Reliance Money Project (1st Jan to 30 June)

8/6/2019 Reliance Money Project (1st Jan to 30 June)

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PREFACE

Private sector is one of the fastest growing sectors in the country. After the Liberalizationthe Private industry still holds vast opportunities for young and experienced

professionals. On the life insurance side public sector life insurance Corporation of Indiais, of course, the largest player with a history of over 50 years. After Privatization, thePSU has been making efforts to improve efficiency and customer services. Among theprivate life insurance player Reliance life insurance is the key player. Reliance money -Anil Dhirubhai Ambani Group offers most dynamic web based trading environment to itscustomers .The Reliance Money stock trading websites uses special security features'Security Token', which makes you online trading experience more secure withoutcomplexity. Reliance ADG provide the vast opportunities to the new aspirants of thebusiness administration. The financial Sector is full of competition even if there are a lotof opportunities to the job in Reliance Money and It is the platform to go on the highestpeak in the life of any coming one. Reliance Money is a single window that provides the

multi system facilities of the financial Products. There are many companies in the marketwhich are providing the financial product like insurance, demat account services, mutualfunds, general insurance, Portfolio management services(PMS), wealth management,gold coins, Money changing , Money Transfer, and the others. Hence Reliance Moneyprovides many financial products on the single window. Reliance money deals with theproduct and Investment options are available in...

Equity (Stock) Trading

Derivatives Trading Special feature is available first time to track

your positions online, in real time.

Forex Trading

Commodity Trading

IPO's

Mutual Funds

Insurance

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ABSTRACT

This project has been a great learning experience for me; at the same time itgave me enough scope to implement my analytical ability. This project as a

whole can be divided into two parts:

The first part gives an insight about the mutual funds and its variousaspects. It is purely based on whatever I learned at Reliance Money. One canhave a brief knowledge about Mutual funds and all its basics through the

project. Other than that the real servings come when one moves ahead. Someof the most interesting questions regarding mutual funds have been covered.Apart from Mutual Funds a light has also been through on equity.

All the topics have been covered in a very systematic way. The language hasbeen kept simple so that even a layman could understand. All the datas havebeen well analyzed with the help of charts and graphs.

The second part consists of data and their analysis, collected through asurvey done on 200 people. It covers the topic Awareness and Impact levelamong people about Equity and Mutual fund. The data collected has been

well organized and presented. Hope the research findings and conclusionswill be of use. It has also covered why people dont want to go in invest?The advisors can take further steps to approach more and more people andindulge them for taking their advices.

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SCOPE OF THE STUDY

The scope of the study refers to the job that to know about the activities ofthe organization. The study means that the analysis of the products of thecompany on which he/she has to focus.

During the training days the volunteer need to find out the corporatestrategies of the running company and the mile stone which the company hascovered during its journey. In the summer training, it is necessary for thestudent that he /she involve with the experience guys to get the knowledgeabout the company. That is how the company has got the success, Or if it is

going in the loss, why.

During this training period I have found that the reliance group is the biggestgroup in Indian companies. I felt that I can learn the more in the RelianceMoney and Reliance Mutual Fund.

Reliance Money and Reliance Mutual fund is the part of the RelianceCapital Limited which is a growing company in the financial products.

Reliance Anil Dhirubhai Ambani group is also deals in communication,

energy, natural resources, media, and entertainment, healthcare andinfrastructure.

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COMPANY PROFILE

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RELIANCE CAPITAL: INTRODUCTION

RELIAReliance Capital Ltd is a part of the Reliance - Anil DhirubhaiAmbani Group and is now ranked among the 25 most valuable privatecompanies in India.

Reliance Capital is one of Indias leading and fastest growing private sectorfinancial services companies, and ranks among the top 3 private sectorfinancial services and banking groups, in terms of net worth.

Reliance Capital has interests in asset management and mutual funds, lifeand general insurance, private equity and proprietary investments, stock

broking, depository services, distribution of financial products, consumerfinance and other activities in financial services.

The Reliance Anil Dhirubhai Ambani Group currently has a marketcapitalization of over Rest. 112,000 crore (US$ 24 billion), net worth in

excess of Rs. 58,000 crore (US$ 12 billion), cash flows of Rs. 12,000 crore(US$ 3 billion), net profit of Rs. 8,000 crore (US$ 2 billion) and zero netdebt.

Reliance Capital is a constituent of S&P CNX Nifty and MSCI India andalso features in the Forbes list of Worlds largest 2000 public companies.

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Chairman's Profile

Regarded as one of the foremost corporate leaders of contemporary India, Shri Anil D

Ambani, 50, is the chairman of all listed companies of the Reliance ADA Group, namely,

Reliance Communications, Reliance Capital, Reliance Energy, Reliance Natural

Resources and Reliance Power.

He is also Chairman of the Board of Governors of Dhirubhai AmbaniInstitute of Information and Communication Technology, Gandhi Nagar,Gujarat.

Till recently, he also held the post of Vice Chairman and Managing Directorin Reliance Industries Limited (RIL), India's largest private sector enterprise.

Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, andwas centrally involved in every aspect of the company's management overthe next 22 years.

He is credited with having pioneered a number of path-breaking financialinnovations in the Indian capital markets. He spearheaded the country's first

forays into the overseas capital markets with international public offerings ofglobal depositary receipts, convertibles and bonds. Starting in 1991, hedirected Reliance Industries in its efforts to raise over US$ 2 billion. He alsosteered the 100-year Yankee bond issue for the company in January 1997.

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He is a member of:

Wharton Board of Overseers, The Wharton School, USA

Central Advisory Committee, Central Electricity Regulatory Commission

Board of Governors, Indian Institute of Management, Ahmedabad

Board of Governors Indian Institute of Technology, Kanpur

In June 2004, he was elected for a six-year term as an independent memberof the Rajya Sabha, Upper House of Indias Parliament a position he choseto resign voluntarily on March 25, 2006.

Awards and Achievements

Conferred the CEO of the Year 2004 in the Platts Global Energy Awards

Rated as one of Indias Most Admired CEOs for the sixth consecutive yearin the Business Barons TNS Mode opinion poll, 2004

Conferred The Entrepreneur of the Decade Award by the BombayManagement Association, October 2002

Awarded the First Wharton Indian Alumni Award by the Wharton IndiaEconomic Forum (WIEF) in recognition of his contribution to theestablishment of Reliance as a global leader in many of its business areas,December 2001

Selected by Asiaweek magazine for its list of Leaders of the Millennium in

Business and Finance and was introduced as the only new hero inBusiness and Finance from India, June 1999

Amitabh Jhunjhunwala, Vice-Chairman

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Shri Amitabhabh Jhunjhunwala, 51, is a Fellow Chartered Accountant. Hehas vast experience in the areas of financial services and capital markets.Shri Jhunjhunwala was appointed to the Board on March 7, 2003 and wasappointed Vice Chairman on March 20, 2006. He is a Director on the Boardof Harmony Art Foundation and Reliance Anil Dhirubhai Ambani GroupPvt. Ltd.

