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COMPANY PROFILE

KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporates, comprising the who is who of Corporate India. KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPO’s, among others. We appreciate that karvy is the one of the main registrar for IPO’s registration. Big companies like Infosys, Wipro, Acc, GMR-infra and other companies are registered under karvy only.

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

Karvy Stock Broking:

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

National Stock Exchange (NSE) Bombay Stock Exchange (BSE) Hyderabad Stock Exchange (HSE)

Demat Services:

Karvy is a depository participant with the National Securities Depository Limited (NSDL) for trading and settlement of dematerialized shares.

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

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

Business Model

Karvy Stock Broking Limited

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

• National Stock Exchange (NSE)

• Bombay Stock Exchange (BSE)

• Hyderabad Stock Exchange (HSE)

Karvy Comtrade Limited

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

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

The company provides investment, advisory and brokerage services in Indian Commodities Markets. And most importantly, they offer a wide reach through their branch network of over 225 branches located across 180 cities.

Karvy Insurance Broking Limited

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

Karvy Investor Services Limited

Deepening of the Financial Markets and an ever-increasing sophistication in corporate transactions, has made the role of Investment Bankers indispensable to organizations seeking professional expertise and counselling, in raising financial resources through capital market apart from Capital and Corporate restructuring, Mergers & Acquisitions, Project Advisory and the entire gamut of Financial Market activities.

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

Their quality professional team and work-oriented dedication have propelled them to offer value-added corporate financial services and act as a professional navigator for long term growth of their clients, who include leading corporates, State Governments, Foreign Institutional Investors, public and private sector companies and banks, in Indian and global markets. They have also emerged as a trailblazer in the arena of relationships, both at the customer and trade levels because of their unshakable integrity, seamless service and innovative solutions that are tuned to meet varied needs. Their team of committed industry specialists, having extensive experience in capital markets, further nurtures this relationship.

Credentials

• Emerging as a leading Investment Banker with a strong support from its Group entities in Research, Stock Broking, Institutional Sales and Retail Distribution.

• Strong team of more than 25 qualified professionals operating from six cities; Hyderabad, Mumbai, Delhi, Kolkata, Chennai, and Bangalore apart from two overseas offices at New York (USA) and Dubai.

• One of the largest retail distribution networks with over 584 branches in over 389 cities/towns.

• Excellent Institutional Sales Desk.

Karvy Realty (India) Limited

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

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

• Buying/ selling/ renting of properties

• Identifying valuable investments opportunities in the real estate sector

• Facilitating financial support for real estate and investments in properties

• Real estate portfolio advisory services.

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

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

A single stop shop for realty services offering:

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

• Investing Options: Give your investments a good opportunity with properties marketed by KRIL.

• Financing Options: Get unmatched deals for financing your investment

• Research Options: they undertake valuation and feasibility studies, area analysis and customized analysis on behalf of clients.

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

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

Karvy Computershare (P) Limited

Karvy Computershare Private Limited is a joint venture between Computershare, Australia and Karvy Consultants Limited, India in the registry management services industry.

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

Karvy Corporate and Mutual Fund Share Registry and Investor Services business, India's No. 1 Registrar and Transfer Agent and rated as India's "Most Admired Registrar" for its overall excellence in volume management, quality processes and technology driven services.

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

Computershare has over 6000 experienced professionals, Computershare operates in five continents, providing services and solutions to listed companies, investors, employees, exchanges and other financial institutions while Karvy has handled over 675 issues as Registrar to Issues servicing over 16 million investors from multiple locations across India.

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

The combination of local knowledge and global expertise with technological innovations is going to mark the emergence of a fully integrated services provider with cross border capabilities.

Karvy Global Services Limited

They have a simple approach to doing business.

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

The key values that transcend the organization are:

• Integrity in all business functions

• Transparency in the organization

• Performance based culture

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

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

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

It is hard to stay in front.

Karvy Global Services is a knowledge services company. They provide specialist resources to extend in house analyst teams in driving clear business results. They serve investment banks, insurance providers, brokerages, hedge funds, research agencies, and life settlement providers across the United States, Middle East, and Europe. Their clients have found their cost advantage, ability to scale efforts, and specialist knowledge regarding emerging markets to be a strong advantage in the new, fast, and unpredictable world.

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

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

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

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

The key values that transcend the organization are:

• Integrity in all business functions

• Transparency in the organization

• Performance based culture

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

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

Karvy Data Management Services Limited

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

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

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

Our Clients Our Focus –

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

Respect for the individual –

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

Teamwork - None of them is more important than all

Each team member is the face of Karvy. Together they offer diverse services with speed, accuracy and quality to deliver only one product: excellence. Transparency, co-operation, invaluable individual

contributions for a collective goal, and respecting individual uniqueness within a corporate whole, are how they deliver again and again.

