TABLE OF CONTENTS

S.NO.

PARTICULARS PAGE.NO.

1. Introduction 1

1.1. Overview of Industry as a whole 2

1.2. Profile of the Organization

Origin

Recent Achievements

Mission & Vision

Products

Organization Structure

8-20

1.3 Introduction to the Topic 21

2. Objective & Methodology 43

2.1. Objectives of the Study 44

2.2. Research Methodology

Research Design

Sources of data

Sampling Technique

Sample size, if any

Methods of data collection

Tools and techniques of analysis

44

2.3. Limitations of the Study

3. Data Analysis & Interpretation 454. Findings 62

5. Recommendations 65

6. ANNEXURES:

Questionnaire

68

BIBLIOGRAPHY/REFERENCES

CHAPTER- IIntroduction

1

INTRODUCTION

1.1 INDUSTRY OVERVIEW

Overview of Industry as a Whole

Do you know that the world's foremost marketplace New York Stock Exchange (NYSE), started its trading

under a tree (now known as 68 Wall Street) over 200 years ago? Similarly, India's premier stock exchange

Bombay Stock Exchange (BSE) can also trace back its origin to as far as 125 years when it started as a

voluntary non-profit making association.

You hear about it any time it reaches a new high or a new low, and you also

hear about it daily in statements like 'The BSE Sensitive Index rose 5%

today'. Obviously, stocks and stock markets are important. Stocks of public

limited companies are bought and sold at a stock exchange. But what really

are stock exchanges? Known also as TV News on the stock market appears in

different media every day. he stock market or bourse, a stock exchange is an

organized marketplace for securities (like stocks, bonds, options) featured by

the centralization of supply and demand for the transaction of orders by

member brokers, for institutional and individual investors. The exchange makes buying and selling easy. For

example, you don't have to actually go to a stock exchange, say, BSE - you can contact a broker, who does

business with the BSE, and he or she will buy or sell your stock on your behalf.

All stock exchanges perform similar functions with respect to the listing, trading, and clearing of securities,

differing only in their administrative machinery for handling these functions. Most stock exchanges are

auction markets, in which prices are determined by competitive bidding. Trading may occur on a continuous

auction basis, may involve brokers buying from and selling to dealers in certain types of stock, or it may be

conducted through specialists dealing in a particular stock.

But where did it all start? The need for stock exchanges developed out of early trading activities in

agricultural and other commodities. During the middle Ages, traders found it easier to use credit that

required supporting documentation of drafts, notes and bills of exchange. The history of the earliest stock

exchange, the French stock exchange, may be traced back to 12th century when transactions occurred in

commercial bills of exchange.

2

The first stock exchange in India, Bombay Stock Exchange was established in 1875 as 'The Native Share

and Stockbrokers Association' and has evolved over the years into its present status as the premier stock

exchange in the country. It may be noted that BSE is the oldest stock exchange in Asia, even older than the

Tokyo Stock Exchange, which was founded in 1878. The country's second stock exchange was established

in Ahmedabad in 1894, followed by the Calcutta Stock Exchange (CSE). CSE can also trace its origin back

to 19th century. From a get together under a 'Neem Tree' way back in the 1830s, the CSE was formally

established in May 1908.

India's other major stock exchange National Stock Exchange (NSE), promoted by leading financial

institutions, was established in April 1993. Over the years, several stock exchanges have been established in

the major cities of India. There are now 23 recognized stock exchanges — Mumbai (BSE, NSE and OTC),

Calcutta, Delhi, Chennai, Ahmedabad, Bangalore, Bhubhaneswar, Coimbatore, Guwahati, Hyderabad,

Jaipur, Kochi, Kanpur, Ludhiana, Mangalore, Patna, Pune, Rajkot, Vadodara, Indore and Meerut. Today,

most of the global stock exchanges have become highly efficient, computerized organizations. Computerized

networks also made it possible to connect to each other and have fostered the growth of an open, global

securities market.

Realizing there is untapped market of investors who want to be able to execute their own trades when it suits

them, brokers have taken their trading rooms to the Internet. Known as online brokers, they allow you to buy

and sell shares via Internet.

Online Trading is a service offered on the Internet for purchase and sale of shares. In the real world, you

place orders on your stockbroker either verbally (personally or telephonically) or in a written form (fax). In

Online Trading, you will access a stockbroker's website through your internet-enabled PC and place orders

through the broker's internet-based trading engine. These orders are routed to the Stock Exchange without

manual intervention and executed thereon in a matter of a few seconds.

There are 2 types of online trading service: discount brokers and full service online broker. Discount online

brokers allow you to trade via Internet at reduced rates. Some provide quality research, other don’t. Full

service online brokerage is linked to existing brokerages. These brokers allow their clients to place online

orders with the option of talking/ chatting to brokers if advice is needed. Brokerage rates here are higher.

5Paisa.com, ICICIDirect.com, IndiaBulls.com, sharekhan.com, HDFCsec.com, Tatatdw.com,

HMRstreet.com are some of the online broking sites in India.

3

Stock Market

With the backing of the World Bank group, many developing countries started giving prominence to stock

markets for financing enterprises and allocation of savings. In India too, the process started in the early

‘eighties. In the wake of increased pace of economic liberalization initiated in 1991, the Capital Issues

Control Act, 1947, which till then regulated the issue and pricing of new capital, was done away with and

even greater emphasis was placed on the stock market. As a part of the measures to develop the stock market

and liberalization of the external sector, foreign institutional investors were invited to trade directly on the

Indian stock exchanges. The main expectations were that the market would help corporate raise resources

directly from investors, help attract foreign portfolio capital and facilitate the process of privatization. The

entry of foreign portfolio/institutional investors (FIIs) was expected to broaden the base of the market and

also help in the market’s development by forcing developing country governments to follow consistent and

market friendly policies. Through their expert analysis and research, FIIs were expected to help in better

price discovery. Since 1991, a number of measures at improving share trading and delivery mechanisms and

investor protection ranging from more periodic disclosures, takeover regulations, insider trading rules,

corporate governance code, etc. have been introduced by the Securities and Exchange Board of India

( SEBI), the market regulator.

PARTIES INVOLVED IN SHARE TRADING

1. BOMBAY STOCK EXCHANGE (BSE)

Bombay Stock Exchange Limited is the oldest stock exchange in Asia with a rich heritage. Popularly known

as "BSE", it was established as "The Native Share & Stock Brokers Association" in 1875. It is the first stock

exchange in the country to obtain permanent recognition in 1956 from the Government of India under the

Securities Contracts (Regulation) Act, 1956.The Exchange's pivotal and pre-eminent role in the development

of the Indian capital market is widely recognized and its index, SENSEX, is tracked worldwide. Earlier an

Association of Persons (AOP), the Exchange is now a demutualised and corporative entity incorporated

under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and

Demutualization) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI).

The Exchange has a nation-wide reach with a presence in 417 cities and towns of India. The systems and

processes of the Exchange are designed to safeguard market integrity and enhance transparency in

operations. During the year 2004-2005, the trading volumes on the Exchange showed robust growth.

4

The Exchange provides an efficient and transparent market for trading in equity, debt instruments and

derivatives. The BSE's On Line Trading System (BOLT) is a proprietary system of the Exchange and is BS

7799-2-2002 certified. The surveillance and clearing & settlement functions of the Exchange are ISO

9001:2000 certified.

2. NATIONAL STOCK EXCHANGE (NSE)

Capital market reforms in India have outstripped the process of liberalization in most other sectors of the

economy. However, the creation of an independent capital market regulator was the initiation of this reform

process. After the formation of the Securities Market regulator, the Securities and Exchange Board of India

(SEBI), attention were drawn towards the inefficiencies of the bourses and the need was felt for better

regulation, discipline and accountability. A Committee recommended the creation of a 2nd stock exchange

in Mumbai called the "National Stock Exchange". The Committee suggested the formation of an exchange

which would provide investors across the country a single, screen based trading platform, operated through a

VSAT network.

It was on this recommendation that setting up of NSE as a technology driven exchange was conceptualized.

NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has

written for itself the mandate to create a world-class exchange and use it as an instrument of change for the

industry as a whole through competitive pressure. NSE was incorporated in 1992 and was given recognition

as a stock exchange in April 1993. It started operations in June 1994, with trading on the Wholesale Debt

Market Segment. Subsequently it launched the Capital Market Segment in November 1994 as a trading

platform for equities and the Futures and Options Segment in June 2000 for various derivative instruments.

