TABLE OF CONTENTS

Chapter No. Title Page No.

1. Introduction of Mutual Funds 8

2. Types of Mutual Funds 10

3. Scope & Importance 14

4. Objectives 17

5. Regulatory Aspects 18

6. Current Market Trend 22

7. Company’s Profile

(i) Overview 42

(ii) Product Profile 45

(iii) Objective of the study 60

(iv) Research Methodology 61

8. Limitations 63

9. Conclusion and Reccommendation 64

10. Frequently used terms 66

11. Questionnaire 70

12. Biblography 77

INTRODUCTION

MUTUAL FUNDS – CONCEPT, ORGANISATIONAL STRUCTURE

& ADVANTAGES & TYPES: -

Concept: -

A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus collected is

then invested in capital market instruments such as shares, debentures and

other securities. The income earned through these investments and the

capital appreciation realized are shared by its unit holders in proportion to

the number of units owned by them. Thus a Mutual Fund is the most

suitable investment for the common man as it offers an opportunity to

invest in a diversified, professionally managed basket of securities at a

relatively low cost.

The flow chart below describes broadly the working of a mutual

fund:

Mutual Fund Operation Flow Chart

Organisation of Mutual Funds:-

There are many entities involved and the diagram below illustrates

the organizational set up of a mutual fund:

Organization of a Mutual Fund

Advantages of Mutual Funds:-

The advantages of investing in a Mutual Fund are:

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

TYPES OF MUTUAL FUNDS

Wide variety of Mutual Fund Schemes exists to cater to the needs

such as financial position, risk tolerance and return expectations etc. The

figure below gives an overview into the existing types of schemes in the

Industry.

TYPES OF MUTUAL FUND SCHEMES

More abruptly, Mutual fund schemes may be explained as under:-

By Structure:

Open-ended Funds

An open-end fund is one that is available for subscription all

through the year. These do not have a fixed maturity. Investors can

By

Structure

By

Investment

Other Schemes

Open ended

Scheme

Close ended

SchemeInterval Scheme

Tax

Saving

Special Scheme

Growth Scheme

Income Scheme

Balanced Scheme

Money

Market

Index

Scheme

Sector

Specie

Sche

conveniently buy and sell units at Net Asset Value (‘‘NAV’’) related

prices. The key feature of open-end schemes is liquidity.

Closed-ended Funds

A Closed-end fund has a stipulated maturity period which generally

ranging from 3 to 15 years. The und is open for subscription only during a

specified period. Investors can invest in the scheme at the time of the initial

public issue and thereafter they can buy or sell the units of the scheme on

the stock exchanges where they are listed. In order to provide an exit route

to the investors, some close-ended funds give an option of selling back the

units to the Mutual Fund through periodic repurchase at NAV related

prices. SEBI Regulations stipulate that at least one of the two exit routes is

provided I investor.

Interval Funds

Interval funds combine the features of open-ended and close-ended

schemes. They are open for sale or redemption during pre-determined

intervals at NAV related prices.

By Investment Objective :

Growth Funds

The aim of growth funds is to provide capital appreciation over the

medium to long-term. Such schemes normally invest a majority of their

corpus in equities. It has been proven that returns from stocks, have

outperformed most other kind of investments helf over the long term.

Growth schemes are ideal for investors having a long-term outlook seeking

growth over a period of time.

Income Funds

The aim of income funds is to provide regular and steady income to

investors. Such schemes generally invest in fixed income securities such as

bonds, corporate debentures and government securities. Income Funds are

ideal for capital stability and regular income.

Balanced Funds

The aim of balanced funds is to provide both growth and regular

income. Such schemes periodically distribute a part of their earning and

invest both in equites and fixed income securities in the proportion

indicated in their offer documents. In a rising stock market, the NAV of

these schemes may not normally keep pace, or fall equally when the market

falls. These ar5e ideal for investors looking for a combination of income

and moderate growth.

Money Market Funds

The aim of money market funds is to provide easy liquidity,

preservation of capital and moderate income. These schemes generally

invest in safer short-term instruments such as treasury bills, certificates of

deposit commercial paper and inter-bank call money. Returns on these

schemes may fluctuate depending upon the interest rates prevailing in the

market. These are ideal for Corporate and individual investors as a means

to part their surplus funds for short periods.

