A SUMMER PROJECT REPORT

ON

“Risk Factors in Capital Market”

CONDUCTED AT

ICICI Securities Limited, Madhuban, Udaipur (Raj.)

SUBMITTED TO

FACULTY OF MANAGEMENT STUDIESMOHAN LAL SUKHADIA UNIVERSITY, UDAIPUR

(MBA-FSM) 2009-11

Under Guidance of: Submitted By:

Dr. Anil Kothari Mudrika Jain

Coordinator (MBA –FSM IInd PART)

MBA-FSM

PREFACE

“THE KNOWLEDGE WHICH IS NOT PRACTICALLY IMPLEMENTED

IS A BURDEN”

Knowledge is wealth but it is proved when it is utilized wisely in practical aspects. In this day

and age the above statement is of paramount importance especially for an M.B.A. student.

Equipped with the theoretical knowledge, an M.B.A. student can apply the same in practical

life to gain some valuable experience. This project study provides such an opportunity. It

familiarizes me with the corporate world as well as the challenges, which are in store for me

after getting an M.B.A. degree.

I Mudrika Jain, the student of Faculty of Management Studies, Mohan Lal Sukhadia

University, Udaipur was placed with ICICI Securities Limited for a period of 45 days. . Being

thoroughly managed organization we had a good opportunity to put over theoretical

knowledge in to practices. During the 45 days in the company we worked on the

FINANCIAL SERVICES (SECURITIES MARKET). Needles to say these 45 days

constitute one of the most interesting and rewarding periods of our MBA programme.

I gained valuable experience working on this project and I hope that this presentation will

prove to be useful to all concerned. However I believe that there is no end to knowledge and

learning process changes from time to time.

MUDRIKA JAIN

ACKNOWLEDGEMENT

I dedicate this page to convey my deepest and heart-felt appreciation for all those people who

have purposefully and inadvertently assisted me in this project. Without their thought

fullness, the satisfactory completion of this project would not have been possible.

First of all, I would express my sincere regard to Mr. MITUL JANI (Senior Sales

Manager) for giving me a chance to pursue my project in ICICI SECURITIES LTD,

Udaipur for giving me an opportunity to do this project in Udaipur Branch under his

guidance. I sincerely thank him for being my project guide and for his guidance, valuable

suggestions and time which proved to be of immense importance to me.

I would pay my sincere regards to Dr. ANIL KOTHARI (Faculty Guide) for constantly

encouraging me during the training period. I am very much thankful for his involvement at

every stage of this project and extending maximum possible help.

Also I also give my sincere thanks to Prof. KARUNESH SAXENA (Director) for his moral

support and encouragement given to me.

I express thanks to Mr. YOGESH BHARDWAJ (Assistant Unit manager) for his valuable

suggestions and for providing necessary facilities and co-operation.

I obliged to Mr. MANISH SHARMA (Associate) for his valuable suggestion, feedback for

building up survey details, schedules and implementation of the survey analysis and sustained

interest and encouragement for the project.

And last but not least I am thankful to all the Members of ICICI SECURITIES LTD. for

their support and encouragement which I have received during the course of time.

MUDRIKA JAIN

CONTENTS

Sr. no. Topic

1) Preface

2) Acknowledgement

3) Corporate profile

a) introduction and history of ICICI group

b) about ICICI group

c) about ICICI securities

d) product profile

e) SWOT analysis

4) Project profile

a) introduction of capital market

b) meaning and definition of risk

c) elements of risk

d) what causes risk

e) ways to deal with risk

f) risk and return relationship

5) Research methodology

6) Analysis and interpretation

7) Conclusion

8) Limitations

9) Questionnaire

10) Bibliography

CORPORATE PROFILE

PROFILE OF THE SAMPLE UNIT

ICICI SECURITIES LTD.

Profile Of ICICI Securities

GENERAL PROFILE

Name of the company – ICICI securities Ltd

Registered office – Mumbai

Date of incorporation and commencement of business – Feb 2003

Sector – Private Enterprises

Constitution – Constituted under the companies law (1956)

CORPORATE PROFILE

History of the organisation

A subsidiary of ICICI Bank, ICICI Securities was set up in February 1993 to provide

investment-banking services to investors in India. As on date ICICI Bank holds 99.9% of the

share capital of ICICI Securities. The dematerialized form of shareholding and the depository

mode of trade (scrip less trade) have been in operation in developed financial markets for

over 15 years. In India, the first depository commenced operation a decade back and is

relatively new. The Indian financial market is in need of both scrip-based and scrip less trade,

but the investing community, which is used scrip-based trade, is bound to take some time to

accept the latter. The scrip less trading, till now a domain of the western world, institutional

investors and GDR holders is now mandatory even for small investors. All those who hold

physical share certificates have to get them dematerialized. If they do not, they will be forced

to do so at the time of sale.

The countless numbers of conservative Indians have to digest it, whether they like it or not.

First, the institutional investors succumbed. Then the high net worth individuals, trading in

more than a certain numbers of shares, were forced to give in. now, it is the turn of the small

investors of select-companies.

With their share certificates being replaced by small slips and receipts, naturally the average

investors will have their share of fears and apprehensions. It is necessary to educate and

convince these investors about the benefit of Demat rather than forcing them to take part in

the game.

Vision and Mission:

Company’s Vision:

To make ICICI Direct the dominant online share trading by world class people and

services.

This we hope to achieve by:

Understanding the needs of customers and offering them superior product and service.

Leveraging technology to service customers quickly and conveniently.

Developing and implementing superior risk management and investment strategic to

offer sustainable and stable return to our shareholder.

Providing and enabling environment to foster growth and learning for our employees.

Company’s mission:

To judged by their sales and earnings growth rates than on the absolute value of their sales

and earnings. Look for companies that consistently grow faster than there peers.

Investors prefer companies that increase profit margins -- the percentage of sales that they

keep -- every year. This is accomplished either by lowering expenses or raising prices. Look

for companies that consistently find ways to squeeze more profits out of sales than their

peers.

The financial health of a company is dependent on a combination of profitability, short-term

liquidity and long term liquidity. Companies, which are profitable, but have poor short term

or long term liquidity measures, do not survive the troughs of the trade cycle.

PROFILE OF THE ORGANISATION

ICICI was founded by the Government of India, World Bank and representatives of the

Indian private sector, on January 5, 1955 to encourage and assist industrial development and

investment in India. Over the years, ICICI has evolved into a Virtual Universal Bank by

becoming the most preferred financial institution for both the corporate and retail sectors.

ICICI Group has been a pioneer in Internet enabling of businesses, by starting the first

Internet enabled bank in India. ICICI Group believes in leveraging the power of the Internet

to create value for its customers by making their life easier. In December 1999, ICICI Group

created a dedicated E-Commerce Group to extend and explore the opportunities made

possible by the Internet. The Group has since been conceptualising and incubating Internet

based in-house projects. Bill Junction is one of the first offerings of this group.

