A

Project Report

On

“ A study on Mutual Funds ”

At

Submitted By

G. Sai Prasad (1701145)

Project Submitted In Partial Fulfilment for the Award of the Degree of

Post Graduate Diploma in Management

2017-2019

Under the guidance of

P. Mahesh (Assistant Professor)

INSTITUTE OF PUBLIC ENTERPRISE

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 DECLARATION

I, G. Sai Prasad, a student of Institute of Public Enterprise (IPE), hereby declare

that I have worked on a project titled “A Study on Mutual Fund” during my
Summer Internship at Sharekhan in partial fulfillment of the requirement for the
Post Graduate Diploma in Management Program.

I guarantee/underwrite my research work to be authentic and original to the best of

my knowledge in all respects of the process carried out during the project tenure.

My learning experience at Sharekhan, under the guidance of Mr. Kishore, has been
truly enriching.

G. Sai Prasad
Roll number: 1701145
PGDM: 2017-2019

Institute of public Enterprise (IPE)

SHAMIRPET CAMPUS.

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 ACKNOWLEDGEMENT

I take this privilege to express my sincere gratitude towards Sharekhan Limited for
giving this opportunity to carry out my project in their esteemed Organization. In
the course of writing this project, I have drawn on many well-wishers for
comments on various chapters. I thank to my beloved Assistant manager Mr.
Kishore and other members of the organization in Sharekhan Limited Hyderabad
(Tarnaka) for their valuable guidance, advice, suggestion and cooperation
throughout my project work and for having permitted me to undertake project and
providing me immense support in a successful completion.

I would also like to thank the overwhelming support of all the people who gave me
an opportunity to learn and gain knowledge about the various aspects of the
industry.

I also express my sincere gratitude to my guide P. Mahesh Sir (Assistant Professor)

at Institute of Public Enterprise for his guidance.

(G. Sai Prasad)

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ABSTRACT

Relevance of Cash Management has various Savings and Investment options such
as stock, mutual funds, gold and commodities. Of these, mutual funds are one of
the most liquid investment options due to the flexibility to get in and out of it with
relative ease. In order to invest into the mutual fund, investors have two options.

1. One-time or Lump-sum investment.

2. Systematic Investment plan (SIP).

We have many schemes; of them the following are majorly opted.

• Open ended scheme

• Interval scheme
• Closed ended scheme

Open ended scheme is accepted and liquidated on a continuous basis by a Mutual

fund manager.

Interval scheme is a mode of scheme with a feature that it remains open during a
particular period of the year for the benefit of investors.

Closed ended scheme is liquidated only after the expiry of a specified period.

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1. TABLE OF CONTENTS
1. INTRODUCTION ...............................................................................................5
1.1 INTRODUCTION OF MUTUAL FUND ....................................................8
1.2 BASIC OF MUTUAL FUND .......................................................................9
1.3 ABOUT MUTUAL FUND ...........................................................................9
1.4 FACTS ABOUT MUTUAL FUNDS ...........................................................9
1.5 NEED FOR THE STUDY : .......................................................................10
1.6 OBJECTIVE OF THE STUDY ..................................................................10
2. MUTUAL FUND ..............................................................................................12
2.1 HISTORY OF MUTUAL FUND -INTERNATIONAL SCENARIO ......12
2.2 EVOLUTION OF MUTUAL FUNDS IN INDIA ......................................13
2.3 TYPES OF MUTUAL FUNDS ..................................................................15
2.4 OPTIONS AVAILABLE FOR AN INVESTOR IN MUTUAL FUNDS: .22
2.5 RETURN ON INVESTMENT....................................................................23
2.6 RISK RETURN ANALYSIS ......................................................................23
2.7 ADVANTAGES OF MUTAL FUNDS: .....................................................23
2.8 DIS-ADVANTAGES OF MUTUAL FUNDS ...........................................25
2.9 DISTRIBUTION CHANNELS...................................................................26
2.10 FACTORS CONDUCIVE TO THE GROWTH OF MUTUAL FUND
INDUSTRY ..........................................................................................................26
2.11 MUTUAL FUND INDUSTRY IN INDIA .................................................27
2.12 STRUCTURE OF MUTUAL FUNDS .......................................................28
2.13 WORKING OF MUTUAL FUNDS ...........................................................28
2.14 ASSET MANAGEMENT COMPANY ......................................................29
2.15 ASSET UNDER MANAGEMENT (AUM) ...............................................34
2.16 PROCESS OF MUTUAL FUNDS .............................................................34
2.17 WHO CAN INVEST IN MUTUAL FUNDS? ...........................................35
2.18 KYC REQUIREMENTS FOR MUTUAL FUND INVESTORS ..............35
2.19 WHERE AND HOW TO BUY MUTUAL FUNDS? ................................35
2.20 HOW TO INVEST IN MUTUAL FUNDS? ..............................................36

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 2.21 TYPES OF RISK.........................................................................................36
2.22 DEMAT ACCOUNT ..................................................................................37
2.23 DEMAT BENEFITS ...................................................................................37
2.24 ONLINE TRADING ...................................................................................38
2.25 BENEFITS OF THE ONLINE TRADING ................................................38
3. MUTUAL FUND V/S OTHER PRODUCTS ...................................................40
3.1 MUTUAL FUNDS V/S GOLD ..................................................................40
3.2 MUTUAL FUND V/S REAL ESTATE .....................................................41
3.3 MUTUAL FUNDS V/S FIXED DEPOSITS ..............................................42
4. INTRODUCTION TO THE COMPANY .........................................................44
4.1 SHAREKHAN STOCK BROKING COMPANY ......................................44
4.2 SHARE KHAN FIRST DAY PROGRAM .................................................45
4.3 ACHIEVEMENT OF THE COMPANY: ...................................................46
4.4 SWOT ANALYSIS .....................................................................................46
4.5 ORGANIZATIONAL STRUCTURE OF SHAREKHAN .........................48
4.6 PRODUCTS AND SERVICES OFFERED BY SHARE KHAN ..............48
4.7 HOW WILL I LEARN THE BASICS OF INVESTING IN SHARE? ......48
4.8 REASONS TO CHOOSE SHARE KHAN.................................................49
4.9 BENEFITS ..................................................................................................50
5. ANALYSIS AND INTERPRETATION ...........................................................52
6. CONCLUSION..................................................................................................62
7. BIBLIOGRAPHY..............................................................................................66

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 CHAPTER-1
INTRODUCTION

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1 INTRODUCTION OF MUTUAL FUND

A Mutual fund is a trust that pools together the saving of a number of investors who share
a common financial goal. All such investors buy units in a fund that best suit their needs – be it
growth in capital, regular returns of safety of capital. The fund manager then invests this pool of
money in securities, ranging from shares to debentures to Money market instruments or a
mixture of Equity and Debt, depending on the objective of the scheme. The income earned
through these investments and the Capital appreciated realized by the scheme by its unit’s
holders in proportion to the number of units owned by them.

One of the reason for popularity of Mutual fund as an investment option is their low risk factor
owing to the diversification of the investment into various sectors or assets.

Portfolio are also constantly reviewed and adjusted according to the changing markets in order to
maximize the profits of the investors.

