Avisha Project Report 2003

Perception of Consumers Towards Investing in Share Market and Mutual Funds
EXECUTIVE SUMMARY
‘Perception of Customers Preferences towards investing in Mutual
Fund and Share Trading’ is the topic head of the project report. In present
scenario is not only confined to the selling of products, advertisement and
sales promotio but it includes consumer satisfaction as a whole. Marketing is
a phenomenon which emphasizes in making new customers and keeping the
relations with the existing customers.
Financial products are those products which have values in monetary terms.
The Financial products are intangible in nature that means the customer
cannot even touch , smell or feel it. In this manner, it becomes a challenge
for the sales personnel in financial sector to convince the customer to invest
in it. The sales personnel can only guarantee for the benefit that the customer
will get after a certain period of time span.
The evaluation of financial planning has been increased through decades,

which is best seen in customer rise. Now a day’s investment of saving has
assumed great importance.
According to the study of the Market, it is being observed that markets are
doing well in investments like, Mutual funds, Shares, Life Insurance etc. In
near future a proper financial planning is required to invest money in all type
of financial product because there is good potential in market to invest.The
main objective of this project is to know the Perception of Customers
Preferences towards investing in Mutual Fund and Share Trading.
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INTRODUCTION
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Savings form an important part of the economy of any nation. With the
savings invested in various options available to the people, the money acts
as the driver for growth of the country .Indian financial scene too presents a
plethora of avenues to the investors. Though certainly not the best or deepest
of markets in the world, it has reasonable options for an ordinary man to
invest his savings.
The money you earn is partly spent and the rest saved for meeting future
expenses. Instead of keeping the savings idle you may like to use savings in
order to get return on it in the future. This is called Investment.
One needs to invest to and earn return on your idle resources and generate a
specified sum of money for a specific goal in life and make a provision for
an uncertain future One of the important reasons why one needs to invest
wisely is to meet the cost of Inflation.
The cost of living is simply what it costs to buy the goods and services you
need to live. Inflation causes money to lose value because it will not buy the
same amount of a good or service in the future as it does now or did in the
past. The sooner one starts investing the better. By investing early you allow
your investments more time to grow, whereby the concept of compounding
increases your income, by accumulating the principal and the interest or
dividend earned on it, year after year. The three golden rules
for all investors are:
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Invest early
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Invest regularly
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Invest for long term and not short term
This project will also help to understand the investors facet before investing
in any of the investment tools and thus to scrutinize the important aspects for
the investors before investing that further helped in analyzing the relation
between the features of the products and the investors’ requirements
OBJECTIVES OF THE PROJECT:
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The purpose of the study was to determine the saving behavior and
investment preferences of customers. Customer perception will provide a
way to accurately measure how the customers think about the products and
services provided by the company. Today’s trying economic conditions have
forced difficult decisions for companies. Most are making conservative
decisions that reflect a survival mode in the business operations. During
these difficult times, understanding what customers on an ongoing basis.
More than ever management needs ongoing feedback from the customers,
partners and employees in order to continue to innovate and grow. The main
objective of the project is to find out the needs of current and future
customers. For this report, customer perception and awareness level will be
measured in many important areas like:
 To understand all about different investment avenues available in

India.
 To find out how the investors get information about the various
financial instrument.
 To find out the saving habits of the different customers and the
amount they invest in various financial instruments.
 In which type of financial instrument they like to invest.
 How long they prefer to keep their money invested.
 What is the return that they expect from the investment.
 What are the various factors that they consider before investing.
 To find out the risk profile of the investor.
 To give a recommendation to the investors that where they should
invest.
 To give a suggestion to my company where our fund lacks in the
market & how it should be rectified.
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After all as a management trainee I will try to get some

valuable knowledge from my seniors in the organization as well as
from my faculty guide which will help me in the future.
VALUE ADDITION TO THE COMPANY

This report will help the company to strengthen customer intimacy. The
report on various investment avenues available In India will help the
company in many areas like.
 It will help the company to understand the expectations the customer

have about their company from the perspective of financial
performance and corporate social responsibility.
 It will provide fresh insights which can help their business continue
to flourish.
 The company can identify the particular service requirements of
different types of customers.
 The company can understand the problem areas.
 The company can evaluate new services initiatives.
 The study will help in gaining a better understanding of what an
investor looks for in an investment option.
 It can be used by the financial sector in designing better financial
instrument customized to suit the needs of the investor.
 It will help agents and brokers in marketing the existing instruments.
 It will provide knowledge to the customer about the various financial
services provided by the company to their customers.
 It can help the company to understand what the requirement of the
different categories of customers is .
This report will be developed in order to empower companies with detailed

primary market research needed to make well informed decisions and it will
provide independent measurement and validation of the health of
company’s relationship with their customers. These are the various
advantages which will give some value addition to the company in
understanding the awareness level of the customer about the various
investment options and what is the perception of the investors with regard to
the investments they want to make.
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LIMITATIONS OF THE STUDY

The project is based upon various financial instrument that are available in
India and the perception level of the customer about these financial
instruments. For which there will be the need of information from the
customers about their knowledge of these financial products.
The various limitations of the study are:
 Total number of financial instrument in the market is so large that it

needs a lot of resources to analyze them all. There are various
companies providing these financial instruments to the public.
Handling and analyzing such a varied and diversified data needs a lot
of time and resources .
 As the project is based on secondary data, possibility of unauthorized

information cannot be avoided.
 Reluctance of the people to provide complete information about

themselves can affect the validity of responses
 Due to time and cost constraint study will be conducted in only

selected area of a Chandigarh and panchkula.
 The lack of knowledge in customers about the financial instruments

can be a major limitation.
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Overview of Broking industry
The Indian broking industry is one of the oldest trading industries that has
been around even before the establishment of the BSE in 1875. Despite
passing through a number of changes in the post liberalization period, the
industry has found its way towards sustainable growth. With the purpose of
gaining a deeper understanding about the role of the Indian stock broking
industry in the country’s 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 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.
Some key characteristics of the sample 394 firms are:
 On the basis of geographical concentration, the West region has the

maximum representation of 52%. Around 24% firms are located in the
North, 13% in the South and 10% in the East
 3% firms started broking operations before 1950, 65% between 1950-
1995 and 32% post 1995
 On the basis of terminals, 40% are located at Mumbai, 12% in Delhi,
8% in Ahmadabad, 7% in Kolkata, 4% in Chennai and 29% are from
other cities
 From this study, we find that almost 36% firms trade in cash and
derivatives and 27% are into cash markets alone. Around 20% trade in
cash, derivatives and commodities
 In the cash market, around 34% firms trade at NSE, 14% at BSE and
52% trade at both exchanges. In the derivative segment, 48% trade at
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NSE, 7% at BSE and 45% at both, whereas in the debt market, 31%
trade at NSE, 26% at BSE and 43% at both exchanges
 Majority of branches are located in the North, i.e. around 40%. West
has 31%, 24% are located in South and 5% in East
 In terms of sub-brokers, around 55% are located in the South, 29% in
West, 11% in North and 4% in East
 Trading, IPOs and Mutual Funds are the top three products offered
with 90% firms offering trading, 67% IPOs and 53% firms offering
mutual fund transactions
 In terms of various areas of growth, 84% firms have expressed interest in
expanding their institutional clients, 66% firms intend to increase FII clients and
43% are interested in setting up JV in India and abroad
 In terms of IT penetration, 62% firms have provided their website and around
94% firms have email facility
Terminals
 Almost 52% of the terminals in the sample are based in the Western
region of India, followed by 25% in the North, 13% in the South and
10% in the East. Mumbai has got the maximum representation from
the West, Chennai from the South, New Delhi from the North and
Kolkata from the East.
 Mumbai also has got the maximum representation in having the
highest number of terminals. 40% terminals are located in Mumbai
while 12% are from Delhi, 8% from Ahmadabad, 7% from Kolkata,
4% from Chennai and 29% are from other cities in India.
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Branches & Sub-Brokers