Today, Bill Junction Payments Limited - a network company of ICICI Venture is India's

foremost player in the Electronic Bill Presentment and Payment (EBP) Bill Junction is at the

forefront of Internet electronic commerce, committed to the conversion of traditional modes

of bill payment through collection centre’s and drop boxes to an online and convenient

process. Bill Junction has used technology to create a superior product and has harnessed the

power of the Internet to deliver to you an easy hassle-free bill payment solution.

Bill Junction is dedicated to creating value for its customers by continuously upgrading its

product and by incorporating customer friendly features on an ongoing basis. With Bill

Junction taking care of your bills you will have more free time, fewer headaches and fewer

worries.

Financial planning and share trading have been the strong pillars of ICICI's growth. They

expect these to remain thrust areas in the future too. The financial institution sees significant

opportunities in the power sector, and in the rapid de-regulation of the Telecom sector. On

the retail side, ICICI has established a retail franchisee through a physical presence across 42

cities. Its retail thrust has been on the planks of technology enabled low cost distribution

channels like the Internet, Call centers and ATMs.

It occupies the number one position in automobile financing (over 20% of the market share),

number one in credit cards on an incremental basis. It also has a growing presence in home

finance and on-line trading.

Six parts of ICICI:-

ICICI Bank

ICICI Prudential

ICICI Lombard

ICICI Securities Ltd.

ICICI prudential Mutual Fund

ICICI Venture

ICICI Group

ABOUT THE ORGANISATION

Ms. Chanda D. Kochhar, chair person of ICICI

BOARD OF DIRECTORS

Ms. Chanda D. Kochhar is the Managing Director and Chief Executive Officer of ICICI

Bank Limited. She began her career with ICICI as a Management Trainee in 1984 and has

thereon successfully risen through the ranks by handling multidimensional assignments and

heading all the major functions in the Bank at various points in time.

Education & Certifications: Mrs. Kochhar joined Jaihind College for a Bachelors Degree in

Arts and after graduating in 1982, completed her MBA and Cost Accountancy. She did her

Masters in Management Studies (Finance) from the Jamnalal Bajaj Institute of Management

Studies, Mumbai and topped her batch and received the Wockhardt Gold Medal for

Excellence in Management Studies. In Cost Accountancy, she received the J. N. Bose Gold

Medal for highest marks in that year.

ICICI Securities Limited

Ms. Chanda Kochhar,Chairperson

Mr. Uday Chitale

Mr. Narendra Murkumbi

Mr. Ketan Patel

Mr. Sandeep Bakhshi

Mr. Pravir Vohra

Ms. Madhabi Puri-Buch, Managing Director & CEO

Mr. A. Murugappan, Executive Director

Mr. Anup Bagchi, Executive Director

ICICI Securities Holding Inc.

Mr. Anup Bagchi,Chairman

Mr. A Murugappan

Mr. Charanjit Attra

Mr. Subir Saha

Mr. Gopakumar P., President

ICICI Securities, Inc.

Mr. Anup Bagchi, Chairman

Mr. A Murugappan

Mr. Charanjit Attra

Mr. Subir Saha

Mr.Gopakumar

MANAGEMENT TEAM

Ms Madhabi

Puri-Buch

Managing

Director &

CEO

Ms Madhabi Puri-Buch, Managing Director and CEO of ICICI Securities

Limited, has been with the ICICI Group for over 15 years. Madhabi

spearheads the company's initiatives in Corporate Finance which includes

Equity Capital Markets Advisory Services, and Institutional Equities;

Retail Equities which includes ICICIdirect.com, one of the largest players

in the internet brokerage space and Financial Product Distribution.

Mr. A

Murugappan

Executive

Director

Mr. A Murugappan, Executive Director - ICICI Securities Limited. He

oversees the institutional business of ICICI Securities comprising

Investment Banking and Institutional Broking. ICICI Securities

Institutional Broking business is one of the leading domestic brokerages...

Mr Anup

Bagchi

Executive

Director

Anup Bagchi is Executive Director at ICICI Securities Ltd. Mr Bagchi is

responsible for the development and business growth of the retail

broking, distribution of retail financial products, and wealth management

services. Mr Bagchi pioneered seamless online broking in India through

ICICIdirect.com. ICICIdirect.com is the leader in the online share trading

space with over 2 million customers.

Mr Charanjit

As Chief Financial Officer & Head-SFG, Mr Attra is in charge of all

strategic financial activities, business planning, forecasting and analysis,

management systems, setting up the internal control framework, &

management of all operating funds containing working capital of the

company.(Chief Financial Officer & Head – SFG)

ABOUT I – SEC

ICICI Securities is a strongly positioned investment bank in India and provides products and

services in Fixed Income, Equities and Corporate Finance. In the fixed income business

ICICI Securities is a leading market participant in the country. ICICI Securities fixed income

activities include interest rate trading, derivatives trading, research and issue management.

The Corporate Finance business focuses on industry consolidation. ICICI Securities has been

involved in a number of mergers, cross border acquisition, equity and bidding for a number

of reputed companies. The equity business offers research, sales and execution services to

institutional investors in the secondary market and capital market related services such as

execution of public offerings, structuring and regulatory and legal documentation services.

In order to assist/provide corporate clients and institutional investors with investment banking

services in the United States of America, ICICI Securities has set up two subsidiaries namely,

ICICI Securities Holdings Inc and ICICI Securities Inc, ICICI Securities Inc, has become the

registered broker dealer with the National Association of Securities Dealers Inc, empowering

it to engage in a variety of securities transactions in the U.S. market.

ICICI Brokerage Services Limited, a member of the National Stock Exchange of India

Limited, is the domestic broking subsidiary of ICICI Securities. ICICI Securities Ltd is the

largest equity house in the country providing end-to-end solutions (including web-based

services) through the largest non-banking distribution channel so as to fulfill all the diverse

needs of retail and corporate customers. ICICI Securities (I-Sec) has a dominant position in

its core segments of its operations - Corporate Finance including Equity Capital Markets

Advisory Services, Institutional Equities, Retail and Financial Product Distribution.

With a full-service portfolio, a roster of blue-chip clients and performance second to none,

we have a formidable reputation within the industry. Today ICICI Securities is among the

leading Financial Institutions both on the institutional as well as retail side.

Headquartered in Mumbai, I-Sec operates out of several locations in India. ICICI Securities

Inc.,the step-down wholly owned US subsidiary of the company is a member of the Financial

Regulatory Authority (FINRA). ICICI Securities Inc. activities include Dealing in Securities

and Corporate Advisory Services in the United States. ICICI Securities Inc. is also registered

with the Monetary Authority of Singapore (MAS) and operates a branch office in Singapore.

