bba training report

7/28/2019 bba training report

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TRAINING REPORT

ON

MUTUAL FUND IN SHARE MARKET SECTOR

(SHAREKHAN LTD.)

(M-5, D-15, South Extension-2, Delhi-110049)

Submitted to

MAHARSHI DAYANAND UNIVERSITY, ROHTAK

In partial fulfillment of the requirements

For the award of the degree of

BACHELOR OF BUSINESS ADMINISTRATION(INDUSTRY INTEGRATED)

(IVth Semester)

Submitted by

Name: Ranjana Lata Upadhyay

Roll No.:

HARGOBIND INSTITUTE OF GURU MANAGEMENT

& INFORMATION TECHNOLOGY

(Hargobind Enclave, Delhi-110092)

JULY 2012


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STUDENT DECLARATION

I hereby declare that the Training Report conducted at

SHAREKHAN LTD.M-5, D-15, South Extn-2, Delhi-110049

Under the guidance of

Ms. Rajni

Submitted in partial fulfillment of the requirement for the

Degree of

BACHELOR OF BUSINESS ADMINISTRATION(Industry Integrated)

TO

MAHARSHI DAYANAND UNIVERSITY,

ROHTAK

Is my original work and the same has not been submitted for theaward of any other Degree/diploma /fellowship

or other similar title or prizes.

Ranjana Lata Upadhyay


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ACKNOWLEDGEMENTS

I take this opportunity to thank the various persons who helped me in

one way or during the development of my summer training Product &

Services of Sharekhan in Share market sector.

I would also like to express my gratitude towards Mr. Nurul Hasan

(A.M, Assistant Manager), Shahid, Darnish and other friends and Mrs.

Mrs. Rajni (Faculty Guide) for valuable suggestion without which it

have been difficult for me to accomplish my project work.

Mrs. Rajni


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CONTENTS

CHAPTER 1: INTRODUCTION

1.1 General Introduction about the sector.

1.2 Industry Profile.

a. Origin and Development of the industry.

b. Growth and present status of the industry.

c. Future of the industry.

CHAPTER 2 : PROFILE OF THE ORGANISATION

2.1 Origin of the Organization.

2.2 Growth, Development and Present status of the Organization.

2.3 Organization structure and Organization chart.

2.4 Product and Service profile of the organization.

2.5 Market profile of the Organization.

CHAPTER 3 : DISCUSSIONS ON TRAINING

3.1 Students work profile (Role and Responsibilities).

3.2 Key learnings from training.

CHAPTER 4 : STUDY OF SELECTED RESEARCH PROBLEM

4.1 Statement of research problem.

4.2 Statement of research objectives.

4.3 Research design and methodology.

CHAPTER 5 : ANALYSIS

5.1 Data Analysis.

5.2 Summary of Findings.

CHAPTER 6 : SUMMARY AND CONCLUSIONS

6.1 Summary of Learning Experience.

6.2 Conclusions and Recommendations.APPENDICES

Annexure re like copy of questionnaires, interview schedules, leaf lets, brochures,

Photographs to be enclosed.

BIBLIOGRAPHY


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1.1General Introduction about the sector.

Introduction

Stock markets refer to a market place where investors can buy and sell

stocks. The price at which each buying and selling transaction takes is

determined by the market forces (i.e. demand and supply for a particular

stock).

A stock market orequity market is a public entity (a loose network of

economic transactions, not a physical facility or discrete entity) for the

trading of company stock(shares) and derivatives at an agreed price; these

are securities listed on a stock exchange as well as those only tradedprivately.

The size of the world stock market was estimated at about $36.6 trillion at the beginning

of October 2008. The totalworld derivatives market has been estimated at about

$791 trillion face or nominal value,11 times the size of the entire world economy. The

value of the derivatives market, because it is stated in terms ofnotional values, cannot be

directly compared to a stock or a fixed income security, which traditionally refers to an

actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a

derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the

event notoccurring). Many such relatively illiquid securities are valued as marked to

model, rather than an actual market price.

The stocks are listed and traded on stock exchanges which are entities of a

corporation ormutual organization specialized in the business of bringing

buyers and sellers of the organizations to a listing of stocks and securities

together. The largest stock market in the United States, by market

capitalization, is theNew York Stock Exchange (NYSE). In Canada, the

largest stock market is the Toronto Stock Exchange. Major European

examples of stock exchanges include the Amsterdam Stock Exchange,

London Stock Exchange, Paris Bourse, and the Deutsche Brse (Frankfurt


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Stock Exchange). In Africa, examples includeNigerian Stock Exchange,

JSE Limited, etc. Asian examples include the Singapore Exchange, the

Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Shanghai

Stock Exchange, and the Bombay Stock Exchange. In Latin America,

there are such exchanges as the BM&F Bovespa and the BMV.

Market participants include individual retail investors, institutional investors such as

mutual funds, banks, insurance companies and hedge funds, and also publicly traded

corporations trading in their own shares. Some studies have suggested that institutional

investors and corporations trading in their own shares generally receive higher risk-

adjusted returns than retail investors.

Trading

Participants in the stock market range from small individual stock investors to large

hedge fundtraders, who can be based anywhere. Their orders usually end up with a

professional at a stock exchange, who executes the order of buying or selling.

Some exchanges are physical locations where transactions are carried out on a trading

floor, by a method known as open outcry. This type ofauction is used in stock exchanges

and commodity exchanges where traders may enter "verbal" bids and offers

simultaneously. The other type of stock exchange is a virtual kind, composed of a

network of computers where trades are made electronically via traders.