NSE was set up with the objectives of:

(a) Establishing a nationwide trading facility for all types of securities;

(b) Ensuring equal access to investors all over the country through an appropriate communication network;

(c) Providing a fair, efficient and transparent securities market using electronic trading system;

(d) Enabling shorter settlement cycles and book entry settlements; and

(e) Meeting international benchmarks and standards.

NSE has been able to take the stock market to the doorsteps of the investors. The technology has been

harnessed to deliver the services to the investors across the country at the cheapest possible cost. It provides

5

a nation-wide, screen-based, automated trading system, with a high degree of transparency and equal access

to investors irrespective of geographical location. The high level of information dissemination through on-

line system has helped in integrating retail investors on a nation-wide basis. The standards set by the

exchange in terms of market practices, products, technology and service standards have become industry

benchmarks and are being replicated by other market participants.

Within a very short span of time, NSE has been able to achieve all the objectives for which it was set up. It

has been playing a leading role as a change agent in transforming the Indian Capital Markets to its present

form. The Indian Capital Markets are a far cry from what they used to be a decade ago in terms of market

practices, infrastructure, technology, risk management, clearing and settlement and investor service.

FUTURE OUTLOOK

With increasing globalisation and consolidation amongst exchanges, the future of the regional stock

exchanges, around 22 in India, is likely to be very uncertain and even their very survival is a question mark.

Sebi has permitted the regional exchanges to form subsidiary companies, which are akin to super brokers.

These companies have acquired membership of both BSE and NSE at confessional entry fees and permitted

their members to trade on the BSE and NSE thus increasing trade volumes and business in both BSE and

NSE.

The stock markets of the future will have a redefined purpose and reinvented architecture due to the advent

and widespread use of technology. Information and stock price quotations are available almost

instantaneously and more importantly investors can act on this data by executing a trade from anywhere at

any time.

This new market will bring benefits to investors, listed companies, and the economies of countries. Trading

will be cheaper, faster and settlement will be simpler and with reduced risk. Raising capital for companies

will be easier, thus contributing directly to economic expansion.

The leaders in this new world of investing will be the ones willing to be agents of change, to best meet the

needs of investors and companies, and to do what is best for these two principal stakeholders in the capital

markets.

If done right, the stock markets of the future will be even better vehicles than today in helping companies

grow, creating jobs, providing fair investment opportunities for people, and in improving economies.

Both the exchanges, BSE and NSE, are visionary, proactive and increasingly use leading-edge technologies

to effectively compete in the global environment. In the not-too-distant future, once full capital account

6

convertibility is permitted in India one could well witness an expansion of trading volumes and its resultant

economic benefits to the thriving and ever-young metropolis of Mumbai.

7

1.2 PROFILE OF INDIA INFOLINE LTD.

Origin

India Infoline was launched on 11 may 1999 with SEBI REGN. NO. : INB 231097537 &CODE NO. :

10975, Regd. &Dealing Office :Building No. 24 1st Floor Nirlon Compound, Western Express Highway,

Goreagaon (e) Mumbai -400 063.www.indiainfoline.com is India’s leading and most comprehensive

business and financial information and analysis – earlier restricted to a few people – to the common man

absolutely free. The site met with an overwhelming response and has been reviewed as the most

comprehensive financial content website in India by BBC World – Money watch, Business World, Business

line and others. The company also won the Golden Mouse Award in India Internet World 2000 for the Best

Finance site.

In May 2001, our website was included in top 200 Best of the web list by Forbes Global under the Asia’s

investing category. We were the only website from India to be featured in any category. Since then it has

been nominated twice to this list. In its last review, Forbes editors have said. www.indiainfoline.com is a

must read for the investors in South Asia... Our research is also disseminated electronically through

Bloomberg, Investext, First Call/Thomson Financial and internet securities.

On First call/Thomson Financial, We have been one of the largest read research houses from Asia, which is

a testimony to the quality and timeliness of our reports.

The offerings on the site include a combination of information and transaction services. Transaction services

include mutual funds. Personal loans and online broking through www.5paisa .com.

India Infoline was the first company to offer many of these services in the country. In online broking, we

have emerged as a leading player offering online trading facility with significant market share. As on date,

the Group employs 4000 plus employees, most of them are placed at its various branches across India. About

INDIA INFOLINE.

It is a one-stop financial services shop, most respected for quality of its advice, personalized service and

cutting –edge technology

Mission & VISION

Its vision is to be the most respected company in the financial services space India Infoline Ltd. India

Infoline Ltd is listed on both the leading stock exchanges in India, viz, the Stock Exchange, Mumbai (BSE)

8

and the National Stock exchange (NSE). The Infoline group, comprising the holding company, India Infoline

Ltd and its subsidiaries, straddles the entire financial services space with offerings ranging from Equity

research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual

Funds, Life Insurance, Fixed deposits GoI bonds and other small savings instruments to loan products and

Investment banking India Infoline also owns and manages the websites, www.indiainfoline.com and

www.5paisa .com

COMPANY STRUCTURE

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange,

Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is

engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management

Services. It offers broking services in the Cash and Derivatives segments of the NSE as well as the Cash

segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a

one-stop solution for clients trading in the equities market. It has recently launched its Investment banking

and Institutional Broking business.

A SEBI authorized Portfolio Manager; it offers Portfolio Management Services to clients. These services are

offered to clients as different schemes, which are based on differing investment strategies made to reflect the

varied risk-return preferences of clients.

9

India Infoline Ltd, being a listed entity, is regulated by SEBI (Securities and Exchange Board of

India). It undertakes equities research which is acknowledge by none other than Forbes as ‘Best of the Web’

and ‘…a must read for investors in Asia’.

India Infoline’s research is available not just over the internet but also on international wire services

like Bloomberg (Code: IILL).Thomson First Call and Internet Securities where it is amongst the most read

Indian brokers.

Its various subsidiaries are in different of business and hence are governed by different regulator. The

subsidiaries of India Infoline Ltd are India Infoline Securities Pvt Ltd is a 100% subsidiary of India Infoline

Ltd, which is engaged in the businesses of Equities broking and Portfolio Management Services

It holds memberships of both the leading stock exchanges of India viz. the Stock Exchange, Mumbai

(BSE) and the National Stock Exchange (NSE). It offers broking services in the Cash and Derivatives

segments of the NSE as well as the Cash segment of the BSE. A SEBI Authorized Portfolio Management

Services to clients.

These services are offered to clients as different schemes, which are based on differing investment

strategies made to reflect the varied risk-return preferences of client.

India Infoline Commodities Pvt Ltd

INDIA Infoline Commodities Pvt Ltd is a 100%subsidiary of India Infoline Ltd, Which is engaged

in the business of commodities broking.

Our experience in securities broking us with the requisite skills and technologies to allow us offer

commodities broking as a contra-cyclical alternative to equities broking. We enjoy memberships with the

MCX and NCDEX, two leading Indian commodities exchanges, and recently acquired memberships of

DGCX. We have a multi-channel delivery model, making it among the select few to online as well as

offline trading facilities.

India Infoline Distribution Co Ltd (IILD)

India Infoline.com Distribution Co Ltd is a 100% subsidiary of India Infoline Ltd and is engaged

in the business of distribution of Mutual funds, IPO’s, Fixed Deposits and other small savings products. It

is one of the largest ‘vendor-independent’ distribution houses and has a wide pan-India footprint of over

232 branches coupled with a huge number of ‘feet-on-street’, which helps source and service customers

across the length and breadth of India .Its unique value proposition of free doorstep expert advice coupled

10

with free pick-up and delivery of cheque has been met with an enthusiastic response from customers and

fund houses alike.

Our business has expanded to include the online distribution of mutual funds, wherein users can

view and compare different product offerings and download application forms which they can later

submit to the product provider Mortgage & Loans IILD has also entered the business on distribution of

mortgages and loan products during the year 2005-2006. The business is still in the investing phase and

we plan to roll the business out across its pan-Indian network to provide it with a truly national scale in

operations.

India Infoline Insurance Services Ltd

India Infoline Insurance Ltd is also a 100% subsidiary of India Infoline Ltd and is a registered

Corporate Agent with the Insurance Regulatory and Development Authority (IRDA). It is the largest

Corporate Agent for ICICI Prudential Life Insurance Co Ltd, which is India’s largest private Life

Insurance Company

INDIA INFOLINE INVESTMENT SEVICES LTD

India Infoline Investment Service Ltd is also a 100% subsidiary of India Infoline Ltd. It has an

NBFC license from the Reserve Bank of India (RBI) and offers margin-funding facility to the broking

customers.

India Infoline Insurance Brokers Ltd

India Infoline Insurance brokers Ltd is a 100% subsidiary of India Infoline Ltd and is a newly

formed subsidiary which will carry out the business of Insurance broking. We have applied to IRDA for

the insurance broking license and the clearance for the same is awaited.