The maximum concentration of branches is in the North, with as many as
40% of all branches located there, followed by the Western region, with
31% branches. Around 24% branches are located in the South and East
constitutes for 5% of the total branches of the total sample.
In case of sub-brokers, almost 55% of them are based in the South. West
and North follow, with 30% and 11% sub-brokers respectively, whereas
East has around 4% of total sub-brokers.
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MY WORK AT TATA SECURITIES LIMITED

During the summer internship period i.e. from 2nd JUNE to 20th
JULY, I have gone through various stages of Job role. I was basically
given the work to Target various Consumer Groups, Markets and
different Organizations to whom and where the company can pitch its
differential financial products/services as well as to create Awareness
about the company and its offerings in the regard to Promote which
can create a Position in minds of the consumer. Moreover I was given
some training classes about various investments available for
investment which have helped me a lot in the understanding of
different investment product The project has been a great learning
experience for me, at the same time it gave me enough scope to implement
my analytical ability. This project as a whole can be divided into two parts:
 The first part gives an insight about the different investment avenues
available in India and its various aspects. It is purely based on
whatever I learned at TATA SECURITIES LIMITED. All the topics
have been covered in a very systematic way. The language has been
kept simple so that a layman could understand .
 The second part will consist of data and their analysis, will be
collected through a survey done on 60 people. Hope the
research findings and conclusions will be of use. It has also
covered why people don’t want to go in invest? The advisors
can take further steps to approach more and more people and
indulge them for taking their advices.
METHODOLOGY:
Source of Data:-
 Primary Data : Questionnaire, visiting organization.
 Secondary Data : Information from the Company, Websites,
journals and magazines.
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Sample Size: 30
Sampling technique : Random sampling.
SAMPLING METHODOLOGY
Sampling Technique: Initially, a rough draft was prepared keeping in mind the objective
of the research.
A pilot study was done in order to know the accuracy of the Questionnaire. The
final Questionnaire was arrived only after certain important changes were done.
Convenience sampling technique will be used for collecting the data from the
TATA SECURITIES LIMITED customers. The consumers are selected by the
convenience sampling method. The selection of units from the population based on their
easy Availability and accessibility to the researcher is known as convenience sampling.
Convenience sampling is at its best in surveys dealing with an exploratory purpose for
generating ideas and hypothesis.
Sampling Unit:
The respondants who were asked to fill out questionnaires are the sampling
units. These comprise of employees of MNCs, Govt. Employees, Self Employeds
and existing customers of DIFFERENT EQUITY BROKING FIRMS.
Sample size:
The sample size was restricted to only 30, which comprised of mainly peoples from
different regions of Chandigarh , mohali, panchkula due to time constraints.
Sampling area:
The area of the research was Chandigarh, PANCHKULA
The project work can only be complete after:
Analyzing the data

Referring books and gathering more relevant information from the internet.
Drawing detailed and careful inferences from the analysis .
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Data Collection
Questioning & observing are the two basic methods of collecting primary
data. Questionnaire studies are more relevant than observation studies
Importance of Questionnaire
When information is to be collected by asking questions to people
who may have the desired data, a standardized form called
questionnaire is prepared which helps to bring t he data as such
required for the research work. The questionnaire is a list of
questions to be asked to the respondents. Each question is worded
exactly as it is to be asked & the questions are listed in an
established sequence. Spaces in which to record answers are
provided in questionnaire.
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TATA SECURITIES LIMITED- A BRIEF PROFILE

Tata Securities Limited (TSL) is a wholly owned subsidiary of Tata Capital.
Tata Securities holds membership on the Bombay Stock Exchange (BSE)
and the National Stock Exchange(NSE). TSL offers both institutional and
retail clients, quality products and services like Equity Trading, IPOs and
Mutual Funds.
Tata Securities Limited has been engaged in retail and institutional

distribution and broking. TSL distributes third- party investment products
and offers stock broking services of buying, selling or dealing in securities ,
including futures and options, in its capacity as a member of the Bombay
Stock Exchange and the National Stock Exchange.TSL is also a depository
participant.
Tata Securities has a team for institutional and retail research and employed
more than 400 people. Except from it, it also provides the portfolio
management services(PMS) under the wealth management business of the
company.
Broking business requires three ingredients. Strong Brand, Distribution

network and the IT backbone. This are the aspects which the management
believes works for the Tata Securities.
Presently Tata Securities has 50 branches country-wide, which is

distributing third party mutual funds, fixed deposits, etc. for investors.
TATA SECURITIES LIMITED

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 Tata Securities Limited was established in 2007.
 Tata Securities Limited (TSL) is the Equity Broking arm of Tata

Capital Limited.
 It is the 100% subsidiary of Tata Capital Limited
 It is the Corporate Member of NSE (National Stock Exchange) and

BSE (Bombay Stock Exchange)
 TSL offers specialized Broking Services in Equity and Derivative

Segment for retail and institutional clients
A Depository Participant of:
1. Central Depository Services (India) Limited(CDSL)

2. National Securites Depository Limited.
Tata Securities Limited is providing two kinds of services :-
A. Retail Broking : Tata Securities is offering a 3- in -1 account which

brings to its customers a seamless platform for trading in Equities and
investing in Mutual Funds and IPOs at very attractive brokerage rates.
B. Institutional Broking : Tata Securities provides a suite of products and

services to Institutional clients supported with comprehensive
research on companies and their sectors.
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Tata Capital Limited is a subsidiary of Tata Sons

Limited and is registered with the Reserve Bank of India(RBI) as a
systematically important Non-Deposit Accepting Non-Banking Financial
Company. Tata Capital caters to the need of the diverse needs of retail,
corporate and institutional customers, directly or indirectly through its
subsidiaries through various areas of business namely Consumer Finance
and advisory services.
Tata Capital caters to the need of the diverse needs of retail, corporate and
institutional customers, directly or indirectly through its subsidiaries through
various areas of business namely Consumer Finance and advisory services.
Tata Capital marks the entry of the Tata Group into a host of new financial
services. The Company caters to multiple needs of the retail and institutional
customer- truly a one-stop shop, be it investment or finance
Tata Capital brings the trust and the expertise of the Tata Group into the
world of financial standards. The Company is driven by a strong focus on
value creation for stakeholders and the society at large.
AREAS OF BUSINESS
Tata Capital has financial products and the services in the following seven
sectors:
 Distribution and Broking: Third party investment products, equity

and commodity trading for retail and institutional investors.
 Retail finance: Passenger and commercial vehicle loans,

used car loans, credit cards and consumer durable loans for retail
customers.
 Commercial Finance: Financial products for SMEs and project

finance
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for capital equipment and

infrastructure
 Investment Banking: Advisory and debt and equity market

products for
corporate and SMEs.
 Private Equity: Investments in India and other countries.
 Wealth Management: Suite of advisory and investment offerings

for high net worth individuals.
 Rural Finance: Relevant financial products for rural

customers including financing of farm equipment, agricultural inputs and
agricultural enterprises.
MANAGEMENT TEAM
Ratan N Tata – Chairman
BS Degree in Architecture, MBA from Harvard Business School
Held many senior management positions, won accolades from the national
and the international arena, and is associated with many organizations in
India and abroad
R Gopalakrishnan – Executive Director
B Tech from IIT
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Held higher level positions in companies like Hindustan Unilever, Unilever

