SUMMER TRAINING PROJECT REPORT

On

Investors Perception towards Mutual Fund

Prepared and Presented to

SHAREKHAN LIMITED
Under the guidance of

Sambhav Singh Dr. Shekhar Srivastava

Sales Manager Astt. Professor

Submitted In The Partial Fulfilment For The Award Of Post Graduate Diploma In
Management, Equivalent To MBA By AICTE Batch: 2016-2018

By
Saurabh Dixit, 1542
PGDM

International Institute for Special Education

Certificate from the ORG
Certificated from the HOD
 PREFACE

Myself Saurabh Dixit, student of International Institute For Special Education,

Lucknow, who is presently undertaking education in the spare of Post Graduate Diploma In
Management which covers total business activities.

As students of management, I must be encouraged by the growth and rapid

developments taken place in Various Sectors, in India. Still recently, management is growing
baby. Keeping in mind the ever development field of management and great demand for
Finance in our country, our College (IISE) has arranged specialization program in many field
of management. Thus, it is our moral and obligatory duty to take this part of our studies with
great enthusiasm and seriousness and give it the due importance.

My report gives information about the Investors Perception Towards Mutual

Fund. The report contains graphical representation & interpretation with each graphs and
charts. For the preparation of this report, I have used simple random sampling method for
survey purpose. This training proved to be an experience, which is required to become a true
student of management and administration.
 Acknowledgement

I express my deep sense of gratitude towards my guide,DR. Shekhar Srivastava

without whose kind help this project study would have been extremely difficult. She has
helped me with her valuable suggestions right from the beginning till the final draft of the
report. The sheer mention of my project study shall ever commemorate her kind guidance.

I am also grateful to Mrs. Varsha Patel, faculty of the Vivekanand College for B.B.A.
for his kind effort to make all the required facilities available and gave his valuable
suggestions in preparing this project report. The library facility of the college has been of
immense use to me for reference of books and old project reports.

I am also thankful to Mr. Zubin Bhatporia (Associate Vice President) of Sharekhan

Ltd., Surat for giving me an opportunity for getting in valuable experience in such reputed
organization.

I am also thankful to Mr. Darwin Variava who is presently working with Sharekhan
Limited for providing me actual training and the required knowledge & guidance in
completing this training successfully.

Finally, I would like to record my special thanks to my parents, friends, and

colleagues help me directly or indirectly in preparation of project work.

ASHISH L. SORATHIYA

T.Y.B.B.A (Sem-VI)
Roll No. 79
 Executive Summary
Days were gone when people only invest their money in Post offices or in Banks and
another safely fixed return investment. Today people have several choices for the investment
alternatives. Now a day, one of the most emerging choices is to invest in equities shares. To
get good return on investment, people are ready to take risks. Law always says that
investors get HIGHER RETURN if they take HIGH RISK. For high risk there is one avenue
to invest and that is Equity Market.

This Project Focused On INVESTORS BEHAVIOUR FOR INVESTING IN EQUITY

MARKET IN VARIOUS SECTORS IN SURAT CITY. Objectives behind this project are to
know investors behavior for investing in various sectors regarding equity market, to know
their preference of investment in equity market, and to know whether potential growth of
equity market is there or not.

I have used Descriptive Research Design because answers the questions who,
what, where, when and how. This study is complex and determines high degree scientific
skill to study the problem. Questionnaires are used for survey purpose and before going to
actual survey pilot testing were also done.

Sample size is of 175 respondents who are the actual and potential investors from
whole of the equity market of Surat city and also from Sharekhan Securities Pvt. Ltd. Here,
each sample has the chance to be selected on an equal basis because I have used simple
random sampling method for surveying purpose.

From research I found that 68% of investors are investing in Equity Market. While
36% of investors are not investing in Equity Market as per my sample size 175.

Means most of the customers are aware about Equity Market. There are certain
customers who are also aware about equity market but, they not want to invest in equity
market, Reasons for not investing in equity market is high risk and there are no any fixed
returns criteria and Investors age also affect in risk factor. Means old persons risk bearing
capacity is law so, investors also select investment avenue as per his/her risk bearing
capacity
 Equity share holder is real owner of the company in spite of their priority in getting
dividend is comes last.

Major Investors are investing in equity market only due to earn high return and hedge
the risk by investing their 5%-10% of income in Equity Market. 28% of investors invest in
Equity market for the period of 1 to 3 Months and the same proportion of investors are invest
for long period more than year.

On the basis of research I found that, major investors have selected Oil & gas sector
as a 1st Rank, IT sector as a 2nd Rank, Banking sector as a 3nd Rank, Automobile sector
as a 4th Rank and Infrastructure sector as a 5nd Rank.

Most of investors have considered Market trend, Price Earning Ratio, Dividend and
Profitability as a most important factor while selecting the Sector and company under the
sector.

I have used SPSS software (Statistical Package for the Social Sciences) for
analysis purpose and in that I have used graphical representation & interpretation with each
graphs and charts and Microsoft Office is used for data typing formatting and analyzing
the data.
 Executive Summary

INTRODUCTION

Investment can be defined as an item of value purchased for income or capital

appreciation. Investments are made to achieve a specific objective and savings are made to
meet an unforeseen event.

There are various avenues of investments in accordance with individual preferences.

Investments are made in different asset classes depending on an individuals risk and return
characteristics Investment choices are physical assets and financial assets.

Gold and Real estates are examples of physical assets, which have a physical form to
them. There is a strong preference for these assets, as these assets can be purchased with
cash and held for a long term. The obvious disadvantages with physical assets are the risks of
loss and theft, lower levels of return; illiquid secondary markets; and adhoc valuations and
transactions.

Financial assets are securities, which are certificates embodying a financial contract
between parties. Bonds, Equity shares, Deposits and Insurance policies are some of the
examples of financial assets. In financial assets investors only hold the proof of their
investments in the form of a certificate or account. These products are usually liquid,
transferable and in most cases, stored electronically with high degree of safety.

But a minimum amount of cash is always kept in hand for transactions and
contingencies. To face the contingencies and unexpected events the insurance came into
existence.
 Another avenue of investment is mutual funds. It is created when investors put their
money together. It is therefore a pool of the investors funds. The most important
characteristics of a mutual fund is that the contributors and the beneficiaries of the fund are
the same class of people, namely the investors. The term mutual means that investors
contribute to the pool, and also benefit from the pool. There are no other claimants to the
funds. The pool of funds held mutually by investors is the mutual fund.

A mutual fund pools the money of people with similar investment goals. The
money in turn is invested in various securities depending on the objectives of the mutual fund
scheme, and the profits (or loss) are shared among investors in proportion to their
investments.

Mutual fund schemes are usually open-ended (perpetually open for investments
and redemptions) or closed end (with a fixed term). A mutual fund scheme issues units that
are normally priced at Rs.10 during the initial offer. Thus, the number of units you own as
against the total number of units issued by the mutual fund scheme determines your share
in the profits or loss of a scheme.

In the case of open-end schemes, units can be purchased from or sold back to the
fund at a Net Asset Value (NAV) based price on all business days.

The NAV is the actual value of a unit of the fund on a given day. Thus, when you
invest in a mutual fund scheme, you normally get an account statement mentioning the
number of units that have been allotted to you and the NAV based price at which the units
have been allotted. The account statement is similar to your bank statement.

Mutual funds invest basically in three types of asset classes:

Stocks: Stocks represent ownership or equity in a company, popularly known as shares.

Bonds: These represent debt from companies, financial institutions or Government agencies.

Money market instruments: These include short-term debt instruments such as treasury
bills, certificate of deposits and inter-bank call money.

A mutual funds business is to invest the funds thus collected, according to the wishes of the
investors who created the pool. In many markets these wishes are articulated as investment
mandates.

Analysis of The perception towards these mutual funds is done here in this project.
Even what factors the investors look before investing can also be observed.
 OBJECTIVES

To understand the awareness level of the investors regarding mutual funds

To analyse the perception of investors towards mutual funds.

To study the factors considered by the investors at the time of investment.

To determine the type of mutual fund investor prefers the most.

Hypothesis
 RESEARCH METHODOLOGY

Primary data is data that is tailored to a companys needs, by customizing true approach
focus groups, survey, field-tests, interviews or observation.

Primary data delivers more specific results than secondary research, which is an
especially important consideration when one launching a new product or service. In addition,
primary research is usually based on statistical methodologies. The tiny sample can give an
accurate representation of a particular market.

Secondary data is based on information gleaned from studies previously performed

by government agencies, chambers of commerce, trade associations and other organizations.
This includes census bureau information. Much kind of this information can be found in
libraries or on the web, but looks and business publications, as well as magazines and
newspapers.

Analysis of individual investment patterns can be done by this primary data analysis.
In this project I have done a survey with a questionnaire with a sample size of 100 individuals
who are employees and tax payees. The questionnaire includes the economic status of the
individuals, age group, marital status, investments made etc.

As Sharekhan ltd. distributes several investment products like mutual funds,

insurance, shares, debentures etc. This survey will help them in developing marketing
strategies for their investment products.
S.No. TABLE OF CONTENT PAGE NO.

I CHAPTER-1 5-8
INTRODUCTION 9
OBJECTIVES 10
RESEARCH METHODOLOGY 11
LIMITATIONS
II CHAPTER-2 12-30

REVIEW OF LITERATURE
III CHAPTER-3 31-38

INDUSTRY PROFILE 39-46

COMPANY PROFILE
IV CHAPTER-4 47-70

DATA ANALYSIS & INTERPRETATION 71

FINDINGS
V CHAPTER-5 72-74

SUMMARY& CONCLUSIONS 75-76

SUGGESTIONS
VI CHAPTER- 6 77-78

BIBLIOGRAPHY
VII CHAPTER- 7 79-82

ANNEXURE
 OF BROKING FIRMS

INDUSTRY

PROFILE OF BROKING
FIRMS

The Indian retail brokerage industry

consists of companies that primarily act
as agents for the buying and selling of
securities (e.g. stocks, shares, and similar
financial instruments) on a commission or
transaction fee or Brokerage basis.

An agent that charges a fee or

commission for executing buys and sell
orders submitted by an investor. The firm
that acts as an agent for a customer,
charge the customer the commission for
its service. Roles similar to that of a
stockbroker include investment advisor,
financial advisor and probably many
others. A stockbroker may or may not be
also an investment advisor.

A stockbroker is a regulated professional broker who buys and sells shares and other
securities through market makers or Agency Only Firms on behalf of investors.
 Typically, a broker who receives an order from a customer will communicate with a
company employee located at a particular exchange, who will execute the order at the
exchange and report details of the transaction to the broker. Customers typically keep their
securities in an account with the broker. Brokers charge customers commissions for
conducting transactions and fees for maintaining their accounts.

Some of the main characteristics of the brokerage industry include growth in e-broking,
decline in brokerage fees and growing derivative market and many more.

There are several national as well as local players in stock trading services which are
providing various services to their customers like online trading, portfolio management
system, stock broking etc.

They are helping the investors to take decision about where to invest because there is
lots of Investment Avenue available with investors. Some of them are as follows working at
the national level.

