legal status. Like a school, its existence
does not depend on the people who run it.
When the price of a particular stock rises, that stock is said to be "up," meaning up in price.
When the price falls, the stock is said to have gone "down. The terms "up" and "down" are also
used to describe the rise and fall of the market as a whole. Stock market
The stock market is the market for the trading of company stock, both those securities listed on
a stock exchange as well as those only traded privately. Although common, the term 'the stock
market' is a somewhat abstract concept for the mechanism that enables the trading of company
stocks. It is also used to describe the totality of all stocks, especially within one country. In
simple words:
Place where business of buying and selling stock takes place.
The stock market is not a specific place, though some people use the term "Dalaal
Street.
Types of stocks
Equity
Preference
Market segments
Primary market
-Channel for creation of new securities
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Secondary market
-The new securities issued in the primary market are traded the secondary market
Stock exchange
The Bombay Stock Exchange (BSE)
National Stock Exchange of India Ltd (NSE)
NEAT CASH
BOLT
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Market timing
Trading on the equities segment takes place on all days of the week (except Saturdays and
Sundays and holidays declared by the exchange in advance).
The market timings of the equities segment are:
Normal market open : 09:55 hours
Normal market close : 15:30 hours
The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and
15.50 hours in BSE
Index
Number which measures the change in a set of values over a period of time.
Stock index represents the change in value of a set of stocks which constitute the index
A good stock market index is one which captures the behavior of the overall equity market
It has to be well diversified yet highly liquid
Important market index
A market index is very important for its use as
A barometer for market behavior
As a benchmark portfolio performance
A passive fund management in index funds
An underlying for index futures and options
Types of indexes
Price weighted index
Equally weighted index
Market capitalization weighted index
Market Segments
Rolling Settlement
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Limited physical market
Institutional Segment
Trade for Trade Segment
Clearing and Settlement
Stock Markets follow a system of settling trades on T+2 basis, which means
Transactions done on Monday are to be settled by Wednesday by way of giving
securities or funds.
Providing of securities or funds to
Exchange / Clearing Corporation is called Pay-In.
Receiving securities or funds from Exchange / Clearing Corporation is called pay-out
Sometimes trades dont get settled because of short or bad delivery or company
objection.
In such cases, trade is settled through auction of securities.
If a trade remains unsettled even after auction, then Exchange carries Close Out
Margins and Risk Management
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It is of paramount importance that investors have faith smooth functioning of stock
Markets.
Exchanges achieve this by putting in place a comprehensive Risk Management system
and margin requirements.
Margin Requirement
MTM- Mark to Market margin
Volatility Margin
Gross Exposure Margin
SPAN margin
Risk Management
Capital Adequacy requirement.
Additional Base Capital
Intra-Day Trading and Exposure limits
On-line Exposure monitoring
Settlement Guarantee Fund
Inspection of Books
Penalties
Frequently used terms
Margin Money
Bull and Bear
Settlement Cycle
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Squared transaction
Delivery Transaction
Positions - + (buy) & - (sell)
Prices- Last traded price, closing price, opening price, average price
Pay-in & pay-out
Bid and offer
Short selling
Long position
Auction
Settlement Number
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B. CAPITAL MARKETS
Segments of the Capital Market
Primary market
-Channel for creation of new securities
Secondary market
-The new securities issued in the primary market are traded the secondary market.
Primary Market
This is part of the financial market where enterprises issue their new shares and bonds. It is
characterized by being the only moment when the enterprise receives money in exchange for
selling its financial assets. In simple words:
The primary market provides the channel for creation of new securities.
Primary market provides opportunity to issuers of securities; Government as well as
corporates, to raise resources to meet their requirements of investment.
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Classification of Issues
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Initial Public Offer
Initial Public Offering (IPO) is when an unlisted company makes either a fresh
issue of securities or an offer for sale of its existing securities or both for the first timeto the public. This paves way for listing and trading of the issuers securities.
A follow on public offering (Further Issue)is when an already listed company
makes either a fresh issue of securities to the public or an offer for sale to the public,
through an offer document.
Pricing of an Issue Fixed Price
Price discovery through Book Building Process
Book Building Process
Book Building is basically a process used in IPOs for efficient price discovery.
It is a mechanism where, during the period for which the IPO is open, bids are collected
from investors at various prices, which are above or equal to the floor price. The offer
price is determined after the bid closing date.
Rights Issue
Rights Issue is when a listed company which proposes to issue fresh securities to its
existing shareholders as on a record date.
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The rights are normally offered in a particular ratio to the number of securities held
prior to the issue and generally issued at a price lower than the currently traded market
price of the share
Preferential Issue
A Preferential issue is an issue of shares or of convertible securities by listed
companies to a select group of persons which is neither a rights issue nor a public issue.
This is a faster way for a company to raise equity capital.
Private placement can be done with a maximum of 50 investors.
Secondary Market
The market where securities are traded after they are initially offered in the primary market.
Most trading is done in the secondary market. In simple words:
Secondary market refers to a market where securities are traded after being initially
offered to the public in the primary market and/or listed on the Stock Exchange.
Majority of the trading is done in the secondary market.
Secondary market comprises of equity markets and the debt markets.
Role of Secondary Market For the general investor, the secondary market provides an efficient platform for trading
of his securities.
For the management of the company, secondary equity markets serve as a monitoring
and control conduitby facilitating value-enhancing control activities
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C-Capital Market Instruments
Equity shares
Preference shares
Futures and Options
Debentures/Bonds
Government securities
Equity Shares
Equity shares represent proportionate ownership in a company. Investors who own
equity shares in a company are entitled to ownership rights such as
Share in the profits of the company ( in the form of dividends )
Share in the residual funds after liquidation / winding up of the company
Voting rights
Reasons for buying equities
Owning equity in a company means owning part of that company. Each part is known
as a share.