Arabia, Brook Bond Lipton and is currently serves as an independent
director in various capacities.
Mr PP Kadle- Managing Director
An Honors Graduate in Commerce and Accountancy
Member of Institute of Chartered Accountants of India, The Institute of Cost

and Works Accountants of India, and the Institute of Companies Secretaries
of India
Held positions in the fields of management, accountancy, law, finance and

treasury.
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MILESTONES ACHIEVED BY THE COMPANY
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PROJECT OVERVIEW
In today’s dynamic investment world, the options for an investor are in large
no. A smart investor considers many factors while making an investment
decision. Different investment options have different degrees of risks,
different pattern of cash outflow, and different ways of paying back of
returns and above all suitability for different income pattern of investor.
We can divide investment options in two categories. They are mainly, real
investments and financial investments. Real investments include investments
made to buy house, car or machinery which are real assets. Financial
investments include investing funds in buying some shares, mutual funds or
bonds which are financial assets.
In a more generalized form there are the below mentioned investment
options available.
PERSONAL INVESTMENTS:
These are a type of financial investments wherein we can save our money as
savings in a bank and get interest on the invested amount. These are very
general form of investments.
STOCK MARKET INVESTMENTS:

In these form of investments we can invest our money in stocks and earn
profits or make losses depending on the stock's performance in the market. It
is a complex form of investment wherein we are continuously required to
keep an eye on the market performance.
REAL ESTATE INVESTMENTS:
These are a type of property investments wherein we can invest our money
in buying a house or a piece of land. We can use the real estate for personal
residential or commercial use or can rent or lease it for commercial or
residential purposes. Here we get a good profit margin and at the same time
our assets are increased.
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BUSINESS INVESTMENTS:
We can invest our money in our own business instead of investing it with
some other source. This is a good method of investing our money and at the
same time setting something for ourselves.
There are many companies and advisors to guide people regarding the
selection of a particular investment option. They analyze the market
situation and refer a suitable investment option for people. People can take
their help if they want to reduce their risks and increase their profits. There
are even many investment brokers and investment analysts to help people
with the process of investment.
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Investment options
Fixed Deposits
There are many investment options available for the people in the market,
but there are mainly five investment options, which are considered to be as
most popular and most effective investment options available in the current
market scenario. In general, almost 95-98% people do invest in these, since
the Expected Rate of Return is much higher than any other investment
options, irrespective of the amount of risk is very high in some of the cases.
This investment option is most popular and safest option available in the
market. With almost every working people invest in fixed deposits; this
investment option leads the chart of four investment options because of its
safety and popularity.
Though the amount of return is much lesser than the other three options, this
option heads the table as it has almost no risk of losing the invested amount.
Also, it is the oldest among the other three, so the trust factor of people is
very high.
There are mainly three types of fixed deposits available in the market,
namely, viz.
FIXED DEPOSITS:
1. Fixed deposits offered by Banks
2. Fixed deposits offered by Post Offices
3. Company fixed deposits
Now, we’ll see these three fixed deposit schemes in details.
1. Fixed deposits offered by Banks:

Considered as the safest of all options, banks have been the roots of the
financial systems in India. Promoted as the means of social development,
banks in India have indeed played an important role in not only urban areas,
but also in rural upliftment. For an ordinary person though, banks have acted
as the safest avenue wherein a person deposits money and earns interest on
it. The two main modes of investment in banks, savings
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accounts and fixed deposits have been effectively used by one and all.
However, today the interest rate structure in the country is headed
southwards, keeping in line with global trends. With the banks offering just
above in their fixed deposits for one year, the yields have come down
substantially in recent times. Add to this, inflammatory pressure in the
economy and we have a position where the savings are not earning. The
inflation is creeping up almost 8% at times, this means the value of money
saved goes down instead of going up. This effectively mars any chance of
gaining investments from the banks.
Banks in India can be categorized into non-scheduled banks and scheduled

banks. Scheduled banks constitute of commercial banks and co-operative
banks. There are about 67,000 branches of Scheduled banks spread across
India. During the first phase of financial reforms, there was a nationalization
of 14 major banks in 1969.
As far as the present scenario is concerned the banking industry is in a

transition phase. The Public Sector Banks (PSBs), which are the foundation
of the Indian Banking system account for more than 78 per cent of total
banking industry assets. On the other hand the Private Sector Banks in
India is witnessing immense progress. They are leaders in Internet banking,
mobile banking, phone banking, ATMs. On the other hand the Public Sector
Banks are still facing the problem of unhappy employees. There has been a
decrease of 20 percent in the employee strength of the private sector in the
wake of the Voluntary Retirement Schemes (VRS).
st of the banks and their fixed deposit rates:
ABN AMRO Bank 5-6.75%

Allahabad Bank 5.5-6%
Andhra Bank 5.5-6%
Axis Bank 6.5-7.3%
Bank of Baroda 6-7%
Bank of India 6.75-7%
Barclays Bank 5-5.5%
Canara Bank 7-7.5%
Citi Bank 4.25-4.5%
Corporation Bank 5-5.5%
Dena Bank 6.75-7.5%
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Deutsche Bank 3-4.5%

Dhanalakshmi Bank 6.5-8%
Federal Bank 6.5-7.5%
LiHDFC Bank 5.5-7%
Hongkong Sanghai 8-8.75%
Banking Corp. Ltd.
ICICI Bank 25-7.5%
IDBI Bank 7-7.75%
Indian Overseas 6-7.5%
Bank
Indus sind Bank 7-8.25%
ING Vysya Bank 5.75-7.75%
Jammu and Kashmir
Bank 5.5-6%
Karnataka Bank 7-8%
Karur Vysya Bank 7-8.25%
Kotak Mahindra Bank 6-7%
Oriental Bank of
Commerce 5.5-6%
Punjab National
Bank 5-6.5%
SBI 6.25-7%
Standard Chartered Bank 4.5-7.25%
State Bank Of B&J 6.75-7.5%
State Bank of Hyderabad 6.5-7.5%
State Bank of Indore 6.75-7.5%
State Bank of Mysore 6.5-7.25%
State Bank of Travancore 4.25-5.75%
Syndicate Bank 7-7.5%
UCO Bank 6.5-7%
Union Bank of India 5.50%
United Bank Of India 6.5-7.5%
Vijaya Bank 5.5-6%
YES Bank 7.25-7.75%
Source: various bank’s websites
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2. Fixed offered by Post Offices deposits:

Just like banks, post offices in India have a wide network. Spread across the
nation, they offer financial assistance as well as serving the basic
requirements of communication. Among all saving options, Post office
schemes have been offering the highest rates. Added to it is the fact that the
investments are safe with the department being a Government of India
entity. So the two basic and most sought features, those of return safety and
quantum of returns were being handsomely taken care of.
Though certainly current market position is not the most efficient systems in
terms of service standards and liquidity; these have still managed to attract
the attention of small, retail investors. However with the government
investing its intention of reducing the interest rates in small savings options,
this avenue is expected to lose some of the investors. Public Provident Funds
act as options to save for the post retirement period for most people and have
been considered good option largely due to the fact that returns were higher
than most other options and also helped people gain from tax benefits under
various sections. This option too is likely to lose some of its sheen on
account of reduction in the rates offered.
3. Company fixed deposits:
Another oft-used route to invest has been the fixed deposit schemes floated
by companies. Companies have used fixed deposit schemes as a means of
mobilizing funds for their options and have paid interest on them. The safer
a company is rated, the lesser the return offered has been the thumb rule.
However, there are several potential roadblocks are there.
Firstly, of all the danger of financial positions of the company not being
understood by the investor lurks. The investors rely on intermediaries who
more often than not, don’t reveal the entire truth.
Secondly, liquidity is a major problem with the amount being received

months after the due dates. Premature redemption is generally not
entertained without cuts in the returns offered and though they present a
reasonable option to counter interest rate risk (especially when the economy
is headed for a low interest regime), the safety of amount has been found
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lacking. Many cases like the Kuber Group and DCM Group fiascoes have
resulted in low confidence in this option.
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EQUITY SHARES
ABOUT SHARES:-
At the most basic level, stock (often referred to as shares) is