5Paisa.com - Online trading, live stock quotes and market research

Anagram Capital - Stock broking, portfolio management and investment banking

services

Angel Broking -Stock-Broking and Wealth Management services

Advani Share Brokers - Share broking and market research services

Anand Rathi Securities - Portfolio management, corporate finance, equity & fixed
income brokerage services

Brescon Group - Advisory and broking services

CIL Securities - Stock broking & merchant banking services

CRN India - Trends of stock market, trading tips, chat etc

Churiwala Securities - Stock trading, quotes and market analysis

DSP Merrill Lynch - Investment banking and brokerage services

Dalmia Securities - Stock broking & depository services

Equity Trade - Stock trading, company news & market research

Gandhi Securities - Stock broking and investment services

 Gogia Capital Services - Stock broking and market analysis

Hasmukh Lalbhai - Stock trading services

Idafa Investments - Stock broking services

India Info line Securities - Stock broking, portfolio management and investment banking
services

India Market Access - Offers stock broking, portfolio management and investment
banking services

Investsmart India - Personal finance advisory & online brokerage services

Kisan Ratilal Choksey Shares - Stock broking and e-trading services

Kotak Securities - Brokerage services & retail distributor of financial securities

Manubhai Mangaldas Securities - Stock broking and market analysis

Moneypore - Investment and broking services

Motilal Oswal Securities - Online trading, live BSE and NSE quotes

Navia Markets - Stock broking, IPO and mutual funds services

Parag Parikh - Stock broking and portfolio management

Parsoli Corporation - Investment management & stock trading services

Pratibhuti Viniyog - Stock broking services

Prudential - Investment management services

Quantum Securities - Offers broking and portfolio management services.

Religare Enterprises Limited - Stock broking services and diversified financial services
group with in multiple international locations

Sivan Securities - offers services related investment banking & stock broking with a focus
on South India.

Etc..etc..

Lots of brokerage companies are moving towards consolidation with the smaller ones
becoming either franchisee for the larger brokers or closing operations. There is an increasing
demand for online trading due to consumers growing preference for Internet as compared to
approaching the brokers.
 New forms of trading including T+2 settlement system, dematerialization etc. are
strengthening the retail brokerage market and attracting foreign companies to enter the Indian
industry Various alternative forms of investment including fixed deposits with banks and post
offices etc act as substitutes to retail broking products and services.

Stock Market

Stock markets refer to a market place where investors can buy and sell stocks. The
price at which each buying and selling transaction takes is determined by the market forces
(i.e. demand and supply for a particular stock).
A stock market is a public market for the trading of company stock and derivatives at
an agreed price; these are securities listed on a stock exchange as well as those only traded
privately.

The size of the world stock market was estimated at about $36.6 trillion USD at the
beginning of October 2008.

The stock market is one of the most important sources for companies to raise
money. This allows businesses to be publicly traded, or raise additional capital for expansion
by selling shares of ownership of the company in a public market.

In fact, the stock market is often considered the primary indicator of a country's
economic strength and development. Rising share prices, for instance, tend to be associated
with increased business investment and vice versa.
 In this way, investing in stock market, the stock exchanges also play importance role.
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. So, here
we also understand about Stock Exchanges as follows.

Stock exchange

A stock exchange is an entity which provides "trading" facilities for stock brokers and
traders, to trade stocks and other securities.

Stock Exchanges are an organised marketplace, either corporation or mutual

organisation, where members of the organisation gather to trade company stocks or other
securities.

Stock exchanges also provide facilities for the issue and redemption of securities as
well as other financial instruments and capital events including the payment of income and
dividends.

The securities traded on a stock exchange include: shares issued by companies, unit
trusts, derivatives, pooled investment products and bonds. To be able to trade a security on
a certain stock exchange, it has to be listed there. Usually there is a central location at least
for recordkeeping, but trade is less and less linked to such a physical place, as modern
markets are electronic networks, which gives them advantages of speed and cost of
transactions. Trade on an exchange is by members only. The initial offering of stocks and
bonds to investors is by definition done in the primary market and subsequent trading is done
in the secondary market.

A stock exchange is often the most important component of a stock market. Supply
and demand in stock markets is driven by various factors which, as in all free markets, affect
the price of stocks.
 There is usually no compulsion to issue stock via the stock exchange itself, nor must
stock be subsequently traded on the exchange. Such trading is said to be off exchange or
over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly,
stock exchanges are part of a global market for securities.
 Major stock exchanges in the world

Twenty Major Stock Exchanges in The World: Market Capitalization & Year-to-date
Total Turnover at the end of August 2009

Where, Two major Stock Exchanges from India, which is

1. Bombay Stock Exchange

2. National Stock Exchange

List of Stock Exchanges In India

 1. Bombay Stock Exchange(BSE)
2. National Stock Exchange(NSE)
3. Regional Stock Exchanges (21)
There are 21 other regional stock exchanges, which are
AhmedabadBangalore Bhubaneshwar Calcutta CochinCoimbatore
Delhi Guwahati Hyderabad Jaipur Ludhiana Madhya Pradesh
Madras Magadh Mangalore Meerut OTC Exchange Of India Pune
Saurashtra Kutch Uttar Pradesh Vadodara etc.

Bombay Stock Exchange (BSE)

The Bombay Stock Exchange Limited is the oldest stock exchange not only in the
country, but also in Asia with a rich heritage of over 133 years of existence. In the early days,
BSE was established as "The Native Share & Stock Brokers Association."

It was established in the year 1875 and became the first stock exchange in the
country to be recognised by the government. In 1956, BSE obtained a permanent recognition
from the Government of India under the Securities Contracts (Regulation) Act, 1956.

Today, BSE is the world's number 1 exchange in terms of the number of listed
companies and the world's 5th in handling of transactions through its electronic trading
system.
The companies listed on BSE command a total market capitalization of USD Trillion
1.06 as of July, 2009.
BSE reaches to over 400 cities and town nation-wide and has around 4,937 listed
companies, with over 7745 scripts being traded as on 31st July 09.

The BSE Index, SENSEX, is India's first and most popular stock market benchmark
index. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used
market index in India and Asia. Sensex is tracked worldwide. It constitutes 30 stocks
representing 12 major sectors. The SENSEX is constructed on a 'free-float' methodology,
and is sensitive to market movements and market realities. Apart from the SENSEX, BSE
offers 23 indices, including 13 sectoral indices.

BSE provides an efficient and transparent market for trading in equity, debt
instruments and derivatives.

BSE is the first exchange in India and the second in the world to obtain an ISO
9001:2000 certifications. It is also the first exchange in the country and second in the world
to receive Information Security Management System Standard BS 7799-2-2002 certification
for its BSE On-line Trading System (BOLT).
BSE continues to innovate. In 2006, it became the first national level stock exchange
to launch its website in Gujarati and Hindi and now Marathi to reach out to a larger number
of investors.

The BSE On-line Trading (BOLT):

BSE On-line Trading (BOLT) facilitates on-line screen based trading in securities.
BOLT is currently operating in 25,000 Trader Workstations located across over 359
cities in India.

BSE Vision
The vision of the Bombay Stock Exchange is -

"To Emerge as the premier Indian stock exchange by

establishing global benchmarks."

BSE Profile

Address :- Phiroze Jeejeebhoy Towers, Dalal Street

Mumbai-400001, India
 Telephone :-91-22-227212334
Website :-www.bseindia.com
Trading hours :-Monday-Friday, 9:00am to 3:30pm
Securities :-Stocks, derivatives, debt
Trading System :-Electronic
MD & CEO :-Mr.Madhu Kannan

History of BSE
The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its
history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai's
Town Hall. The location of these meetings changed many times, as the number of brokers
constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875
became an official organization known as 'The Native Share & Stock Brokers Association'. In
1956, the BSE became the first stock exchange to be recognized by the Indian Government
under the Securities Contracts Regulation Act.

The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a
means to measure overall performance of the exchange. In 2000 the BSE used this index to
open its derivatives market, trading Sensex futures contracts. The development of Sensex
options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading
platform.

Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched
to an electronic trading system in 1995. It took the exchange only fifty days to make this
transition.

Indices of BSE:

Sensex
BSE 100(This covers Banking Sector)
BSE 200(This covers Capital goods)
BSE 500(This covers Consumer goods)
BSE mid-cap index
 BSE small-cap index

BSE mid-cap index covers the FMCG sector and BSE small-cap index covers the IT,
Metal, Oil & gas, Power industry, PSUs, etc. BSE disseminates information
on the Price-Earnings Ratio, the Price to Book Value Ratio and the Dividend Yield Percentage
on day-to-day basis of all its major indices.

The values of all BSE indices are updated every 15 seconds during market hours and
displayed through the BOLT system, BSE website and news wire agencies.

All BSE Indices are reviewed periodically by the BSE Index Committee. This
Committee which comprises eminent independent finance professionals frames the broad
policy guidelines for the development and maintenance of all BSE indices. The BSE Index
Cell carries out the day-to-day maintenance of all indices and conducts research on
development of new indices.

Awards achieved by BSE

The World Council of Corporate Governance has awarded the Golden Peacock Global
CSR Award for BSE's initiatives in Corporate Social Responsibility (CSR).

ICAI award for excellence in financial reporting for the year 2006-07

BSE has won the Asia - Pacific HRM awards for its efforts in employer branding through
talent management at work, health management at work and excellence in HR through
technology.

National Stock Exchange (NSE)

The National Stock Exchange of India Limited (NSE), is a Mumbai-based stock

exchange. It is the largest stock exchange in India in terms of daily turnover and number of
trades, for both equities and derivative trading.
NSE has a market capitalization of around Rs 47,01,923 crore (7
August 2009) and is expected to become the biggest stock exchange in India in terms of
market capitalization by 2009 end. Though a number of other exchanges exist, NSE and the
Bombay Stock Exchange are the two most significant stock exchanges in India, and between
them are responsible for the vast majority of share transactions.
NSE is mutually-owned by a set of leading financial institutions, banks, insurance
companies and other financial intermediaries in India but its ownership and management
operate as separate entities.
There are at least 2 foreign investors NYSE Euro next and Goldman Sachs who have
taken a stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover more
than 1500 cities across India.
In October 2007, the equity market capitalization of the companies listed on the NSE
was US$ 1.46 trillion, making it the second largest stock exchange in South Asia.
NSE is the third largest Stock Exchange in the world in terms of the number of trades
in equities. It is the second fastest growing stock exchange in the world with a recorded
growth of 16.6%.

Origins:

The National Stock Exchange of India was promoted by leading Financial institutions
at the behest of the Government of India, and was incorporated in November 1992 as a tax-
paying company.

In April 1993, it was recognized as a stock exchange under the Securities Contracts
(Regulation) Act, 1956.

NSE commenced operations in the Wholesale Debt Market (WDM) segment in June
1994.

The Capital Market (Equities) segment of the NSE commenced operations in

November 1994, while operations in the Derivatives segment commenced in June 2000.