Actual trades are based on an auction market model where a potential buyerbids a

specific price for a stock and a potential sellerasks a specific price for the stock. (Buying

or selling at marketmeans you will accept any ask price or bid price for the stock,

respectively.) When the bid and ask prices match, a sale takes place, on a first-come-first-

served basis if there are multiple bidders or askers at a given price.

The purpose of a stock exchange is to facilitate the exchange of securities between buyers

and sellers, thus providing a marketplace (virtual or real). The exchanges provide real-

time trading information on the listed securities, facilitatingprice discovery


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Market participants

Market participants include individual retail investors, institutional investors such as

mutual funds, banks, insurance companies and hedge funds, and also publicly traded

corporations trading in their own shares. Some studies have suggested that institutionalinvestors and corporations trading in their own shares generally receive higher risk-

adjusted returns than retail investors.

1.2: Industry Profile

A. Origin and Development of Stock Exchange

History

Established in 1875, the Bombay Stock Exchange is Asia's first stock exchange

In 12th century France the courretiers de change were concerned with managing and

regulating the debts of agricultural communities on behalf of the banks. Because these

men also traded with debts, they could be called the first brokers. A common misbelief isthat in late 13th century Bruges commodity traders gathered inside the house of a man

called Van der Beurze, and in 1309 they became the "Brugse Beurse", institutionalizing

what had been, until then, an informal meeting, but actually, the family Van der Beurze

had a building in Antwerp where those gatherings occurred; the Van der Beurze had

Antwerp, as most of the merchants of that period, as their primary place for trading. The


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idea quickly spread around Flanders and neighboring counties and "Beurzen" soon

opened in Ghent and Amsterdam.

In the middle of the 13th century, Venetian bankers began to trade in government

securities. In 1351 the Venetian government outlawed spreading rumors intended to

lower the price of government funds. Bankers in Pisa, Verona, Genoa and Florence also

began trading in government securities during the 14th century. This was only possible

because these were independent city states not ruled by a duke but a council of influential

citizens. Italian companies were also the first to issue shares. Companies in England and

the Low Countries followed in the 16th century. The Dutch East India Company

(founded in 1602) was the firstjoint-stock company to get a fixed capital stock and as a

result, continuous trade in company stock emerged on the Amsterdam Exchange. Soonthereafter, a lively trade in various derivatives, among which options and repos, emerged

on the Amsterdam market. Dutch traders also pioneered short selling - a practice which

was banned by the Dutch authorities as early as 1610

There are now stock markets in virtually every developed and most developing

economies, with the world's largest markets being in the United States, United Kingdom,

Japan, India, China, Canada, Germany (Frankfurt Stock Exchange), France, South Korea

and theNetherlands

Importance of stock market

Function and purpose

The stock market is one of the most important sources forcompanies to raise money.

This allows businesses to be publicly traded, or raise additional financial capital for

expansion by selling shares of ownership of the company in a public market. The

liquidity that an exchange affords the investors gives them the ability to quickly and

easily sell securities. This is an attractive feature of investing in stocks, compared to other

less liquid investments such as real estate.Some companies actively increase liquidity by

trading in their own shares.


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Relation of the stock market to the modern financial system

The financial system in most western countries has undergone a remarkable

transformation. One feature of this development is disintermediation. A portion of the

funds involved in saving and financing, flows directly to the financial markets instead of

being routed via the traditional bank lending and deposit operations. The general public

interest in investing in the stock market, either directly or through mutual funds, has been

an important component of this process.

Statistics show that in recent decades shares have made up an increasingly large

proportion of households' financial assets in many countries. In the 1970s, in Sweden,

deposit accounts and other very liquid assets with little risk made up almost 60 percent of

households' financial wealth, compared to less than 20 percent in the 2000s. The major

part of this adjustment is that financial portfolios have gone directly to shares but a good

deal now takes the form of various kinds of institutional investment for groups of

individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of

premiums, etc.

Crashes

A stock market crash is often defined as a sharp dip in share prices ofequities listed on

the stock exchanges. In parallel with various economic factors, a reason for stock market

crashes is also due to panic and investing public's loss of confidence. Often, stock market

crashes end speculative economic bubbles.


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Robert Shiller's plot of the S&P Composite Real Price Index, Earnings, Dividends, and

Interest Rates, fromIrrational Exuberance, 2d ed.[21] In the preface to this edition, Shiller

warns, "The stock market has not come down to historical levels: the price-earnings ratio

as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the

historical average... People still place too much confidence in the markets and have too

strong a belief that paying attention to the gyrations in their investments will someday

make them rich, and so they do not make conservative preparations for possible bad

outcomes."

Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert

Shiller(Figure 10.1,[21]

source). The horizontal axis shows the real price-earnings ratio of


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the S&P Composite Stock Price Index as computed inIrrational Exuberance (inflation

adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The

vertical axis shows the geometric average real annual return on investing in the S&P

Composite Stock Price Index, reinvesting dividends, and selling twenty years later. Data

from different twenty year periods is color-coded as shown in the key. See also ten-year

returns. Shiller states that this plot "confirms that long-term investorsinvestors who

commit their money to an investment for ten full yearsdid do well when prices were

low relative to earnings at the beginning of the ten years. Long-term investors would be

well advised, individually, to lower their exposure to the stock market when it is high, as

it has been recently, and get into the market when it is low."[21]

Stock market index

The movements of the prices in a market or section of a market are captured in price

indices called stock market indices, of which there are many, e.g., the S&P, the FTSE and

the Euronext indices. Such indices are usually market capitalization weighted, with the

weights reflecting the contribution of the stock to the index. The constituents of the index

are reviewed frequently to include/exclude stocks in order to reflect the changing

business environment.