ownership, or equity, in a company. Investors buy stock in the form of
shares, which represent a portion of a company's assets (capital) and
earnings (dividends) .
As a shareholder, the extent of your ownership (your stake) in a

company depends on the number of shares you own in relation to the
total number of shares available For example, if you buy 1000 shares
of stock in a company that has issued a total of 100,000 shares, you
own one per cent of the company. While one per cent seems like a
small holding, very few private investors are able to accumulate a
shareholding of that size in publicly quoted companies, many of
which have a market value running into billions of pounds. Your stake
may authorize you to vote at the company's annual general meeting,
where shareholders usually receive one vote per share.
In theory, every stockholder, no matter how small their stake,

can exercise some influence over company management at the
annual general meeting. In reality, however, most private investors'
stakes are insignificant. Management policy is far more likely to be
influenced by the votes of large institutional investors such as
pension funds.
A) STOCKS SYMBOLS:-
A stock symbol, or 'Epic' symbol, is the standard abbreviation of a
stock's name. You can find stock symbols wherever stock
performance information is published - for example, newspaper stock
listings and investment websites. Company names also have
abbreviations called ticker symbols. However, it's worth remembering
that these may vary at the different exchanges where the company is
quoted.
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b) PERFORMANCE INDICATORS:-
Here is a list of the standard performance indicators

Performance Indicator
Definition
Closing price
The last price at which the stock was bought or sold.
High and low
The highest and lowest price of the stock from the previous trading day .
52 week range
The highest and lowest price over the previous 52 weeks .
Volume
The amount of shares traded during the previous trading day High and low .
Net change
The difference between the closing price on the last trading day and the
closing price on the trading day prior to the last .
THE STOCK EXCHANGES:-

A marketplace in which to buy or sell something makes life a lot easier. The
same applies to stocks. A stock exchange is an organization that provides a
market place in which investors and borrowers trade stocks. Firstly, the
stock exchange is a market for issuers who want to raise equity capital by
selling shares to investors in an Initial Public Offering (IPO). The stock
exchange is also a market for investors who can buy and sell shares at any
time.
a)Trading shares on the stock exchange:

As an investor in the INDIA, you can't buy or sell shares on a stock
exchange yourself. You need to place your order with a stock exchange
member firm (a stockbroker) who will then execute the order on your behalf.
The NSE AND BSE are the leading stock exchange in the INDIA. Trading
is done through computerized systems.
b) The Trading process:-

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If you decide to buy or sell your shares, you need to contact a stockbroker
who will buy or sell the shares on your behalf. After receiving your order,
the stockbroker will input the order on the SETS or SEAQ system to match
your order with that of another buyer or seller. Details of the trade are
transmitted electronically to the stockbroker who is responsible for settling
the trade. You will then receive confirmation of the deal.
c) Types of shares available on the stock exchange:-

You cannot trade all stocks on the stock exchange. To be listed on a stock
exchange, a stock must meet the listing requirements laid down by that
exchange in its approval process. Each exchange has its own listing
requirements, and some exchanges are more particular than others. It is
possible for a stock to be listed on more than one exchange. This is known
as a dual listing.
Why do so many people invest in shares?

Simply put, you want to invest in order to create wealth. While investing is
relatively painless, its rewards are plentiful. To understand why you need to
invest, you need to realize that you lose when you just save and do not
invest. That is because the value of the rupee decreases every year due to
inflation. Historically shares have outperformed all the other investment
instruments and given the maximum returns in the long run. In the twenty-
five year period of 1980-2005 while the other instruments have barely
managed to generate returns at a rate higher than the inflation rate (7.10%),
on an average shares have given returns of about 17% in a year and that does
not even take into account the dividend income from them. Were we to
factor in the dividend income as well, the shares would have given even
higher returns during the same period.
[Inflation: general rise in prices and wages caused by an increase in the
money supply and demand for goods, and resulting in a fall in the value of
money. Inflation occurs when most prices rise by some degree across the
economy.]
Investment options Returns per annum

37
Stock market 17
Bank fixed deposits 9%
Gold 5.7%
Advantages of investing in shares:
There are lots of advantages of investment in share market. Some of these

are:
Dividend income: investments in shares are attractive as much for the

appreciation in the share prices as for the dividends their companies pay out.
Tax advantages: shares appear as the best investment option if you also
consider the unbeatable tax benefits that they offer. First, the dividend
income is tax-free in the hands of investors. Second, you are required to pay
only a 10% short term capital gains tax on the profits made from
investments in shares, if you book your profits within a year of making the
purchase. Third, you don't need to pay any long term capital gains tax on the
profits if you sell the shares after holding them for a period of one year. The
capital gains tax rate is much higher for other investment instruments: a 30%
short-term capital gains tax (assuming that you fall in the 30% tax bracket)
and a 10% long-term capital gains tax.
Easy liquidity: shares can also be made liquid anytime from anywhere (on
sharekhan.com you can sell a share at the click of a mouse from anywhere in
the world) and the gains can be realized in just two working days.
Considering the high returns, the tax advantages and the highly liquid
nature, shares are the best investment option to create wealth.
How people earn from the investment in shares?

Shares can give us returns in two forms:
A. Appreciation in share prices: You buy shares with the belief that
their price will increase and that when this happens you will be able to sell
off your shares and earn profit. For example, if you bought a share for Rs100
three years ago and it is
Rs500 today, then you have earned Rs400 in three years.
38
B. Dividend: when a company makes profits, it can choose to share part of

dividend of 25%. Then if the face value of its share is Rs10 you will get
Rs2.50 for every share you own of that company, irrespective of the market
price. In itself this might not be much, but over a longer period of time or if
you have a lot of shares, you could earn quite a bit from the dividend itself.
The best thing about dividends is that they are tax-free in the hands of
investors. Dividend yield stocks are known to give returns higher than fixed
deposits [dividend yield = (dividend per share / market price of the share) x
100].its profits with its shareholders by paying out dividend. This dividend
is paid as a percentage of the face value of the share. For example, a
company may declare a
What are the expenses during transaction?
Every share transaction attracts some tax or the other. Some of the main
expenses are as follows.
Capital gains tax: If you purchase a share and sell it at a price higher than
the purchase price and if this sale is within a year of the purchase, then a
10% capital gains tax is levied on the profit that you make. For example, if
you bought a share for Rs100 on January 1, 2005 and sold it for Rs150 on
July 1, 2005, then you have to pay a tax of 10% on the Rs50 profit that you
make. If you sell after a year of purchase, there is no tax on the long-term
gains.
Securities transaction tax: Securities transaction tax (STT) is levied by

the government on every transaction you do on a stock exchange. You don’t
have to pay this separately; it’s collected by your broker. As per the Union
Budget 2005 the STT will be 0.10% on delivery-based transactions and
0.02% on intra-day transactions.
Brokerage: Brokers get a commission on every trade that they do for you.
This commission varies from broker to broker; at sharekhan.com the
brokerage is 0.5% for delivery-based transactions and 0.10% for intraday
transactions. On the brokerage amount you are required to pay a service tax
to the government (to be collected by the broker). The brokerage varies
39
depending on the service that the broker provides you. Some brokers, such
as Share khan, offer its clients regular updates on companies, multiple means
to transact and customer service support.
Depository fees: Since most of the shares exist in a dematerialized form,

every time you buy or sell shares the transactions are being noted by your
DP. The DPs normally levy a charge which is an annual charge or a charge
on each transaction.
Risks ---the only disadvantage in investing in shares:
There are two types of risk associated with this kind of investment:
company specific risk and market risk.
Set of risks that deals with a company and its sector are referred to as
company specific risk. Examples of company specific risk: bad
management, bad marketing strategies, sector disturbances that have an
impact on industry etc. External factors (economic, global factors) that affect
the market as a whole are referred to as market risk.
Examples of market risk: political instability, high inflation, rupee
depreciation, rising interest rates, global incidents like wars and disasters
that throttle the nation's economy etc.
How company specific risk can be identified?