Other Schemes :

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific

provisions of the Indian Income Tax laws as the government offers tax

incentives for investment in specified avenues.

Investments made in Equity Linked Savings Schemes (ELSS) and Pension

Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The

Act also provides opportunities to investors to save capital gains u/s 54EA

and 54EB by investing in Mutual Funds, Provided the capital asset has

been sold prior to April 1, 2000 and the amount is invested before

September 30, 2000.

Special Schemes

Industry Specific Schemes

Industry Specific Schemes invest only in the industries specified in

the offer document. The investment of these funds is limited to specific

industries like Info Tech, FMCG, Pharmaceuticals etc.

Index Schemes

Index funds attempts to replicate the performance of a particular

index number as the BSE Sensex or the NSE 50.

Sectoral Schemes

Sectoral funds are those which invest excusively in a specified

industry or group of industries or various segments such as ’A’

Group shares or initial public offering.

SCOPE & IMPORTANCE OF MUTUAL FUND

Return Potential

Over a medium to long-term, Mutual Funds have the potential to

provide a higher return as they invest in a diversified basket of selected

securities.

Low Costs

Mutual Funds are a relatively less expensive way to invest

compared to directly investing in the capital markets because the benefits

of scale in brokerage, custodial and other fees translate into lower costs for

investors.

Liquidity

In open-end schemes, the investor gets the money back promptly at

net asset value related prices from the Mutual Fund. In close-end schemes,

the units can be sold on a stock exchange at the prevailing market price or

the investor can avail of the facility of direct repurchase at NAV related

prices by the Mutual Fund.

Transparency

You get regular information on the value of your investment in

addition to disclosure on the specific investments made by your scheme,

the proportion invested in each class of assets and the fund manager’s

investment strategy and outlook.

Flexibility

Through features such as regular investment plans, regular

withdrawal plans and dividend reinvestment plans, you can systematically

invest or withdraw funds according to your needs and convenience.

Affordability

Investors individually may lack sufficient funds to invest in high-

grade stocks. A mutual fund because of its large corpus allows even a small

investor to take the benefit of its investment strategy.

Choice of Schemes

Mutual Funds offer a family of schemes to suit our varying needs

over a lifetime.

Well Regulated

All Mutual Funds are registered with SEBI and they function within

the provisions of strict regulations designed to protect the interests of

investors. The operations of Mutual Funds are regularly monitored by

SEBI.

Net Asset Value (NAV)

The net asset value of the fund is the cumulative market value of the assets

fund net of its liabilities. In other words, if the fund is dissolved or

liquidated, by selling off all the assets in the fund, this is the amount that

the shareholders would collectively own. This gives rise to the concept of

net asset value per unit, which is the value, represented by the ownership of

one unit in the fund. It is calculated simply by dividing the net asset value

of the fund by the number of units. However, most people refer loosely to

the NAV per unit as NAV, ignoring the ‘‘per unit’’. We also abide by the

same convention.

Note: - In order to understand the term NAV more accurately it is

important to learn it’s calculation which is explained as under: -

Calculation of NAV

The most important part of the calculation is the valuation of the

assets owned by the fund. Once it is calculated, the NAV is simply the net

value of assets divided by the number of units outstanding. The detailed

methodology for the calculation of the asset value is given below.

Asset value is equal to

Sum of market value of shares/debentures + Liquid assets/cash

held, if any + Dividends/interest accrued Amount due on unpaid assets

Expenses accrued but not paid.

Details on the above items

For liquid shares/debentures, valuation is done on the basis of the

last or closing market price on the principal exchange where the security is

traded.

For illiquid and unlisted and/or thinly traded shares/debentures, the

value has to be estimated. For shares, this could be the book value per

share or an estimated market price if suitable benchmarks are available. For

debentures and bonds, value is estimated on the basis of yields of

comparable liquid securities after adjusting for illiquidity. The value of

fixed interest bearing securities moves in a direction opposite to interest

rate changes Valuation of debentures and bonds is a big problem since

most of them are unlisted and thinly traded. This gives considerable leeway

to the AMCs on valuation and some of the AMCs are believed to take

advantage of this and adopt flexible valuation policies depending on the

situation.