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

As a responsible corporate citizen, their duty is to foster a better environment in the society where they live and work. Abiding by its norms, and behaving responsibly towards the environment, are some of their growing initiatives towards realizing it.

Integrity - Everything else is secondary

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

Karvy Consultants Limited

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

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

IT enabled services

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

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

PRODUCTS & SERVICES:

Retail Services

Equities and Derivatives Commodities Mutual Fund Services Depository Services Insurance Broking Services Bonds and Deposits Realty Services Portfolio Management Services

Institutional Services

Registrar and Transfer Agency Mutual Fund Registry Investment Banking corporate finance Institutional Broking Debt Market Services BPO and KPO Services Corporate Advisor

Online stock broking services:

Product Features

Web / Executable Version – Absolutely free Online trading for BSE Cash, NSE cash & NSE F&O. Online Market watch for BSE Cash, NSE cash & NSE F&O. Index Price graphs are available. Online Risk/Exposure calculations. Market to Market P/L alerts. Receivables & payables statements for stock & cash. Intraday & delivery Alerts. Digital Contract notes. Recommendations – Pop up facility. Call center Service. Balance Statement. Order Entry. Order Confirmation. Trade Confirmation. Margin Computations. Statements (Margin &Limits, Cash, Stock, Net worth) Online interface with HDFC/IDBI/UTI/ICIC

HISTORY:

The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company. Karvy Consultants Limited. It started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 1985. Since then, it have utilized its experience and superlative expertise to go from strength to strength, to better its services, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one of India’s premier integrated financial service enterprise.

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

Its highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for them the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world.

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

Achievements

Among the top 5 stock brokers in India (4% of NSE volumes). India's No. 1 Registrar & Securities Transfer Agents. Among the two top 3 Depository Participants. Largest Network of Branches & Business Associates. ISO 9002 certified operations by DNV. Among top 10 Investment bankers. Largest Distributor of Financial Products. Adjudged as one of the top 50 IT uses in India by MIS Asia. Full Fledged IT driven operations.

KARVY AS AN ORGANIZATION

KARVY, is a premier integrated financial services provider, and ranked among the top five in the country in all its business segments, services over 16 million individual investors in various capacities, and provides investor services to over 300 corporate, comprising the who is who of Corporate India.

KARVY covers the entire spectrum of financial services such as Stock broking, Depository Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities, Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant Banking & Corporate Finance, placement of equity, IPOs, among others. Karvy has a professional management team and ranks among the best in technology, operations and research of various industrial segments.

Karvy – Early Days:-

The birth of Karvy was on a modest scale in 1981. It began with the vision and enterprise of a small group of practicing Chartered Accountants who founded the flagship company.

Karvy Consultants Limited. Started with consulting and financial accounting automation, and carved inroads into the field of registry and share accounting by 1985. Since then, Karvy used its experience and superlative expertise to go from strength to strength, to better services, to provide new ones, to innovate, diversify and in the process, evolved Karvy as one of India’s premier integrated financial service enterprise.

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

KARVY highly qualified manpower, cutting-edge technology, comprehensive infrastructure and total customer-focus has secured for the position of an emerging financial services giant enjoying the confidence and support of an enviable clientele across diverse fields in the financial world. Values and vision of attaining total competence in servicing has served as the building block for creating a great financial enterprise, which stands solid on our fortresses of financial strength - various companies.

Company of the Karvy Group, Karvy Consultants Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress.

Milestone of Karvy

• INCEPTION 1979

• Corporate Registry services 1985

• Stock Broking & ISCs 1990

• Financial Product Distribution 1993

• Corporate Finance 1995

• Depository Services 1997

• ITES & BPO Services 2000

• Personal Finance Advisory Services 2001

• Secondary Debt & WDM Services 2003

• Joint Venture with Computer Share 2004

• Comtrade 2004

Business Objective

Comprehensive Investor centric wealth management Information Seamless integration with other diversified systems for cross product aggregation Real time processing capabilities for collecting and aggregating financial information

VALUE ADDITION TO THE COMPANY

This report will help the company to strengthen customer intimacy. The report on various investment avenues available in India will help the company in many areas like.

It will help the company to understand the expectations the customer have about their company from the perspective of financial performance and corporate social responsibility.

It will provide fresh insights which can help their business continue to flourish.

The company can identify the particular service requirements of different types of customers.

The company can understand the problem areas.

The company can evaluate new services initiatives.

The study will help in gaining a better understanding of what an investor looks for in an investment option.

It can be used by the financial sector in designing better financial instrument customized to suit the needs of the investor.

It will help agents and brokers in marketing the existing instruments.

It will provide knowledge to the customer about the various financial services provided by the company to their customers.

It can help the company to understand what the requirement of the different categories of customers is

This report will be developed in order to empower companies with detailed primary market research needed to make well informed decisions and it will provide independent measurement and validation of the health of company’s relationship with their customers. These are the various advantages which will give some value addition to the company in understanding the awareness level of the customer about the various investment options and what is the perception of the investors with regard to the investments they want to make.