With careful scrutiny and proper homework, it might be easy to identify and
be forewarned of the risks a company may be carrying. Specifically check
out for the mergers and acquisitions that do not have a real synergy or are a
nightmare after reconciliation (A O L - Time Warner, Hewlett Packard-
Compaq). Also is suspicious of diversifications that do not really add value
to a company's core offering. A third kind of risk would be with the
companies that have bet their stakes on a single product offering and are
high on debt. Likewise companies that depend on research could be prone to
higher risk, if the research doesn't come to fruition.
How to identify sector driven risk?

If steel prices rise, auto companies get affected. If low cost Chinese products
invade the country's market, then local fast moving consumer goods
companies might find no takers for their products. The changing nature of
40
the industry itself may lead to dipping stock prices; a print publication may
see revenue loss if everyone moves to reading on the Internet.
How to predict market risk?

It is difficult to predict market risks. The only thing we can say here is that
start noticing all the small signs early. If the election results are feared to
lead to a fall in the stock market, notice the signals beforehand. Read SEBI's
bulletins and track companies whose shares prices are very volatile
How people can minimize their risk and maximize their

return?
Buy when stocks are falling, sell when these are rising. This works well
when you are a long-term investor and there is an extended bear or Bull Run.
Don't try to second guess or predict that the market will fall today and rise
tomorrow. Even seasoned investors cannot do that!
2.Don't try to guess the market's favorites
Your instincts might tell you that pharmacy or technology stocks are hot due
to certain policies or events, but remember millions of investors have
already guessed that and bought these stocks. The prices of these stocks
would therefore be at a higher level when you buy them. Instead focus on
the long term and don't get swayed by short-term events.
3.Aim for the long haul
Short-term investing is prone to higher risks. When investing in stocks, aim

to get good returns after a period of three to five years at the minimum. Also
churn your portfolio periodically and based on the progress that a company
makes in a quarter or in six months, decide whether to hold the stock or get
out of it.
4.Avoid hot tips
You may have overheard some news about a stock or your friend may advise
that a particular stock is all geared to move up. Avoid such tips like the
plague and your investments will remain safe.
41
5. Blue-chips are safe bets
Blue-chip companies are there because they have done well in the past and
have a high market capitalization. It is a likely guess that they will maintain
their track record and give you higher returns even in future. Therefore
invest in companies that have a good track record.
6. Slow and steady stream of investments
Set aside a certain portion of your earnings every month and invest that sum
in shares irrespective of the market conditions. This way, over a period of
time you can amass a substantial number of shares of the stocks in your
portfolio.
7. Think portfolio
Don't put all your earnings in a single stock. Try to have a diverse portfolio
of stocks. This way even if one stock doesn't do well, you are still well
protected. Also invest across sectors, since any problem in one sector would
affect all stocks in the sector. As a thumb rule, if you have investments of up
to Rs50, 000 invest in two to three stocks. For about Rs150, 000 invest in
three to five stocks, for around Rs500, 000 have five to seven stocks and
around ten stocks for higher amounts.
8. Don’t invest all your savings
Always maintain a core set of reserves. You should never touch these
reserves for investing, so that even in the worst case you still have some
money. Typically these reserves should be your salary of about six months.
9. be level-headed
Invest wisely, don't get swayed by rumors and allow Share khan to be your
guide at all times. Investment success won't happen overnight, so avoid
overreacting to short term market swings.
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43
Mutual Funds
Mutual Funds are essentially investment vehicles where people with
similar investment objective come together to pool their money and then
44
invest accordingly. Each unit of any scheme represents the proportion of

pool owned by the unit holder (investor).
Mutual Funds in India are financial instruments. These funds are collective
investments which gather money from different investors to invest in stocks,
short term money market financial instruments, bonds and other securities
and distribute the proceeds as dividends. The Mutual Funds in India are
handled by Fund Managers, also referred as the portfolio managers. The
Securities Exchange Board of India regulates the Mutual Funds In India. The
share value of the Mutual Funds in India is known as net asset value per
share (NAV). The NAV is calculated on the total amount of the Mutual
Funds in India, by dividing it with the number of shares issued and
outstanding shares on daily basis.
Mutual funds in India – advantages:
 The Mutual Funds in India offer flexibility by means of dividend

reinvestment, systematic investment plans and systematic withdrawal
plans.
Mutual funds:
 These funds are available in small units, so they are affordable to the
small investors.
 The fees charged for to the custodial, brokerage and others services
are very low in case of Mutual Funds in India.
 These funds have the option of redeeming or withdrawing money at
any point of time.
 The Mutual Funds in India have low risk as it is managed
professionally.
 Like most developed and developing countries the mutual fund cult
has been catching on in India.
The important reasons for this interesting occurrence are:

Mutual funds make it easy and less costly for investors to satisfy their need
for capital growth, income and/or income preservation.
Mutual fund brings the benefits of diversification and money management to
the individual investor, providing an opportunity for financial success that
was once available only to a select few. Understand a Mutual fund is easy as
it's such a straightforward concept. A mutual fund is a company that pools
45
the money of many investors, its shareholders to invest in a variety of

different securities.
Investments may be in stocks, bonds, money market securities or some
combination of these.
For the individual investor, mutual funds propose the benefit of having
someone ESE manage your investments and diversify your money over
many different securities that may not be available or affordable to you
otherwise. A mutual fund, by its very nature, is diversified -- its assets are
invested in many different securities. Beyond that, there are many different
types of mutual funds with different objectives and levels of growth
potential, furthering your odds to diversify. Investing in mutual has various
benefits, which makes it an ideal investment .
Professional investment management:
One of the primary benefits of mutual funds is that an investor has access to
professional management. A good investment manager is certainly worth the
fees you will pay. Good mutual fund managers with an excellent research
team can do a better job of monitoring the companies they have chosen to
invest in than you can, unless you have time to spend on researching the
companies you select for your portfolio. That is because Mutual funds hire
full-time, high-level investment professionals. Funds can afford to do so as
they manage large pools of money. The managers have real-time access to
crucial market information and are able to execute trades on the largest and
most cost-effective scale. When you buy a mutual fund, the primary asset
you are buying is the manager, who will be controlling which assets are
chosen to meet the funds' stated investment objectives.
Diversification:
A crucial element in investing is asset allocation. It plays a very big part in

the success of any portfolio. However, small investors do not have enough
money to properly allocate their assets. By pooling your funds with others,
you can quickly benefit from greater diversification. Mutual funds invest in
a broad range of securities. This limits investment risk by reducing the effect
of a possible decline in the value of any one security. Mutual fund unit-
holders can benefit from diversification techniques usually available only to
investors wealthy enough to buy significant positions in a wide variety of
securities.
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Low Cost:
A mutual fund let's you participate in a diversified portfolio for as little as