SERVICES OFFERED BY INDIA INFOLINE:

Here’s look at the rocketing list of what’s on offer from The India

Infoline Group:

EQUITY TRADING AND STOCK BROKING:-

Cash and Derivatives segment. Member –BSE and NSE, DP with NSDL.

11

PORTFOLIO MANAGEMENT:-

SEBI-Registered, backed by a pool of analysis with over 200 man-years in managing portfolios

RESEARCH &ANALYSIS:-

Exhaustive information and data mining, covering the spectrum of Indian business, industry

and financial markets.

MUTUAL FUNDS:-

Primary agent for the entire phalanx of leading funds. Something to suit every risk

profile.

LIFE INSURANCE:-

Leading corporate agent of ICICI Prudential life insurance Company miles ahead of the

runner-up!

COMMODITIES BROKING:-

Member of the Multi-commodities Exchange (MCX) Again, rock-bottom brokerage and quality

research support. Fixed Income Instruments: From Fixed deposits, Post Office Saving schemes to RBI

Tax saving and Infrastructure Bonds.

12

SHAREHOLDING PATTERN

Type of Share Holders SharesForeign 78,232,566 27.6%

Institutions 57,843,332 20.4%

Govt Holding 0 0.0%

Non Promoter Corporate Holding 11,528,968 4.1%

Promoters 95,655,532 33.8%

Public & others 40,139,602 14.2%

Total 283,400,000 100.0%

PROBLEMS OF THE INDIA INFOLINE LIMITED

Lack of Techno Savvy people and poor Internet penetration: -

Since most of the people are quite experienced and also they are not techno savvy. Also Internet

penetration is poor in India.

Some respondents are unwilling to talk: -- Some respondents either do not have time or willing

does not respond, as they are quite annoyed with the phone call.

Lack of Career Opportunities

Limitations of online trading

Competition

Technical Problem

13

COMPETITORS INFORMATION

ICICIDIRECT.COM

Products and Services

A product for every need: ICICIdirect.com is the most comprehensive website, which allows you to

invest in Shares, Mutual funds, Derivatives (Futures and Options) and other financial products.

Simply put we offer you a product for every investment need of yours.

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an Affiliate of ICICI Bank Limited

and the Website is owned by ICICI Bank

Limited

Product & Services :

1.Trading in shares:ICICIdirect.com offers you various options while trading in shares.

Cash Trading: This is a delivery based trading system, which is generally done with the intention of taking

delivery of shares or monies.

Margin Trading: You can also do an intra-settlement trading upto 3 to 4 times your available funds,

wherein you take long buy/ short sell positions in stocks with the intention of squaring off the position

within the same day settlement cycle. (ONLY for intraday)

MarginPLUS Trading: Through MarginPLUS you can do an intra-settlement trading upto 25 times your

available funds, wherein you take long buy/ short sell positions in stocks with the intention of squaring off

the position within the same day settlement cycle. MarginPLUS will give a much higher leverage in your

account against your limits.

Spot Trading: When you are looking at an immediate liquidity option, 'Cash on Spot' may work the best for

you, On selling shares through "cash on spot", money is credited to your bank a/c the same evening & not on

the exchange payout date. This money can then be withdrawn from any of the ICICIBank ATMs.

14

BTST : Buy Today Sell Tomorrow (BTST) is a facility that allows you to sell shares even on 1 st and 2nd day

after the buy order date, without you having to wait for the receipt of shares into your demat account.

CallNTrade®: CallNTrade® allows you to call on a local number in your city & trade on the telephone

through our Customer Service Executives. This facility is currently available in over 11 major states across

India.

Trading on NSE/BSE: Through ICICIdirect.com, you can trade on NSE as well as BSE.

2. TRADE IN DERIVATIVES:

FUTURES

Through ICICIdirect.com, you can now trade in index and stock futures on the NSE. In futures trading, you

take buy/sell positions in index or stock(s) contracts having a longer contract period of up to 3 months.

Presently only selected stocks, which meet the criteria on liquidity and volume, have been enabled for

futures trading.

Calculate Index and Know your Margin are tools to help you in calculating your margin requirements and

also the index & stock price movements..

OPTIONS

To take the buy/sell position on index/stock options, you have to place certain % of order value as margin.

With options trading, you can leverage on your trading limit by taking buy/sell positions much more than

what you could have taken in cash segment.

3. Mutual Funds:

4. IPOs and Bonds Online:

You could also invest in Initial Public Offers (IPOs) and Bonds online without going through the hassles of

filling ANY application form/ paperwork.

Get in-depth analyses of new IPOs issues (Initial Public Offerings), which are about to hit the market and

analysis on these. IPO calendar, recent IPO listings, prospectus/offer documents, and IPO analysis are few of

the features, which help you, keep on top of the IPO markets.

15

INDIA BULLS

Indiabulls Group is one of the top business houses in the country with business interests in Real Estate,

Infrastructure, Financial Services, Retail, Multiplex and Power sectors. Indiabulls Group companies are

listed in Indian and overseas markets and have a market capitalization of over USD 7 billion. The Networth

of the Group exceeds USD 2.5 billion. Indiabulls Group companies enjoy highest ratings from CRISIL, a

subsidiary of Standard and Poor’s. Indiabulls has been conferred the status of a “Business Superbrand” by

The Brand Council, Superbrands India.

Indiabulls Financial Services is an integrated financial services powerhouse providing Consumer Finance,

Housing Finance, Commercial Loans, Life Insurance, Asset Management and Advisory services. Indiabulls

Financial Services Ltd is amongst 68 companies constituting MSCI - Morgan Stanley India Index. Indiabulls

Financial is also part of CLSA’s model portfolio of 30 Best Companies in Asia. Indiabulls Financial

Services signed a joint venture agreement with Sogecap, the insurance arm of Societé Generale (SocGen) for

its upcoming life insurance venture. Indiabulls Financial Services in partnership with MMTC Limited, the

largest commodity trading company in India, is setting up India’s 4th Multi-Commodities Exchange.

Indiabulls Real Estate Limited is India’s third largest property company with development projects

spread across residential projects, commercial offices, hotels, malls, and Special Economic Zones

(SEZs) infrastructure development. Indiabulls Real Estate partnered with Farallon Capital

Management LLC of USA to bring the first FDI into real estate. Indiabulls Real Estate is

transforming 14 million sqft in 16 cities into premium quality, high-end commercial, residential and

retail spaces. Indiabulls Real Estate has diversified significantly in the following three business

verticals within the real estate space: Real Estate Development, Project Advisory & Facilities

Management: Residential, Commercial (Office and Malls) and SEZ Development. Power: Thermal

and Hydro Power Generation. Retail: Departmental Stores, Hypermarket Stores, Daily Needs

Neighborhood Stores.

Indiabulls Securities Limited is India’s leading capital markets company with All-India Presence and an

extensive client base. Indiabulls Securities possesses state of the art trading platform, best broking practices

and is the pioneer in trading product innovations. Power Indiabulls, in-house trading platform, is one of the

fastest and most efficient trading platforms in the country. Indiabulls Securities Limited is the first and only

brokerage house to be assigned the highest rating BQ – 1 by CRISIL.

16

ABHIPRA

Beginning as a Broking House, we grew into Business House. We broadened our horizons and stepped into the field of Depository, Stock Broking, Full-Fledged Money Changing Services, Category I Registrar & Transfer Agent, Commodity Trading, Online Trading (Equity, F&O & Commodity), e-Return Intermediary. Abhipra today commands the status of being one of the leading Depository

Participant of Northern India in Private Sector . Moreover, Abhipra has Trading Terminal Outlets for NSE & BSE spread to almost every nook & corner of Northern India.

Abhipra Capital Limited is also empanelled as a Depository Participant with one of the premier Commodity bourse, National Commodities and Derivatives Exchange Limited (NCDEX). So a client now can open Commodity Demat Account with us

At Abhipra, we offer our clients far more than merely a comprehensive range of financial services. We offer them ideas, innovations, and solutions with extra-ordinary results. We feel that quality is an essential ingredient in building successful businesses. Not only do products and services need to be of high quality, but potential customers also n eed to have assurance that the products will be of high quality. This is evidenced from the fact that Abhipra is a ISO 9001 (Quality Assurance Systems) Registered Company.

Abhipra group has been promoted and governed by the high entrepreneurial and charismatic endeavors of its Chairman Mr. V.D. Aggarwal, Chartered Accountant, with a standing of 27 years. His acumen backed by his foresight and vision has made Abhipra as one of the leading groups among the competitors in the Capital Market. Mr. V.D. Ag garwal enjoys the honor of being The President of Depository Partici pants Association of India (DPAI)

and also President of Chamber of Chartered Accountants of India (CCA). He is also former President of Association NSE Members of India.

