SHARE MARKET
Content
(IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY Centre for Distance Learning (Recognized by Distance Education Council)
SYNOPSIS
ON SHARE MARKET AN OVERVIEW Submitted By Harsimarn Kaur
Enrollment No. 42101688 To (IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY Centre for Distance Learning (Recognized by Distance Education Council)
PROFORMA FOR SYNOPSIS OF PROJECT WORK
Name:
Harsimran kaur
Enrollment No.: 42101688 Address for correspondence: House no. 80, Sheetal Apartments, Sector – 14, Rohini, Delhi-110085. Mobile no.: 9313216953 Phone No. : 011-27315411 Major Area of Specialization : Finance Questionnaire Attached – yes Resume of Project Guide Attached – Yes Consent Letter of Project Guide – Yes Phone no. Project Guide : 9312211526 Date of Submission :
STATEMENT ABOUT THE PROBLEM The objective of the project is to find the sales potential of Demat Account in Delhi and NCR regions. The research will help what the current trends are in the market and the competitors product offering are relates to share market and recommendations to increase the market share. Specifically, the research objective is to: To study the Mutual funds industry in detail- This will done by managing The Various client relationship and educating them about the various benefits that Mutual fund offer as compared to bank FD’s, National saving certificate etc. this also involves studying in depth about the various schemes offered by PRINCIPAL PNB Asset Management Company. To study about the investment Procedure in Mutual funds To study the investor’s preference in mutual funds by way of questionnaire And Personal visits to clients. To generate sales for the company Awareness of the competitor’s product among investors. Determine the type of services needed by the investors. Gather and analyze the future aspirations of the investors with respect to the demat account. Rank and evaluate the relative importance the Share Market parameter associated with the Demat Account.
Comparative analysis of various mutual funds schemes of PRINCIPAL with that Of the other on the bases of Alpha, beta, stander Deviation, Sharp ratio and Tenor ratio
WHY IS THIS PARTICULAR TOPIC CHOSEN The purpose of the undergone study is to study the Demat Account services of the different bank & other securities companies & evaluates the competitive position of Standard chartered so as to suggest way to increase its market share. The main problem faced by the company was that it had a very less customer base. The company’s own product had very less market as compare to it’s third party selling. The company does a third party selling for all the investment products. The study thus focuses on following dimensions:
1. To identify the critical factors that influences the buying behavior of Investors. 2. To know the investor acceptance of the services of Standard chartered 3. bank in Delhi & NCR regions. 4. According to current scenario it is a very relevant Topic. 5. To assess the problem volume of future sales . 6. Many big company are dealing in this market.
WHAT CONTRIBUTION WOULD THE PROJECT MAKE For the purpose of the research it is absolutely imperative for me to find out what the investor want from their company. It is also necessary to find out the Investor’s profile i.e. his/her age, monthly income, occupation and sex and also the current company with which he/she is investing. This will require me to get a details questionnaire filled by the concern person. All the analysis in the report will be drawn out of this questionnaire. For carrying out the competitor analysis Further help will be taken from company websites and journals. This research will provide Standard chartered bank with information like current Market share of Securities Company and also a detailed analysis of the services Offered by stock & securities broker and stock & Securities Company and what are the most important criteria for selecting a particular securities company. The company can also get data on prospective customer by designing its product offering and marketing strategy in a way so as to attract more clients in the near future.
OBJECTIVE AND SCOPE OF THE STUDY
The study is the part of academic curriculum of 3 years MBA therefore the primary objective of this study is to fulfill the requirement for the award of MBA degree of (IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY.
The present study was carried out with the objective to know Scope of share market and its various catchments areas of Punjab current securities company. So as to know strength and weakness of share schemes of securities company, So that strengths can be increased and weaknesses can be made “the best” in securities Industry. To study the invester perceptions about various securities company. To know the level of awareness among consumers about Share Market. To make people know about the various products offered by securities company. To know the interest level of the consumers to get associated with share market. To collect various suggestions from the consumers to make share market better one. To study the Mutual funds industry in detail- This will done by
managing the Various client relationship and educating them about the various benefits that Mutual fund offer as compared to bank FD’s, National saving certificate etc. this also involves studying in depth about the various schemes offered by PRINCIPAL of Securities Management Company. 1. To study about the investment Procedure in Mutual funds. 2. To study the investor’s preference in mutual funds by way of Questionnaire and Personal visits to clients.
METHODOLOGY
Research is a systemic and objective process of gathering recording and analyzing data for aid of making decision regarding a particular problem. 1. RESEARCH DESIGN The research design is a master plan specifying the methods and procedures for collecting and analyzing the needed information the research design of my dissertation is DESCRIPTIVE RESEARCH Descriptive research includes surveys and facts findings inquiries of different kinds. 2. DATA COLLECTION PRIMARY DATA primary data is gathered through a survey with the help of questionnaire. SECONDARY DATA secondary data sources includes
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Books Journals various websites
3 RESEARCH INSTRUMENTS QUESTIONNAIRE 4 SAMPLE DESIGN
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target population people of industries . sample size 100 people .
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sampling technique convenience and judgmental .
Type of Research Research methodology is a way to systematic solve the research problem. It is a procedure, which is followed step by step to solve a particular research problem. There are basically four types of researches
EXPLORATIVE RESEARCH DESCRIPTIVE RESEARCH DIAGNOSTIC RESEARCH HYPOTHESIS TESTING RESEARCH
Hypothesis Testing Research. To test a hypothesis of casual relationship between variables. The present project is Descriptive in nature. It is done to poetry accurately the characteristic of a particular individual situation or a group. The major purpose is descriptive research is the description of the state of the affairs as it exits at presents. The main characteristics of this method are that the researcher has no control over the variables; he can only report what has happened or what is happening.
CHAPTERISATION SCHEME
1. Introduction 2. Literature Support 3. Process/ Methodology of Study 4. Analysis and Interpretation 5. Conclusion 6. Recommendation 7. Appendices Bibliography
QUESTIONNAIRE
Name: …………………………… Occupation:………………………….. Investment Presently Held:Please list the value the assets in your total investments portfolio (in Rs): Stocks:_________ Bonds:_____________ Options:____________ Real estate:____________ Mutual Funds:_______________ Govt. Securities:_____________ Bank Deposits:_____________
1.Over the next 3-5 years, do you expect your annual income to change? Increase Decrease Remain the same 2.Do you invest in Mutual Funds? Yes No Earlier, now stopped 3.What is your experience in the market? Less than a year 1-4 years 4.What is your Trading Preference? Speculation Investment Both More than 4 years
5.What is your Average investment period? Less than 3 months 3 to 9 months 9 months to 2 years More than 2 years 6.Factors influencing the investment decisions? Advice from Broker Current news Reviews in Financial Magazines Advice from Friends Self Evaluation Others 7.How much Risks are you willing to take? High Low Moderate
8.What is your preference in Mutual Funds? Equity Income Money Market Funds ELSS Balanced Funds SIP Others 9.How much Appreciation do you expect from your investments? Up to 15% 15-25% 25-35% More than 35% 10.How much loss are you willing to take? Less than 5% 5-10% more than 10% 11.Which type of Mutual funds do you prefer? Open ended schemes Closed ended schemes 12.Do you get influenced by the name of Company promoting Mutual Funds? Yes NO 13.Do you get influence by the name of returns given by a fund or by the current NAV of a funds? By NAV By Returns Both 14.After how many years do you expect to redeem your investment? 0-2 Years 3-5 Years 6-10 Years 11-15 Years Over15 Years 15.How many people are financially dependent upon you? More than 4 persons Three people Two people One people I only need to take care of myself
TITLE OF THE PROJECT
SHARE MARKET AN OVERVIEW
CONTENTS
1. Introduction 2. Literature Support 3. Process/ Methodology of Study 4. Data Collection 5. Analysis and Interpretation 6. Conclusion 7. Recommendation 8. Appendices Bibliography
LIST OF GRAPHS & CHARTS Sl. No. 1. Graph no. 4.1 Graph Title Page no. 68
On which Basis of choose loan
Occupation of the people
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LIST OF TABLE Sl. No. 1. Table no. 4.1 Graph Title Page no. 67
Company share price
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On which Basis of choose loan
Occupation of the people
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PREFACE
The introduction and application of the concept of customer services entered in a welcoming way in India only after independence. The share market in India has come a long way during the last two centuries. Its growth was faster and the coverage wider since and major position of securities sector was entrusted to the public sector. This process continued and embraced few private banks in 1980. The transfer of ownership of banks from the public to private was aimed at entrusting the banks with greater responsibilities for the economic development of India by taking securities services to the masses and taking special care of the weaker section of the society and the priority sector of the economy. Though the number of securities company magnitude and the variety of their operations has grown considerably during the period of near about three decades, but it appears that the securities sector has entered into serious among customers.
For overcoming this problem, securities industry should seek introspection and adopt refined management techniques. It has been endeavor of this study to analyze the present state of various company keeping in view the primary data has been collected regarding the present state of invest schemes in various company by using a questionnaire.
ACKNOWLEDGMENT
“People must have guidance in doing their work know where to turn For help guidance”
It is said that “No learning is possible without any proper guidance and no research is possible without any proper guidance , some contribution is performed by various individual This project work, which is my step in the field of professinalisation, has been successfully accomplished only because of time support of my well-wisher. I would like to pay my sincere and thank to those, who directed me at every step in my project work. I express my gratitude to my esteemed guide, for their valuable assistance and encouragement, which enable me to carry on the project successfully. They gave me wonderful opportunity to work on the project. There time-to-time guidance and incessant support helped me to broaden my outlook on the project. I am highly obliged for their support throughout the internship. I also had the privilege of meeting many company officials including marketing chief manager and discussing particular aspect of various investment options. The project also involved constant interaction with my friends in the college. A vote of thank also goes to them. At last this acknowledgement can only be completed after being to my parent and Almighty God.
DECLARATION
I Harsimran Kaur Enrollment No: 42101688 of class MBA of (IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY here by declare the project entitled “SHARE MARKET AN OVERVIEW” is an original work and same has not been submitted to any other institution for awards of any other degree partially or wholly.
(Signature of Candidate)
1. Introduction
Basics of Indian Share Market Share Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock. A person carrying a share of a company holds that part of ownership in that company. A person holding maximum shares has maximum ownership like directors, chairman etc. Share Market A Share market is the place where buying and selling of shares takes place. Now days due to internet and advanced technology there is no need to be physical present in exchanges like NSE and BSE but the buying and selling of shares takes place from anywhere in India and also from foreign country. One should need the demat account, computer and internet connection and he/she can start trading. Share market and its analysis Financial markets like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are countries economic barometer (a guide to economic growth). Stock markets like NSE and BSE are the stock exchanges where the trading of a company's stock takes place. First let us understand the Working of a share (stock) market To learn about how you can earn on the stock market, one has to understand
how it works. When a person want to buy/sell shares in the share market then he has to first place the order with a broker or can do themselves using online trading systems (this will be discussed later). When you place the buy order, the message is transferred to the exchange [either NSE {National Stock Exchange} or BSE {Bombay Stock Exchange}] and the order stays in the queue of exchange's other orders and gets executed if the price of that share comes to that value. Once you get the confirmation of this transcation,the shares purchased, will be sent to your demat account.The shares will be in electronic format in demat account. Rolling Settlement Cycle: (RSC) RSC means when you will get your shares in your demat account. In a rolling settlement, each trading day(T) is considered as a trading period and trades executed during the trading day(T) are settled on a T+2 basis i.e. trading day plus two working days. So on forth working day you can see the shares in your demat account What is Demat account and why it is required? Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed by the Government of India in 1992 with its head office at Mumbai. Its one of the function is helping the business in stock exchanges and any other securities markets. In another word it is the regulator for stock exchanges. # Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical certificates) converted into electronic form maintained in an account with the Depository Participant (DP). # DP could be organizations involved in the business of providing financial
services like banks, brokers, financial institutions etc. DP’s are like agents of Depository. # Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.) # Investor’s wishing to open Demat account has to go DP and open the account. # Opening the Demat account is as simple as opening the bank account with any bank. As you need bank account to save your money, make cheque payments etc, likewise you need to open a demat account if you want to buy and sell stocks in share market. # All shares what you possess will show in your demat account, so you don't have to possess any physical certificates. They are all held electronically in your demat account. As you buy and sell the shares accordingly your shares will get adjusted in your demat account.
Is a demat account a must? YES. The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares in share market. So a demat account is a must for trading and investing in share market.
How to open a Demat account? You have to approach a DP to open a Demat account. Most banks are DP participants so you may approach them or else you can contact us. To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com. A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.
Following are the documents required to open Demat account When you approach any DP, you will be guided through the formalities for opening a demat account. The DP will ask to provide some documents as proof of your identity and address. Below is a list but you may not require all of them. PAN card, Voter’s ID, Passport, Ration card, Driver’s license, Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc.
Do you need any shares to open a Demat account? NO. You need not have to have any shares to open a demat account. A demat account can be opened with no balance of shares. And there is no minimum balance to be maintained either. You can have a zero balance (shares) in your account.
How much it cost to open a Demat account? The charges for demat account opening, annual account maintenance fees and transaction charges varies between various DP’s. To have latest charges please visit websites of www.nsdl.co.in and www.cdslindia.com or else you need to contact the specific broker.
Finally After successfully opening the demat account you are ready to do buy and sell shares in share market exchanges like BSE and NSE. Important points to remember while opening online account ♦ Do multiple enquiries and try get low brokerage trading account. ♦ Also discuss about the margin they provide for day trading. ♦ Discuss about fund transfer. The fund transfer should be reliable and easy. Fund transfer from your bank account to trading account and visa versa. Some online share trading account has integrated savings account which makes easy for you to transfer funds from your saving account to trading account. ♦ Very important is about service they provide, the research calls, intraday or daily trading tips. ♦ Also enquire about their services charges and any other hidden fees if any. ♦ And also see how reliable and easy is to contact them in case if any
emergency. Emergency like buying and selling of shares on immediate basis or in case of any technical or other problems at your side while doing trading yourself. Investing!! What's that Judging by the fact that you've taken the trouble to navigate to this page my guess is that you don't need much convincing about the wisdom of investing. However, I hope that your quest for knowledge/information about the art/science of investing ends here. Read on. Knowledge is power. It is common knowledge that money has to be invested wisely. If you are a novice at investing, terms such as stocks, bonds, futures, options, Open interest, yield, P/E ratio may sound Greek and Latin. Relax. It takes years to understand the art of investing. You're not alone in the quest to crack the jargon. To start with, take your investment decisions with as many facts as you can assimilate. But, understand that you can never know everything. Learning to live with the anxiety of the unknown is part of investing. Being enthusiastic about getting started is the first step, though daunting at the first instance. That's why my investment course begins with a dose of encouragement: With enough time and a little discipline, you are all but guaranteed to make the right moves in the market. Patience and the willingness to invest your savings across a portfolio of securities tailored to suit your age and risk profile will propel your revenues and cushion you against any major losses. Investing is not about putting all your money into the "Next big thing," hoping to make a killing. Investing isn't gambling or speculation; it's about taking reasonable risks to reap steady rewards. Investing is a method of purchasing assets in order to gain profit in the form of reasonably predictable income (dividends, interest, or rentals) and appreciation over the long term.