PROJECT DESCRIPTION

Mutual Fund:-

Mutual fund is a pool of money collected from investors and is invested according to stated investment objectives Mutual fund investors are like shareholders and they own the fund. Mutual fund investors are not lenders or deposit holders in a mutual fund. Everybody else associated with a mutual fund is a service provider, who earns a fee. The money in the mutual fund belongs to the investors and nobody else. Mutual funds invest in marketable securities according to the investment objective. The value of the investments can go up or down, changing the value of the investor’s holdings.NAV of a mutual fund fluctuates with market price movements. The market value of the investors’ funds is also called as net assets. Investors hold a proportionate share of the fund in the mutual fund. New investors come in and old investors can exit, at prices related to net asset value per unit.

Emergence of Mutual Funds:-

Mutual Funds now represent perhaps the most appropriate investment opportunity for most small investors. As financial markets become more sophisticated and complex, investor need a financial intermediary who provides the required knowledge and professional expertise on successful investing. It is no wonder then that in the birthplace of mutual funds-the U.S.A.-the fund industry has already overtaken the banking industry, with more money under Mutual Fund management than deposited with banks.

The Indian Mutual Fund industry has already opened up many exciting investment opportunities to Indian investors. Despite the expected continuing growth in the industry, Mutual Fund is a still new financial intermediary in India.

History of Mutual Funds:-

In the second half of 19th century, investor in UK considered the stock market is good for the investment. But for small investor it is not possible to operate in the market effectively. This led to establishment of an investment company which led to the small investor to invest in equity market. The first investment company was the Scottish-American Investment Company, set up in London in 1860.

Mutual Fund Industry in India:-

Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of

investors operating through a fund manager own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification.

Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously.

In 1963, the government of India took the initiative by passing the UTI act, under which the Unit Trust of India (UTI) was set-up as a statutory body. The designated role of UTI was to set up a Mutual Fund. UTI’s first scheme, called. In 1987 the other public sector institutions set up their Mutual Funds. In 1992, government allowed the private sector players to set-up their funds. In 1994 the foreign Mutual Funds arrives in Indian market. In 2001 there is a crisis in UTI and in 2003 UTI splits up into UTI 1and UTI 2. The history of Indian Mutual Fund industry can be explained easily by various phases:-

to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their

Benefits of Investing in Mutual Funds

Professional Management: -

Mutual Funds provide the services of experienced and skilled professionals, backed by a dedicated investment research team that analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.

Diversification: -

Mutual Funds invest in a number of companies across a broad cross-section of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. You achieve this diversification through a Mutual Fund with far less money than you can do on your own.

Convenient Administration: -

Investing in a Mutual Fund reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual Funds save your time and make investing easy and convenient.

Return Potential: -

Over a medium to long-term, Mutual Funds have the potential to provide a higher return as they invest in a diversified basket of selected securities.

Low Costs:

Mutual Funds are a relatively less expensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors.

Liquidity: -

In open-end schemes, the investor gets the money back promptly at net asset value related prices from the Mutual Fund. In closed-end schemes, the units can be sold on a stock exchange at the prevailing market price or the investor can avail of the facility of direct repurchase at NAV related prices by the Mutual Fund.

Transparency: -

You get regular information on the value of your investment in addition to disclosure on the specific investments made by your scheme, the proportion invested in each class of assets and the fund manager's investment strategy and outlook.

Flexibility: -

Through features such as regular investment plans, regular withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience.

Affordability: -

Investors individually may lack sufficient funds to invest in high-grade stocks. A mutual fund because of its large corpus allows even a small investor to take the benefit of its investment strategy.

Choice of Schemes: -

Mutual Funds offer a family of schemes to suit your varying needs over a lifetime.

Well Regulated:-

All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors. The operations of Mutual Funds are regularly monitored by SEBI.

Disadvantages of Investing Mutual Funds:-

Professional Management: -

Some funds doesn’t perform in neither the market, as their management is not dynamic enough to explore the available opportunity in the market, thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself, for picking up stocks.

Costs: –

The biggest source of AMC income is generally from the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.

Dilution: –

Because funds have small holdings across different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money.

Taxes: -

When making decisions about your money, fund managers don't consider your personal tax situation. For example, when a fund manager sells a security, a capital-gain tax is triggered.

Mutual fund schemes may be classified on the basis of its structure and its objective:-

By Structure:-

Open-ended Funds:-

An open-end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.

Closed-ended Funds:-

A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. 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 they 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.

Interval Funds:-

Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices.

Money Market Funds:-

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods.

Load Funds:-

A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history.

No-Load Funds:-

A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work.

Tax Saving Schemes:-

These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds, provided the capital asset has been sold prior to April 1, 2000 and the amount is invested before September 30, 2000.