Markets:

Currently, NSE has the following major segments of the capital market:

Equity
Futures and Options
Retail Debt Market
Wholesale Debt Market
 Currency futures

NSE became the first stock exchange to get approval for Interest rate futures as
recommended by SEBI-RBI committee, on 31 August,2009, a futures contract based on 7%
10 Year GOI bond (NOTIONAL) was launched with quarterly maturities.

Hours:

NSE's normal trading sessions are conducted from 9:00 am India Time to 3:30 pm
India Time on all days of the week except Saturdays, Sundays and Official Holidays declared
by the Exchange (or by the Government of India) in advance.

The exchange in association with BSE (Bombay Stock Exchange Ltd.,) thinking to
revise its timings from 9.00 am India Time till 5.00 pm India Time.

However, on Dec 17, 2009, after strong protests from brokers, the Exchange decided
to postpone the change in trading hours till Jan 04, 2010.

NSE new market timing from Jan 04, 2010 is 9:00 am till 3:30 pm India Time.

NSE Group:

National Securities Clearing Corporation Ltd. (NSCCL)

National Securities Depository Ltd. (NSDL)
India Index Services & Products Ltd. (IISL)
NSE.ITltd.
DotEx International Limited

History of N.S.E

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.

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 Products Ltd (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).

Indices of N.S.E

NSE also set up as index services firm known as India Index Services & Products
Limited (IISL) and has launched several stock indices, including:

S&P CNX Nifty(Standard & Poor's CRISIL NSE Index)

CNX Nifty Junior
CNX 100 (= S&P CNX Nifty + CNX Nifty Junior)
S&P CNX 500 (= CNX 100 + 400 major players across 72 industries)
CNX Midcap (introduced on 18 July 2005 replacing CNX Midcap 200)

Mission of N.S.E.

NSE's mission is setting the agenda for change in the securities markets in India. The
NSE was set-up with the main objectives of:

Establishing a nation-wide trading facility for equities, debt instruments and hybrids,
 Ensuring equal access to investors all over the country through an appropriate
communication network,
Providing a fair, efficient and transparent securities market to investors using
electronic trading systems,
Enabling shorter settlement cycles and book entry settlements systems, and
Meeting the current international standards of securities markets.

The standards set by NSE in terms of market practices and technology have become
industry benchmarks and are being emulated by other market participants. NSE is more than
a mere market facilitator. It's that force which is guiding the industry towards new horizons
and greater opportunities.
 COMPANY PROFILE

Company Name:
SHAREKHAN LIMITED
Parental Company: SSKI Group
(Shripal Sevantilal Kantilal Ishwarlal Pvt. Ltd)
Establishment year:
1922
CEO of the
Mr. Tarun Shah
company:
Head Office:
A-206, Phoenix House,
2nd Floor, Senapati Bapat Marg,
Lower Parel,
Mumbai- 400 013.

Surat Main Branch:

M- 1 to 6, Jolly Plaza,
(Where I have taken
Mezzanine Floor,
training)
Athwa Gate,
Surat - 395001
Telephone No: (022) 67482000
0261- 6560310-314
Online division as
Sharekhan 8th February 2000
Web Site:
www.sharekhan.com
Email:
surat@branch.sharekhan.com
Offices(Network):
More than 640 outlets in 280 cities
 INTRODUCTION OF SHAREKHAN

Sharekhan is one of the leading share broking and retail brokerage firms in the country.
It is the retail broking arm of the Mumbai-basedSSKI Group (Shripal Sevantilal Kantilal
Ishwarlal Pvt. Ltd), which has more than 88 years of experience in the stock broking
business. SSKI is a veteran equities solutions company with more than 8 decades of trust
and credibility in the Indian stock markets. It helps the customers/people to make informed
decisions and simplifies investing in stocks.

Sharekhan brings to you a user- friendly online trading facility, coupled with a wealth
of content that will help you stalk the right shares. SSKI named its online division as a
Sharekhan and it is into retail broking. The business of the company overhauled 10 years
ago on February 8, 2000. It acts as a discount brokerage house to a full service investment
solution provider. It has specialized research product for the small investors and day traders.

Sharekhans online trading and investment site ww.sharekhan.com was launched in

2000.

Though the www.sharekhan.com, have been providing investors a powerful online

trading platform, the latest news, research and other knowledge-based tools and Sharekhan's
equity related services include trade execution on BSE, NSE, Derivatives, commodities,
depository services, online trading and investment advice.

Sharekhans ground network includes over 640 Share shops across 280 cities in
India. With branches and outlets across the country, Sharekhans ground network is one of
the biggest in India!

They have talent pool of experienced professionals specially designated to guide

you when you need assistance, which is hy investigating with us is bound to be a hassle-
free experience for you!

The Sharekhan provides its Customers First Step program, built specifically for all
investors, so testament is
 YOUR GUIDE TO THE FINANCIAL JUNGLE means
Our commitment to being your guide throughout your investing lifecycle

The institutional broking arm of SSKI was also awarded Indias best broking house
for 2004 by Asia Money brokers poll recently & It has also won the prestigious Awaaz
Consumer Vote Awards 2005 for the Most Preferred Stock Broking Brand in India, in the
Investment Advisors category.

They have 640 share shops across 280 cities in India to get a host of trading related
services our friendly customer service staff will also help you with any account related
queries you may have.

Sharekhan won the award by the vote of consumers around the country, as part of
Indias largest consumer study cover 7000 respondents 21 products and services across
21 major cities. The study, initiated by Awaaz Indias first dedicated Consumer Channel
and member of the worldwide CNBC Network, & AC NielsenORG Marg, was aimed at
understanding the brand preferences of the consumers & to decipher what are the most
important loyalty criteria for the consumer in each vertical.

The reasons behind the preferences for brands were unveiled by examining the
following:

Tangible features of product / service.

Softer, intangible features like imagery, equity driving preference.
Tactical measures such as promotional / pricing schemes.
 ABOUT SHAREKHAN

SSKI named its online division as SHAREKHAN and it is into retail broking.
The business of the company overhauled 10 years ago on February 8, 2000.
It acts as a discount brokerage house to a full service investment solutions provider.
It has specialized research product for the small investors and day traders.
Largest chain of 640 shares shops in 280 cities across India.
The site was also launched on February 8, 2000 and named it as www.sharekhan.com.
The Speed Trade account of Sharekhan is the next generation technology product
launched on April 17, 2002.
It offers its customers with the trade execution facilities on the NSE and BSE, for cash as
well as derivatives, depository services.
Ensures convenience in Trading Experience: Sharekhans trading services are designed
to offer an easy, hassle free trading experience, whether trading is done daily or
occasionally. Sharekhan providing the customers with a multi-channel access to the stock
markets.
It gives advice based on extensive research to its customers and provides them with
relevant and updated information to help him make informed about his investment
decisions.
Sharekhan offers its customers the convenience of a broker-DP.
It helps the customers meet his pay in obligations on time thereby reducing the possibility
of auctions. And execute the instruction immediately on receiving it and thereafter the
customer can view his updated account statement on Internet.
Sharekhan depository services offer Demat services to individual and corporate investors.
A customer can avail of Demat, repurchase and transmission facilities at any of the
Sharekhan branches and business partners outlets.
 BRAND NAME:

The company as a whole in its offline business has named itself as SSKI Securities
Private Limited Shripal Sevantilal Kantilal Ishwarlal Securities Private Limited. The
company has preferred to name themselves under a blanket family name.

But, in its online division started since 1997, the company preferred to name itself as
SHAREKHAN. The Brand name SHAREKHAN itself suggests the business in which the
company is dealing so that the customer could easily identify the product or service category.

SHAREKHANS MISSION & VISION:

MISSION

To educate and empower the retail investor to

help him/her take better investment decisions.

VISION

To be the best retail broking brand in the Indian equities market.

ROLE OF SHAREKHAN:

Interface between the stock exchange and the investor.

Assistance to investors in precise allocation of funds.
Building awareness amongst general public about stock market.
Organisational Chart
Product Range

As a Sharekhan customer you can decide the channel through which you want to
receive different Services.
 OTHER SERVICES PROVIDED BY SHAREKHAN

1. Online Services
2. Offline Services
3. Depository Services: Demat & Remat Transactions
4. Derivatives Trading (Futures and Options)
5. Commodities Trading
6. IPOs & Mutual Funds Distribution
7. Fundamental Research
8. Technical Research
9. Portfolio Management
10. Free access to investment advice from Sharekhan's Research team
11. Sharekhan Value Line (a monthly publication with reviews of recommendations, stocks
to watch out for etc)
12. Daily research reports and market review (High Noon & Eagle Eye)
13. Pre-market Report (Morning Cuppa)
14. Daily trading calls based on Technical Analysis
15. Cool trading products (Daring Derivatives and Market Strategy)
16. Personalised Advice
17. Live Market Information
18. Internet-based Online Trading: SpeedTrade

1. Online Services:
Online BSE and NSE executions (through BOLT & NEAT terminals
Mutual Funds
Commodity Futures
PMS (Portfolio Management Services)
Technical PMS
Demat Services
Share shops
 2. Offline Services:

Trading with the help of Dealer

Trading without credit
By calling to the Share shops
Credit facility (Only in Delivery-based)
Special website for Offline Clients: www.mysharekhan.com
Physical contract notes

It provides various On-line trading services through various account:

TYPES OF DEMAT
ACCOUNT

Online Account Offline Account

Classic Accounts Trade Tiger Account Dial N Trade

The company provided mainly two types of services to their customers for the Demate
Accounts.

(1) Online Account and

(2) Offline Account

1. Online Account: -

In the Online account, the company simply provides the terminal to the customers or
clients and the clients can do trading himself/herself when he/she wants. The charges of
online account is Rs. 750 /-, which is varies from company to company. Online accounts are
most popular than the Offline accounts.

In the Online A/C, the company provides 3 types of facilities to their clients as per the
requirements.

A. Classic Accounts

B. Trade Tiger Accounts

C. Dial n Trade

A. Classic Accounts:

Investing Online is so much easier!

In Classic accounts, it is very simple to do trading. Here customer has first to open a
Demat account with Sharekhan and after opening an account he can get the login ID and
password. With the help of login ID and password, the client can login to the Sharekhan.com
and in the classic a/c whatever companys information the clients wants, he has to type the
companys name or code and he will get all the necessary information about that company
and he can buy or sell the that companys stock or shares. But, here in the classical account
the client can access only one scrip at a time.

Features of Classic Account:

 Classic account enables you to buy and sell shares through our website. You get
features like

Online trading account for investing in Equities and Derivatives via sharekhan.com
Integration of: Online trading + Bank + Demat account
Instant cash transfer facility against purchase & sale of shares
Make IPO bookings
You get Instant order and trade confirmations by e-mail
Streaming Quotes
Personalised Market Scan with your own customized stock ticker!
Single screen interface for cash and derivatives
Your very own Portfolio Tracker!

B. Trade Tiger Account: -

Earlier it was known as Speed Trade and now it is known as Tiger Trade.