Why should you invest? Simply put, you should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation or maybe have some fun in your life and do things you had always dreamed of doing with a little extra cash in your pocket. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary. When to Invest? The sooner the better. By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends. Considering the unpredictability of the markets, research and history indicates these three golden rules for all investors 1. Invest early 2. Invest regularly 3. Invest for long term and not short term While it’s tempting to wait for the “best time” to invest, especially in a rising market, remember that the risk of waiting may be much greater than the potential rewards of participating. Trust in the power of compounding. Compounding is
growth via reinvestment of returns earned on your savings. Compounding has a snowballing effect because you earn income not only on the original investment but also on the reinvestment of dividend/interest accumulated over the years. The power of compounding is one of the most compelling reasons for investing as soon as possible. The earlier you start investing and continue to do so consistently the more money you will make. The longer you leave your money invested and the higher the interest rates, the faster your money will grow. That's why stocks are the best long-term investment tool. The general upward momentum of the economy mitigates the stock market volatility and the risk of losses. That’s the reasoning behind investing for long term rather than short term. How much to invest? There is no statutory amount that an investor needs to invest in order to generate adequate returns from his savings. The amount that you invest will eventually depend on factors such as: 1 Your risk profile 2. Your Time horizon 3. Savings made Remember that no amount is too small to make a beginning. Whatever amount of money you can spare to begin with is good enough. You can keep increasing the amount you invest over a period of time as you keep growing in confidence and understanding of the investment options available and So instead of just dreaming about those wads of money do something concrete about it and start investing soon as you can with whatever amount of money you can spare. Investment is a term with several closely-related meanings in finance and economics. It refers to the accumulation of some kind of asset in hopes of getting a future return from it.
Assets such as equity shares or bonds held for their financial return (interest, dividends or capital appreciation), rather than for their use in the organization’s operations. Return on Investments The money you earn or lose on your investment, expressed as a percentage of your original investment. In Simple words, It is the amount received as a result of investing in particular ventures. Collective Investments Schemes Funds which manage money for a number of investors and pool it together. This enables investors to benefit from a larger number of individual investments and cost Short-Term Investments efficiencies.
Short-Term Investments are generally investments with maturities of less than one Capital Investments year.
Investments into the fixed capital (capital assets), including costs for the new construction, expansion, reconstruction and technical reequipment of the operating enterprises, purchase of machinery, equipment, tools, accessories, project and investigation works and other costs and expenditures.
There are two ways for investors to get shares from the primary and secondary markets. In primary markets, securities are bought by way of public issue directly from the company. In Secondary market share are traded between two investors.
In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT's. In British English, the usage of the word share alone to refer solely to stocks is so common that it almost replaces the word stock itself. In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market. By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price. A company's stock price reflects what investors think about the stock, not necessarily what the company is "worth." For example, companies that are growing quickly often trade at a higher price than the company might currently be "worth." Stock prices are also affected by all forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price.
Quick Facts on Stocks and Shares
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Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer no guarantee of any returns and can lose value even in the long run
Investments in stocks can generate returns through dividends, even if the
price How does one trade in shares ? Every transaction in the stock exchange is carried out through licensed members called brokers. To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders. The general investors should identify a sub-broker for regular trading in shares and palce his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it .
What are active Shares ? Shares in which there are frequent and day-to-day dealings, as distinguished from partly active shares in which dealings are not so frequent. Most shares of leading companies would be active, particularly those which are sensitive to economic and political events and are, therefore, subject to sudden price movements. Some market analysts would define active shares as those which are bought and sold at least three times a week.
Demat refers to a dematerialised account. Though the company is under obligation to offer the securities in both physical and demat mode, you have the choice to receive the securities in either mode. If you wish to have securities in demat mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application.
It is, however desirable that you hold securities in demat form as physical
securities
carry
the
risk
of
being
fake,
forged
or
stolen.
Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account. Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions. Is a demat account a must? Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing. Most banks are also DP participants, as are many brokers. You can choose your very own DP. To get a list, visit the NSDL and CDSL websites and see who the registered DPs are. A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients.
2. Literature Support
A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). Thus it is a contract to buy (known as a "call" contract) or sell (known as a "put" contract) shares of stock, at a predetermined or calculable (from a formula in the contract) price. It is Having the Rights to purchase a corporation's stock at a specified price. Infact There are two definitions of stock options. 1. The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies.
2. A widely used form of employee incentive and compensation.In some Companies, Stock options constitute part of remuneration. Employee stock options are stock options for the company's own stock that are often offered to upper-level employees as part of the executive compensation package. An employee stock option is identical to a call option on the company's stock, with some extra restrictions.
Performance Stock Options are Options that vest if pre-determined performance measures are achieved. The performance goal (revenue growth, stock-price increases…) must be reached for the options to be exercisable or for the vesting to be accelerated
You can buy any stock and sell any stock and it doesn’t take much to get started. All you need is a brokerage account. A broker that I use is Scottrade http://www.scottrade.com/ and you can start an account with them for $500 and their commissions are only $7, so they are not expensive at all. Once you have setup a brokerage account you then need to choose an investment method and then research different companies and then buy stock in .the ones that you feel will go up because they are good sound companies. So as you can see there are several benefits to online stock trading but let’s recap. With online stock trading all you need is $500 to open a brokerage account, the brokerage commissions are low at Scottrade they’re only $7 and you can buy and sell your stocks from your home computer anytime that the stock market is open. Well now that you know that you can do online stock trading with a minimal investment you should get started today and then start learning about the stock market and choose the stocks you want to invest in. What is NET ASSET VALUE ? The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund. The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV. Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing market value of all securities owned plus all other .assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding.
Calculating NAVs - Calculating mutual fund net asset values is easy. Simply take the current market value of the fund's net assets (securities held by the fund .minus any liabilities) and divide by the number of shares outstanding. So if a . fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs.50.00. These days, you can't retire without using the returns from investments. You can't count on your social security checks to cover your expenses when you retire. It's barely enough for people who are receiving it now to have food, shelter and utilities. That doesn't account for any care you may need or in the even that you need to take advantage of such funds much earlier in life. It is important to have your own financial plan. There are many kinds of investments you can make that will make your life much easier down the road. The following are brief descriptions for beginning investors to familiarize themselves with different kinds of investment options: 401K Plans The easiest and most popular kind of investment is a 401K plan. This is due to the fact that most jobs offer this savings program where the money can be automatically deducted from your payroll check and you never realize it is missing. Life Insurance Life Insurance policies are another kind of investment that is fairly popular. It is a way to ensure income for your family when you die. It allows you a sense of security and provides a valuable tax deduction. Stocks Stocks are a unique kind of investment because they allow you to take partial ownership in a company. Because of this, the returns are potentially bigger and they have a history of being a wise way to invest your money. Bonds A bond is basically a promise note from the government or a private company. You agree to give them a set amount of money as a loan and they keep it for a set number of years with a predetermined amount of interest. This is typically a safe bet and one that is a good investment for a first time investor because there is little risk of losing your money.
Mutual Funds Mutual funds are a kind of investment that are based on the gains and losses of a shareholder. Basically one person manages the money of several or many investors and invests in a list of various stocks to lessen the effect of any losses that may occur. Money Market Funds A good short-term investment is a Money Market Fund. With this kind of investment you can earn interest as an independent shareholder. Annuities If you are interested in tax-deferred income, then annuities may be the right kind of investment for you. This is an agreement between you and the insurer. It works to produce income for you and protect your earning potential. Brokered Certificates of Deposit (CDs) CDs are a kind of investment where you deposit money for a set amount of time. The good thing about CDs is that you can take the money out at any time without paying a penalty fee. We all know life isn't predictable, so this is a nice feature to .have in your option. Real Estate Real Estate is a tangible kind of investment. It includes your land and anything permanently attached to your piece of property. This may include your home, rental properties, your company or empty pieces of land. Real estate is typically a smart and can make you a lot of money over time The Securities and Exchange Board of India (SEBI), the capital market watchdog, Thursday cracked down on some of the top brokerage firms and banks for their alleged involvement in an initial public offering (IPO) scam. SEBI conducted investigations in respect of all the IPOs from January 2003 to December 2005.
The findings of investigations, prima facie, revealed violations of serious nature by several key operators, their financiers, concerned depository participants and the depositories. In its order, SEBI has barred brokerage firms like Karvy Stockbroking and
IndiaBulls from the market. It has also directed HDFC Bank and IDBI Bank not to open new demat accounts for share transactions. SEBI's Order fallout: 24 entities banned from primary and secondary market, including Indiabulls, Karvy Securities • Quasi-judicial proceedings against Karvy DP and Pratik DP, banned from the market • 12 DPs can’t open fresh demat accounts, including HDFC Bank, IDBI Bank, Central Bank, ING Vysya Bank, IL&FS and Motilal Oswal; 15 more under scrutiny, including ICICI Bank, Citibank, Stanchart
• 85 Financiers barred from the market. SEBI said certain entities had cornered shares reserved for retail applicants in the name of fictitious entities in the initial public offerings of Yes Bank and Infrastructure Development Finance Company (IDFC).
Each of the fictitious application was of small value so as to be eligible for allotment under the retail category, it added.
After the allotment, these fictitious beneficiaries transferred these shares to their principals who in turn transferred the shares to their financiers.
The financiers in turn sold most of these shares on the first day of listing, thereby realizing the windfall gain of the price difference between IPO price and the listing price. Generally, most shares have a face value (i.e. the value as in a balance sheet) of Rs.10 though not always offered to the public at this price. Companies can offer a share with a face value of Rs.10 to the public at a higher price. The difference between the offer price and the face value is called the premium. As per the SEBI guidelines, new companies can offer shares to the public at a premium provided : 1.The promoter company has a 3 years consistent record of profitable working. 2.The promoter takes up at least 50 per cent of the shares in the issue. 3.All parties applying to the issue should be offered the same instrument at the
same terms, especially regarding the premium. 4.The propectus should provide justification for the propose premium. On the other hand, exisiting companies can make a premium issue without the above restrictions. A company’s aim is to raise money and simultaneously serve the equity capital. As far as accounting is concerned, premium is credited to reserves and surplus and it does not increase the equity. Therefore, a company which raises Rs.100 crores by way of shares at say Rs.90 premium per share increases its equity by only Rs.10 crores, which is easier to service with an investment of Rs.100 crores. Thus the companies seek to make premium issues. As well shall see later, a premium issue can increase the book value without decreasing the EPS. In a buoyant stock market when good shares trade at very high prices, companies realize that it’s easy to command a high premium.
Many people confuse trading with investing. They are not the same. The biggest difference between them is the length of time you hold onto the assets. An investor is more interested in the long-term appreciation of his assets, counting on that historical rise in market equity. He’s not generally concerned about short-term fluctuations in prices, because he’ll ride them out over the long haul. An investor relies mostly on Fundamental Analysis, which is the analytical method of predicting long-term prospects of a particular asset. Most investors adopt a “buy and hold” approach to assets, which simply means they buy shares of some company and hold onto them for a long time. This approach can be dangerous, even devastating, in an extremely volatile market such as today’s BSE or NSE Indexs Show. Let’s consider someone who bought shares of XYZ Company at their peak value
of around Rs.650 per share at the beginning of the year 2000. Two years later, those shares are worth Rs.100 each. If that investor had spent Rs. 65,000/-, his net loss would be Rs.55000/- ! I don’t know about you, but losing Fifty Five Thousand Rupees would be a relatively big loss for me. Many investors suffer such losses regularly, hoping that in five or ten or fifteen years the market will rebound, and they’ll recoup their losses and achieve an overall gain. What most investors need to remember is this: investing is not about weathering storms with your “beloved” company – it’s about making money. Traders, on the other hand, are attempting to profit on just those short-term price fluctuations. The amount of time an active trader holds onto an asset is very short: in many cases minutes, or sometimes seconds. If you can catch just two index points on an average day, you can make a comfortable living as an Trader. To help make their decisions, Traders rely on Technical Analysis, a form of marketing analysis that attempts to predict short-term price fluctuations. The stock markets are at all time highs and just like the last time around when the market was at its previous high every one thinks that nothing can go wrong and there is just one way where the market can go which is UP. Nothing could be farther from the truth and this will be clear from the way the market behaves in the next few months. Here are a few tips that would hopefully save you from losing a lot of cash in the current frenzy. Time and again investors have burnt their fingers in the markets and here are some tips to you so that you do not end up burning your fingers in this market. The number one tip at this point would be to sell if you have stocks and not to
buy them if you have cash. The golden principle in the markets is “Buy when everyone else sells and sell when everyone else buys”. Simple enough right? Not really. Why? Because of peer pressure pure and simple. When everyone else around you seems to be having a ball at the markets you would feel like a fool if you didn’t participate now. OK so you can’t resist buying at this time then at least do yourself a favor and stay away from unknown Penny Stock and hot tips that your barber gave you. True that the stock has tripled in the last fifteen days but that was before people like your barber started buying the stock. Chances are that the Promoter of the company have started buying into the stock and have spread rumors like acquisition or a big export order to fool investors and sell out to them at a later date. Another tip that would serve useful is to value a stock based on its future growth and not its past performance. For instance many investors say that I will not buy stocks of X company because it has doubled in the last year. Well it may have doubled in the last year but that should not be the thing you should be telling yourself. Rather you should ask yourself why has this doubled in the last year and can it do so again? There should be a solid answer to your question like the launch of a new product or reduction in the prices of raw material. And indeed if the answer is in the positive then by all means go ahead and buy that stock regardless of what has happened in the last year. Another tip would be to remember what you are buying. Quite simply investors often forget that when buying a stock they are simply buying ownership in the companies. Most of you would know that nothing spectacular would happen in the company that you work for, in a month, they are not going to double their revenues and certainly not double your salary every month. Then why expect anything different from the companies that you are investing in. Why expect the prices to double in a month or two. Give time to your investments; don’t reduce it
to a gamble. Only when you invest in fundamentally sound companies and then give the investments sufficient time to grow will you see some healthy returns on your investments. Ideally a minimum horizon of one year is a good time. Hope these tips will prove helpful and you will make a lot more in the stock markets than you have already been making. Happy Investing! 1. You can tell if a Stock is cheap or expensive by the Price to Earnings Ratio. False: PE ratios are easy to calculate, that is why they are listed in newspapers etc. But you cannot compare PE’s on companies from different industries, as the variables those companies and industries have are different. Even comparing within an industry, PE’s don’t tell you about many financial fundamentals and nothing about a stock’s value. 2. To make Money in the Stock Market, you must assume High Risks. False: Tips to Lower your Risk: ·: Do not put more than 10% of your money into any one stock ·:Do not own more than 2-3 stocks in any industry Buy your stocks over time, not all at once· Buy stocks with consistent and predictable earnings growth ·:Buy stocks with growth rates greater than the total of inflation and interest rates ·: Use stop-loss orders to limit your risk 3. Buy Stocks on the Way Down and Sell on the Way Up. False: People believe that a falling stock is cheap and a rising stock is too expensive. But on the way down, you have no idea how much further it may fall. If a stock is rising, especially if it has broken previous highs, there are no unhappy owners who want to dump it. If the stock is fairly valued, it should continue to rise. 4. You can Hedge Inflation with Stocks. False: When interest rates rise, people start to pull money out of the market and into bonds, so that pushes prices down. Plus the cost of business goes up, so corporate earnings go down, along with the stock prices.
5. Young People can afford to take High Risk. False: The only thing true about this is that young people have time on their side if they lose all their money. But young people have little disposable income to risk losing. If they follow the tips above, they can make money over many years. Young people have the time to be patient. Traditionally, saving has been viewed as quite different from investing. In most savings alternatives, the initial amount of capital or cash remains constant, earning guaranteed rates of interest. The capital value of investments can go up or down. Returns are not guaranteed. However, creation of money market funds and deregulation of the banking industry have resulted in a variety of savings options that earn variable rates of return. Savings provide funds for emergencies and for making specific purchases in the relatively near future (generally within two years). The primary goal is to store funds and keep them safe. This is why savings are generally placed in interestbearing accounts that are safe (such as those insured or guaranteed by the federal government) and liquid (those in the form of cash or easily changed into cash on short notice with minimal or no loss). However, these generally have low yields. Because of the opportunities for earning a higher return with a relatively small pool of funds, some financial experts suggest that savers consider slightly higher risk (but liquid) alternatives for at least part of their savings. Saved money is insurance. It is insurance against risk, against losing your job, against having a major unexpected repair bill or medical expense in the family. It is the backbone of you and your family’s financial well-being. Saved money grants you financial security. And the more you save, the more financial secure and independent you will be. The goal of investing is generally to increase net worth and work toward longterm goals. Investing involves risk. Risk of your stocks losing money, or even
going bankrupt (Enron, MCI, the airlines, etc. etc.). Risk of interest rates rising, and bond prices falling. Risks of your broker swindled you, or coerced you though his sales pitch to buy speculative investments. Risks of the economy. Risks of a particular industry. Risk of losing your principal. Risk of losing it all, and then some (such as with margin calls). Trying to win in the stock market without a trading plan is like trying to build a house without blueprints - costly mistakes are inevitable. Why do you need a Trading Plan? 1 - During trading hours, emotions will turn smart people into idiots. Therefore, you have to avoid having to make decisions during those hours. For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline. 2 - Consistent results require consistent actions - consistent actions can only be achieved through a detailed plan. What should be in your trading plan? 1 - Your strategy to enter and exit trades You have to describe the conditions that have to be met before you enter a trade. You also have to describe the conditions under which you will close a position. These conditions may include technical analysis, fundamental analysis, or a combination of both. They may also include market conditions, public sentiment, etc... 2 - Your Money management rules to keep losses small - the goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following: - Maximum amount at risk for each trade. Maximum amount at risk for all your opened - Maximum daily and weekly amount lost before you stop trading 3 - Your daily routine - after the market closes, before it opens, etc... 4 - Activities you carry out during the weekend. positions.
