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A PROJECT REPORT ON SECURITY ANALYSIS AND INVESTMENT MANAGEMENT IN INDIA INFOLINE

SUBMITTED TO

M.M.INSTITUTE OF MANAGEMENT MAHARISHI MARKANDESHWAR UNIVERSITY MULLANA-AMBALA 133207 www.mmumullana.org

INDEX
Chap. No. Table Of Content Title Declaration Certificate Acknowledgement Executive Summary 1. 1.1 1.2 1.3 2. 3. 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 4. A 5. Introduction Introduction To The Topic Introduction To The Industry Introduction To The Company Review of litrature Research Methodology Objectives Of The study Nature Of The Study Sampling Procedure and design Methods Of data collection Scope Of The Study Sampling Method Significance Of The Study Limitations Of The Study Major Findings And Conclusion Suggestions And Recommendations Annexure Sample Questionnaire Bibliography Page No.

DECLARATION
I hereby declare that this project report titled SECURITY ANAYLISIS AND INVESTMENTMENT MANAGEMENT has been submitted by me for the award of Post Graduate Diploma in Management, as partial fulfillment of the requirement for the course. This is the result of the original work carried out by me. This report has not been submitted anywhere else for the award of any other degree or diploma.

Date: 30th Aug 2012 VARSHA RANI

CERTIFICATE

ACKNOWLEDGEMENT
The success behind the completion of job is the support and joint team effort of a number of people. The satisfaction of the successful completion of any task wouldnt be complete without the expression of gratitude to the people who made it possible. It was a great opportunity for me to work with India Infoline Ltd., pioneers in the field of Finance Industry. I am extremely grateful to all those who have shared their expertise and knowledge with me and without whom the completion of this project would have been virtually impossible. My deepest sense of gratitude, profound respect and sincere thanks to Mr. Virander Kashyap, Branch Manager-Sales, my company guide, for his valuable assistance, keen interest and constant motivation at each step of the project. He always had the answers to my queries, be it regarding any concept related to stock trading and De-mat account. His warm support, practical guidance and easy explanations regarding the project matter add to the success of my project.

I would also like to thank my guide Mr. Ankur Aggarwal for all their time-to time assistance. Last but not the least I would like to thank God because without his divine grace nothing would have been possible.

VARSHA RANI 5

EXECUTIVE SUMMARY

1.INTRODUCTION
This summer project which is on how to create and manage portfolio, and know investor perception about investment in capital market which is most useful for me. This project Increase my knowledge and ability to understand external forces of environment. Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream of retiring early (or of being able to retire at all)? Do you know that you should invest, but don't know where to start? . There are many different ways you can go about making an investment. This includes putting money into stocks, bonds, mutual funds, or real estate (among many other things), or starting your own business. Sometimes people refer to these options as "investment vehicles," which is just another way of saying "a way to invest." Each of these vehicles has positives and negatives, which we'll discuss in a later section of this tutorial. The point is that it doesn't matter which method you choose for investing your money, the goal is always to put your money to work so it earns you an additional profit. Even though this is a simple idea, it's the most important concept for you to understand. The world of finance can be extremely intimidating, but we firmly believe that the stock market and greater financial world won't seem so complicated once you learn some of the language and major concepts.

INDUSTRY PROFILE
The Indian broking industry is one of the oldest trading industries that have been around even before the establishment of the BSE in 1875. Despite passing through number of changes in the post liberalization period, the industry has found its way onwards sustainable growth. With the purpose of gaining a deeper understanding about the role of the Indian stock broking industry in the countrys economy, we present in this section some of the industry insights gleaned from analysis of data received through primary research. For the broking industry, we started with an initial database of over 1,800 broking firms that were contacted, from which 464 responses were received. The list was further short listed based on the number of terminals and the top 210 were selected for profiling. 394 responses, that provided more than 85% of the information sought have been included for this analysis presented here as insights.

All the data for the study was collected through responses received directly from the customers and employees of broking firms. The insights have been arrived at through an analysis on various parameters, pertinent to the equity broking industry, such as region, terminal, market, branches, sub brokers, products and growth areas.

2.COMPANY PROFILE
The India infoline was founded by a group of professionals in 1995, a seemingly distant past in the Internet age. Our meticulous research was published and distributed in printed form to a client base comprising the who's who of Indian business including leading MNCs, investment banks and consulting firms. The quality of research was highly acclaimed and soon became the industry benchmark. Over the last few years, our research coverage has grown to cover practically all companies, economy and financial markets. The breadth and depth of our content is unmatched - stock markets, mutual funds, personal finance, taxation and economy. We saw an opportunity to expand our client base, from a few hundreds to several millions and also to complete the value chain. In early 1999, when Internet penetration in India was at its infancy and the future unknown, we took the hard decision of killing our earlier business model and embracing the Internet. We discontinued delivery of reports in printed form and made available quality research at the click of a mouse. Thus, was born www.indiainfoline.com? The site has emerged as the most popular website on Indian business and finance. A publication, no less than Forbes has chosen us in their Best of the Web under the Asian Investing category. The India Info line group, comprising the holding company, Angel Broking Ltd and its wholly owned subsidiaries offers the entire gamut of investment products ranging from Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments. Angel Broking also owns and manages the websites, www.indiainfoline.com and www.5paisa.com. Angel Broking Ltd is a company listed on both the leading stock exchanges in India namely the Stock Exchange, Mumbai stock exchange (BSE) and the National Stock Exchange (NSE). Angel Broking is a forerunner in the field of equity research. Angel Brokings research is acknowledged by none other than Forbes as Best of the Web and a must read for investors in Asia. India Info lines research is available not just over the internet but also on international wire services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is amongst the most read Indian brokers. The Angel Broking group has a significant presence 10

across the country owing to its 125 offices across 45 cities across India. All these offices are networked and are connected with the corporate office in Mumbai. The group has invested significantly in technology and research, the results of which are there for everyone to see. The 5paisa trading interface is one of the most advanced platforms available to retail investor in India. The group has memberships on BSE and NSE for equities trading and on MCX and NCDEX for commodities trading. It has a SEBI license for Portfolio Management under which, various schemes are offered which have been consistently beating the benchmark indices since inception. Angel Broking is the one-stop shop for all investment needs for the Indian retail investor, from advice to execution, from east to west, online or offline. To be the premier provider of investment advisory and financial planning services in India To be a leading investment intermediary for transactions through both online and offline medium.