This account is same as fast trade account. But, difference between these two
accounts is that in the Tiger Trade Account the client can access more than 25 scripts at a
time and buy and sell the share from wherever they wants. This account also provides the
charts and graphs, so that the clients can easily understand about the stock of the company.
This is only for big clients and dealer kind of customers. This account is mainly for active
traders who trade frequently during the trading session.
 Features
of Trade
Tiger
Account: -
A single
platform for
multiple
exchange
BSE & NSE
(Cash & F&O),
MCX, NCDEX,
Mutual Funds, IPOs
Multiple Market Watch available on Single Screen
Multiple Charts with Tick by Tick Intraday and End of Day Charting powered with
various Studies
Graph Studies include Average, Band- Bollinger, Know Sure Thing, MACD, RSI, etc
Apply studies such as Vertical, Horizontal, Trend, Retracement & Free lines
User can save his own defined screen as well as graph template, that is, saving the layout
for future use
User-defined alert settings on an input Stock Price trigger
Tools available to gauge market such as Tick Query, Ticker, Market Summary, Action
Watch, Option Premium Calculator, Span Calculator
Shortcut key for FAST access to order placements & reports
Online fund transfer activated with 12 Banks
 C. Dial-n-trade:

Features of Dial-n-trade:

TWO dedicated numbers for placing your orders with your cell phone or landline. Toll
free number: 1-800-22-7050. For people with difficulty in accessing the toll-free number,
we also have a Reliance number (Your Local STD Code) 30307600 which is charged
at as a local call.
Simple and Secure Interactive Voice Response based system for authentication
No waiting time. Enter your TPIN to be transferred to our telebrokers
You also get the trusted, professional advice of our telebrokers
After hours order placement facility between 9.00 am and 9.30 am (timings to be
extended soon)

2. Offline Account: -

This is simple way to do trading. In the offline account, the client can place the
order by telephone or through personal visit in the office. The client who is very busy
in their jobs or business, they can directly place the order by the telephone or the client
who are not much busy; they can come to the office of Sharekhan.

Sharekhan also provide the Dial-n-trade service to their customers. So that

customers can directly place the order by the telephone.

Demat Account Opening & Brokerage Charges: -

 Fee structure for General Individual:

Charges Classic Account Trade Tiger Account

Account Opening Charges Rs. 750/- Rs. 1000/-

Brokerage Intra-day : 0.10 % Intra-day : 0.10 %

Delivery : 0.50 % Delivery : 0.50 %
Annual Maintenance Charges Rs. NIL first year
Rs. 300/= p.a. from second year onwards

For Intra-day Trades:-

This is subject to a minimum brokerage of 5 paisa per share. This means that if the
share price you trade in is Rs 50/- or less, a minimum brokerage of 5 paisa per share
will be charged.

For Delivery Based Trades :-

This is subject to a minimum brokerage of 10 paisa per share. Minimum brokerage of

10 paisa per share will be applicable when the share price is Rs 20/- or less.
 Sharekhan launchs ShareMobile, an exclusive live
streaming quotes and trading facility for its
online trading customers

Next time when you are on move, you need not

worry about your favorite stocks price
movement. You can carry stock market
terminal with you anywhere anytime.
Have you ever missed an investment or an
opportunity to book profit / loss, just because you
were on move?
Sharekhan brings your freedom of being
Mobile. Yes, its so easy with ShareMobile to track
your favorite stocks price movement tick-by- tick.

How ShareMobile does empower you?

Live tick by tick stock price.
Latest News Headlines
Track your My Trade Portfolio investments
Live Research Fundamental & Trading Calls

Sharekhan Depository Services:

Sharekhan Depository Services offers dematerialization services to individual and

corporate investors.
 Sharekhan has a team of professionals and the latest technological expertise
dedicated exclusively to our Demat department, apart from a national network of
franchisee, making the services quick, convenient and efficient.

Trading in Commodity Futures:

It provides with facility to trade in commodities (Bullion: Gold, silver and agricultural
commodities) through a wholly owned subsidiary of its Parent SSKI.

Sharekhan is a member of 2 Commodity Exchanges and offers trading facility at both

these exchanges:

1. Multi Commodity Exchange Of India (MCX)

2. National Commodity And Derivative Exchange, Mumbai (NCDEX)

Software (Technology) Used In Sharekhan: -

Sharekhan is using different technology for the running of their daily transactions.

Mainly for the trading, the company using three software.

1. ODIN (VSAT Based)

2. Trade Tiger (WEB Based)
3. Classic/Fast Trade (WEB Based)

And also NEAT System Used for making transaction in NSE listed company & same
way BOLT System Used for making transaction BSE listed company.
And for the client information or customer service, the company using two software.

1. CIS Client Information System.

2. BOC Back Office.

Some Information about Sharekhan:

 Turnover Rs. 15 corers daily

Employees Strength 35

Offices More than 640 outlets in 280 cities

Clients : Demat A/c 5000

Trading A/c 3000

Head office Mumbai

Working Capital More than 400 corers

Sharekhan Classic Account

Special Features Sharekhan Trade Tiger Account
Dial n - Trade

Sharekhan provide right investment decision to Investors

according to their needs
 Seven Reasons

Why Customers first choice is SHARAKHAN?

1. EXPERIENCE:
 SSKI has more than eight decades of trust and Credibility in the Indian stock market.
In the Asia Money brokers poll held recently, Sharekhan won the India best broking house
for 2004 award. Ever since it launched Sharekhan as its retail broking division in February
2000, it has been providing institutional-level research & broking services to investors.

2. TECHNOLOGY:

With Sharekhan online trading account you can buy and sell shares in an instant from
any PC with an internet connection. You will get access to our powerful online trading tools
that will help you take complete control over your investment in shares.

3. KNOWLEDGE:

In a business where the right information at the right time can translate into direct
profits, you get access to a wide range of information on Sharekhans website
www.sharekhan.com. You will also get a useful set of Knowledge-based tools that will
empower you to take informed decisions.

4. ACCESSIBILITY:

In addition to Sharekhan online and phone trading services also very useful.
Sharekhan also have a ground network of 640 share shops across 280 Cities in India where
you can get personalize Services.

5. CONVENIENCE:

You can call Sharekhans Dial-n-Trade number to get investment advice and execute
your transactions. Sharekhan have a dedicated Call Center to provide this service via a toll-
free number from anywhere in India.

6. CUSTOMER SERVICE:
 Sharekhans customer service team will assist you for any help that you need relating
to transactions, billing, demat and other queries. Sharekhans customer service can be
contacted via a toll-free number-mail or live chat on Sharekhan.com.

7. INVESTMENT ADVICE:

Sharekhan has dedicated research teams for fundamental and technical research.
Sharekhans analysts constantly track the pulse of the market and provide timely investment
advice to you in form of daily research e-mail, online chat, printed reports and SMS on your
phone.

SWOT ANALYSIS of Sharekhan

STRENGTHS:

Online Trading Facility

Largest Chain of Retail Share Shops in India
88 years of Experience in securities market
Dedicated and responsive workforce/staff
Value added service for HNI client
Research Center
Membership of NSE & BSE
Trading option like Future & Option and Commodities
Volume based differentiated product.

WEAKNESSES:
 Less informative website
Does not have slab rate brokerage which is provided by competitors
Problems due to network crash
Unawareness Among Investors

OPPORTUNITY:

Collaboration with international financial institution

To tap the Untapped market
To capture the market lost to its Competitors.
To focus on developing a superior and powerful portal
To spread awareness of its Brand Name.

THREATS:

Follow government laws

Competitors develops
Prolonged depression and high volatility in the market
New Entrants.

Awards & Achievements of SHAREKHAN:

2001 - Web Award winner of Chip magazines Best

Financial Website Award.

2004 - Best Local Brokerage by Advisory Poll of Poll

2004.

2005 - Awaaz Consumer Awards Best Broking

House by CNBC channel.

Sharekhan is amongst top 3 online Brokers in India.

Balance Sheet
Chapter 2

MUTUAL FUNDS

THEORITICAL BACKGROUND

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and
investing funds in securities in accordance with objectives as disclosed in offer document.

A mutual fund is an investment vehicle for investors who pool their savings for investing in
diversified portfolio of securities with the aim of attractive yields and appreciation in their
value.

Investments in securities are spread across a wide cross-section of industries and sectors and
thus the risk is reduced .Mutual funds issues units to the investors in accordance with
quantum of money invested by them. Investors of mutual funds are known as unit-holders.
The profit or losses are shared by the investors in proportion to their investments. The mutual
funds normally come out with a number of schemes with different investment objectives,
which are launched from time to time. A mutual fund is required to be registered with
securities and exchange board of India.

A mutual fund is setup in the form of a trust, which has

1. Sponsor

2. Trustees

3. Asset Management Company and

4. Custodian.

The trust is established by a sponsor or more than one sponsor who is like promoter of a
company. The trustees of mutual fund hold its property for the benefit of the unit-holders.
Asset management company (AMC) approved by SEBI manages the funds by making
investments in various types of securities.

Respective asset management companies (AMC) management mutual fund schemes.

Different business groups have sponsored these AMC s. some international funds are also
operation independently in India like Aliens and Template.

A BRIEF HISTORY OF MUTUAL FUND

The concept of mutual fund is a new feather in Indian capital market but not to
international capital markets. The formal origin of mutual funds can be traced to Belgium
where society generated Belgium was established in 1822 as an investment company to
finance investments in National Industries with high associated risk. The concept of mutual
funds spread to USA in the beginning of 20th century and three investment companies were
started in 1924 since then the concept of mutual funds has been growing all around the world

In India, first mutual fund was started in 1964 when unit trust of India (UTI) was established
in the similar line of operation of the UK.

The term Mutual fund has not been explained in British literature but it is considered as
synonym of investment trust of

DEFINITIONS

The concept of mutual fund has been defined in various ways.

The mutual fund as an important vehicle for bringing wealth holders and deficit units
together indirectly

...Mr. James pierce

Mutual fund as financial intermediaries which being a wide variety of securities with in the
reach of the most modest of investors.

Frank Relicy

According to SEBI mutual fund regulations 1993, Mutual fund means a fund established in
the form of trust by sponsor to raise moneys by the trustees through the sale of units to the
public under one or more schemes for investing in securities in accordance with these
regulations.

CONCEPT OF MUTUAL FUNDS

A Mutual Fund is a trust that pools the savings of a number of investors who share a
common financial goal. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned through
these investments and the capital appreciation realized are shared by its unit holders in
proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable
investment for the common man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively low cost.

The flow chart below describes broadly the working of a mutual fund:
VALUE CHAIN OF MUTUAL FUND
SPONSOR:

Any person who, acting alone or in combination with another body corporate, establishes a
mutual fund.

Asset Management Company

A firm that invests the pooled funds of retail investors in securities in line with the stated
investment objectives. For a fee, the investment company provides more than diversification,
liquidity, and professional management service than is normally available to individual
investors.

Trustee

The Board of Trustees or the Trustee company who hold the property of the Mutual Fund in
trust for the benefit of the unit holders.

Mutual Fund

A fund established in the form of a trust to raise money through the sale of units to the public
or a section of the public under one or more schemes for investing in securities, including
money market instruments.

Transfer Agent

A transfer agent is employed by a mutual fund to maintain records of shareholder accounts

calculate and disburse dividends and prepare and mail shareholder account statements, federal
income tax information and other shareholder notices.