Derivative instruments

Financial innovation has brought many new financial instruments whose pay-offs or

values depend on the prices of stocks. Some examples are exchange-traded funds (ETFs),

stock index and stock options, equity swaps, single-stock futures, and stock index futures.

These last two may be traded on futures exchanges (which are distinct from stock

exchangestheir history traces back to commodities futures exchanges), or traded over-

the-counter. As all of these products are only derivedfrom stocks, they are sometimes

considered to be traded in a (hypothetical) derivatives market, rather than the

(hypothetical) stock market.


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Leveraged strategies

Stock that a trader does not actually own may be traded using short selling; margin

buying may be used to purchase stock with borrowed funds; or, derivatives may be used

to control large blocks of stocks for a much smaller amount of money than would be

required by outright purchase or sales.

Short selling

In short selling, the trader borrows stock (usually from his brokerage which holds its

clients' shares or its own shares on account to lend to short sellers) then sells it on the

market, hoping for the price to fall.

Margin buying

In margin buying, the trader borrows money (at interest) to buy a stock and hopes for it to

rise. Most industrialized countries have regulations that require that if the borrowing is

based on collateral from other stocks the trader owns outright, it can be a maximum of a

certain percentage of those other stocks' value. .

A margin call is made if the total value of the investor's account cannot support the loss

of the trade. (Upon a decline in the value of the margined securities additional funds may

be required to maintain the account's equity, and with or without notice the margined

security or any others within the account may be sold by the brokerage to protect its loan

position. The investor is responsible for any shortfall following such forced sales.)


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B. Growth and present status of the industry.

India Stock Market

Stocks in India had a positive performance during the last month. The SENSEX, a major

stock market index based in India, rallied 673 points or 3.87 percent during the last 30

days. Historically, from 1979 until 2012, the SENSEX averaged 5267.2 reaching an all

time high of 21005.0 in November of 2010 and a record low of 113.3 in December of

1979. The SENSEX is a major stock market index which tracks the performance of large

companies based in India. A stock market or exchange is the centre of a network of

transactions where securities buyers meet sellers at a certain price. This page includes achart with historical data for India Stock Market.

STOCKMARKETS

A stock market or exchange is the center of a network of transactions where securities

buyers meet sellers at a certain price. A stock market or exchange is not necessary a

physical facility and with the advancement of information technology are increasingly

rare those traders that exchange their stocks in the floor of a major stock exchange. The

main stock market in the United States is New York Stock Exchange (NYSE). In Europe,

examples of stock exchanges include the London Stock Exchange, the Paris Bourse, and

the Deutsche Bourse. In Asia, the main stock exchanges include the Tokyo Stock

Exchange, the Hong Kong Stock Exchange, and the Bombay Stock Exchange. In Latin


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America, there are such exchanges as the BOVESPA in Brazil and the MERVAL in

Argentina.

C. Future of the industry.

Market

The turnover for the global market in exchange-traded equity index futures is notionally valued, for 2008,

by the Bank for International Settlements at USD 130 trillion.

Uses

Stock index futures are used forhedging, trading, and investments.

Hedging using stock index futures could involve hedging against a portfolio of shares or equity

index options.

Trading using stock index futures could involve, for instance, volatility trading (The greater the

volatility, the greater the likelihood of profit usually taking relatively small but regular profits).

Investing via the use of stock index futures could involve exposure to a market or sector without

having to actually purchase shares directly.

Please note the following cases of equity hedging with index futures:

Where your portfolio 'exactly' reflects the index (this is unlikely). Here, your portfolio is perfectly

hedged via the index future.

Where your portfolio does not entirely reflect the index (this is more likely to be the case). Here,

the degree of correlation between the underlying asset and the hedge is not high. So, your portfolio is

unlikely to be 'fully hedged'.

Equity index futures and index options tend to be in liquid markets for close to delivery contracts. They

trade for cash delivery, usually based on a multiple of the underlying index on which they are defined (for

example 10 per index point).

OTC products are usually for longer maturities, and are usually a form of options product. For example, the

right but not the obligation to cash delivery based on the difference between the designated strike price, and

the value of the designated index at the expiration date. These are traded in the wholesale market, but are

often used as the basis of guaranteed equity products, which offer retail buyers a participation if the equity


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index rises over time, but which provides guaranteed return of capital if the index falls. Sometimes these

products can take the form ofexotic options (for example Asian options orQuanto options).

PricingForward prices of equity indices are calculated by computing the cost of carry of holding a long position in

the constituent parts of the index. This will typically be

The risk-free interest rate, since the cost of investing in the equity market is the loss of interest

Minus the estimated dividend yield on the index, since an equity investor receives the sum of the

dividends on the component stocks. Since these occur at different times, and are difficult to predict,

estimation of the forward price can be difficult, particularly if there are not many stocks in the chosen

index.

Indices for futures are the well-established ones, such as S&P 500, FTSE, DAX, CAC40 and

otherG12 country indices. Indices forOTCproducts are broadly similar, but offer more flexibility.

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2.1 Origin of the Organization.


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2.2 Growth, Development and Present status of the

Organization.

Sharekhan is online stock trading company of SSKI Group, provider of India-basedinvestment banking and corporate finance service. Sharekhan is one of the largest stock

broking houses in the country.

Sharekhan's equity related services include trade execution on BSE, NSE,

Derivatives,Commodities, Depository Services, Online Trading and Investment Advice.

Along with Sharekhan.com website, ShareKhan has 1700 'Share Shops' in 550 cities and

serving more than 10,00,000 customers across the nation. It also has international

presence through its branches in the UAE.