But nevertheless, it is important that an investor reads the offer document carefully before
investing. The investor must also make research on the sector that the investor wishes to invest
in, be it Equity sector or Pharma sector etc.

Investor should be clear on the loads that are charged by a fund house. It is also essential to
consider the funds past performance. These measures will help in negating the losses that may be
incurred by a Mutual fund to a certain extent.

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1.1 Basic of mutual fund

Mutual funds are perhaps the easiest and least stressful way to invest in the market. In
fact, more new money has been introduced into funds during the past few years than at a time in
history.

• A mutual fund is a common pool of money into which investors place their contributions that
are to be invested in different types of securities in accordance with the stated objective.
• An equity fund would buy equity assets-ordinary shares, preference shares, warrants etc.
• A bond fund would buy debt instruments such as debenture bonds, or government securities.
• A balanced fund will have a mix of equity assets and debts instruments.
• Mutual Fund shareholder or a unit holder is a part owner of the fund’s asset.

1.2 About Mutual Fund

• Mutual Funds invest only in shares.

• Mutual Funds are prone to very high risks/actively traded.
• Mutual Funds are very new in the financial markets.
• Mutual Funds are not reliable and people rarely invest in them.
• The good thing about Mutual Funds is that you don’t have to pay attention to them.

1.3 Facts about Mutual Funds

• Equity Instruments like shares are only a part of the securities held by mutual funds. Mutual
Funds also invest in debt securities which are relatively much safer.
• Mutual Funds are there in India since 1964.Mutual Funds market has evolved in U.S.A and is
there for last 60 years.
• Mutual Funds are the best solution for people who want to manage risks and get good returns.
• US are very much a part of the market and is not immune to its vagaries. The crisis has risen
due to mismanagement of the fund.

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1.4 NEED FOR THE STUDY:

In this present scenario of slowdown popularly known as recession the most important
and highly influential aspect is finance. This aspect of finance has major impact on funding the
various sectors for the government also. The FIIs and the FDIs also get attracted by the financial
policies of a particular country. Now the major source of investments for these FIIs and FDIs is
shares of particular company listed in BSE or NSE, but the major that affects investment in
shares is high risk that an investor has to face due to recession as the money flow in the market is
very less as the companies are not earning desired results and as a result the foreign investors are
bit scared of investing in the country .The major negative impact of this being decrease in the
value of share leading to the loss of money to the investors.

All this gave rise to the concept called Mutual funds. The major important benefit of
mutual funds is diversification. When an investor invests in a share and market goes up/down
then the investor will gain/loss in that share only. But in case of mutual funds the investor gets
the benefits of Diversification i.e.., the amount that an investor invests in the mutual funds is not
invested in single mutual fund but the AMC (Asset Management Company) of the mutual fund
Diversity the amount in various shares and that to sector wise. Thus, even if a particular sector is
covered by well performing sectors. This diversification helps to fight the Nightmare of
Recession in a such a way that the money is through not directly invested by the investors in the
share market but it indirectly gets invested through the mutual fund companies. Thus money
flow continues to be in the market leading to great impact on the profits of the companies
helping the investors to gain increasing their money inflow which in turns leads to money
outflow and again money supply increases in the market. This is known as Cascading effect.

1.5 Objective of the study

• “To understand the concept of equity market to know the current position of equities trading in
India and how much it is successful and what is its future to know the investors perception
towards investment in equity market”.

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 CHAPTER-2
REVIEW OF LITERATURE

11
2. MUTUAL FUND

2.1 HISTORY OF MUTUAL FUND -INTERNATIONAL SCENARIO

In the second half of the 19th century, investors in the UK considered the stock market as
an attractive investment opportunity. Yet the small investors did not have the funds required to
operate in the market effectively. This led to the establishment of investment companies which
provided an opportunity to small investors to invest in the equity market. The first investment
company was the Scottish American investment company, set up in London in 1860. Most
investment companies established at that time where closed ended and invested primarily in
stock markets. Hence due to the 1890 stock market crisis many investment companies got ck of
interest in stock market. However, when stock markets where reviewed in the 1920’s with the
Boom phase in the stock market, their growth was more in the US than in the UK. In this
phase, open ended investment companies where more in Vogue as they were allowed to
borrow money investing in securities. This facility allowed them to increase the shareholders
returns in booming market. It was during this period that the first Mutual Fund, Massachusetts
investors trust, was formed in Boston in 1924. However, the market crash of 1929 marked the
end of the second phase of growth of investment companies.

The third phase of evolution of Investment Company started after the World War II. As a
stock market is revived, so did the investors interest too. In the next 20 years, the mutual funds
industry grew tremendously. Gradually, the mutual fund caught on with the changing and
booming Markets and came up with various types of innovative funds such as money market
funds, fixed income funds, tax exempt mutual funds, junk Bond mutual funds, emerging
markets Mutual Funds etc. The innumerable types of funds have become the best selling point
for the mutual fund industry. United States of America leads in terms of size of mutual fund
industry in the world.

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2.2 EVOLUTION OF MUTUAL FUNDS IN INDIA

The formation of Unit Trust of India marked the evolution of the India Mutual Fund industry in
the year 1963. The primary objective at that time was to attract the small investors and it was
made possible through the collective efforts of the Government of India and the Reserve Bank
of India. The history of mutual fund industry in India can be better understood divided into
following phases:

FIRST PHASE -1964 TO 1987:

Unit Trust of India (UTI) was established in 1963 by an act of parliament. It was set up by the
Reserve Bank of India and functioned under the regulatory and administrative control of The
Reserve Bank of India. In 1978 UTI was delinked from the RBI and the Industrial
Development Bank of India (IDBI took over the regulatory and administrative control in place
of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI
had Rs. 6700 crores of assets under management.

SECOND PHASE- 1987 TO 1993(ENTRY OF PUBLIC SECTOR FUNDS):

1987 marked the entry of non UTI, public sector Mutual Funds set up by public sector banks
and Life Insurance Corporation of India(LIC)and General Insurance Corporation of
India(GIC).SBI Mutual Fund was the first non UTI Mutual Fund established in 1987 followed
by Can bank mutual fund (Dec 87), Punjab National Bank mutual fund (Aug 89), Indian Bank
mutual fund (Nov 89), Bank of India(Jun 90), Bank of Baroda mutual fund ( October 92 ).LIC
established its mutual fund in June 1989 while GIC had set up its mutual fund in December
1990.
At the end of 1993, the mutual fund industry had assets under management of Rs 47,004
crores.

THIRD PHASE- 1993 TO 2003 (ENTRY OF PRIVATE SECTOR FUNDS):

With the entry of private sector funds in 1993, a New Era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year
in which the first mutual fund regulations came into being, under which all the mutual funds

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 except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merge
with Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) regulations were substituted by a more comprehensive and
revised mutual fund regulations in 1996. The industry now functions under the SEBI (mutual
fund) regulations 1996.The number of mutual fund houses went on increasing, with many
foreign mutual fund setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 Mutual Funds with total
Assets of Rs 1,21,805 crores. The unit Trust of India with Rs 44,541 crores of assets under
management was way ahead of other mutual funds.