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REVIEW OF LITERATURE
21st century the digital revolution has transformed the economy in to a new economy which empowered the customer with new set of capabilities such as: 1. Access to greater amount of information; 2. Wider variety of available good and services 3. Greater ease of interacting with the service provider. This new capability in the new economy led the customer to market the marketing and plays a very vital role in the growth of the market. It is essential in the service industry in particular, place greater emphasis on the enablers leading to customer satisfaction and customer retention. It is in this context is very important to understand the customer requirements to provide value(QSP - Quality, Service and Price) and track and manage the customer satisfaction for retention and creation of new customers. In Service industry it is not enough if the product meets the functional requirements of the customer, it should also meet certain other customer expectations like the behaviours /attitude of the person who provides service. The customer satisfaction is the combination of both technical features & human behavioural aspects. The quality management only addresses the systems and processes; service addresses the customer service independently. In todays new economy, it is essential to address the enablers for customer satisfaction for business growth with utmost importance as they are interdependent in nature.

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NATURE OF STUDY
Investment management is the professional management of various securities (shares, bonds and other securities) and assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations, charities, educational establishments etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded The business of investment has several facets, the employment of professional fund managers, research (of individual assets and asset classes), dealing, settlement, marketing, internal auditing, and the preparation of reports for clients. The largest financial fund managers are firms that exhibit all the complexity their size demands. Apart from the people who bring in the money (marketers) and the people who direct investment (the fund managers), there are compliance staff (to ensure accord with legislative and regulatory constraints), internal auditors of various kinds (to examine internal systems and controls), financial controllers (to account for the institutions' own money and costs), computer experts, and "back office" employees (to track and record transactions funds). The term asset management is often used to refer to the investment management of collective investments, while the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth management or portfolio management often within the context of so-called "private banking". The provision of investment management services includes elements of financial statement analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Coming under the remit of financial services many of the world's largest companies are at least in part investment managers and employ millions of staff. Fund manager (or investment adviser in the United States) refers to both a firm that provides investment management services and an individual who directs fund management decisions and fund valuations for up to thousand s of clincts per institution.) 14

STOCK MARKET BASICS Meaning of stock

Stock is a share in the ownership of a company. It represents a claim on the company's assets and earnings. Whether you say shares, equity or stock, it all means the same thing. If a company wants to growmaybe build more factories, hire more people or develop new productsit needs money. It could get a loan from a bank. By issuing stock, a company can raise money without going into debt. People who buy the stock are giving the company the money it needs to grow. Not every company can issue stock. A business owned by one person (a proprietorship) or a few people (a partnership) cannot issue stock. Only a business corporation can issue stock. A corporation has a special legal status. Like a school, its existence does not depend on the people who run it. When the price of a particular stock rises, that stock is said to be "up," meaning up in price. When the price falls, the stock is said to have gone "down. The terms "up" and "down" are also used to describe the rise and fall of the market as a whole. Stock market The stock market is the market for the trading of company stock, both those securities listed on a stock exchange as well as those only traded privately. Although common, the term 'the stock market' is a somewhat abstract concept for the mechanism that enables the trading of company stocks. It is also used to describe the totality of all stocks, especially within one country. In simple words: Place where business of buying and selling stock takes place. The stock market is not a specific place, though some people use the term "Dalaal Street.

Types of stocks
Equity Preference

Market segments
Primary market -Channel for creation of new securities

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 Secondary market -The new securities issued in the primary market are traded the secondary market

Stock exchange
The Bombay Stock Exchange (BSE) National Stock Exchange of India Ltd (NSE)

NEAT CASH

BOLT

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BOLT

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Market timing
Trading on the equities segment takes place on all days of the week (except Saturdays and Sundays and holidays declared by the exchange in advance). The Normal Normal 15.50 hours in BSE market timings market market of open close the : : equities segment 09:55 15:30 are: hours hours

The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and

Index
Number which measures the change in a set of values over a period of time. Stock index represents the change in value of a set of stocks which constitute the index A good stock market index is one which captures the behavior of the overall equity market It has to be well diversified yet highly liquid

Important market index

A market index is very important for its use as A barometer for market behavior As a benchmark portfolio performance A passive fund management in index funds An underlying for index futures and options

Types of indexes
Price weighted index Equally weighted index Market capitalization weighted index

Market Segments
Rolling Settlement 18

 Limited physical market Institutional Segment Trade for Trade Segment

Clearing and Settlement

Stock Markets follow a system of settling trades on T+2 basis, which means Transactions done on Monday are to be settled by Wednesday by way of giving securities or funds. Providing of securities or funds to Exchange / Clearing Corporation is called Pay-In. Receiving securities or funds from Exchange / Clearing Corporation is called pay-out

Sometimes trades dont get settled because of short or bad delivery or company objection. In such cases, trade is settled through auction of securities. If a trade remains unsettled even after auction, then Exchange carries Close Out

Margins and Risk Management

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 It is of paramount importance that investors have faith smooth functioning of stock Markets. Exchanges achieve this by putting in place a comprehensive Risk Management system and margin requirements.

Margin Requirement
MTM- Mark to Market margin Volatility Margin Gross Exposure Margin SPAN margin

Risk Management
Capital Adequacy requirement. Additional Base Capital Intra-Day Trading and Exposure limits On-line Exposure monitoring Settlement Guarantee Fund Inspection of Books Penalties

Frequently used terms

Margin Money Bull and Bear Settlement Cycle 20

 Squared transaction Delivery Transaction Positions - + (buy) & - (sell) Prices- Last traded price, closing price, opening price, average price Pay-in & pay-out Bid and offer Short selling Long position Auction Settlement Number

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B. CAPITAL MARKETS
Segments of the Capital Market Primary market
-Channel for creation of new securities

Secondary market
-The new securities issued in the primary market are traded the secondary market.