AWARDS AND RECOGINITION

Institutional

ICICI Securities is awarded as the Best Investment Bank 2008

by Global Finance Magazine

The Corporate Finance group also was awarded a runner-up Best Merchant Banker by

Outlook Money in 2007.

ICICI Securities (I-Sec) topped the Prime Database League Tables 2007 for money raised

through IPOs/FPOs.

The equities team was adjudged the 'Best Indian Brokerage House-2003' by Asia money.

Retail

CMO Asia Awards for Excellence in Branding and Marketing -     

Brand Leadership Award (overall)     

'Campaign of the Year' for the Trade Racer Campaign     

Brand Excellence in Banking and Financial Services for the store format     

Award for Brand Excellence in the Internet Business

Frost and Sullivan Award for Customer Service Leadership

ICICIdirect wins the prestigious Outlook Money - India's Best e-Brokerage House for

2009.

ICICIdirect, the neighborhood financial superstore won the prestigious Franchise India

`Service Retailer of the Year 2008 award.

ICICIdirect wins the prestigious Outlook Money - India's Best e-Brokerage House for

2008.

ICICIdirect been winning the prestigious Outlook Money - India's Best e-Brokerage House

for 2003-2004, 2004-2005, 2006-2007, 2007-2008 and 2009 - 2010

ICICIdirect has also won the CNBC AWAAZ Consumer Award for the Most Preferred

Brand of Financial Advisory Services.

Best Broker - Web 18 Genius of the Web Awards 2007

Franchisor of the year award 2009

Retail concept of the year awards 2009.

Structure of ICICI Securities Udaipur Branch

The Udaipur branch has three vertical channels.

ICICI Securities

Centre/ branch

sales

Branch manager

(Mr. Vikram Singh)Senior

Relationship

manager (Nidhi

Chaudhary)

Retail channel

sales

Senior sales

manager(Mr. Mitul

Jani)Assistant unit

manager (Mr.

Yogesh Bharadwa

j)Associates (Mr. Manish Sharma

)

Sub broker sales

PRODUCT PROFILE

ICICI DIRECT.COM (ONLINE SHARE TRADING)

ICICI Direct.com is a truly online share-trading site. Which means that from the time you

punch in a buy or sell trade on your computer to the final settlement in your account,

everything happens completely online? The 3-in-1 e-invest account integrates your

brokerage, bank and one or more depository accounts to make sure that you can do the

otherwise cumbersome share trading from the comfort of your home or office, at absolutely

any time of the day or night.

The products offered are

Insurance

E-invest (ICICI Direct.com)

Fixed Deposits

Mutual Funds

Bonds

Demat

Equity IPO

ICICIdirect.com allows the customers various options while trading in the following businesses: Products

Subparts

EQUITIES Cash Margin Margin Plus BTST

POSTAL SAVINGS National Savings certificates

INSURANCE Life insurance General insurance

SWOT ANALYSIS OF THE COMPANY

Strengths

1. Management philosophy and commitment to maximize shareholders returns

2. Upgraded product design and development facilities to develop new financial products and aid diversification

3. Ongoing activities to support up gradation of operational performance and rise in market.

4. Team of talented and committed professionals available to improve company’s performance weakness.

(i) Competition from other brokerage houses

(ii) High customer base

Weakness

Lack of professional personnel.

Opportunities

1. Wide market is there hence proper marketing and research is required to be done, in

order to increase customer.

2. New avenues & areas are to be covered

Threats, Risks & Concerns

1. Constant pressure to be competitive to meet customer expectations.

2. There is vast competition in the market and ICICI also feeling the heat of that. Now they

required to maintain their profitability.

.

DOCUMENTATION

Requisites for opening an account

1. Cheque :

(i) Cheque required of Rs. 500 (for investment a/c)

(ii) Rs. 975 (for DMAT a/c – if person is not salaried).

(iii) Rs. 250 (for DMAT a/c – if person is salaried along with salary

proof )

2. PAN Card (mandatory)

3. 2 Passport size photo

4. Address proof: - Passport, Driving licence, Bank Statement, Telephone Bill (only

landline), Electricity bill.

5. If ICICI a/c holder then no proof is required.

6. Domicile proof can be given along with DL.

7. Ration card is not considered as address proof.

Charges (per annum)

I year - 250 salaried and 975 for non-salaried

II year - D-MAT maintenance charges - 450 + tax = 496

(+) ATM charges - 99 + tax = 109

(+) Maintain in A/C - Rs. 5000 quarterly average balance. If less

than 5000 is kept in a/c than Rs.826 is charged

PROJECT PROFILE

CAPITAL MARKET SCENARIO

The stock market in India dates back to the 18 th century when the East India Company was ruling

the roost in the country and was perhaps the most dominant and powerful institution and its

securities were traded. The securities trading were done in an unorganized form at Bombay and

Calcutta in early 19th century. The decade of 90’s has witnessed several changes in reformation of

capital market. Automation, transparency,. Strict surveillance, depository system, on line trading,

investor protection, new rules and regulations, etc. are some of the activities which only reflect

the growth of Indian capital market. By any reckoning Indian corporate sector has grown very

significantly in the last couple of decades whether to look at it in terms of public and private

limited companies, their share capitalization, their sales turnover or their contribution to capital

formation with this came the legislation of SEBI to act as a regulatory body to protect investors.

WHAT IS CAPITAL MARKET

A market in which individuals and institutions trade financial securities.

Organizations/institutions in the public and private sectors also often sell securities on the

capital markets in order to raise funds. It is defined as a market in which money is provided

for periods longer than a year[1], as the raising of short-term funds takes place on other

markets (e.g., the money market). The capital market includes the stock market (equity

securities) and the bond market (debt).

Capital markets may be classified as primary markets and secondary markets. In primary

markets, new stock or bond issues are sold to investors via a mechanism known as

underwriting in the secondary markets; existing securities are sold and bought among

investors or traders, usually on a securities exchange, over-the-counter or elsewhere.

Classification of capital market

Capital market can be classified into following:

Industrial securities market

Government securities market

Long term loan market

CAPITAL MARKET

INDUSTRIAL SECURITIES

MARKET

PRIMARY

MARKET

SECONDARY MARK

ET

GOVT. SECURITIES

MARKET

LONG TERM LOAN

MARKET

I. INDUSTRIAL SECURITIES MARKET –

The industrial securities market refers to the market which deals in equities and debentures of

the corporate. It is further divided into primary market and secondary market.

Primary market (new issue market):-

Deals with 'new securities', that is, securities which were not previously available and

are offered to the investing public for the first time. It is the market for raising fresh

capital in the form of shares and debentures. It provides the issuing company with

additional funds for starting a new enterprise or for either expansion or diversification

of an existing one, and thus its contribution to company financing is direct. The new

offerings by the companies are made either as an initial public offering (IPO) or rights

issue.