Interest is payable on debentures/bonds on a periodic basis say

every 6 months. But, with every passing day, interest is said to be accrued,

at the daily interest rate, which is calculated by dividing the periodic

interest payment with the number of days in each period. Thus, accrued

interest on a particular day is equal to the daily interest rate multiplied by

the number of days since the last interest payment date.

Usually, dividends are proposed at the time of the Annual General

meeting and become due on the record date. There is a gap between the

dates on which it becomes due and the actual payment date. In the

intermediate period, it is deemed to be ‘‘accrued’’.

Expenses including management fees, custody charges etc. are calculated

on a daily basis.

OBJECTIVES

To define and maintain high professional and ethical standards in

all areas of operation of mutual fund industry.

To recommend and promote best business practices and code of

conduct to be followed by members and other engaged in the

activities of mutual fund and asset management including agencies

connected or involved in the field of capital markets and financial

services.

To interact with the Securities and Exchange Board of India (SEBI)

and to represent to SEBI on all matters concerning the mutual fund

industry.

To represent to the Government, Reserve Bank of India and other

bodies on all matters relating to the Mutual Fund Industry.

To develop a cadre of well-trained Agent distributors and to

implement a program of training and certification for all

intermediaries and others engaged in the industry.

To undertake nation wide investor awareness program so as to

promote proper understanding of the concept and working of

mutual funds.

To disseminate information on Mutual Fund Industry and to

undertake studies and Research directly and/or in association with

other bodies.

REGULATORY ASPECTS

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”.

The mutual fund and asset management company shall be liable to

refund the application money to the applicants,-

(i) If the mutual fund fails to receive the minimum subscription

amount referred to in clause (a) of sub-regulation (1);

(ii) If the moneys received from the applicants for units are in excess of

subscription as referred to in clause (b) of sub-regulation (1).

The asset management company shall issue to the applicant whose

application has been accepted, unit certificates or a statement of

accounts specifying the number of units allotted to the applicant as

soon as possible but not later than six weeks from the date of

closure of the initial subscription list and or from the date of receipt

of the request from the unit holders in any open ended scheme.

Rules Regarding Advertisement :

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 available to the investors.

General Obligations :

Every asset management company for each scheme shall keep and

maintain proper books of accounts, records and documents, for each

scheme so as to explain its transactions and to disclose at any point

of time the financial position of each scheme and in particular give

a true and fair view of the state of affairs of the fund and intimate to

the Board the place where such books of accounts, records and

documents are maintained.

The financial year for all the schemes shall end as of March 31 of

each year. Every mutual fund or the asset management company

shall prepare in respect of each financial year an annual report and

annual statement of accounts of the schemes and the fund as

specified in Eleventh Schedule.

Every mutual fund shall have the annual statement of accounts

audited by an auditor who is not in any way associated with the

auditor of the asset management company.

Procedure For Action In Case of Default :

On and from the date of the suspension of the certificate or the

approval, as the case may be, the mutual fund, trustees or asset

management company, shall cease to carry on any activity as a mutual

fund, trustee or asset management company, during the period of

suspension, and shall be subject to the directions of the Board with regard

to any records, documents, or securities that may be in its custody or

control, relating to its activities as mutual fund, trustees or asset

management company.

Restrictions On Investments:

A mutual fund scheme shall not invest more than 15% of its NAV

in debt instruments 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 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 per

cent 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.

A scheme may invest in another scheme under the same asset

management company or any other mutual fund without charging

any fees, provided that aggregate interscheme investment made by

all schemes under the same management or in schemes under the

management of any other asset management company shall not

exceed 5% of the net asset value of the mutual fund.

The initial issue expenses in respect of any scheme may not exceed

six per cent of the funds raised under that scheme.

Every mutual fund shall buy and sell securities on the basis of

deliveries and shall in all cases of purchases, take delivery of

relative securities and in all cases of sale, deliver in the securities

and shall in no case put itself in a position whereby it has to make

short sale or carry forward transaction or engage in badla finance.