Various types of Mutual Funds:

Equity Funds: -

Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds:-

AGGRESSIVE GROWTH FUNDS:-

In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds.

GROWTH FUNDS: -

Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future.

SPECIALTY FUNDS: -

Specialty Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some specialty funds could be to invest/not to invest in particular regions/companies. Specialty funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of specialty funds:

Sector Funds:-

Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors.

Foreign Securities Funds:-

Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.

Mid-Cap or Small-Cap Funds:-

Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crore but more than Rs. 500 crore) and Small-Cap companies have market capitalization of less than Rs. 500 crore. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky.

Option Income Funds:-

While not yet available in India, Option Income Funds write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors.

DIVERSIFIED EQUITY FUNDS: -

Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sector-specific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past.

Equity Index Funds: -

Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc.). Narrow indices are less diversified and therefore, are more risky.

VALUE FUNDS:-

Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. The portfolio of these funds comprises of shares that are trading at a low Price to Earnings Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced.

EQUITY INCOME OR DIVIDEND YIELD FUNDS: -

The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds.

DEBT / INCOME FUNDS:-

Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds:-

Diversified Debt Funds: -

Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor.

Focused Debt Funds: -

Unlike diversified debt funds, focused debt funds are narrow focus funds that are confined to investments in selective debt securities, issued by companies of a specific sector or industry or origin. Some examples of focused debt funds are sector, specialized and offshore debt funds, funds that invest

only in Tax Free Infrastructure or Municipal Bonds. Because of their narrow orientation, focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India, these funds are conceivable and may be offered to investors very soon.

High Yield Debt funds: -

As we now understand that risk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors.

Assured Return Funds: -

Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible.

Fixed Term Plan Series: -

Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period.

GILT FUNDS:-

Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt

securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction.

MONEY MARKET / LIQUID FUNDS:-

Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks).

HYBRID FUNDS:-

As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India:

Balanced Funds: -

The portfolio of balanced funds includes assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon.

Growth-and-Income Funds: -

Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds.

ASSET ALLOCATION FUNDS: -

Mutual funds may invest in financial assets like equity, debt, money market or non-financial (physical) assets like real estate, commodities etc.. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at any time depending upon their outlook for specific markets. In other words, fund managers may switch over to equity if they

expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets, and therefore, the success of these funds depends upon the skill of a fund manager in anticipating market trends.

COMMODITY FUNDS:-

Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds.

REAL ESTATE FUNDS:-

Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation.

EXCHANGE TRADED FUNDS (ETF):-

Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad.

FUND OF FUNDS:-

Mutual funds that do not invest in financial or physical assets, but do invest in other Mutual Fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non-financial assets. Fund of Funds provide

investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes.

FUND STRUCTURE AND CONSTITUENTS:-

Mutual funds in India have a 3-tier structure of Sponsor-Trustee-AMC .Sponsor is the promoter of the fund. Sponsor creates the AMC and the trustee company and appoints the Boards of both these companies, with SEBI approval. A mutual fund is constituted as a Trust. A trust deed is signed by trustees and registered under the Indian Trust Act. The mutual fund is formed as trust in India, and supervised by the Board of Trustees. The trustees appoint the asset management company (AMC) to actually manage the investor’s money. The AMC’s capital is contributed by the sponsor. The AMC is the business face of the mutual fund. Investors’ money is held in the Trust (the mutual fund). The AMC gets a fee for managing the funds, according to the mandate of the investors. The trustees make sure that the funds are managed according to the investors’ mandate. Sponsor should have atleast 5-year track record in the financial services business and should have made profit in atleast 3 out of the 5 years. Sponsor should contribute atleast 40% of the capital of the AMC. Trustees are appointed by the sponsor with SEBI approval. Atleast 50% of trustees should be independent. Atleast 50% of the AMC’s Board should be of independent members. An AMC cannot engage in any business other than portfolio advisory and management. An AMC of one fund cannot be Trustee of another fund.AMC should have a net worth of at least Rs. 10 crore at all times. AMC should be registered with SEBI AMC signs an investment management agreement with the trustees. Trustee Company and AMC are usually private limited companies. Trustees oversee the AMC and seek regular reports and information from them. Trustees are required to meet atleast 4 times a year to review the AMC the investors’ funds and the investments are held by the custodian. Sponsor and the custodian cannot be the same entity. R&T agents manage the sale and repurchase of units and keep the unit holder accounts. If the schemes of one fund are taken over by another fund, it is called as scheme take over. This requires SEBI and trustee approval. If two AMCs merge, the stakes of sponsor’s changes and the schemes of both funds come together. High court, SEBI and Trustee approval needed. If one AMC or sponsor buys out the entire stake of another sponsor in an AMC, there is a takeover of AMC. The sponsor, who has sold out, exits the AMC. This needs high court approval as well as SEBI and Trustee approval. Investors can choose to exit at NAV if they do not approve of the transfer. They have a right to be informed. No approval is required, in the case of open-ended funds. For close-ended funds the investor approval is required for all cases of merger and takes over.