Features:

Primary market provide the channel for sale of new securities

Primary market provide opportunity to issuers of securities

Government as well as corporate to raise resources to meet their requirement

of investment and discharge some obligation

Secondary market/ stock market (old issues market or stock

exchange):-

It is the market for buying and selling securities of the existing companies. Under this,

securities are traded after being initially offered to the public in the primary market

and/or listed on the stock exchange. The stock exchanges are the exclusive centre’s

for trading of securities. It is a sensitive barometer and reflects the trends in the

economy through fluctuations in the prices of various securities. It been defined as, "a

body of individuals, whether incorporated or not, constituted for the purpose of

assisting, regulating and controlling the business of buying, selling and dealing in

securities". Listing on stock exchanges enables the shareholders to monitor the

movement of the share prices in an effective manner. This assists those to take

prudent decisions on whether to retain their holdings or sell off or even accumulate

further. However, to list the securities on a stock exchange, the issuing company has

to go through set norms and procedures.

Features:

Majority of the trading is done in the secondary market.

Secondary market comprises of equity markets and the debt markets.

II. GOVERNMENT SECURITIES MARKET –

It is also known as Gilt Edged Market. The gilt-edged market refers to the market for

Government and semi-government securities, backed by the Reserve Bank of India (RBI).

Government securities are tradable debt instruments issued by the Government for meeting

its financial requirements. The term gilt-edged means 'of the best quality'. This is because the

Government securities do not suffer from risk of default and are highly liquid (as they can be

easily sold in the market at their current price). The open market operations of the RBI are

also conducted in such securities.

It includes:

Stock certificates or inscribed stock

Promissory notes

Bearer bonds which can be discounted

III. LONG TERM LOAN MARKET –

It includes:

Term loans market

Mortgages market

Financial guarantees market

Advantages and Disadvantages

Advantages of Capital Market:

Capital markets provide the lubricant between investors and those needing to raise capital.

Capital markets create price transparency and liquidity. They provide a safe platform for a

wide range of investors —including commercial and investment banks, insurance companies,

pension funds, mutual funds, and retail investors—to hedge and speculate.

Holding different shares or bonds allows an investor to spread investment risk.

The secondary market gives important pricing information that permits efficient use of

limited capital.

Disadvantages of Capital Market:

In capital markets, bond prices are influenced by economic data such as employment, income

growth/decline, consumer prices, and industrial prices. Any information that implies rising

inflation will weaken bond prices, as inflation reduces the income from a bond.

Prices for shares in capital markets can be very volatile. Their value depends on a number of

external factors over which the investor has no control.

Different shares can have different levels of liquidity, i.e. demand from buyers and sellers.

CAPITAL MARKET INSTRUMENTS

The capital market is characterized by a large variety of financial instruments: equity and

preference shares, fully convertible debentures (FCDs), non-convertible debentures (NCDs)

and partly convertible debentures (PCDs) currently dominate the capital market, however

new instruments are being introduced such as debentures bundled with warrants, participating

preference shares, zero-coupon bonds, secured premium notes, etc.

1) SECURED PREMIUM NOTES

SPN is a secured debenture redeemable at premium issued along with a detachable warrant,

redeemable after a notice period, say four to seven years. The warrants attached to SPN gives

the holder the right to apply and get allotted equity shares; provided the SPN is fully paid.

There is a lock-in period for SPN during which no interest will be paid for an invested

amount. The SPN holder has an option to sell back the SPN to the company at par value after

the lock in period. If the holder exercises this option, no interest/ premium will be paid on

redemption.

Ex-TISCO issued warrants for the first time in India in the year 1992 to raise 1212 crores.

2) DEEP DISCOUNT BONDS

A bond that sells at a significant discount from par value and has no coupon rate or lower

coupon rate than the prevailing rates of fixed-income securities with a similar risk profile.

They are designed to meet the long term funds requirements of the issuer and investors who

are not looking for immediate return and can be sold with a long maturity of 25-30 years at a

deep discount on the face value of debentures.

Ex-IDBI deep discount bonds for Rs 1 lac repayable after 25 years were sold at a discount

price of Rs. 2,700.

3) EQUITY SHARES WITH DETACHABLE WARRANTS

A warrant is a security issued by company entitling the holder to buy a given number of

shares of stock at a stipulated price during a specified period. These warrants are separately

registered with the stock exchanges and traded separately. Warrants are frequently attached to

bonds or preferred stock as a sweetener, allowing the issuer to pay lower interest rates or

dividends.

Ex-Essar Gujarat, Ranbaxy, Reliance issue this type of instrument.

4) FULLY CONVERTIBLE DEBENTURES WITH INTEREST

This is a debt instrument that is fully converted over a specified period into equity shares.

The conversion can be in one or several phases. When the instrument is a pure debt

instrument, interest is paid to the investor. After conversion, interest payments cease on the

portion that is converted. If project finance is raised through an FCD issue, the investor can

earn interest even when the project is under implementation. Once the project is operational,

the investor can participate in the profits through share price appreciation and dividend

payments

5) CONVERTIBLE CUMULATIVE PREFRENCE SHARES

They are fully convertible cumulative preference shares. This instrument is divided into 2

parts namely Part A & Part B. Part A is convertible into equity shares automatically

/compulsorily on date of allotment without any application by the allottee.

Part B is redeemed at par or converted into equity after a lock in period at the option of the

investor, at a price 30% lower than the average market price.

6) SWEAT EQUITY SHARES

The phrase `sweat equity' refers to equity shares given to the company's employees on

favorable terms, in recognition of their work. Sweat equity usually takes the form of giving

options to employees to buy shares of the company, so they become part owners and

participate in the profits, apart from earning salary.

7) MORTGAGE BACKED SECURITIES(MBS)

MBS is a type of asset-backed security, basically a debt obligation that represents a claim on

the cash flows from mortgage loans, most commonly on residential property.

Mortgagebacked securities represent claims and derive their ultimate values from the

principal and payments on the loans in the pool. These payments can be further broken down

into different classes of securities, depending on the riskiness of different mortgages as they

are classified under the MBS.

8) PARTICIPATORY NOTES

Also referred to as "P-Notes" Financial instruments used by investors or hedge funds that are

not registered with the Securities and Exchange Board of India to invest in Indian securities.

Indian-based brokerages buy India-based securities and then issue participatory notes to

foreign investors. Any dividends or capital gains collected from the underlying securities go

back to the investors. These are issued by FIIs to entities that want to invest in the Indian

stock market but do not want to register themselves with the SEBI.

9) FUND OF FUNDS

A "fund of funds" (FoF) is an investment strategy of holding a portfolio of other investment

funds rather than investing directly in shares, bonds or other securities. This type of investing

is often referred to as multi-manager investment. A fund of funds allows investors to achieve

a broad diversification and an appropriate asset allocation with investments in a variety of

fund categories that are all wrapped up into one fund.

10) EXCHANGE TRADED FUNDS

An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much

like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the

same price as the net asset value of its underlying assets over the course of the trading day.