5 - I also like to include reminders that I read every day I will follow a trading plan to guide my trading - therefore my job will be one of patience and discipline. I will always keep my trading plan simple. - I will take actions according to my trading plan, not because of greed, fear, or hope. - I will not deceive myself when I deviate from my trading plan. Instead I will admit the error and correct it. I will have a winning attitude. - Take responsibility for all your actions – don’t blame the market or world events. - Trade to trade well and for the love of trading, not to trade often and not for the money. Don’t be influenced by the opinions of others. - Never think that taking money from the market is easy. - Don’t try to guess the future – trading is a game of probabilities. - Use your head and stay calm – don’t get excited or depressed. Handle trading as a serious intellectual pursuit. - Don’t count how much money you have made or lost while you are in a trade – focus on trading well. A trading plan will not guarantee you success in the stock market but not having one will pretty much guarantee failure. PRIMARYMARKET Market for new issues of securities, as distinguished from the Secondary Market, where previously issued securities are bought and sold.
A market is primary if the proceeds of sales go to the issuer of the securities sold. This is part of the financial market where enterprises issue their new shares and bonds. It is characterised by being the only moment when the enterprise receives money in exchange for selling its financial assets. SECONDARY MARKET
The market where securities are traded after they are initially offered in the
primary market. Most trading is done in the secondary market. To explain further, it is Trading in previously issued financial instruments. An organized market for used securities. Examples are the New York Stock Exchange (NYSE), Bombay Stock Exchange (BSE),National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc.
A stock broker is a person or a firm that trades on its clients behalf, you tell them what you want to invest in and they will issue the buy or sell order. Some stock brokers also give out financial advice that you a charged for. It wasn’t too long ago and investing was very expensive because you had to go through a full service broker which would give you advice on what to do and would charge you a hefty fee for it. Now there are a plethora of discount stock brokers such as Scottrade http://www.scottrade.com now you can trade stocks for a low fee such as $7 total. I can think of three different types of stock brokers. 1. Full Service Broker - A full-service broker can provide a bunch of services such as investment research advice, tax planning and retirement planning. 2. Discount Broker – A discount broker let’s you buy and sell stocks at a low rate but doesn’t provide any investment advice.
3. Direct-Access Broker- A direct access broker lets you trade directly with the electronic communication networks (ECN’s) so you can trade faster. Active traders such as day traders tend to use Direct Access Brokers So as you can tell there a few options for a stock broker and you really need to pick which one suits you needs. Reed Floren runs a stock market forum where you can find answers to all your stock market questions register for your free membership at this stock market forum
In order to understand what stocks are and how stock markets work, we need to dive into history--specifically, the history of what has come to be known as the corporation, or sometimes the limited liability company (LLC). Corporations in one form or another have been around ever since one guy convinced a few others to pool their resources for mutual benefit. The first corporate charters were created in Britain as early as the sixteenth century, but these were generally what we might think of today as a public corporation owned by the government, like the postal service. Privately owned corporations came into being gradually during the early 19th century in the United States , United Kingdom and western Europe as the governments of those countries started allowing anyone to create corporations. In order for a corporation to do business, it needs to get money from somewhere. Typically, one or more people contribute an initial investment to get the company off the ground. These entrepreneurs may commit some of their own money, but if they don't have enough, they will need to persuade other people, such as venture capital investors or banks, to invest in their business. They can do this in two ways: by issuing bonds, which are basically a way of selling debt (or taking out a loan, depending on your perspective), or by issuing stock, that is, shares in the ownership of the company. Long ago stock owners realized that it would be convenient if there were a central place they could go to trade stock with one another, and the public stock exchange was born. Eventually, today's stock markets grew out of these public places. Stocks A corporation is generally entitled to create as many shares as it pleases. Each share is a small piece of ownership. The more shares you own, the more of the company you own, and the more control you have over the company's operations. Companies sometimes issue different classes of shares, which have different privileges associated with them.
So a corporation creates some shares, and sells them to an investor for an agreed upon price, the corporation now has money. In return, the investor has a degree of ownership in the corporation, and can exercise some control over it. The corporation can continue to issue new shares, as long as it can persuade people to buy them. If the company makes a profit, it may decide to plow the money back into the business or use some of it to pay dividends on the shares.
Public Markets How each stock market works is dependent on its internal organization and government regulation. The NYSE (New York Stock Exchange) is a non-profit corporation, while the NASDAQ (National Association of Securities Dealers Automated Quotation) and the TSE (Toronto Stock Exchange) are for-profit businesses, earning money by providing trading services. Most companies that go public have been around for at least a little while. Going public gives the company an opportunity for a potentially huge capital infusion, since millions of investors can now easily purchase shares. It also exposes the corporation to stricter regulatory control by government regulators. When a corporation decides to go public, after filing the necessary paperwork with the government and with the exchange it has chosen, it makes an initial public offering (IPO). The company will decide how many shares to issue on the public market and the price it wants to sell them for. When all the shares in the IPO are sold, the company can use the proceeds to invest in the business.
There are two classic market types used to characterize the general direction of the market. Bull markets are when the market is generally rising, typically the result of a strong economy. A bull market is typified by generally rising stock prices, high economic growth, and strong investor confidence in the economy. Bear markets are the opposite. A bear market is typified by falling stock prices, bad economic news, and low investor confidence in the economy. A bull market is a financial market where prices of instruments (e.g., stocks)
are, on average, trending higher. The bull market tends to be associated with rising investor confidence and expectations of further capital gains. A market in which prices are rising. A market participant who believes prices will move higher is called a "bull". A news item is considered bullish if it is expected to result in higher prices.An advancing trend in stock prices that usually occurs for a time period of months or years. Bull markets are generally characterized by high trading volume. Simply put, bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low. Bear markets are the opposite--stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation. A key to successful investing during a bull market is to take advantage of the rising prices. For most, this means buying securities early, watching them rise in value and then selling them when they reach a high. However, as simple as it sounds, this practice involves timing the market. Since no one knows exactly when the market will begin its climb or reach its peak, virtually no one can time the market perfectly. Investors often attempt to buy securities as they demonstrate a strong and steady rise and sell them as the market begins a strong move downward. Portfolios with larger percentages of stocks can work well when the market is moving upward. Investors who believe in watching the market will buy and sell accordingly to change their portfolios.Speculators and risk-takers can fare relatively well in bull markets. They believe they can make profits from rising prices, so they buy stocks, options, futures and currencies they believe will gain value. Growth is what most bull investors seek. What is a Bear Market?
The opposite of a bull market is a bear market when prices are falling in a financial market for a prolonged period of time. A bear market tends to be accompanied by widespread pessimism.A bear market is slang for when stock
prices have decreased for an extended period of time. If an investor is "bearish" they are referred to as a bear because they believe a particular company, industry, sector, or market in general is going to go down. Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, Mutual Funds also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking Mutual Fund investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. Mutual Funds are portfolio of stock market shares and other financial instruments built with funds collected from (usually) small investors whose primary concern is security of investment. These funds are run by government trusts, banks, and now private financial institutions as well. These funds can be OPEN – FUNDED or CLOSED – ENDED. There are different kinds of mutual funds to cater to varied investment objectives: Growth Funds, Income Funds, Balanced Funds, and Liquid Assets Funds, also known as Money Market Funds. What is known in the United States and India as mutual funds is called a Unit Trust in Britain . This site is an attempt to make aware Basics of Mutual Funds from an Invester Point of View. The Information provided here is for learning purpose only If you've ever owned stocks or held certain other types of investments, you might already be familiar with the concept of dividends. Even those people who have made investments that paid dividends may still be a little confused as to exactly what dividends are, however… after all, just because a person has received a dividend payment doesn't mean that they fully appreciate where the payment is coming from and what its purpose is. If you have ever found yourself wondering exactly what dividends are and why
they're issued, then the information below might just be what you've been looking for.
Defining the Dividend Dividends are payments made by companies to their stockholders in order to share a portion of the profits from a particular quarter or year. The amount that any particular stockholder receives is dependent upon how many shares of stock they own and how much the total amount being divided up among the stockholders amounts to. This means that after a particularly profitable quarter a company might set aside a lump sum to be divided up amongst all of their stockholders, though each individual share might be worth only a very small amount potentially fractions of a cent, depending upon the total number of shares issued and the total amount being divided. Individuals who own large amounts of stock receive much more from the dividends than those who own only a little, but the total per-share amount is usually the same. When Dividends Are Paid How often dividends are paid can vary from one company to the next, but in general they are paid whenever the company reports a profit. Since most companies are required to report their profits or losses quarterly, this means that most of them have the potential to pay dividends up to four times each year. Some companies pay dividends more often than this, however, and others may pay only once per year. The more time there is between dividend payments can indicate financial and profit problems within a company, but if the company simply chooses to pay all of their dividends at once it may also lead to higher pershare payments on those dividends. Why Dividends Are Paid
Dividends are paid by companies as a method of sharing their profitable times with the stockholders that have faith in the company, as well as a way of luring other investors into purchasing stock in the company that is paying the dividends. The more a particular company pays in dividend payments, the more likely it is to sell additional common stock… after all, if the company is well-known for high dividend payments then more people will want to get in on the action. This can actually lead to increases in stock price and additional profit for the company which can result in even more dividend payments.
In order to get the most out of the dividends that you receive on your investments, it is generally recommended that you reinvest the dividends into the companies that pay them. While this may seem as though you're simply giving them their money back, you're receiving additional shares of the company's stock in exchange for the dividend. This will increase future dividend payments (since they're based upon how much stock that you own), and can set you up to make a lot more money than the actual dividend payment was for since increases in stock prices will affect the newly-purchased stock as well.
INTRODUCTION ABOUT MUTUAL FUNDS:
Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally forms the basis for an investor’s decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time. Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much
better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on the investors (also known as unit holders) in proportion of the number of units they own.
Concept of Mutual Fund
Many investor with common financial objectives pool their money
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Investors, on a proportionate basis, get mutual fund units for the sum contributed to the pool The money collected from investors is invested into shares, debentures and other securities by the fund manger
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The fund manager realizes gains or losses, and collects dividend or interest income
Any capital gains or losses from such investments are passed on to the investors proportion of the number of units held by them
When an investor subscribes for the units of a mutual fund, he becomes part of the assets of the mutual fund in the same proportion as his contribution amount put up with the corpus (the total amount of the mutual fund). Mutual Fund investor is also known as a fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme’s assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme’s assets by the total number of units issued to the investors.
For example: A. If the market value of the assets of a fund is Rs.1,00, 000/B. The total number of units issued to the investors is equal to Rs.10,000/C. Then the NAV of this scheme= (A)/(B), i.e. 1,00,000/10,000 or 10.00 D. Now if an investor ‘X’ owns 5 units of this scheme E. Then his total contribution to the fund is Rs.50/- (i.e. Number of units held multiplied by the NAV of the scheme)
EQUITY FUNDS
Equity funds are considered to be the most risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for a long term i.e. for 3 years or more. There are different types of equity fund each falling into different risk bracket. In order of decreasing risk level, there are following types of equity funds:
Aggressive Growth Funds: - In aggressive Growth Funds, fund managers
aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Mutual Funs become more volatile and thus, are prone to higher risk than other equity funds.
Growth Funds:- Growth Funds also invest for capital appreciation (with time
horizon of 3e to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in future. SPECIALITY FUND:- Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some specialty funds could be to invest/not to invest in particular region/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of Speciality Funds:
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Sector Funds: - Equity Funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods)
Why they are more risky than equity funds that invest in multiple sectors.
Foreign Securities Funds:- Foreign Securities Equities Funds have the
option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.
Mid-Cap or Small-Cap Funds: - Funds that invest in companies having lower
market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs.2500/-crores but more than Rs.500/crores) and Small-Cap companies have market capitalization of less than Rs.500/-crores. Market Capitalization of a company can be calculated by multiplying the market price of the company’s share by the total number of its outstanding share in the market. The share of Mid-Cap or Small-Cap Companies is not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky.
Option Income Funds:- While not yet available in India, Option Income Funds
write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds in big, high dividend yielding companies, and then sell options against their stock.
Diversified Equity Funds:- Except for a small potion of investment in liquid
money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and
reduce sector-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Scheme (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs.1 lakh) at the time of filling the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income on such income(s) for which he may have received any tax exemption(s) in the past.
Equity Index Funds:- Equity Index Funds have the objective to match the
performance of a specific stock market index. The portfolio of these funds comprises of the companies that form the index and is constituted in the same proportion as the index. Equity index funds that follows broad indices (like S & P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX bank Index etc.). Narrow indices are less diversified and therefore, are more risky.
Value Funds:- Value Funds invest in those companies that have sound
fundamentals and whose share prices are currently under-valued. The portfolio of these comprises of shares that are trading at a low Prices to Earning Ratio (Market Price per Share/ Earning per share) and a low market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value Stocks are generally from cynical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a extent, is reduced.
Equity Income or Dividend Yield Funds:- The objective of Equity Income or
Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issues high dividends (such as power or Utility companies whose share prices fluctuate comparatively lesser than other companies’ share pries). Equity Income or Dividend Yield Equity funds are generally exposed to the lowest risk level as compared to other equity funds. .
Sale Price: - Sale price is the price you pay when you invest in a scheme. Also
called Offer Price. It may include a sales load.
Repurchase Price: - Repurchase Price is the price at which a close-ended
scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
Redemption Scheme: - Redemption scheme is the price at which open-ended
schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales Load: - Sales Load is a charge collected by a scheme when it sells the
units. Also called, “Front-End” load. Schemes that do not charge a load are called ‘No Load’ scheme.
Repurchase or ‘Back-end’ Load; - Is a charge collected by a scheme when
it buys back the units from the unit-holders.
SPONSER: - Sponsor is the person who acting or in combination with another
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Manager and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulation, 1996. The Sponsor is not responsible or liable for the any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual fund. The board of trustee manages the MF and the sponsor executes the trust deeds in favour of the trustees. It is the job of the MF trustees to see the schemes floated and managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI guidelines. The Sponsor appoints the Trustees, Custodian and the like the company promoter, the sponsor takes big-picture decisions related to the Mutual funds, leaving money management and other such nitty-gritty to the other constituents, whom it appoints. The sponsor should inspire confidence in you as a manager and, preferably, be profitable. Financial muscle, so long as it is complemented by good fund management, helps, as money is the not an impediment for the Mutual Fund –it can hire the best talent, invest in technology offer high service standards to the investors.
TRUST: -
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trust Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.