FOURTH PHASE -SINCE FEBRUARY 2003:

In February 2003, following the repeal of the unit Trust of India Act 1963 UTI was bifurcated
into two separate entities. One is the specified undertaking of unit Trust of India with assets
under management of rupees 29,835 crores as at the end of the January 2003, representing
broadly the Assets of US 64 scheme, assured return and certain other schemes. The specified
undertaking of unit Trust of India, functioning under an administrator and under the rules
framed by Government of India and does not come under the purview of the mutual fund
regulations.

The second is the UTI Mutual Fund, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the mutual fund regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs 76,000 crores of assets under
management and with the setting up of a UTI Mutual Fund conforming to the SEBI mutual
fund regulations and with recent mergers taking place among the different private sector funds,
the mutual fund industry has entered its current phase of consolidation and growth.

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2.3 Types of mutual funds

Based on
Classification

By investment
By structure By nature Other schemes
objective

Open ended Growth Tax saving

Equity fund
scheme scheme scheme

Interval Income
Debt fund Index scheme
scheme scheme

Closed ended Sector specific

scheme Balanced fund Balanced
scheme
scheme

Money market
scheme

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Every investor has a different investment objective.

• Some go for stability

• some opt for safer securities such as Government securities and bonds
• some go for higher risk for higher Return

• Based on structure Mutual Funds can be

1.Closed ended
2.Open ended
3.Interval funds

• Based on the nature they can be

1.Equity funds
2.Debt funds
3.Hybrid funds

• Based on investment objective they can be classified as

1.Growth funds
2.Income funds
3.Balanced funds
4.Index funds

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BY STRUCTURE:

By structure

Close ended Interval Open ended

funds funds funds

• CLOSE ENDED FUNDS

Close ended funds or scheme has a predetermined maturity period (example 5 to 7 years). The
fund is open for subscription during the launch of the scheme for a specific period of time.
Investors can invest in the scheme at the time of initial public issue and thereafter they can buy
or sell the units on the stock exchanges where they 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 purchase at a NAV related prices or they are listed in security market.

• INTERVAL FUNDS

Interval schemes combine the features of open ended and closed ended schemes. The units may
be traded on the stock exchange or may be open for sale or redemption during pre-determined
intervals at NAV related prices. FMPs or fixed maturity plans are examples of these type of
schemes.

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• OPEN ENDED FUNDS

The most common type of mutual fund available for investment is an open ended Mutual Fund.
Investors can choose to invest or transact in these schemes as per their convenience. In an open
ended Mutual Fund, there is no limit to the number of investors, shares, or overall size of the
fund, unless the fund manager decides to close the fund to new investors in order to keep it
manageable. The value or share price of an open ended Mutual Fund is determined at the
market close every day and is called the Net Asset Value (NAV).

BY NATURE

Equity
Debt funds
funds

Large cap MIP's

Small cap Gilt funds

Tax planning Liquid funds

Floating rate
Mid cap
funds

Capital
Sectoral protection
plans

Theme

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EQUITY MUTUAL FUNDS

These funds invest maximum part of the Corpus into equity Holdings. The structure of the fund
may vary for different schemes and the fund manager’s outlook on different stocks. The equity
funds are sub classified depending upon their investment objective into diversified equity funds,
midcap funds, small cap funds, sector specific funds and tax saving funds/ equity linked savings
scheme (ELSS). Equity investments rank high on the risk return grid and hence, are ideal for a
longer time frame.

RISKS IN EQUITY SCHEMES

➢ Generic risk -- economic cycles

➢ Portfolio specific
➢ Concentration risk in sector funds
➢ Diversified funds- risk well spread
➢ Thematic funds- lesser than sector but more than diversified
➢ Mid Cap funds-liquidity and information risk
➢ Contra funds- miss judgment risk
➢ Dividend yield- less price fluctuation
➢ Arbitrage - risk are cancelled, low return low risk

DEBT MUTUAL FUNDS

These funds invest in debt instruments to ensure low risk and provide a stable income to the
investors. Government authorities, Private companies, Banks and Financial Institutions are some
of the major issuers of debt papers. Debt funds can be further classified into gilt funds, income
funds, MIP’s, short term plans and liquid funds.

RISK IN DEBT FUNDS

➢ Generic risk Government and RBI policies predictability

➢ Market risk lack of vibrancy and trading
➢ Interest rate risk

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 ➢ Reinvestment risk
➢ Liquid risk
➢ Call risk
➢ Credit risk
➢ Inflation or purchasing risk
➢ Marketability or liquidity risk

BALANCED FUNDS

They invest in both equities and fixed income securities which are in line with predefined
investment objective of the scheme the equity portion provides growth while debt provide
stability in Returns. This way investors get to taste the best of both worlds.

BY INVESTMENT OBJECTIVE

➢ Growth funds
Also known as equity schemes, this scheme aims at providing capital appreciation or
medium to long term. These schemes normally invest a major portion of the fund in equities
and are willing to with stand short term decline in value for possible future appreciation.

➢ Balanced funds
A combination of growth and income funds, also known as balanced funds, are those that have a
mix of goals. They seek to provide investors with current income while still offering the
potential for growth. Some funds buy stocks and bonds so that the portfolio will generate
income while still keeping ahead of inflation. Equities provide the growth potential, while the
exposure to fixed income securities provides stability to the portfolio during volatile times in
the equity markets. Growth and income funds have a low to moderate stability along with a
moderate potential for current income and growth.

➢ Index funds
These schemes attempt to reproduce the performance of a particular index such as the BSE
Sensex are the NSE 50. Their portfolios consist of only those stocks that constitute the index.

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 The percentage of each stock to the total holding is identical to the stock index weightage.
And hence, the returns from such schemes are more or less equivalent to those of the index.

➢ Income funds
It also known as debt schemes, they generally invest in fixed income securities such as
bonds and corporate debentures. These scheme aims at providing regular and steady income
to investors. However, capital appreciation in such schemes may be limited.

➢ Gilt funds
These funds invest exclusively in government securities. Government securities have no
default risk. NAV’s of the schemes also fluctuate due to change in interest rates and other
economic factors as is the case with income or debt oriented schemes
Three key players namely sponsor, mutual fund trust and Asset Management Company
(AMC) are involved in setting up a mutual fund. They are assisted by other independent
administrative entities like banks, registrars, transfer agents and custodians (depository
participants).

➢ Money market or liquid funds

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

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OTHERS

TYPES OF MUTUAL FUND BASED ON PORTFOLIO MANAGEMENT

➢ Actively managed funds

The portfolio manager of an actively managed fund tries to beat the market by picking and
choosing Investments. The manager performs an in depth analysis for Investments.
➢ Passively managed funds
Index funds are considered to be passively managed funds. The fund manager of an index
funds tries to invest in the same portion as that of the market index.

2.4 OPTIONS AVAILABLE FOR AN INVESTOR IN MUTUAL FUNDS:

GROWTH OPTION

In this option the scheme does not pay any dividend but continuous to grow. Therefore, nothing
is received by a unit holder and hence they will be nothing to reinvest in the scheme. Gains, if
any made by selling the fund’s Holdings are invested back into the scheme. This is seen in the
n a v of the scheme. The number of units with the investor remains same.

DIVIDEND PAYOUT

In this option, the mutual fund scheme pays an amount known as dividend (the return) from the
profits made by the scheme. If divided periodically is defined quarterly, half yearly or yearly
the same would be paid accordingly in case of availability of distributable surplus. However, a
mutual fund is not bound to pay the dividend on a fund.