Primary Market
This is part of the financial market where enterprises issue their new shares and bonds. It is characterized by being the only moment when the enterprise receives money in exchange for selling its financial assets. In simple words: The primary market provides the channel for creation of new securities. Primary market provides opportunity to issuers of securities; Government as well as corporates, to raise resources to meet their requirements of investment.

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 Classification of Issues

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Initial Public Offer

Initial Public Offering (IPO) is when an unlisted company makes either a fresh issue of securities or an offer for sale of its existing securities or both for the first time to the public. This paves way for listing and trading of the issuers securities. A follow on public offering (Further Issue) is when an already listed company makes either a fresh issue of securities to the public or an offer for sale to the public, through an offer document.

Pricing of an Issue
Fixed Price Price discovery through Book Building Process

Book Building Process

Book Building is basically a process used in IPOs for efficient price discovery. It is a mechanism where, during the period for which the IPO is open, bids are collected from investors at various prices, which are above or equal to the floor price. The offer price is determined after the bid closing date.

Rights Issue
Rights Issue is when a listed company which proposes to issue fresh securities to its existing shareholders as on a record date.

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 The rights are normally offered in a particular ratio to the number of securities held prior to the issue and generally issued at a price lower than the currently traded market price of the share

Preferential Issue
A Preferential issue is an issue of shares or of convertible securities by listed companies to a select group of persons which is neither a rights issue nor a public issue. This is a faster way for a company to raise equity capital. Private placement can be done with a maximum of 50 investors.

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. In simple words: Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets.

Role of Secondary Market

For the general investor, the secondary market provides an efficient platform for trading of his securities. For the management of the company, secondary equity markets serve as a monitoring and control conduitby facilitating value-enhancing control activities

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C-Capital Market Instruments

Equity shares Preference shares Futures and Options Debentures/Bonds Government securities

Equity Shares
Equity shares represent proportionate ownership in a company. Investors who own equity shares in a company are entitled to ownership rights such as Share in the profits of the company ( in the form of dividends ) Share in the residual funds after liquidation / winding up of the company Voting rights

Reasons for buying equities

Owning equity in a company means owning part of that company. Each part is known as a share. If a company has issued 100 shares of stock, and you bought one, you own 1% of that company. People who own stock are called stockholders, or shareholders.

Stockholders hope the company will earn money as it grows. If a company earns money, the stockholders share the profits. Over time, people usually earn more from owning stock than from leaving money in the bank, buying bonds, or making other investments.

Preference Shares

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 Preferential shareholders enjoy a preferential right over equity shareholders with regards to : Receipt of dividend Receipt of residual funds after liquidation

Futures and Options

Future and Options are derivative products whose value is derived from the value of one or more basic variables Underlying Asset can be Equity, Forex, commodity or any other asset.

Debentures/ Bonds
Debt instruments issued by corporate and government Debentures and bonds can have many variations depending upon redemption, charge, convertibility etc.

Government Securities
The Central Government and the State Governments issue securities periodically for the purpose of raising loans from the public. There are two main types of Government securities: Dated Securities: These securities have a maturity period of more than 1 year Treasury Bills: These have a maturity period of less than 1 year

Regulatory Framework
Main legislations governing the capital market Securities Contract (Regulations) Act,1956 Companies Act, 1956 Securities Exchange Board of India Act, 1992 Depositories Act,1996 27

Role of SEBI
SEBI was set up to develop and regulate capital market protect interest of investors register various participants make rules for participants regulate stock exchanges promote investors education

LISTING REQUIREMENTS [I] Minimum Listing Requirements for new companies (A) Minimum Capital:
1. New companies can be listed on the Exchange, if their issued & subscribed equity capital after the public issue is Rs.10 crores. In addition to this the issuer company should have a post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 crores. 2. For new companies in high technology ( i.e. information technology, internet, ecommerce, telecommunication, media including advertisement, entertainment etc.) the following criteria will be applicable regarding there hold limit: i. The total income/sales from the main activity, which should be in the field of information technology, internet, e-commerce, telecommunication, media including advertisement, entertainment etc. should not be less than 75% of the total income during the two immediately preceding years as certified by the Auditors of the company. ii. The minimum post-issue paid-up equity capital should be Rs.5 Crores.

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iii.

The minimum market capitalization should be Rs.50 Crores. (The capitalization will be calculated by multiplying the post issue subscribed number of equity shares with the Issue price).

iv.

Post issue net worth (equity capital + free reserves excluding revaluation reserve) of Rs.20 Crores.

(B) Minimum Public offers:

As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of a company can be listed on a Stock Exchange only when at least 25% of each class or kind of securities is offered to the public for subscription. In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the securities issued by the company may be offered to the public subject to the following:

Minimum 20 lakhs securities are offered to the public (excluding reservation, firm allotment and promoters contribution)

The size of the offer to the public is minimum 50 crores.

For this purpose, the term "offered to the public" means only the portion offered to the public and does not include reservations of securities on firm or competitive basis. SEBI may, however, relax this condition on the basis of recommendations of stock exchange(s), only in respect of a Government company defined under Section 617 of the Companies Act, 1956.

[II] Minimum Listing Requirements for companies listed on other stock exchanges
1. The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on others The Company should have minimum issued and paid up equity capital of Rs. 3 crores.

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2. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of nonrecurring nature should be excluded while calculating distributable profits. 3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). 4. Minimum market capitalization of the listed capital should be at least two times of the paid up capital. 5. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%.

6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-Resident Indians. 7. The company should sign an agreement with CDSL & NSDL for demat trading.

[III] Minimum Requirements for companies delisted by this Exchange seeking relisting of this Exchange
The companies delisted by this Exchange and seeking relisting are required to make a fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial public offerings.

[IV] Permission to use the name of the Exchange in an Issuer Company's prospectus
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The Exchange follows a procedure in terms of which companies desiring to list their securities offered through public issues are required to obtain its prior permission to use the name of the Exchange in their prospectus or offer for sale documents before filing the same with the concerned office of the Registrar of Companies. The Exchange has since last three years formed a "Listing Committee" to analyse draft prospectus/offer documents of the companies in respect of their forthcoming public issues of securities and decide upon the matter of granting them permission to use the name of "Bombay Stock Exchange Limited" in their prospectus/offer documents. The committee evaluates the promoters, company, project and several other factors before taking decision in this regard.