Abhipra is a progressive, computerized and professionally managed organization which takes pride in offering value-added services to its clients. Abhipra's range of professional financial services cover

D e p o s i t o r y S e r v i c e s ( N S D L ,

C D S )

F u t u r e s & O p t i o n s

Capital MarketTrading ( N S E , B S E )

C o m m o d i t y T r a d i n g ( N M C E ,

N C D E X , M C X )

F O R E X ( R B I A p p r o v e d )

T o u r s & T r a v e l s

S E B I A p p r o v e d R & T ( C a t - I )

I n v e s t m e n t A r r a n g e r

e - R e t u r n I n t e r m e d i a r y

KOTAK SECURITIES

Kotak Securities Limited, a subsidiary of Kotak Mahindra Bank, is the stock broking and distribution arm of

the Kotak Mahindra Group. Kotak Mahindra is one of India's leading financial institutions, offering

complete financial solutions that encompass every sphere of life. From commercial banking, to stock

17

broking, to mutual funds, to life insurance, to investment banking, the group caters to the financial needs of

individuals and corporate.

Kotak Securities was set up in 1994. Kotak Securities is a corporate member of both The Bombay Stock

Exchange and the National Stock Exchange of India Limited.

The company has four main areas of business:

Institutional Equities,

Retail (equities and other financial products),

Portfolio Management and

Depository Services.

MOTILAL OSWAL

Motilal Oswal Securities Ltd. was founded in 1987 as a small sub-broking unit, with just two people running

the show. It has established itself as the Best Local Brokerage House in India (Asia Money Brokers’ Poll

2005). Their Institutional Equity Division combines the efforts of the Research and Sales & Trading

departments to best serve clients' needs. Consistent delivery of high quality advice on individual stocks,

sector trends and investment strategy has established them as a reliable research unit amongst leading Indian

as well as international investors.

S.W.O.T. ANALYSIS OF INDIA INFOLINE LIMITED

STRENGTHS

The `do-it-yourself' framework of online share trading offers retail investors the three benefits of

transparency, access and efficiency. Paperwork diminishes significantly, and no more painful trips to

your broker to check if everything's in order. Online trading has made it possible to universalize access

to retail investors. This was earlier very difficult, as the cost of servicing often-outweighed transaction

volumes. Online brokerage ranges between 0.05-0.20 per cent of the value of transactions for non-

delivery-based trades, and between 0.25-0.95 per cent for delivery-based trades. Once major investments

in online infrastructure are over and done with - and with the economies of scale coming into play - it is

expected that brokerage rates would head further downwards.

18

Access to online trading and latest financial happenings, apart from quotes and unbiased investment

analyses, all consolidate into a value-added product mix in tandem with evolving markets that are freer

and fairer. The Net result: An inquisitive, informed and demanding investor. Today's investor is more

involved in managing his or her assets and analyzing a vast array of investment options. Technology and

today's enabled investor have, in turn, driven competition, resulting in reduced costs of trading,

transparency in dealings, and pricing info that is accurate and real-time. More and more investors now

want to know how their trades are executed, and whether they have received the best possible price.

Critical components of execution quality include the prices at which orders were executed as well as the

speed of execution. The quality of execution, in turn, hinges on efficient order routing. We owe this to

our investor fraternity.

Weakness

Everything in the world has a flip side to it - Transaction velocity is crucial. And more often than not,

connections are lousy. There's also a degree of investor skepticism about online payment and settlement

mechanisms in spite of all the encryption and fire walling brought into play. Time and technology will

soon assuage these concerns, which hark back to the `physical' days.

“The three main technology obstacles which have prevented Internet broking from taking off are:

Lack of Internet penetration

Bandwidth infrastructure

Poor quality of ISP infrastructure.”

Opportunities

You have some money to dabble with. Trading shares on BSE/NSE has always been your dream.

When will you ever find the time? And besides, the hassle of finding a broker is not easy. This is

your main opportunity.

Realizing there is untapped market of investors who want to be able to execute their own trades when

it suits them, brokers have taken their trading rooms to the Internet. Known as online brokers, they

allow you to buy and sell shares via Internet.

There are 2 types of online trading service: discount brokers and full service online broker . Discount

online brokers allow you to trade via Internet at reduced rates. Some provide quality research, other

don’t. Full service online brokerage is linked to existing brokerages. These brokers allow their clients

to place online orders with the option of talking/ chatting to brokers if advice is needed. Brokerage

19

rates here are higher. 5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit

securities.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of the online broking sites in

India.

And daily trading turnover is estimated in the vicinity of 0.75 per cent of the combined BSE and NSE

daily turnover of about RS 11,000 crore!!! The point is, there's tremendous scope for growth.

Especially when you consider the US, where trading over the Net accounts for about 55 per cent of

the total volumes. And, I believe, in some Asian markets the figures as high as 70 per cent.

Threats

On to some threat perception - Domestic funds, foreign institutional investors and operators comprise the

three main market constituents. And all three include term investors as well as opportunists in their

pecking order. Some, for instance, hitch their fate with what the FIIs are up to. All this spells spurting

volumes. But nobody gives a damn about the resultant volatility.

And some, not all, offer free investment advice over the Net to lure rookie investors with misleading

information. Prices of scripts can also be influenced to the advantage of vested interests, courtesy the

Net. Unlike in the US, stockbrokers out here willingly (or under the force of circumstance) assume

the role of `advisors', sans the neutral, non-vested stance.

20

1.3INTRODUCTION ABOUT THE TOPIC

Portfolio (finance) means a collection of investments held by an institution or a private individual. Holding a

portfolio is often part of an investment and risk-limiting strategy called diversification. By owning several

assets, certain types of risk (in particular specific risk) can be reduced. There are also portfolios which are

aimed at taking high risks – these are called concentrated portfolios.

Investment management is the professional management of various securities (shares, bonds etc) and other

assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. Investors may be

institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via

investment contracts and more commonly via collective investment schemes e.g. mutual funds).

The term asset management is often used to refer to the investment management of collective investments,

whilst the more generic fund management may refer to all forms of institutional investment as well as

investment management for private investors. Investment managers who specialize in advisory or

discretionary management on behalf of (normally wealthy) private investors may often refer to their services

as wealth management or portfolio management often within the context of so-called "private banking".

The provision of 'investment management services' includes elements of financial analysis, asset selection,

stock selection, plan implementation and ongoing monitoring of investments. Outside of the financial

industry, the term "investment management" is often applied to investments other than financial instruments.

Investments are often meant to include projects, brands, patents and many things other than stocks and

bonds. Even in this case, the term implies that rigorous financial and economic analysis methods are used.

21

Need of PMS

As in the current scenario the effectiveness of PMS is required. As the PMS gives investors periodically

review their asset allocation across different assets as the portfolio can get skewed over a period of time.

This can be largely due to appreciation / depreciation in the value of the investments.

As the financial goals are diverse, the investment choices also need to be different to meet those needs. No

single investment is likely to meet all the needs, so one should keep some money in bank deposits and /

liquid funds to meet any urgent need for cash and keep the balance in other investment products/ schemes

that would maximize the return and minimize the risk. Investment allocation can also change depending on

one’s risk-return profile.

22

Objective of PMS

There are the following objective which is full filled by Portfolio Management Services.

1. Safety Of Fund: -

The investment should be preserved, not be lost, and should remain in the returnable position in cash

or kind.

2. Marketability: -

The investment made in securities should be marketable that means, the securities must be listed and

traded in stock exchange so as to avoid difficulty in their encashment.

3. Liquidity: -

The portfolio must consist of such securities, which could be en-cashed without any difficulty or

involvement of time to meet urgent need for funds. Marketability ensures liquidity to the portfolio.

4. Reasonable return: -

The investment should earn a reasonable return to upkeep the declining value of money and be

compatible with opportunity cost of the money in terms of current income in the form of interest or

dividend.

Borrowers

Secondary

Mkt

Client ManagementOrigination

PortfolioManagerCredit decision

Risk Rating

Pricing/Return

Portfolio Decision

Syndication

Loan TradingHedging & Securitization

Servicing

23

5. Appreciation in Capital: -

The money invested in portfolio should grow and result into capital gains.

6. Tax planning: -

Efficient portfolio management is concerned with composite tax planning covering income tax,

capital gain tax, wealth tax and gift tax.