TRUSTEE – ASSET MANAGEMENT COMPANY (AMC):The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC does the research, the managers the corpus of the fund. It launches the various scheme of the fund, manages them, and then liquidates them at the end of their term. The people in the AMC who should matter the most to you are those who take investment decisions. There is the head of the fund house, generally referred to as the Chief Executive Officer (CEO). Under him comes the Chief Investment Officer (CIO), who shapes the fund’s investment philosophy, and fund mangers, who manages its schemes. They are assisted by a team of analysts, who track markets, sectors and companies. Although these people are employed by the AMC, it’s you, the unit holders, who pay their salaries, partly of wholly. Each scheme pays the AMC an annual ‘fund management fee’, which is linked to the scheme size and results in a corresponding drop in your return. If a scheme’s corpus is up to Rs.100crores it pays 1.25% of its corpus a year; on over Rs.100 crores, the fee is 1% of the corpus. So if a fund house has two schemes, with a corpus of Rs.100 crores and Rs.200 crores respectively, the AMC will earn Rs.3.25 crore (1.25+2) as a fund management fee that year.
Regulatory requirements for the AMC: -
Only SEBI registered AMC can be appointed as investment managers of mutual funds.
AMC must have a minimum net worth of Rs.10 crores at all times. An AMC cannot be an AMC or Trustee of another Mutual Fund. AMCs cannot indulge in any other business, other than that of asset management. At least half of the members of the Board of an AMC have to be independent. The 4th schedule of SEBI Regulations spells out rights and obligations of both trustees and AMCs.
Obligations of the AMC: Investments have to be according to the investment management agreement and SEBI regulations. The actions of its employees and associates have to be as mandated by the trustees. AMCs have to submit detailed quarterly reports on the working and performance of the mutual fund. AMCs have to make the necessary statutory disclosures o portfolio, NAV and price to the investors.
Restrictions on the AMC: AMCs cannot launch a scheme without the prior approval of the trustees. AMCs have to provide full details of the investments by employees and Board members in all cases where the investment exceeds Rs.1 lakh.
Over the last few years, high equity may have skewed asset allocation towards equities. The retail investor should re-examine his asset allocation to see that it is more balanced in light of improving bond returns. If the equity component of the portfolio is low, a SIP (Systematic Investment Plan ) mode of investment with a 3 to year horizon is the right strategy.
3. Process/ Methodology of Study
Research Methodology in a way is systematic representation of research or any other problem. It is a written game plan for conducting research. It tends to describe the step taken by a researcher in studying the research problem along with a logical background. It tends to describe methodology for solution of the problem that has been taken for the purpose of study this project focuses on the methodology for technique used for the collection, classification & tabulation of the data. This plan throws light on the research problem, the objective of study & limitation of the study. Therefore, in order to solve a problem, it is necessary to design a research methodology for problem as the same way differs from problem to problem.
Type of Research Research methodology is a way to systematic solve the research problem. It is a procedure, which is followed step by step to solve a particular research problem. There are basically four types of researches
EXPLORATIVE RESEARCH DESCRIPTIVE RESEARCH DIAGNOSTIC RESEARCH HYPOTHESIS TESTING RESEARCH
Explorative Research To gain familiarity with the phenomenon or to achieve an insight into it.
Descriptive Research To poetry accurately the characteristic of the particular individual situation or a group.
Diagnostic Research To determine the frequency with which something occurs or with which it is associate with something else.
Hypothesis Testing Research. To test a hypothesis of casual relationship between variables. The present project is Descriptive in nature. It is done to poetry accurately the characteristic of a particular individual situation or a group. The major purpose is descriptive research is the description of the state of the affairs as it exits at presents. The main characteristics of this method are that the researcher has no
control over the variables; he can only report what has happened or what is happening.
Statement of research problem A research problem, refers to some difficulty which a researcher experiences in the context of either a theoretical or practical situation and wants to obtain a solution for the same. Here the research problem is mutual funds (special reference with PNB).
Statement of research objectives It aims at getting an insight in to Retail loan. It also aims at familiarized with the customer during the market survey help me a lot in understanding the practical aspect of the loan as a whole .
To give level of information to the customer. To give satisfaction regarding services offered by bank To make out which bank provide services with best resources
To know the awareness among the common man about loan which they want to take.
RESEARCH DESIGN AND METHODOLOGY
Research is a systemic and objective process of gathering recording and anayzing data for aid of making decision regarding a particular problem.
RESEARCH DESIGN The research design is a master plan specifying the methods and procedures for collecting and analyzing the needed information the research design of my dissertation is DESCRIPTIVE RESEARCH Descriptive research includes surveys and facts findings inquiries of different kinds. RESEARCH INSTRUMENTS QUESTIONNAIRE SAMPLE DESIGN
• • •
target population people of industries sample size 100 people sampling technique convenience and judgmental
4. DATA COLLECTION
DATA COLLECTION PRIMARY DATA primary data is gathered through a survey with the help of questionnaire. SECONDARY DATA secondary data sources includes
• • •
Books Journals various websites
company share price
Company Price % Ch VIDEOIND 222.85 13.87 SATYAMCOMP 318.75 7.47 PATNI 190.85 7.43 GAMMONIND 148.00 7.13 JPASSOCIAT 118.90 7.02 Company % Ch LT 1215.30 50.25 KSK 222.00 -6.74 HCC 71.90 -6.68 JSWSTEEL 454.65 -5.32 BAJAJFINSV 364.10 -5.18 Price
Table no. 4.1
On which Basis of choose loan
Rate of interest EMI Total Amt. any Other Table no. 4.2
42% 25% 31% 2%
50% 40% 30% 20% 10% 0% Rate of interest EMI Total Amt. any Other
Graphs no. 4.1
Occupation of the people
businessman traders contracer any other
45% 32% 18% 15% Table no.4.3
50% 40% 30% 20% 10% 0% businessman traders contracer any other
Graphs no. 4.2
5. Analysis and Interpretation
Analysis is a method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns A stock market term - The attempt to look for numerical trends in a random function. The stock market used to be filled with technical analysts deciding what to buy and sell, until it was decided that their success rate is no better than chance. Now technical stock analysis is virtually non-existent. The Readers Submitted Examples page has more on this topic. Research and examination of the market and securities as it relates to their supply and demand in the marketplace. The technician uses charts and computer programs to identify and project price trends. The analysis includes studying price movements and trading volumes to determine patterns such as Head and Shoulder Formations and W Formations. Other indicators include support and resistance levels, and moving averages. In contrast to fundamental analysis, technical analysis does not consider a corporation's financial data. Technical analysts study trading histories to identify price trends in particular stocks, mutual funds, commodities, or options in specific market sectors or in the overall financial markets. They use their findings to predict probable, often short-term, trading patterns in the investments that they study. The speed (and advocates would say the accuracy) with which the analysts do their work depends on the development of increasingly sophisticated computer programs. Technical Analysis supposes markets have memory.If so, past prices, or the current price momentum, can give an idea of the future price evolution. Technical Analysis is a tool to detect if a trend (and thus the investor's behavior) will persist or break. It gives some results but can be deceptive as it
relies mostly on graphic signals that are often intertwined, unclear or belated. It might become a source of representiveness heuristic (spotting patterns where there are none) Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance. The use of past performance should come as no surprise. People using fundamental analysis have always looked at the past performance of companies by comparing fiscal data from previous quarters and years to determine future growth. The difference lies in the technical analyst's belief that securities move according to very predictable trends and patterns. These trends continue until something happens to change the trend, and until this change occurs, price levels are predictable. There are many instances of investors successfully trading a security using only their knowledge of the security's chart, without even understanding what the company does. However, although technical analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental analysis. Fundamental Analysis
Fundamental analysis looks at a share’s market price in light of the company’s underlying business proposition and financial situation. It involves making both quantitative and qualitative judgements about a company. Fundamental analysis can be contrasted with 'technical analysis’, which seeks to make judgements about the performance of a share based solely on its historic price behavior and without reference to the underlying business, the sector it's in, or the economy as a whole. This is done by tracking and charting the companies stock price, volume of shares traded day to day, both on the company itself and also on its competitors. In this way investors hope to build up a picture of future price movements.
MISTAKE ONE Lack of Knowledge and No Plan It amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course. The stock market is not the place for the ill informed. But learning what you need is straightforward – you just need someone to show you the way. The opposite extreme of this is those traders who spend their life looking for the Holy Grail of trading! Been there, done that! The truth is, there is no Holy Grail. But the good news is that you don't need it. Our trading system is highly successful, easy to learn and low risk.
MISTAKE TWO Unrealistic Expectations Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write out their resignation letter before they have even placed their first trade! Now, don't get us wrong. The stock market can be a great way to replace your current income and for creating wealth but it does require time. Not a lot, but some. So don't tell your boss where to put his job, just yet! Other beginners think that trading can be 100% accurate all the time. Of course this is unrealistic. But the best thing is that with our methods you only need to get 50-60% of your trades "right" to be successful and highly profitable. MISTAKE THREE
Listening to Others When traders first start out they often feel like they know nothing and that everyone else has the answers. So they listen to all the news reports and so called "experts" and get totally confused. And they take "tips" from their buddy, who got it from some cab driver… We will show you how you can get to know everything you need to know and so never have to listen to anyone else, ever again! MISTAKE FOUR Getting in the Way By this we mean letting your ego or your emotions get in the way of doing what you know you need to do. When you first start to trade it is very difficult to control your emotions. Fear and greed can be overwhelming. Lack of discipline; lack of patience and over confidence are just some of the other problems that we all face. It is critical you understand how to control this side of trading. There is also one other key that almost no one seems to talk about. But more on this another time! MISTAKE FIVE Poor Money Management It never ceases to amaze us how many traders don't understand the critical nature of money management and the related area of risk management. This is a critical aspect of trading. If you don't get this right you not only won't be successful, you won't survive! Fortunately, it is not complex to address and the simple steps we can show you will ensure that you don't "blow up" and that you get to keep your profits.
MISTAKE SIX Only Trading Market in One Direction Most new traders only learn how to trade a rising market. And very few traders know really good strategies for trading in a falling market. If you don't learn to trade "both" sides of the market, you are drastically limiting the number of trades you can take. And this limits the amount of money you can make. We can show you a simple strategy that allows you to profit when stocks fall. MISTAKE SEVEN Overtrading Most traders new to trading feel they have to be in the market all the time to make any real money. And they see trading opportunities when they're not even there (we’ve been there too). We can show you simple techniques that ensure you only "pull the trigger" when you should. And how trading less can actually make you more!
6. Conclusion
After going through my whole study I came to the conclusion that different Company of India either private or public both provides investment scheme With the objective to generate income. They have many financial schemes regarding Commercial investment There are many people who are satisfies with the Scheme. The procedure of Investing from this company is simple and easy and also costumer friendly. I also come to know that many industrialist, traders, and new entrepreneur were aware of these schemes.
Advantages of MUTUAL FUNDS:Portfolio Diversification:- Mutual Funds invest in a well-diversified portfolio of
securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).
Professional Management:- Fund manager undergoes through various
research works and has better investment management skills which ensure higher returns to the investor that what he can manage his own. Less Risk:- Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.
Low Transaction Costs:- Due to the economies of scale (benefits of larger
volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors.
Liquidity: - An investor may not be able to sell some of the shares held by him
very easily and quickly, whereas units of a mutual fund are far more liquid.
Choice of Scheme: - Mutual Funds provide investors with various schemes
with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options.
Transparency: - Funds provide investors with updated information pertaining
to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.
Flexibility: - Investors also benefit from the convenience and flexibility offered
by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.
Safety:- Mutual Fund industry is a part of a well-regulated investment where the
interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.
LIMITATIONS OF STUDY It is very small research, which may be insufficient to give the real picture scope of the share market.
The research is based on collected data and the researcher is not responsible for any wrong inference drawn due to the incorrect filling of the questionnaire by the respondents.
The method of result is also limited to the reliability of method of investigations, measurement and analysis of data.
People were not interested in filling questionnaire properly.
Investing scheme has been revised very soon.
7. Recommendation
Securities Company needs to provide such type of facilities as much as possible because these students can be the future customers of the company for other services also. As for as branches are concern they are not providing much attention on promoting these facilities as compare to top management of the company so proper steps must be taken for that. Visiting schools and colleges for promotion purpose is only practicing in Delhi region it should be on national basis. In case of any kind o delay in service proper feed back system should be there. More efficient staff should be appointed so that they can easily provides all the cooperation required by the customer. Unnecessary formalities should be removed and should try to reduced the large documentation process while sanctioned investing. Interior space should be extended so that people will freely move during rush hour. News paper and magazines should kept for customers, so that they feel relaxed until their transactions are over. Proper water and toilet should be provided and that should be well noticed to everybody. As study reveals that securities company schemes are the best as compare to there sector it should be capitalized as much as possible.
8. Appendices Bibliography
www.sebi.gov.in www.gogle.com www.business.niapsofindia.com www.ficci.com www.networkmagaziineindia.com Business Magazines Presentation by Trainers
SYNOPSIS
ON SHARE MARKET AN OVERVIEW Submitted By Harsimarn Kaur
Enrollment No. 42101688 To (IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY Centre for Distance Learning (Recognized by Distance Education Council)
PROFORMA FOR SYNOPSIS OF PROJECT WORK
Name:
Harsimran kaur
Enrollment No.: 42101688 Address for correspondence: House no. 80, Sheetal Apartments, Sector – 14, Rohini, Delhi-110085. Mobile no.: 9313216953 Phone No. : 011-27315411 Major Area of Specialization : Finance Questionnaire Attached – yes Resume of Project Guide Attached – Yes Consent Letter of Project Guide – Yes Phone no. Project Guide : 9312211526 Date of Submission :
STATEMENT ABOUT THE PROBLEM The objective of the project is to find the sales potential of Demat Account in Delhi and NCR regions. The research will help what the current trends are in the market and the competitors product offering are relates to share market and recommendations to increase the market share. Specifically, the research objective is to: To study the Mutual funds industry in detail- This will done by managing The Various client relationship and educating them about the various benefits that Mutual fund offer as compared to bank FD’s, National saving certificate etc. this also involves studying in depth about the various schemes offered by PRINCIPAL PNB Asset Management Company. To study about the investment Procedure in Mutual funds To study the investor’s preference in mutual funds by way of questionnaire And Personal visits to clients. To generate sales for the company Awareness of the competitor’s product among investors. Determine the type of services needed by the investors. Gather and analyze the future aspirations of the investors with respect to the demat account. Rank and evaluate the relative importance the Share Market parameter associated with the Demat Account.
Comparative analysis of various mutual funds schemes of PRINCIPAL with that Of the other on the bases of Alpha, beta, stander Deviation, Sharp ratio and Tenor ratio
WHY IS THIS PARTICULAR TOPIC CHOSEN The purpose of the undergone study is to study the Demat Account services of the different bank & other securities companies & evaluates the competitive position of Standard chartered so as to suggest way to increase its market share. The main problem faced by the company was that it had a very less customer base. The company’s own product had very less market as compare to it’s third party selling. The company does a third party selling for all the investment products. The study thus focuses on following dimensions:
1. To identify the critical factors that influences the buying behavior of Investors. 2. To know the investor acceptance of the services of Standard chartered 3. bank in Delhi & NCR regions. 4. According to current scenario it is a very relevant Topic. 5. To assess the problem volume of future sales . 6. Many big company are dealing in this market.
WHAT CONTRIBUTION WOULD THE PROJECT MAKE For the purpose of the research it is absolutely imperative for me to find out what the investor want from their company. It is also necessary to find out the Investor’s profile i.e. his/her age, monthly income, occupation and sex and also the current company with which he/she is investing. This will require me to get a details questionnaire filled by the concern person. All the analysis in the report will be drawn out of this questionnaire. For carrying out the competitor analysis Further help will be taken from company websites and journals. This research will provide Standard chartered bank with information like current Market share of Securities Company and also a detailed analysis of the services Offered by stock & securities broker and stock & Securities Company and what are the most important criteria for selecting a particular securities company. The company can also get data on prospective customer by designing its product offering and marketing strategy in a way so as to attract more clients in the near future.
OBJECTIVE AND SCOPE OF THE STUDY
The study is the part of academic curriculum of 3 years MBA therefore the primary objective of this study is to fulfill the requirement for the award of MBA degree of (IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY.