If a company has issued 100 shares of stock, and you bought one, you own 1% of that
company. People who own stock are called stockholders, or shareholders.
Stockholders hope the company will earn money as it grows. If a company earns
money, the stockholders share the profits. Over time, people usually earn more from
owning stock than from leaving money in the bank, buying bonds, or making otherinvestments.
Preference Shares
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Preferential shareholders enjoy a preferential right over equity shareholders with
regards to :
Receipt of dividend
Receipt of residual funds after liquidation
Futures and Options
Future and Options are derivative products whose value is derived from the value of one
or more basic variables
Underlying Asset can be Equity, Forex, commodity or any other asset.
Debentures/ Bonds
Debt instruments issued by corporate and government
Debentures and bonds can have many variations depending upon redemption, charge,
convertibility etc.
Government Securities
The Central Government and the State Governments issue securities periodically for the
purpose of raising loans from the public. There are two main types of Government
securities:
Dated Securities: These securities have a maturity period of more than 1 year
Treasury Bills: These have a maturity period of less than 1 year
Regulatory Framework
Main legislations governing the capital market
Securities Contract (Regulations) Act,1956
Companies Act, 1956
Securities Exchange Board of India Act, 1992
Depositories Act,1996
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Role of SEBI
SEBI was set up to
develop and regulate capital market
protect interest of investors
register various participants
make rules for participants
regulate stock exchanges
promote investors education
LISTING REQUIREMENTS
[I] Minimum Listing Requirements for new companies
(A) Minimum Capital:
1. New companies can be listed on the Exchange, if their issued & subscribed equity
capital after the public issue is Rs.10 crores. In addition to this the issuer company
should have a post issue net worth (equity capital + free reserves excluding revaluation
reserve) of Rs.20 crores.
2. For new companies in high technology ( i.e. information technology, internet, e-
commerce, telecommunication, media including advertisement, entertainment etc.) the
following criteria will be applicable regarding there hold limit:
i. The total income/sales from the main activity, which should be in the field of
information technology, internet, e-commerce, telecommunication, media
including advertisement, entertainment etc. should not be less than 75% of the
total income during the two immediately preceding years as certified by the
Auditors of the company.
ii. The minimum post-issue paid-up equity capital should be Rs.5 Crores.
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iii. The minimum market capitalization should be Rs.50 Crores. (The capitalization
will be calculated by multiplying the post issue subscribed number of equity
shares with the Issue price).
iv. Post issue net worth (equity capital + free reserves excluding revaluation
reserve) of Rs.20 Crores.
(B) Minimum Public offers:
As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of
a company can be listed on a Stock Exchange only when at least 25% of each class or kind of
securities is offered to the public for subscription.
In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the
securities issued by the company may be offered to the public subject to the following:
Minimum 20 lakhs securities are offered to the public (excluding reservation, firm
allotment and promoters contribution)
The size of the offer to the public is minimum 50 crores.
For this purpose, the term "offered to the public" means only the portion offered to the
public and does not include reservations of securities on firm or competitive basis.
SEBI may, however, relax this condition on the basis of recommendations of stock
exchange(s), only in respect of a Government company defined under Section 617 of the
Companies Act, 1956.
[II] Minimum Listing Requirements for companies listed on other stock
exchanges
1. The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the
direct listing norms for companies listed on others The Company should have minimum
issued and paid up equity capital of Rs. 3 crores.
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2. The Company should have profit making track record for last three years. The
revenues/profits arising out of extra ordinary items or income from any source of non-
recurring nature should be excluded while calculating distributable profits.
3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves
excluding revaluation reserves).
4. Minimum market capitalization of the listed capital should be at least two times of the paid
up capital.
5. The company should have a dividend paying track record for the last 3 consecutive years
and the minimum dividend should be at least 10%.
6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders
as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single
shareholder should hold more than 0.5% of the paid-up capital of the company individually
or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional
Investors/Overseas Corporate Bodies and Non-Resident Indians.
7. The company should sign an agreement with CDSL & NSDL for demat trading.
[III] Minimum Requirements for companies delisted by this Exchange
seeking relisting of this Exchange
The companies delisted by this Exchange and seeking relisting are required to make a
fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial
public offerings.
[IV] Permission to use the name of the Exchange in an Issuer Company's
prospectus
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The Exchange follows a procedure in terms of which companies desiring to list their
securities offered through public issues are required to obtain its prior permission to use the
name of the Exchange in their prospectus or offer for sale documents before filing the same
with the concerned office of the Registrar of Companies. The Exchange has since last three
years formed a "Listing Committee" to analyse draft prospectus/offer documents of the
companies in respect of their forthcoming public issues of securities and decide upon the matter
of granting them permission to use the name of "Bombay Stock Exchange Limited" in their
prospectus/offer documents. The committee evaluates the promoters, company, project and
several other factors before taking decision in this regard.
[V] Submission of Letter of Application
As per Section 73 of the Companies Act, 1956, a company seeking listing of its
securities on the Exchange is required to submit a Letter of Application to all the Stock
Exchanges where it proposes to have its securities listed before filing the prospectus with the
Registrar of Companies.
[VI] Allotment of Securities
As per Listing Agreement, a company is required to complete allotment of securities
offered to the public within 30 days of the date of closure of the subscription list and approach
the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval
of the basis of allotment. In case of Book Building issue, Allotment shall be made not later than
15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to
the investors.
[VII] Trading Permission
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As per Securities and Exchange Board of India Guidelines, the issuer company should
complete the formalities for trading at all the Stock Exchanges where the securities are to be
listed within 7 working days of finalization of Basis of Allotment.