Most ETFs track an index, such as the S&P 500 or MSCI EAFE. ETFs may be attractive as

investments because of their low costs, tax efficiency, and stock-like features, and single

security can track the performance of a growing number of different index funds (currently

the NSE Nifty)

11) GOLD ETF

Gold Exchange Traded Fund (ETF) is a financial instrument like a mutual fund whose value

depends on the price of gold. In most cases, the price of one unit of gold ETF approximately

reflects the price of 1 gram of gold. As the price of gold rises, the price of the

ETF is also expected to rise by the same amount. Gold exchange-traded funds are traded on

the major stock exchanges including Zurich, Mumbai, London, Paris and New York There

are also closed-end funds (CEF's) and exchange-traded notes (ETN's) that aim to track the

gold price.

Difference between Capital and Money Market

Sr. No. Capital market Money market

1) Funds are borrowed or invested for a

longer period.

Funds are borrowed or invested for a

shorter period.

2) Capital markets deal with stocks and

bonds.

Money markets deal with certificates

of deposits, bankers' acceptance,

repurchase agreements and commercial

paper.

3) More speculative market because

capital market offers high maturity on

the credit instruments.

Money market is less speculative.

4) Higher returns are paid on the

securities traded in the capital market

as compare to the money market

because of the high risk in capital

markets.

Returns are lower as compared to

capital market because less risk is

involved.

5) In capital market even a small

individual investor can deal by

sale/purchase of shares, debentures or

mutual fund units.

Money market is a wholesale market

and the participants in money market

are large institutional investors,

commercial banks, mutual funds, and

corporate bodies.

6) In capital market, the two common

segments are primary market and

secondary market. Both these

In case of money market, there is no

such sub-division in general.

segments are interrelated.

7) It is less liquid market. Money market is more liquid.

MEANING OF RISK

A person making an investment expects to get some return from the investment in the future.

But, as future is uncertain, so is the future expected return. It is this uncertainty associated

with the returns from an investment that introduces risk into an investment.

We can distinguish between the expected return and the realised return from an investment.

The expected return is the uncertain future return that an investor expects to get from his

investment. The realised return, on the contrary, is the certain return that an investor has

actually obtained from his investment at the end of the holding period. The investor makes

the investment decision based on the expected return from the investment. The actual return

realised from the investment may not correspond to the expected return. This possibility of

variation of the actual return from the expected return is termed risk. Where realisations

correspond to expectations exactly, there would be no risk. Risk arises where there is a

possibility of variation between expectations and realisations with regard to an investment.

Thus, risk can be defined in terms of variability of returns. “Risk is the potential for

variability in returns.” An investment whose returns are fairly stable is considered to be a

low-risk investment, whereas an investment whose returns fluctuate significantly is

considered to be a high-risk investment. Equity shares whose returns are likely to fluctuate

widely are considered risky investments. Government securities whose returns are fairly

stable are considered to possess low-risk.

DEFINITION OF RISK

Risk can be defined as “Possibility of suffering losses”. T is the chance of something

happening that will have an impact upon objectives. It is measured in terms of consequences

and likelihood.

Risk can also be defined as “The chance that an investment’s actual return will be different

than expected” this includes the possibility of losing some or all of the original investments.”

ELEMENTS OF RISK

The essence of risk in an investment is the variation in its returns. This variation in returns is

caused by a number of factors. These factors which produce variations in the returns from an

investment constitute the elements of risk.

The elements of risk may be broadly classified into two groups. The first group comprises

factors that are external to a company and affect a large number of securities simultaneously.

These are mostly uncontrollable in nature. The second group includes those factors which are

internal to companies and affect only those particular companies. These are controllable to a

great extent. The risk produced by the first group of factors is known as systematic risk, and

that produced by the second group is known as unsystematic risk.

The total variability in returns of a security represents the total risk of that security.

Systematic risk and unsystematic risk are the two components of total risk. Thus,

TOTAL RISK = SYSTEMATIC RISK + UNSYSTEMATIC RISK

I. SYSTEMATIC RISK:

As the society is dynamic, changes occur in the economic, political and social systems

constantly. These changes have an influence on the performance of companies and thereby on

their stock prices. But these changes affect all companies and all securities in varying

degrees. For example, economic and political instability adversely affects all industries and

companies. When an economy moves into recession, corporate profits will shift downwards

and stock prices of most companies may decline. Thus, the impact of economic, political and

social changes is system-wide and that portion of total variability in security returns caused

by such system-wide factors is referred to as systematic risk. Systematic risk is further

subdivided into interest rate risk, market risk, and purchasing power risk.

Types of systematic risk

Interest rate risk

Market risk

Purchasing power risk

1) Interest rate risk:

Interest rate risk is a type of systematic risk that particularly affects debt securities like bonds

and debentures. A bond or debenture normally has a fixed coupon rate of interest. The issuing

company pays interest to the bond holder at this coupon rate. A bond is normally issued with

a coupon rate which is equal to the interest rate prevailing in the market at the time of issue.

Subsequent to the issue, the market interest rate may change but the coupon rate remains

constant till the maturity of the instrument. The change in market interest rate relative to the

coupon rate of a bond causes changes in its market price.

A bond having a face value of Rs. 100 issued with a coupon rate of ten per cent when the

market interest rate is also ten per cent will have a market price of Rs. 100. If, subsequent to

the issue, the FII interest rate moves up to 12.5 per cent, no investor will buy the bond with

ten per cent coupon interest rate unless the holder of the bond reduced the price to Rs. 80.

When the price is reduced to Rs. 80, the purchaser of the bond gets interest of Rs. ten on an

investment of Rs. 80 which is equivalent to a return of 12.5 per cent which is the same as the

prevailing market interest rate.

Thus, we see that as the market interest rate moves up in relation to the coupon interest rate,

the market price of the bond declines. Similarly, the market price of the bond would move up

when there is a drop in market interest rate compared to the coupon rate. In other words, the

market price of bonds and debentures is inversely related to the market interest rates. As a

result, the market price of debt securities fluctuates in response to variations in the market

interest rates. This variation in bond prices caused due to the variations in interest rates is

known as interest rate risk.

Many companies use borrowed funds to finance their operation. When interest rates move up,

companies using borrowed funds have to make higher interest payments. This leads to lower

earnings, dividends and share prices. On the contrary, lower interest rates may push up

earnings and prices. Thus, we see that variations in interest rates may indirectly influence

stock prices. Interest rate risk is a systematic risk which affects bonds directly and shares

indirectly.

2) Market risk:

Market risk is a type of systematic risk that affects shares. Market prices of shares move up or

down consistently for some time periods. A general rise in share prices is referred to as a

bullish trend, whereas a general fall in share prices is referred to as a bearish In other words,

the share market alternates between the bullish phase and the bearish phase. The alternating

movements can be easily seen in the movement of share price indices such as the BSE

Sensitive Index, BSE National Index, and NSE Index etc.