[V] Submission of Letter of Application

As per Section 73 of the Companies Act, 1956, a company seeking listing of its securities on the Exchange is required to submit a Letter of Application to all the Stock Exchanges where it proposes to have its securities listed before filing the prospectus with the Registrar of Companies.

[VI] Allotment of Securities

As per Listing Agreement, a company is required to complete allotment of securities offered to the public within 30 days of the date of closure of the subscription list and approach the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval of the basis of allotment. In case of Book Building issue, Allotment shall be made not later than 15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to the investors.

[VII] Trading Permission

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As per Securities and Exchange Board of India Guidelines, the issuer company should complete the formalities for trading at all the Stock Exchanges where the securities are to be listed within 7 working days of finalization of Basis of Allotment. A company should scrupulously adhere to the time limit for allotment of all securities and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the listing permissions of all the Exchanges whose names are stated in its prospectus or offer documents. In the event of listing permission to a company being denied by any Stock Exchange where it had applied for listing of its securities, it cannot proceed with the allotment of shares. However, the company may file an appeal before the Securities and Exchange Board of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.

[VIII] Requirement of 1% Security

The companies making public/rights issues are required to deposit 1% of issue amount with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited in the event of the company not resolving the complaints of investors regarding delay in sending refund orders/share certificates, non-payment of commission to underwriters, brokers, etc.

[IX] Payment of Listing Fees

All companies listed on the Exchange have to pay Annual Listing Fees by the 30th April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed from time to time. The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board of the Exchange and approved by the Securities and Exchange Board of India is given hereunder tock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect.

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[X] Compliance with Listing Agreement

The companies desirous of getting their securities listed are required to enter into an agreement with the Exchange called the Listing Agreement and they are required to make certain disclosures and perform certain acts. As such, the agreement is of great importance and is executed under the common seal of a company. Under the Listing Agreement, a company undertakes, amongst other things, to provide facilities for prompt transfer, registration, subdivision and consolidation of securities; to give proper notice of closure of transfer books and record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely to materially affect the financial performance of the Company and its stock prices, to comply with the conditions of Corporate Governance, etc. The Listing Department of the Exchange monitors the compliance of the companies with the provisions of the Listing Agreement, especially with regard to timely payment of annual listing fees, submission of quarterly results, requirement of minimum number of shareholders, etc. and takes penal action against the defaulting companies.

[XI] "Z" Group

The Exchange has introduced a new category called "Z Group" from July 1999 for companies who have not complied with and are in breach of provisions of the Listing Agreement. The number of companies placed under this group as at the end of May, 2001

New Direct listing norms

The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at BSE. These norms are applicable with immediate effect. 1. The company should have minimum issued and paid up equity capital of Rs. 3 crores.

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2. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of nonrecurring nature should be excluded while calculating distributable profits. 3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). 4. Minimum market capitalization of the listed capital should be at least two times of the paid up capital. 5. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%. 6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single shareholder should hold more than 0.5% of the paid-up capital of the company individually or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and NonResident Indians. 7. The company should have at least two years listing record with any of the Regional Stock Exchange. 8. The company should sign an agreement with CDSL & NSDL for demat trading. 9. The company should have minimum issued and paid up equity capital of Rs. 3 crores. 10. The Company should have profit making track record for last three years. The revenues/profits arising out of extra ordinary items or income from any source of nonrecurring nature should be excluded while calculating distributable profits. 11. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves excluding revaluation reserves). 12. Minimum market capitalization of the listed capital should be at least two times of the paid up capital.

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13. The company should have a dividend paying track record for the last 3 consecutive years and the minimum dividend should be at least 10%.

[XII] Cash Management Services (CMS) - Collection of Listing Fees

As a further step towards simplifying the system of payment of listing fees, the Exchange has entered into an arrangement with HDFC Bank for collection of listing fees, from 141 locations, situated all over India. Details of the HDFC Bank branches, are available on our website site www.bseindia.com as well as on the HDFC Bank website www.hdfcbank.com The above facility is being provided free of cost to the Companies.

C.INVESTMENT BASICS
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TYPES OF SECURITIES TRADED IN COMPANY

Shares Commodities Mutual fund Life insurance

SHARES Meaning: - 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.

Procedure for doing trading in shares:

Every transaction in the stock exchange is carried out through licensed members called brokers.

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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 place 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 .

Derivatives
Introduction
A derivative is a contract/product that has no independent value i.e.: it derives its value from the underlying asset. Underlying asset can be securities, commodities, bullion, currency, live stock or anything else. A derivative is a financial instrument whose value depends on other, more basic, underlying variables. The variables underlying could be prices of traded securities and stock, prices of gold or copper, prices of oranges to even the amount of snow that falls on a ski resort. Derivatives have become increasingly important in the field of finance. Options and futures are traded actively on many exchanges. Forward contracts, swaps and different types of options are regularly traded outside exchanges by financial institutions, banks and their corporate clients in what are termed as over-the-counter markets i.e. there is no single market place or an organized exchange In other words, derivatives means forward, futures, option or any other hybrid contract of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of specified real or financial asset or to index of securities. In the international market, various derivatives products are traded. To start with, we need to understand three products, namely forward, futures and options.

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Concept
Derivative is a product whose value is derived from the value of one or more basic variables. Underlying Asset can be Equity, Forex, commodity or any other asset.

Types of Derivatives
Forwards Futures Options SWAPS

Forwards
A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Forward contract is a one to one bipartite contract, which is to be performed in future cover the currency risk. Forward contracts being negotiated by the parties on one to one basis, offer the tremendous flexibility to them to articulate the contract in terms of price, quantity, quality, delivery time and place. However, forward contracts suffer from poor liquidity and default risk at the terms decided today. Forward contracts are being used in India on large scale in the foreign exchange market to

Futures
Future contracts are the organized/standardized contracts in terms of quantity, quality, delivery time and place for settlement on any date in future. These contracts are traded on exchanges. Futures trading entail liquid investments that allow investors to purchase or sell assets at specified prices or at later dates. Based upon the anticipated price of the future, futures contracts can be drawn up for various markets. In simple words:

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 A future is contracting to buy or sell an underlying asset at a specified future date, at a specified price. These contracts are traded and settled on exchanges. Future contracts can be on individual scrips or indices.