A company should scrupulously adhere to the time limit for allotment of all securities
and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the
listing permissions of all the Exchanges whose names are stated in its prospectus or offer
documents. In the event of listing permission to a company being denied by any Stock
Exchange where it had applied for listing of its securities, it cannot proceed with the allotment
of shares. However, the company may file an appeal before the Securities and Exchange Board
of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.
[VIII] Requirement of 1% Security
The companies making public/rights issues are required to deposit 1% of issue amount
with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited
in the event of the company not resolving the complaints of investors regarding delay in
sending refund orders/share certificates, non-payment of commission to underwriters, brokers,
etc.
[IX] Payment of Listing Fees
All companies listed on the Exchange have to pay Annual Listing Fees by the 30th
April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed
from time to time.
The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board
of the Exchange and approved by the Securities and Exchange Board of India is given
hereunder tock Exchange(s) and seeking listing at BSE. These norms are applicable with
immediate effect.
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[X] Compliance with Listing Agreement
The companies desirous of getting their securities listed are required to enter into an
agreement with the Exchange called the Listing Agreement and they are required to make
certain disclosures and perform certain acts. As such, the agreement is of great importance and
is executed under the common seal of a company. Under the Listing Agreement, a company
undertakes, amongst other things, to provide facilities for prompt transfer, registration, sub-
division and consolidation of securities; to give proper notice of closure of transfer books and
record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the
shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial
results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely
to materially affect the financial performance of the Company and its stock prices, to comply
with the conditions of Corporate Governance, etc.
The Listing Department of the Exchange monitors the compliance of the companies with the
provisions of the Listing Agreement, especially with regard to timely payment of annual listing
fees, submission of quarterly results, requirement of minimum number of shareholders, etc. and
takes penal action against the defaulting companies.
[XI] "Z" Group
The Exchange has introduced a new category called "Z Group" from July 1999 for
companies who have not complied with and are in breach of provisions of the Listing
Agreement. The number of companies placed under this group as at the end of May, 2001
New Direct listing norms
The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the
direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at
BSE. These norms are applicable with immediate effect.
1. The company should have minimum issued and paid up equity capital of Rs. 3 crores.
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2. The Company should have profit making track record for last three years. The
revenues/profits arising out of extra ordinary items or income from any source of non-
recurring nature should be excluded while calculating distributable profits.
3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves
excluding revaluation reserves).
4. Minimum market capitalization of the listed capital should be at least two times of the
paid up capital.
5. The company should have a dividend paying track record for the last 3 consecutive
years and the minimum dividend should be at least 10%.
6. Minimum 25% of the company's issued capital should be with Non-Promoters
shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter
holding no single shareholder should hold more than 0.5% of the paid-up capital of the
company individually or jointly with others except in case of Banks/Financial
Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-
Resident Indians.
7. The company should have at least two years listing record with any of the Regional
Stock Exchange.
8. The company should sign an agreement with CDSL & NSDL for demat trading.
9. The company should have minimum issued and paid up equity capital of Rs. 3 crores.
10. The Company should have profit making track record for last three years. The
revenues/profits arising out of extra ordinary items or income from any source of non-
recurring nature should be excluded while calculating distributable profits.
11. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves
excluding revaluation reserves).
12. Minimum market capitalization of the listed capital should be at least two times of the
paid up capital.
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13. The company should have a dividend paying track record for the last 3 consecutive
years and the minimum dividend should be at least 10%.
[XII] Cash Management Services (CMS) - Collection of Listing Fees
As a further step towards simplifying the system of payment of listing fees, the
Exchange has entered into an arrangement with HDFC Bank for collection of listing fees, from
141 locations, situated all over India. Details of the HDFC Bank branches, are available on our
website sitewww.bseindia.comas well as on the HDFC Bank website www.hdfcbank.com The
above facility is being provided free of cost to the Companies.
C.INVESTMENT BASICS
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TYPES OF SECURITIES TRADED IN COMPANY
Shares
Commodities
Mutual fund
Life insurance
SHARES
Meaning: -A share or stock is a document issued by a company, which entitles its holder to
be one of the owners of the company. A share is issued by a company or can be purchased from
the stock market.
By owning a share you can earn a portion and selling shares you get capital gain. So,
your return is the dividend plus the capital gain. However, you also run a risk of making a
capital loss if you have sold the share at a price below your buying price.
Procedure for doing trading in shares:
Every transaction in the stock exchange is carried out through licensed members calledbrokers.
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To trade in shares, you have to approach a broker However, since most stock exchange
brokers deal in very high volumes, they generally do not entertain small investors. These
brokers have a network of sub-brokerswho provide them with orders.
The general investors should identify a sub-broker for regular trading in shares and
place his order for purchase and sale through the sub-broker. The sub/broker will transmit the
order to his broker who will then execute it
.
Derivatives
Introduction
A derivative is a contract/product that has no independent value i.e.: it derives its valuefrom the underlying asset. Underlying asset can be securities, commodities, bullion, currency,
live stock or anything else.
A derivative is a financial instrument whose value depends on other, more basic,
underlying variables. The variables underlying could be prices of traded securities and stock,
prices of gold or copper, prices of oranges to even the amount of snow that falls on a ski resort.
Derivatives have become increasingly important in the field of finance. Options and
futures are traded actively on many exchanges. Forward contracts, swaps and different types of
options are regularly traded outside exchanges by financial institutions, banks and their
corporate clients in what are termed as over-the-counter markets i.e. there is no single market
place or an organized exchange
In other words, derivatives means forward, futures, option or any other hybrid contract
of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of
specified real or financial asset or to index of securities.
In the international market, various derivatives products are traded. To start with, we
need to understand three products, namely forward, futures and options.
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Concept
Derivative is a product whose value is derived from the value of one or more basic
variables. Underlying Asset can be Equity, Forex, commodity or any other asset.