EQUITY SHARES

ABOUT SHARES:-

At the most basic level, stock (often referred to as shares) is ownership, or equity, in a company. Investors buy stock in the form of shares, which represent a portion of a company's assets (capital) and earnings (dividends).

As a shareholder, the extent of your ownership (your stake) in a company depends on the number of shares you own in relation to the total number of shares available For example, if you buy 1000 shares of stock in a company that has issued a total of 100,000 shares, you own one per cent of the company.

While one per cent seems like a small holding, very few private investors are able to accumulate a shareholding of that size in publicly quoted companies, many of which have a market value running into billions of pounds. Your stake may authorize you to vote at the company's annual general meeting, where shareholders usually receive one vote per share.

In theory, every stockholder, no matter how small their stake, can exercise some influence over company management at the annual general meeting. In reality, however, most private investors' stakes are insignificant. Management policy is far more likely to be influenced by the votes of large institutional investors such as pension funds.

a) STOCKS SYMBOLS:-

A stock symbol, or 'Epic' symbol, is the standard abbreviation of a stock's name. You can find stock symbols wherever stock performance information is published - for example, newspaper stock listings and investment websites. Company names also have abbreviations called ticker symbols. However, it's worth remembering that these may vary at the different exchanges where the company is quoted.

b) PERFORMANCE INDICATORS:-

Here is a list of the standard performance indicators

Performance Indicator Definition

Closing price The last price at which the stock was bought or sold

High and low The highest and lowest price of the stock from the previous trading day

52 week range The highest and lowest price over the previous 52 weeks

Volume The amount of shares traded during the previous trading day High and low

Net change The difference between the closing price on the last trading day and the closing price on the trading day prior to the last

THE STOCK EXCHANGES:-

A marketplace in which to buy or sell something makes life a lot easier.

The same applies to stocks. A stock exchange is an organization that provides a marketplace in which investors and borrowers trade stocks. Firstly, the stock exchange is a market for issuers who want to raise equity capital by selling shares to investors in an Initial Public Offering (IPO). The stock exchange is also a market for investors who can buy and sell shares at any time.

a) Trading shares on the stock exchange:

As an investor in the INDIA, you can't buy or sell shares on a stock exchange yourself. You need to place your order with a stock exchange member firm (a stockbroker) who will then execute the order on your behalf. The NSE AND BSE are the leading stock exchange in the INDIA. Trading is done through computerized systems.

b) The trading process:-

If you decide to buy or sell your shares, you need to contact a stockbroker who will buy or sell the shares on your behalf. After receiving your order, the stockbroker will input the order on the SETS or SEAQ system to match your order with that of another buyer or seller. Details of the trade are transmitted electronically to the stockbroker who is responsible for settling the trade. You will then receive confirmation of the deal.

c) Types of shares available on the stock exchange:-

You cannot trade all stocks on the stock exchange. To be listed on a stock exchange, a stock must meet the listing requirements laid down by that exchange in its approval process. Each exchange has its own listing requirements, and some exchanges are more particular than others. It is possible for a stock to be listed on more than one exchange. This is known as a dual listing.

INSURANCE

People need insurance in the first place. An insurance policy is primarily meant to protect the income of the family’s bread earners. The idea is if any one or both die their dependents continue to live comfortably. The circle of life begins at birth follower by education, marriage and eventually after a lifetime of work we look forward to life of retirement. Our finances too tend to change as we go through the various phases of life. In the first twenty of our life, we are financially and emotionally dependents on our parents and there are no financial commitments to be met. In the next twenty years we gain financial independence and provide financial independence to our families. This is also the stage when our income may be unable to meet the growing expenses of a young household. In the next twenty as we see our investments grow after our children grow and become financially independent. Insurance is a provision for the distribution of risks that is to say it is a financial provision against loss from unavoidable disasters. The protection which it affords takes form of a guarantee to indemnify the insured if certain specified losses occur. The principle of insurance so far as the undertaking of the obligation is concerned is that for the payment of a certain sum the guarantee will be given to reimburse the insured. The insurer in accepting the risks so distributes them that the total of all the amounts is paid for this insurance protection will be sufficient to meet the losses that occur. Insurance then provide divided responsibility. This principle is introduced in most stores where a division is made between the sales clerk and the cashiers department the arrangement dividing the risks of loss. The insurance principle is similarly applied in any other cases of divided responsibility. As a business however insurance is usually recognized as some form of securing a promise of indemnity by the payment of premium and the fulfillment of certain other stipulations

Types of insurance

Term insurance plans

Term insurance is the cheapest form of life insurance available. Since a term insurance contract only pays in the event of eventuality the life cover comes at low premium rates. Term insurance is a useful tool to purchase against risk of early death and protection of an asset

Endowment plans

Endowment plans are savings and protection plans that provide a dual benefit of protection as well as savings. Endowment plans pay a death benefit in the event of an eventuality should the customer survive the benefit period a maturity benefit is paid to the life insured.