Reasons for buying Futures contracts

Reasons contracts Hedgers To lock in a price and thereby obtain protection against rising prices Speculators To profit from rising prices for BUYING futures Reasons for SELLING futures contracts To lock in a price and thereby obtain protection against declining prices To profit from declining prices

Procedure for work in future

Futures trading occur on exchange, allowing investors the right and obligation to buy and sell. The contracts are regulated so the investors can turn their investments into money right away. Some standard conditions include guaranteeing the delivery month and location, the quantity and quality of the commodities, as well as the last day to trade. In order to end the futures contract, the holder must either sell the long position or purchase back the short position. Cash settlement, expiry, and physical delivery are three ways to complete the transaction of a futures contract.

Futures terminology

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 Spot Price Futures Price Expiry Date Contract Cycle -One month -Two month -Three month

Options
An option is a contract, which gives the buyer (holder) the right, but not the obligation, to buy or sell specified quantity of the underlying assets, at a specific (strike) price on or before a specified time (expiration date). The underlying may be physical commodities like wheat/ rice/ cotton/ gold/ oil or financial instruments like equity stocks/ stock index/ bonds etc. In simple words:

Options are derivative instruments where one party has a right to buy/sell the underlying while the other party has an obligation to buy/sell The person with the right is called the buyer of the option. The person with the obligation is called the writer of the option.

Risks in Options
The risk/ loss of an option buyer is limited to the premium that he has paid. An option holder who neither sells his option in the secondary market nor exercises it prior to its expiration loses his entire investment (Premium), in the option. The risk of an Options Writer however is unlimited where his gains are limited to the Premiums earned. The writer of an uncovered call is in an extremely risky position and may incur large losses if the value of the underlying asset increases above the exercise price. The potential loss is unlimited for the writer of an uncovered call. When a physical delivery uncovered call is assigned an exercise, the writer will have to purchase the underlying asset to meet his call obligation and his loss will

40

be the excess of the purchase price over the exercise price of the call reduced by the premium received for writing the call. (In the case of a cash-settled option, the loss will be the cash settlement amount reduced by the premium.) As with writing uncovered calls, the risk of writing put options is substantial. The writer of a put option bears a risk of loss if the value of the underlying asset declines below the exercise price, and such loss could be substantial if the decline is significant. The writer of a put bears the risk of a decline in the price of the underlying interest-potentially to zero. Since the leverage inherent in an option can cause the impact of price changes in the underlying asset to be magnified in the price of the option, a writer of an option that is uncovered and unhedged may have a significantly greater risk than a short seller of the underlying interest.

Types of Options

Based on the right:

Call option Put option

Call Option: A call option gives the holder (buyer/ one who is long call), the right to
buy specified quantity of the underlying asset at a specified price on or before a specified time. The seller (one who is short call ) however, has the obligation to sell the underlying asset if the buyer of the call option decides to exercise his option to buy. The buyer of a call option acquires the right but not the obligation to purchase a particular futures contract at a stated price on or before a particular date.

Put Option: A Put option gives the holder (buyer/ one who is long Put), the right to
sell specified quantity of the underlying asset at a specified price on or before a specified time. The seller (one who is short Put) however, has the obligation to buy the underlying asset if the buyer of the put option decides to exercise his option to sell.

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CALL OPTIONS Option buyer or option holder

PUT OPTIONS

Buys the right to buy the Buys the right to sell the underlying asset at the specified underlying asset at the specified price price

Option seller or option writer

Has the obligation to sell the Has the obligation to buy the underlying asset (to the option underlying asset (to the option holder) at the specified price holder) at the specified price.

Based on the exercise:

American ( Individual Securities) European (S&P CNX Nifty)

Procedure for using Options

If you anticipate a certain directional movement in the price of a stock, the right to buy or sell that stock at a predetermined price, for a specific duration of time can offer an attractive investment opportunity. The decision as to what type of option to buy is dependent on whether your outlook for the respective security is positive (bullish) or negative (bearish). If your outlook is positive, buying a call option creates the opportunity to share in the upside potential of a stock without having to risk more than a fraction of its market value. Conversely, if you anticipate downward movement, buying a put option will enable you to protect against downside risk without limiting profit potential. Purchasing options offer you the ability to position yourself accordingly with your market expectations in a manner such that you can both profit and protect with limited risk. Once you have purchased an option contract, you can do one of the following:

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 You can sell an option of the same series as the one you had bought & close out your position in that option at any time, or; You can exercise the option on the expiration day in case of European Option or on or before the expiration day in case of an American option.

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ITM/ATM/OTM:
CALL OPTION In-the-money PUT OPTION

Strike price < Spot price of Strike price > Spot price of underlying asset underlying asset

At-the-money

Strike price = Spot price of Strike price = Spot price of underlying asset underlying asset

Out-of-the-money

Strike price > Spot price of Strike price < Spot price of underlying asset underlying asset

Futures V/s Options

The major differences in Futures and Options are as under: Futures Options

Futures are agreements/contracts to buy or sell Unlike futures, the buyer in case of options specified quantity of the underlying assets at a enjoys the right & not obligation, to buy or sell price agreed upon by the buyer & seller, on or the underlying asset. before a specified time. The buyer is obligated to buy/sell the underlying asset.

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Futures contracts are highly leveraged positions In case of options, for a buyer (or holder of the with unlimited risk for both the buyer as well as option), the downside is limited to the premium the seller. (option price) he has paid while the profits may be unlimited. For a seller or writer of an option, however, the downside is unlimited while profits are limited to the premium he has originally received from the buyer. The Futures contracts prices are affected only by The prices of options are however; affected by the prices of the underlying asset. prices of the underlying asset, time remaining for expiry of the contract & volatility of the It costs nothing to enter into a futures contract. underlying asset. There is a cost of entering into an options contract, termed as Premium.