About Reliance Money in brief

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Reliance money

Is a part of the reliance Anil Dhirubhai Ambani Group and is promoted byReliance capital, the fastest growing private sector financial servicescompany in India, ranked amongst the top 3 private sector financialcompanies in terms of net worth. Reliance money is a comprehensivefinancial solution provider that enables you to carry out trading andinvestment activities in a secure, cost-effective and convenient manner.Through reliance money, you can invest in a wide range of asset classes

from Equity, Equity and commodity Derivatives, Mutual Funds, insuranceproducts, IPOs to availing services of Money Transfer & Money changing.Reliance Money offers the convenience of on-line and offline transactionsthrough a variety of means, including its Portal, Call & Transact,Transaction Kiosks and at its network of affiliates.

Some key steps of the company that are as..

Reliance Capital

Reliance Life Insurance

Reliance General Insurance

Reliance Money

Reliance Consumer Finance

Reliance

Mutual fund

Reliance Money

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Reliance Money is a group company of Reliance Capital; one of India's

leading and fastest growing private sector financial services companies,

ranking among the top 3 private sector financial services and banking

companies, in terms of net worth. Reliance Capital is a part of the Reliance

Anil Dhirubhai Ambani Group.

Reliance Money is a comprehensive electronic transaction platform offering

a wide range of asset classes. Its Endeavour is to change the way India

transacts in financial markets and avails financial services. Reliance Money

is a single window, enabling you to access, amongst others in Equities,

Equity & Commodities Derivatives, Mutual Funds, IPOs, Life & General

Insurance products, Offshore Investments, Money Transfer, Money

Changing and Credit Card About Us

Reliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani

Group, and is ranked among the 25 most valuable private companies in

India.

Reliance Capital is one of India's leading and fastest growing private sector

financial services companies, and ranks among the top 3 private sector

financial services and banking groups, in terms of net worth.

Reliance Capital has interests in asset management and mutual funds, life

and general insurance, private equity and proprietary investments, stock

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broking, depository services, distribution of financial products, consumer

finance and other activities in financial services.

The Reliance Anil Dhirubhai Ambani Group is one of India's top 2 business

houses, and has a market capitalization of over Rs.2,90,000 crore (US$ 75

billion), net worth in excess of Rs.55,000 crore (US$ 14 billion), cash flows

of Rs. 11,000 crore (US$ 2.8 billion) and net profit of Rs. 7,700 crore (US$

1.9 billion)

Reliance Capital's stock brokerage arm, Reliance Money brings trading

closer to customers by bringing internet trading services through web

enabled retail kiosks. It is India's first company to provide share trading

through web enabled retail kiosks providing users an transaction portal

through anytime-anywhere access through which they can invest in various

financial instruments in a secure environment. These kiosks will be like

ATMs, and will also act as the groups financial services portal, where they

can buy a whole host of financial products. This will essentially help

investors have access to the trading terminal even if they are away from their

desktops and laptops.

Introducing one of the most secured way of online

share trading where users will not only. By having their personalized

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username and password but will be provided with each individual electronic

gadget called token to generate a second level password in terms of digits.

The password provided by the token will be valid for only 20 seconds or else

a fresh token has to be generated. Any token assigned to one user for their

account can be accessed only by that particular/single user and will not

generate any login if used by any other user. Reliance Money is the only

player to have introduced such high ended technology first time in India for

a share trading platform.

It also provides an unique platform wherein any user can invest in various

financial instruments like Mutual Funds, Commodities, Derivatives, IPO's,

Forex and Insurance. It also provides an unmatched lowest brokerage in the

country.

Success is a journey, not a destination.If we look for examples toprove this quote then we can find many but there is none like that ofReliance Money. The company which is today known as the largest financial

service provider of India.

Success sutras of Reliance Money

The success story of the company is driven by 9 success sutras adopted by itnamely

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Trust, Integrity, Dedication, Commitment, Enterprise, Hard work,

Home work, Team work play, Learning and Innovation, Empathy

and Humility and last but not the least its the Network .These are the values that bind success with Reliance Money.

Vision of Reliance Money

To achieve & sustain market leadership, Reliance Money shall aim forcomplete customer satisfaction, by combining its human and technologicalresources, to provide world class quality services. In the process RelianceMoney shall strive to meet and exceed customer's satisfaction and setindustry standards.

Mission statement

Our mission is to be a leading and preferred service provider to

our customers, and we aim to achieve this leadership position by

building an innovative, enterprising , and technology driven

organization which will set the highest standards of service and

business ethics.

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Largest Indian brokerage with

Million customers & largest distribution Network

8,512 outlets in over 4,250 locations

713,636 broking accounts

Daily average volume of Rs. 20 billion

Revenue for FY08 Rs. 2.4 billion

Break even in first year of operations

PARTNERS OF COMPANY

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Equity

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Commodities

A single platform to trade on both the major commodity exchanges i.e.NCDEX and MCX. In addition In-house research desk shall provide

research reports on all major commodities which shall enable in gettingviews for trading and diversify clients holdings. Trade Execution assistanceis also provided to clients.

Structured Products, Art Investments

Structured Products is a new class of financial products for investorsapprehensive of increased volatility in stock markets. Specially designed

products could include Equity, Index-linked in nature, Real Estate Funds,Art Funds, Overseas Investments and Infrastructure Investments.

Tax planning

With a view to provide complete wealth management solutions, RelianceMoneys wealth management offerings include tax related services like: TaxPlanning & advisory Filing Tax returns for individuals

Real Estate Advisory Services

Broking Model for lease/rent and buy/sell of property Property ValuationReal-estate Consulting Corporate earnings model, Lease rentals, etc.

Offshore Investments

Reliance Money provides a unique opportunity to invest in internationalfinancial markets through the online platform which includes different

product ranges.

MUTUAL FUNDS AN UNDERSTANDING

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Like most developed and developing countries the mutual fund cult has beencatching on in India. There are various reasons for this. Mutual funds makeit easy and less costly for investors to satisfy their need for capital growth,income and/or income preservation.

And in addition to this a mutual fund brings the benefits of diversificationand money management to the individual investor, providing an opportunityfor financial success that was once available only to a select few.

Understanding Mutual funds is easy as it's such a simple concept: a mutualfund is a company that pools the money of many investors -- its shareholders-- to invest in a variety of different securities. Investments may be in stocks,

bonds, money market securities or some combination of these. Thosesecurities are professionally managed on behalf of the shareholders, and

each investor holds a pro rata share of the portfolio -- entitled to any profitswhen the securities are sold, but subject to any losses in value as well.

For the individual investor, mutual funds provide the benefit of havingsomeone else manage your investments and diversify your money overmany different securities that may not be available or affordable to youotherwise. Today, minimum investment requirements on many funds arelow enough that even the smallest investor can get started in mutual funds.

A mutual fund, by its very nature, is diversified -- its assets are invested inmany different securities. Beyond that, there are many different types ofmutual funds with different objectives and levels of growth potential,furthering your chances to diversify.

Mutual Funds Definition

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Mutual funds have large sums of money to invest and often they tradecommission-free and have personal contacts at the brokerage firms.

Conclusion

By investing in stocks you can get more return than mutual funds but, byinvesting in mutual funds your risk is lower. Mutual funds are great forfunding retirement plans and investors that don't have the time or energy toconsider individual stocks.

It is noticeable that most expert traders in stock market invest in mutualfunds too. I recommend investing in both of mutual funds and stocks but, ifyou have experience, time and energy you can invest most of your money inindividual stocks.