Business cycles are considered to be a major determinant of the timing and extent of the bull

and bear phases of the market. This would suggest that the ups and downs in share markets

would follow the expansion and recession phase of the economy. This may be true in the long

run, but it does not sufficiently explain the short-term movements in the market.

The short-term volatility in the stock market is caused by sweeping changes in investor

expectations which are the result of investor reactions to certain tangible as well as intangible

events. The basis of the reaction may be a set of real tangible events, political, economic or

social, such as the fall of a government, drastic change in monetary policy, etc. The change in

investor expectations is usually initiated by the reaction to real events. But the reaction is

often aggravated by the intangible factor of emotional instability of investors. They tend to

act collectively and irrationally, leading to an overreaction.

The stock market is seen to be volatile. This volatility leads to variations in the returns of

investors in shares. The variation in returns caused by the volatility of the stock market is

referred to as the market risk.

3) Purchasing power risk:

Another type of systematic risk is the purchasing power risk. It refers to the variation in

investor returns caused by inflation.

Inflation results in lowering of the purchasing power of money. When’ an investor purchases

a security, he foregoes the opportunity to buy some goods or services. In other words, he is

postponing his consumption. Meanwhile, if there is inflation in the economy, the prices of

goods and services would increase and thereby the investor actually experiences a decline in

the purchasing power of his investments and the return from the investment. Let us consider a

simple example. Suppose a person lends Rs. 100 today at ten per cent interest. He would get

back Rs. 110 after one year. If during the year, the prices have increased by eight per cent,

Rs. 110 received at the end of the year will have a purchasing power of only Rs. 101.20, i.e.

92 per cent of Rs. 110. Thus, inflation causes a variation in the purchasing power of the

returns from an investment. This is known as purchasing power risk and its impact is

uniformly felt on all securities in the market and as such, is a systematic risk.

The two important sources of inflation are rising costs of production and excess demand for

goods and services in relation to their supply. They are known as cost-push and demand-pull

inflation respectively. When demand is increasing but supply cannot be increased, price of

the goods increases thereby forcing out some of the excess demand and bringing the demand

and supply into equilibrium. This phenomenon is known as demand pull inflation. Cost push

inflation occurs when the cost of production increases and this increase in cost is passed on to

the consumers by the producers through higher prices of goods.

In an inflationary economy, rational investors would include an allowance for the purchasing

power risk in their estimate of the expected rate of return from an investment. In other words,

the expected rate of return would be adjusted upwards by the estimated annual rate of

inflation.

II. UNSYSTEMATIC RISK:

The returns from a security may sometimes vary because of certain factors affecting only the

company issuing such security. Examples are raw material scarcity, labour strike, and

management inefficiency. When variability of returns occurs because of such firm—specific

factors, it is known as unsystematic risk. This risk is unique or peculiar to a company or

industry and affects it in addition to the systematic risk affecting all securities.

The unsystematic or unique risk affecting specific securities arises from two sources:

The operating environment of the company, and

The financing pattern adopted by the company. These two types of unsystematic risk

are referred to as business risk and financial risk respectively.

Types of unsystematic risk

Business risk

Financial risk

1) Business risk:

Every company operates within a particular operating environment. This operating

environment comprises both internal environment within the firm and external environment

outside the firm. The impact of these operating conditions is reflected in the operating costs

of the company. The operating costs can be segregated into fixed costs and variable costs. A

larger proportion of fixed costs is disadvantageous to a company. If the total revenue of such

a company declines due to some reason or the other, there would be a more than

proportionate decline in its operating profits because it would be unable to reduce its fixed

costs. Such a firm is said to face a larger business risk. Business risk is thus a function of the

operating conditions faced by a company and is the variability in operating income caused by

the operating conditions of the company.

2) Financial risk:

Financial risk is a function of financial leverage which is the use of debt in the capital

structure. The presence of debt in the capital structure creates fixed payments in the form of

interest which is a compulsory payment to be made whether the company makes profit or

loss. This fixed interest payment creates more variability in the earnings per share (EPS)

available to equity share holders. For example, if the rate of return or operating profit ratio is

higher than the interest rate payable on the debt, EPS would increase. On the contrary, if the

operating profit ratio is lower than the interest rate, EPS would be depressed. The increase or

decrease in EPS in response to changes in operating profit would be much wider in the case

of a levered firm (a company having debt in its capital structure) than in the case of an

unlevered firm.

This variability in EPS due to the presence of debt in the capital structure of a company is

referred to as financial risk.

What Causes the Risks?

These risks are caused by the following factors:

1) Wrong decision of what to invest in.

2) Wrong time of investments.

3) Nature of investments.

4) Creditworthiness of the issuer.

5) Maturity period or the length of the instrument.

6) Method of investments, namely, secured by collateral or not.

7) Terms of lending such as periodicity of servicing, redemption period, etc.

8) Nature of industry in which the company is operating.

9) Amount of investment.

10) National and International factors, acts of God.

Ways to deal with Risks

1) Avoid it:

Investor should take those risks, which are bearable. Unnecessary and excessive risks

should be avoided.

2) Retain it:

Every Investment posses some inherent risks which are unavoidable; in order to earn

certain returns investor has to retain certain risks.

3) Reduce it:

Investor can reduce the risk by taking advice from a knowledgeable persons, analysts

etc before investing in any instruments.

4) Transfer it:

Insurance policies are the best way to transfer any risk.

5) Share it:

While investing an investor can approach his friends, relatives etc to invest with him

and the risk gets shared among different people.

Risk and Return Relationship

Dealing risksAvoid risk

Retain risk

Reduce risk

Transfer risk

Share risk

Low risk Low return

High risk High return

RISK/ RETURN TRADE OFF

Return

Risk

Every investor invests money to receive returns. The risk/return trade-off could easily be

called the iron stomach test. Deciding what amount of risk you can take on while allowing

you to get rest at night is an investor’s most important decision. The risk/return trade-off is

the balance, an investor must decide on between the desires for the lowest possible risk for

the highest possible returns. Remember to keep in mind that low levels of uncertainty (low

risks) are associated with low potential return and high levels of uncertainty (high risks) are

associated with high potential returns. Therefore risks and return go hand in hand.

Risk Return relationship between various Investments Instruments

The Risk Return relationship between various Investments Instruments is as follows:

* Insurance Schemes

* Bank Deposits

* Post Office Certificates

* Fixed Deposits

* Debentures

* Mutual Funds

* Equity

Returns

Risk

RESEARCH METHODOLOGY

RESEARCH METHODOLOGY

Research problem

Risk Factors are the vital factors that are to be considered in the capital market. The interplay

of these factors on stock market requires a deep study about how these factors affect its

performance. Hence my research problem is risk factors in capital market. The study is based

on survey technique. For the purpose of the study 80 investors were picked up and their

views were solicited on different parameters.