Types of Derivatives
Forwards
Futures
Options
SWAPS
Forwards
A forward contract is a customized contract between two entities, where settlement takes
place on a specific date in the future at todays pre-agreed price. Forward contract is a one
to one bipartite contract, which is to be performed in future at the terms decided today.
Forward contracts are being used in India on large scale in the foreign exchange market to
cover the currency risk.
Forward contracts being negotiated by the parties on one to one basis, offer the
tremendous flexibility to them to articulate the contract in terms of price, quantity, quality,
delivery time and place. However, forward contracts suffer from poor liquidity and default
risk
Futures
Future contracts are the organized/standardized contracts in terms of quantity, quality,
delivery time and place for settlement on any date in future. These contracts are traded on
exchanges. Futures trading entail liquid investments that allow investors to purchase or sell
assets at specified prices or at later dates. Based upon the anticipated price of the future,
futures contracts can be drawn up for various markets. In simple words:
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A future is contracting to buy or sell an underlying asset at a specified future date, at a
specified price.
These contracts are traded and settled on exchanges.
Future contracts can be on individual scrips or indices.
Reasons for buying Futures contracts
Procedure for work in future
Futures trading occur on exchange, allowing investors the right and obligation to buy
and sell. The contracts are regulated so the investors can turn their investments into money
right away. Some standard conditions include guaranteeing the delivery month and location, the
quantity and quality of the commodities, as well as the last day to trade. In order to end the
futures contract, the holder must either sell the long position or purchase back the short
position. Cash settlement, expiry, and physical delivery are three ways to complete the
transaction of a futures contract.
Futures terminology
Reasons for BUYING futures
contracts
Reasons for SELLING futures
contracts
Hedgers To lock in a price and thereby obtain
protection against rising prices
To lock in a price and thereby obtain
protection against declining prices
Speculators To profit from rising prices To profit from declining prices
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Spot Price
Futures Price
Expiry Date
Contract Cycle -One month
-Two month
-Three month
Options
An option is a contract, which gives the buyer (holder) the right, but not the obligation, to
buy or sell specified quantity of the underlying assets, at a specific (strike) price on or before a
specified time (expiration date). The underlying may be physical commodities like wheat/ rice/
cotton/ gold/ oil or financial instruments like equity stocks/ stock index/ bonds etc. In simple
words:
Options are derivative instruments where one party has a right to buy/sell the
underlying while the other party has an obligation to buy/sell
The person with the right is called the buyer of the option. The person with the
obligation is called the writer of the option.
Risks in Options
The risk/ loss of an option buyer is limited to the premium that he has paid. An option
holder who neither sells his option in the secondary market nor exercises it prior to its
expiration loses his entire investment (Premium), in the option. The risk of an Options Writer
however is unlimited where his gains are limited to the Premiums earned. The writer of an
uncovered call is in an extremely risky position and may incur large losses if the value of theunderlying asset increases above the exercise price. The potential loss is unlimited for the
writer of an uncovered call. When a physical delivery uncovered call is assigned an exercise,
the writer will have to purchase the underlying asset to meet his call obligation and his loss will
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be the excess of the purchase price over the exercise price of the call reduced by the premium
received for writing the call. (In the case of a cash-settled option, the loss will be the cash
settlement amount reduced by the premium.) As with writing uncovered calls, the risk of
writing put options is substantial. The writer of a put option bears a risk of loss if the value of
the underlying asset declines below the exercise price, and such loss could be substantial if the
decline is significant. The writer of a put bears the risk of a decline in the price of the
underlying interest-potentially to zero. Since the leverage inherent in an option can cause the
impact of price changes in the underlying asset to be magnified in the price of the option, a
writer of an option that is uncovered and unhedged may have a significantly greater risk than a
short seller of the underlying interest.
Types of Options
Based on the right:
- Call option
- Put option
Call Option: A call option gives the holder (buyer/ one who is long call), the right to
buy specified quantity of the underlying asset at a specified price on or before aspecified time. The seller (one who is short call ) however, has the obligation to sell the
underlying asset if the buyer of the call option decides to exercise his option to buy. The
buyer of a call option acquires the right but not the obligation to purchase a particular
futures contract at a stated price on or before a particular date.
Put Option: A Put option gives the holder (buyer/ one who is long Put), the right to
sell specified quantity of the underlying asset at a specified price on or before a
specified time. The seller (one who is short Put) however, has the obligation to buy the
underlying asset if the buyer of the put option decides to exercise his option to sell.
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CALL OPTIONS PUT OPTIONS
Option buyer or option holder Buys the right to buy the
underlying asset at the specified
price
Buys the right to sell the
underlying asset at the specified
price
Option seller or option writer Has the obligation to sell the
underlying asset (to the option
holder) at the specified price
Has the obligation to buy the
underlying asset (to the option
holder) at the specified price.
Based on the exercise:
- American ( Individual Securities)
- European (S&P CNX Nifty)
Procedure for using Options
If you anticipate a certain directional movement in the price of a stock, the right to buy or sell
that stock at a predetermined price, for a specific duration of time can offer an attractive
investment opportunity. The decision as to what type of option to buy is dependent on whether
your outlook for the respective security is positive (bullish) or negative (bearish). If your
outlook is positive, buying a call option creates the opportunity to share in the upside potential
of a stock without having to risk more than a fraction of its market value. Conversely, if you
anticipate downward movement, buying a put option will enable you to protect against
downside risk without limiting profit potential. Purchasing options offer you the ability to
position yourself accordingly with your market expectations in a manner such that you can both
profit and protect with limited risk. Once you have purchased an option contract, you can do
one of the following:
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You can sell an option of the same series as the one you had bought & close out your
position in that option at any time, or;
You can exercise the option on the expiration day in case of European Option or on or
before the expiration day in case of an American option.