The Concept of Mutual Fund

A mutual fund is a common pool of money into which investors place theircontributions that are to be invested in accordance with a stated objective.The ownership of the fund is thus joint and mutual; the fund belongs toall investors.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of theconcept of mutual fund by UTI in the year 1963. Though the growth wasslow, but it accelerated from the year 1987 when non-UTI players enteredthe industry.

In the past decade, Indian mutual fund industry had seen a dramaticimprovement, both qualities wise as well as quantity wise. Before, themonopoly of the market had seen an ending phase; the Assets underManagement (AUM) was Rs. 67bn. The private sector entry to the fundfamily raised the AUM to Rs. 470 bn in March 1993 and till April 2004; itreached the height of 1,540 bn.

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Putting the AUM of the Indian Mutual Funds Industry into comparison, thetotal of it is less than the deposits of SBI alone, constitute less than 11% ofthe total deposits held by the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in Indiais new in the country. Large sections of Indian investors are yet to beintellectuated with the concept. Hence, it is the prime responsibility of allmutual fund companies, to market the product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according tothe development of the sector. Each phase is briefly described as under.

How to Invest in Mutual Funds?

Mutual funds normally come out with an advertisement in newspaperspublishing the date of launch of the new schemes. Investors can also contactthe agents and distributors of mutual funds who are spread all over thecountry for necessary information and application forms. Forms can bedeposited with mutual funds through the agents and distributors who providesuch services. Now a day, the post offices and banks also distribute the units

of mutual funds. However, the investors may please note that the mutualfunds schemes being marketed by banks and post offices should not be takenas their own schemes and no assurance of returns is given by them. The onlyrole of banks and post offices is to help in distribution of mutual fundsschemes to the investors.

Investors should not be carried away by commission/gifts given byagents/distributors for investing in a particular scheme. On the other handthey must consider the track record of the mutual fund and should takeobjective decisions.

Non-Resident Indians(NRI)

can also invest inmutual funds

. Normally,necessary details in this respect are given in the offer documents of theSchemes

Can Mutual Fund Change Schemes?

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Yes. They Can However, no change in the nature or terms of the scheme,known as fundamental attributes of the Mutual Fund e.g. structure,investment pattern, etc. can be carried out unless a written communication issent to each unit holder and an advertisement is given in one English dailyhaving nationwide circulation and in a newspaper published in the languageof the region where the head office of the mutual fund is situated. The unitholders have the right to exit the Mutual Fund at the prevailing NAVwithout any exit load if they do not want to continue with the scheme. Themutual funds are also required to follow similar procedure while convertingthe scheme form close-ended to open-ended scheme and in case of change insponsor.

The mutual funds are required to inform any material changes to their unitholders. Apart from it, many mutual funds send quarterly newsletters to theirinvestors.

At present, offer documents are required to be revised and updated at leastonce in two years. In the meantime, new investors are informed about thematerial changes by way of addendum to the offer document till the timeoffer document is revised and reprinted.

Where do the Mutual Funds Invest?

How to check it

The mutual funds are required to disclose full portfolios of all of their

schemes on half-yearly basis which are published in the newspapers. Somemutual funds send the portfolios to their unit holders.

The scheme portfolio shows investment made in each security i.e. equity,debentures, money market instruments, government securities, etc. and theirquantity, market value and % to NAV. These portfolio statements alsorequired to disclose illiquid securities in the portfolio, investment made inrated and unrated debt securities, non-performing assets ( NPAs), etc.

Some of the mutual funds send newsletters to the unit holders on quarterlybasis which also contain portfolios of the schemes.

What is Assured Return Scheme?

In Mutual Funds, Assured Return Schemes are those schemes that assure aspecific return to the unitholders irrespective of performance of the scheme.

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A scheme cannot promise returns unless such returns are fully guaranteed bythe sponsor or AMC and this is required to be disclosed in the offerdocument.

Investors should carefully read the offer document whether return is assured

for the entire period of the scheme or only for a certain period. Someschemes assure returns one year at a time and they review and change it atthe beginning of the next year.

What is Tax Saving Schemes?

In India, Tax Saving Schemes schemes offer tax rebates to the investorsunder specific provisions of the Income Tax Act, 1961 as the Governmentoffers tax incentives for investment in specified avenues. E.g. EquityLinked Savings Schemes (ELSS).

Pension schemes launched by the mutual funds also offer tax benefits.These schemes are growth oriented and invest pre-dominantly in equities.Their growth opportunities and risks associated are like any equity-orientedscheme.

What are Load Funds / No Load Funds?

A Load Fund is one that charges a percentage of NAV for entry or exit.That is, each time one buys or sells units in the fund, a charge will be

payable. This charge is used by the mutual fund for marketing anddistribution expenses. Suppose the NAV per unit is Rs.10. If the entry aswell as exit load charged is 1%, then the investors who buy would berequired to pay Rs.10.10 and those who offer their units for repurchase to themutual fund will get only Rs.9.90 per unit. The investors should take theloads into consideration while making investment as these affect theiryields/returns. However, the investors should also consider the performancetrack record and service standards of the mutual fund which are moreimportant. Efficient Mutual funds may give higher returns in spite of loads.

A no-load fund is one that does not charge for entry or exit. It means theinvestors can enter the fund/scheme at NAV and no additional charges arepayable on purchase or sale of units.

What is NET ASSET VALUE?

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The Term Net Asset Value (NAV) is used by investment companies tomeasure net assets. It is calculated by subtracting liabilities from the valueof a fund's securities and other items of value and dividing this by thenumber of outstanding shares. Net asset value is popularly used innewspaper mutual fund tables to designate the price per share for the fund.

The value of a collective investment fund based on the market price ofsecurities held in its portfolio. Units in open ended funds are valued usingthis measure. Closed ended investment trusts have a net asset value but havea separate market value. NAV per share is calculated by dividing this figure

by the number of ordinary shares. Investments trusts can trade at net assetvalue or their price can be at a premium or discount to NAV.

Value or purchase price of a share of stock in a mutual fund. NAV iscalculated each day by taking the closing market value of all securitiesowned plus all other assets such as cash, subtracting all liabilities, thendividing the result (total net assets) by the total number of sharesoutstanding.

Calculating NAVs - Calculating mutual fund net asset values is easy.Simply take the current market value of the fund's net assets (securities held

by the fund minus any liabilities) and divide by the number of sharesoutstanding. So if a fund had net assets of Rs.50 lakh and there are one lakhshares of the fund, then the price per share (orNAV) is Rs.50.00.

PHASES:

First Phase - 1964-87:

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Unit Trust of India (UTI) was established on 1963 by an Act of Parliament.It was set up by the Reserve Bank of India and functioned under theRegulatory and administrative control of the Reserve Bank of India. In 1978UTI was de-linked from the RBI and the Industrial Development Bank ofIndia (IDBI) took over the regulatory and administrative control in place ofRBI. The first scheme launched by UTI was Unit Scheme 1964. At the endof 1988 UTI had Rs.6,700 crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds):

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed byCan bank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank ofBaroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of

1993 marked Rs.47, 004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds):

With the entry of private sector funds in 1993, a new era started in theIndian mutual fund industry, giving the Indian investors a wider choice offund families. Also, 1993 was the year in which the first Mutual FundRegulations came into being, under which all mutual funds, except UTI were

to be registered and governed. The erstwhile Kothari Pioneer (now mergedwith Franklin Templeton) was the first private sector mutual fund registeredin July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a morecomprehensive and revised Mutual Fund Regulations in 1996. The industrynow functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreignmutual funds setting up funds in India and also the industry has witnessedseveral mergers and acquisitions. As at the end of January 2003, there were33 mutual funds with total assets of Rs. 1, 21,805 crores. The Unit Trust ofIndia with Rs.44, 541 crores of assets under management was way ahead ofother mutual funds.