Whole of life plans

A whole of life plan provides life insurance cover to an individual up to a specified age. A whole of life plan is suitable for an individual who is looking for an extended life insurance cover and /or wants to pay premium over as long as tenure as possible to reduce the amount of upfront premium payment.

Pension plans

Pension plans allow an individual to save in a tax differed manner. An individual can either contribute through regular premiums or make single premium investments. Savings accumulate over the deferment period. Once the contract reaches the vesting age, the individual has the option of choosing an annuity plan from a life insurance company. An annuity is paid till the life the lifetime of the insured or a pre-determined period depending upon the annuity option chosen by the life insured.

Unit Linked Insurance Plans

Unit linked insurance plan (ULIP) is life insurance solution that provides for the benefits of risk protection and flexibility in investment. The investment is denoted as units and is represented by the value that it has attained called as Net Asset Value (NAV). The policy value at any time varies according to the value of the underlying assets at the time.

In a ULIP, the invested amount of the premiums after deducting for all the charges and premium for risk cover under all policies in a particular fund as chosen by the policy holders are pooled together to form a Unit fund. A Unit is the component of the Fund in a Unit Linked Insurance Policy.

The returns in a ULIP depend upon the performance of the fund in the capital market. ULIP investors have the option of investing across various schemes, i.e, diversified equity funds, balanced funds, debt funds etc. It is important to remember that in a ULIP, the investment risk is generally borne by the investor.

In a ULIP, investors have the choice of investing in a lump sum (single premium) or making premium payments on an annual, half-yearly, quarterly or monthly basis. Investors also have the flexibility to alter the premium amounts during the policy's tenure. For example, if an individual has surplus funds, he can enhance the contribution in ULIP. Conversely an individual faced with a liquidity crunch has the option of paying a lower amount (the difference being adjusted in the accumulated value of his ULIP). ULIP investors can shift their investments across various plans/asset classes (diversified equity funds, balanced funds, debt funds) either at a nominal or no cost.

Expenses Charged in a ULIP

Premium Allocation Charge:

A percentage of the premium is appropriated towards charges initial and renewal expenses apart from commission expenses before allocating the units under the policy.

Mortality Charges:

These are charges for the cost of insurance coverage and depend on number of factors such as age, amount of coverage, state of health etc.

Fund Management Fees:

Fees levied for management of the fund and are deducted before arriving at the NAV.

Administration Charges:

This is the charge for administration of the plan and is levied by cancellation of units.

Surrender Charges:

Deducted for premature partial or full encashment of units.

Fund Switching Charge:

Usually a limited number of fund switches are allowed each year without charge, with subsequent switches, subject to a charge.

Service Tax Deductions: Service tax is deducted from the risk portion of the premium.

GOVERNMENT SECURITIES

Government securities (G-secs) are sovereign securities which are issued by the Reserve Bank of India on behalf of Government of India, in lieu of the Central Government's market borrowing programme.

The term Government Securities includes:

• Central Government Securities.

• State Government Securities

• Treasury bills

The Central Government borrows funds to finance its 'fiscal deficit’. The market borrowing of the Central Government is raised through the issue of dated securities and 364 days treasury bills either by auction or by floatation of loans.

In addition to the above, treasury bills of 91 days are issued for managing the temporary cash mismatches of the Government. These do not form part of the borrowing programme of the Central Government

Types of Government Securities

Government Securities are of the following types:-

Dated Securities: - are generally fixed maturity and fixed coupon securities usually carrying semi-annual coupon. These are called dated securities because these are identified by their date of maturity and the coupon, e.g., 11.03% GOI 2012 is a Central Government security maturing in 2012, which carries a coupon of 11.03% payable half yearly. The key features of these securities are:

• They are issued at face value.

• Coupon or interest rate is fixed at the time of issuance, and remains constant till redemption of the security.

• The tenor of the security is also fixed.

• Interest /Coupon payment is made on a half yearly basis on its face value.

• The security is redeemed at par (face value) on its maturity date.

Zero Coupon bonds are bonds issued at discount to face value and redeemed at par. These were issued first on January 19, 1994 and were followed by two subsequent issues in 1994-95 and 1995-96 respectively. The key features of these securities are:

• They are issued at a discount to the face value.

• The tenor of the security is fixed.

• The securities do not carry any coupon or interest rate. The difference between the issue price (discounted price) and face value is the return on this security.