The present study was carried out with the objective to know Scope of share market and its various catchments areas of Punjab current securities company. So as to know strength and weakness of share schemes of securities company, So that strengths can be increased and weaknesses can be made “the best” in securities Industry. To study the invester perceptions about various securities company. To know the level of awareness among consumers about Share Market. To make people know about the various products offered by securities company. To know the interest level of the consumers to get associated with share market. To collect various suggestions from the consumers to make share market better one. To study the Mutual funds industry in detail- This will done by
managing the Various client relationship and educating them about the various benefits that Mutual fund offer as compared to bank FD’s, National saving certificate etc. this also involves studying in depth about the various schemes offered by PRINCIPAL of Securities Management Company. 1. To study about the investment Procedure in Mutual funds. 2. To study the investor’s preference in mutual funds by way of Questionnaire and Personal visits to clients.
METHODOLOGY
Research is a systemic and objective process of gathering recording and analyzing data for aid of making decision regarding a particular problem. 1. RESEARCH DESIGN The research design is a master plan specifying the methods and procedures for collecting and analyzing the needed information the research design of my dissertation is DESCRIPTIVE RESEARCH Descriptive research includes surveys and facts findings inquiries of different kinds. 2. DATA COLLECTION PRIMARY DATA primary data is gathered through a survey with the help of questionnaire. SECONDARY DATA secondary data sources includes
• • •
Books Journals various websites
3 RESEARCH INSTRUMENTS QUESTIONNAIRE 4 SAMPLE DESIGN
• •
target population people of industries . sample size 100 people .
•
sampling technique convenience and judgmental .
Type of Research Research methodology is a way to systematic solve the research problem. It is a procedure, which is followed step by step to solve a particular research problem. There are basically four types of researches
EXPLORATIVE RESEARCH DESCRIPTIVE RESEARCH DIAGNOSTIC RESEARCH HYPOTHESIS TESTING RESEARCH
Hypothesis Testing Research. To test a hypothesis of casual relationship between variables. The present project is Descriptive in nature. It is done to poetry accurately the characteristic of a particular individual situation or a group. The major purpose is descriptive research is the description of the state of the affairs as it exits at presents. The main characteristics of this method are that the researcher has no control over the variables; he can only report what has happened or what is happening.
CHAPTERISATION SCHEME
1. Introduction 2. Literature Support 3. Process/ Methodology of Study 4. Analysis and Interpretation 5. Conclusion 6. Recommendation 7. Appendices Bibliography
QUESTIONNAIRE
Name: …………………………… Occupation:………………………….. Investment Presently Held:Please list the value the assets in your total investments portfolio (in Rs): Stocks:_________ Bonds:_____________ Options:____________ Real estate:____________ Mutual Funds:_______________ Govt. Securities:_____________ Bank Deposits:_____________
1.Over the next 3-5 years, do you expect your annual income to change? Increase Decrease Remain the same 2.Do you invest in Mutual Funds? Yes No Earlier, now stopped 3.What is your experience in the market? Less than a year 1-4 years 4.What is your Trading Preference? Speculation Investment Both More than 4 years
5.What is your Average investment period? Less than 3 months 3 to 9 months 9 months to 2 years More than 2 years 6.Factors influencing the investment decisions? Advice from Broker Current news Reviews in Financial Magazines Advice from Friends Self Evaluation Others 7.How much Risks are you willing to take? High Low Moderate
8.What is your preference in Mutual Funds? Equity Income Money Market Funds ELSS Balanced Funds SIP Others 9.How much Appreciation do you expect from your investments? Up to 15% 15-25% 25-35% More than 35% 10.How much loss are you willing to take? Less than 5% 5-10% more than 10% 11.Which type of Mutual funds do you prefer? Open ended schemes Closed ended schemes 12.Do you get influenced by the name of Company promoting Mutual Funds? Yes NO 13.Do you get influence by the name of returns given by a fund or by the current NAV of a funds? By NAV By Returns Both 14.After how many years do you expect to redeem your investment? 0-2 Years 3-5 Years 6-10 Years 11-15 Years Over15 Years 15.How many people are financially dependent upon you? More than 4 persons Three people Two people One people I only need to take care of myself
TITLE OF THE PROJECT
SHARE MARKET AN OVERVIEW
CONTENTS
1. Introduction 2. Literature Support 3. Process/ Methodology of Study 4. Data Collection 5. Analysis and Interpretation 6. Conclusion 7. Recommendation 8. Appendices Bibliography
LIST OF GRAPHS & CHARTS Sl. No. 1. Graph no. 4.1 Graph Title Page no. 68
On which Basis of choose loan
Occupation of the people
2.
4.2
69
.
LIST OF TABLE Sl. No. 1. Table no. 4.1 Graph Title Page no. 67
Company share price
2
4.2
On which Basis of choose loan
Occupation of the people
67
3
4.3
68
PREFACE
The introduction and application of the concept of customer services entered in a welcoming way in India only after independence. The share market in India has come a long way during the last two centuries. Its growth was faster and the coverage wider since and major position of securities sector was entrusted to the public sector. This process continued and embraced few private banks in 1980. The transfer of ownership of banks from the public to private was aimed at entrusting the banks with greater responsibilities for the economic development of India by taking securities services to the masses and taking special care of the weaker section of the society and the priority sector of the economy. Though the number of securities company magnitude and the variety of their operations has grown considerably during the period of near about three decades, but it appears that the securities sector has entered into serious among customers.
For overcoming this problem, securities industry should seek introspection and adopt refined management techniques. It has been endeavor of this study to analyze the present state of various company keeping in view the primary data has been collected regarding the present state of invest schemes in various company by using a questionnaire.
ACKNOWLEDGMENT
“People must have guidance in doing their work know where to turn For help guidance”
It is said that “No learning is possible without any proper guidance and no research is possible without any proper guidance , some contribution is performed by various individual This project work, which is my step in the field of professinalisation, has been successfully accomplished only because of time support of my well-wisher. I would like to pay my sincere and thank to those, who directed me at every step in my project work. I express my gratitude to my esteemed guide, for their valuable assistance and encouragement, which enable me to carry on the project successfully. They gave me wonderful opportunity to work on the project. There time-to-time guidance and incessant support helped me to broaden my outlook on the project. I am highly obliged for their support throughout the internship. I also had the privilege of meeting many company officials including marketing chief manager and discussing particular aspect of various investment options. The project also involved constant interaction with my friends in the college. A vote of thank also goes to them. At last this acknowledgement can only be completed after being to my parent and Almighty God.
DECLARATION
I Harsimran Kaur Enrollment No: 42101688 of class MBA of (IMT) INSTITUTE OF MANAGEMENT TECHNOLOGY here by declare the project entitled “SHARE MARKET AN OVERVIEW” is an original work and same has not been submitted to any other institution for awards of any other degree partially or wholly.
(Signature of Candidate)
1. Introduction
Basics of Indian Share Market Share Share is nothing but the Ownership of the company divided into small parts and each part is called as Share or Stock. A person carrying a share of a company holds that part of ownership in that company. A person holding maximum shares has maximum ownership like directors, chairman etc. Share Market A Share market is the place where buying and selling of shares takes place. Now days due to internet and advanced technology there is no need to be physical present in exchanges like NSE and BSE but the buying and selling of shares takes place from anywhere in India and also from foreign country. One should need the demat account, computer and internet connection and he/she can start trading. Share market and its analysis Financial markets like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are countries economic barometer (a guide to economic growth). Stock markets like NSE and BSE are the stock exchanges where the trading of a company's stock takes place. First let us understand the Working of a share (stock) market To learn about how you can earn on the stock market, one has to understand
how it works. When a person want to buy/sell shares in the share market then he has to first place the order with a broker or can do themselves using online trading systems (this will be discussed later). When you place the buy order, the message is transferred to the exchange [either NSE {National Stock Exchange} or BSE {Bombay Stock Exchange}] and the order stays in the queue of exchange's other orders and gets executed if the price of that share comes to that value. Once you get the confirmation of this transcation,the shares purchased, will be sent to your demat account.The shares will be in electronic format in demat account. Rolling Settlement Cycle: (RSC) RSC means when you will get your shares in your demat account. In a rolling settlement, each trading day(T) is considered as a trading period and trades executed during the trading day(T) are settled on a T+2 basis i.e. trading day plus two working days. So on forth working day you can see the shares in your demat account What is Demat account and why it is required? Securities and Exchange Board of India (SEBI) is a board (corporate body) appointed by the Government of India in 1992 with its head office at Mumbai. Its one of the function is helping the business in stock exchanges and any other securities markets. In another word it is the regulator for stock exchanges. # Demat (short form of Dematerialization) is the process by which an investor can get shares (also called as physical certificates) converted into electronic form maintained in an account with the Depository Participant (DP). # DP could be organizations involved in the business of providing financial
services like banks, brokers, financial institutions etc. DP’s are like agents of Depository. # Depository is an organization responsible to maintain investor's securities (securities can be shares or any other form of investments) in the electronic form. In India there are two such organizations called NSDL (National Securities Depository Ltd.) and CDSL (Central Depository Services India Ltd.) # Investor’s wishing to open Demat account has to go DP and open the account. # Opening the Demat account is as simple as opening the bank account with any bank. As you need bank account to save your money, make cheque payments etc, likewise you need to open a demat account if you want to buy and sell stocks in share market. # All shares what you possess will show in your demat account, so you don't have to possess any physical certificates. They are all held electronically in your demat account. As you buy and sell the shares accordingly your shares will get adjusted in your demat account.
Is a demat account a must? YES. The market regulator, the Securities and Exchange Board of India (SEBI), has made it compulsory to open the demat account if you want to buy and sell shares in share market. So a demat account is a must for trading and investing in share market.
How to open a Demat account? You have to approach a DP to open a Demat account. Most banks are DP participants so you may approach them or else you can contact us. To have latest list of registered DP please visit websites www.nsdl.co.in and www.cdslindia.com. A broker and a DP are two different people. A broker is a member of the stock exchange, who buys and sells shares on his behalf and also on behalf of his customers.
Following are the documents required to open Demat account When you approach any DP, you will be guided through the formalities for opening a demat account. The DP will ask to provide some documents as proof of your identity and address. Below is a list but you may not require all of them. PAN card, Voter’s ID, Passport, Ration card, Driver’s license, Photo credit card Employee ID card, IT returns, Electricity/ Landline phone bill etc.
Do you need any shares to open a Demat account? NO. You need not have to have any shares to open a demat account. A demat account can be opened with no balance of shares. And there is no minimum balance to be maintained either. You can have a zero balance (shares) in your account.
How much it cost to open a Demat account? The charges for demat account opening, annual account maintenance fees and transaction charges varies between various DP’s. To have latest charges please visit websites of www.nsdl.co.in and www.cdslindia.com or else you need to contact the specific broker.
Finally After successfully opening the demat account you are ready to do buy and sell shares in share market exchanges like BSE and NSE. Important points to remember while opening online account ♦ Do multiple enquiries and try get low brokerage trading account. ♦ Also discuss about the margin they provide for day trading. ♦ Discuss about fund transfer. The fund transfer should be reliable and easy. Fund transfer from your bank account to trading account and visa versa. Some online share trading account has integrated savings account which makes easy for you to transfer funds from your saving account to trading account. ♦ Very important is about service they provide, the research calls, intraday or daily trading tips. ♦ Also enquire about their services charges and any other hidden fees if any. ♦ And also see how reliable and easy is to contact them in case if any
emergency. Emergency like buying and selling of shares on immediate basis or in case of any technical or other problems at your side while doing trading yourself. Investing!! What's that Judging by the fact that you've taken the trouble to navigate to this page my guess is that you don't need much convincing about the wisdom of investing. However, I hope that your quest for knowledge/information about the art/science of investing ends here. Read on. Knowledge is power. It is common knowledge that money has to be invested wisely. If you are a novice at investing, terms such as stocks, bonds, futures, options, Open interest, yield, P/E ratio may sound Greek and Latin. Relax. It takes years to understand the art of investing. You're not alone in the quest to crack the jargon. To start with, take your investment decisions with as many facts as you can assimilate. But, understand that you can never know everything. Learning to live with the anxiety of the unknown is part of investing. Being enthusiastic about getting started is the first step, though daunting at the first instance. That's why my investment course begins with a dose of encouragement: With enough time and a little discipline, you are all but guaranteed to make the right moves in the market. Patience and the willingness to invest your savings across a portfolio of securities tailored to suit your age and risk profile will propel your revenues and cushion you against any major losses. Investing is not about putting all your money into the "Next big thing," hoping to make a killing. Investing isn't gambling or speculation; it's about taking reasonable risks to reap steady rewards. Investing is a method of purchasing assets in order to gain profit in the form of reasonably predictable income (dividends, interest, or rentals) and appreciation over the long term.
Why should you invest? Simply put, you should invest so that your money grows and shields you against rising inflation. The rate of return on investments should be greater than the rate of inflation, leaving you with a nice surplus over a period of time. Whether your money is invested in stocks, bonds, mutual funds or certificates of deposit (CD), the end result is to create wealth for retirement, marriage, college fees, vacations, better standard of living or to just pass on the money to the next generation or maybe have some fun in your life and do things you had always dreamed of doing with a little extra cash in your pocket. Also, it's exciting to review your investment returns and to see how they are accumulating at a faster rate than your salary. When to Invest? The sooner the better. By investing into the market right away you allow your investments more time to grow, whereby the concept of compounding interest swells your income by accumulating your earnings and dividends. Considering the unpredictability of the markets, research and history indicates these three golden rules for all investors 1. Invest early 2. Invest regularly 3. Invest for long term and not short term While it’s tempting to wait for the “best time” to invest, especially in a rising market, remember that the risk of waiting may be much greater than the potential rewards of participating. Trust in the power of compounding. Compounding is
growth via reinvestment of returns earned on your savings. Compounding has a snowballing effect because you earn income not only on the original investment but also on the reinvestment of dividend/interest accumulated over the years. The power of compounding is one of the most compelling reasons for investing as soon as possible. The earlier you start investing and continue to do so consistently the more money you will make. The longer you leave your money invested and the higher the interest rates, the faster your money will grow. That's why stocks are the best long-term investment tool. The general upward momentum of the economy mitigates the stock market volatility and the risk of losses. That’s the reasoning behind investing for long term rather than short term. How much to invest? There is no statutory amount that an investor needs to invest in order to generate adequate returns from his savings. The amount that you invest will eventually depend on factors such as: 1 Your risk profile 2. Your Time horizon 3. Savings made Remember that no amount is too small to make a beginning. Whatever amount of money you can spare to begin with is good enough. You can keep increasing the amount you invest over a period of time as you keep growing in confidence and understanding of the investment options available and So instead of just dreaming about those wads of money do something concrete about it and start investing soon as you can with whatever amount of money you can spare. Investment is a term with several closely-related meanings in finance and economics. It refers to the accumulation of some kind of asset in hopes of getting a future return from it.
Assets such as equity shares or bonds held for their financial return (interest, dividends or capital appreciation), rather than for their use in the organization’s operations. Return on Investments The money you earn or lose on your investment, expressed as a percentage of your original investment. In Simple words, It is the amount received as a result of investing in particular ventures. Collective Investments Schemes Funds which manage money for a number of investors and pool it together. This enables investors to benefit from a larger number of individual investments and cost Short-Term Investments efficiencies.
Short-Term Investments are generally investments with maturities of less than one Capital Investments year.
Investments into the fixed capital (capital assets), including costs for the new construction, expansion, reconstruction and technical reequipment of the operating enterprises, purchase of machinery, equipment, tools, accessories, project and investigation works and other costs and expenditures.
There are two ways for investors to get shares from the primary and secondary markets. In primary markets, securities are bought by way of public issue directly from the company. In Secondary market share are traded between two investors.