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Fourth Phase - since February 2003:

This phase had bitter experience for UTI. It was bifurcated into twoseparate entities. One is the Specified Undertaking of the Unit Trust of Indiawith AUM of Rs.29, 835 crores (as on January 2003). The SpecifiedUndertaking of Unit Trust of India, functioning under an administrator andunder the rules framed by Government of India and does not come under the

purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB andLIC. It is registered with SEBI and functions under the Mutual FundRegulations. With the bifurcation of the erstwhile UTI which had in March2000 more than Rs.76, 000 crores of AUM and with the setting up of a UTIMutual Fund, conforming to the SEBI Mutual Fund Regulations, and withrecent mergers taking place among different private sector funds, the mutualfund industry has entered its current phase of consolidation and growth.

As at the end of September, 2004, there were 29 funds, which manage assets

of Rs.153108 crores under 421 schemes.

GROWTH IN ASSETS UNDER MANAGEMENT

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Note:

Erstwhile UTI was bifurcated into UTI Mutual Fund and the SpecifiedUndertaking of the Unit Trust of India effective from February 2003. TheAssets under management of the Specified Undertaking of the Unit Trust of

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India has therefore been excluded from the total assets of the industry as awhole from February 2003 onwards.

Mutual Fund Companies in India

The concept of mutual funds in India dates back to the year1963. The era between 1963 and 1987 marked the existanceof only one mutual fund company in India with Rs. 67bnassets under management (AUM), by the end of itsmonopoly era, the Unit Trust of India (UTI). By the end of the80s decade, few other mutual fund companies in India took

their position in mutual fund market.

The new entries of mutual fund companies in India were SBIMutual Fund, Canbank Mutual Fund, Punjab National BankMutual Fund, Indian Bank Mutual Fund, Bank of India MutualFund.

The succeeding decade showed a new horizon in Indian mutual fundindustry. By the end of 1993, the total AUM of the industry was Rs. 470.04

bn. The private sector funds started penetrating the fund families. In thesame year the first Mutual Fund Regulations came into existence with re-registering all mutual funds except UTI. The regulations were further givena revised shape in 1996.

Kothari Pioneer was the first private sector mutual fund company in Indiawhich has now merged with Franklin Templeton. Just after ten years with

private sector players penetration, the total assets rose up to Rs. 1218.05 bn.Today there are 33 mutual fund companies in India.

Major Mutual Fund Companies in India

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1) ABN AMRO M F

2) AIG Global Investment Group M F

3) Alliance Capital M F

4) Baroda pioneer

5) Benchmark

6) Bharti Axa

7) Birla sunlife

8) Canara Robeco

9) DBS Chola

10) Deutsche

11) DSP Blackhorse

12) EDELWEISS

13) ESCORTS

14) FIDELITY15) FORTIS

16) FRANKLIN

17) GIC

18) GOLDMAN

19) HDFC

20) HSBC

21) ICICI PRUDENTIAL

22) IDFC

23) IL&F24) ING

25) JM FINACIAL

26) JP MORGAN

27) KOTAK MAHINDRA

28) LIC

29) MIRAE ASSET

30) MORGAN STANLEY

31) PNB

32) PRINCIPAL

33) QUANTUM34) RELIANCE

35) RELIGARE

36) RELIGARE AEGON

37) SAHARA

38) SBI

39) SHINSEI

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40) STANDERD CHARTED

41) SUN F&C

42) SUNDARAM BNP PARIBAS

43) TATA

44) TAURUS

45) UTI

46) ZURICH INDIA

ABN AMRO Mutual Fund:

ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMROTrustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMROAsset Management (India) Ltd. was incorporated on November 4, 2003.

Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund:

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group andSun Life Financial. Sun Life Financial is a global organization evolved in1871 and is being represented in Canada, the US, the Philippines, Japan,Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fundfollows a conservative long-term approach to investment. Recently it

crossed AUM of Rs. 10,000 crores.

Bank of Baroda Mutual Fund (BOB Mutual Fund):

Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October30, 1992 under the sponsorship of Bank of Baroda. BOB Asset ManagementCompany Limited is the AMC of BOB Mutual Fund and was incorporatedon November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund:

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HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namelyHousing Development Finance Corporation Limited and Standard LifeInvestments Limited.

HSBC Mutual Fund:

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities andCapital Markets (India) Private Limited as the sponsor. Board of Trustees,HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund:

ING Vysya Mutual Fund was setup on February 11, 1999 with the samenamed Trustee Company. It is a joint venture of Vysya and ING. The AMC,ING Investment Management (India) Pvt. Ltd. was incorporated on April 6,1998.

Prudential ICICI Mutual Fund:

The mutual fund of ICICI is a joint venture with Prudential Plc. of America,one of the largest life insurance companies in the US of A. Prudential ICICIMutual Fund was setup on 13th of October, 1993 with two sponsor,

Prudential Plc. and ICICI Ltd. The Trustee Company formed is PrudentialICICI Trust Ltd. and the AMC is Prudential ICICI Asset ManagementCompany LimitedIncorporated on 22nd of June, 1993.

Sahara Mutual Fund:

Sahara Mutual Fund was set up on July 18, 1996 with Sahara India

Financial Corporation Ltd. as the sponsor. Sahara Asset ManagementCompany Private Limited incorporated on August 31, 1995 works as theAMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs25.8 crore.

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Unit Trust of India Mutual Fund:

UTI Asset Management Company Private Limited,established in Jan 14, 2003, manages the UTI Mutual Fundwith the support of UTI Trustee Company Private Limited. UTIAsset Management Company presently manages a corpus ofover Rs.20000 Crore. The sponsorers of UTI Mutual Fund areBank of Baroda (BOB), Punjab National Bank (PNB), StateBank of India (SBI), and Life Insurance Corporationof India (LIC). The schemes of UTI Mutual Fund are Liquid

Funds, Income Funds, Asset Management Funds, IndexFunds, Equity Funds and Balance Funds.

Standard Chartered Mutual Fund:

Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered TrusteeCompany Pvt. Ltd. Standard Chartered Asset Management Company Pvt.Ltd. is the AMC which was incorporated with SEBI on December 20, 1999.

Franklin Templeton India Mutual Fund:

The group, Franklin Templeton Investments is a California (USA) based

company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It isone of the largest financial services groups in the world. Investors can buy orsell the Mutual Fund through their financial advisor or through mail orthrough their website. They have Open end Diversified Equity schemes,Open end Sector Equity schemes, Open end Hybrid schemes, Open end TaxSaving schemes, Open end Income and Liquid schemes, closed end Incomeschemes and Open end Fund of Funds schemes to offer.