Custodian

Mutual funds are required by law to protect their portfolio securities by placing them with a
custodian. Nearly all mutual funds use qualified bank custodians.

Unit Holder
 A person who is holding units in a scheme of a mutual fund.

CLASSIFICATION OF SCHEMES

By Structure

Open-ended

A scheme where investors can buy and redeem their units on any business day. Its units are
not listed on any stock exchange but are bought from and sold to the mutual fund.

Close-ended

A mutual fund scheme that offers a limited number of units, which have a lock-in period,
usually of three to five years. The units of closed-end funds are often listed on one of the major
stock exchanges and traded like securities at prices, which may be higher or lower than its
NAV.In India 90% of the schemes is open-ended fund and the rest 10% is close-ended funds.
There are 1062 open-ended funds and 119 close-ended funds.

By Objective
A scheme can also be classified as growth scheme, income scheme, or balanced scheme
considering its investment objective. Such schemes may be open-ended or close-ended
schemes as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long- term.
Such schemes normally invest a major part of their corpus in equities. Such funds have
comparatively high risks. These schemes provide different options to the investors like
dividend option, capital appreciation, etc. and the investors may choose an option depending
on their preferences. The investors must indicate the option in the application form. The mutual
funds also allow the investors to change the options at a later date. Growth schemes are good
for investors having a long-term outlook seeking appreciation over a period of time.

Income / Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes
generally invest in fixed income securities such as bonds, corporate debentures, Government
securities and money market instruments. Such funds are less risky compared to equity
schemes. These funds are not affected because of fluctuations in equity markets. However,
opportunities of capital appreciation are also limited in such funds. The NAVs of such funds
are affected because of change in interest rates in the country. If the interest rates fall, NAVs
of such funds are likely to increase in the short run and vice versa. However, long-term
investors may not bother about these fluctuations.

Balanced Fund

The aim of balanced funds is to provide both growth and regular income as such schemes
invest both in equities and fixed income securities in the proportion indicated in their offer
documents. These are appropriate for investors looking for moderate growth. They generally
invest 40-60% in equity and debt instruments. These funds are also affected because of
fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to
be less volatile compared to pure equity funds.
Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity, preservation of
capital and moderate income. These schemes invest exclusively in safer short-term instruments
such as treasury bills, certificates of deposit, commercial paper and inter-bank call money,
government securities, etc. Returns on these schemes fluctuate much less compared to other
funds. These funds are appropriate for corporate and individual investors as a means to park
their surplus funds for short periods.

Gilt Fund

These funds invest exclusively in government securities. Government securities have no

default risk. NAVs of these schemes also fluctuate due to change in interest rates and other
economic factors as, is the case with income or debt oriented schemes.

Index Funds

Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P
NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage
comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise
or fall in the index, though not exactly by the same percentage due to some factors known as
"tracking error" in technical terms. Necessary disclosures in this regard are made in the offer
document of the mutual fund scheme.

There are also exchange traded index funds launched by the mutual funds that are traded on
the stock exchanges.

AVENUES OF INVESTMENTS

Savings form an important part of the economy of any nation. With the savings invested in
various options available to the people, the money acts as the driver for growth of the country.
Indian financial scene too presents a plethora of avenues to the investors.
Banks:

Considered as the safest of all options, banks have been the roots of the financial system in
India. For an ordinary person though, they have acted as the safest investment avenue wherein
a person deposits money and earns interest on it. One and all have effectively used the two
main modes of investment in banks, savings accounts and fixed deposits. However, today the
interest rate structure in the country is headed southwards, keeping in line with global trends.
With the banks offering little above 7% in their fixed deposits for one year, the yields have
come down substantially in recent times. Add to this, the inflationary pressures in economy
and you have a position where the savings are not earning. The inflation is creeping up, to
almost 8% at times, and this means that the value of money saved goes down instead of going
up. This effectively mars any change f gaining from the investments in banks.

Post office Schemes

Among all saving options, post office schemes have been offering the highest rates. Added to
it is that the investments are safe with the department being a government of India entity. So
the two basic and most sought for features, those of return safety and quantum of returns were
being handsomely taken care of Public Provident Funds act as options to save for the post
retirement period for most people and have been considered good option largely due to the fact
that returns were higher than most other options and also helped people gain from tax benefits
under various sections. The following are the post office savings schemes available for the
investors:

Monthly Income scheme:

This scheme offers an interest of 8%p.a, payable monthly and a bonus of 10% payable at
maturity after 6 years. There is no tax deductible at source (TDS) applicable on investments
made in this scheme.

National Savings Scheme:

This scheme offers an interest of 8% p.a; compounded half yearly and payable at maturity in
6 years.
Post Office Time Deposits:

There are 4 options available to investors depending on the term of investment desired by
the investor. They are:

1 year) this gives an interest of 6.25% p.a

2 year) This gives an interest of 6.5% p.a

3 year) This gives an interest of 7.25% p.a

4 year) This gives an interest of 7.5% p.a

Kisan Vikas Patra:

An important feature of this scheme is that it assures that the money invested doubles in 8
years and 7 months.

Public Provident Fund:

This scheme gives a return of 8% per annum, compounded annually for maturity of 15 years.

Government of India Bonds:

The GOI Bonds have the following investment options:

6.5% Tax free bonds

There is no ceiling on the amount of investment in these bonds. The effective yields of these
bonds are 9.28% p.a for the period of 5 years and premature encashment option available to
investors only after the completion of 3 years.
8% Taxable Bonds:

These bonds do not have any TDS charged on them. There is no maximum limit of
investment in these bonds but there should be a minimum investment of Rs.1, 000. The
maturity period is 6 years. The investor has the option of interest payable half yearly or
cumulative. The investors can also avail tax benefit under section 80L of income Tax Act, up
to Rs. 15,000.

Company Fixed Deposits:

Companies have used fixed deposit schemes as a means of mobilizing funds for their
operations and have paid interest on them. The safer a company is rated, the lesser the return
offered has been the thumb rule. However, there are several potential roadblocks in these.

The danger of financial position of the company not being understood by the investor lurks.

1. Liquidity is a major problem with the amount being received monthly

after the due dates.

2. The safety of principal amount has been found lacking.

Stock markets:

Stock markets provide an option to invest in a high risk, high return game. While the
potential return is much more than 10-11% any of the options discussed above can generally
generate, the risk is undoubtedly of the highest order. However, as it might appear, people
generally are clueless as to how the stock market functions and in the process can endanger the
hard-earned money.

For those who are not adept at understanding the stock market, the task of generating
superior returns at similar levels of risk is arduous to say the least. This is where mutual funds
come into picture.
COMPARISION OF OTHER AVENUES WITH MUTUAL FUNDS

The mutual fund sector operates under stricter regulations as compared to most other
investment avenues. Apart from offering investors tax efficiency and legal comfort, how do
mutual funds compare with other products?

Company Fixed Deposits versus Mutual Funds

Fixed deposits are unsecured borrowings by the company accepting the deposit. Credit
rating of the fixed deposit program is an indication of the inherent default risk in t he
investment. The money of investors in a mutual fund scheme are invested by the AMC in
specified investments under that scheme. These investments are held and managed in-trust for
the benefit of the schemes investors. On the other hand, there is no such direct correlation
between a companys fixed deposit mobilization, and the avenues where it deploys these
resources.

There can be no certainty of yield, unless a named guarantor assures a return or to a

lesser extent, if the investment is in a serial gilt scheme. O the other hand, the return under a
fixed deposit is certain, subject only to the default risk of the borrower.

The basic value at which fixed deposits are encashable is not subject to market risk.
However, the value at which units of a scheme are redeemed entirely depends on the market.
If securities have gained value during the period, then the investor can even earn that is higher
than what she anticipated when she invested. Conversely, she could also end up with a loss.

Early encashment of fixed deposits is always subject to a penalty charged by the

company that accepted the fixed deposit. Mutual fund schemes also have the option of charging
a penalty on early redemption of units (by way of an exit load).

Bank Fixed Deposits versus Mutual Funds

 Bank fixed deposits are similar to company fixed deposits. The major difference is that
banks are more stringently regulated than are companies. They even operate under stricter
requirements regarding Statutory Liquidity ratio(SLR) and Cash Reserve Ratio (CRR)
mandated by RBI.

While the above are for comfort, bank deposits too are subject to default risk. However,
given the political and economic impact of bank defaults, the government as well as Reserve
Bank of India (RBI) tries to ensure that banks do not fail.

Further, the Deposit Insurance and Credit Guarantee Corporation (DICGC) protect bank
deposits up to Rs. 100,000. The monetary ceiling of Rs.100,000 is for all the deposits in all the
branches of a bank, held by the depositor in the same capacity and right.

Bonds and Debentures versus Mutual funds

As in the case of fixed deposits, credit rating of a bond or debenture is an indication of the
inherent default risk in the investment. However, unlike fixed deposits, bonds and debentures
are transferable securities.

While an investor may have an early encashment option from the issuer ( for instance through
a put option), liquidity is generally through a listing in the market, implications of this are:

The value that the investor would realize in an early exit is subject to market risk. The
investor could have a capital gain or a loss. This aspect is similar to a mutual fund scheme.

A hypothecation or mortgage of identified fixed and / or current assets could back debt
securities, e.g secured bonds or debentures. In such a case, if there is a default, the identified
assets become available for meeting redemption requirements.

An unsecured bond or debenture is for all practical purposes like a fixed deposit, as far
as access to assets is concerned.

A custodian for the benefit of investors in the scheme holds the investment of a mutual
fund scheme.
Equity versus Mutual fund

Investment in both equity and mutual funds are subject to market risk. Investment in an
open-end mutual fund eliminates this direct risk of not being able to dell the investment in the
market. An indirect risk remains, because the scheme has to realize its investments to pay
investors. The AMC is however in a better position to handle the situation. Further, on account
of various SEBI regulations, such as illiquid securities are likely to be only a part of the
schemes portfolio.

Another benefit of equity mutual fund scheme is that they give investors the benefit of
portfolio diversification through a small investment.

RISK AND RETURN GRID:

An investor has mainly three investment objectives.

1. Safety of Principal

2. Return

3. Liquidity

BANKS FIXED BONDS AND EQUITY MARKET MUTUAL

DEPOSIT DEBENTURES FUND
 Returns Low Low to Low to Moderate to Better
Moderate moderate high
Administrativ High Moderate Moderate to Low to Low
e expenses to High high Moderate
Risk Low Low to Low to High Moderate
Moderate moderate
Investment Less Few Few Many More
options
Network High Low Low Low but Low but
penetratio penetratio penetration improving fast improving
n n
Liquidity At a cost Low Low to Moderate to Better
moderate High
Quality of Not Not Not Transparent Transparen
Assets transpare transpare transparent t
nt nt
Guarantee Maximum None
Rs 1 lakh

Pricing

The net asset value of the fund is the cumulative market value of the asset fund net of its
liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in
the fund, this is the amount that the shareholders would collectively own. This gives rise to the
concept of the net asset value per unit, which is the value, represented by the ownership of one
unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number
of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the per
unit. We also abide by the same convention.