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ITM/ATM/OTM:
CALL OPTION PUT OPTION
In-the-money Strike price < Spot price of
underlying asset
Strike price > Spot price o
underlying asset
At-the-money Strike price = Spot price of
underlying asset
Strike price = Spot price o
underlying asset
Out-of-the-money Strike price > Spot price of
underlying asset
Strike price < Spot price o
underlying asset
Futures V/s Options
The major differences in Futures and Options are as under:
Futures Options
Futures are agreements/contracts to buy or sell
specified quantity of the underlying assets at a
price agreed upon by the buyer & seller, on or
before a specified time. The buyer is obligated to
buy/sell the underlying asset.
Unlike futures, the buyer in case of options
enjoys the right & not obligation, to buy or sell
the underlying asset.
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Futures contracts are highly leveraged positions
with unlimited risk for both the buyer as well as
the seller.
In case of options, for a buyer (or holder of the
option), the downside is limited to the premium
(option price) he has paid while the profits may
be unlimited. For a seller or writer of an option,
however, the downside is unlimited while profits
are limited to the premium he has originally
received from the buyer.
The Futures contracts prices are affected only by
the prices of the underlying asset.
The prices of options are however; affected by
prices of the underlying asset, time remaining for
expiry of the contract & volatility of the
underlying asset.
It costs nothing to enter into a futures contract. There is a cost of entering into an options
contract, termed as Premium.
Benefits of trading in F&O
Transfer of risk
Incentive to make profit with minimal amount of risk capital
Lower transaction costs
Liquidity, price discovery
Eliminates security specific risks
Power to leverage
Margin
SPAN Margin
-Initial margin
-Mark to market margin
Exchange requires customer to maintain margin with broker.
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Meaning of commodities
Commodities are broadly defined as natural resources, chemicals and physical
products you can touch, taste, smell, grow, mine, consume or deliver. In simple
words:
Commodity includes all kinds of goods.
FCRA defines "goods" as "every kind of movable property
Other than actionable claims, money and securities".
Goods with commercial value traded widely in bulk; usually a raw material or primary
produce, for processing;
Agricultural commodities: food grains, fibers, oilseeds complex, sugar, plantation crops,
horticulture crops;
Non-agro commodities: Base metals, precious metals; industrial products: crude;
Comparison of India Asset Market
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MUTUAL FUND
History of Mutual Fund in India
Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In
early 1990s, Government allowed public sector banks and institutions to set up mutual funds.
UTI has an extensive marketing network of over 40,000 agents all over the country.
In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The
objectives of SEBI are to protect the interest of investors in securities and to promote the
development of and to regulate the securities market.
In 1995, the RBI permitted private sector institutions to set up Money Market MutualFunds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper,
commercial bills accepted/co-accepted by banks, certificates of deposit and dated government
securities having unexpired maturity up to one year.
As far as mutual funds are concerned, SEBI formulates policies and regulates the
mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual
funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to
enter the capital market. The regulations were fully revised in 1996 and have been amended
thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to
time to protect the interests of investors.
All mutual funds whether promoted by public sector or private sector entities including
those promoted by foreign entities are governed by the same set of Regulations. There is no
distinction in regulatory requirements for these mutual funds and all are subject to monitoring
and inspections by SEBI. The risks associated with the schemes launched by the mutual funds
sponsored by these entities are of similar type.
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MEANING
Mutual fund is Investment Company that pools money from shareholders and invests in
a variety of securities, such as stocks, bonds and money market instruments. Most open-end
mutual funds stand ready to buy back (redeem) its shares at their current net asset value, whichdepends on the total market value of the fund's investment portfolio at the time of redemption.
Most open-end mutual funds continuously offer new shares to investors. Also known as an
open-end investment company, to differentiate it from a closed-end investment company.
Mutual funds invest pooled cash of many investors to meet the fund's stated investment
objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's
current net asset value: total fund assets divided by shares outstanding.
In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing
units to the investors and investing funds in securities in accordance with objectives as
disclosed in offer document.
In Short, a mutual fund is a common pool of money in to which investors with
common investment objective place their contributions that are to be invested in accordance
with the stated investment objective of the scheme. The investment manager would invest the
money collected from the investor in to assets that are defined/ permitted by the stated
objective of the scheme. For example, an equity fund would invest equity and equity related
instruments and a debt fund would invest in bonds, debentures, gilts etc . Mutual Fund is a
suitable investment for the common man as it offers anopportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.
A mutual fund is a group of investors operating through a fund manager to purchase a diverse
portfolio of stocks or bonds. There are myriad kinds of mutual funds, each with its own goals
and methodologies. Whether or not a mutual fund is a good investment is a matter of much
public debate, with many claiming they are excellent for the average person, and others saying
they are simply a poor way to invest.
A mutual fund may be either an actively managed fund or an indexed mutual fund.
Actively managed funds are changed on a regular basis by a fund manager in the attempt to
maximize their profitability. They fund manager looks at the market and the sectors a fund
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invests in and redistributes the fund accordingly. An indexed fund simply takes one of the
major indexes and buys according to that index. Indexed funds change much less frequently
than actively managed funds, but in theory an active fund has more potential for profit.
Many critics of mutual funds point out that scarcely over 20% of mutual funds
outperform the Standard and Poor's 500 Index. This means that nearly 80% of the time, an
investor would have been more profitable by simply buying equal shares in all 500 of the
companies currently on the S&P 500.
Supporters point out that for most people the complications involved in traditional
investment are simply not worth the effort. A mutual fund offers an easy way to invest in
something with a higher return than, say, interest earned at the bank, while keeping funds
somewhat fluid. It also eliminates the need to track the market oneself.