In finance a share is a unit of account for various financial instruments including stocks, mutual funds, limited partnerships, and REIT's. In British English, the usage of the word share alone to refer solely to stocks is so common that it almost replaces the word stock itself. In simple Words, a share or stock is a document issued by a company, which entitles its holder to be one of the owners of the company. A share is issued by a company or can be purchased from the stock market. By owning a share you can earn a portion and selling shares you get capital gain. So, your return is the dividend plus the capital gain. However, you also run a risk of making a capital loss if you have sold the share at a price below your buying price. A company's stock price reflects what investors think about the stock, not necessarily what the company is "worth." For example, companies that are growing quickly often trade at a higher price than the company might currently be "worth." Stock prices are also affected by all forms of company and market news. Publicly traded companies are required to report quarterly on their financial status and earnings. Market forces and general investor opinions can also affect share price.
Quick Facts on Stocks and Shares
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Owning a stock or a share means you are a partial owner of the company, and you get voting rights in certain company issues Over the long run, stocks have historically averaged about 10% annual returns However, stocks offer no guarantee of any returns and can lose value even in the long run
Investments in stocks can generate returns through dividends, even if the
price How does one trade in shares ? Every transaction in the stock exchange is carried out through licensed members called brokers. To trade in shares, you have to approach a broker However, since most stock exchange brokers deal in very high volumes, they generally do not entertain small investors. These brokers have a network of sub-brokers who provide them with orders. The general investors should identify a sub-broker for regular trading in shares and palce his order for purchase and sale through the sub-broker. The sub/broker will transmit the order to his broker who will then execute it .
What are active Shares ? Shares in which there are frequent and day-to-day dealings, as distinguished from partly active shares in which dealings are not so frequent. Most shares of leading companies would be active, particularly those which are sensitive to economic and political events and are, therefore, subject to sudden price movements. Some market analysts would define active shares as those which are bought and sold at least three times a week.
Demat refers to a dematerialised account. Though the company is under obligation to offer the securities in both physical and demat mode, you have the choice to receive the securities in either mode. If you wish to have securities in demat mode, you need to indicate the name of the depository and also of the depository participant with whom you have depository account in your application.
It is, however desirable that you hold securities in demat form as physical
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Just as you have to open an account with a bank if you want to save your money, make cheque payments etc, Nowadays, you need to open a demat account if you want to buy or sell stocks. So it is just like a bank account where actual money is replaced by shares. You have to approach the DPs (remember, they are like bank branches), to open your demat account. Let's say your portfolio of shares looks like this: 150 of Infosys, 50 of Wipro, 200 of HLL and 100 of ACC. All these will show in your demat account. So you don't have to possess any physical certificates showing that you own these shares. They are all held electronically in your account. As you buy and sell the shares, they are adjusted in your account. Just like a bank passbook or statement, the DP will provide you with periodic statements of holdings and transactions. Is a demat account a must? Nowadays, practically all trades have to be settled in dematerialised form. Although the market regulator, the Securities and Exchange Board of India (SEBI), has allowed trades of upto 500 shares to be settled in physical form, nobody wants physical shares any more. So a demat account is a must for trading and investing. Most banks are also DP participants, as are many brokers. You can choose your very own DP. To get a list, visit the NSDL and CDSL websites and see who the registered DPs are. A broker is separate from a DP. A broker is a member of the stock exchange, who buys and sells shares on his behalf and on behalf of his clients.
2. Literature Support
A stock option is a specific type of option with a stock as the underlying instrument (the security that the value of the option is based on). Thus it is a contract to buy (known as a "call" contract) or sell (known as a "put" contract) shares of stock, at a predetermined or calculable (from a formula in the contract) price. It is Having the Rights to purchase a corporation's stock at a specified price. Infact There are two definitions of stock options. 1. The right to purchase or sell a stock at a specified price within a stated period. Options are a popular investment medium, offering an opportunity to hedge positions in other securities, to speculate on stocks with relatively little investment, and to capitalize on changes in the market value of options contracts themselves through a variety of options strategies.
2. A widely used form of employee incentive and compensation.In some Companies, Stock options constitute part of remuneration. Employee stock options are stock options for the company's own stock that are often offered to upper-level employees as part of the executive compensation package. An employee stock option is identical to a call option on the company's stock, with some extra restrictions.
Performance Stock Options are Options that vest if pre-determined performance measures are achieved. The performance goal (revenue growth, stock-price increases…) must be reached for the options to be exercisable or for the vesting to be accelerated
You can buy any stock and sell any stock and it doesn’t take much to get started. All you need is a brokerage account. A broker that I use is Scottrade http://www.scottrade.com/ and you can start an account with them for $500 and their commissions are only $7, so they are not expensive at all. Once you have setup a brokerage account you then need to choose an investment method and then research different companies and then buy stock in .the ones that you feel will go up because they are good sound companies. So as you can see there are several benefits to online stock trading but let’s recap. With online stock trading all you need is $500 to open a brokerage account, the brokerage commissions are low at Scottrade they’re only $7 and you can buy and sell your stocks from your home computer anytime that the stock market is open. Well now that you know that you can do online stock trading with a minimal investment you should get started today and then start learning about the stock market and choose the stocks you want to invest in. What is NET ASSET VALUE ? The Term Net Asset Value (NAV) is used by investment companies to measure net assets. It is calculated by subtracting liabilities from the value of a fund's securities and other items of value and dividing this by the number of outstanding shares. Net asset value is popularly used in newspaper mutual fund tables to designate the price per share for the fund. The value of a collective investment fund based on the market price of securities held in its portfolio. Units in open ended funds are valued using this measure. Closed ended investment trusts have a net asset value but have a separate market value. NAV per share is calculated by dividing this figure by the number of ordinary shares. Investments trusts can trade at net asset value or their price can be at a premium or discount to NAV. Value or purchase price of a share of stock in a mutual fund. NAV is calculated each day by taking the closing market value of all securities owned plus all other .assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding.
Calculating NAVs - Calculating mutual fund net asset values is easy. Simply take the current market value of the fund's net assets (securities held by the fund .minus any liabilities) and divide by the number of shares outstanding. So if a . fund had net assets of Rs.50 lakh and there are one lakh shares of the fund, then the price per share (or NAV) is Rs.50.00. These days, you can't retire without using the returns from investments. You can't count on your social security checks to cover your expenses when you retire. It's barely enough for people who are receiving it now to have food, shelter and utilities. That doesn't account for any care you may need or in the even that you need to take advantage of such funds much earlier in life. It is important to have your own financial plan. There are many kinds of investments you can make that will make your life much easier down the road. The following are brief descriptions for beginning investors to familiarize themselves with different kinds of investment options: 401K Plans The easiest and most popular kind of investment is a 401K plan. This is due to the fact that most jobs offer this savings program where the money can be automatically deducted from your payroll check and you never realize it is missing. Life Insurance Life Insurance policies are another kind of investment that is fairly popular. It is a way to ensure income for your family when you die. It allows you a sense of security and provides a valuable tax deduction. Stocks Stocks are a unique kind of investment because they allow you to take partial ownership in a company. Because of this, the returns are potentially bigger and they have a history of being a wise way to invest your money. Bonds A bond is basically a promise note from the government or a private company. You agree to give them a set amount of money as a loan and they keep it for a set number of years with a predetermined amount of interest. This is typically a safe bet and one that is a good investment for a first time investor because there is little risk of losing your money.
Mutual Funds Mutual funds are a kind of investment that are based on the gains and losses of a shareholder. Basically one person manages the money of several or many investors and invests in a list of various stocks to lessen the effect of any losses that may occur. Money Market Funds A good short-term investment is a Money Market Fund. With this kind of investment you can earn interest as an independent shareholder. Annuities If you are interested in tax-deferred income, then annuities may be the right kind of investment for you. This is an agreement between you and the insurer. It works to produce income for you and protect your earning potential. Brokered Certificates of Deposit (CDs) CDs are a kind of investment where you deposit money for a set amount of time. The good thing about CDs is that you can take the money out at any time without paying a penalty fee. We all know life isn't predictable, so this is a nice feature to .have in your option. Real Estate Real Estate is a tangible kind of investment. It includes your land and anything permanently attached to your piece of property. This may include your home, rental properties, your company or empty pieces of land. Real estate is typically a smart and can make you a lot of money over time The Securities and Exchange Board of India (SEBI), the capital market watchdog, Thursday cracked down on some of the top brokerage firms and banks for their alleged involvement in an initial public offering (IPO) scam. SEBI conducted investigations in respect of all the IPOs from January 2003 to December 2005.
The findings of investigations, prima facie, revealed violations of serious nature by several key operators, their financiers, concerned depository participants and the depositories. In its order, SEBI has barred brokerage firms like Karvy Stockbroking and
IndiaBulls from the market. It has also directed HDFC Bank and IDBI Bank not to open new demat accounts for share transactions. SEBI's Order fallout: 24 entities banned from primary and secondary market, including Indiabulls, Karvy Securities • Quasi-judicial proceedings against Karvy DP and Pratik DP, banned from the market • 12 DPs can’t open fresh demat accounts, including HDFC Bank, IDBI Bank, Central Bank, ING Vysya Bank, IL&FS and Motilal Oswal; 15 more under scrutiny, including ICICI Bank, Citibank, Stanchart
• 85 Financiers barred from the market. SEBI said certain entities had cornered shares reserved for retail applicants in the name of fictitious entities in the initial public offerings of Yes Bank and Infrastructure Development Finance Company (IDFC).
Each of the fictitious application was of small value so as to be eligible for allotment under the retail category, it added.
After the allotment, these fictitious beneficiaries transferred these shares to their principals who in turn transferred the shares to their financiers.
The financiers in turn sold most of these shares on the first day of listing, thereby realizing the windfall gain of the price difference between IPO price and the listing price. Generally, most shares have a face value (i.e. the value as in a balance sheet) of Rs.10 though not always offered to the public at this price. Companies can offer a share with a face value of Rs.10 to the public at a higher price. The difference between the offer price and the face value is called the premium. As per the SEBI guidelines, new companies can offer shares to the public at a premium provided : 1.The promoter company has a 3 years consistent record of profitable working. 2.The promoter takes up at least 50 per cent of the shares in the issue. 3.All parties applying to the issue should be offered the same instrument at the
same terms, especially regarding the premium. 4.The propectus should provide justification for the propose premium. On the other hand, exisiting companies can make a premium issue without the above restrictions. A company’s aim is to raise money and simultaneously serve the equity capital. As far as accounting is concerned, premium is credited to reserves and surplus and it does not increase the equity. Therefore, a company which raises Rs.100 crores by way of shares at say Rs.90 premium per share increases its equity by only Rs.10 crores, which is easier to service with an investment of Rs.100 crores. Thus the companies seek to make premium issues. As well shall see later, a premium issue can increase the book value without decreasing the EPS. In a buoyant stock market when good shares trade at very high prices, companies realize that it’s easy to command a high premium.
Many people confuse trading with investing. They are not the same. The biggest difference between them is the length of time you hold onto the assets. An investor is more interested in the long-term appreciation of his assets, counting on that historical rise in market equity. He’s not generally concerned about short-term fluctuations in prices, because he’ll ride them out over the long haul. An investor relies mostly on Fundamental Analysis, which is the analytical method of predicting long-term prospects of a particular asset. Most investors adopt a “buy and hold” approach to assets, which simply means they buy shares of some company and hold onto them for a long time. This approach can be dangerous, even devastating, in an extremely volatile market such as today’s BSE or NSE Indexs Show. Let’s consider someone who bought shares of XYZ Company at their peak value
of around Rs.650 per share at the beginning of the year 2000. Two years later, those shares are worth Rs.100 each. If that investor had spent Rs. 65,000/-, his net loss would be Rs.55000/- ! I don’t know about you, but losing Fifty Five Thousand Rupees would be a relatively big loss for me. Many investors suffer such losses regularly, hoping that in five or ten or fifteen years the market will rebound, and they’ll recoup their losses and achieve an overall gain. What most investors need to remember is this: investing is not about weathering storms with your “beloved” company – it’s about making money. Traders, on the other hand, are attempting to profit on just those short-term price fluctuations. The amount of time an active trader holds onto an asset is very short: in many cases minutes, or sometimes seconds. If you can catch just two index points on an average day, you can make a comfortable living as an Trader. To help make their decisions, Traders rely on Technical Analysis, a form of marketing analysis that attempts to predict short-term price fluctuations. The stock markets are at all time highs and just like the last time around when the market was at its previous high every one thinks that nothing can go wrong and there is just one way where the market can go which is UP. Nothing could be farther from the truth and this will be clear from the way the market behaves in the next few months. Here are a few tips that would hopefully save you from losing a lot of cash in the current frenzy. Time and again investors have burnt their fingers in the markets and here are some tips to you so that you do not end up burning your fingers in this market. The number one tip at this point would be to sell if you have stocks and not to
buy them if you have cash. The golden principle in the markets is “Buy when everyone else sells and sell when everyone else buys”. Simple enough right? Not really. Why? Because of peer pressure pure and simple. When everyone else around you seems to be having a ball at the markets you would feel like a fool if you didn’t participate now. OK so you can’t resist buying at this time then at least do yourself a favor and stay away from unknown Penny Stock and hot tips that your barber gave you. True that the stock has tripled in the last fifteen days but that was before people like your barber started buying the stock. Chances are that the Promoter of the company have started buying into the stock and have spread rumors like acquisition or a big export order to fool investors and sell out to them at a later date. Another tip that would serve useful is to value a stock based on its future growth and not its past performance. For instance many investors say that I will not buy stocks of X company because it has doubled in the last year. Well it may have doubled in the last year but that should not be the thing you should be telling yourself. Rather you should ask yourself why has this doubled in the last year and can it do so again? There should be a solid answer to your question like the launch of a new product or reduction in the prices of raw material. And indeed if the answer is in the positive then by all means go ahead and buy that stock regardless of what has happened in the last year. Another tip would be to remember what you are buying. Quite simply investors often forget that when buying a stock they are simply buying ownership in the companies. Most of you would know that nothing spectacular would happen in the company that you work for, in a month, they are not going to double their revenues and certainly not double your salary every month. Then why expect anything different from the companies that you are investing in. Why expect the prices to double in a month or two. Give time to your investments; don’t reduce it
to a gamble. Only when you invest in fundamentally sound companies and then give the investments sufficient time to grow will you see some healthy returns on your investments. Ideally a minimum horizon of one year is a good time. Hope these tips will prove helpful and you will make a lot more in the stock markets than you have already been making. Happy Investing! 1. You can tell if a Stock is cheap or expensive by the Price to Earnings Ratio. False: PE ratios are easy to calculate, that is why they are listed in newspapers etc. But you cannot compare PE’s on companies from different industries, as the variables those companies and industries have are different. Even comparing within an industry, PE’s don’t tell you about many financial fundamentals and nothing about a stock’s value. 2. To make Money in the Stock Market, you must assume High Risks. False: Tips to Lower your Risk: ·: Do not put more than 10% of your money into any one stock ·:Do not own more than 2-3 stocks in any industry Buy your stocks over time, not all at once· Buy stocks with consistent and predictable earnings growth ·:Buy stocks with growth rates greater than the total of inflation and interest rates ·: Use stop-loss orders to limit your risk 3. Buy Stocks on the Way Down and Sell on the Way Up. False: People believe that a falling stock is cheap and a rising stock is too expensive. But on the way down, you have no idea how much further it may fall. If a stock is rising, especially if it has broken previous highs, there are no unhappy owners who want to dump it. If the stock is fairly valued, it should continue to rise. 4. You can Hedge Inflation with Stocks. False: When interest rates rise, people start to pull money out of the market and into bonds, so that pushes prices down. Plus the cost of business goes up, so corporate earnings go down, along with the stock prices.