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Morgan Stanley Mutual Fund India:

Morgan Stanley is a worldwide financial services company and its leadingin the market in securities, investment management and credit services.

Morgan Stanley Investment Management (MISM) was established in theyear 1975. It provides customized asset management services and productsto governments, corporations, pension funds and non-profit organizations.Its services are also extended to high net worth individuals and retailinvestors. In India it is known as Morgan Stanley Investment ManagementPrivate Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund(MSMF). This is the first close end diversified equity scheme serving theneeds ofIndian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund:

Escorts Mutual Fund was setup on April 15, 1996 with Escorts FinanceLimited as its sponsor. The Trustee Company is Escorts Investment TrustLimited. Its AMC was incorporated on December 1, 1995 with the nameEscorts Asset Management Limited.

Alliance Capital Mutual Fund:

Alliance Capital Mutual Fund was setup on December 30, 1994 withAlliance Capital Management Corp. of Delaware (USA) as sponsored. TheTrustee is ACAM Trust Company Pvt. Ltd. And AMC, the Alliance CapitalAsset Management India (Pvt) Ltd. With the corporate office in Mumbai.

Benchmark Mutual Fund:

Benchmark Mutual Fund was setup on June 12, 2001 with Niche FinancialServices Pvt. Ltd. as the sponsored and Benchmark Trustee Company Pvt.

Ltd. as the Trustee Company. Incorporated on October 16, 2000 andheadquartered in Mumbai, Benchmark Asset Management Company Pvt.Ltd. is the AMC.

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constituted as a Trust in accordance with the provisions ofthe Indian Trusts Act, 1882

Future of Mutual Funds in India

By December 2004, Indian mutual fund industry reached Rs1, 50,537 crore. It is estimated that by 2010 March-end, thetotal assets of all scheduled commercial banks should be Rs40, 90,000 crore.

The annual composite rate of growth is expected 13.4%during the rest of the decade. In the last 5 years we haveseen annual growth rate of 9%. According to the currentgrowth rate, by year 2010, mutual fund assets will bedouble.

Let us discuss with the following table:

Aggregate deposits of Scheduled Com Banks in India (Rs.Crore)

Month/Year

Mar-98

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Sep-04

4-Dec

Deposits

605410

851593

989141

1131188

1280853

- 1567251

1622579

Changein %overlast yr

15 14 13 12 - 18 3

Source RBI

Mutual Fund AUMs Growth

Month/Year

Mar-98

Mar-00

Mar-01

Mar-02

Mar-03

Mar-04

Sep-04

4-Dec

MFAUM's

68984 93717 83131 94017 75306 137626

151141

149300

Changein %

26 13 12 25 45 9 1

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overlast yrSource AMFI

Some facts for the growth of mutual funds in India

100% growth in the last 6 years.

Number of foreign AMCs is in the queue to enter the Indian marketslike Fidelity Investments, US based, with over US$1trillion assetsunder management worldwide.

Our saving rate is over 23%, highest in the world. Only channelizingthese savings in mutual funds sector is required.

We have approximately 46s mutual funds which is much less than UShaving more than 800. There is a big scope for expansion.

'B' and 'C' class cities are growing rapidly. Today most of the mutualfunds are concentrating on the 'A' class cities. Soon they will find

scope in the growing cities.

Mutual fund can penetrate rural like the Indian insurance industrywith simple and limited products.

SEBI allowing the MF's to launch commodity mutual funds.

Emphasis on better corporate governance.

Trying to curb the late trading practices.

Introduction of Financial Planners who can provide need basedadvice.

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CATAGORIES OF MUTUAL FUND

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WHY INVEST IN MUTUAL FUNDS

Investing in mutual has various benefits, which makes it anideal investment avenue. Following are some of the primarybenefits:

Professional investment management

One of the primary benefits of mutual funds is that aninvestor has access to professional management. A goodinvestment manager is certainly worth the fees you will pay.Good mutual fund managers with an excellent researchteam can do a better job of monitoring the companies theyhave chosen to invest in than you can, unless you have timeto spend on researching the companies you select for your

portfolio. That is because Mutual funds hire full-time, high-level investment professionals.

Funds can afford to do so as they manage large pools ofmoney. The managers have real-time access to crucialmarket information and are able to execute trades on thelargest and most cost-effective scale. When you buy amutual fund, the primary asset you are buying is themanager, who will be controlling which assets are chosen tomeet the funds' stated investment objectives.

Reliance Mutual Fund

Reliance Mutual Fund (RMF), a part of the Reliance - AnilDhirubhai Ambani Group, is India's leading Mutual Fund, withaverage Assets under Management of Rs. 90,813 crores for

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the month of June 2008, and an investor base of over 6.7million. Reliance Mutual Fund offers investors a well roundedportfolio of products to meet varying investor requirements.Reliance Mutual Fund has a presence in 300 cities across the

country and constantly endeavors to launch innovativeproducts and customer service initiatives to increase valueto investors. Reliance Mutual Fund schemes are managed byReliance Capital Asset Management Ltd., a wholly ownedsubsidiary of Reliance Capital Ltd.

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Types of Reliance Mutual Funds

1. Reliance Growth Fund

2. Reliance Vision Fund

3. Reliance Banking Fund

4. Reliance Diversified Power Sector Fund

5. Reliance Pharma Fund

6. Reliance Media & Entertainment Fund

7. Reliance NRI Equity Fund

8. Reliance Equity opportunities Fund

9. Reliance Index Fund

10. Reliance Tax Saver (ELSS) Fund

11. Reliance Equity Fund

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12. Reliance Long Term Equity Fund

13. Reliance Regular Saving Fund

There are two types of investment in Mutual Funds

Lump Sum

Systematic Investment Plan (SIP)

1.) Lump sum: In Lump sum the investment is only one times that

is of Rs. 5,000. And if the investment is monthly then the investment will be6,000/-.

2.) Systematic Investment Plan (SIP):

We have already mentioned about Sips in brief in the previous pages butnow going into details, we will see how the power of compounding could

benefit us. In such case, every small amounts invested regularly can growsubstantially. SIP gives a clear picture of how an early and regularinvestment can help the investor in wealth creation. Due to its unlimited

advantages SIP could be redefined as a methodology of fund investingregularly to benefit regularly from the stock market volatility. In the latersections we will see how returns generated from some of the Sips haveoutperformed their benchmark.

But before moving on to that lets have a look at some of the top performingSips and their return for 1 year:

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In the above chart, we can see how if we start investing Rs.1000 per month

then what return well get for the total investment of Rs. 12000. There isreliance diversified power sector retail giving the maximum returns of Rs.2524.07 per year which comes to 21% roughly. Next we can see if anybodywould have undertaken the SIP in Principal would have got returns of app.18%. We can see reliance regular savings equity, DWS investmentopportunities and BOB growth fund giving returns of 13.20%, 14.92%, and14.74% respectively which is greater than any other monthly investmentoptions. Thus we can easily make out how SIP is beneficial for us. Its hasslefree, it forces the investors to save and get them into the habit of saving.Also paying a small amount of Rs. 1000 is easy and convenient for them,

thus putting no pressure on their pockets.

Now we will analyze some of the equity fund SIP s of Birla Sun life withBSE 200 and bank fixed deposits In a tabular format as well as graphical.