DIVIDEND REINVESTMENT

In this option, the dividend is not paid but it is reinvested in the fund by purchasing more

units.

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2.5 RETURN ON INVESTMENT

The investor who invests in mutual fund units can receive returns in the two following ways:

1. Capital appreciation:
Profit on a sale of units at Higher NAV than the original cost of acquisition.
2. Income distribution (dividend):
When a fund makes a profit on its investment, this profit will be given to investor as dividend
can be reinvested in the fund.

2.6 RISK RETURN ANALYSIS

All investments have some risks. Investments in share of companies has its own risk for
uncertainty, this risk arises out of variability of field and uncertainty of appreciation or
depreciation of share prices etc. The risk overtime can be represented by the variance of the
returns. While the returns over time is capital appreciation plus payout, divided by the purchase
price of the shares.

2.7 ADVANTAGES OF MUTAL FUNDS:

▪ LIQUIDITY:

A good advantage of Mutual Fund is that the assets are liquid in financial jargon; liquidity
basically refers to converting your assets to cash with relative ease. Mutual Funds are
considered as liquid assets since there is a high demand for many of the funds in the
Marketplace. As this is a case, investor can convert the Asset into cash by quickly selling it to
the another investor.

▪ PROFESSIONAL MANAGEMENT:

Mutual Funds do not require a great deal of time or knowledge from the investor because
they are managed by professional fund managers. This can be a big help to an inexperienced
investor who is looking to maximize their financial goals.

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▪ DIVERSIFICATION

Investing in a diversified portfolio can be very expensive. The good thing about Mutual Fund is
that they allow anyone to hold a diversified portfolio. The reason why investors invest in a
diversified portfolio is because it increases the expected returns while minimizing the risk.
Therefore, many see mutual funds as a cost effective way to achieve this.

▪ TAX BENEFITS

Mutual Funds offer many tax benefits. The structure of mutual fund is that they are tax
efficient by taking of tax burden.

▪ CHOICE OF SCHEMES

There are many mutual fund schemes available for every kind of Return and risk level and
suitable for every kind of time Horizon.

▪ REGULATORY INDUSTRY

Mutual Funds are regulated by the stock market regulator SEBI, which regularly comes up
with rules to protect interests of the investors.

▪ LOW COST

Mutual Funds are relatively less expensive way to invest when compared to directly investing in
the capital markets.

▪ TRANSPARENCY

The regular information such as value of investment, the proportion investor in which asset
class, fund manager’s strategy and outlook will be made available by the mutual funds.

▪ FLEXIBILITY

Through features like regular Investment plans, regular withdrawal plans and dividend
reinvestment plans, one can systematically invest for withdraw funds according to one’s own
needs and convenience.
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2.8 DIS-ADVANTAGES OF MUTUAL FUNDS

▪ FEES
The fees that are charged will depend on the type of mutual fund purchased. If a fund is riskier
and more aggressive, the management fee will tend to be higher. In addition, the investor will
also be required to pay taxes, transaction fees as well as other cause related to maintaining the
fund.

▪ UNPREDICTABLE
All the expected returns will be quoted; it is impossible to find a mutual fund with a guaranteed
return. This is because all assets carry some degree of risk. However, some Mutual Funds will
carry a higher level of risk than others depending on how well it is diversified.

▪ COST
It is also a downside to Mutual Fund because they have a high cost associated with them in
relation to the returns they produce. This is because investors are not only charged for the price
of the fund but they will often face additional fees. Depending on the fund, commission
charges can be significant. You will also need to pay fees that will go towards the fund
manager.

▪ INDEX
Sometimes, the stock index may outperform the mutual fund. However, this is not always the
case as it depends in large part on Mutual Fund the investor has invested in, as well as the skill
set of the fund manager. Therefore, it would be better idea to do your research before investing
in a fund. If historical data indicates that it consistently underperformed compared to an index,
then it is not a wise investment.

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 2.9 DISTRIBUTION CHANNELS

o DIRECT MARKETING

▪ Mutual Funds sell their own products through their sales officers and employees of the AMC.
▪ This channel is normally used to mobilize funds from high net worth individuals and
institutional investors.

o SALES PRACTICES

▪ Agent Commissions.
▪ No rules prescribed for governing the maximum or minimum Commission payable by a fun to
its agents.
▪ As per SEBI regulations, 1996 all initial expenses including brokerage charges paid to agents
cannot exceed 6% of resources raised under the scheme. Excess distribution charges have to be
borne by the AMC.
▪ A no load is authorized to charge the schemes with the commissions paid to agents as part of
the regular management and marketing expenses allowed by SEBI.

o BANKS AND NBFCS

▪ Several Banks, particularly private and foreign banks are involved in a fund distribution by
providing similar services like that of distribution companies. They work on commission basis.

2.10 FACTORS CONDUCIVE TO THE GROWTH OF MUTUAL FUND

INDUSTRY

On observing the past trends, it can be seen that certain factors are essential for the growth of
the Mutual Funds industry. These factors are:

• INVESTOR BASE

A mutual fund makes it possible for investors to earn a higher return on their capital by
pooling the capital of a large number of small investors and investing the pooled sum in a
diversified manner. As the small investors cannot diversify on their own, their present acts as
a catalyst for the mutual funds to grow. As different investors have different investment
26
 requirements, their presence also acts as an incentive for the mutual funds to come up with
new schemes, thus helping in further evolution of the industry.

• RETURNS ON MARKET

Mutual Funds invest in a diversified manner. The returns generated by them are generally
reflective of the market returns. Higher the market returns, higher the expected returns from
the mutual funds. Higher expected returns attract more investors, giving a boost to the mutual
funds.

• INVESTMENT AVENUES

The presence of certain investment avenues makes Mutual Funds more attractive than direct
investment. One example of such investment avenues is money market instruments. These
instruments generally involve a large minimum investment which makes it impossible for a
small investor to invest directly. Another example is investment in real estate. While a small
investor may not be able to invest in real estate, especially on a diversified basis,
internationally, there are Mutual Funds dedicated to such investments and are called Real
Estate Mutual Funds (REMF) such funds are now introduced in Indian Mutual Fund market.
Then there are some investment avenues which require in-depth knowledge of complex
instruments, for example –scrutinized debt, derivatives, etc. Small investors may not have the
knowledge to understand the complexities of such instruments on their own and may find it
preferable to depend on the expert knowledge offered by mutual fund managers. The presence
of such instruments makes investment flow to mutual funds.

The area where Mutual Funds as a mode of investment scores over other mode of investment
is in its transaction cost. The transaction cost in the mutual fund is divided among all the
mutual funds shareholders, which allows for cost- effective diversification. Here, the investors
also benefit from having a third party expertise management of the fund.