Every mutual fund shall, get the securities purchased or transferred

in the name of the mutual fund on account of the concerned

scheme, wherever investments are intended to be of long-term

nature.

Pending deployment of funds of a scheme in securities in terms of

investments objectives of the scheme a mutual fund can invest the

funds of the scheme in short term deposits of scheduled commercial

banks.

No mutual fund scheme shall make any investment in;

i. Any unlisted security of an associate or group company of

the sponsor, or

ii. Any security issued by way of private placement by an

associate or group company of the sponsor; or

The listed securities of group companies of the sponsor which is in

excess of 30% of the net assets [of all the schemes of a mutual fund]

No mutual fund scheme shall invest more than 10 per cent of its

NAV in the equity shares or equity related instruments of any

company. Provided that, the limit of 10 per cent shall not be

applicable for investments in index fund or sector or industry

specific scheme.

A mutual fund scheme shall not invest more than 5% of its NAV in

the equity shares or equity related investments in case of open-

ended scheme and 10% of its NAV in case of close-ended scheme.

CURRENT MARKET TREND OF MUTUAL FUNDS

IN KARVY

Hold Kingfisher Airlines, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can hold

Kingfisher Airlines.

Buy Axis Bank on declines: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can buy

Axis Bank on declines.

Nifty has support at 27502700: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, the

indices may find support around 90008700/27502700 levels for the day.

See crude at $68/bbl if OPEC cuts output: Karvy Comtrade

Harish G of Karvy Comtrade feels if OPEC decides on a second round of

production cuts the supplydemand difference would tighten and prices

should move up towards USD 68 per barrel.

Buy Everest Kanto, target of Rs 310: Karvy

Karvy Stock Broking has maintained its buy rating on Everest Kanto

Cylinder (EKC) with a target of Rs 310. EKC reported net profit of Rs 432

million as against Rs 284 million reported during 2QFY08.

Buy Shree Cements, target of Rs 653: Karvy

Karvy Stock Broking has recommended a buy rating on Shree Cements

with a target of Rs 653. The company has reported adj. Net profit of Rs

1.07 billion.

Buy Oriental Bank, target of Rs 224: Karvy

Karvy Stock Broking has maintained its buy rating on Oriental Bank of

Commerce (OBC) with a target of Rs 224. In 2QFY09, Oriental Bank of

Commerce reported NII growth of 31% (Y/Y) to Rs 5.2 billion.

Difficult time for mkts, stay away: Experts

Sudarshan Sukhani, Technical Trends said this is an extreme on the

downside and should not be sold into. Ambareesh Baliga of Karvy Stock

Broking said this is not the time to look at the markets or invest in these

markets because we don’t know as to where the bottom is.

Cinemax India an outperformer: Karvy

Karvy Stock Broking has downgraded its rating on Cinemax India from

buy to outperformer with a target of Rs 61. Cinemax is expected to show a

topline growth of 44% YoY and 34% QoQ. The YoY growth will be

primarily on the back of 8 new properties with 23 screens, which have been

launched since 2Q FY08.

Baliga bullish on IT stock for long term

Ambareesh Baliga of Karvy Stock Broking is bullish on IT stocks with

long term perspective.

Buy PNB, target of Rs 627: Karvy

Karvy Stock Broking has recommended a buy rating on Punjab National

Bank (PNB) with a target of Rs 627. During 2QFY09, the research firm

expects the bank would its deposit and advances by 19.5% and 20% (Y/Y)

respectively.

SBI a market performer: Karvy

Karvy Stock Broking has recommended a market performer rating on State

Bank of India (SBI) with a target of Rs 1559. In 2QFY09, the research firm

expects for State Bank (Standalone) to report total business to grow by

around 27.5% (Y/Y) on the back of 25.5% growth in deposits and 30% in

advances.

Buy Patel Engg, target of Rs 366: Karvy

Karvy Stock Broking has recommended a buy rating on Patel Engineering

Company (PEL) with a target of Rs 366. PEL’s business is diversified into

nature; the research firm has valued the company on SOTP valuation

method.