Partly Paid Stock is stock where payment of principal amount is made in installments over a given time frame. It meets the needs of investors with regular flow of funds and the need of Government when it does not need funds immediately. The first issue of such stock of eight year maturity was made on November 15, 1994 for Rs. 2000 crore. Such stocks have been issued a few more times thereafter. The key features of these securities are:

• They are issued at face value, but this amount is paid in installments over a specified period.

• Coupon or interest rate is fixed at the time of issuance, and remains constant till redemption of the security.

• The tenor of the security is also fixed.



Floating Rate Bonds are bonds with variable interest rate with a fixed percentage over a benchmark rate. There may be a cap and a floor rate attached thereby fixing a maximum and minimum interest rate payable on it. Floating rate bonds of four year maturity were first issued on September 29, 1995, followed by another issue on December 5, 1995. Recently RBI issued a floating rate bond, the coupon of which is benchmarked against average yield on 364 Days Treasury Bills for last six months. The coupon is reset every six months. The key features of these securities are:


• Coupon or interest rate is fixed as a percentage over a predefined benchmark rate at the time of issuance. The benchmark rate may be Treasury bill rate, bank rate etc.

• Though the benchmark does not change, the rate of interest may vary according to the change in the benchmark rate till redemption of the security.

The tenor of the security is also fixed.



Bonds with Call/Put Option: First time in the history of Government Securities market RBI issued a bond with call and put option this year. This bond is due for redemption in 2012 and carries a coupon of 6.72%. However the bond has call and put option after five years i.e. in year 2007. In other words it means

that holder of bond can sell back (put option) bond to Government in 2007 or Government can buy back (call option) bond from holder in 2007. This bond has been priced in line with 5 year bonds.

Capital indexed Bonds are bonds where interest rate is a fixed percentage over the wholesale price index. These provide investors with an effective hedge against inflation. These bonds were floated on December 29, 1997 on tap basis. They were of five year maturity with a coupon rate of 6 per cent over the wholesale price index. The principal redemption is linked to the Wholesale Price Index. The key features of these securities are:


• Coupon or interest rate is fixed as a percentage over the wholesale price index at the time of issuance. Therefore the actual amount of interest paid varies according to the change in the Wholesale Price Index.

• The tenor of the security is fixed.


• The principal redemption is linked to the Wholesale Price Index.

Features of Government Securities

Nomenclature

The coupon rate and year of maturity identifies the government security.

Example: 12.25% GOI 2008 indicates the following:

12.25% is the coupon rate, GOI denotes Government of India, which is the borrower, 2008 is the year of maturity.

Eligibility

All entities registered in India like banks, financial institutions, Primary Dealers, firms, companies, corporate bodies, partnership firms, institutions, mutual funds, Foreign Institutional Investors, State Governments, Provident Funds, trusts, research organizations, Nepal Rashtra bank and even individuals are eligible to purchase Government Securities.

Availability

Government securities are highly liquid instruments available both in the primary and secondary market. They can be purchased from Primary Dealers. PNB Gilts Ltd., is a leading Primary Dealer in the government securities market, and is actively involved in the trading of government securities.

Forms of Issuance of Government Securities

• Banks, Primary Dealers and Financial Institutions have been allowed to hold these securities with the Public Debt Office of Reserve Bank of India in dematerialized form in accounts known as Subsidiary General Ledger (SGL) Accounts.

• Entities having a Gilt Account with Banks or Primary Dealers can hold these securities with them in dematerialized form.

• In addition governments securities can also be held in dematerialized form in demat accounts maintained with the Depository Participants of NSDL.

Minimum Amount

In terms of RBI regulations, government dated securities can be purchased for a minimum amount of Rs. 10,000/-only. Treasury bills can be purchased for a minimum amount of Rs 25000/- only and in multiples thereof. State Government Securities can be purchased for a minimum amount of Rs 1,000/- only.

Repayment

Government securities are repaid at par on the expiry of their tenor. The different repayment methods are as follows:

• For SGL account holders, the maturity proceeds would be credited to their current accounts with the Reserve Bank of India.

• For Gilt Account Holders, the Bank/Primary Dealers, would receive the maturity proceeds and they would pay the Gilt Account Holders.

• For entities having a demat account with NSDL, the maturity proceeds would be collected by their DP's and they in turn would pay the demat Account Holders.

Day Count

For government dated securities and state government securities the day count is taken as 360 days for a year and 30 days for every completed month. However for Treasury bills it is 365 days for a year.

Example : A client purchases 7.40% GOI 2012 for face value of Rs. 10 lacs.@ Rs.101.80, i.e. the client pays Rs.101.80 for every unit of government security having a face value of Rs. 100/- The settlement is due on October 3, 2002. What is the amount to be paid by the client?

The security is 7.40% GOI 2012 for which the interest payment dates are 3rd May, and 3rd November every year.

OBJECTIVES OF THE PROJECT:

To know the purpose of the study was to determine the saving behavior and investment preferences of customers.