Benefits of trading in F&O

Transfer of risk Incentive to make profit with minimal amount of risk capital Lower transaction costs Liquidity, price discovery Eliminates security specific risks Power to leverage

Margin
SPAN Margin -Initial margin -Mark to market margin Exchange requires customer to maintain margin with broker.

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Meaning of commodities
Commodities are broadly defined as natural resources, chemicals and physical products you can touch, taste, smell, grow, mine, consume or deliver. In simple words: Commodity includes all kinds of goods. FCRA defines "goods" as "every kind of movable property Other than actionable claims, money and securities". Goods with commercial value traded widely in bulk; usually a raw material or primary produce, for processing; Agricultural commodities: food grains, fibers, oilseeds complex, sugar, plantation crops, horticulture crops; Non-agro commodities: Base metals, precious metals; industrial products: crude;

Comparison of India Asset Market

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47

MUTUAL FUND
History of Mutual Fund in India

Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. UTI has an extensive marketing network of over 40,000 agents all over the country. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are to protect the interest of investors in securities and to promote the development of and to regulate the securities market. In 1995, the RBI permitted private sector institutions to set up Money Market Mutual Funds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper, commercial bills accepted/co-accepted by banks, certificates of deposit and dated government securities having unexpired maturity up to one year. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type.

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MEANING
Mutual fund is Investment Company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most open-end mutual funds stand ready to buy back (redeem) its shares at their current net asset value, which depends on the total market value of the fund's investment portfolio at the time of redemption. Most open-end mutual funds continuously offer new shares to investors. Also known as an open-end investment company, to differentiate it from a closed-end investment company. Mutual funds invest pooled cash of many investors to meet the fund's stated investment objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's current net asset value: total fund assets divided by shares outstanding. In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with objectives as disclosed in offer document. In Short, a mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc . Mutual Fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. There are myriad kinds of mutual funds, each with its own goals and methodologies. Whether or not a mutual fund is a good investment is a matter of much public debate, with many claiming they are excellent for the average person, and others saying they are simply a poor way to invest. A mutual fund may be either an actively managed fund or an indexed mutual fund. Actively managed funds are changed on a regular basis by a fund manager in the attempt to maximize their profitability. They fund manager looks at the market and the sectors a fund 49

invests in and redistributes the fund accordingly. An indexed fund simply takes one of the major indexes and buys according to that index. Indexed funds change much less frequently than actively managed funds, but in theory an active fund has more potential for profit. Many critics of mutual funds point out that scarcely over 20% of mutual funds outperform the Standard and Poor's 500 Index. This means that nearly 80% of the time, an investor would have been more profitable by simply buying equal shares in all 500 of the companies currently on the S&P 500. Supporters point out that for most people the complications involved in traditional investment are simply not worth the effort. A mutual fund offers an easy way to invest in something with a higher return than, say, interest earned at the bank, while keeping funds somewhat fluid. It also eliminates the need to track the market oneself. There are more types of mutual fund available than there are publicly traded stocks, making the process of choosing one a somewhat daunting prospect for most people. In general, it is good to look at a few types of mutual fund that catch your eye and investigate them to see if they fit your needs. The length of time you want to remain invested, associated costs, tax status, and whether a fund is closed- or open-ended may all prove important. The sector of investment for a mutual fund may also be something you want to look at. Many sector funds exist, and they are most often the top-performing mutual funds in a given year. The problem, of course, is guessing which sector will next see uniform growth, and avoiding sectors that can be hard-hit by single events . In other words A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. The flow chart below describes broadly the working of a mutual fund:

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organisational set up of a mutual fund.

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Types of Mutual Fund

Schemes According To Maturity period Schemes According To Investment Objective

Schemes according to Maturity Period: A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

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 Open-ended Fund: An open-ended Mutual fund is one that is available for subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of open-end schemes is liquidity. Close-ended Fund: A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

Schemes according to Investment Objective:

A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows: Growth / Equity Oriented Scheme : The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual

53

funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. Income / Debt Oriented Scheme The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However, opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long term investors may not bother about these fluctuations.

Points should be kept in mind before investing in Mutual Funds

Mutual Fund investment decisions require consistent effort on the part of the investor. Before investing in Mutual Funds, the following steps must be given due weightage to decide on the right type of scheme: (A) Identifying the Investment Objective (B) Selecting the right Scheme Category (C) Selecting the right Mutual Fund (D) Evaluating the Portfolio

A) Identifying

the

Investment

Objective

your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses, among many other factors. Therefore, the first step is to assess you needs on the basis of following points: Needs of an investor to invest

To a regular income To finance a wedding 54

He need to educate my children or A combination of all the above

Risk potential of an Investor willing to take

The risk-taking capacities of investors vary depending on various factors. Based on their risk bearing capacity, investors can be classified as:

Very conservative Conservative Moderate Aggressive Very Aggressive Cash flow requirements

For example, you may require:

A regular Cash Flow A lump sum after a fixed period of time for some specific need in the future Or, you may have no need for cash, but you may want to create fixed assets for future the

B) Selecting the scheme category

The next step is to select a scheme category that matches your investment objectives:

55

For Capital Appreciation go for equity sectoral funds, equity diversified funds or balanced funds.

For Regular Income and Stability you should opt for income funds/MIPS For Short-Term Parking of Funds go for liquid funds, floating rate funds,

C) Selecting the right Mutual fund

Once you have a clear strategy in mind, you now have to choose which Mutual fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some important factors to evaluate before choosing a particular Mutual Fund are:

The track record of performance over that last few years in relation to the appropriate yardstick and similar funds in the same category.

How well the Mutual Fund is organized to provide efficient, prompt and personalized service.

The degree of transparency as reflected in frequency and quality of their communications.

D) Evaluation of portfolio Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio, fund managers style of investment, portfolio diversification, fund managers experience. Good equity fund should provide consistent returns over a period of time. Also expense ratio should be within the prescribed limits. These days fund house charge around 2.50% as management fees.

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Evaluation of bond funds involve it's assets allocation analysis, return's consistency, its rating profile, maturity profile, and its performance over a period of time. The bond fund with ideal mix of corporate debt and gilt fund should be selected.

DIFFERENT TYPES OF INVESTMENT

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.

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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.