Sharekhan launched online trading portal in 2000, providing fundamental and statistical

information across equity, mutual funds and IPOs. Sharekhan offers its services to all

types of customers- individual investors and traders, corporate, institutional and NRI's;

trade execution facilities for cash as well as derivatives, on BSE and NSE, depository

services, mutual funds, initial public offerings (IPOs), commodities trading on MCX and

NCDEX and currency trading facilities on NSE, USE & MCX-SX. Sharekhan provides

market related news, stock quotes fundamental and statistical information across equity,

mutual funds, IPOs and much more.

Trade In: BSE and NSE

Stock Broker Review Ratings

Overall Rating Fees Brokerage Usability Customer Service 68 votes

Account Types

1. Classic account

Allow investor to buy and sell stocks online along with the following features like multiple watch

lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking with price alerts

and Instant credit & transfer.


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a. Online trading account for investing in Equities and Derivatives

b. Free trading through Phone (Dial-n-Trade)

I. Two dedicated numbers for placing your orders with your cellphone or landline.

II. Automtic funds tranfer with phone banking (for Citibank and HDFC bank

customers)

III. Simple and Secure Interactive Voice Response based system for authentication

IV. get the trusted, professional advice of our telebrokers

V. After hours order placement facility between 8.00 am and 9.30 am

c. Integration of: Online trading + Bank + Demat account

d. Instant cash transfer facility against purchase & sale of shares

e. IPO investments

f. Instant order and trade confirmations by e-mail

g. Single screen interface for cash and derivatives

2. Trade Tiger account

This is a net based executable application for active traders who trade frequently during the day's

trading session. Following are few popular features of Trade Tiger account.

a. A single platform for multiple exchange BSE & NSE (Cash & F&O), MCX, NCDEX

b. Multiple Market Watch available on Single Screen

c. Hot keys similar to a traditional broker terminal

d. Tie-up with 12 banks for online transfer of funds

e. Different tools available to gauge market such as Tick Query, Ticker, Market Summary,

Action Watch, Option Premium Calculator, Span Calculator

f. Graph Studies are available including Average, Band- Bollinger, Know SureThing, MACD,

RSI, etc

Sharekhan's Trading Brokerage, AMC and Fees

Account Opening Fees & Annual maintenance charges (AMC)

Trading Account Opening Charges (One Time): Rs 750 (Classic Account), Rs 1000 (Trade Tiger

Account)

Trading Annual maintenance charges (AMC): -

Demat Account Opening Charges (One Time): -

Demat Account Annual Maintenance Charges (AMC): Rs. 400 (Free for 1st year with trading

account.)


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Trading Brokerages

Intra-day Trades: 0.1% on the buy side and 0.1% on the sell side.

Delivery Based Trades: 0.5% or 10 paise per share or Rs. 16/- per scrip whichever is higher.

F&O Trades: 0.1% on the first leg and 0.02% on the second leg if squared off on the same day and0.1% if squared off on any other day.

Options Trades: Rs. 100/- per contract or 2.5% on the premium (which ever is higher).

How to open account with Sharekhan?

For online trading with Sharekhan, investor has to open an account. Following are the ways to open an

account with Sharekhan:

Call them at phone number provided below and ask that you want to open an account with them.

1. Call on Toll free number: 1-800-22-7500 to speak to a Customer Service executive

2. Land Line: 39707500 / 022-6115 1111

Visit one of their branches. Sharekhan has a huge network all over India. Click

on http://sharekhan.com/Locateus.aspx this link to find out your nearest branch. Just select the

place near you and you'll find a manager to assist you there.

You can send them an Email on [email protected] to know about their products and services.

If you wish to chat with customer service representative, you can join the chat sesssion.


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2.3 Organization structure and Organization chart.


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Organizational chart


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2.4 Product and Service profile of the organization


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INTRODUCTION

The term Mutual Fund has been defined as a non-depository or non-banking financial

intermediary which acts as an important vehicle for bringing wealth holders and deficit

units together indirectly.

Mutual funds are financial intermediaries which pool the savings of numerous

individuals and invest the money thus raised in a diversified portfolio of securities, thus

spreading and reducing risk. The object is to minimize the return to the investor who

participates in equity indirectly through Mutual Funds.

Mutual Funds earn income by way of interest or divided or both from the securities if

holds. It deducts operating expenses fee and a management income and them posses the

remember to wealth holders through dividends on the Mutual Fund shares.

Mutual Funds offer to their investors the following Main Advantages :

1. Responsible dividends and capital appreciation.

2. Reduced Risk through diversification of portfolio.

3. Access to expertise investment decision and professional Management.

4. Safety and liquidity.

5. Economics of scale in transaction casts and cast of search of information.

6. Liquidity of investments and ability to choose a fund, which meets the precise cash,

flow needs.

the Mutual fund industry is growing and will continue to grow due to the following

factors :

1. In the past scan phase, millions of investors and no longer so sure about primary issues

and one looking for a lower risk option. Which is offered by funds.


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2. Companies are new changing a higher premium on primary and rights issue. As a

result of this small in vestures are shying away.

3. SEBIs introduction of proportionate allotment system for new issued has reduced the

small investor's chances of allotment in primary issues.

4. The minimum for primary issues has been liked to Rs. 500 from Rs. 1000. But for

Mutual Funds the least inevitable amount is only Rs. 1000.

The share of individual investors in primary issues has dropped shortly from 83% in

192-93 to 61% in December 1995.