Calculation of NAV

The most important part of the calculation is the valuation of the assets owned by the
fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of
units outstanding. The detailed methodology for the calculation of the asset value is given
below.

Asset value = (Value of investments+ receivables+ accrued income+ other current assets-
liabilities- accrued expenses) /Number of units outstanding.

ADVANTAGES OF INVESTING IN MUTUAL FUND:

Number of options available

Mutual funds invest according to the underlying investment objective as specified at

the time of launching a scheme. Mutual fund have equity funds, debt funds, gilt funds and
many others that cater to the different needs of the investor. While equity funds can be as risky
as the stock markets themselves, debt funds offer the kind of security that is aimed for at the
time making investments. The only pertinent factor here is that the fund has to be selected
keeping the risk profile of the investor in mind because the products listed above have different
risks associated with them.

Diversification

Diversification reduces the risk because all stocks dont move in the same direction at
the same time. One can achieve this diversification through a Mutual Fund with far less money
that one can on his own.

Professional Management

Mutual Funds employ the services of the skilled professionals who have years of
experience to back them up. They use intensive research techniques to analyze each investment
option for the potential of returns along with their risk levels to come up with the figures for
the performance that determine the suitability of any potential investment.
Potential of returns

Returns in the mutual are generally better than any option in any other avenue over a
reasonable period of time. People can pick their investment horizon and stay put in the chosen
fund for the duration.

Liquidity

The investors can withdraw or redeem money at the Net Asset Value related prices in
the open-end schemes. In the Closed-end Schemes, the units can be transacted at the prevailing
market price on a stock exchange. Mutual Funds also provide the facility of direct repurchase
at NAV related prices.

Well Regulated

The Mutual Fund industry is very well regulated. All investment has to be accounted
for, decisions judiciously taken. SEBI acts as a true watch dog in this case and can impose
penalties on the AMCs at fault. The regulations designed to protect the investors interests are
implemented effectively.

Transparency

Being under a regulatory frame work, Mutual Funds have to disclose their holdings,
investment pattern and all the information that can be considered as material, before all
investors. This means that investment strategy, outlooks of the markets and scheme related
details are disclosed with reasonable frequency to ensure that transparency exists in the system.

Flexible, Affordable and Low cost

Mutual Funds offer a relatively less expensive way to invest when compared to other
avenues such as capital market operations. The fee in terms of brokerages, custodial fees and
other management fees are substantially lower than other options and are directly linked to the
performance of the scheme. Investment in Mutual Funds also offer a lot of flexibility with
features such as regular investment plans, regular withdrawal plans and dividend investment
plans enabling systematic investment or withdrawal of funds.

Convenient Administration

Investment in the mutual fund reduces paper work and helps you avoid many problems
such as bad deliveries, delayed payments and follow up with brokers and companies. Mutual
Funds save your time and make investing easy and convenient.

TAXATION ON MUTUAL FUNDS

An Indian mutual fund registered with the SEBI, or schemes sponsored by specified
public sector banks/financial institutions and approved by the central government or authorized
by the RBI are tax exempt as per the provisions of section 10(23D) of the income tax act. The
mutual fund will receive all income without any deduction of tax at source under the provisions
of section 196(iv), of the income tax act.
 Chapter III
RESEARCH METHODOLOGY

Introduction:
Research is one of the best instruments to identify the investing pattern of investors to
invest in various sectors & to study different sectors of Capital market.

Definition:
Research is careful inquiry or examination to discover new information and
relationship and to expand and to vary existing knowledge.

Research always starts with question or any problem and finds answer of problem by
using scientific method. It gives complete knowledge about any problem or question.

Objective of Study (research):

Every study is conducted within for some specific purpose or to solve some problem.
When any research is conducted it has some primary objective that helps to solve the main
problem whereas a secondary objective helps to solve peripheral problems. The primary and
secondary objectives of this research are:

Primary Objective:
The primary objective of carrying out this research is:--

Investors behaviour for Investing in Equity Market in Various Sectors

Secondary Objectives:

To find out in which investment option people invests most.

 To find out how investors are motivates for investing in Equity Market.

To study the general investment criteria of people.

To know the peoples time horizon for investing in Equity Market and to know the rate

of return expected by them.

To study the interest of people for further investment in Equity Market.

To assess the customer satisfaction level for investing in equity market.

To classify the different sector on the basis of investors behaviour regarding investing
in equity market.
To identify various motivation factor which affect to investor while investing in various
selected sectors.

BENEFITS OF STUDY:

The study carried out under the title of Investors Behaviour for Investing in Equity
Market in Various Sectors will give benefits as under:

The research will be help to know in which sector investors are investing more.

The study will be helpful in knowing that what factors consider most important while

selecting the Sectors and company under the sectors.

The study will be helpful in knowing that how the investors are trade in Equity market.

The study will be helpful in knowing responses regarding problems faced by the

investors while investing in Equity Market

The study will be helpful in knowing that what are the motivational factors that

encouraging to the investors for investing in Equity Market.

LIMITATIONS OF THE STUDY:

 As no human being is perfect, it is not possible for anyone to make the best or perfect
report. Each person has some level of knowledge and is affected by some uncontrollable
factors within which he/she has to work. So, it might possible that there can be some
limitations in this report that may be due to my knowledge level or some other factors.

According to me following limitations can be prevailing in my report:

Respondents might have felt hesitation in providing information related to their age,
income etc. So, there can be some data that might questionable because of
unwillingness of respondents to give right information.
Sample selected may not represent whole population, as sample size selected is very
small in proportion to population due to time and cost constraints.

Even many of the respondents may give bias answer.

Research Design:

Research design is the plan structure and strategy if investigation conceived

so as obtain answers to research question and to control variance

A research design is the master plan or model for the conduct of formal investigation
and survey. It is a specification of methods and procedures for acquiring the information
needs for solving the problem. It decides the source of information and methods for gathering
the data. A questionnaire and other forms are tested to use the collection of data.

In the research study there is no perfect study to solve the problem. The research
design has broadly three categories as follow.

RESEARCH
DESIGN

Exploratory Descriptive Casual

Research Research Research

I have used Descriptive

1. Exploratory Research
Research Design for research
2. Descriptive Research purpose.
3. Casual Research

2. Descriptive Research:

Descriptive research, also known as statistical research. It describes data and

characteristics about the population or phenomenon being studied.

Descriptive research answers the questions who, what, where, when and how. This
study is complex and determines high degree scientific skill to study the problem.

The description is used for frequencies, averages and other statistical calculations.
Often the best approach, prior to writing descriptive research, is to conduct a survey
investigation. Qualitative research often has the aim of description and researchers may
follow-up with examinations of why the observations exist and what the implications of the
findings are.
 In short descriptive research deals with everything that can be counted and studied.

In this report, I have used this Descriptive Research Design for conducting
survey on Investors behaviour for Investing in Equity Market in Various Sectors

Data Collection Method:

Data collection usually takes place early on in an improvement project, and is often
formalized through a data collection plan which often contains the following data collection
methods.

The source of data collection method is as follows.

Primary Data
Secondary Data

Primary Data:

Primary data means data collected directly from first-hand experience. Means data
collected for the first time by any researcher for any research use. There are many
methods of collecting primary data and the main methods include:

Methods of collecting the primary data are:

Questionnaire method
Interviews method
Focus group interviews
Observation method
Case-studies method
Diaries method

I have used Questionnaire method for the Primary data collection for the study.
 Secondary Data:

Secondary data means data which are collected by any one for a particular research
purpose and which are used by others for different purpose.

I have also used the secondary data for the study like some company resources
like broachers, websites etc.

Sampling Plan:

Sampling is the process to analyze the whole population

by analyzing a part of it.

The effectiveness of the report depends on the sample size selected from the population.

Sampling Unit:

Here, target population is decided who are the actual and potential investors, each
sample has the chance to be selected on an equal basis & this research has been conducted
through surveying the whole of the equity market of Surat city

Sample Size:
 For getting better result of the given problem I have to determine the perfect sample
size as on 90% confidence level which is calculated statically by the given formula.

n = p*q (z /c) 2
Where,
n = sample size
p = percentage picking a choice (expressed as decimal)
q = (1 - p)
Z = Z value (e.g. 1.645 for 90% confidence level)
c = confidence interval, expressed as decimal
(e.g., 0.05 = 5)
For Example:
p = 0.80 q = 0.20
z = 1.645 c = 0.05

n = p*q (z /c) 2
= 0.80*0.20 (1.645/0.05) 2
= 173.1856
= 175
Therefore, I used sample size is 175

Confidence interval:
In statistics, a confidence interval (CI) is a particular kind of interval estimate of a
population parameter. Instead of estimating the parameter by a single value, an interval likely
to include the parameter is given. Thus, confidence intervals are used to
indicate the reliability of an estimate.

The end points of the confidence interval are referred to as confidence limits.

A confidence interval is always qualified by a particular confidence level, usually

expressed as a percentage.

The calculation of a confidence interval generally requires assumptions about the

nature of the estimation.
For example,

Here, I have used a confidence interval of 0.05 and 80% percent of sample picks an
answer is to be "sure" that if I had asked the question of the entire relevant population
between 80% (100-20) and 20% (100-80) would have picked that answer.

Confidence level:

The confidence level tells you how sure you can be. It is expressed as a percentage
and represents how often the true percentage of the population who would pick an answer
lies within the confidence interval.

The confidence level associated with a confidence interval estimate is the success
rate of the method used to construct the interval.

The 90% confidence level means you can be 90% sure; When I put the confidence
level and the confidence interval together, I can say that I am 90% sure that the true
percentage of the population is between 20% and 80%.

So, I have taken 90% confidence level means I am 90% sure. As on 90%
confidence level value of Z = 1.645

Here, I have calculated formula on the basis of 90% confidence level .

Sampling frame:

Sampling frame is the actual set of units from which a sample has been drawn. In
sampling frame, I have used simple random sampling method for conducting survey. In a
simple random sample ('SRS') all units from the sampling frame have an equal chance to be
drawn and to occur in the sample.
 Here, I have used sampling frame as an actual and potential investors from whole of
the equity market of Surat city and also from Sharekhan Securities Pvt. Ltd. Here, each
sample has the chance to be selected on an equal basis because I have used simple random
sampling method for surveying purpose.

Response Rate:

The response rate was average.

I have used questionnaire method for the financial information of the respondent, most of
the people hesitated to provide the required information and also the questionnaire
contained some financial terms that were technical in nature, which resulted into reduced
response rate.
I have visited nearly 200 potential respondents, out of which only 175 gave proper
response.
Hence,
Response Rate = 175/200 = 87.5%

Data analysis tools:

I have used SPSS software (Statistical Package for the Social Sciences) for analysis
purpose.
In that I have used Mean, Median, Mode, Frequency Table, and Cross Tabulation,
Graphical representation & interpretation with each graphs and charts.
Microsoft Office is used for data typing formatting and analyzing the data.
CHOOSING FUNDS

When it comes down to it, the decision to invest in a mutual fund is one you have to
make on your own. When you try to choose an investment, however, it is a good idea to seek
the guidance of a financial advisor who will review its objective to make sure it supports your
financialgoal.