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Working of a Mutual Fund

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Advantages of Mutual Funds

Diversification: The best mutual funds design their portfolios soindividual investments will react differently to the same economic

conditions. For example, economic conditions like a rise in interestrates may cause certain securities in a diversified portfolio to decreasein value. Other securities in the portfolio will respond to the sameeconomic conditions by increasing in value. When a portfolio is

balanced in this way, the value of the overall portfolio shouldgradually increase over time, even if some securities lose value.

Professional Management: Most mutual funds pay topflight professionals to manage their investments. These managers decidewhat securities the fund will buy and sell.

Regulatory oversight: Mutual funds are subject to many governmentregulations that protect investors from fraud.

Liquidity: It's easy to get your money out of a mutual fund. Write acheck, make a call, and you've got the cash.

Convenience: You can usually buy mutual fund shares by mail,phone, or over the Internet.

Low cost:Mutual fund expenses are often no more than 1.5 percentof your investment. Expenses for Index Funds are less than that,

because index funds are not actively managed. Instead, theyautomatically buy stock in companies that are listed on a specificindex.

Transparency

Flexibility

Choice of schemes

Tax benefits

Drawbacks of Mutual Funds

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Mutual funds have their drawbacks and may not be for everyone:

No Guarantees: No investment is risk free. If the entire stock market

declines in value, the value of mutual fund shares will go down aswell, no matter how balanced the portfolio. Investors encounter fewerrisks when they invest in mutual funds than when they buy and sellstocks on their own. However, anyone who invests through a mutualfund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to covertheir day-to-day expenses. Some funds also charge sales commissionsor "loads" to compensate brokers, financial consultants, or financial

planners. Even if you don't use a broker or other financial adviser, you

will pay a sales commission if you buy shares in a Load Fund.

Taxes: During a typical year, most actively managed mutual fundssell anywhere from 20 to 70 percent of the securities in their

portfolios. If your fund makes a profit on its sales, you will pay taxeson the income you receive, even if you reinvest the money you made.

What Is STOCK MARKET

HISTORY OF STOCK EXCHANGES

The history of stock exchanges can be traced to 12th century France,

when the first brokers are believed to have developed, trading in debt and

government securities. Unofficial share markets existed across Europe

through the 1600s, where brokers would meet outside or in coffee houses to

make trades. The Amsterdam Stock Exchange, created in 1602, became the

first official stock exchange when it began trading shares of the Dutch East

India Company. These were the first company shares ever issued.

By the early 1700s there were fully operational stock exchanges in

France and England, and America followed in the later part of the century.

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2. Mobilizing savings for investment

When people draw their savings and invest

in shares, it leads to a more rational allocation of resources because funds,

which could have been consumed, or kept in idle deposits with banks, are

mobilized and redirected to promote business activity with benefits for

several economic sectors such as agriculture, commerce and industry,

resulting in a strongereconomic growth and higherproductivity levels.

3. Facilitating company growth

Companies view acquisitions as an opportunity

to expand product lines, increase distribution channels, hedge against

volatility, increase its market share, or acquire other necessary business

assets. A takeoverbid or a merger agreement through the stock market is

one of the simplest and most common ways for a company to grow by

acquisition or fusion.

4. Redistribution of wealth

By giving a wide spectrum of people a chance to

buy shares and therefore become part-owners (shareholders) ofprofitable

enterprises, the stock market may help to reduce large income inequalities.

However, capital losses may also happen. Both casual and professional stock

investors through stock price increases and dividends get a chance to share

in the profits of promising business that were set up by other people.

5. Corporate governance

By having a wide and varied scope of owners,

companies generally tend to improve on their management standards and

efficiency in order to satisfy the demands of these shareholders and the more

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stringent rules for public corporations imposed by public stock exchanges

and the government. Consequently, it is alleged that public companies

(companies that are owned by shareholders who are members of the general

public and trade shares on public exchanges) tend to have better

management records thanprivately-held companies (those companies where

shares are not publicly traded, often owned by the company founders and/or

their families and heirs, or otherwise by a small group of investors).

However, some well-documented cases are known where it is alleged that

there has been considerable slippage in corporate governance on the part of

some public companies (e.g.Enron Corporation, MCI WorldCom, Pets.com,

Webvan, orParmalat).

6. Creating investment opportunities for small investors

As opposed to other

businesses that require huge capital outlay, investing in shares is open to

both the large and small stock investors because a person buys the number of

shares they can afford. Therefore the Stock Exchange provides the

opportunity for small investors to own shares of the same companies as large

investors, and to enjoy similar rates of return.

7. Government capital-raising for development projects

Governments at various

levels may decide to borrow money in order to finance infrastructure

projects such as sewage and water treatment works or housing estates by

selling another category of securities known asbonds. These bonds can be

raised through the Stock Exchange whereby members of the public buy

them, thus loaning money to the government. The issuance of such

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municipal bonds can obviate the need to directly tax the citizens in order to

finance development, although by securing such bonds with the full faith

and credit of the government instead of with collateral, the result is that the

government must tax the citizens or otherwise raise additional funds to make

any regular coupon payments and refund the principal when the bonds

mature.

8. Barometer of the economy

At the stock exchange, share prices rise and fall

depending, largely, on market forces. Share prices tend to rise or remain

stable when companies and the economy in general show signs of stability

and growth. An economic recession, depression, or financial crisis could

eventually lead to a stock market crash. Therefore the movement of share

prices and in general of the stock indexes can be an indicator of the general

trend in the economy.

HISTORY OF INDIAN STOCK MARKETS

The concept of stock markets came to India in 1875, when Bombay Stock

Exchange (BSE) was established as The Native Share and Stockbrokers

Association', a voluntary non-profit making association. BSE is the oldest in

Asia. Presently India has about 10,000 listed companies, the largest number

of listed companies in the world. Stock exchanges in India can be

categorized as: 1) Voluntary Associations such as Bombay, Indore and

Ahmedabad, 2) Public limited companies such as Calcutta and Delhi, and 3)

Guarantee companies such as Hyderabad, Madras and Bangalore. Besides

BSE, India's other major stock exchange is National Stock Exchange (NSE)

that was promoted by leading financial institutions and was established in

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April 1993. Today, these global stock exchanges have become premier

institutions and are highly efficient, computerized organizations that have

fostered the growth of an open, global securities market.

Stock Exchanges are an organised marketplace, either corporation or mutual

organisation, where members of the organisation gather to trade company

stocks and other securities. The members may act either as agents for their

customers, or as principals for their own accounts.

Stock exchanges also facilitates for the issue and redemption of securities

and other financial instruments including the payment of income and

dividends. The record keeping is central but trade is linked to such physical

place because modern markets are computerised. The trade on an exchange

is only by members and stock broker do have a seat on the exchange. The

total number of Stock Exchanges in India is 22.