There are more types of mutual fund available than there are publicly traded stocks,
making the process of choosing one a somewhat daunting prospect for most people. In general,
it is good to look at a few types of mutual fund that catch your eye and investigate them to see
if they fit your needs. The length of time you want to remain invested, associated costs, tax
status, and whether a fund is closed- or open-ended may all prove important. The sector of
investment for a mutual fund may also be something you want to look at. Many sector funds
exist, and they are most often the top-performing mutual funds in a given year. The problem, of
course, is guessing which sector will next see uniform growth, and avoiding sectors that can be
hard-hit by single events .
In other words A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus collected is then invested in
capital market instruments such as shares, debentures and other securities. The income
earned through these investments and the capital appreciation realized is shared by its
unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost. The flow
chart below describes broadly the working of a mutual fund:
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ORGANISATION OF A MUTUAL FUND
There are many entities involved and the diagram below illustrates the organisational set
up of a mutual fund.
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Types of Mutual Fund
Schemes According To Maturity period
Schemes According To Investment Objective
Schemes according to Maturity Period: A mutual fund scheme can be classified into
open-ended scheme or close-ended scheme depending on its maturity period.
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Open-ended Fund:
An open-ended Mutual fund is one that is available for subscription and repurchase on a
continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently
buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis.The key feature of open-end schemes is liquidity.
Close-ended Fund:
A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is
open for subscription only during a specified period at the time of launch of the scheme.
Investors can invest in the scheme at the time of the initial public issue and thereafter they can
buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to
provide an exit route to the investors, some close-ended funds give an option of selling back the
units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations
stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase
facility or through listing on stock exchanges. These mutual funds schemes disclose NAV
generally on weekly basis.
Schemes according to Investment Objective:
A scheme can also be classified as growth fund, income fund, or balanced fund
considering its investment objective. Such schemes may be open-ended or close-ended schemes
as described earlier. Such schemes may be classified mainly as follows:
Growth / Equity Oriented Scheme :
The aim of growth funds is to provide capital appreciation over the medium to long- term.
Such schemes normally invest a major part of their corpus in equities. Such funds havecomparatively high risks. These schemes provide different options to the investors like
dividend option, capital appreciation, etc. and the investors may choose an option depending on
their preferences. The investors must indicate the option in the application form. The mutual
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funds also allow the investors to change the options at a later date. Growth schemes are good
for investors having a long-term outlook seeking appreciation over a period of time.
Income / Debt Oriented Scheme
The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures,
Government securities and money market instruments. Such funds are less risky compared to
equity schemes. These funds are not affected because of fluctuations in equity markets.
However, opportunities of capital appreciation are also limited in such funds. The NAVs of
such funds are affected because of change in interest rates in the country. If the interest rates
fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long
term investors may not bother about these fluctuations.
Points should be kept in mind before investing in Mutual Funds
Mutual Fund investment decisions require consistent effort on the part of the investor.
Before investing in Mutual Funds, the following steps must be given due weightage to
decide on the right type of scheme:
(A) Identifying the Investment Objective
(B) Selecting the right Scheme Category(C) Selecting the right Mutual Fund
(D) Evaluating the Portfolio
A) Identifying the Investment Objective
your financial goals will vary, based on your age, lifestyle, financial independence, family
commitments, level of income and expenses, among many other factors. Therefore, the
first step is to assess you needs on the basis of following points:
Needs of an investor to invest
To a regular income
To finance a wedding
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He need to educate my children or
A combination of all the above
Risk potential of an Investor willing to take
The risk-taking capacities of investors vary depending on various factors. Based on their
risk bearing capacity, investors can be classified as:
Very conservative
Conservative
Moderate
Aggressive
Very Aggressive
Cash flow requirements
For example, you may require:
A regular Cash Flow
A lump sum after a fixed period of time for some specific need in the future
Or, you may have no need for cash, but you may want to create fixed assets for the
future
B) Selecting the scheme category
The next step is to select a scheme category that matches your investment objectives:
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For Capital Appreciation go for equity sectoral funds, equity diversified funds or
balanced funds.
For Regular Income and Stability you should opt for income funds/MIPS
For Short-Term Parking of Funds go for liquid funds, floating rate funds,
C) Selecting the right Mutual fund
Once you have a clear strategy in mind, you now have to choose which Mutual fund and
scheme you want to invest in. The offer document of the scheme tells you its objectives and
provides supplementary details like the track record of other schemes managed by the same
Fund Manager. Some important factors to evaluate before choosing a particular Mutual Fund
are:
The track record of performance over that last few years in relation to the appropriate
yardstick and similar funds in the same category.
How well the Mutual Fund is organized to provide efficient, prompt and personalized
service.
The degree of transparency as reflected in frequency and quality of their
communications.
D) Evaluation of portfolio
Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio,
fund managers style of investment, portfolio diversification, fund managers experience. Good
equity fund should provide consistent returns over a period of time. Also expense ratio should
be within the prescribed limits. These days fund house charge around 2.50% as management
fees.
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Evaluation of bond funds involve it's assets allocation analysis, return's consistency, its
rating profile, maturity profile, and its performance over a period of time. The bond fund with
ideal mix of corporate debt and gilt fund should be selected.
DIFFERENT TYPES OF INVESTMENT
The following are brief descriptions for beginning investors to familiarize themselves with
different kinds of investment options:
401K Plans
the easiest and most popular kind of investment is a 401K plan. This is due to the fact that most
jobs offer this savings program where the money can be automatically deducted from your
payroll check and you never realize it is missing
Life Insurance
Life Insurance policies are another kind of investment that is fairly popular. It is a way to
ensure income for your family when you die. It allows you a sense of security and provides a
valuable tax deduction.