As an investor, your goals are unique, and a financial advisor can help match you
with the best funds. Remember, however, when you are choosing funds, to consider how much
risk you are comfortable with and when you'll need the money. If you have the time to weather
the market's ups and downs, you may want to consider equity investments.

Before you select a mutual fund, it is essential to read the prospectus carefully to
learn all you can about the fund's performance, investment goals, risks, charges and expenses.

DECISION MAKING FACTORS WHILE INVESTING IN MUTUAL FUNDS

Before looking at the mutual funds available to you, it may be best to decide

the mix of stock, bond, and money market funds you prefer. Some experts believe this is the

most important decision in investing. Here are some general points to keep in mind when

deciding what your investment strategy should be.

Diversify. It is a good idea to spread your investment among mutual funds that invest
in different types of securities. Stocks, bonds, and money market securities work
differently. Each offers different advantages and disadvantages. You may also want to
diversify within the same class of securities. Diversifying can keep you from putting all
your eggs in one basket and therefore, may increase your returns over along period
oftime.
Consider the effects of inflation. Since the money you set aside today may be intended
to be used several years down the road, you need to look at inflation. Inflation measures
the increase of general prices over time.

Conservative investments like money market funds often may be popular because they
are managed to keep a steady value. But their return after accounting for the inflation
rate can be very low, perhaps even negative.

For example, a 4% inflation rate over a period of many years could erase a money
market fund's 3% yield over the same period of time. So even though such an investment
may give some safety of principal, it may not be able to grow enough in value over the
years or even keep up with the rate of inflation.

Patience is a virtue. It's no secretthe prices of common stocks can change quite a bit
from day to day. Therefore, the part of your account invested in stock funds would likely
fluctuate in value much the same way.

If you don't need your money right away (for at least 5 years), you probably don't need
to panic if the stock market declines or you find that your quarterly statement shows the
value of your investment has fallen. In the past, the stock market has regained lost value
over time. Although you are not assured it will do so in the future, try to be patient and
allow your stock funds time to recover.
Remember the saying, "buy low, and sell high." Switching out of a stock mutual fund
when prices are low is usually not the way to make the most of your investment. Of
course, if a fund continues to under-perform over time as well as your other fund
choices, you may want to consider changing funds.

Look at your age. Younger investors may be more at ease with stock funds, because
they have time to wait out the short-term ups and downs of stock prices. By investing
in a stock fund, they might be able to receive high returns over the long-term.
On the other hand, people who are closer to retirement may be more interested in
protecting their money from possible drops in prices, since they'll need to use it soon.
In this case, it may be wise to place a greater percentage of money in bond and/ or
 money market funds, which may not have such large changes in value.

How can you determine an investment mix appropriate for your age? One way is
to subtract your age from 100. The answer you come up with may be a good number to
start with in deciding what portion of your total investments to put into stock
mutual funds.

Risk. When you are choosing funds, be sure to consider how much risk you are
comfortable with and how close you are to retirement. If retirement is around the corner,
you may want a portfolio with very little risk. On the other hand, if you are younger,
and have the time to weather the market's ups and downs, you may want to choose a
more aggressive investment strategy.

READ FUND DOCUMENTS

Your primary source of data concerning the mutual fund will be the prospectus. It is a legal
document illustrating the rules and regulations that a mutual fund must follow and contains
information on the fund's goal and strategy, risks, performance, financial highlights fees and
expenses, and a wide variety of information that you should know before investing.

What are the fund' s goal and strategy?

Goals vary from fund to fund, and they're important to understand so you can decide
if they match your personal objectives. Some funds generate income for their shareholders,
while others concentrate on capital appreciation. Some focus on a combination of the two, and
others are oriented towards tax benefits or preservation of capital.
Funds also implement differing strategies to help accomplish their goals. The Goals and
Strategies section of a prospectus details the types of securities in which fund managers can
invest and how managers analyze them

Funds can be limited to domestic investments, focus on a certain country or region, or invest
anywhere in the world. In addition, some funds invest only in specific industries or in particular
types of companies. Others invest in large-, medium- or small-capitalization companies.

What are the risks?

As with all investments, each fund, whether domestic, international or sector specific, carries
different risks. The Main Risks section of a prospectus explains which ones are associated with
the securities in that particular fund, which may help you decide what level of risk you're
comfortable having in your investment portfolio.

How has a fund performed?

While historical performance doesn't predict how a fund will do in the future, you may be
interested in how it performed in past market environments. Depending on the age of the fund,
a prospectus will provide its 1- 5- and 10-year average annual returns, including a comparison
to its benchmark index over the same period.

What are financial highlights?

In this section a prospectus lists 5 years of annual financial information, if a fund is less than
5 years old, provides data since inception. Information includes net asset values at the
beginning and end of each year, and details the gains or losses, dividends and distributions that
account for any changes.

Financial Highlights also show fund asset information such as net assets ratios to average net
assets for expenses and net investment income, and portfolio turnover rates.

What are the expenses of a fund?

Operating a fund entails some costs you should be aware of. The Fees and Expenses section
breaks out these costs and who pays them. In addition, an example of fund expenses is provided
to help you compare the cost of investing in one fund versus another.

Who's managing the fund?

In the Management section, a prospectus gives a brief biography of a fund' s managers,

including how long they have worked on the fund and their overall industry
experience.

.MARKET SEGMENTATION

Market segmentation is the division of market into homogeneous groups, which will
respond differently to promotions, communications, advertising and other marketing mix
variables. A different marketing mix can target each group, or segment, because the
segments are created to minimize inherent differences between respondents within each
segment and maximize differences between each segment.

Market segmentation was first described in the 1950s, when product differentiation
was the primary marketing strategy used. In the 1970s and 1980s, market segmentation
began to take off as a means of expanding sales and obtaining competitive advantages.

Uses of Market Segmentation

There are many good reasons for dividing a market into smaller segments. The primary
reasons:

Easier marketing

It is easier to address the needs of smaller groups of customers, particularly if they

have many characteristics in common (e.g. seek the same benefits, same age, gender, etc.).
Find niches

Identify under-served or un-served markets. Using niche marketing, segmentation

can allow a new company or new product to target less contested buyers and helps a mature
product seek new buyers.

Efficient

More efficient use of marketing resources is by focusing on the best segments for the
investor offeringproduct, price, promotion, and place (distribution). Segmentation can help
avoid sending the wrong message or sending message to the wrong people.

Classification variables

Classification variables are used to classify survey respondents into market segments.
Almost any demographic, geographic, Psychographic or behavioral variable can be used to
classify people into segments.

Demographic variables Age, gender, income, ethnicity, martial status, education,

occupation, household size, length of residence, type of residence, etc.

Geographic variables City, state, zip code, census tract, country, region, metropolitan or
rural location, population density, climate, etc.

Psychographic variables Attitudes, lifestyle, hobbies, risk aversion, personality traits,

leadership traits, magazines read, television programs watched, PRIZM clusters, etc.

Behavioral variables Brand loyalty, usage level, benefits sought, distribution channels used,
reaction to marketing factors, etc.
Summary

Target marketing or market segmentation based on customer needs and wants can
increase profits. Target market identifies customer groups and the reasons they purchase.
Market segmentation helps a business be more responsive to changing customer needs. An
overall marketing plan or strategy visually shows how all aspects of a marketing effort work
together. The ultimate goal of any business is to sell the product or service.

PRIMARY DATA FOR THE PROJECT:

For the customized needs o the project, primary data was collected through a survey
in the twin cities of Hyderabad & Secunderabad. A Random sample of 100 investors were
surveyed. They were all asked to answer a questionnaire true to their knowledge. The
feedback obtained from the customer was instrumental, gauging the perception of the
investors towards mutual funds. It also throws light on the factors, which influence them to
make decisions while investing. Further the interaction with few of the investors goes a long
way in understanding the inlaid reasons for their decisions.

SECONDARY DATA:
 The main sources of secondary data are the web sites of various mutual fund houses
like cholamandalam mutual fund, Franklintempletonindia, ICICI, BIRLA SUNLIFE, KOTAK and
more such houses. Many references were collected from different libraries to gain an insight
on mutual funds. Previous studies conducted in this field provided valuable help. In addition
to the above sources, Working with Shrekhan associates and interaction with their personnel
provided a pragmatic edge to my theoretical concepts.

Survey Details

Total Sample Size 100

Economic Status Criterion Tax payees & Non tax payees

Age groups 23 years and above

Martial Status Criterion Married, Married with children & Unmarried

 FACTORS CONSIDERED BY INVESTORS

WHILE INVESTING

Every investor considers several factors while investing in any of the products as it deals with
the most important need of life money.

The five main factors that were considered are:

1. Safety & security

2. Tax exemption

3. Liquidity

4. Profitability

5. Return pattern

Factors considered by investors

While investing
17%
31%
14%

12% 26%
Safety & security Tax exemption
Liquidity Profitability
Return pattern

SAMPLE SIZE 100

ECONOMIC STATUS TAX PAYEES AND NON-TAX PAYEES

The above graph shows that 31% people consider safety & security as the main factor while
investing, 26% goes for Tax exemption, 17% considered return pattern in the investment, 14%
went with profitability and 12% showed interest in liquidity.

ANALYSIS OF THE ABOVE GRAPH:

In a developing country like India most of the people fall in the lower middle class and middle
class sectors. The attitude of the investors is of primary concern. As more and more options
that warrant high returns are available in the market, investor tends to be more skeptical. So,
while investing in any avenue, their first priority is safety and security. Even the age of the
investor plays a major role in the decision-making. For example, if the investor is in the age of
50 and above, he usually looks for low or no risks while investing. Therefore, 31% of investors
surveyed preferred safety & security.

Next is the tax exemption; as there is tremendous boom in the corporate sector and the
remuneration system for a particular sector has changed. This created a change in income levels
and thereby affected the expenditure patterns. In the past, it took employee years of time to
reach a five-figured salary. But, gradually the system has changed. Even the employee in the
lower level or the middle level of the corporate ladder is receiving a handsome emolument. So,
they are opting for the exemption of tax. Therefore, the next preference is for tax exemption
that is 26% of the total.

Besides investors going for Safety & security, there are investors who opt for return on
investments they made. They are mainly in the age group of 23 and 35. Because these investors
are likely to think that, at this age they are mentally more stable and feel that they can cope
with financial risks. Any profits made would further bolster their financial stability. And so,
17% went with return pattern of their investment. In the same way, 14% of the investors look
for profitability, especially those who are already doing business, i.e. those who are already
accustomed to taking risks.Out of the total, 12% of investors preferred liquidity. The main
reason for this could be that, that making the invested money liquefied as and when required
is important, and this is not possible if the investments are made in any insurance, Bank
deposits, etc.
 Though there are numerous factors that can be attributed to an investors psyche, by large,
we can conclude that maximum number of investors is investing in those sectors where there
is safety & security for their principal. The other factors antecede safety.

INVESTMENT PATTERN:

Investment pattern

7% 5% 4%
2%
9% 42%

31%

Bank deposits insurance mutual fund

bonds shares Equity
none

Sample size 100

Economic status Tax payees & non-tax payees

From the above graph, it is clear that 42% opted for an investment in bank deposits, 31% for
insurance, 7% for shares, 9% for mutual fund, 2% for bonds, 5% for equity and remaining 4%
have invested in some other investments such as real estates etc.