Buy Dishman Pharma, target of Rs 310: Karvy

Karvy Stock Broking has upgraded its rating on Dishman Pharmaceuticals

Chemicals to buy with a target of Rs 310. The research firm expects

revenues and earnings to grow at a CAGR of 31.4% and 27% from FY08

to FY10E driven primarily from the high margin CRAMS segment.

Buy HDFC Bank, target of Rs 1435: Karvy

Karvy Stock Broking has recommended a buy rating on HDFC Bank with

a target of Rs 1435. In FY200810, we expect that the bank\’s total

business, NII and net profit would grow by 32%, 34% and 31.3% CAGR

respectively.

Buy Petronet LNG, target of Rs 63: Karvy

Karvy Stock Broking has changed its rating on Petronet LNG from market

performer to buy with a target of Rs 63. For FY09, the research firm

expects the revenue growth of 9.8% to Rs 71,948 million and adjusted

profit to rise by 11.9% to Rs 5,309 million.

Buy Unichem Labs, target of Rs 240: Karvy

Karvy Stock Broking has maintained its buy rating on Unichem

Laboratories with a target of Rs 240. Net revenues for the quarter is

expected to grow by 18% to Rs 1,771 million on the back of 15 % growth

in domestic formulations business to Rs 1357 million.

Buy Aventis Pharma, target of Rs 1000: Karvy

Karvy Stock Broking has maintained its buy rating on Aventis Pharma with

a target of Rs 1000. Net revenues for the quarter are expected to be higher

by 8 % to Rs 2.44 billion.

Buy Jubilant Organosys, target of Rs 300: Karvy

Karvy Stock Broking has recommended a buy rating on Jubilant Organosys

with a target of Rs 300. The research firm expects 37% CAGR growth in

net revenues from Rs 24.9 billion in FY08 to Rs 46.8 billion in FY10E.

HCL Technologies an underperformer: Karvy

Karvy Stock Broking has recommended an underperformer rating on HCL

Technologies with a target of Rs 160. HCL Tech for Q1FY09 is likely to

report a sequential revenue growth of 6.5% (to Rs 23.09 billion), with

rupee aiding the growth to the tune of 6%, and we expect the volume

growth to improve by a meek 0.5%.

Buy Satyam, target of Rs 350: Karvy

Karvy Stock has upgraded its rating on Satyam Computer Services from

outperformer to buy with a target of Rs 350. The research firm expects

Satyam to report a sequential revenue growth of 10.3%.

Nifty has support at 3450: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, supports

for the day are placed at the 1135011050/35003450 levels, while,

resistances for the day are placed at the 11700/3650 levels.

Buy TCS, target of Rs 950: Karvy

Karvy Stock Broking has recommended a buy rating on Tata Consultancy

Services (TCS) with a target of Rs 950. The research firm expects TCS to

report a sequential revenue growth of 8.5% in Q2FY09.

Buy Cairn India, target of Rs 287: Karvy

Karvy Stock Broking has upgraded its rating on Cairn India (CIL) from

outperformer to buy with a target of Rs 287. The research firm believes

that the market has become overly negative on CIL due to the recent fall in

crude oil price in dollar terms.

Expect weak opening: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, Domestic

markets are likely to open on a weak note following negative global cues.

Cement sector an underperformer: Karvy

Karvy Stock Broking has maintained its underperformer rating on Cement

Sector. Expected marginal increase in cement price and easing of cost

pressure coupled with attractive valuation would provide the short term

bounce back in cement stocks.

Sensex has support at 1180011350: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, supports

for the day are placed at the 1180011350/36503580 levels, while,

resistances for the day are placed at the 12000/3800 levels.

Buy Infy, Wipro, TCS: Karvy Stock Broking

R Ravi, Karvy Stock Broking maintains a buy on TierI IT stocks but is

underweight on TierII companies. According to him, Infosys, Wipro and

TCS are good opportunities to get into because valuations look very

attractive.