List of Stock Exchanges In India

Ahmedabad Stock Exchange

Bangalore Stock Exchange

Bhubaneswar Stock Exchange (BhSE)

Bombay Stock Exchange (BSE)

Calcutta Stock Exchange

Cochin Stock Exchange

Coimbatore Stock Exchange

Delhi Stock Exchange Association

Gauhati Stock Exchange

Hyderabad Stock Exchange

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Inter-connected Stock Exchange of India

Jaipur Stock Exchange

Ludhiana Stock Exchange Association

Madhya Pradesh Stock Exchange

Madras Stock Exchange

Mangalore Stock Exchange

National Stock Exchange of India (NSE)

OTC Exchange of India (OTCEI)

Pune Stock Exchange

Saurashtra-Kutch Stock Exchange

Uttar Pradesh Stock Association

Vadodara Stock Exchange

Importance of stock market

The stock market is one of the most important sources forcompanies to raise

money. This allows businesses to go public, or raise additional capital for

expansion. The liquidity that an exchange provides affords investors the

ability to quickly and easily sell securities. This is an attractive feature of

investing in stocks, compared to other less liquid investments such as real

estate.History has shown that the price ofshares and other assets is an

important part of the dynamics of economic activity, and can influence or be

an indicator of social mood. Rising share prices, for instance, tend to be

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associated with increased business investment and vice versa. Share prices

also affect the wealth of households and their consumption. Therefore,

central banks tend to keep an eye on the control and behavior of the stock

market and, in general, on the smooth operation offinancial system

functions. Financial stability is the raison d'tre of central banks. Exchanges

also act as the clearinghouse for each transaction, meaning that they collect

and deliver the shares, and guarantee payment to the seller of a security. This

eliminates the risk to an individual buyer or seller that the counterparty

could default on the transaction. The smooth functioning of all these

activities facilitates economic growth in that lower costs and enterprise risks

promote the production of goods and services as well as employment. In this

way the financial system contributes to increased prosperity.

National Stock Exchange of India (NSE)

History of the National Stock Exchange of India:

Capital market reforms in India and the launch of the Securities and

Exchange Board of India (SEBI) accelerated the incorporation of the second

Indian stock exchange called the National Stock Exchange (NSE) in 1992.

After a few years of operations, the NSE has become the largest stock

exchange in India.

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Three segments of the NSE trading platform were established one after

another. The Wholesale Debt Market (WDM) commenced operations in

June 1994 and the Capital Market (CM) segment was opened at the end of

1994. Finally, the Futures and Options segment began operating in 2000.

Today the NSE takes the 14th position in the top 40 futures exchanges in the

world.

In 1996, the National Stock Exchange of India launched S&P CNX Nifty

and CNX Junior Indices that make up 100 most liquid stocks in India. CNX

Nifty is a diversified index of 50 stocks from 25 different economy sectors.

The Indices are owned and managed by India Index Services and ProductsLtd (IISL) that has a consulting and licensing agreement with Standard &

Poor's.

In 1998, the National Stock Exchange of India launched its web-site and was

the first exchange in India that started trading stock on the Internet in 2000.

The NSE has also proved its leadership in the Indian financial market by

gaining many awards such as 'Best IT Usage Award' by Computer Society in

India (in 1996 and 1997) and CHIP Web Award by CHIP magazine (1999).

About the National Stock Exchange of India:

In the fast growing Indian financial market, there are 22 stock exchanges

trading securities. The National Stock Exchange of India (NSE) situated in

Mumbai - is the largest and most advanced exchange with 1016 companies

listed and 726 trading members.

The NSE is owned by the group of leading financial institutions such as

Indian Bank or Life Insurance Corporation of India. However, in the totally

de-modularized Exchange, the ownership as well as the management does

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not have a right to trade on the Exchange. Only qualified traders can be

involved in the securities trading.

The NSE is one of the few exchanges in the world trading all types of

securities on a single platform, which is divided into three segments:

Wholesale Debt Market (WDM), Capital Market (CM), and Futures &

Options (F&O) Market. Each segment has experienced a significant growth

throughout a few years of their launch. While the WDM segment has

accumulated the annual growth of over 36% since its opening in 1994, the

CM segment has increased by even 61% during the same period.

The National Stock Exchange of India has stringent requirements and

criteria for the companies listed on the Exchange. Minimum capital

requirements, project appraisal, and company's track record are just a few of

the criteria. In addition, listed companies pay variable listing fees based on

their corporate capital size.

The National Stock Exchange of India Ltd. provides its clients with a single,

fully electronic trading platform that is operated through a VSAT network.Unlike most world exchanges, the NSE uses the satellite communication

system that connects traders from 345 Indian cities. The advanced

technologies enable up to 6 million trades to be operated daily on the NSE

trading platform.

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BOMBAY STOCK EXCHANGE (BSE)

The Bombay Stock Exchange Limited (formerly, The Stock Exchange,Mumbai; popularly called The Bombay Stock Exchange, orBSE) is the

oldest stock exchange in Asia. It is located at Dalal Street, Mumbai, India.

The Bombay Stock Exchange was established in 1875. There are around

3,500 Indian companies listed with the stock exchange, and has a significant

trading volume. At October 2006, the market capitalization of the BSE was

about Rs. 33.4 trillion (US $ 730 billion). The BSE SENSEX (SENSitive

indEX), also called the "BSE 30", is a widely used market index in India and

Asia. As of 2005, it is among the five biggest stock exchanges in the world

in terms of transactions volume.

The oldest exchange in Asia and the first exchange in the country to be

granted permanent recognition under the Securities Contract Regulation Act,

1956, Bombay Stock Exchange Limited (BSE) has had an interesting rise to

prominence over the past 130 years.

While the BSE is now synonymous with Dalal Street, it wasnt always so. In

fact the first venues of the earliest stock broker meetings in the 1850s were

amidst rather natural environs - under banyan trees - in front of the Town

Hall, where Horniman Circle is now situated. A decade later, the brokers

moved their venue to another set of foliage, this time under banyan trees at

the junction of Meadows Street and Mahatma Gandhi Road. As the number

of brokers increased, they had to shift from place to place, and wherever

they went, through sheer habit, they overflowed in to the streets. At last, in

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1874, found a permanent place, and one that they could, quite literally, call

their own. The new place was, aptly, called Dalal Street.

The journey of BSE is as eventful and interesting as the history of Indias

securities markets. Indias biggest bourse, in terms of listed companies and

market capitalisation, BSE has played a pioneering role in the Indian

Securities Market - one of the oldest in the world. Much before actual

legislations were enacted, BSE had formulated comprehensive set of Rules

and Regulations for the Indian Capital Markets. It also laid down best

practices adopted by the Indian Capital Markets after India gained its

Independence.

Perhaps, there would not be any leading corporate in India, which has not

sourced BSEs services in resource mobilization.

BSE as a brand is synonymous with capital markets in India. The BSE

SENSEX is the benchmark equity index that reflects the robustness of the

economy and finance. At par with international standards, BSE has been a

pioneer in several areas. It has several firsts to its credit even in an intenselycompetitive environment.

First in India to introduce Equity Derivatives

First in India to launch a Free Float Index

First in India to launch US$ version of BSE Sensex

First in India to launch Exchange Enabled Internet Trading Platform

First in India to obtain ISO certification for Surveillance, Clearing &

Settlement

'BSE On-Line Trading System (BOLT) has been awarded the globally

recognised the Information Security Management System standard

BS7799-2:2002.

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First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of a nationwide

investor awareness campaign - Safe Investing in the Stock Market - under

which nationwide awareness campaigns and dissemination of information

through print and electronic medium was undertaken. BSE also actively

promoted the securities market awareness campaign of the Securities and

Exchange Board of India.