24

7. Minimize risk: -

Risk avoidance and minimization of risk are important objective of portfolio management. Portfolio

managers achieve these objectives by effective investment planning and periodical review of market,

situation and economic environment affecting the financial market.

MYTHS ABOUT PMS

There are two most common myths found about Portfolio Management Services (PMS) which we found

among most of the Investors. They are as follows.

Myth No. 1: “PMS and Mutual Fund are Similar as the investment option”

As in the Finance Basket both the PMS and Mutual Fund are used for minimizing risk and maximize the

profit of the Investors. The objectives are similar as in both the product but they are different from each

other in certain aspects. They are as follows.

Management Side

In PMS, it’s ongoing personalized access to professional money management services. Whereas, in Mutual

fund gives personalize access to money.

Customization

In PMS, Portfolio can be tailored to address each investor's specific needs. Whereas in Mutual Fund

Portfolio structured to meet the fund's stated investment objectives.

Ownership

In PMS, Investors directly own the individual securities in their portfolio, allowing for tax management

flexibility, whereas in Mutual Fund Shareholders own shares of the fund and cannot influence buy and sell

decisions or control their exposure to incurring tax liabilities.

Liquidity

In PMS, managers may hold cash; they are not required to hold cash to meet redemptions, whereas, Mutual

funds generally hold some cash to meet redemptions.

25

Minimums

PMS generally gives higher minimum investments than mutual funds. Generally, minimum ranges from: Rs.

1 Crore + for Equity Options Rs. 5 Crore + for Fixed Income Options Rs. 20 Lacs + for Structured Products,

whereas in Mutual Fund Provide ongoing, personalized access to professional money management services.

Flexibility

PMS is generally more flexible than mutual funds. The Portfolio Manager may move to 100% cash if it

required. The Portfolio Manager may take his own time in building up the portfolio. The Portfolio Manager

can also manage a portfolio with disproportionate allocation to select compelling opportunities whereas, in

Mutual Fund comparatively less flexible.

Myth No. 2: “PMS is more Risk free than other Financial Instrument”

In Financial Market Risk factor is common in all the financial products, but yes it is true that Risk Factor

vary from each other due to its nature. All investments involve a certain amount of risk, including the

possible erosion of the principal amount invested, which varies depending on the security selected . For

example, investments in small and mid-sized companies tend to involve more risk than investments in larger

companies.

26

PORTFOLIO CONSTRUCTION

The Portfolio Construction of Rational investors wish to maximize the returns on their funds for a given

level of risk. All investments possess varying degrees of risk. Returns come in the form of income, such as

interest or dividends, or through growth in capital values (i.e. capital gains).

The portfolio construction process can be broadly characterized as comprising the following steps:

1. Setting objectives .

The first step in building a portfolio is to determine the main objectives of the fund given the constraints (i.e.

tax and liquidity requirements) that may apply. Each investor has different objectives, time horizons and

attitude towards risk. Pension funds have long-term obligations and, as a result, invest for the long term.

Their objective may be to maximize total returns in excess of the inflation rate. A charity might wish to

generate the highest level of income whilst maintaining the value of its capital received from bequests. An

individual may have certain liabilities and wish to match them at a future date. Assessing a client’s risk

tolerance can be difficult. The concepts of efficient portfolios and diversification must also be considered

when setting up the investment objectives.

2. Defining Policy .

Once the objectives have been set, a suitable investment policy must be established. The standard procedure

is for the money manager to ask clients to select their preferred mix of assets, for example equities and

bonds, to provide an idea of the normal mix desired. Clients are then asked to specify limits or maximum

and minimum amounts they will allow to be invested in the different assets available. The main asset classes

are cash, equities, gilts/bonds and other debt instruments, derivatives, property and overseas assets.

Alternative investments, such as private equity, are also growing in popularity, and will be discussed in a

later chapter. Attaining the optimal asset mix over time is one of the key factors of successful investing.

3. Applying portfolio strategy.

At either end of the portfolio management spectrum of strategies are active and passive strategies. An active

strategy involves predicting trends and changing expectations about the likely future performance of the

27

various asset classes and actively dealing in and out of investments to seek a better performance. For

example, if the manager expects interest rates to rise, bond prices are likely to fall and so bonds should be

sold, unless this expectation is already

factored into bond prices. At this stage, the active fund manager should also determine the style of the

portfolio. For example, will the fund invest primarily in companies with large market capitalizations, in

shares of companies expected to generate high growth rates, or in companies whose valuations are low? A

passive strategy usually involves buying securities to match a preselected market index. Alternatively, a

portfolio can be set up to match the investor’s choice of tailor-made index. Passive strategies rely on

diversification to reduce risk. Outperformance versus the chosen index is not expected. This strategy

requires minimum input from the portfolio manager. In practice, many active funds are managed somewhere

between the active and passive extremes, the core holdings of the fund being passively managed and the

balance being actively managed.

28

4. Asset selections .

Once the strategy is decided, the fund manager must select individual assets in which to invest. Usually a

systematic procedure known as an investment process is established, which sets guidelines or criteria for

asset selection. Active strategies require that the fund managers apply analytical skills and judgment for

asset selection in order to identify undervalued assets and to try to generate superior performance.

5. Performance assessments

In order to assess the success of the fund manager, the performance of the fund is periodically measured

against a pre-agreed benchmark – perhaps a suitable stock exchange index or against a group of similar

portfolios (peer group comparison). The portfolio construction process is continuously iterative, reflecting

changes internally and externally. For example, expected movements in exchange rates may make overseas

investment more attractive, leading to changes in asset allocation. Or, if many large-scale investors

simultaneously decide to switch from passive to more active strategies, pressure will be put on the fund

managers to offer more active funds. Poor performance of a fund may lead to modifications in individual

asset holdings or, as an extreme measure; the manager of the fund may be changed altogether.

29

Steps to Stock Selection Process

Types of Assets

The structure of a portfolio will depend ultimately on the investor’s objectives and on the asset selection

decision reached. The portfolio structure takes into account a range of factors, including the investor’s time

horizon, attitude to risk, liquidity requirements, tax position and availability of investments. The main asset

classes are cash, bonds and other fixed income securities, equities, derivatives, property and overseas assets.

Cash and cash instruments

Cash can be invested over any desired period, to generate interest income, in a range of highly liquid or

easily redeemable instruments, from simple bank deposits, negotiable certificates of deposits, commercial

paper (short term corporate debt) and Treasury bills (short term government debt) to money market funds,

30

which actively manage cash resources across a range of domestic and foreign markets. Cash is normally held

over the short term pending use elsewhere (perhaps for paying claims by a non-life insurance company or

for paying pensions), but may be held over the longer term as well. Returns on cash are driven by the general

demand for funds in an economy, interest rates, and the expected rate of inflation. A portfolio will normally

maintain at least a small proportion of its funds in cash in order to take advantage of buying opportunities.

Bonds

Bonds are debt instruments on which the issuer (the borrower) agrees to make interest payments at periodic

intervals over the life of the bond – this can be for two to thirty years or, sometimes, in perpetuity. Interest

payments can be fixed or variable, the latter being linked to prevailing levels of interest rates. Bond markets

are international and have grown rapidly over recent years. The bond markets are highly liquid, with many

issuers of similar standing, including governments (sovereigns) and state-guaranteed organizations.

Corporate bonds are bonds that are issued by companies. To assist investors and to help in the efficient

pricing of bond issues, many bond issues are given ratings by specialist agencies such as Standard & Poor’s

and Moody’s. The highest investment grade is AAA, going all the way down to D, which is graded as in

default. Depending on expected movements in future interest rates, the capital values of bonds fluctuate

daily, providing investors with the potential for capital gains or losses. Future interest rates are driven by the

likely demand/ supply of money in an economy, future inflation rates, political events and interest rates

elsewhere in world markets. Investors with short-term horizons and liquidity requirements may choose to

invest in bonds because of their relatively higher return than cash and their prospects for possible capital

appreciation. Long-term investors, such as pension funds, may acquire bonds for the higher income and may

hold them until redemption – for perhaps seven or fifteen years. Because of the greater risk, long bonds

(over ten years to maturity) tend to be more volatile in price than medium- and short-term bonds, and have a

higher yield.