2.11 MUTUAL FUND INDUSTRY IN INDIA

Though the evolution of mutual fund industry was marked by the information of UTI in 1963,
the UTI Act was repealed in February 2003 and UTI was stripped of its special legal status as “a

27
trust formed by an Act of Parliament”. The primary objective behind this was to bring all Mutual
fund players on the same level. Presently Unit Trust of India operates under the name of UTI
Mutual Fund and its past schemes (US- 64 Assured Returns Schemes) are being gradually wound
up. However, UTI Mutual Fund is still the largest player in the Industry. The continuing phase of
growth of the mutual fund industry through the consolidation and entry of new international and
private sector players can be illustrated as follows:

2.12 STRUCTURE OF MUTUAL FUNDS

A Mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset Management
Company (AMC) and a custodian. The trust is established by a sponsor or more than one
sponsors who is like a promoter of a company. The trustees of the mutual fund hold its property
for the benefit of the unit-holders. The AMC, approved by SEBI, manages the funds by making
the investments in various types of securities. The custodian, who is registered with SEBI, holds
the securities of various schemes of the fund in its custody. The trustees are vested with the
general power of superintendence and the direction over AMC. They monitor the performance
and compliance of SEBI Regulations by the mutual fund.

2.13 WORKING OF MUTUAL FUNDS

• Mutual Fund schemes announce investment objective and seek subscriptions from public
through NFO period.

28
• Investors get “units” with a face value generally Rs. 10.00
• Total units allotted X face value is Unit Capital of scheme.
• Amount mobilized is invested in tradable, marketable securities as per investment objectives.
• Value of the securities is variable as they are traded on the market.
• The value of units for public to buy post NFO is called Net Asset Value (NAV).
• Relative size of mutual fund companies (AMC) assessed by Assets Under Management
(AUM).

2.14 ASSET MANAGEMENT COMPANY

In order to understand the role and position of an Asset Management Company in the mutual
fund concept, it is important to understand the structure of the flow of operations of a mutual
fund.

29
 Structure of Asset Management Company

SPONSOR

Sponsor means any person who acting alone or with another body corporate establishes a mutual
fund. The sponsor of a fund is a key to the promoter of a company as he gets the fund registered
with SEBI. The sponsor forms a trust and appoints a Board of Trustees. He also points an Asset
Management Company as fund managers. The sponsor either directly or acting through the
Trustees, also appoints a custodian to hold the fund assets. The sponsor is required to contribute
at least 40% of the minimum net worth of the Asset Management Company.

MUTUAL FUNDS AS TRUST

A mutual fund in India is constituted in the form of a public trust created under the Indian Trusts
Act, 1882. The sponsor forms the Trust and registers it with SEBI. The fund sponsor acts as the
settler of the Trust, contributing to its initial capital and appoints a Trustee to hold the assets of

30
the Trust for the benefit of the unit-holders, who are the beneficiaries of the Trust. The fund then
invites investors to contribute their money in the common pool, by subscribing to ‘units’ issued
by various schemes established by the Trust as evidence of the beneficial interest in the fund.
Thus, a mutual fund is just a ‘pass through’ vehicle. Most of the funds in India are managed by
the Board of Trustees, which is an independent body and acts as Protector of the unit-holder’s
interests.

ASSET MANAGEMENT COMPANY

The trustees appoint the Asset Management Company AMC) with the prior approval of SEBI.
The AMC is a Company formed and registered under the Companies Act, 1956, to manage the
affairs of the mutual fund and operate the schemes of such Mutual Funds. It charges a fee for the
services it renders to the mutual fund trust. It acts as the investment manager to the Trust under
the supervision and direction of trustees. The AMC, in the name of the Trust floats and then
manages the different investment schemes as per SEBI regulations and the Trust Deed. The
AMC should be registered with SEBI. The AMC of a mutual fund must have a net worth of at
least Rs.10 crores at all times and this net worth should be in the form of cash. It cannot act as a
Trustee of any other Mutual Fund. It is required to disclose the scheme particulars and base of
calculation of NAY. It can undertake specific activities such as advisory services and financial
consultancy. It must submit quarterly reports to the mutual fund. The trustees are empowered to
terminate the appointment of the AMC and may appoint a new AMC with the prior approval of
the SEBI and unit-holders. At least 50% of the directors of the board of AMC should not be
associated with the sponsor or its subsidiaries or the trustees.

CUSTODIAN

A mutual fund is required, under the Mutual Fund Regulations, to appoint a custodian to carry
out the custodial services for the schemes of the fund. Only Institutions with substantial
organizational strength, service capability in terms of computerization, and other infrastructure
facilities are approved to act as custodians. The custodian must be totally delinked from the
AMC must be registered with SEBI.

31
ROLE OF SEBI

SEBI regulations (2001) provide for exercise of due diligence by Asset Management companies
(AMC’s) in their investment decisions. For effective implementation of the regulations and also
to bring about transparency in the investment decisions, all the AMC’s is required to maintain
records in support of each investment decision, which would indicate the data, facts, and other
opinions leading to an investment decision. While AMC’s can prescribe broad parameters for
Investments, the basis for taking individual script-wise investment decision in equity and debt
securities would have to be recorded. The AMC is required to report compliance in their
periodical reports to the trustees and the trustees are required to report to SEBI, in their half-
yearly reports. Trustees can also check its compliance through independent auditors or internal
statutory auditors or through other systems developed by them.

The unclaimed redemption and dividend amount can now be deployed by the
mutual funds in call money market or money market instruments and the investors who claim
these amounts during a period of 3 years from the due date shall be paid at the prevailing net
asset value. After period of 3 years, the amount can be transferred to a pool account and the
investors can claim the amount at a NAV prevailing at the end of the third year. The income
earned on such funds can be used for the purpose of investor education. The AMC has to make a
continuous effort to remind the investors through letters to take the unclaimed amount. In case of
schemes to be launched in the future, disclosures on the above provisions are required to be
made on the offer documents. Also, the information on amount unclaimed and number of such
investors for each scheme is required to be disclosed in the annual reports of mutual funds.

SEBI issued a directive during 2000-01 that the annual report containing accounts
of the Asset Management companies should be displayed on the websites of the Mutual Funds. It
should also be mentioned in the annual report of mutual fund schemes that the unit holders, if
they so desire, can request for the annual report of the Asset Management Company. Mutual
Funds earlier where required to get prior approval of the board of trustees and AMC’s to invest
in un-rated debt instruments. However, the detail parameters for such investments must be
approved by the AMC board and trustees. The details of such investments are required to be
communicated by the AMC to the trustees in their periodical reports and it should be clearly
mentioned as to how the parameters have been compiled with. However, in case of security does

32
not fall under the parameters the prior approval of the board of the AMC and trustees is required
to be taken.

To provide the investors an objective analysis of the performance of the mutual

fund schemes in comparison with the rise or fall in the markets, SEBI decided to include the
disclosure of performance of benchmark indices in case of equity-oriented schemes and
subsequently extended to the debt oriented and balanced fund schemes in the format for half
yearly results. In case of sector or industry specific schemes Mutual Funds may select any
sectoral indices published by stock exchanges and other reputed agencies.

In pursuance with the proposal in the Union Budget 2002-03 SEBI allowed the
mutual funds to invest in foreign debt securities in the countries with full convertible currencies
and with highest rating (foreign currency credit rating) by accredited / registered credit rating
agencies. They were also allowed to invest in government securities where the countries are
AAA rated.