Objectives of the research

Main objective

Every company has a particular goal. A study without objectives cannot reach the destination.

My project work programme was also directed to some particular targets and the main

objective of the study is -

To know what kind of risks exists in stock market.

Secondary objective

Study of ICICI Direct.com., Udaipur branch.

Scope of study

Globalization of the financial market has led to a manifold increase in investment. New

markets have been opened; new instruments have been developed; and new services have

been launched. Besides, a number of opportunities and challenges have also been thrown

open.

Research design

A research design is the basic framework which provides guidelines or the rest of research

process. It is a map or blueprint according to which the research is to be conducted. It

specifies the method of data collection as well as other features of study.

About the study

This research is to know and study whether the investors are aware about the risks that exist

in market.

Reason for the study

The study is being made to know the general working of the bank along with the services

provided by the bank to its customers and to check the accuracy and efficiency of the bank.

Place of study-

The study is carried out with the customers of ICICI securities at Udaipur city.

Type of research

It is a type of DESCRIPTIVE RESEARCH.

Method of research

The research is conducted by doing surveys with help of questionnaires and direct interview.

Type of data used

Both primary and secondary data is used for conducting the study.

Place of data collection

The data is collected by taking interview of the daily customers of ICICI securities along with

the employees of the bank.

Techniques of data collection

Data is collected through questionnaires and direct interview of customers and employees.

Research instrument

The basic research instrument used for my study is an interview schedule consisting 12

questions designed and framed in a set format.

Sampling plan

Sampling method

Customers are chosen as respondents on the basis of simple random sampling in which each

respondent have equal chance of selection.

Sample size

Sample size is 80.

Sampling unit

Sampling unit is customers of “ICICI securities ltd”

Organisation of field work

Initial field work has done for pre testing tools for data collection. The data is collected

through the direct interaction with the ICICI’s customers through questionnaires answered by

them. Fifty customers of ICICI were randomly chosen for the purpose of the study in

Udaipur.

Tool for analysis & interpretation

To analyse and interpret the data statistical tools like tables, graphs & pie charts are used.

What all data was collected from customers is used to obtain material information. The

statistical techniques of classifying and tabulating of data was used to interpret useful data.

All questions are analysed and some of the conclusions are drawn out and on the basis of

lacunae in the system suggestions are made.

Report formation

It is the last stage of the project formulation. The collected data which was analysed and

interpreted is now systematically arranged and henceforth printed in the form of a report in

clear and understandable format.

ANALYSIS AND

INTERPRETATION

ANALYSIS AND INTERPRETATION

Q.1) What percent of your total income is invested in different investment avenues?

Table – 1

Scale Response PercentageUpto 10% 6 7.510 – 20% 67 83.7520 – 30% 6 7.5

Above 30% 1 1.25Total 80 100

Interpretation:

From the above chart it is observed that 7.5% investors from the selected sample invest upto

10% of their earnings, 83.75% people invest 10 – 20% of their earnings, 7.5% invest 20 –

30% of their earnings, and rest 1.25% invest above 30% of their earnings in different

investment avenues.

Q. 2) Among the following avenues which would you prefer to invest in?

upto 10% 10 - 20% 20 - 30% above 30%0

10

20

30

40

50

60

70

80

90

percentage

percentage

Table – 2

Avenues Response Percentage Equity 16 20

Fixed income 45 56.25Commodities 6 7.5

Real estate 10 12.5Others 3 3.75Total 80 100

Interpretation:

As per the survey conducted 20% investors choose equity, 56.25% choose fixed income,

7.5% choose commodities, 12.5% choose real estate, and rest 3.75% choose others

investment avenues as their first priority. Thus it can be observed that large number of

investors still prefer fixed income securities as an investment option. They do not want to

take any risk. After fixed income securities investors give priority to equity and real estate.

Thus it can be concluded that still large number of investors are conservative in nature.

Q. 3) what percent of your total investment is in equity?

Table – 3

equity fixed income commodities real estate others0

10

20

30

40

50

60

percentage

percentage

Scale Response PercentageUpto 10% 30 37.510 – 20% 40 5020 – 30% 10 12.5

Above 30% 0 0Total 80 100

Interpretation:

From the above chart it is observed that 37.5% investors invest upto 10% of their total

investments only in equity, 50% people invest 10 – 20%, and 12.5% invest 20 – 30% in

equity respectively. It is also observed that people do not invest or very few invest above

30% of their total investments in equity. It can be concluded that out of their total

investments people invest less portion in equity because returns in equity are not fixed.

Probably they invest major portion of their total investments in some other fixed or less risky

avenues.

Q. 4) What kind of returns have you generated on equity?

Table – 4

upto 10% 10 - 20% 20 - 30% above 30%0

5

10

15

20

25

30

35

40

45

50

percentage

percentage

Scale Response Percentage

Upto 10% 30 37.5

10 – 20% 45 56.25

20 – 30% 5 6.25

Above 30% 0 0

Total 80 100

Interpretation:

According to the survey conducted 37.5% generated upto 10%, 56.25% generated 10 – 20%,

6.25% generated 20 – 30% returns in equity. It is also observed that none has generated

returns above 30%. This depicts that returns in equity are average.

Q.5) Are you satisfied with the returns in your equity investments?

Table – 5

upto 10% 10 - 20% 20 - 30% above 30%0

10

20

30

40

50

60

percentage

percentage

Attributes Response Percentage

Yes 26 32.5

No 54 67.5

Total 80 100

Interpretation:

From the above chart it can be observed that 32.5% of the surveyed sample is satisfied with

the returns which they receive from equity, while 67.5% of the surveyed sample was not

satisfied with the returns from equity.

Q. 6) Do you consult financial advisors of ICICI before you make your investment?

Table – 6

percentage

yes no

Attributes Response Percentage

Yes 46 57.5

No 34 42.5

Total 80 100

Interpretation:

From the above chart it can be observed that 57.5% of the surveyed sample consults financial

advisors of ICICI before making investment decision, while 42.5% of the surveyed sample

either take investment decision on their own or consult other brokerage houses.

Q. 7) Are you satisfied with the services of icicidirect.com?

Table – 7

percentage

yes

no

Attributes Response Percentage

Yes 50 62.5

No 30 37.5

Total 80 100

Interpretation:

According to survey 62.5% of customers are satisfied with the services of ICICI Direct .com

and 37.5% are not satisfied with its services. Hence it is observed that some investors are not

satisfied with the services of ICICI direct.com probably due to their high charges.

Q. 8) If no then what do you suggest to improve their services?

Table – 8

percentage

yes

no

Suggestions Response Percentage

Decrease brokerage 17 56.67

Improve technical support 5 16.67

Easy access to financial advisors 7 23.33

Others 1 3.33

Total 30 100

Interpretation:

According to survey conducted 56.67% suggested to decrease brokerage, 16.67% suggested

to improve technical support, 23.33% suggested to provide easy access to financial advisors,

and rest 3.33% suggested other measures. Hence, it is observed that the brokerage charges of

ICICI are bit high. So if it reduces its charges to some extent then its customers will be more

satisfied.