Equities

Equity consists of shares in a company representing the capital originally provided by shareholders. An

ordinary shareholder owns a proportional share of the company and an ordinary share carries the residual

risk and rewards after all liabilities and costs have been paid. Ordinary shares carry the right to receive

income in the form of dividends (once declared out of distributable profits) and any residual claim on the

company’s assets once its liabilities have been paid in full. Preference shares are another type of share

31

capital. They differ from ordinary shares in that the dividend on a preference share is usually fixed at some

amount and does not change. Also, preference shares usually do not carry voting rights and, in the event of

firm failure, preference shareholders are paid before ordinary shareholders. Returns from investing in

equities are generated in the form of dividend income and capital gain arising from the ultimate sale of the

shares. The level of dividends may vary from year to year, reflecting the changing profitability of a

company. Similarly, the market price of a share will change from day to day to reflect all relevant available

information. Although not guaranteed, equity prices generally rise over time, reflecting general economic

growth, and have been found over the long term to generate growing levels of income in excess of the rate of

inflation. Granted, there may be periods of time, even years, when equity prices trend downwards – usually

during recessionary times. The overall long-term prospect, however, for capital appreciation makes equities

an attractive investment proposition for major institutional investors.

32

Derivatives

Derivative instruments are financial assets that are derived from existing primary assets as opposed to being

issued by a company or government entity. The two most popular derivatives are futures and options. The

extent to which a fund may incorporate derivatives products in the fund will be specified in the fund rules

and, depending on the type of fund established for the client and depending on the client, may not be

allowable at all.

A futures contract is an agreement in the form of a standardized contract between two counterparties to

exchange an asset at a fixed price and date in the future. The underlying asset of the futures contract can be a

commodity or a financial security. Each contract specifies the type and amount of the asset to be exchanged,

and where it is to be delivered (usually one of a few approved locations for that particular asset). Futures

contracts can be set up for the delivery of cocoa, steel, oil or coffee. Likewise, financial futures contracts can

specify the delivery of foreign currency or a range of government bonds. The buyer of a futures contract

takes a ‘long position’, and will make a profit if the value of the contract rises after the purchase. The seller

of the futures contract takes a ‘short position’ and will, in turn, make a profit if the price of the futures

contract falls. When the futures contract expires, the seller of the contract is required to deliver the

underlying asset to the buyer of the contract. Regarding financial futures contracts, however, in the vast

majority of cases no physical delivery of the underlying asset takes place as many contracts are cash settled

or closed out with the offsetting position before the expiry date.

An option contract is an agreement that gives the owner the right, but not obligation, to buy or sell

(depending on the type of option) a certain asset for a specified period of time. A call option gives the holder

the right to buy the asset. A put option gives the holder the right to sell the asset. European options can be

exercised only on the options’ expiry date. US options can be exercised at any time before the contract’s

maturity date. Option contracts on stocks or stock indices are particularly popular. Buying an option involves

paying a premium; selling an option involves receiving the premium. Options have the potential for large

gains or losses, and are considered to be high-risk instruments. Sometimes, however, option contracts are

used to reduce risk. For example, fund managers can use a call option to reduce risk when they own an asset.

Only very specific funds are allowed to hold options.

33

Property

Property investment can be made either directly by buying properties, or indirectly by buying shares in listed

property companies. Only major institutional investors with long-term time horizons and no liquidity

pressures tend to make direct property investments. These institutions purchase freehold and leasehold

properties as part of a property portfolio held for the long term, perhaps twenty or more years. Property

sectors of interest would include prime, quality, well-located commercial office and shop properties, modern

industrial warehouses and estates, hotels, farmland and woodland. Returns are generated from annual rents

and any capital gains on realization. These investments are often highly illiquid.

Types of Portfolios

The different types of Portfolio which is carried by any Fund Manager to maximize profit and minimize

losses are different as per their objectives .They are as follows.

Aggressive Portfolio:

Objective : Growth. This strategy might be appropriate for investors who seek High growth

and who can tolerate wide fluctuations in market values, over the short term.

34

Growth Portfolio:

Objective : Growth. This strategy might be appropriate for investors who have a preference

for growth and who can withstand significant fluctuations in market value.

Balanced Portfolio :

Objective: Capital appreciation and income. This strategy might be appropriate for investors

who want the potential for capital appreciation and some growth, and who can withstand

moderate fluctuations in market values

Conservative Portfolio:

35

Objective : Income and capital appreciation. This strategy may be appropriate for investors

who want to preserve their capital and minimize fluctuations in market value.

36

TECHNIQUES OF PORTFOLIO MANAGEMENT

Various types of portfolio require different techniques to be adopted to achieve the desired objectives. Some

of the techniques followed in India by portfolio managers are summarized below.

(1). Equity portfolio-

Equity portfolio is affected by internal and external factors:

(a) Internal factors –

Pertain to the inner working of the particular company of which equity shares are held. These factors

generally include:

Market value of shares

Book value of shares

Price earnings ratio (P/E ratio)

Dividend payout ratio

(b) External factors –

Government policies

Norms prescribed by institutions

(3) Business environment

(4) Trade cycles

(2). Equity stock analysis –

The basic objective behind the analysis is to determine the probable future – value of the shares of the

concerned company. It is carried out primarily fewer than two ways. :

Trend of earning: -

A higher price-earnings ratio discount expected profit growth. Conversely, a downward trend in

earning results in a low price-earnings ratio to discount anticipated decrease in profits, price and

37

dividend. Rising EPS causes appreciation in price of shares, which benefits investors in lower tax

brackets? Such investors have not pay tax or to give lower rate tax on capital gains.

Many institutional investor like stability and growth and support high EPS.

Growth of EPS is diluted when a company finances internally its expansion program and offers new

stock.

EPS increase rapidly and result in higher P/E ratio when a company finances its expansion program

from internal sources and borrowings without offering new stock.

Quality of reported earning: -

Quality of reported earnings affects P/E ratio. The factors that affect the quality of reported earnings are as

under:

Depreciation allowances: -

Larger (Non Cash) deduction for depreciation provides more funds to company to finance profitable

expansion schemes internally. This builds up future earning power of company.

Research and development outlets : -

There is higher P/E ratio for a company, which carries R&D programs. R&D enhances profit

earning strength of the company through increased future sales.

Inventory and other non-recurring type of profit : -

Low cost inventory may be sold at higher price due to inflationary conditions among profit but such

profit may not always occur and hence low P/E ratio.

(C) Dividend policy: -

Dividend policy is significant in affecting P/E ratio. With higher dividend ratio, equity price goes up and

thus raises P/E ratio. Dividend rates are raised to push in share prices up. Dividend cover is calculated to find

out the time the dividend is protected, In terms of earnings. It is calculated as under:

Dividend Cover = EPS / Dividend per Share

(D) Investors demand: -

Demand from institutional investors for equity also enhances the P/E ratio.

38

INDIA INFOLINE LIMITED PORTFOLIO MANAGEMENT SERVICES

Pro Prime

Product Approach

Investment will be keeping in mind 3 investment tenets.

Consistent, steady and sustainable returns.

Margin of Safety

Low Volatility

Product Offering

Pro Prime is the ideal for investors looking at steady and superior with low and medium risk appetite.

The portfolio consists of a blend of quality blue chip and growth stocks ensuring a balanced portfolio with

relatively medium risk profile.

The portfolio constitutes of relatively large capitalization stocks, based on sector and themes which have

medium to long term growth potential.

PMS

Pro Prime Pro Arbitrage Pro Tech

39

Product Characteristics

Bottom up stock selection

In depth ,independent fundamental research

High quality companies with relatively large capitalization

Disciplined valuation approach applying multiple valuation measure.

Medium to long term vision, resulting in low portfolio turnover.

How to invest?

Minimum Investment : 10 Lacs

Lock in : 6 months

Reporting: Access to website showing clients holding .Monthly reporting of portfolio holding

/transaction.

Charges: 2.5% pa AMC (Annual Maintenances Charges) fees charged every quarter ,0.5% brokerage

,20% profit sharing after 15% hurdle is crossed chargeable at the end of fiscal year.

Pro Arbitrage

Product Approach

An opportunity lies in basis which is the difference between cash and future. Whenever basis is high we buy

the stocks and sell the future to lock in difference .The difference is bound to be zero at expiry.

Product Offered

Cash –future arbitrage:

The product intends to spot low risk opportunities which will yield more than the normal low risk product.

Whenever such opportunity is spotted stocks will be bought and to lock in the basis, future will be sold .This

position will be liquated in the expiry or before that if the basis vanishes early .Similarly the scheme will

move on from opportunity to opportunity.

Product Characteristics

Low –Risk: This is relatively low risk product which can be compared with liquid funds issued by mutual

funds.

High return: Compared with other low risk products, this products offers an indicative post tax return of

8 to 10% plus.

40

Product Details

Minimum Investment:Rs.1 Crore

Lock in :6 months

Reporting: Fortnightly for portfolio Net worth, Monthly reporting pf portfolio Holding

/transaction.