TYPES OF MUTUAL FUNDS

Broadly speaking, Mutual funds may be classified into two categories :

a. Open ended mutual funds

Open-ended mutual funds function on a regular deposit and withdrawal basis. they accept

funds form investors at any point of time and the investor has the right to withdraw from

the share/units instead of being publicly traded, are repurchased by the fund at any time ata repurchased rate. instances of such a fund are Unit Trust of India and can stock of can

bank.

b. Close ended mutual funds

Close-ended mutual funds raise their capital at one point of time. the size of fund the

number of share/units is determined in advance, once subscription reaches this

predetermined level, entry of any prospective investor is closed. The share/units of suchfunds are publicity traded instead of being repurchased by the fund. An other fact of

close-ended mutual funds is that at end of specific term of mutual funds, these liquidate

their investments and distribute the realization amongst the investors. Master Card

issued by UTI and canshare issued by can bank fund are examples of such funds.


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Depending upon the varying needs and objectives of different types of investors, mutual

funds may also be classified on the basis of yield and investment pattern. The main

categories are :

Money market mutual funds

Besides the above type of funds, mutual funds have now come up with other important

varieties such as Money Market Mutual funds (MMMFs) and offshore funds.

With the gradual broadening f the capital market over the past few year, setting up of

money market mutual funds has been a logical step. As the name itself suggests money

market mutual funds invest their resources in a portfolio of high quality money market

instruments exclusively. Money market instruments are intentions or claims, having low

default risk, short marketability. For example, Treasury Bills, commercial paper,

certificates of deposit, commercial bills, Inter corporate deposit certificates, participation

certificates etc. They assist in bridging the gap between receipts and expenditure of

economic units.

Money market mutual funds have been eminently successful in a few countries in the

west for instance in finance where mutual funds activity has surged by 300% since 1986,

and this growth has been contributed entirely by funds. In India, the money market which

had a limited number of participants and was characterized by a policy of instruments,

opened up as a result of some major developments such as introduction of instruments

(commercial paper, certificates of deposit, 182 days Treasury bills, 364 days Treasury

bills), removal of ceiling on call money rate, establishment of Discount and finance house

of India (DFHI) and promotion of financial instruments to participate in call money.


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Off-Shore Mutual Funds

In order to channelsise the foreign funds into the domestic stock markets and to enable

NRIs and other international investors to participates in Indian capital market. Offshore

mutual funds were launched by UTI-once again the pioneer in the filed. Offshore mutual

funds are an ideal vehicle for opening up domestic capital markets to the international

investors. They are an excellent means of bringing foreign funds into the country and are

often preferred to the direct foreign investment since they do allow foreign dominate over

the host countrys corporate sector.

Off-share mutual funds, though of the same type as domestic mutual funds, are different

in many ways. Incase off-shore mutual funds, source of funds are from abroad, they

involve currency and country risk for the floral investors and can yield higher returns and

greater spread of risk through diversification into newer markets. Offshore funds like

domestic funds can be either closed ended or open end. So far, India has floated only

closed ended funds, which means that an individual investor has nor right to ask for

redemption of his holdings except at the end of specified period, the first off-shore

mutual fund launched as India funds in 1986, in association with Merrill Lynch in UK

and was targeted at the non resident Indians and other foreign investors.

This fund is listed on the London stock exchange. the initial offering was 70 million

pounds (Rs. 210 crores) but was heavily over subscribed and as a result, the size was

raised to 94.2 million pounds (Rs 282.60 crores) Indian growth funds was floated by the

UTI in 1988 in the US with a corpos of $ 60 million. This was marketed by Merrill lunch

and is listed on the New York Stock exchange. The state bank of India floated the Indian

magnum fund of # 156 million in Netherlands., It has a lock in period of 5 years and is

managed by Morgan Stanley Asset Management and SBI Capital markets. The fourth

major fund. The Indo Suez Himalayan Fund N. V. was launched by canbank mutual

funds jointly with Indosuez Asia Investment services Ltd., in 1990. This fund is listed on


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the London stock exchange and was targeted for investment in the Indian sub-continent

with 70% of this fund Invested in the Indian equity market.

Apart from these four funds the ADB sponsored a multi-currency regional fund-Asia

convertibles & Income fund was for promoting use of convertibles in emergent capital

markets of Asia. This fund was for private placement an demobilized about $ 63 million.

Twenty percent of these were set of to be invested in Indian capital market. Canbank

mutual fund also floated commonwealth Equity fund (CEF), in association with Battery

March financial service, which attracted capital of $ 51 million. The CEF is to invest

40% each in India and Malaysia and balance in 16 developing countries within the

commonwealth.

Though the government has already approved many offshore funds no new fund has

actually been floated since mid 1990. Total investment under these funds is not only

small as compared to the total market capitalization of the quoted companies in India, but

is also small in comparison to similar funds floated by other countries. Apart from Indias

low credit rating one of the reasons for absence of new off-shore mutual funds is the fact

that the existing funds are quoted well below their Net Asset value.

The outlook of off-shore mutual funds is colossal related to future of Indian capital

market. the potential of Indian capital market is associated with the continued good

performance of economy. Rapid policy changes are point that soon the Indian corporate

sector, in future, will have to meet international present half-yearly performance by

internationally, quartile reporting is the usual practice.

In sum, it can be said that whole India is making great efforts to heralds market

orientation, they have also occurred big changes of the international scenario. There has

also been an explosive word wide growth in mutual funds as an investment medium.


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Name Of The Instrument Limit (% Of Non-Invisible

Resources of Each Scheme)

Treasury Bills and dated Government Securities

having an unexplored maturity upto one year.