SCHEMES

Under Mutual Fund Regulations (SEBI, 1996), a mutual fund is allowed to float different
schemes. Each scheme has to be approved by the trustees and the offer document is required to
be filed with the SEBI. The offer document should contain disclosures which are adequate
enough to enable the investors to make informed investment decision, including the disclosure
on maximum investments proposed to be made by the scheme in the listed securities of the group
companies of the sponsor. If the SEBI does not comment on the contents of the offering
documents within 21 days from the date of filing, the AMC would be free to issue the offer
documents to public.

INVESTMENT CRITERIA

The mutual fund regulations lay down certain investment criteria that the mutual fund
need to observe. There are certain restrictions on the investment made by mutual fund. These
restrictions are listed down by SEBI. The money collected under any scheme of a mutual fund
shall be invested only in transferable securities in the money market or in the capital market or
in privately placed debentures or securitized debts. However, in the case of securitized debts,
such fund may invest in asset backed securities and mortgaged backed securities. Furthermore,

33
 the mutual fund having an aggregate of securities which are worth Rs 100 million
(approximately USD 2.15 million) or more shall be required to settle their transactions through
dematerialized securities.

2.15 ASSET UNDER MANAGEMENT (AUM)

Asset Under Management (AUM) denotes the market value of the assets that an investment
company manages on the behalf of investors. AUM is looked at as a measure of success against
competition and consists of growth/ decline due to both capital appreciation /losses and new
money inflow/outflow.

Factors that affect AUM’s are foreign exchange moments, structural effects of the company,
market performance, i.e., gains / losses and Net New Asset (NNA’s).

NNA refers to the amount of money that has come by way of any new investment from a client.

2.16 PROCESS OF MUTUAL FUNDS

34
2.17 WHO CAN INVEST IN MUTUAL FUNDS?

• Person of Indian Origin

• Resident Indians
• Nonresident Indians
• Indian public sector undertakings
• Indian private sector undertakings
• Hindu undivided family
• Partnership firms
• Co-operative societies
• Charitable Trust etc.

2.18 KYC REQUIREMENTS FOR MUTUAL FUND INVESTORS

• Proof of Identity
• Proof of Address
• Photograph
• Bank Statement.

2.19 WHERE AND HOW TO BUY MUTUAL FUNDS?

▪ Direct plan
These plans are targeted at investors who do not make their Mutual Funds investment through
distributors but directly apply with the fund house. For the first-time investor, he may have two
of the same AMC can be made online or offline.

▪ Regular plan
These plans are provided through an authorized agent/distributor. These distributors are paid
Commission for the service.

▪ Through Bank
Banks also act as intermediaries that distribute fund schemes of different AMC’s.

35
2.20 HOW TO INVEST IN MUTUAL FUNDS?

Step 1- Identify your investment needs

• What are your financial goals and needs?
• How much risk I am willing to take?
• What are my cash flow requirements?

Step 2- Choose the right Mutual Fund

• The track record of a fund is important.

• The mutual funds should be well organized to provide prompt service.
• Degree of transparency is required

Step 3- Select the ideal mix of schemes

• Investment in a combination of schemes to reach your investment goal.

2.21 TYPES OF RISK

Mutual Fund does not provide assured Returns. Their returns are linked to their performance.
They invest in shares, debentures, bonds, etc. all these investments involve an element of risk.
The unit value may vary depending upon the performance of the company and if a company
defaults in payment of interest /principle on their debentures/bonds the performance of the
fund may get affected. Besides in case there is a sudden downturn in an industry or the
government comes up with a new regulation which affects a particular industry or company,
the fund can gain be adversely affected. All these factors influence the performance of mutual
funds.
• MARKET RISK

At times the prices or yields of all the securities in a particular market rise or fall due to broad
outside influences. When this happens the stock prices of both an outstanding, highly profitable
company and fledging corporation may be affected. This change in price is due to market risk.

36
• INFLATION RISK
Sometimes referred to as “loss of purchasing power”. Whenever inflation sprints forward faster
than the earnings on your investment, you run the risk that you’ll actually be able to buy less,
not more. Inflation risk also occurs when prices rise faster than you are return.
• CREDIT RISK

In short, how stable is the company or entity to which you lend your money when you invest.
How certain are that it will be able to pay the interest you are promised or repay your principle
when the investment matures.
• EXCHANGE RISK

A number of companies generate revenues in foreign currencies and may have investments or
expenses also denominated in foreign currencies. Changes in exchange rates may, therefore
have a positive negative impact on companies which is in turn would have an effect on the
investment of the fund.
• CHANGES IN GOVERNMENT POLICY

Changes in government policy especially in regard to tax benefits may impact business
prospects of the companies leading to an impact on the investment made by the fund.

2.22 DEMAT ACCOUNT

• The term Demat account, refers to a dematerialized account.

• The Securities Exchange Board of India (SEBI) requires investor to maintain a Demat
Account.
• Shares and securities are held in electronic form Instead of taking actual possession of
certificates.
• Purchases and sales of securities on the Demat account are automatically made once
transactions are executed and completed.

2.23 DEMAT BENEFITS

• A safe and convenient way to hold securities.

• Immediate transfer of securities.
• Elimination of risk associated with physical certificates.
37
• Reduction in paper work.
• Reduction in transaction cost.

2.24 ONLINE TRADING

• Buying and selling securities using the internet or broker provided proprietory software that
works through the internet.
• It reduces paperwork.
• It reduces various costs.
• The online trading brings data to the investor online and net broking enables him to trade on a
click.

2.25 BENEFITS OF THE ONLINE TRADING

• Increase transparency in the market.

• Enhance Market quality through improved liquidity, by increasing quote continuity and
market depth.
• Provide Management Information System.
• Reduce settlement risks due to open trades, by elimination of mismatches.

38
 CHAPTER 3
MUTUAL FUND V/S OTHER
PRODUCTS

39
3. MUTUAL FUND V/S OTHER PRODUCTS

3.1 MUTUAL FUNDS V/S GOLD

Gold is regarded as a good Hedge against inflation and safe investment as it is known to
keep gaining in the market value. However, Mutual Funds, equity schemes in particular are
capable of generating much higher returns. Since, Mutual Funds units are held in electronic
form, cost of storing the assets which you would have to incur in case of gold.

V/s

40
3.2 MUTUAL FUND V/S REAL ESTATE

From a small investor’s point of view, the key areas where mutual fund scores over physical
property are transparency and ease of buying. Once Mutual Funds units are allotted, you have
completed the undisputed ownership of them. However, in the case of property you will have
to carry out a series of documentary and background checks. Besides, property is a highly
liquid asset which cannot be sold at a short notice in case the need arises.

V/s

41
3.3 MUTUAL FUNDS V/S FIXED DEPOSITS

Fixed income mutual funds and fixed deposits fall in the same category of debt instruments.
While former is offered why fund houses the latter is offered by banks. Yet it’s the fixed deposits
which are preferred by most retail investors despite the debt mutual funds fetching superior
returns. Fixed deposits of 1 and 3 years’ duration are currently building a return of 6% and 6.9
respectively. On the other hand, liquid Mutual Funds are offering the return of 7% and 8.05 %(
category average) over 1 and 3 year periods.