5. Young People can afford to take High Risk. False: The only thing true about this is that young people have time on their side if they lose all their money. But young people have little disposable income to risk losing. If they follow the tips above, they can make money over many years. Young people have the time to be patient. Traditionally, saving has been viewed as quite different from investing. In most savings alternatives, the initial amount of capital or cash remains constant, earning guaranteed rates of interest. The capital value of investments can go up or down. Returns are not guaranteed. However, creation of money market funds and deregulation of the banking industry have resulted in a variety of savings options that earn variable rates of return. Savings provide funds for emergencies and for making specific purchases in the relatively near future (generally within two years). The primary goal is to store funds and keep them safe. This is why savings are generally placed in interestbearing accounts that are safe (such as those insured or guaranteed by the federal government) and liquid (those in the form of cash or easily changed into cash on short notice with minimal or no loss). However, these generally have low yields. Because of the opportunities for earning a higher return with a relatively small pool of funds, some financial experts suggest that savers consider slightly higher risk (but liquid) alternatives for at least part of their savings. Saved money is insurance. It is insurance against risk, against losing your job, against having a major unexpected repair bill or medical expense in the family. It is the backbone of you and your family’s financial well-being. Saved money grants you financial security. And the more you save, the more financial secure and independent you will be. The goal of investing is generally to increase net worth and work toward longterm goals. Investing involves risk. Risk of your stocks losing money, or even
going bankrupt (Enron, MCI, the airlines, etc. etc.). Risk of interest rates rising, and bond prices falling. Risks of your broker swindled you, or coerced you though his sales pitch to buy speculative investments. Risks of the economy. Risks of a particular industry. Risk of losing your principal. Risk of losing it all, and then some (such as with margin calls). Trying to win in the stock market without a trading plan is like trying to build a house without blueprints - costly mistakes are inevitable. Why do you need a Trading Plan? 1 - During trading hours, emotions will turn smart people into idiots. Therefore, you have to avoid having to make decisions during those hours. For every action you take during trading hours, the reason should not be greed or fear. The reason should be because it is in the plan. With a good plan, your task becomes one of patience and discipline. 2 - Consistent results require consistent actions - consistent actions can only be achieved through a detailed plan. What should be in your trading plan? 1 - Your strategy to enter and exit trades You have to describe the conditions that have to be met before you enter a trade. You also have to describe the conditions under which you will close a position. These conditions may include technical analysis, fundamental analysis, or a combination of both. They may also include market conditions, public sentiment, etc... 2 - Your Money management rules to keep losses small - the goal of money management is to ensure your survival by avoiding risks that could take you out of business. Your money management rules should include the following: - Maximum amount at risk for each trade. Maximum amount at risk for all your opened - Maximum daily and weekly amount lost before you stop trading 3 - Your daily routine - after the market closes, before it opens, etc... 4 - Activities you carry out during the weekend. positions.
5 - I also like to include reminders that I read every day I will follow a trading plan to guide my trading - therefore my job will be one of patience and discipline. I will always keep my trading plan simple. - I will take actions according to my trading plan, not because of greed, fear, or hope. - I will not deceive myself when I deviate from my trading plan. Instead I will admit the error and correct it. I will have a winning attitude. - Take responsibility for all your actions – don’t blame the market or world events. - Trade to trade well and for the love of trading, not to trade often and not for the money. Don’t be influenced by the opinions of others. - Never think that taking money from the market is easy. - Don’t try to guess the future – trading is a game of probabilities. - Use your head and stay calm – don’t get excited or depressed. Handle trading as a serious intellectual pursuit. - Don’t count how much money you have made or lost while you are in a trade – focus on trading well. A trading plan will not guarantee you success in the stock market but not having one will pretty much guarantee failure. PRIMARYMARKET Market for new issues of securities, as distinguished from the Secondary Market, where previously issued securities are bought and sold.
A market is primary if the proceeds of sales go to the issuer of the securities sold. This is part of the financial market where enterprises issue their new shares and bonds. It is characterised by being the only moment when the enterprise receives money in exchange for selling its financial assets. SECONDARY MARKET
The market where securities are traded after they are initially offered in the
primary market. Most trading is done in the secondary market. To explain further, it is Trading in previously issued financial instruments. An organized market for used securities. Examples are the New York Stock Exchange (NYSE), Bombay Stock Exchange (BSE),National Stock Exchange NSE, bond markets, over-the-counter markets, residential mortgage loans, governmental guaranteed loans etc.
A stock broker is a person or a firm that trades on its clients behalf, you tell them what you want to invest in and they will issue the buy or sell order. Some stock brokers also give out financial advice that you a charged for. It wasn’t too long ago and investing was very expensive because you had to go through a full service broker which would give you advice on what to do and would charge you a hefty fee for it. Now there are a plethora of discount stock brokers such as Scottrade http://www.scottrade.com now you can trade stocks for a low fee such as $7 total. I can think of three different types of stock brokers. 1. Full Service Broker - A full-service broker can provide a bunch of services such as investment research advice, tax planning and retirement planning. 2. Discount Broker – A discount broker let’s you buy and sell stocks at a low rate but doesn’t provide any investment advice.
3. Direct-Access Broker- A direct access broker lets you trade directly with the electronic communication networks (ECN’s) so you can trade faster. Active traders such as day traders tend to use Direct Access Brokers So as you can tell there a few options for a stock broker and you really need to pick which one suits you needs. Reed Floren runs a stock market forum where you can find answers to all your stock market questions register for your free membership at this stock market forum
In order to understand what stocks are and how stock markets work, we need to dive into history--specifically, the history of what has come to be known as the corporation, or sometimes the limited liability company (LLC). Corporations in one form or another have been around ever since one guy convinced a few others to pool their resources for mutual benefit. The first corporate charters were created in Britain as early as the sixteenth century, but these were generally what we might think of today as a public corporation owned by the government, like the postal service. Privately owned corporations came into being gradually during the early 19th century in the United States , United Kingdom and western Europe as the governments of those countries started allowing anyone to create corporations. In order for a corporation to do business, it needs to get money from somewhere. Typically, one or more people contribute an initial investment to get the company off the ground. These entrepreneurs may commit some of their own money, but if they don't have enough, they will need to persuade other people, such as venture capital investors or banks, to invest in their business. They can do this in two ways: by issuing bonds, which are basically a way of selling debt (or taking out a loan, depending on your perspective), or by issuing stock, that is, shares in the ownership of the company. Long ago stock owners realized that it would be convenient if there were a central place they could go to trade stock with one another, and the public stock exchange was born. Eventually, today's stock markets grew out of these public places. Stocks A corporation is generally entitled to create as many shares as it pleases. Each share is a small piece of ownership. The more shares you own, the more of the company you own, and the more control you have over the company's operations. Companies sometimes issue different classes of shares, which have different privileges associated with them.
So a corporation creates some shares, and sells them to an investor for an agreed upon price, the corporation now has money. In return, the investor has a degree of ownership in the corporation, and can exercise some control over it. The corporation can continue to issue new shares, as long as it can persuade people to buy them. If the company makes a profit, it may decide to plow the money back into the business or use some of it to pay dividends on the shares.
Public Markets How each stock market works is dependent on its internal organization and government regulation. The NYSE (New York Stock Exchange) is a non-profit corporation, while the NASDAQ (National Association of Securities Dealers Automated Quotation) and the TSE (Toronto Stock Exchange) are for-profit businesses, earning money by providing trading services. Most companies that go public have been around for at least a little while. Going public gives the company an opportunity for a potentially huge capital infusion, since millions of investors can now easily purchase shares. It also exposes the corporation to stricter regulatory control by government regulators. When a corporation decides to go public, after filing the necessary paperwork with the government and with the exchange it has chosen, it makes an initial public offering (IPO). The company will decide how many shares to issue on the public market and the price it wants to sell them for. When all the shares in the IPO are sold, the company can use the proceeds to invest in the business.
There are two classic market types used to characterize the general direction of the market. Bull markets are when the market is generally rising, typically the result of a strong economy. A bull market is typified by generally rising stock prices, high economic growth, and strong investor confidence in the economy. Bear markets are the opposite. A bear market is typified by falling stock prices, bad economic news, and low investor confidence in the economy. A bull market is a financial market where prices of instruments (e.g., stocks)
are, on average, trending higher. The bull market tends to be associated with rising investor confidence and expectations of further capital gains. A market in which prices are rising. A market participant who believes prices will move higher is called a "bull". A news item is considered bullish if it is expected to result in higher prices.An advancing trend in stock prices that usually occurs for a time period of months or years. Bull markets are generally characterized by high trading volume. Simply put, bull markets are movements in the stock market in which prices are rising and the consensus is that prices will continue moving upward. During this time, economic production is high, jobs are plentiful and inflation is low. Bear markets are the opposite--stock prices are falling, and the view is that they will continue falling. The economy will slow down, coupled with a rise in unemployment and inflation. A key to successful investing during a bull market is to take advantage of the rising prices. For most, this means buying securities early, watching them rise in value and then selling them when they reach a high. However, as simple as it sounds, this practice involves timing the market. Since no one knows exactly when the market will begin its climb or reach its peak, virtually no one can time the market perfectly. Investors often attempt to buy securities as they demonstrate a strong and steady rise and sell them as the market begins a strong move downward. Portfolios with larger percentages of stocks can work well when the market is moving upward. Investors who believe in watching the market will buy and sell accordingly to change their portfolios.Speculators and risk-takers can fare relatively well in bull markets. They believe they can make profits from rising prices, so they buy stocks, options, futures and currencies they believe will gain value. Growth is what most bull investors seek. What is a Bear Market?
The opposite of a bull market is a bear market when prices are falling in a financial market for a prolonged period of time. A bear market tends to be accompanied by widespread pessimism.A bear market is slang for when stock
prices have decreased for an extended period of time. If an investor is "bearish" they are referred to as a bear because they believe a particular company, industry, sector, or market in general is going to go down. Different investment avenues are available to investors. Mutual funds also offer good investment opportunities to the investors. Like all investments, Mutual Funds also carry certain risks. The investors should compare the risks and expected yields after adjustment of tax on various instruments while taking Mutual Fund investment decisions. The investors may seek advice from experts and consultants including agents and distributors of mutual funds schemes while making investment decisions. Mutual Funds are portfolio of stock market shares and other financial instruments built with funds collected from (usually) small investors whose primary concern is security of investment. These funds are run by government trusts, banks, and now private financial institutions as well. These funds can be OPEN – FUNDED or CLOSED – ENDED. There are different kinds of mutual funds to cater to varied investment objectives: Growth Funds, Income Funds, Balanced Funds, and Liquid Assets Funds, also known as Money Market Funds. What is known in the United States and India as mutual funds is called a Unit Trust in Britain . This site is an attempt to make aware Basics of Mutual Funds from an Invester Point of View. The Information provided here is for learning purpose only If you've ever owned stocks or held certain other types of investments, you might already be familiar with the concept of dividends. Even those people who have made investments that paid dividends may still be a little confused as to exactly what dividends are, however… after all, just because a person has received a dividend payment doesn't mean that they fully appreciate where the payment is coming from and what its purpose is. If you have ever found yourself wondering exactly what dividends are and why
they're issued, then the information below might just be what you've been looking for.
Defining the Dividend Dividends are payments made by companies to their stockholders in order to share a portion of the profits from a particular quarter or year. The amount that any particular stockholder receives is dependent upon how many shares of stock they own and how much the total amount being divided up among the stockholders amounts to. This means that after a particularly profitable quarter a company might set aside a lump sum to be divided up amongst all of their stockholders, though each individual share might be worth only a very small amount potentially fractions of a cent, depending upon the total number of shares issued and the total amount being divided. Individuals who own large amounts of stock receive much more from the dividends than those who own only a little, but the total per-share amount is usually the same. When Dividends Are Paid How often dividends are paid can vary from one company to the next, but in general they are paid whenever the company reports a profit. Since most companies are required to report their profits or losses quarterly, this means that most of them have the potential to pay dividends up to four times each year. Some companies pay dividends more often than this, however, and others may pay only once per year. The more time there is between dividend payments can indicate financial and profit problems within a company, but if the company simply chooses to pay all of their dividends at once it may also lead to higher pershare payments on those dividends. Why Dividends Are Paid
Dividends are paid by companies as a method of sharing their profitable times with the stockholders that have faith in the company, as well as a way of luring other investors into purchasing stock in the company that is paying the dividends. The more a particular company pays in dividend payments, the more likely it is to sell additional common stock… after all, if the company is well-known for high dividend payments then more people will want to get in on the action. This can actually lead to increases in stock price and additional profit for the company which can result in even more dividend payments.
In order to get the most out of the dividends that you receive on your investments, it is generally recommended that you reinvest the dividends into the companies that pay them. While this may seem as though you're simply giving them their money back, you're receiving additional shares of the company's stock in exchange for the dividend. This will increase future dividend payments (since they're based upon how much stock that you own), and can set you up to make a lot more money than the actual dividend payment was for since increases in stock prices will affect the newly-purchased stock as well.
INTRODUCTION ABOUT MUTUAL FUNDS:
Mutual fund is a trust that pools money from a group of investors (sharing common financial goals) and invest the money thus collected into asset that match the stated investment objectives of the scheme. Since the stated investment objectives of a mutual fund scheme generally forms the basis for an investor’s decision to contribute money to the pool, a mutual fund can not deviate from its stated objectives at any point of time. Every Mutual Fund is managed by a fund manager, who using his investment management skills and necessary research works ensures much
better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on the investors (also known as unit holders) in proportion of the number of units they own.
Concept of Mutual Fund
Many investor with common financial objectives pool their money
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Investors, on a proportionate basis, get mutual fund units for the sum contributed to the pool The money collected from investors is invested into shares, debentures and other securities by the fund manger
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The fund manager realizes gains or losses, and collects dividend or interest income
Any capital gains or losses from such investments are passed on to the investors proportion of the number of units held by them
When an investor subscribes for the units of a mutual fund, he becomes part of the assets of the mutual fund in the same proportion as his contribution amount put up with the corpus (the total amount of the mutual fund). Mutual Fund investor is also known as a fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme’s assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme’s assets by the total number of units issued to the investors.
For example: A. If the market value of the assets of a fund is Rs.1,00, 000/B. The total number of units issued to the investors is equal to Rs.10,000/C. Then the NAV of this scheme= (A)/(B), i.e. 1,00,000/10,000 or 10.00 D. Now if an investor ‘X’ owns 5 units of this scheme E. Then his total contribution to the fund is Rs.50/- (i.e. Number of units held multiplied by the NAV of the scheme)
EQUITY FUNDS
Equity funds are considered to be the most risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for a long term i.e. for 3 years or more. There are different types of equity fund each falling into different risk bracket. In order of decreasing risk level, there are following types of equity funds:
Aggressive Growth Funds: - In aggressive Growth Funds, fund managers
aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Mutual Funs become more volatile and thus, are prone to higher risk than other equity funds.
Growth Funds:- Growth Funds also invest for capital appreciation (with time
horizon of 3e to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in future. SPECIALITY FUND:- Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some specialty funds could be to invest/not to invest in particular region/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds. There are following types of Speciality Funds:
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Sector Funds: - Equity Funds that invest in a particular sector/industry of the market are known as Sector Funds. The exposure of these funds is limited to a particular sector (say Information Technology, Auto, Banking, Pharmaceuticals or Fast Moving Consumer Goods)
Why they are more risky than equity funds that invest in multiple sectors.
Foreign Securities Funds:- Foreign Securities Equities Funds have the
option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However, foreign securities funds are exposed to foreign exchange rate risk and country risk.
Mid-Cap or Small-Cap Funds: - Funds that invest in companies having lower
market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs.2500/-crores but more than Rs.500/crores) and Small-Cap companies have market capitalization of less than Rs.500/-crores. Market Capitalization of a company can be calculated by multiplying the market price of the company’s share by the total number of its outstanding share in the market. The share of Mid-Cap or Small-Cap Companies is not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky.
Option Income Funds:- While not yet available in India, Option Income Funds
write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds in big, high dividend yielding companies, and then sell options against their stock.
Diversified Equity Funds:- Except for a small potion of investment in liquid
money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and
reduce sector-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Scheme (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs.1 lakh) at the time of filling the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income on such income(s) for which he may have received any tax exemption(s) in the past.