To understand all about different investment avenues available in India.

To find out how the investors get information about the various financial instrument

To find out the saving habits of the different customers and the amount they invest in various financial instruments. In which type of financial instrument they like to invest.

To find out the risk profile of the investor.

To give a recommendation to the investors that where they should invest.

To evaluate the consumer attitude towards saving and decision making regarding investments.

RESEARCH METHODOLOGY

MeaningResearch methodology is a careful investigation or inquiry and especially

for search for new fact in any branch of knowledge is called a research methodology.

The research work is a combined word of two words first is re and second is search means to search again and search means to search so the total meaning means search for the new factor to modify and facts in any branch of knowledge. The main function of research is to add new knowledge in simple words research can be defined as critical investigation search for truth fact or for certainty.

RESEARCH DESIGN:

A research design is purely and simply the framework or plan for a

study that guides the collection and analysis of data. A good research design

has the characteristics , problem definition, specific method of data

collection& analysis , time required for research project and expenses to be

incurred.

Research Design is the arrangement of condition for collection and

analyzing data in a manner that aims to combined relevance to research

purpose with economy in procedure. The present project is an exploratory

type of research. It helps to gain a new insight in to the problem.

QUESTIONNAIRE DESIGN:

The questionnaire has been designed in such a way so as to get the good results from the persons. The questionnaires are filled by the person and on its basis a proper analysis and interpretation of the data done. The research methodology was totally based on the method of questionnaires.

The research was done on the basis of a structured questionnaire.

SAMPLING PROCEDURE:

Sampling Plan:

Convenient Sampling (Non-Probabilistic Sampling Method)

DATA COLLECTION:

Data was collected from the following two sources:

PRIMARY DATA COLLECTION:

Primary Data was collected through “SURVEY” using a structured questionnaire through which the research was able to get an insight in to the consumers mind and to learn about perception towards “INVESTMENT OPTION”.

SECONDARY DATA COLLECTION:

Secondary Data was collected through magazines, journals, browsers and earlier reports. Secondary Data helped in finding the variables that has an effect on the decisions made by the people towards Investment.

Data Analysis & Interpretation:

Preference of customers to various investment option:

Investment Option Percentage

Mutual Funds 24

Bonds 10

Gov.Secuirities 26

Other 40

Factors affect customers about investment:

Factors Percentage

Secuirity 48

Return 40

Other 12

Age of customers who invest money:

Age Distribution Percentage

20-35 45

35-50 33

Above 50 22

Why customers invest money:

Factors Percentage

Tax saving 23

For future 40

Save money 27

Other 10

FINDINGS

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

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

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

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

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

• There is an increasing awareness about the equity investments which would be a great factor in attracting DIIs to invest more into the market.

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

LIMITATIONS

The project is based upon various financial instruments that are available in India and the perception level of the customer about these financial instruments. For which there will be the need of information from the customers about their knowledge of these financial products. The various limitations of the study are:

As the project is based on secondary data, possibility of unauthorized information cannot be avoided.

Reluctance of the people to provide complete information about themselves can affect the validity of responses.

As the project is prepared for the academic purpose only, it suffers from the limitation of time, due to

which the detailed report about the topic was not possible.

This research is dependent on the information provided by the respondents and sometimes the

respondents are very reluctant in providing right informantion and often provide it carelessly and the result

drawn out by only this information, so sometimes all efforts might not find direction and results.

This conclusion and recommendations made are based on a very less experience of researcher in this

field.

Time was the biggest constraints as the study was limited for a period of 50 days only as per the

curriculum of researcher, which means that any relevant market phenomenon before and after this duration

of time might have been skipped in the study.

CONCLUSION

Business class investors more proportion of their income in shares & securities as compared to service

class investors.

Majority of investors trade according to expert the daily traders.

Majority of investors take the decision on investment (where/what amount to invest) on their own idea

and some rely on expert’s opinion and broker’s advice.

In cash segment, capital gain is the prior motive of the investors followed by regular of the investors

followed by regular income and tax income and tax planning.

The satisfaction level regarding services by brokers of phone service & professional advice is very low.

Professional advice available is not adequate regarding investment in secondary market.

Most of the investors feel that online trading is more transparent than the older form of trading (Ring

trading).

Most of the people are aware of different charges charged by the brokers (Demat charges, transaction

charges, service charges, service charges etc.).

REFERENCE

www.karvy.com

www.icicidirect.com

www.mutualfundsindia.com

www.nseindia.com

www.bseindia.com

www.mcx.com

www.equitymaster.com

Business Today

The Economic Times

The Mint

Karvy Fin polis

http://www.karvy.com/

http://www.equitymaster.com/

http://www.mcx.com/

http://www.bseindia.com/

http://www.nseindia.com/

http://www.mutualfundsindia.com/

http://www.icicidirect.com/

complain project

Documents

Transcript of complain project