Debt funds are tax efficient too, if an investor stay invested for three years he has to pay long
term capital gain tax at the rate of 20% on any profit made with indexation. Interest from fixed
deposits is simply added to the taxable income and taxed as per the slab rate applicable to the
concerned person. If an investor as ability to accept market fluctuation risk that debt funds carry
interim, they are capable of growing your money faster than fixed deposits.

v/s

42
 CHAPTER-4
COMPANY PROFILE

43
4. INTRODUCTION TO THE COMPANY

Sharekhan Limited operates as a brokerage firm. The company offers online security
brokerage, Equities, IPO, Mutual Funds, Depository Services and Portfolio management
services to the Institutions, large corporate houses, and individual investors. Share khan serves
customers in India. It also offers personalized Wealth Management Services for high net worth
individuals with a physical presence in over 300 cities of India through more than 800 “share
shops”, and an online presence through sharekhan.com, India’s premier online destination, we
reach out to more than 8,00,000trading customers. Sharekhan Limited was formerly known as
SSKI Investor Services Private Limited. The company is based in Mumbai, India. Sharekhan
has its customers participating in the booming commodities market with our membership at the
Multi Commodity Exchange of India and National Commodity and Derivatives Exchange
through, Sharekhan. Com Ltd. With its strong support and business units of research,
distribution and advisory, Sharekhan aims to become a one stop solution to the broking and
investment needs of its clients globally.

4.1 SHAREKHAN STOCK BROKING COMPANY

Sharekhan is one of the leading retail brokerage of City venture which is running successfully
since 1922 in the country. Earlier it was retail broking arm of the Mumbai based SSKI group
which has over 8 decades of experience in the stock broking business. Sharekhan offers its
customers a wide range of equity related services including trade execution on BSE, NSE,
Derivatives Depository services, Online trading, Investment advice etc. Earlier with the legacy
of more than 80 years in the stock markets, the SSKI group ventured into institutional broking
and corporate finance 18 years ago. SSKI is one of the leading players in institutional broking
and corporate finance activities. SSKI holds a sizeable portion of the market in each of these
segments. SSKI’s institutional broking arm accounts for 7% of the market for Foreign
Institutional portfolio investment and 5% of all Domestic Institutional portfolio investment in

44
 the country. It has 60 institutional clients spread over India, Far East UK and US. Foreign
institutional investors generate about 65% of the organizations revenue, with a daily turnover
of over US$ 2 million. The objective has been to let customers make informed decisions and to
simplify the process of investing in stocks.

4.2 SHARE KHAN FIRST DAY PROGRAM

The Share Khan first step is a program designed especially for those who are new to investing in
shares. First step has special booklets, a tutorial session, and electronic Demos that will help
you get started immediately, Share Khan. The SSKI Group comprises of Institutional Broking
and Corporate Finance. The institutional broking division caters to domestic and foreign
institutional investors, while the Corporate Finance Division focuses on niche areas such as
infrastructure, telecom and medium, SSKI has been voted as the Top Domestic Brokerage
House in the research category by the Euro Money survey and Asia Money survey. Through a
portal Sharekhan. Com, we ‘ve been providing investors a powerful online trading platform the
latest news, research and other knowledge- based tool for over 5 years now. We have dedicated
terms for fundamental and Technical research so that you get all the information you are you
need to take the right investment decision. With branches and outlets across the country, our
ground network is one of the biggest in India. We have a talent pool of experienced
professional specially designated to guide you when you need assistance, which is why
investing with us is born to be a hassle- free experience for you!

45
 To be the best retail

Vision brokering brand in the

retail business of stock
marketing.

To educate and empower

the individual investor to

Mission make better investment,

better decisions through
the quality advice and
superior services.

4.3 ACHIEVEMENT OF THE COMPANY:

• A top rated among the top 20 wired companies along with Reliance, Infosys, etc by
‘Business today’, January 2004 edition.
• Awarded ‘Top Domestic Brokerage house’ four times by Euro money and Asia money.
• Pioneers of online trading in India amongst the top 3 online trading websites from India.
• Most preferred financial destination amongst online booking customers
• Winners of “Best Financial Website” award.
• India's most preferred brokers within 5 years ‘’Awaaz customer award’’.

4.4 SWOT ANALYSIS

STRENGTHS

• It is a Pioneer in online trading with a turnover of Rs. 400 crores and more than 3000
people working in the organization.
• Employees are highly empowered and strong communication network
• Number 1 Registrar and transfer agent and dealer of investment products in India.
• Good co-operation between employees.
46
WEAKNESSES

• Localized presence due to insufficient investments for country wide expansion.

• High brokerage charges but now they overcome this buy a new prepaid scheme in which
brokerage is reduced to half.
• High employee turnover.
• Lack of awareness among customers because of non-aggressive promotional strategies(
print media ,newspaper)

OPPORTUNITIES

• With the booming capital market it can successfully launch new services and raise its
client’s base.
• Marketing at rural and semi -urban areas.
• Increasing usage of online trading may boost a whole new breed of investors for trading
in securities.
• As interest on fixed deposits with post office and banks are all time low, more and more
small investors are entering into the market.

THREATS
• Lack of sufficient branch- offices for speedy delivery of services.
• Increasing number of Competitors.
• Constant pressure to be cost competitive to meet customer’s expectations.
• Aggressive promotional strategies by close competitors may hamper Share khan’s
acceptance by new clients.

47
4.5 ORGANIZATIONAL STRUCTURE OF SHAREKHAN

4.6 PRODUCTS AND SERVICES OFFERED BY SHARE KHAN

• Equity Trading Platform (online/offline).

• Commodities Trading Platform (online/offline).
• Portfolio Management Service.
• Mutual Fund Advisory and Distribution.
• Insurance Distribution.
• Forex.

4.7 HOW WILL I LEARN THE BASICS OF INVESTING IN SHARE?

As a Share Khan first step customer, you get all this to help you get started

Stage-1: Account Opening Kit

a. A booklet on “simplifying shares”.

b. An electronic Demo CD on how to use:

i. Online investing through sharekhan.com

48
 ii. Research based investment advice
iii. Dial and trade
iv. Customer service

Stage- 2: Welcome call

Our executive will call you to ensure that you have received all the content to get started with
investing in shares

Stage-3: First step Tutorial

A seminar where you’ll get a step-by-step guide to investing in shares and tips on how to make
the best use of our services.

Stage-4: Assistance for executive your first trade online

A Sharekhan representative will take you through the online process, step by step.

4.8 REASONS TO CHOOSE SHAREKHAN

EXPERIENCE

SSKI has more than 8 decades of trust and credibility in the Indian stock market. In the Asia
Money Broker’s poll held recently, SSK won the ‘India’s best broking house for 2004’award.
Ever since it launched Share Khan as its retail broking division in February 2000, it has been
providing institutional level research and broking services to individual investors.

CUSTOMER SERVICE

Its customer service team assist their customer for any help then they need relating to
transactions, billing, demat and other queries. Their customer service can be contacted via a toll
free number, email or live chat on.

INVESTMENT ADVICE

Sharekhan has dedicated research teams of more than 30 people for fundamental and Technical
research. Their analysts constantly track the pulse of the market and provide timely investment
advice to customer in the form of a daily research emails online chat, printed reports etc.

49
CONVENIENCE

One can call Sharekhan’s Dial-N-Trade number to get investment advice and execute his/her
transactions. They have dedicated Call-Centre to provide this service via a Toll Free number
from anywhere in India.