Rs.5, 000, and sometimes less.
Convenience and Flexibility:
Investing in mutual funds has its own convenience. While you own just one
security rather than many, you still enjoy the benefits of a diversified
portfolio and a wide range of services. Fund managers decide what securities
to trade collect the interest payments and see that your dividends on
portfolio securities are received and your rights exercised. It also uses the
services of a high quality custodian and registrar. Another big advantage is
that you can move your funds easily from one fund to another within a
mutual fund family.
Liquidity:
In open-ended schemes, you can get your money back promptly at net asset
value related prices.
Transparency:
Regulations for mutual funds have made the industry very transparent. You
can track the investments that have been made on your behalf and the
specific investments made by the mutual fund scheme to see where your
money is going. In addition to this, you get regular information on the value
of your investment.
Variety:
There is no shortage of variety when investing in mutual funds. You can find
a mutual fund that matches just about any investing strategy you select.
There are funds that focus on blue-chip stocks, technology stocks, bonds or a
mix of stocks and bonds. The greatest challenge can be sorting through the
variety and picking the best for you.
Mutual fund risks:
47
Having understood the basics of mutual funds the next step is to build a
successful investment portfolio. Before you can begin to build a portfolio,
one should understand some other elements of mutual fund investing and
how they can affect the potential value of your investments over the years.
The first thing that has to be kept in mind is that when you invest in mutual
funds, there is no guarantee that you will end up with more money when you
withdraw your investment than what you started out with.
That is the potential of loss is always there. Even so, the opportunity for
investment growth that is possible through investments in mutual funds far
exceeds that concern for most investors. Here's why.
At the cornerstone of investing is the basic principal that the greater the risk
you take, the greater the potential reward. Risk then, refers to the volatility --
the up and down activity in the markets and individual issues that occurs
constantly over time. This volatility can be caused by a number of factors --
interest rate changes, inflation or general economic conditions. It is this
variability, uncertainty and potential for loss, that causes investors to worry.
We all fear the possibility that a stock we invest in will fall substantially.
Different types of mutual funds have different levels of volatility or potential
price change, and those with the greater chance of losing value are also the
funds that can produce the greater returns for you over time. You might find
it helpful to remember that all financial investments will fluctuate. There are
very few perfectly safe havens and those simply don't pay enough to beat
inflation over the long run.
Number of available options:

 Diversification
 Professional Management
 Potential of returns
Beside these important features, mutual funds also offer several other key
traits.
Important among them are:
1. Well Regulated
2. Transparency
3. Flexible, Affordable and a Low Cost affair
48
Structure of the Indian mutual fund industry:

The Indian mutual fund industry is dominated by the Unit Trust of India,
which has a total corpus of Rs. 700bn collected from more than 20 million
investors. The UTI has many schemes in all categories i.e. equity, balanced,
income etc with something open ended and some being closed ended. The
unit scheme 1964 commonly referred to as US 64, which is a balanced fund,
is the biggest scheme with a corpus of about Rs. 200bn. UTI was floated by
financial institution and is govern by a special act of parliament. Most of its
investors believe that the UTI is government owned and controlled, which,
while legally uncorrected, is true for all practical purposes.
Recent trends in mutual fund industry:
The most important trend in the mutual fund industry is the aggressive
expansion of the foreign owned mutual fund companies and the decline of
the companies floated by nationalized banks and smaller private sector
players. Many nationalized banks got into the mutual fund business in the
early nineties and got off to a good start due to the stock market boom
prevailing them. These banks did not really understand the mutual fund
business and they just viewed it as another kind of banking activity. Few
hired specialized staff and generally chose to transfer staff from the parent
organizations.
The performance of most of the schemes floated by these funds was not
good. Some schemes had offered guaranteed returns and their parent
organizations had to bail out these AMCs by paying large amounts of money
as the difference between the guaranteed and actual returns. The service
levels were also very bad. Most of these AMCs have not been to retain staff,
float new schemes etc, and it is doubtful whether, barring a few exceptions,
they have serious plans of continuing the activity in a major way.
The foreign owned companies have deep pockets and have come in here
with the expectation of a long haul. They can be credited with introducing
many new practices such as new product innovation, sharp Improvement in
service standards and disclosure, usage of technology, broker education and
support etc. In fact, they have forced the industry to upgrade itself and
service levels of organizations like UTI have improved dramatically in the
last few years in response to the competition provided by these.
49
Schemes of a Mutual Fund:
• The asset management company shall launch no scheme unless the trustees
approve such scheme and a copy of the offer document has been filed with
the Board.
• Every mutual fund shall along with the offer document of each scheme pay
filing fees.
• The offer document shall contain disclosures which are adequate in order
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 a close-ended
scheme shall be fully redeemed at the end of the maturity period. “Unless a
majority of the unit holders otherwise decide for its rollover by passing a
resolution”.
Rules Regarding Advertisements:

• The offer document and advertisement materials shall not be misleading or
contain any statement or opinion, which are incorrect or false.
Investment Objectives and Valuation Policies:

• The price at which the units may be subscribed or sold and the price at
which such units may at any time be repurchased by the mutual fund shall be
made an available to the investors.
Restrictions on Investments:
• A mutual fund scheme shall not invest more than 15% of its NAV in debt
instrument issued by a single issuer, which are rated not below investment
grade by a credit rating agency authorized to carry out such activity under
the Act. Such investment limit may be extended to 20% of the NAV of the
50
scheme with the prior approval of the Board of Trustees and the Board of
Asset Management Company.
• A mutual fund scheme shall not invest more than 10% of its NAV in
unrated debt instruments issued by a single issuer and the total investment in
such instruments shall not exceed 25% of the NAV of the scheme. All such
investments shall be made with the prior approval of the Board of Trustees
and the Board of Asset Management Company.
• No mutual fund under all its schemes should own more than ten percent of
any company’s paid up capital carrying voting rights.
• Such transfers are done at the prevailing market price for quoted
instruments on spot basis. The securities so transferred shall be in
conformity with the investment objective of the scheme to which such
transfer has been made.
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63
COMMODITIES
A commodity is a normal physical product used by everyday people during

the course of their lives, or metals that are used in production or as a
traditional store of wealth and a hedge against inflation. For example, these
commodities include grains such as wheat, corn and rice or metals such as
copper, gold and silver. The full list of commodity markets is numerous and
too detailed. The best way to trade the commodity markets is by buying and
selling futures contracts on local and international exchanges. Trading
futures is easy, and can be accessed by using the services of any full or on-
line futures brokerage service. Traditionally, there is an expectation when
trading commodity futures of achieving higher returns compared to shares or
real estate, so successful investors can expect much higher returns compared
to more conventional investment products.
The process of trading commodities, as mentioned above, must be facilitated

by the use of trading liquid, exchangeable, and standardized futures
contracts, as it is not practical to trade the physical commodities. Futures
contracts give the investor ease of use and the ability to buy or sell without
64
delay. A futures contract is used to buy or sell a fixed quantity and quality of
an underlying commodity, at a fixed date and price in the future. Futures
contracts can be broken by simply offsetting the transaction. For example, if
you buy one futures contract to open then you sell one futures contract to
close that market position.
The execution method of trading futures contracts is similar to trading

physical shares, but futures contracts have an expiry date and are deliverable
.Futures contracts have an expiry date and need to be occasionally rolled
over from the current contract month to the following contract month.
The reason is because the biggest advantage to trading commodity futures,

for the private investor is the opportunity to legally short-sell these markets.
Short-selling is the ability to sell commodity futures creating an open
position in the expectation to buy-back at a later time to profit from a fall in
the market. If you wish to trade the up-side of commodity futures, then it
will simply be a buy-to-open and sell-to- close set of transactions similar to
share trading.
The commodity markets will always produce rising of falling trends, and
with the abundance of information and trading opportunities available there
is no reason for any investor to exclusively trade the share market when
there is potential profits from trading commodity futures .The increased use
of commodity trading vehicles in investment management has led
practitioners to create investable commodity indices and products that offer
unique performance opportunities for investors in physical commodities. As
is true for stock and bond performance, as well as investment in managed
futures and hedge fund products, commodity-based products have a variety
of uses. Besides being a source of information on cash commodity and
futures commodity market trends, they are used as performance benchmarks
for evaluation of commodity trading advisors and provide a historical track
record useful in developing asset allocation strategies. However, the investor
benefits of commodity or commodity-based products lie primarily in their
ability to offer risk and return trade-offs that cannot be easily replicated
65
through other investment alternatives. Previous research that direct stock and
bond investment offers little evidence of providing returns consistent with
direct commodity investment. commodity-based firms may not be exposed
to the risk of commodity price movement. Thus for investors, direct
commodity investment may be the principal means by which one can obtain
exposure to commodity price movements.
The commodities that are traded in the market
• Gold
• Copper
• Silver
66
Survey Report
I conducted a survey upon various classes in Punjab. I asked them about
their income range and the investment options in which they invest. The
objective of the survey was to know the behavior of people as per as
investment decision is concerned.
I divided Investment options in four categories:
1. Fixed deposits
2. Equity (Stock markets)
3. Mutual Funds
4. Commodity
I also divided income pattern in four categories:
1. Low (<150000 p.a.)