Equity Index Funds:- Equity Index Funds have the objective to match the
performance of a specific stock market index. The portfolio of these funds comprises of the companies that form the index and is constituted in the same proportion as the index. Equity index funds that follows broad indices (like S & P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX bank Index etc.). Narrow indices are less diversified and therefore, are more risky.
Value Funds:- Value Funds invest in those companies that have sound
fundamentals and whose share prices are currently under-valued. The portfolio of these comprises of shares that are trading at a low Prices to Earning Ratio (Market Price per Share/ Earning per share) and a low market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or specialty funds. Value Stocks are generally from cynical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a extent, is reduced.
Equity Income or Dividend Yield Funds:- The objective of Equity Income or
Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issues high dividends (such as power or Utility companies whose share prices fluctuate comparatively lesser than other companies’ share pries). Equity Income or Dividend Yield Equity funds are generally exposed to the lowest risk level as compared to other equity funds. .
Sale Price: - Sale price is the price you pay when you invest in a scheme. Also
called Offer Price. It may include a sales load.
Repurchase Price: - Repurchase Price is the price at which a close-ended
scheme repurchases its units and it may include a back-end load. This is also called Bid Price.
Redemption Scheme: - Redemption scheme is the price at which open-ended
schemes repurchase their units and close-ended schemes redeem their units on maturity. Such prices are NAV related.
Sales Load: - Sales Load is a charge collected by a scheme when it sells the
units. Also called, “Front-End” load. Schemes that do not charge a load are called ‘No Load’ scheme.
Repurchase or ‘Back-end’ Load; - Is a charge collected by a scheme when
it buys back the units from the unit-holders.
SPONSER: - Sponsor is the person who acting or in combination with another
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment Manager and meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual Funds) Regulation, 1996. The Sponsor is not responsible or liable for the any loss or shortfall resulting from the operation of the Schemes beyond the initial contribution made by it towards setting up of the Mutual fund. The board of trustee manages the MF and the sponsor executes the trust deeds in favour of the trustees. It is the job of the MF trustees to see the schemes floated and managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI guidelines. The Sponsor appoints the Trustees, Custodian and the like the company promoter, the sponsor takes big-picture decisions related to the Mutual funds, leaving money management and other such nitty-gritty to the other constituents, whom it appoints. The sponsor should inspire confidence in you as a manager and, preferably, be profitable. Financial muscle, so long as it is complemented by good fund management, helps, as money is the not an impediment for the Mutual Fund –it can hire the best talent, invest in technology offer high service standards to the investors.
TRUST: -
The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trust Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.
TRUSTEE – ASSET MANAGEMENT COMPANY (AMC):The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset management company of the Mutual Fund. At least 50% of the directors of the AMC are independent directors who are not associated with the Sponsor in any manner. The AMC does the research, the managers the corpus of the fund. It launches the various scheme of the fund, manages them, and then liquidates them at the end of their term. The people in the AMC who should matter the most to you are those who take investment decisions. There is the head of the fund house, generally referred to as the Chief Executive Officer (CEO). Under him comes the Chief Investment Officer (CIO), who shapes the fund’s investment philosophy, and fund mangers, who manages its schemes. They are assisted by a team of analysts, who track markets, sectors and companies. Although these people are employed by the AMC, it’s you, the unit holders, who pay their salaries, partly of wholly. Each scheme pays the AMC an annual ‘fund management fee’, which is linked to the scheme size and results in a corresponding drop in your return. If a scheme’s corpus is up to Rs.100crores it pays 1.25% of its corpus a year; on over Rs.100 crores, the fee is 1% of the corpus. So if a fund house has two schemes, with a corpus of Rs.100 crores and Rs.200 crores respectively, the AMC will earn Rs.3.25 crore (1.25+2) as a fund management fee that year.
Regulatory requirements for the AMC: -
Only SEBI registered AMC can be appointed as investment managers of mutual funds.
AMC must have a minimum net worth of Rs.10 crores at all times. An AMC cannot be an AMC or Trustee of another Mutual Fund. AMCs cannot indulge in any other business, other than that of asset management. At least half of the members of the Board of an AMC have to be independent. The 4th schedule of SEBI Regulations spells out rights and obligations of both trustees and AMCs.
Obligations of the AMC: Investments have to be according to the investment management agreement and SEBI regulations. The actions of its employees and associates have to be as mandated by the trustees. AMCs have to submit detailed quarterly reports on the working and performance of the mutual fund. AMCs have to make the necessary statutory disclosures o portfolio, NAV and price to the investors.
Restrictions on the AMC: AMCs cannot launch a scheme without the prior approval of the trustees. AMCs have to provide full details of the investments by employees and Board members in all cases where the investment exceeds Rs.1 lakh.
Over the last few years, high equity may have skewed asset allocation towards equities. The retail investor should re-examine his asset allocation to see that it is more balanced in light of improving bond returns. If the equity component of the portfolio is low, a SIP (Systematic Investment Plan ) mode of investment with a 3 to year horizon is the right strategy.
3. Process/ Methodology of Study
Research Methodology in a way is systematic representation of research or any other problem. It is a written game plan for conducting research. It tends to describe the step taken by a researcher in studying the research problem along with a logical background. It tends to describe methodology for solution of the problem that has been taken for the purpose of study this project focuses on the methodology for technique used for the collection, classification & tabulation of the data. This plan throws light on the research problem, the objective of study & limitation of the study. Therefore, in order to solve a problem, it is necessary to design a research methodology for problem as the same way differs from problem to problem.
Type of Research Research methodology is a way to systematic solve the research problem. It is a procedure, which is followed step by step to solve a particular research problem. There are basically four types of researches
EXPLORATIVE RESEARCH DESCRIPTIVE RESEARCH DIAGNOSTIC RESEARCH HYPOTHESIS TESTING RESEARCH
Explorative Research To gain familiarity with the phenomenon or to achieve an insight into it.
Descriptive Research To poetry accurately the characteristic of the particular individual situation or a group.
Diagnostic Research To determine the frequency with which something occurs or with which it is associate with something else.
Hypothesis Testing Research. To test a hypothesis of casual relationship between variables. The present project is Descriptive in nature. It is done to poetry accurately the characteristic of a particular individual situation or a group. The major purpose is descriptive research is the description of the state of the affairs as it exits at presents. The main characteristics of this method are that the researcher has no
control over the variables; he can only report what has happened or what is happening.
Statement of research problem A research problem, refers to some difficulty which a researcher experiences in the context of either a theoretical or practical situation and wants to obtain a solution for the same. Here the research problem is mutual funds (special reference with PNB).
Statement of research objectives It aims at getting an insight in to Retail loan. It also aims at familiarized with the customer during the market survey help me a lot in understanding the practical aspect of the loan as a whole .
To give level of information to the customer. To give satisfaction regarding services offered by bank To make out which bank provide services with best resources
To know the awareness among the common man about loan which they want to take.
RESEARCH DESIGN AND METHODOLOGY
Research is a systemic and objective process of gathering recording and anayzing data for aid of making decision regarding a particular problem.
RESEARCH DESIGN The research design is a master plan specifying the methods and procedures for collecting and analyzing the needed information the research design of my dissertation is DESCRIPTIVE RESEARCH Descriptive research includes surveys and facts findings inquiries of different kinds. RESEARCH INSTRUMENTS QUESTIONNAIRE SAMPLE DESIGN
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target population people of industries sample size 100 people sampling technique convenience and judgmental
4. DATA COLLECTION
DATA COLLECTION PRIMARY DATA primary data is gathered through a survey with the help of questionnaire. SECONDARY DATA secondary data sources includes
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Books Journals various websites
company share price
Company Price % Ch VIDEOIND 222.85 13.87 SATYAMCOMP 318.75 7.47 PATNI 190.85 7.43 GAMMONIND 148.00 7.13 JPASSOCIAT 118.90 7.02 Company % Ch LT 1215.30 50.25 KSK 222.00 -6.74 HCC 71.90 -6.68 JSWSTEEL 454.65 -5.32 BAJAJFINSV 364.10 -5.18 Price
Table no. 4.1
On which Basis of choose loan
Rate of interest EMI Total Amt. any Other Table no. 4.2
42% 25% 31% 2%
50% 40% 30% 20% 10% 0% Rate of interest EMI Total Amt. any Other
Graphs no. 4.1
Occupation of the people
businessman traders contracer any other
45% 32% 18% 15% Table no.4.3
50% 40% 30% 20% 10% 0% businessman traders contracer any other
Graphs no. 4.2
5. Analysis and Interpretation
Analysis is a method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns A stock market term - The attempt to look for numerical trends in a random function. The stock market used to be filled with technical analysts deciding what to buy and sell, until it was decided that their success rate is no better than chance. Now technical stock analysis is virtually non-existent. The Readers Submitted Examples page has more on this topic. Research and examination of the market and securities as it relates to their supply and demand in the marketplace. The technician uses charts and computer programs to identify and project price trends. The analysis includes studying price movements and trading volumes to determine patterns such as Head and Shoulder Formations and W Formations. Other indicators include support and resistance levels, and moving averages. In contrast to fundamental analysis, technical analysis does not consider a corporation's financial data. Technical analysts study trading histories to identify price trends in particular stocks, mutual funds, commodities, or options in specific market sectors or in the overall financial markets. They use their findings to predict probable, often short-term, trading patterns in the investments that they study. The speed (and advocates would say the accuracy) with which the analysts do their work depends on the development of increasingly sophisticated computer programs. Technical Analysis supposes markets have memory.If so, past prices, or the current price momentum, can give an idea of the future price evolution. Technical Analysis is a tool to detect if a trend (and thus the investor's behavior) will persist or break. It gives some results but can be deceptive as it
relies mostly on graphic signals that are often intertwined, unclear or belated. It might become a source of representiveness heuristic (spotting patterns where there are none) Technical analysis has become increasingly popular over the past several years, as more and more people believe that the historical performance of a stock is a strong indication of future performance. The use of past performance should come as no surprise. People using fundamental analysis have always looked at the past performance of companies by comparing fiscal data from previous quarters and years to determine future growth. The difference lies in the technical analyst's belief that securities move according to very predictable trends and patterns. These trends continue until something happens to change the trend, and until this change occurs, price levels are predictable. There are many instances of investors successfully trading a security using only their knowledge of the security's chart, without even understanding what the company does. However, although technical analysis is a terrific tool, most agree it is much more effective when used in combination with fundamental analysis. Fundamental Analysis
Fundamental analysis looks at a share’s market price in light of the company’s underlying business proposition and financial situation. It involves making both quantitative and qualitative judgements about a company. Fundamental analysis can be contrasted with 'technical analysis’, which seeks to make judgements about the performance of a share based solely on its historic price behavior and without reference to the underlying business, the sector it's in, or the economy as a whole. This is done by tracking and charting the companies stock price, volume of shares traded day to day, both on the company itself and also on its competitors. In this way investors hope to build up a picture of future price movements.
MISTAKE ONE Lack of Knowledge and No Plan It amazes us that some people expect to trade the stock market successfully without any effort. Yet if they want to take up golf, for example, they will happily take some lessons or at least read a book before heading out onto the course. The stock market is not the place for the ill informed. But learning what you need is straightforward – you just need someone to show you the way. The opposite extreme of this is those traders who spend their life looking for the Holy Grail of trading! Been there, done that! The truth is, there is no Holy Grail. But the good news is that you don't need it. Our trading system is highly successful, easy to learn and low risk.
MISTAKE TWO Unrealistic Expectations Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write out their resignation letter before they have even placed their first trade! Now, don't get us wrong. The stock market can be a great way to replace your current income and for creating wealth but it does require time. Not a lot, but some. So don't tell your boss where to put his job, just yet! Other beginners think that trading can be 100% accurate all the time. Of course this is unrealistic. But the best thing is that with our methods you only need to get 50-60% of your trades "right" to be successful and highly profitable. MISTAKE THREE
Listening to Others When traders first start out they often feel like they know nothing and that everyone else has the answers. So they listen to all the news reports and so called "experts" and get totally confused. And they take "tips" from their buddy, who got it from some cab driver… We will show you how you can get to know everything you need to know and so never have to listen to anyone else, ever again! MISTAKE FOUR Getting in the Way By this we mean letting your ego or your emotions get in the way of doing what you know you need to do. When you first start to trade it is very difficult to control your emotions. Fear and greed can be overwhelming. Lack of discipline; lack of patience and over confidence are just some of the other problems that we all face. It is critical you understand how to control this side of trading. There is also one other key that almost no one seems to talk about. But more on this another time! MISTAKE FIVE Poor Money Management It never ceases to amaze us how many traders don't understand the critical nature of money management and the related area of risk management. This is a critical aspect of trading. If you don't get this right you not only won't be successful, you won't survive! Fortunately, it is not complex to address and the simple steps we can show you will ensure that you don't "blow up" and that you get to keep your profits.
MISTAKE SIX Only Trading Market in One Direction Most new traders only learn how to trade a rising market. And very few traders know really good strategies for trading in a falling market. If you don't learn to trade "both" sides of the market, you are drastically limiting the number of trades you can take. And this limits the amount of money you can make. We can show you a simple strategy that allows you to profit when stocks fall. MISTAKE SEVEN Overtrading Most traders new to trading feel they have to be in the market all the time to make any real money. And they see trading opportunities when they're not even there (we’ve been there too). We can show you simple techniques that ensure you only "pull the trigger" when you should. And how trading less can actually make you more!
6. Conclusion
After going through my whole study I came to the conclusion that different Company of India either private or public both provides investment scheme With the objective to generate income. They have many financial schemes regarding Commercial investment There are many people who are satisfies with the Scheme. The procedure of Investing from this company is simple and easy and also costumer friendly. I also come to know that many industrialist, traders, and new entrepreneur were aware of these schemes.
Advantages of MUTUAL FUNDS:Portfolio Diversification:- Mutual Funds invest in a well-diversified portfolio of
securities which enables investor to hold a diversified investment portfolio (whether the amount of investment is big or small).
Professional Management:- Fund manager undergoes through various
research works and has better investment management skills which ensure higher returns to the investor that what he can manage his own. Less Risk:- Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities.
Low Transaction Costs:- Due to the economies of scale (benefits of larger
volumes), mutual funds pay lesser transaction costs. These benefits are passed on to the investors.
Liquidity: - An investor may not be able to sell some of the shares held by him
very easily and quickly, whereas units of a mutual fund are far more liquid.
Choice of Scheme: - Mutual Funds provide investors with various schemes
with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options.
Transparency: - Funds provide investors with updated information pertaining
to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.
Flexibility: - Investors also benefit from the convenience and flexibility offered
by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.
Safety:- Mutual Fund industry is a part of a well-regulated investment where the
interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.
LIMITATIONS OF STUDY It is very small research, which may be insufficient to give the real picture scope of the share market.
The research is based on collected data and the researcher is not responsible for any wrong inference drawn due to the incorrect filling of the questionnaire by the respondents.
The method of result is also limited to the reliability of method of investigations, measurement and analysis of data.
People were not interested in filling questionnaire properly.
Investing scheme has been revised very soon.
7. Recommendation
Securities Company needs to provide such type of facilities as much as possible because these students can be the future customers of the company for other services also. As for as branches are concern they are not providing much attention on promoting these facilities as compare to top management of the company so proper steps must be taken for that. Visiting schools and colleges for promotion purpose is only practicing in Delhi region it should be on national basis. In case of any kind o delay in service proper feed back system should be there. More efficient staff should be appointed so that they can easily provides all the cooperation required by the customer. Unnecessary formalities should be removed and should try to reduced the large documentation process while sanctioned investing. Interior space should be extended so that people will freely move during rush hour. News paper and magazines should kept for customers, so that they feel relaxed until their transactions are over. Proper water and toilet should be provided and that should be well noticed to everybody. As study reveals that securities company schemes are the best as compare to there sector it should be capitalized as much as possible.
8. Appendices Bibliography
www.sebi.gov.in www.gogle.com www.business.niapsofindia.com www.ficci.com www.networkmagaziineindia.com Business Magazines Presentation by Trainers