KNOWLEDGE

In a business where the right information at the right time can translate into direct profits,
investors get access to a wide range of information on the content, rich portal
www.sharekhan.com. Investors will also get a useful set of knowledge-based tools that will
empower them to take informed decisions

TECHNOLOGY

With their online trading account one can buy and sell shares in an instant from any PC with an
Internet connection. Customers get access to the powerful online trading tools that will help them
to take complete control over their investment in shares.

4.9 Benefits

• Free Depository A/c.

• Instant Cash Transfer.
• Multiple Bank Option.
• Personalized Price and Account alerts delivered instantly to your mobile phone and email
address.
• Secure order by voice tool Dial-N-Trade.
• Automated portfolio to keep track of the value of your actual purchases.
• Special Personal Inbox for order and trade confirmation.
• Anytime ordering.
• Online customer service via Web Chat.
• Buy or sell even single share.

50
 CHAPTER-5
ANALYSIS
AND
INTERPRETATION

51
5. ANALYSIS AND INTERPRETATION

1. Various Age groups of the respondents?

Age Groups
70

60
60

50
45
43 42 43 43
40 41
40 37 37 38
36
33 3433 32 32 33 33 31 32
34
32 32
34
Age Groups
30 29 30
30 28 27 27 27
2625 25 26 25 25
23 23 23 22 24 24 24 23 2223 23
2122 22
20

10

Interpretation:
Out of survey of 52 people, from the above graph we can see that many of the people are the age
groups between 30-40, and few are between the age of 20-30, few in between 40-50 and the
senior people of age between 50-60.

52
2. In which all financial instruments do you invest?

Investing in different financial instruments

17.3
32.7

Online trading

26.9 Bonds
Mutual funds
Derivatives
23.1

Interpretation:
Out of survey of 52 people, 32.7% of the people like to invest in Derivatives, 23.1% of the
people like to invest in Mutual funds, 26.9% of the people like to invest in Bonds and 17.3% of
the people on online trading.

53
3. Did you hear about Sharekhan Ltd?

Heard about Sharekhan

17.3

Yes
No

82.7

Interpretation:
Out of the survey of 52 people 82.7% are aware about Sharekhan Ltd and 17.3 are Un-aware of
it.

54
4. Do you know about facilities provided by Sharekhan Ltd?

Awareness of facilties provided by Sharekhan

32.7

Yes
No

67.3

Interpretation:

Out of the survey of 52 people 67.3% people are aware about the facilities provided by
Sharekhan Ltd and 32.7 are un-aware about it.

55
5. Are you aware of online trading, if yes how frequently do you trade?

Awareness of Online trading

5.8

Yes
No

94.2

How frequently do you trade

35

30
28.8 28.8
25
23.1
20 19.2
How frequently do you trade
15

10

0
Daily Weekly Monthly Yearly

Interpretation:
Out of the survey of 52 people, 94.2% people are aware about the online trading and 5.8% are
un-aware of online trading.
People who are aware about online trading, 28.8% of the people are trading weekly, 28.8 % of
the people are trading yearly, 23.1% of the people are trading monthly and 19.25% of the people
are trading daily.

56
6. What kind of risk do you perceive while investing in the stock
market?

Risk perceived while investing.

50 40.4
40
28.8
30
20
17.3
10
13.5
0

Uncertainity of
returns Fear of winding up
of a company Slump in stock
market Others

Interpretation:
Out of the survey of 52 people, 40.4% of the people are perceiving Uncertainty of returns as a
risk, 28.8% of the people are perceiving Fear of winding up of company as a risk, 17.3% of the
people are perceiving Slump in stock market as a risk, 13.5% of the people have perceived Other
risk factors.

57
7. Which company provides large number of products and services?

Which Company provides more products and

services

Sharekhan 53.8

HDFC 17.3

ICICI 28.8

0 10 20 30 40 50 60

Interpretation:
Out of the survey of 52 people, 53.8% of the people agrees that large no. of products and
services are served by Sharekhan Ltd, 17.3% of the people are agreeing HDFC is providing more
and 28.8 % of the people are agreeing that ICICI is providing more.

58
8. Would you like to open a Demat Account with Sharekhan Ltd?

Would you like to open demat account in

Sharekhan

34.6

Yes
65.4
No

Interpretation:
Out of the survey of 52 people, 65.4% of the people like to open Demat account and 34.6% of
the people are unlike open Demat account.

59
9. According to your perspective, which investment gives you the maximum

return?

40
36.5
35

30
28.8

25

20 19.2

15

10 9.6

5 5.9

0
Equity Mutual fund Insurance Policy Derivatives Others

Interpretation:
Out of the survey of 52 people, 36.5% of the people are thinking Mutual fund gives the
maximum returns, 28.8% of the people are thinking Insurance policy gives the maximum returns,
19.2% of the people are thinking Equity gives the maximum returns, 9.6% of the people are
thinking Derivatives gives the maximum returns, 5.9% of the people are thinking Other returns
gives the maximum return apart from these.

60
 CHAPTER-6
CONCLUSION

61
6. Conclusion

• There are many types of mutual funds based on asset class, investing strategy, region etc.
• Mutual Fund brings together a large group of people and invests their aggregated money
in stocks bonds and other securities.
• The advantages of mutual funds are professional management diversification economies
of scale and wide range of offerings.
• Regulatory comfort in mutual fund because SEBI has mandated strict checks and
balances in the structure of mutual fund and their activities.
• Convenient option for the investor.
• Mutual fund is not liable to pay tax on the income they earn.
• Proper liquidity of the investor fund.
• Risk is diversified by portfolio diversification.
• Mutual Fund offer investor the opportunity to earn income through professional
management.
• Comparing fund returns across the number of metrics is important such as overtime
compared to its benchmark and compared to other funds in its peer group
• Mutual Funds are easy to buy and sell. You can either by them directly from the fund
company or through a third party.
• Some funds carry no broker fee, known as no- load mutual funds.
• Mutual Funds have expenses that can be broken down generally into ongoing fees and
transaction fees (loads).

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 QUESTIONNAIRE

1. Various Age groups of the respondents?

a. 20-30
b. 30-40
c. 40-50
d. 50-60

2. In which all financial instruments do you invest?

a. Online trading

b. Bonds

c. Mutual Funds

d. Derivatives

3. Did you hear about Sharekhan Ltd?

a. Yes

b. No

4. Do you know about facilities provided by Sharekhan Ltd?

a. Yes

b. No

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5. Are you aware of online trading, if yes how frequently do you trade?

• If Yes - a. Daily

b. Weekly

c. Monthly

d. Yearly

• No

6. What kind of risk do you perceive while investing in the stock market?
a. Uncertainty of returns
b. Fear of winding up of a company
c. Slump in stock market
d. Others

7. Which company provides large number of products and services?

a. HDFC

b. ICICI

c. Sharekhan

8. Would you like to open a Demat Account with Sharekhan Ltd?

a. Yes

b. No

9. According to your perspective, which investment gives you the maximum return?

a. Equity

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b. Mutual Fund

c. Insurance Policy

d. Derivatives

e. Others.

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7. BIBLIOGRAPHY

Websites:

www.sharekhan.com

www.amfiindia.com

www.moneycontrol.com

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