Charges: 0.035% brokerage for future ,0.07% for delivery

Pro Tech

Protech using the knowledge of technique analysis and the power of depravities markets to identify trading

opportunities in the market .The protech line of the product is designed around various risk /reward

/volatility profiles for the different kind of investment needs.

Product Approach

Better performance is possible from superior market timing and from picking stocks before inflation points

in their trading cycles. Linear return are possible from having hedged/ sell market positions in downtrends.

Absolute return are targeted by focusing on finding trading opportunities & not out performance of an index.

Product offered

1. Nifty Thirty :

Nifty futures will be bought and sold on the basis of an automated trading system generated calls to

go long/short. The exposure will never exceed the value of portfolio i.e. no leveraging; but allows us

to be short /hedged in Nifty in falling market therefore allowing the client to earn irrespective of the

market direction.

2. Beta Portfolio :

Positional trading opportunities are identified in the future segment based on technical analysis.

Inflection points in the momentum cycles are identified to go long /short on stock/index futures with

1-2 months time horizon .The idea is to generate the best possible return in the medium term

irrespective of the direction of the market without really leveraging beyond the portfolio value. Risk

protection is done based on stop losses on daily closing prices.

3. Star Nifty:

41

Swing trading technique and Dow theory is used to identify short –term reversal levels for Nifty

futures and ride with trend both on the long and short side .This return can be earned in bull and bear

market .Stop and reverse means to reverse ones position from long to short or vice a versa at the

reversal levels simultaneously .The exposure never exceeds value of portfolio i.e. there is no

leveraging.

4. Trailing Stops.

Momentum trading techniques are used to spot short –term momentum of 5-10 days in stocks and

stocks /index futures .Trailing stop loss method of risk management or profit protection is used to

lower the portfolio volatility and maximize return .Trading opportunities are exposed both on the

long side and the short side as the market demands to get the best of both upward and downward

trends.

42

Product Characteristics

Using swing based index –trading systems stop and reverse .trend following and momentum trading

technique.

Nifty based products for low impact cost and low product volatility

Both long and short strategies to earn returns even in falling market.

Trading in future market to allow for active risk protection using trailing stop losses.

How to invest?

Minimum : Rs.10 Lacs

Lock in : 6 months

Reporting: Fortnightly reporting of portfolio Net Worth, monthly reporting of

portfolio Holding /Transaction.

Charges: 0% AMC (Annual Maintenance Charges), 0.05% brokerage for derivatives, 20%

profit sharing on booked profit quarterly basis.

43

CHAPTER- IIObjective & Methodology

44

2.1 OBJECTIVES

To know the concept of Portfolio Management Services.

To know about the awareness in public towards stock brokers and share market.

To study about the competitive position of India Infoline Limited in Competitive Market.

To study about the effectiveness & efficiency of India Infoline Limited in relation to its competitors

2.2 METHODOLOGY ADOPTED

Research Methodology

The methodology section is the blue print for researcher activity and specifies bow the investigator intents to

study the people or describe social settings. In other words the methodology section make explicit the study

desire and constitutes the “how to do it” phase.

The project study has been conducted by collecting primary data only using structured questionnaire.

I have put my best possible effort to do this research and collect the necessary information to learn about this

topic thoroughly.

RESEARCH DESISGN OF THE STUDY

This report is based on primary as well secondary data, however primary data collection was given more

importance since it is overhearing factor in attitude studies.

Sampling Technique: The tool used for smpling is Simple random sampling.

Types of researches:The type of research conducted is Descriptive Research.

Primary data: The tool used for collection of primary data is Questionnaire.

Secondary data: secondary data is collected through Company database, magazines, newspaper.

Sample size: The sample size on which the reseach is conducted is 100.

Area of Observation: The sample was selected from the area of Delhi NCR.

45

2.3 LIMITATIONS

This research is a descriptive research and in these types of researches, the researcher has no control

over the variables. He can only report what has happened or what is happening.

For such a wide research topic, a sample size of around 100 is not sufficient.

Insufficient sample unit.

Time constraint.

Matching the time with the clients.

Getting in contact with the clients.

Communication Gap between the clients and the surveyor.

Downfall of the secondary market made people reluctant of opening a trading account.

People involved in trading were not in favor of switching over to some other company for trading.

46

CHAPTER- 3

Data Analysis & Interpretation

47

DATA ANALYSIS

1. Do you know about the Investment Option available?

85%

15%

yesno

Interpretation

As the above table shows the knowledge of Investor out of 100 respondent carried throughout the Delhi-

NCR Area is only 85%. The remaining 15% take his/her residential property as an investment. According to

law purpose this is not an investment because of it is not create any profit for the owner. The main problem

is that in this time from year 2012-2013 , the recession and the Inflation make the investor think before

investing a even a Rs. 100.So , it also create the problem for the Investor to not take interest in Investment

option.

48

2. What is the basic purpose of your Investments?

Liqidity

Return

Capital Appreciation

Tax Benefits

Risk Covering

Others

0% 5% 10% 15% 20% 25% 30%

%AGE

Interpretation

As with the above analysis, it is found 75% people are interested in liquidity, returns and tax benefits. And

remaining 25% are interested in capital appreciations, risk covering, and others. In the entire respondent it is

common that this time everyone is looking for minimizing the risk and maximizing their profit with the short

time of period.

As explaining them About the Portfolio Management Services of India Infoline Limited, they were quite

interested in Protech Services.

49

3. What is the most important factor you consider at the time of Investment?

Risk Return

Both

0%

10%

20%

30%

40%

50%

60%

70%

12%23%

65%

%AGE

Interpretation

As the above analysis gives the clear idea that most of the Investors considered the market factor as around

12% for Risk and 23% Return, but most important common things in all are that they are even ready for

taking both Risk and Return in around 65% investor.

Moreover, the Market is fluctuating now days, so as it also getting improvement. So, Investor are looking for

Investment in long term and Short-term.

50

4. From which option you will get the best returns?

Mutual Funds

Shares

Commodities Market

Fixed Deposits

Bonds

Property

Others

20%

22%

16%

18%

8%

14%

2%

PERCENATGE OF RESPODENTS

Interpretation

Most of the respondents say they will get more returns in Share Market. Since Share Market

is said to be the best place to invest to get more returns. The risk in the investment is also

high.

Similarly, the Investor are more Interested in Investing their money in Mutual Fund

Schemes as that is also very important financial product due to its nature of minimizing risk

and maximizing the profit. As the commodities market is doing well from last few months

so Investor also prefer to invest their money in Commodities Market basically in GOLD

nowadays.

Moreover, even who don’t want to take Risk they are looking for investing in Fixed Deposit

for long period of time.

51

5. “Investing in PMS is far safer than Investing in Mutual Fund”. Do you agree?

Yes No

%Age of Respodents 76% 24%

5%

15%

25%

35%

45%

55%

65%

75%

76%

24%

Interpretation

In the above graphs it’s clear that 24% of respondent out of hundred feel that investing their

money in Mutual Fund Scheme are far safer than Investing in PMS. this is because of lack of

proper information about the Portfolio management services. As the basis is same for the

mutual fund and PMS but the investment pattern is totally different from each other and

which depends upon different risk factor available in both the Financial Products.

52

6. How much you carry the expectation in Rise of your Income from Investments?

Interpretation

The optimism is shown in the attitude of the respondents. The confidence was appreciable

with which they are looking forward to a rise in their investments. Major part of the sample

feels that the rise would be of around 15%. Only 8% of the respondents were confident

enough to expect a rise of upto 35%.

As all the respondents were considering the Risk factor also before filling the questionnaire

and they were asking about the performance report of all the PMS services offered by India

Infoline Limited.

53

7. If you invested in Share Market, what has been your experience?

Interpretation

20% of the respondents have invested in Share market and received satisfactory returns, 40%

of the respondents have not at all invested in Share Market. Some of the investors face

problems due to less knowledge about the market. Some of the respondents don’t have

complete overview of the happenings and invest their money in wrong shares which result in

Loss. This is the reason most of the respondents prefer Portfolio Management Services to

trade now a days, which gives the Investor the clear idea when is the right time to buy and

right time to sell the shares which is recommended by their Fund Manger.

54

8. How do you trade in Share Market?

Interpretation

As we know that Share market is totally based on psychological parameters of Investors, which changed as

per the market condition, but at the same time the around 45% investor trade on the basis of speculation and

31% depend upon Investment option Bonds, Mutual Funds etc.

Moreover, the now a day’s Hedging is most common derivatives tools which is used by the Investor to get

more return from the Market ,this is mostly used in the Commodities Market.