ON LINE TRADING PLATEFORM

When you place your orders electronically through our revolutionary on-line order entry system, you can route your orders DIRECTLY to hand-held devices in the trading pit. Your order is sent directly to the filling broker in the trading pit without any interruption of any kind. Compare this execution to that of other brokerage firms where your execution may involve up to six steps: You call your broker and place the order Your broker calls his central order desk The central order desk calls the exchange order desk The exchange order desk hands your order to a runner The runner takes your order to a trader in the pit Your order is finally executed At Farr Financial, your orders are executed like this: You enter the order on-line over the Internet or place it with the professional trade desk. The order is instantly received by the filling broker in the pit who immediately executes it

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Investment process
The investment process involves a service of activity leading to purchase of securities or there investments alternatives. The investment can be divided in to five stages. I. Framing of investment policy II. Investment analysis III. Valuation IV. Portfolio contributes V. Portfolio evolution

Investment Process

Invt. Policy

Analysis

Valuation

Portfolio Construction

Portfolio Evaluation

- Investable Fund - Objectives -Knowledge

- Market - Industries - Company

- Intrinsic Value - Future Value -

-Diversification -Selection & Allocation

- Appraisal - Revision

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D-RELATIONSHIP MANAGER Job Profile of an RM

To offer personalized service based on needs and requirements of each client One point contact for the client He is a Financial Advisor will advise the client not only on equity but MF,PMS,Insurance, Acquire and Retain clients The Goal. CUSTOMER FOR LIFE

Skills required

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P - Polite, patience, perseverance E - Emotions...Managing Hope, Fear, Greed O - Openness and honesty P - Proactive, prepared, professional L - Listen and learn E Efficient

Working of HNI desk

Induct and Train RMs Activation List - RMs Meeting clients Welcome note Special Conditions to be kept confidential CMR based on profile References to build client list Rules to be adhered from Checklist Error free

Check List
First Meeting with Client- Fill Client Profile Sheet and make meeting Report Offline and Online client Attend morning meeting and inform clients accordingly Know your clients position Monitor position of clients Dealing errors Special Conditions

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 Maintain MIS on weekly basis

Acquire new customers acquired from

Natural social circle Databases and telemarketing leads References of existing customers

Role of an RM

Research Offers Investment Story

RM
Offers Information Relationship Execution Consistency

Client
Demands Cost Speed Convenience Confidentiality

Role of an RM

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RM
Consistency Information

Closing the deal

Relationship

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Customer services in broking business

Commoditized business Quality as differentiator

Top Quality Customer services

Retaining a customer is relatively cheaper Customer was king, now he is emperor A bad service experience rankles for long time in memory A bad service experience can prompt a customer to switch loyalty

The Challenge
How does Company provide top quality customer service?

Basic Principles Of Customer Services

Principle One
Do onto others what you want others to do onto you Place yourself in customers shoes How do you feel when provided with poor

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 Customer service?

Principle Two
Dont make customer run from pillar to post Recall your experience in rationing office. One single phone call from customer should Solve his problem.

Principle Three
Under promise and over deliver

Principle Four
Mere smile is not enough, you must deliver solutions.

F. MARKET ANALYSIS COMMON TRADING MISTAKES

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 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.

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 doesnt 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.

Listening to Others

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When traders first start out they often feel like they know nothing and that everyone else have 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!

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!

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.

Only Trading Market in One Direction

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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.

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REVIEW OF LITERATURE

21st century the digital revolution has transformed the economy in to a new economy which empowered the customer with new set of capabilities such as: 1. Access to greater amount of information; 2. Wider variety of available good and services 3. Greater ease of interacting with the service provider. This new capability in the new economy led the customer to market the marketing and plays a very vital role in the growth of the market. It is essential in the service industry in particular, place greater emphasis on the enablers leading to customer satisfaction and customer retention. It is in this context is very important to understand the customer requirements to provide value(QSP - Quality, Service and Price) and track and manage the customer satisfaction for retention and creation of new customers. In Service industry it is not enough if the product meets the functional requirements of the customer, it should also meet certain other customer expectations like the behaviours /attitude of the person who provides service. The customer satisfaction is the combination of both technical features & human behavioural aspects. The quality management only addresses the systems and processes; service addresses the customer service independently. In todays new economy, it is essential to address the enablers for customer satisfaction for business growth with utmost importance as they are interdependent in nature.

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RESEARCH METHODOLOGY
Research in Common parlance refers to the search for knowledge. One can also define research as a Scientific and Systematic search for pertinent information of a specific topic, it is the pursuit of truth with the help of study , observation , comparison and experiment.

SELECTION OF THE TOPIC

I select this topic because of I like that type of work which is full of interest. I also consulted my seniors about this topic. Many of the people of india are not aware about this field like many rural people who are very rich but because of unawareness they lost this opportunity. I want to make my career in this field for serving my ideas with others.

3. OBJECTIVES OF STUDY
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1. To create the awareness among the people with security analysis and investment management. 2. To increase profit margin in a risky situation 3. To analysis the profitability of securities in india infoline

NATURE OF STUDY
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72

SAMPLIN PROCEDURE AND DESIGN SAMPLE DESIGN

Sampling design The sampling method adopted for research work was Convenience sampling method.

Sample- The sample was selected from businessman, shopkeepers, professionals, employed and salaried personnel for their interest in De-mat account; I started interviewing the concerned either by directly interacting or through tele calling.

Sample size - The sample size selected was 50. The data collection method was based on the following: a. Tools: The tool that was used to conduct the study was questionnaire designed by me, which was mixture of open ended and close ended question. The questionnaire was designed in such so as to cover the relating to securities and investment.

METHOD OF DATA COLLECTION DATA COLLECTION

The data used for the project can be divided into two major forms: 1) Primary Data 2) Secondary Data Primary Data was collected by getting the feedback forms filled by the people we met in the organizations visited. We also used to write our daily reports based on our experiences of 73

that particular day and maintained a record of the companys reaction on the product, as well as the presentation.

Secondary Data was collected by going through several websites of the companies on the Internet like www.nseindia.com,www.5paisa.com,www.indiainfoline.com etc. Information about the companies and the industry was also collected by going through financial papers and magazines like Economic Times,Business World,Business Today.etc.