Minimum 25%

Call/Notice Money Minimum 30%

Exponential commercial papers not to be more

than 3%

Minimum 15%

Commercial bill arising out of genuine

trade/commercial transactions and accepted/co-

accepted by banks

Minimum 20%

Certificate of deposits No limit

The above limits have been designed basically with a view to ensuring safety and

inquidity of the investors.


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S. No. Types of funds Objective

1. Income funds Maximization of yield on securities.

2. Growth funds Maximization capital appreciation I security

value

3. Equity funds Undertaking risk associated with investment

inequity share

4. Tax exempt funds Investment in securities getting tax

benefit/exclusive tax frees treatment.

5. liquidity funds Investment in short term money market

instruments given low rate of return but high

liquidity.

6. Specialized funds Investment in specialized channels likes a

specific category of companies (technology

funds) or gold and silver.

7. Index linked funds Investment in share included in market

indices and in the same proportion (value of

shares vary correspondingly with the market

index).

8. Leveraged funds Increasing the value of portfolio and benefit

to unit holders by gains exceeding the cost of

borrowed. leveraged funds


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9. Dual purpose funds high yield and capital appreciation arising

our of the whole portfolio for the investors

wishing for such benefits.

10. Real Estate funds Investment in real estate

11. Balanced funds Investment in both equity shares and bonds

for safety, growth and regularity of income.

12. Hedge funds Use of funds in the way of a speculator-

buying/selling shares when prices are likely

to go up/down.

13. Off-shore funds Investment in foreign company/corporations

to channels foreign funds into domestic

market

14. New Direction funds Investment in companies engaged in

scientific and technological research.


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HOW THE INDUSTRY HAS GROWN IN LAST 10 YEARS

Year Rs. in crores % growth

1986-87 4563.68 --

1987-88 6738.81 3.2

1988-89 13455.65 49.91

1989-90 1911.92 29.59

1990-91 23060.45 17.12

1991-92 37480.20 38.47

1992-93 46988.02 20.23

1993-94 60385.21 22.18

1994-95 72050.21 16.19

1995-96 77367.00 6.89


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SIZE OF SCHEMES

A study of the schemes launched by all mutual funds excluding UTI reveals the following

:

a. Of the total number of schemes launched 84% are from Public sector mutual funds,

while remaking 16% are from Private sector mutual funds.

No. of schemes Corpus size

27 > - 50 Cr

28 50 - 100 Cr

23 100 - 200 Cr

12 200 - 500 Cr

05 < - 500 Cr

% of Public Sector Mutual

Fund

% of Private Sector Mutual

Fund

Corpus Size

57 60 > - 100 cr.

26 13 100 - 200 cr.

17 27 < - 200 cr.


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2.5 Market profile of the Organization

MUTUAL FUNDS : THE PRESENT SENARIO IN THE INDIAN MARKET

The institution dealing in mutual fund is professional fund managers who manager

funds of individuals and bodies who.

May not have such high degree of expertise

May not have sufficient time to cope up with the complexities of various investment

instruments, tax laws, corporate performance, stock market behaviour.

Saving may be too small to take advantage of a widely diversified and growth oriented

portfolio on the market.

By subscribing to mutual funds, an investor is able to get a balanced and well diversified

portfolio, which would reduce his exposure to risk. Mutual funds as professional

managers take into account diverse income needs of investors and respond with various

different schemes or funds.

The certainty of yield has mainly been instrumental in attracting large flow of funds from

the household sector to mutual funds under these schemes. While the mutual funds

endeavor to offer higher yields than available on alternative instruments and provide high

degree of safety both for yield as well as return of capital, they also aim at providing

continuous liquidity on their subscription. The Indian mutual funds, have attempted to

provide all three requirements of good investment namely, yield and liquidity in a fairly

satisfactory way.

The first mutual was launched in Indian in 1986 and upto 1993 all the mutual funds

operating were government owned. The real fund began as 1993 drew to an end. The

mutual funds industry was deregulated and private financial institutions were allowed to

raise funds from the market just as public sector organization had so far. Kothari Pioneer


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and CRB capital were the first to announce the launch of their mutual funds. Today there

are 14 private mutual funds operating in the market. In just three years, they have

between the mobilized Rs. 3223 crores. And this is just the beginning.

But the last two years have not been kind to the countrys mutual funds. Whipped by

falling stock prices, frustrated by the growing refusal on the part of investors to trust their

money to them and tormented by the lack of autonomy and operational flexibility.

However, not all of them have been bleeding. More than one fund manager has not only

managed to protect his portfolio from the assault on prices, but also even boosted the

value of his corpus with smart mind and even smart selling. Leaders of a battered

brigade, they have succeeding in proving that mutual fund scheme can still do its job.

Shield the investor from risks and still ensure high reward.

The icy scalpel of dropping stock prices sliced way the portfolio values of funds after

fund, scheme after scheme. Realizing that their investment vehicles were lunging rather

roaring, investors have been punishing mutual funds by refusing to provide them with

fuel.

Out of 197 schemes presently operating in the market close-end schemes dominant.

MAJOR DEVELOPMENTS PREDICTED TO TAKE PLACE IN COMING YEARS

Most funds now have more to offer than just a straight forward investment additional

features are being packed into the schemes to make them more attractive.

The latest such is a medium issue by IDBI Mutual fund. IDBI-nit95, a zero discount

encashable close end scheme is target4ed at investors who are low on the risk dimension

but high on the income dimension. Despite being a close-end fund, I-NITs without any

discount to the NAVs

GIC Fortune 94 provided offered insurance warrants to avail discounts on premium

payable on a variety of issuance covers without tax deduction at source.

Mutual funds : Enter the Foreign Banks


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More than three years after the government permitted private mutual funds, a clutch of

foreign banks is getting ready to test the waters (ING Bank, Hong Kong Bank, Citibank

and ANZ Grindlays).