55

9. How do you manage your Portfolio?

Self 57%

Depends on the Company for Portfolio

43%

%of Respodents

Interpretation

About 57% of the respondents say they themselves manage their portfolio and 43% of the respondents say

they depends on the security company for portfolio Management. 43% of the respondents prefer PMS of the

company because they don’t have to keep a close eye on their investment; they get all the information time

to time from their Fund Manager.

Moreover, talking about the India Infoline Limited PMS services they are far satisfied with the Protech and

Prop rime Performance during last year. They are satisfied with the quick and active services of India

Infoline Limited customer services where, they get the updated knowledge about the scrip detail everyday

from their Fund Manager.

56

10. If you trade with India Infoline Limited then why?

Services22%

Investment Tips are good15%

Brokerage28%

Research35%

Interpretation

As the above research shows the reasons and the parameters on which investor lie on India

Infoline Limited and they do the trade.

Among hundred respondents 35% respondents do the trade with the company due to its

research Report, 28% based on Brokerage Rate whereas 22 % are happy with its Services.

Last but not the least, 15% respondents are depends upon the tips of India Infoline Limited

which gives them idea where to invest and when to invest.

At the time of research what I found is that still India Infoline Limited need to make the

clients more knowledge about their PMS product.

57

11. Are you using Portfolio Management services (PMS) of India Infoline Limited?

Yes56%

No44%

Interpretation

As talking about the Investment option, in most of clients it was common that they know

about the Option but as the PMS of India Infoline Limited have different Product offering,

Product Characteristics and the Investment amount is also different this makes the clients to

think differently.

It is found that 56% of India Infoline LImited client where using PMS services as for their

Investment Option.

58

12. Which Portfolio Type you preferred?

Equity Debt Balanced

%Age of Respodents 45% 27% 28%

3%

8%

13%

18%

23%

28%

33%

38%

43%

48%45%

27%

28%

Interpretation

The above analysis shows, in which portfolio the investor like to deal more in PMS.

As 45% investor likes to go for Equity Portfolio and 28% with Balanced Portfolio, whereas

around 27% investor like to, go for Debt Portfolio.

59

13. How was your experience about Portfolio Management services (PMS) of India

Infoline Limited?

Earned

Faced Loss

No Profit No Loss Situation

5% 15% 25% 35% 45% 55%Earned Faced Loss No Profit No Loss

Situation

%Age of Respon-dents

0.52 0.18 0.3

Interpretation

In the above analysis it is clear that the Investor have the good and the bad experience both

with the iifl PMS services.

In this current scenario 52% of the Investor earned, whereas around 18% have to suffer

losses in the market. Similarly 30% of the Respondents are there in Breakeven Point (BEP),

where no loss and no profit.

60

14. Does India Infoline Limited keep it PMS process Transparent?

63%

37%

YesNo

Interpretation

The above analysis is talking about the India Infoline Limited Transparency of their PMS services. In

hundred respondents 63% said that they get all the information about their scrip buying and selling

information day by day, where as 37% of respondents are not satisfied with the PMS information and

Transparency because they don’t get any type of extra services in PMS as they were saying.

61

15. Do you recommend India Infoline Limited PMS to others?

Yes86%

No14%

Interpretation

The above analysis shows the Investor perception toward the India Infoline Limited PMS as

on the basis of their good and bad experience with India Infoline Limited. Among hundred

respondents 86% respondents were agree to recommend the PMS of India Infoline Limited

to their peers, relatives etc.

62

CHAPTER- 4Findings

FINDINGS

63

About 85% Respondents knows about the Investment Option, because remaining 15% take his /her

residential property as Investment, but in actual it not an investment philosophy carries that all the

Investment does not create any profit for the owner.

More than 75% Investors are investing their money for Liquidity, Return and Tax benefits.

At the time of Investment the Investors basically considered the both Risk and Return in more %age

around 65%.

As among all Investment Option for Investor the most important area to get more return is share

around 22%after that Mutual Fund and other comes into existence.

More than 76% of Investors feels that PMS is less risky than investing money in Mutual Funds.

As expected return from the Market more than 48% respondents expect the rise in Income more than

15%, 32% respondents are expecting between 15-25% return.

As the experience from the Market more than 34% Investor had lose their money during the

concerned year, whereas 20% respondents have got satisfied return.

About 45% respondents do the Trade in the Market with Derivatives Tools Speculation compare to

24% through Hedging .And the rest 31% trade their money in Investments.

Around 57% residents manage their Portfolio through the different company whereas 43%Investor

manage their portfolio themselves.

The most important reasons for doing trade with India Infoline Limited is India Infoline Limited

Research Department than its Brokerage rate Structure.

Out of hundred respondents 56% respondents are using India Infoline Limited PMS services.

64

Investors preferred more than 45% equity Portfolio, 28%Balanceed Portfolio and about 27% Debt

Portfolio with India Infoline Limited PMS.

About 52% Respondents earned through India Infoline Limited PMS product, whereas 18% investor

faced loses also.

More than 63% Investor are happy with the Transparency system of India Infoline Limited.

As based on the good and bad experience with India Infoline Limited around 86% are ready to

recommended the PMS of India Infoline Limited to their peers, relatives etc.

65

CHAPTER- 5Recommendations

66

RECOMMENDATIONS

The company should organize seminars and similar activities to enhance the knowledge of

prospective and existing customers, so that they feel more comfortable while investing in the stock

market.

Companies must make Investors feel safe about their money invested.

Investor’s accounts must be kept more transparent as compared to other companies.

India Infoline Limited must try to promote more its Portfolio Management Services through

Advertisements.

India Infoline Limited needs to improve its Customer Services

There is need to change the lock in period in all three PMS i.e.Protech, Proprime, Pro Arbitrage.

67

CONCLUSION:

On the basis of the study it is found that India Infoline Limited is better services provider than the other

stockbrokers because of their timely research and personalized advice on what stocks to buy and sell. India

Infoline Ltd. provides the facility of Trade tiger as well as relationship manager facility for encouragement

and protects the interest of the investors. It also provides the information through the internet and mobile

alerts that what IPO’s are coming in the market and it also provides its research on the future prospect of the

IPO. We can conclude the following with above analysis.

India Infoline Ltd has better Portfolio Management services than Other Companies

It keeps its process more transparent.

It gives more returns to its investors.

It charges are less than other portfolio Management Services

It provides daily updates about the stocks information.

Investors are looking for those investment options where they get maximum returns with less returns.

Market is becoming complex & it means that the individual investor will not have the time to play stock game on his own.

People are not so much ware aware about the Investment option available in the Market.

68

ANNEXURE

69

QUESTIONNAIRE

NAME: AGE:

OCCUPATION: PHONE NO:

1. Do you know about the Investments Option available?

a. YES

b. NO

2. What is the basic purpose of your Investments?

a. Liquidity

b. Return

c. Tax Benefits

d. Risk Covering

e. Capital Appreciation

f. Others

3. What is the most important factor you consider at the time of Investment?

a. Risk

b. Return

c. Both

4. From which option you will get the best returns?

a. Mutual Funds

b. Shares

c. Commodities Market

d. Bonds

e. Fixed Deposits

f. Property

g. Others

70

5. “Investing in PMS is far safer than Investing in Mutual Fund”. Do you agree?

a. Yes

b. No

6. How much you carry the expectation in Rise of your Income from Investments?

a. Upto 15%

b. 15-25%

c. 25-35%

d. More than 35%

7. If you invested in Share Market, what has been your experience?

a. Satisfactory Return

b. Burned Finger

c. Unsatisfactory Results

d. No

8. How do you trade in Share Market?

a. Hedging

b. Speculation

c. Investment

9. How do you manage your Portfolio?

a. Self

b. Depends on the company for portfolio

10. If, you trade with India Infoline Limited then why?

a. Research

b. Brokerage

c. Services

d. Investments Tips

11. Are you using Portfolio Management services (PMS) of India Infoline Limited?

71

a. Yes

b. No

12. Which Portfolio Type you preferred?

a. Equity

b. Debt

c. Balanced

13. How was your experience about Portfolio Management services (PMS) of India Infoline

Limited?

a. Earned

b. Faced Loss

c. No profit No loss

14. Does India Infoline Limited keep it PMS process Transparent?

a. Yes

b. No

15. Do you recommend India Infoline Limited PMS to others?

a. Yes

b. No

72

BIBLIOGRAPHY

73

BIBLIOGRAPHY

MAGAZINE: -

Business World

WEBSITES:-

www.sebi.gov.in

www.moneycontrol.com

www.karvy.com

www.yahoofinance.com

www.nseindia.com

www.bseindia.com

www.indiainfoline.com

www.5paisa.com

www.HDFCsec.com

74