In 2002, the name The Stock Exchange, Mumbai, was changed to BSE.

BSE, which had introduced securities trading in India, replaced its open

outcry system of trading in 1995, when the totally automated trading through

the BSE Online trading (BOLT) system was put into practice. The BOLT

network was expanded, nationwide, in 1997. It was at the BSE's

International Convention Hall that Indias 1st Bell ringing ceremony in the

history Capital Markets was held on February 18th, 2002. It was the listing

ceremony of Bharti Tele ventures Ltd.

BSE with its long history of capital market development is fully geared to

continue its contributions to further the growth of the securities markets of

the country, thus helping India increase its sphere of influence in

international financial markets.

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Hats are bear and bull markets?

A bull market is one where prices are rising, whereas a bear market is onewhere prices are falling. The two terms are also used to describe types of

investors. These terms gives a general impression of how the market isdoing. This article covers:

What drives bull and bear markets? How to predict bull and bear markets? What do you about the conditions in bull and bear markets?

The media as well as investors often use terms such as bull market and bearmarket. They give a general impression of how the market is doing. A bullmarket is one where prices are rising, whereas a bear market is one where

prices are falling. The two terms are also used to describe types of investors.A stock market bull is someone who has a very optimistic view of themarket; they may be stock-holders or maybe investors who aggressively buyand sell stocks quickly. A bear investor, on the other hand, is pessimisticabout the market and may make more conservative stock choices.Sometimes, the terms are used to refer to specific funds or stocks. Bearmarket funds, for example, are those that are falling and faring poorly.Investors sometimes refer to bull stocks to describe securities that areaggressively rising and making their investors money.

Knowing what is meant by the bear and bull market can help you understandwhether the market is currently rising or falling. There is no need to getfrightened by a bear market indicator; however, as experts agree that themarket is cyclical. When prices start falling, they will eventually recoup.

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What are derivatives?

The term derivative refers to an asset that has no independent value, butderives its value from that of an underlying asset. The underlying asset

could be securities, commodities, bullion, currency, livestock or any thingelse. A very simple example of derivative is petrol, which is derived fromoil. The price of petrol depends upon the price of oil, which in turn dependsupon the demand and supply of oil. In this discuses derivatives, where theunderlying asset or an index.

Benefits of trading in derivatives:

Trading in derivative offers four advantages:

1.) It allows you are speculate.

2.) It allows you are to hedge.

3.) It allows you to undertake arbitrage activities.

4.) It allows you to buy on margin.

1.) It allows you to speculate: if you have a view on where the marketwill move, you can cash in on this view by using derivative.

2.) It allows you to hedge: derivatives are very effective riskmanagement instruments. You can use derivatives to cap your

potential losses in the underlying asset.3.) It allows you to undertake arbitrage activity: you can derivatives to

take advantage of the differences in prices of the derivative productand the underlying asset.

4.) It allows you to buy on margin: when you purchase a derivative

product a derivative product, you simply have to pay a fraction of theprice of the traded value. In order words, you dont have to pay u thefull value of the at the time of the transaction.

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There are two types of actively traded equity derivative instrument:

1.) Options

2.) Futures

Both options and futures are traded on the stock exchanges and canbe bought and sold through a registered stockbroker.

The value of both instruments depends on the spot price (currentmarket price) of the underlying asset.

Both these derivative instruments can have a validity of 1 month, 2months or three months. In order words, if you buy a one month

derivative instrument, it will expire after the completion of thespecified one month tenure.

About options:

An option is a type of derivative contract that gives the buyer the right(butnot the obligation or the liability), to buy or sell a specified quantity of theunderlying asset(in this case, stocks or an index) at an agreed

price(strike/exercise price) on or before the specified futuredate(expiration date). You can purchase an option for a price calledpremium. :

What is an option?

An option contract gives the buyer the right, but not the obligation to buy/sell an underlying asset at a pre-determined price on or before aspecified time. The option buyer acquires a right, while the option sellertakes on an obligation. It is the buyers prerogative to exercise the acquired

right. If and when the right is exercised, the seller has to honour it. Theunderlying asset for option contracts may be stocks, indices, commodityfutures, currency or interest rates

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American options: it can be exercised by the holder on or before theexpiration date, i.e. any time between the day of purchase of the optionand the day of its expiry.

European options: it can be exercised by the holder on the expirationday only and not any time before that.In India, stock options of the American type, while index options re ofthe European type.

3.)Call and put options:

Put options.

Call options.

put option :An option contract that gives the holdertheright to sell a certain quantity of an underlying security tothe writerof the option, at a specifiedprice (strike price) upto a specified date (expiration date); here also calledput.

Introduction to Put Writing:

Learningput writing is one of the building blocks of skills in options

strategies. A naked put or selling a put is a strategy with which an investorwrites a put contract. The investor is therefore said to be "short the puts". Byselling the contract to the put buyer, the investor has sold the right to sellshares at a specific price. Thus, the put buyer now has the right to sell sharesto the put seller.

Selling a put is advantageous to an investor because he or she will receivethe premium in exchange for committing to buy shares at the strike price. Ifthe price of the stock falls below the strike price, the put seller will have to

purchase shares from the put buyer when the option is exercised. Therefore,

a put seller usually has a neutral/positive outlook on the stock or expects adecrease in volatility, with which he or she can create a profitable position.

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Why Would You Consider This Strategy?

Put writing can be a very profitable method not only for generating incomebut also for entering a stock at a predetermined price. Put writing generatesincome since the writer of any option contract receives the premium whilethe buyer obtains the option rights. If timed correctly, a put writing strategycan generate profits for the seller as long as he or she is not forced to buyshares of the underlying stock. Thus, one of the major risks the put sellerfaces is the possibility of the stock price falling below the strike price,forcing the put seller to buy shares. Also note that the amount of money ormargin that is required in such an event will be much larger than the option

premium itself. These concepts will become clearer once we consider an

example.

Instead of using the premium-collection strategy, a put writer might want topurchase shares at a predetermined price that is lower than the market price.In this case, the put writer would sell a put at a strike price below the market

price and collect the premium. Such an trader would be eager to purchaseshares at the strike price, and, as an added advantage, he or she makes a

profit on the option premium if the price remains high. Note, however, thatthe downside to this strategy is that the trader is buying a stock that is fallingor has fallen. Also, since you have agreed to pay a certain price for theshares, you will suffer a significant loss if the shares fall significantly belowthe strike price.

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An Example to Put Things into Perspective

Say ABC stock trades for $75 and its one-month $70 puts trade for $3. A putwriter would sell the $70 puts into the market and collect the $300 [$3 x100] premium. Such a trader expects the price of ABC to trade above $67 inthe coming month, as represented below:

Thus, we see that the trader is exposed to increasing losses as the price of thestock falls below $67. For example, at a share price of $65, the put seller isstill obligated to buy shares of ABC at the strike price of $70. He or shetherefore would face a loss of $200, which is calculated as the following:$6500 (market value) - $7000 (price paid) + $300 (premium collected).

Case Closed

To close out the outstanding put prior to expiry, the put seller would

purchase back the put contract in the open market. If the price of the stockhas remained c

Reliance Money Project (1st Jan to 30 June)

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Transcript of Reliance Money Project (1st Jan to 30 June)