Q. 9) By what means do you select stocks for investment?

Table – 9

Means Response Percentage

News channels 7 8.75

decrease brokerage

improve technical support

easy access to financial advisors

others0

10

20

30

40

50

60

percentage

percentage

Financial advisors 40 50

Friends and relatives 5 6.25

Others 28 35

Total 80 100

Interpretation:

According to the survey conducted 8.75% people consult news channels, 50% people consult

financial advisors, 6.25% consult friends and relatives, and rest 35% consult other means

while selecting stocks for investments.

Q. 10) What are the sectors that you invest in?

Table – 10

Sectors Responses Percentage

IT 8 10

Metals 8 10

news channels financial advisors friends and reltives others0

5

10

15

20

25

30

35

40

45

50

percentage

percentage

Automobiles 13 16.25

Banking 30 37.5

Others 21 26.25

Total 80 100

Interpretation:

According to the survey conducted 10% investors invest in IT, 10% invest in metals, 16.25%

invest in automobiles, 37.5% invest in banking and 26.25% invest in other sectors. Hence it

can be observed that investors prefer banking sector most because in current scenario the

returns of banking sector are high.

Q. 11) Your purpose behind making investment?

Table – 11

Purpose Response Percentage

Safety 7 8.75

Liquidity 6 7.5

Tax planning 21 26.25

IT metals automobiles banking others0

5

10

15

20

25

30

35

40

percentage

percentage

Returns 46 57.5

Total 80 100

Interpretation:

According to the survey conducted 8.75% investor invest for safety, 7.5% for liquidity,

26.25% for tax planning, and rest 57.5% for returns. Thus it can be concluded that the main

aim of large group of investors behind investing is to earn returns. Then average number of

investor invests for getting tax exemption. Then the rest segment of investors invests for

safety and liquidity.

Q. 12) Do you follow capital market regularly?

Table – 12

Attributes Response Percentage

Yes 58 72.5

No 22 27.5

Total 80 100

safety liquidity tax planning returns0

10

20

30

40

50

60

percentage

percentage

Interpretation:

According to the survey conducted 72.5% of the investors follow capital market regularly

while 27.5% of the investors do not follow capital markets regularly.

Q. 13) Has the current trend of index on stock exchange added to your confidence in equity

as an investment option?

Table – 13

Attributes Response Percentage

Yes 60 75

No 20 25

Total 80 100

percentage

yes

no

Interpretation:

According to the survey conducted the current trend of index in stock exchange has boost the

morale of investors. 75% of the investors are satisfied with the current trend of stock

exchange while 25% investors are not affected with the current trend of stock exchange.

CONCLUSION

Working with ICICI securities was really a great experience. From the study conducted

following conclusions can be drawn:

1) Investors consider that capital market is not predictable and that is the biggest risk. It

is a fluctuating market hence it cannot be trusted.

percentage

yes

no

2) Investors invest large portion of their total amount to be invested in fixed income

avenues and less portion in equity because the returns in equity market are not sure

and it is a risky investment.

3) Also large numbers of investors choose fixed income avenues as their first priority to

invest in because they are safer investment avenues as compared to other investment

avenues. They contain less or no risk.

4) A large number of investors generally in equity market in order to get capital

appreciation.

5) The brokerage charges of ICICI are a bit high so if it reduces its brokerage charges to

some extent then it will be able to retain more number of customers.

LIMITATIONS

Since sample size is only 80, which is not a true representative of the population as a

whole.

Since segment wise investors is not available in ICICI Securities Ltd. Overall concept

is taken for the study.

Information is partly based on secondary data and hence the authentic of the study can

be visualized and is measurable.

Level of accuracy of the results of research is restricted to the accuracy level with

which the customers have given their answers and the accuracy level of the answers

cannot be predicted.

QUESTIONAIRE

QUESTIONAIRE

PERSONAL INFORMATION:

NAME : _________________________________________________________

ADDRESS : _________________________________________________________

_________________________________________________________

CONTACT NO.: _________________________________________________________

AGE : 20 – 30 30 – 40

40 – 50 50 – 60

OCCUPATION : PROFESSIONAL BUSINESSMEN

GOVT. SERVICE PRIVATE SERVICE

ANNUAL INCOME: UPTO 1, 50,000 1, 50,000 - 2, 50,000 AA

2, 50,000 – 3, 50,000 ABOVE 3, 50,000

ANNUAL : UPTO 50,000 50,000 – 1, 00,000

INVESTMENT1, 00,000 – 1, 50,000 ABOVE 1, 50,000 __

_________________________________________________________________________

Q 1) What percent of your total income is invested in different investment avenues?

a) Upto 10% b) 10 – 20%

c) 20 – 30% d) Above 30%

Q 2) Among the following avenues which would you prefer to invest in ?

a) Equity b) Fixed income

c) Commodities d) Real estate

e) Others Q 3) What percent of your total investment is in equity?

a) Upto 10% b) 10 – 20%

c) 20 – 30% d) Above 30%

Q 4) What kind of returns have you generated on equity?

a) Upto 10% b) 10 – 20%

c) 20 – 30% d) Above 30%

Q 5) Are you satisfied with the returns in your equity investments?

a) Yes b) No

Q 6) What are the risk involved in equity investments?

Ans) ______________________________________________________________________ ____________________________________________________________________

____________________________________________________________________

Q 7) Do you consult the financial advisors of ICICI before you make your investment?

a) Yes b) No

Q 8) Are you satisfied with the services of icicidirect.com?

a) Yes b) No

Q 9) If no then what do you suggest to improve their services?

a) Decrease the brokerage

b) Improve technical support

c) Easy access to financial advisors

d) Others

Q 10) By what means do you select stocks for investment?

a) News channels b) Financial advisors

c) Friends and relatives d) Others

Q11) What are the sectors that you invest in?

a) IT b) Metals

c) Automobiles d) Banking

e) others

Q 12) Your purpose behind making investment?

a) Safety b) Liquidity

c) Tax planning d) Returns

Q 13) Do you follow capital market regularly?

a) Yes b) No

Q 14) What do you suggest can be done to minimise risk in equity investment?

Ans) _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________

Q 15) Has the current trend of index on stock exchange added to your confidence in equity as an investment option?

a) Yes b) No

BIBLIOGRAPHY

Books and journals:-

ICICIdirect.com broachers and leaflets

Periodical published by ICICI Securities Ltd.

Journals published by ICICI Securities Ltd.

Websites:-

www.investopedia.com

www.moneycontrol.com

www.icicidirect.com

www.cdslindia.com/FAQ/demat.htm

www.nsdl.co.in/services/demat.php

www.sebi.gov.in/faq/faqdemat.html