ANALYSIS OF THE ABOVE GRAPH:

The investment pattern of an investor is also very important because this shows the avenues
where the people are really interested. Here, 42% have invested in bank deposits as it is very
safe and risk free. Out of the sample of 100,it is observed that those who opted for an
investment in banks in the form of deposits are found to be in the age group of 40 and above
and are in government services.

The next preference, as observed in the pie chart for investment pattern is Insurance.
People generally opt for life insurance because it promotes a sense of safety & security for the
dependents on the person and even his belongings. So, the next priority is insurance. 7% of the
investors went for an investment in shares as it brings quick returns, although shares are prone
to high risks.

As shown 9% of the investors opted for an investment in mutual funds. From this we
can infer that the market of mutual fund is picking up slowly. According to the survey, the
people who have invested in the mutual funds belong to high-income range and they want an
exemption from tax and a mere 2% opted for bonds, 5% for investment in equity and 4% have
invested in other investments such as Real estate to make quick returns on their investments.

AWARENESS TOWARDS MUTUAL FUNDS:

 Awareness towards mutual
funds

13%

87%

Aware of mutual fund Not aware of mutual fund

In the above pie chart, we can observe that nearly 90% of investors are aware of mutual funds
and only 13% people are not aware of it. This shows that most of the investors know about
mutual funds in one or the other way.

ANALYSIS OF THE ABOVE GRAPH:

Of the sample surveyed, almost all of the people are aware of mutual funds. They are aware of
the term mutual fund. Though the questionnaire cannot identify the extent of the awareness.
Through the interaction it is found that they are not actually aware of the advantages in
investing mutual funds, various types of mutual funds and different schemes offered in it. It is
found that People often have an inhibition that investments in mutual funds can be done only
by those who have surplus amount of money with them and want to avail tax redemption.

MUTUAL FUND INVESTMENTS:

Mutual funds are medium risk investments. Though Investing in mutual fund doesnt assure a
fixed amount of returns, nevertheless, they are not low. The awareness about mutual funds is
the primary criterion.

Mutual fund investments

19%
6%

75%

Equity funds Debt funds Liquid funds

Sample size 16

Criterion Mutual fund investors in the survey

From the graph, it is clear that only 16 out of 100 invested in mutual funds. From those 16, 12
have invested in Equity funds, 3 in liquid funds and the remaining 1 in debt funds.

ANALYSIS OF THE ABOVE GRAPH:

Only 16 out of 100 invested in mutual funds this can be mainly attributed to the low level of
awareness, various inhibitions and a not so clear idea about the mutual funds. It is very
important to have a clear perception of mutual funds, how they work and how the money is
invested in different portfolios according to the investors choice.

Investors who opted for equity funds are 12 of 16 percent. Equity funds being the
majority preference can be reasoned as they want their investments to be put in various sectors
i.e. DIVERSIFIED FUNDS so that they can make profits out of it easily. Even some went for
INDEX FUNDS as the investments are made in Bench Nark Index Stock like BSE, NSE.
 A few (3%of 16%) investors made investments in liquid funds as they want a Short term
investments where the investor need not wait for much time for the return. These are also called
as Money Markets for short term.

Only a single investor went for debt funds where investments are in various debt products
like Certificate of Deposits (CDs), Commercial papers and call money as the investor want a
secured investment, which he can avail in Debt Funds.
Chapter V

FINDINGS

Many of the investors are aware of mutual funds but most of their perception towards
them is not positive.
Investors are mainly concerned with the risk factors of mutual funds and are not
directing towards them.
The investors who have invested in mutual funds mainly go for it because of the
Liquidity matter and Tax exemption.
Most of the people dont know the advantages of mutual funds and the various types of
mutual funds.
There are nearly 1173 schemes of mutual funds offered by various mutual fund houses,
which an ordinary person is not aware.
A common investor basically looks for the Tax exemption and Safety & security while
investing.
Investors often feel that those people, who have surplus amount with them and invest
to avail Tax exemption, can do investing in mutual funds.
 SUMMARY

This report is an attempt to provide an analysis of the perception of an investor towards

mutual funds. However, what has been reported is only the tip of iceberg in terms of data
that are available.

However, my examinations suggests that employees are interested to invest in mutual

funds provided sufficiently educated and a know-how is provided on its working. Though the
self-employed are investing in mutual funds and insurance, they are investing small amounts
in them because they do not want to take high risks.

Shrekhan stock broking ltd should educate the people about the various advantages
of investing in mutual funds and create an awareness regarding various investment options.

In conclusion, it is important to remember that the main purpose for initiating the
project is to analyze the perception of an ordinary investor towards the mutual funds and the
aspects that guide him to make investment decisions. The study does not aim to advocate
investments in mutual funds.
 CONCLUSION

Mutual funds are still and would continue to be the unique financial tool in the country.
One has to appreciate the fact that every aspect of life as its periods of high and lows. This
has been the case with the stock markets. Why not apply the same logic to mutual funds?
Mutual funds have not failed in any country where they worked with regulatory frame work.
Their future is bright. The poor performance of many mutual funds schemes may be mostly
attributed to the quality of personal involved and their matter of fund management.
 SUGGESTIONS

Make people aware of mutual funds by:

Arranging free seminars in different organizations about mutual fund investments.

Arranging stalls in Public places is a good publicity.

More advertisements need to come to explain the various advantages of mutual funds
and even the various schemes offered by them.

What to expect from a financial advisor

 The key for mutual fund investors is to define and recognize the value of professional
financial services, and then insist on getting that value. When you pay a sales charge or a
fee, what can you expect a professional to do for you? Your advisor should at least:

Understand investor needs and help him formulate long-term investment

goalsandobjectives.
Before making specific recommendations, advisor should try to gain a whole picture of
investors past experience, lifestyle and goals, as well as his other investments and current
financial situation. When the investor planning to retire, for example? Does the investor
have life insurance? Does he own real estate? How secured is his job?
Help the investor develop realistic expectations by discussing the risks and
rewardsofeachinvestment.Every investment choice has its strengths and weaknesses, and
investor should never feel less than fully informed. When investor ask questions, or have
doubts,
Investor should expect your financial advisor to answer honestly, and help him develop a
strategy that is both realistic and comfortable for him.

Match investors goals and objectives with appropriate mutual funds.

Investor should expect your advisor to make clear and specific recommendations, and
explain the reasons behind them in terms he can understand. Of course, the advisor
should be confident and well informed about the management and portfolio
strategiesofanymutualfundsrecommended.
Continually monitor investor portfolio and help you interpret performance.
Your advisor cannot influence or predict a fund's results. However, he or she should
discuss results with you and help you judge your progress. You should feel that you
canalwaysaskyouradvisor,"HowamIdoing?"

Conduct regular reviews to ensure that your strategy continues to provide optimal
results for you.
 One of the most valuable services your advisor can provide is to help you "stay on course"
with your investment program. But "staying on course" long term does not necessarily
mean staying put. Expect your financial advisor to work with you to adjust your portfolio
in response to any significant change in your lifestyle, priorities, assets or responsibilities.
These are the basic services that investors should expect from their financial advisors.
Beyond the basics, many investors could use even more specialized assistance, like advice
on retirement plan distribution options, setting up and servicing retirement plans for small
businesses and self-employed individuals,
developing tax-advantaged strategies for children's college education, insurance, estate,
and trust planning; and year-end mutual fund tax advice. If you need specialized services,
there are many financial advisors who can help you obtain the help you n
BIBLIOGRAPHY

S.No. Name of the Author Publisher Page Nos.

1 Punithavathi Securities Analysis and Portfolio 29,30,411&412

Pandyan Management
 2 V.A.Avadhani Investment and Securities Markets in 427,428
India
MAGAZINES:

1. Business standard

2. Economic times

Marketing dictionary A. IVONAVIC

S.NO WEBSITES MONTH OF SEARCH

1 http:// www.Shrekhan.com May 2007

2 http:// www.amfiindia.com May 2007

3 http:// www.ici.org May2007

4 http:// www.google.com May 2007

5 http:// www.moneycontrol.com June 2007

6 http:// www.franklintempletonindia.com June 2007

 Investors perception towards Mutual Funds

PERSONAL INFORMATION

A) Name:

B) Type of Business:

C) Address:

D) Telephone: Mobile:

E) Fax: Email:

F) Annual Income:

ANNEXURE

1.In which part of these modes have you made your major part of investment?

[] Shares [] Equity [] Mutual Fund [] Insurance

 [] Bank Deposit [] Bonds

[] Others Specify---------------------------------

2.Why do you prefer the above option?

[] Return Pattern [] Tax Exemption

[] Liquidity [] Safety & Security

[] Profitability [] Guaranteed Return

[] Others Specify-----------------------------------

3.How long would you like to invest?

[] Short term (below 1yr) [] Medium term (up to 2yrs)

[] Long term (above 3yrs)

4.Have you seen any advertisements for Mutual Funds?

[] Yes [] No

5.If yes, what are the advertisement have you seen for?

[] Birla sunlife mutual funds [] Reliance mutual fund

[] Chola mutual funds [] Standard charted mutual funds

[] Franklin Templeton mutual fund [] Sundaram mutual fund

[] HDFC mutual fund [] UTI mutual fund

[] ING VYSA mutual fund [] Any other specify--------------------

[] Prudential ICICI mutual fund

6. Rank the following services preferred by you from a financial Advisory

 Institution?

Services Rank

1. Telephone services

2. Online services

3. Mobile services

4. Personal services

7. Mention the names of mutual funds you have invested?

---------------------------------------------------------------------

8. In which scheme of mutual funds have you invested?

[] Debt [] Equity

[] Liquidity [] Mixed (Debt & Equity)

[] Others specify---------------------------

9. What was the approximate return you got on your investment?

[] Debt [] Equity

[] Liquidity [] Mixed

[] Others specify---------------------------

10. Which factors you consider the most while, investing in mutual funds?

[] Return patterns [] Performance

[] Services [] Risk factors

[] Quality of portfolio [] Professional management

[] Wealth creation
11. Which period of dividend income you prefer the most?

[] Monthly [] Quarterly

[] Half yearly [] Annual

12. How often you need reminders (recall) about mutual fund?

[] Monthly [] Quarterly

[] Half yearly [] Annual

13. If you need so, which mode you would prefer?

[] Account statements [] Remainder letters

[] Television & Internet [] News papers & Magazines

14. Please rank your expectations from a mutual funds Advisory concern

Expectations Rank

1. Right Advice

2. Speed of transaction

3. Research inputs

4. Reputations

5. Reliability

6. Investor facilitation

7. Advertisements

8. Easy procedure

15. Are you willing to invest in mutual funds?

[] Yes [] No
 If no, specify the reason------------------------------------------

If yes, do you need further assistance from Wealth Management Executives from

Shrekhan Consultants Ltd?

[] Yes [] No

16. As investors please specify your needs, expectations and recommendations to Develop
the mutual funds.