2. Medium (150000 to 500000)
3. High (>500000)
67
S. Name Income Investment Options

No
.
Lo Mediu Hig FD Equit MF Commodit
w m h y y
1 Amrik * YE YE YES
Singh S S
2 RK * YES YE YES
Sharma S
3 Gurmit * YE YES
Singh S
4 Satwinder * YES YE
Singh S
5 Aman * YES YE YES
Preet S
6 PK Tyagi * YE YES
S
7 KC * YE YES YE YES
Mouriya S S
8 Manoj * YE YES
Sharma S
9 Mansi * YE
Gupta S
10 Prince * YE YES YE
S S
11 Narender * YE YES
Kumar S
12 Prabhjot * YES YE YES
Singh S
13 Sarita * YE YES
Kandpal S
14 Minakshi * YE YE
S S
15 Karan * YES YE
Singh S
16 Jasbir * YE YES YES
68
Singh S
17 Harpreet * YES YES
Singh
18 Pawan * YE YES
Kumar S
19 Ravi *
Gupta
20 Avantika * YE YES
Mehta S
21 Pooja * YE YES
S
22 G. Trivedi * YE YES YE YES
S S
23 BD Bains * YE YE YES
S S
24 Darshan * YES YE YES
Singh S
25 Mukesh * YE YE YES
Kumar S S
26 Jitander * YE YES
Singh S
27 Harish * YES
Chander
28 Rekha * YE YES
Choudhar S
y
29 Anant * YE YES YE
Singh S S
30 Mohinder * YE YES YE YES
Punj S S
After arranging data income pattern wise and investment option wise, we get
Income No. of Investment Options

Level People
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FD Equity MF Insurance
Low 7 5 1 0 4
Medium 16 11 8 10 12
High 7 3 5 6 6
Total 30 19 14 16 22
70
Interpretation
Let’s find out the risk behavior of the investors with the help of this graph…
71
90
80
70
60
50 Low
Midium
40
High
30
20
10
0
FD Equity MF commo...
Conclusions
1. As FD’s provides fixed income, these are popular in each category.

But as the income of investor shifts from a income range to upper
income range, he looks for another avenues for the Investment.
2. The change in the risk taking behavior of investor with change in
income is clearly indicated by the change in equity investment with
change in the income range.
a. Investors with low income level are very risk avoiders. Hence
they invest with FD’s rather than Equity.
b. But as the income level increases, investor become more risk
takers and start investing in equities. Same is the case with
MF’s.
3. Income pattern drive investment decisions, sort of, in the same way, in
which it effects the equity investments.
a. Though the middle level income investor is more interested in
MF as compared to equities as they want MF’s companies to
take care of the their investment decisions.
b. However the MF’s are less risky as money is pooled in
diversified companies hence are gaining popularity.
c. MF’s are not existent in low income level investors, May be
due to lack of knowledge.
4. Whatever the income level is, insurance investment is popular

among all income levels investors.
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a. However insurance investment is not done on regular basis.

Few investors are just one time investors.
73
Analysis
1) Do you know about the following financial instruments?
74
The sample size consists of 30 respondents and out of which almost

all the people are fully aware about investment avenues like gold and
fixed deposits and almost 95 are aware about equity shares and
mutual funds
2) How do you get information about the following investment

avenues?
Out of the 30 respondents about 50% of them get the information from
advertisements on the television and internet and the rest from the magazines
, company sales executives and friends and relatives.
3) Rate the following according to your preference?
Out of the 30 respondents asked the most preferred financial instrument is

fixed deposits and the then
the rest like equity shares with 70 % and insurance.
4) What is your age?
Out of the respondents that were surveyed the maximum were of the age
group of 31-40
4) What are the factors that you consider while investing in any
financial instrument?
Out of the respondents 50% were of the opinion that return and safety are
the main reasons behind their s
investment decisions .
5) On what basis you invest in any particular financial instrument?
The respondents were mostly of the opinion that portfolio is the most
important factor before investing and then fundamental analysis done by
them or by the financial advisor and then the other factors
6) How will you invest your money in any financial instrument?
75
Most of the respondents surveyed that they mostly invest their money
through a broker and then through sun brokers n agents.
7)
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77
78
79
80
81
82
83
84
85
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What is your age?
Out of the respondents that were surveyed the maximum were of the age
group of 31-40
8) What are the factors that you consider while investing in any
financial instrument?
Out of the respondents 50% were of the opinion that return and safety are
the main reasons behind their investment decisions .
9) On what basis you invest in any particular financial instrument?
The respondents were mostly of the opinion that portfolio is the most
important factor before investing and then fundamental analysis done by
them or by the financial advisor and then the other factors .
10) How will you invest your money in any financial instrument?
Most of the respondents surveyed that they mostly invest their money
through a broker and then through sub brokers and agents .Out the total
87
respondents around 60 %were in the income group of 1- 3lakhs and 22% in

the 3-5lakhs.
11) How much of your money you invest in financial instruments?
Most of the respondents surveyed were mostly those people who invest 10 to
30 % of their money in these instruments.
12) How long do you prefer to keep your money invested?

Out of the 100 respondents mostly were of the view that they invested there
for a money at least for a period of 1year to 3 years .
88
89
CONCLUSION AND RECOMMENDATIONS

After completing the survey and watching the analysis I come to this
conclusion that the before investment investors do have focus on Tax
savings, Income, Capital preservation etc. They also have a
predetermination of the time period of investment.
According to my view the age group of 21-30 can be a great potential

investors for the company as the has high risk profile, more
disposable income, and the time horizon is perfect 3-5 years.
Recommendation for this category is company must follow up these

high potential customers, they can be offered Equity shares because
this group of people have a high risk profile and they can afford to
takes risks which is usually associated with equity shares. This group
of customers can also be offered Mutual funds because in that also
the exposure is in equities. ULIPS can also be offered to this group
.The ULIP has a 20%- 22% return which good enough for
investment. The main focus should be to reach to the customer,
these customers are aware of ULIPs and aware of other product.
Company should try to reach them and tap the investor.
• Mutual Funds can also be offered as they have high risk profile.
Company should take initiative to get demat account of these
customers.
• The age group of 31-40 years, investors are with ‘Moderate’ risk
profile, most of the investors are from the 10,000-15,000 Rs per
month disposable income. Company will get a good investor with
diluted risk profile. Company can offer them ULIPs ,and Fixed
Deposits as investment instrument. Mutual funds can be an option
but that must be a debt fund to invest.
90
• The age group of 41-50 years, investors are from the15,000-20,000