After Moragan Stanleys depressing fund management performance, foreign mutualfunds are suffering from a serve image crisis. Alliance capital wasn't even able to get its

entire corpus subscribed at the first go. Persuading investors to trust to foreign with their

money will be infinitely more difficult.

The foreign banks are venturing into an area where they are relatively inexperienced

because of the belief of that Indian investors will begin to look at mutual funds as an

alternative to bank deposit., almost as safe but with better returns and, in the case of

open-ended funds, nearly the same liquidity. they plan to take advantage of the already

existing network they have.


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3.1 Students work profile (Role and Responsibilities)

3.2 Key learning from training

1. Good communication skills

2. Learnt aggressive customers handling

3. Tactful dealing with customers

4. Conduct of work in a systematized & well planned manner

5. Development in over all personality

6. Confidence.

Goals and Outcomes of Training

Take advantage of growth opportunities

Improve efficiency

Better teamwork

A passionate workforce

A strong customer service focus


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4.1 Statement of research problem

Guaranteed / assumed is the main feature that has made mutual fund a popular mode of

investment. It has also because a topic of debate since the SEBI has questioned the

minimum return concept of MF's has given rise to advertisement galore where every fund

is trying to ensure certain minimum return and is not clearly mentioning the risks

involved.

MF's have also been questioned on basis of adequate inception disclosure, not publishing

their annual accounts etc, and consequently, lack of transparency of their transaction.

It has been reported that most of the share / units of mutual funds with certain inception

are not so regularly traded in stock exchanges. Also, the market making function is

virtually absent thus restricting the liquidity offered by these funds to an extent.

It has also been reported that the mutual funds are inverted in certain dubious deals. Since

mutual funds do not function independently of the commercial banks, which sponsor

them, the funds mobilized by them are often diverted to the sponsoring bank, which may

utilize them to suit their needs. It has also been found that mutual funds do not maintain

proper records of the innumerable transactions that they undertake in the stock and

money market. Custodial service being poor, records are after falsified or motivated or

motivated or incomplete.

Another factor which creates a problem while comparing the performance of various

mutual funds is calculation of the NAV. Different mutual funds currently follow different

policies for accounting of NAV and valuation of their investment portfolio. Such

differences in accounting and valuation procedures makes comparison of NAV's of

different funds difficult. Incidentally, divergences in valuation exist not only in respect of

unlisted securities but even in quoted Scripps. For instance, there is no uniformity in the


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market price, which is considered for the purpose of calculation whether it be the losing,

the opening or the mid-market price.

A few mutual funds value fully convertible debenture on basis of the market price of the

underlying shares, after discounting the dividend element from such price Unquote and

listed securities also pose another problem, being value at cost> however, there arises a

school of thought that if a scrip is infrequently traded due to any corrosion in the

profitability of the company then cost is not the right measure. In such cases therefore,

fund managers invite quotes from a few independent borrowers and arrive at an average

value.

In case of fixed income securities, mutual funds follow different valuation policies. Most

funds adopt either the current yield or yield to maturity value of comparable instruments.

The accrued interest is added back to this is most cases.

There are anomalies in dividend accounting as well. Some account for dividend on cash

basis, other on account basis.


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4.2: Statement of research objectives.

OBJECTIVE

the Primary objective of this project is to study the Mutual Funds in the Indian capital

market and to access customer needs and expectation.

SINGNIFICANCE OF MUTUAL FUNDS

Mutual funds act as an investment conduit between the ultimate savers (householders)

and the corporate sector. As non-banking financial intermediaries, they perform the

function of bringing together the saving and investment opportunities. Mutual fund pools

the savings of small and medium investors and invests in financial intermediaries,

opportunities. Mutual funds pool the savings of small and medium investors and invest

the funds in a fairly large and well diversified portfolio of sound in investment by

employing professional, qualified and well experienced investment consultants and fund

managers with the objective of minimizing investment risk by diversification and

maximizing returns/income on investments.

Mutual funds have become immensely popular mainly because they are perceived by the

investor as providing guaranteed returns with minimum of botheration to them, the

investors, particularly the small ones, my bot have the export knowledge required

carrying our portfolio analyze and management. Moreover, the investors would like to be

relived of the botheration of handling the immense paperwork involved in applying for

various issues and in receipt of refunds increases of non allotment, when issues are over-

subscribed. Thus a small investor has a preference for mutual funds because they may not

have the necessary expertise require to manage his portfolio of capital market securities,

prename a postpone top afford prevocational advice promise his risk by spreading his

funds over different industry groups due to limited resources. He may also not have


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access to the up to date information about developments taking place in the corporate

circle and the capital market. Most important of all, a big chunk of the Indian investor's

population is conservative, having a preference for safety and surety of returns and

convenience. Mutual funds not only cats to the above needs, they also ensure conformed

allotment in fundamentally strong companies, thus improving their own NAV and

providing better returns to their client.

4.3 Research design and methodology


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Data Collection

Primary Data


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5.1 Data Analysis

BIFURCATION ON THE BASIS OF OCCUPATION

Amount (Rs. % age

< 25000 20

25000 1,00,000 55

1,00,000 3,00,000 20

Above 3,00,000 5

Usual amount kept in Bank deposit/saving account 55% of the people keep 25000

1,00,000 as bank deposit, 20% keep < 25000 and 1,00,000 3,00,000 each and only 5%

keep above 3,00,000.

Profession

10%

Business

27%

Service

46%

Others

17%


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Conclusion

Most of the people keep 2a50000 1,00,000 as bank deposit/saving account.