Stocks
Stocks are a unique kind of investment because they allow you to take partial ownership in a
company. Because of this, the returns are potentially bigger and they have a history of being a
wise way to invest your money.
Bonds
a bond is basically a promise note from the government or a private company. You agree to
give them a set amount of money as a loan and they keep it for a set number of years with a
predetermined amount of interest. This is typically a safe bet and one that is a good investment
for a first time investor because there is little risk of losing your money.
Mutual Funds
Mutual funds are a kind of investment that are based on the gains and losses of a shareholder.
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Basically one person manages the money of several or many investors and invests in a list of
various stocks to lessen the effect of any losses that may occur.
Money Market Funds
a good short-term investment is a Money Market Fund. With this kind of investment you canearn interest as an independent shareholder.
Annuities
if you are interested in tax-deferred income, then annuities may be the right kind of investment
for you. This is an agreement between you and the insurer. It works to produce income for you
and protect your earning potential.
ON LINE TRADING PLATEFORM
When you place your orders electronically through our revolutionary on-line order entry
system, you can route your orders DIRECTLY to hand-held devices in the trading pit. Your
order is sent directly to the filling broker in the trading pit without any interruption of any kind.
Compare this execution to that of other brokerage firms where your execution may involve up
to six steps:
You call your broker and place the order
Your broker calls his central order desk
The central order desk calls the exchange order desk
The exchange order desk hands your order to a runner
The runner takes your order to a trader in the pit
Your order is finally executed At Farr Financial, your orders are executed like this:
You enter the order on-line over the Internet or place it with the professional trade desk.
The order is instantly received by the filling broker in the pit who immediately executes
it
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Investment process
The investment process involves a service of activity leading to purchase of securities or there
investments alternatives. The investment can be divided in to five stages.
I. Framing of investment policy
II. Investment analysis
III. Valuation
IV. Portfolio contributes
V. Portfolio evolution
Investment Process
Analysis Valuation Portfolio
Construction
- Market
- Industries
- Company
- Intrinsic
Value
- Future
Value
-
-Diversification
-Selection &
Allocation
- Appraisal
- Revision
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Portfolio
Evaluation
Invt. Policy
- Investable
Fund- Objectives
-Knowledge
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D-RELATIONSHIP MANAGER
Job Profile of an RM
To offer personalized service based on needs and requirements of each client
One point contact for the client
He is a Financial Advisor will advise the client not only on equity but
MF,PMS,Insurance,
Acquire and Retain clients
The Goal.
CUSTOMER FOR LIFE
Skills required
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P - Polite, patience, perseverance
E - Emotions...ManagingHope, Fear, Greed
O - Openness and honesty
P - Proactive, prepared, professional
L - Listen and learn
E Efficient
Working of HNI desk
Induct and Train RMs
Activation List - RMs
Meeting clients
Welcome note
Special Conditions to be kept confidential
CMR based on profile
References to build client list
Rules to be adhered from Checklist
Error free
Check List
First Meeting with Client- Fill Client Profile Sheet and make meeting Report
Offline and Online client
Attend morning meeting and inform clients accordingly
Know your clients position
Monitor position of clients
Dealing errors
Special Conditions
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Maintain MIS on weekly basis
Acquire new customers acquired from
Natural social circle
Databases and telemarketing leads
References of existing customers
Role of an RM
Role of an RM
ResearchResearch RM ClientClient
InformationRelationship
Execution
Consistency
CostSpeed
Convenience
Confidentiality
Offers DemandsOffers
Investment Story
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RMRM
ConsistencyConsistency InformationInformation
Closing theClosing the
dealdealRelationshipRelationship
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Customer services in broking business
Commoditized business
Quality as differentiator
Top Quality Customer services
Retaining a customer is relatively cheaper
Customer was king, now he is emperor
A bad service experience rankles for long time in memory
A bad service experience can prompt a customer to switch loyalty
The Challenge
How does Company provide top quality customer service?
Basic Principles Of Customer Services
Principle One
Do onto others what you want others to do
onto you
Place yourself in customers shoes
How do you feel when provided with poor
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Customer service?
Principle Two
Dont make customer run from pillar to post
Recall your experience in rationing office.
One single phone call from customer should
Solve his problem.
Principle Three
Under promise and over deliver
Principle Four
Mere smile is not enough, you must deliver solutions.
F. MARKET ANALYSIS
COMMON TRADING MISTAKES
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Lack of Knowledge and No Plan
It amazes us that some people expect to trade the stock market successfully without any effort.
Yet if they want to take up golf, for example, they will happily take some lessons or at least
read a book before heading out onto the course.
The stock market is not the place for the ill informed. But learning what you need is
straightforward you just need someone to show you the way.
The opposite extreme of this is those traders who spend their life looking for the Holy Grail of
trading! Been there, done that!
The truth is, there is no Holy Grail. But the good news is that you don't need it. Our trading
system is highly successful, easy to learn and low risk.
Unrealistic Expectations
Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write
out their resignation letter before they have even placed their first trade!
Now, don't get us wrong. The stock market can be a great way to replace your current income
and for creating wealth but it does require time. Not a lot, but some. So doesnt tell your boss
where to put his job, just yet!
Other beginners think that trading can be 100% accurate all the time. Of course this is
unrealistic. But the best thing is that with our methods you only need to get 50-60% of your
trades "right" to be successful and highly profitable.
Listening to Others
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When traders first start out they often feel like they know nothing and that everyone else have
the answers. So they listen to all the news reports and so called "experts" and get totally
confused. And they take "tips" from their buddy, who got it from some cab driver
We will show you how you can get to know everything you need to know and so never have to
listen to anyone else, ever again!
Getting in the Way
By this we mean letting your ego or your emotions get in the way of doing what you know you
need to do.