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Data Analysis and Interpretation

1. Do you have any knowledge about stock market? Aware of stock market Unaware of stock market 72% 28%

Interpretation: With the increase in cyber education, the awareness towards online share trading has increased by leaps and bounds. This awareness is expected to increase further with the increase in Internet education. 2. Are you interested in online stock market trading hence opening De-mat account first?

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76

Scope of Investment Management:Portfolio management is a continuous process. It is a dynamic activity. The following are the basic operations of a portfolio management. a) b) c) d) e) Monitoring the performance of portfolio by incorporating the latest market conditions. Identification of the investors objective, constraints and preferences. Making an evaluation of portfolio income (comparison with targets and achievement). Making revision in the portfolio. Implementation of the strategies in tune with investment objective.

SAMPLING METHOD

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SIGNIFICANCE OF THE STUDY

The primary attraction of active management is that it allows selection of a variety of investments instead of investing in the market as a whole. Investors may have a variety of motivations for following such a strategy: 1. They may be skeptical of the efficient-market hypothesis, or believe that some market segments are less efficient in creating profits than others. 2. They may want to manage volatility by investing in less-risky, high-quality companies rather than in the market as a whole, even at the cost of slightly lower returns. 3. Conversely, some investors may want to take on additional risk in exchange for the opportunity of obtaining higher-than-market returns. 4. Investments that are not highly correlated to the market are useful as a portfolio diversifier and may reduce overall portfolio volatility. 5. Some investors may wish to follow a strategy that avoids or underweights certain industries compared to the market as a whole, and may find an actively-managed fund more in line with their particular investment goals. (For instance, an employee of a high-technology growth company who receives company stock or stock options as a benefit might prefer not to have additional funds invested in the same industry.) Several of the actively-managed mutual funds with strong long-term records invest in value stocks. Passively-managed funds that track broad market indices such as the S&P 500 have money invested in all the securities in that index i.e. both growth and value stocks. The use of managed funds in certain emerging markets has been recommended by Burton Malkiel, a proponent of the efficient market theory who normally considers index funds to be superior to active management in developed markets.[3] Gain real-time visibility to make rapid, well-informed decisions. 6. Implement governance processes with built-in models and workflows

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7.Increase collaboration between management and delivery teams 8.Operational-ize best practices and automate portfolio processes 9.Monitor and control risks, issues, and financials across portfolios 10.Gain 360-degree view across all projects and operations 11. Asset allocation strategy drives your expected return. 12. Evaluate risk investment performance against stated benchmark returns and portfolio. .

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LIMITATIONS
1. The most obvious disadvantage of active management is that the fund manager may make bad investment choices or follow an unsound theory in managing the portfolio. 2. The fees associated with active management are also higher than those associated with passive management, even if frequent trading is not present. 3. Those who are considering investing in an actively-managed mutual fund should evaluate the fund's prospectus carefully. 4. 4Data from recent decades demonstrates that the majority of actively-managed large and mid-cap stock funds in United States fail to outperform their passive stock index counterparts.[4] 5. Active fund management strategies that involve frequent trading generate higher transaction costs which diminish the fund's return. In addition, the short-term capital gains resulting from frequent trades often have an unfavorable income tax impact when such funds are held in a taxable account. 6. When the asset base of an actively-managed fund becomes too large, it begins to take on index-like characteristics because it must invest in an increasingly diverse set of investments instead of those limited to the fund manager's best ideas. 7. Many mutual fund companies close their funds before they reach this point, but there is potential for a conflict of interest between mutual fund management and shareholders because closing the fund will result in a loss of income (management fees) for the mutual fund company.

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RESEARCH DESIGN
Research design is actually the blue print of the research project and when implemented must bring out the information required for solving the identified problem. The research design indicates the method of research (i.e method of information gathering , the instruments of research, the method of sampling etc.). The Choice of research design depends upon the depth and extent of data required the cost benefits of research, the urgency of work and the time available for Completing it.

RESEARCH OBJECTIVE
The purpose of research is to acquire knowledge about the financial products of India Infoline.

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SUGGESTION & RECOMMANDATIONS

After working out the strategy in the organization it was found out that many clients were demanding for: Improved services. Easy accessibility. Technical guidance . Timely receivability of statement of holdings and financial transaction. Door-to-door services . Communication should be proper way. Increase the response time.

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SUGGESTIONS

1. Differentiate your service from competitors by introducing some new features. 2. Take continuous feedback from customer to improve the quality of services. 3. All the complimentary services should available under one roof. 4. Time-to-time proper incentives should be provided to the marketing executives, so that they put their best. 5. Focus on quality clients. As well as small clients also. 6. Every person in the organization must have the knowledge about the product and services so that he should be able to handle the customers all queries. 7. Employees should be behave in proper manner with the customer and should be accordingly dressed, it will present an impressive environment to the clients. 8. Every employee must posses the required certification like NCFM. 9. Communication between departments and with outside clients should be done through electronic media like E-mail.

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CONCLUSION

On the basis of analysis one could easily find that India Infoline Pvt Ltd is suited for big investors. The cost free demat scheme of India Infoline Pvt ltd could be said to be the scheme which any company has services provided by India InfoLine Pvt Ltd are unique which places it as a financial sure market.

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QUESATIONNAIRE
The format of Questionnaire given to people is as follows: Name of Person: Contact Number: E-mail Id Are you interested in Share Market? Yes No

Do you invest in Share market? Yes No

Are you aware of India infoline? Yes No

Do you have a Demat Account? Yes No

Do you invest in IPO online? Yes No

Do you invest in Equities online? Yes No

Do you invest in Mutual Funds online? 85

Yes

No

Are you aware of any Stock broking company? SHERKHAN MOTILAL OSWAL ICICI DIRECT HDFC INDIABULLS KOTAK ANY OTHER DONT KNOW ANY ONE

Presently in which security are you trading? Signature

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BIBLIOGRAPHY

Company manuals Discussion with guide www investopedia.com www Indiainfoline.com www.karvy.com www.traderji.com www.motilaloswal.com www.kotaksecurities.com www.sharekhan.com www.icicisecurities.com www 5paisa.com

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