USUAL AMOUNT KEPT IN BANK DEPOSIT/SAVING ACCOUNT

1. Approximate proportion of financial investment

Bus Service Prof. Others

Banks 5 30 15 40

Fixed Income Products (eg. GDs, NCDs,

Deb.)

10 35 30 45

Equity & Mutual Funds 30 20 25 5

Private (loan & Chit funds) 15 5 10 -

Others (Properties, bus, etc.) 40 10 20 10

Above 3,00,000

5%1,00,000-3,00,000

20%

25000 - 1,00,000

55%


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i) 40% of the business class prefer investing in others (properties, business etc.) and

only 5% invest in bank.

ii) 35% of the service class prefer investing in fixed income products and only 5% in

private (loan % chit funds).

iii) 30% of the profession class prefer investing in fixed income products and only

10% in private (loan and chit funds).

iv) 45% of the other class prefer investing in fixed income products and only 55 in

equity and mutual funds.

Conclusion

Most popular financial investment is fixed income products.

APPROXIMATE PROPORTION OF FINANCIAL INVESTMENT

0

5

10

15

20

25

30

35

40

45

50

Bnks Fixed Income quity Private Others

Bus Service Prof. Others


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INVESTMENT PLANNING FOR NEXT 3-6 MONTHS

Investment%age

Banks 20

PSU Bonds 5

FD 40

MF 15

Others

40% of the people plan to invest in FDs in next 3-6 months, 20% in Bank and others each

and only 5% in PSU bonds.

Conclusion

Most of the people prefer investing in FDs for the next 3-6 months

MF

15%

FD

40%PSU Bonds

5%

Banks

20%

Other

20%


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THE BEST FUNDS

Income Scheme Growth schemes Balanced Schemes

Indjyoti BBOI Double Sqr. Plus A SBI Magnum triple plus

UTI US-64BIO Double S qr. Plus B LIC Dhansahyog C

GIC Big Value Cum.UTI Master Share Canister CG Cantriple plus

Rise II Cumm.UTI Master Plus 91 Ind band Prakash Plan B


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COMPARISON WITH OTHER INVESTMENT OPTIONS

Parameter Bank DepositMonthly Income

schemes

Bonds Escorts

Income bond

Return 10-13% 14-15% 16% Target > 16%

Risk Low-however

only Rs.

30,000 is

insured

Low-Medium Low-but has

exposure to

one company

Low-

diversified

portfolio of

investment

area bounds &

debenture

Liquidity High Medium Low High-6

monthly buy

back

TDS TDS at

income Rs.

2,500

TDS at Income >

Rs. 10,000

TDS at

income > Rs.

2,500

TDS at

income Rs.

10,000

Low t ax

on

Capital

gains

No. No. No. Yes


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5.2 Summary of Findings

FINDINGS OF SURVEY

Sample size 150

Interested 125

2. Bifurcation on the basis of occupation

Occupation Interested %age

Business 35 27

Service 70 46

Profession 10 10

Others 20 17

Out of the interested people 46% belongs to service class; 27% to the business class and

only 10% to the profession class.

Conclusion

Service class is the most interested in the income bond.


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6.1 Summary of Learning Experience


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6.2 Conclusions and Recommendations

Mutual funds have not been doing well in the past two years due to falling stock prices

and various other reasons as mentioned earlier.

The capital market has been growing by leaps and bounds. This expansion will act as an

impediment to the small investors who either has the where with to play the market or the

knowledge to keep pace with the corporate information of thousands of companies. Their

mutual funds will form a favorable alternative.


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APPENDICES

QUESTIONNAIRE

1. Have you recently invested in (past 6 months 1 year)

Yes No If yes, Amount

IDBI Bonds

ICICI Bonds

UTI monthly income scheme

Other fixed income instrument

(e.g. Kotak Mahindra Deb PSU bonds)

2. What is the usual amount you keep in Bank Deposit/Saving Account?

lacs

3. Approximate proportion of financial investment (%) basis

Bank ..

Fixed income products ..

(eg. FDs, NCDs Deb)

Equity & Mutual funds ..

Private (loan, chitfund) ..

4. Usual Monthly investment surplus

100000 .


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5. Have you invested in

Yes No

Income Mutual fund.

Growth Mutual Find

If income Mutual fund,

Which Mutual fund i.. ii iii.

What return

6. Would you be interested in Bond/Income fund

# investing in Fixed Income Instruments

# Providing assured by back at 16% for first year + Early Bird Incentive equivalent

to 18%-19%.

# where fund manager fees will not be charged if 6% not achieved.

Yes . No

8. Do you have illiquid Debentures/Khokas Yes .. No .

Yes, which Debenture ______________________________________

9. Would you like to exchange these for our units Yes No

10. Where do you plan to invest in next 3-6 months

Bank

PSU Bonds

FD

MF Income Scheme


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MF Equity Schemes

PROFILE OF THE RESPONDENT

Name ___________________________________

Age ___________________________________

Sex ___________________________________

Address __________________________________

Tes No. __________________________________

Occupation

Business ..Service Pub . Pvt .Profession ..Other .

Monthly Household Income

>5000

50000 - 10000 10000 20000 20000 - 50000 >50000

Level of InterestQuiet invested

Somewhat Interested ...

Not at all Interested ..


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BIBLIOGRAPHY

1. Mutual funds - K.G. SachadevaM. Thiriralraju

3. Mastering Mutual funds - C. M. Kulshreshtha

4. Indian Economy - Misra - Puri

5. Nabhi's SEBI Guide Line

6. The Economic Times

7. Business Line.

bba training report

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