When you first start to trade it is very difficult to control your emotions. Fear and greed can be
overwhelming. Lack of discipline; lack of patience and over confidence are just some of the
other problems that we all face.
It is critical you understand how to control this side of trading. There is also one other key that
almost no one seems to talk about. But more on this another time!
Poor Money Management
It never ceases to amaze us how many traders don't understand the critical nature of money
management and the related area of risk management.
This is a critical aspect of trading. If you don't get this right you not only won't be successful,
you won't survive!
Fortunately, it is not complex to address and the simple steps we can show you will ensure that
you don't "blow up" and that you get to keep your profits.
Only Trading Market in One Direction
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Most new traders only learn how to trade a rising market. And very few traders know really
good strategies for trading in a falling market.
If you don't learn to trade "both" sides of the market, you are drastically limiting the number of
trades you can take. And this limits the amount of money you can make.
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REVIEW OF LITERATURE
21st century the digital revolution has transformed the economy in to a new economy which
empowered the customer with new set of capabilities such as:
1. Access to greater amount of information;
2. Wider variety of available good and services
3. Greater ease of interacting with the service provider.
This new capability in the new economy led the customer to market the marketing and plays a
very vital role in the growth of the market. It is essential in the service industry in particular,
place greater emphasis on the enablers leading to customer satisfaction and customer retention.
It is in this context is very important to understand the customer requirements to provide value-
(QSP - Quality, Service and Price) and track and manage the customer satisfaction for retention
and creation of new customers.
In Service industry it is not enough if the product meets the functional requirements of the
customer, it should also meet certain other customer expectations like the behaviours /attitude
of the person who provides service. The customer satisfaction is the combination of both
technical features & human behavioural aspects. The quality management only addresses the
systems and processes; service addresses the customer service independently. In todays new
economy, it is essential to address the enablers for customer satisfaction for business growth
with utmost importance as they are interdependent in nature.
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RESEARCH METHODOLOGYRESEARCH METHODOLOGY
Research in Common parlance refers to the search for knowledge. One can also define
research as a Scientific and Systematic search for pertinent information of a specifictopic, it is the pursuit of truth with the help of study , observation , comparison and
experiment.
SELECTION OF THE TOPIC
I select this topic because of I like that type of work which is full of interest.
I also consulted my seniors about this topic. Many of the people of india are not aware about
this field like many rural people who are very rich but because of unawareness they lost this
opportunity. I want to make my career in this field for serving my ideas with others.
3. OBJECTIVES OF STUDY
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1. To create the awareness among the people with security analysis and investment
management.
2. To increase profit margin in a risky situation
3. To analysis the profitability of securities in india infoline
NATURE OF STUDY
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SAMPLIN PROCEDURE AND DESIGNSAMPLE DESIGN
Sampling design The sampling method adopted for research work was Convenience
sampling
method.
Sample- The sample was selected from businessman, shopkeepers, professionals, employed
and salaried personnel for their interest in De-mat account; I started interviewing the concernedeither by directly interacting or through tele calling.
Sample size - The sample size selected was 50. The data collection method was based on the
following:
a. Tools: The tool that was used to conduct the study was questionnaire designed by me,
which was mixture of open ended and close ended question. The questionnaire was
designed in such so as to cover the relating to securities and investment.
METHOD OF DATA COLLECTION DATA COLLECTION
The data used for the project can be divided into two major forms:
1) Primary Data
2) Secondary Data
Primary Data was collected by getting the feedback forms filled by the people we met in
the organizations visited. We also used to write our daily reports based on our experiences of
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that particular day and maintained a record of the companys reaction on the product, as well as
the presentation.
Secondary Data was collected by going through several websites of the companies on the
Internet like www.nseindia.com,www.5paisa.com,www.indiainfoline.com etc. Information
about the companies and the industry was also collected by going through financial papers and
magazines like Economic Times,Business World,Business Today.etc.
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Data Analysis and Interpretation
1. Do you have any knowledge about stock market?
Aware of stock market 72%
Unaware of stock market 28%
Interpretation:
With the increase in cyber education, the awareness towards online share trading has increased
by leaps and bounds. This awareness is expected to increase further with the increase in
Internet education.
2. Are you interested in online stock market trading hence opening De-mat account first?
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Scope of Investment Management:-
Portfolio management is a continuous process. It is a dynamic activity. The following are the
basic operations of a portfolio management.
a) Monitoring the performance of portfolio by incorporating the latest market conditions.
b) Identification of the investors objective, constraints and preferences.
c) Making an evaluation of portfolio income (comparison with targets and achievement).
d) Making revision in the portfolio.
e) Implementation of the strategies in tune with investment objective.
SAMPLING METHOD
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SIGNIFICANCE OF THE STUDY
The primary attraction of active management is that it allows selection of a variety of
investments instead of investing in the market as a whole. Investors may have a variety of
motivations for following such a strategy:
1. They may be skeptical of the efficient-market hypothesis, or believe that some
market segments are less efficient in creating profits than others.
2. They may want to manage volatility by investing in less-risky, high-quality
companies rather than in the market as a whole, even at the cost of slightly lower
returns.
3. Conversely, some investors may want to take on additional risk in exchange for the
opportunity of obtaining higher-than-market returns.
4. Investments that are not highly correlated to the market are useful as a portfolio
diversifier and may reduce overall portfolio volatility.
5. Some investors may wish to follow a strategy that avoids or underweights certain
industries compared to the market as a whole, and may find an actively-managed
fund more in line with their particular investment goals. (For instance, an employee
of a high-technology growth company who receives company stock or stock optionsas a benefit might prefer not to have additional funds invested in the same industry.)
Several of the actively-managed mutual funds with strong long-term records invest in value
stocks. Passively-managed funds that track broad market indices such as the S&P 500 have
money invested in all the securities in that index i.e. both growth and value stocks