Rs disposable income group. Investor in this group are invested in
Insurance sector, the primary focus of these investors are retirement
and time horizon is likely to be 6-9 years. This is also good potential
group for the retirement plan in ULIPs. Fixed deposits can be a good
option for them.
• For the age group of above 50 years, the risk profile would be low
moderate ,as the term is not more than 3 years. Investors have
invested in insurance sector but in this age insurance would not be a
good option for investor. Company should try to minimize the risk
tolerance by offering Fixed deposits.
• In the survey there were lot of people who were in the age group of
above 60. For this group of people the company can target Fixed
deposits which gives continues return like monthly interests so that
they can keep on getting returns.
OCCUPATION
If we see the survey data it will seen that respondents are majorly
Service people and Business Class. Depending upon the data I
conclude that the service class has a time horizon of 3-5 years and
risk tolerance ‘Low- Moderate’. They invested in FDs, Equity shares,
Mutual Fund and ULIPs.
• Recommendation company should tap these class by innovative

marketing strategies as they already invested, and offer FDs, ULIPs.
Mutual fund can be a lucrative offer if the Fund is any moderate fund
or debt fund.
• For the business class, the risk profile is high-very high. Most
investor are with negative return acceptability and time horizon is < 3
years. Company should offer Mutual funds with risk profile High to
very high thus investor can get a high return. Apart from this
company should offer to open demat account with them.
Disposable Income .
91
• The disposable income bracket less than Rs.5000 per month are
basically safe investors and have not and do not prefer investing in
mutual funds and ULIP. Thus positioning of these products should be
such that people are attracted towards this scheme. Emphasis on
marketing of the products should be given.
• Respondents under disposable income bracket Rs.5,000-Rs.10,000
have mainly invested in insurance and real estate. But when survey
was done and their preferences was asked these respondents
strongly preferred investing in these strategies.
• Disposable Income Bracket of Rs.15,000-Rs.20,000 are the strong

contenders for investing their money and these people have invested
in real estate, insurance and fixed deposits. Moreover there is mixed
preferences for their investments thus proper segmentation of the
sample should be done accordingly marketing strategies should be
adopted.
• Though there is a small percentage of respondents in disposable

income bracket above Rs.20,000 who least prefer investing in mutual
fund. But this is the segment which can be well targeted and their
portfolio should be such that gives them more returns. The case of
ULIP is different as people strongly prefer investing in this investment
strategy.
92
93
QUESTIONNAIRE
NAME :
OCCUPATION :
CONTACT NO :
EMAIL ID :
1. Do You Know About The Financial Instruments
o Mutual funds YES/NO

o Stock/Shares option YES/NO
o Banks YES/NO
o Commodities YES /NO
o Real estate YES/NO
o Insurance YES/NO
Any other – specify
-----------------------------
2. How do you get information regarding these Financial

Instrument?
○ Advertisement
○ Company Sales force
○ Friends / Relatives
○ Magazines /Newspaper
94
○ If any other please
specify…………………………………………………………………
……………….
3.Please rate the Financial Instruments as per your Preference.
MORE MODERATE LEAST

PREFERED PREFERED
EQUITYSHARES
Mutual fund
Insurance
Fixed Deposits
COMMODITIES
REAL ESTATES
4.What is your age?
15-20
21-40
41-50
51-60
60 above
5. What are the factors which you consider while investing in any
Financial Instrument?
○ Return (capital appreciation)
○ Tax Saving
○ Liquidity
○ Regular income flow
95
○ Safety
○ Risk
specify…………………………………………………………………….
6. On what basis you will invest in any particular Financial

Instrument?
○ Past Performance
○ Portfolio
○ Fund Manager
○ Fundamental/Technical Analysis
○ Market Sentiment
specify…………………………………………………………………………
7. How will you invest your money in any Financial Instrument?
○ Yourself
○ Through any stock broking company. Please specify
Name…………………………..
○ Sub broker/ Agents
○ Through Banks
96
specify………………………………………………………………………
…..
8. In what type of Financial Instrument you like to invest?

○ Equity based
○ Debt based
○ Balanced Fund
○ Hybrid Fund
○ ELSS (equity linked saving scheme)
○ If any other please specify
9. What is your annual income?

1lac to 3 lack
3lac to 5lac
5lacto 10lac
more than 10 lacks
10. How much of your money you invest in any Financial

Instrument?
○ 10% to 20%
○ 20% to 30%
○ 30% to 50%
○ More than 50%
97
specify………………………………………………………………………
……………..
11. How long you prefer to keep your money in any Financial
Instrument?
○ Less than 6 months
○ 6 months to 1 year
○ 1 year to 3 year
○ More than 3 years

○ If any other please specify
12. How much return you expect from any Financial Instrument?
○ 10% to 20%
○ 20% to 30%
○ 30% to 50%
○ More than 50%
specify………………………………………………………………………
………………
13. Will you invest your money for saving the Tax in any Financial
Instrument?
98
Yes
No
14. Are you satisfied with your investment decision, Please rate?
○ Highly satisfied
○ Satisfied
○ Less satisfied
○ No satisfaction
…………………
15. Any other comments.
………………………………………………………………………
………………………………………………………………………
………………………………………………………………………
………………………………………………………………………
………………………………………………………………………
……………………………………………………
-----------------------------------------
[15]- Give your comment on investment pattern if any?

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99
100
BIBLIOGRAPHY
a. www.tata-aig-life.com
b. www.moneycontrol.com
c. www.investsmartindia.com
d. www.insurancejournal.com
e. www.irdaindia.org
f. http://stockcharts.com
g. http://en.wikipedia.org
h. http://www.google.com/finance
101

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Perception of Consumers Towards Investing in Share Market and Mutual Funds

The evaluation of financial planning has been increased through decades,

OBJECTIVES OF THE PROJECT:

 To understand all about different investment avenues available in

After all as a management trainee I will try to get some

VALUE ADDITION TO THE COMPANY

 It will help the company to understand the expectations the customer

This report will be developed in order to empower companies with detailed

LIMITATIONS OF THE STUDY

The various limitations of the study are:

 Total number of financial instrument in the market is so large that it

 As the project is based on secondary data, possibility of unauthorized

 Reluctance of the people to provide complete information about

 Due to time and cost constraint study will be conducted in only

 The lack of knowledge in customers about the financial instruments

Overview of Broking industry

Some key characteristics of the sample 394 firms are:

 On the basis of geographical concentration, the West region has the

Branches & Sub-Brokers

MY WORK AT TATA SECURITIES LIMITED

The project work can only be complete after:

Analyzing the data

Drawing detailed and careful inferences from the analysis .

TATA SECURITIES LIMITED- A BRIEF PROFILE

Tata Securities Limited has been engaged in retail and institutional

Broking business requires three ingredients. Strong Brand, Distribution

Presently Tata Securities has 50 branches country-wide, which is

TATA SECURITIES LIMITED

 Tata Securities Limited was established in 2007.

 Tata Securities Limited (TSL) is the Equity Broking arm of Tata

 It is the 100% subsidiary of Tata Capital Limited

 It is the Corporate Member of NSE (National Stock Exchange) and

 TSL offers specialized Broking Services in Equity and Derivative

A Depository Participant of:

1. Central Depository Services (India) Limited(CDSL)

Tata Securities Limited is providing two kinds of services :-

A. Retail Broking : Tata Securities is offering a 3- in -1 account which

B. Institutional Broking : Tata Securities provides a suite of products and

Tata Capital Limited is a subsidiary of Tata Sons

 Distribution and Broking: Third party investment products, equity

 Retail finance: Passenger and commercial vehicle loans,

 Commercial Finance: Financial products for SMEs and project

for capital equipment and

 Investment Banking: Advisory and debt and equity market

corporate and SMEs.

 Private Equity: Investments in India and other countries.

 Wealth Management: Suite of advisory and investment offerings

 Rural Finance: Relevant financial products for rural

BS Degree in Architecture, MBA from Harvard Business School

R Gopalakrishnan – Executive Director

B Tech from IIT

Held higher level positions in companies like Hindustan Unilever, Unilever

Mr PP Kadle- Managing Director

An Honors Graduate in Commerce and Accountancy

Member of Institute of Chartered Accountants of India, The Institute of Cost

Held positions in the fields of management, accountancy, law, finance and

MILESTONES ACHIEVED BY THE COMPANY

STOCK MARKET INVESTMENTS:

REAL ESTATE INVESTMENTS:

1. Fixed deposits offered by Banks:

Banks in India can be categorized into non-scheduled banks and scheduled

As far as the present scenario is concerned the banking industry is in a