See Nifty trading in 40004400 range: Karvy Stock Broking

Ambarish Baliga of Karvy Stock Broking said there is no trend in the

market and that sentiment is badly affected. “Participation is extremely low

and no trigger is lasting long enough.” He sees Nifty trading rangebound

between 4,000 and 4,400.

Expect flat opening: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, Global

indices are trading on a mixed note. Our indices are expected to open on a

flat note and lower supports may witness short covering.

EID Parry a market performer: Karvy

Karvy Stock Broking has recommended a market performer rating on EID

Parry (India) with a target of Rs 245 in its September 22, 2008 research

report.

Balrampur Chini Mills an underperformer: Karvy

Karvy Stock Broking has recommended an underperformer rating on

Balrampur Chini Mills with a target of Rs 68 in its September 22, 2008

research report.

Exit Hindalco on upside: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one should

use higher level to exit from Hindalco Industries.

Dishman Pharma an outperformer: Karvy

Karvy Stock Broking has downgraded its rating on Dishman

Pharmaceuticals Chemicals from buy to outperformer with a target of Rs

380. The research firm expects revenues and earnings to grow at a CAGR

of 31.4% and 27% from FY08 to FY10E driven primarily from the high

margin CRAMS segment.

Hexaware Technologies an underperformer: Karvy

Karvy Stock Broking has recommended an underperformer rating on

Hexaware Technologies with a target of Rs 35. At the end of CY07, the

debtors which were above 6 months were Rs 195 million (8.5% of total

debtors), of which the company has provided for Rs 128 million, which

works to 66% of the long debtors.

Buy SpiceJet, target of Rs 33: Karvy

Karvy Stock Broking has maintained its buy rating on SpiceJet with a

target of Rs 33. The research firm expects SpiceJet to report full year seat

factor of 65.3%.

Nifty has support at 4150: Karvy

According to Karvy Stock Broking\’s Weekly Technical Analysis report,

Domestic markets are likely to find support at the 13700/4150 levels after

the heavy sell off witnessed last week.

Jubilant Organosys a market performer: Karvy

Karvy Stock Broking has downgraded its rating on Jubilant Organosys

from outperformer to market performer with a target of Rs 380. The

research firm maintains their net revenue estimates at Rs 37.19 billion in

FY09 and Rs 46.8 billion in FY10E with strong growth propelling the

CRAMS and DDDS segments coupled with good growth from IPP

business.

Sell Sterlite Industries: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can sell

Sterlite Industries. But one can hold on to Madras Aluminium and not

actually buy it at this point of time, he added.

Sell Sesa Goa, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can sell

Sesa Goaat this level.

Sensex has support at 14600: Karvy

According to Karvy Stock Broking Technical Analysis report, supports for

the day are placed at the 14600/4370 levels.

Buy Puravankara Projects,target of Rs 302: Karvy

Karvy Stock Broking has maintained its buy rating on Puravankara

Projects with a target price of Rs 302. The research firm believes that, with

low leveraged balance sheet and inhouse construction activities,

Puravankara stands to benefit in the long run.

Sensex has support at 14750: Karvy

According to Karvy Stock BrokingTechnical Analysis report, resistances

are placed at the 15100/4525 levels while supports for the day are placed at

the 14750/4420 levels.

Mkts overreacting to nuke deal: Karvy Stk Broking

Hemindra Hazari of Karvy Stock Broking feels the market’s attention has

now been focused on capital goods stocks. However, Hazari feels the

market is overreacting at the moment and he does not see anything

happening in the immediate future; even in the nuclear power space.

Buy Cairn India, target of Rs 287: Karvy

Karvy Stock Broking has recommended a buy rating on Cairn India with a

target of Rs 287. The research firm believes that Cairn India Limited (CIL)

stock is attractively priced and offers upside as crude oil price continues to

remain high.

Nifty has resistance at 4450: Karvy

According to Karvy Stock Broking Technical Analysis report, most world

markets have ended in the green suggesting resistances to watch out for in

our markets are 14750/4450 levels.

Buy Godawari Power, target Rs 260: Karvy

Karvy Stock Broking has recommended a buy rating on Godawari Power

Ispat (GPIL) with a 12month target price of Rs 260. The research firm

expects net profit to record a CAGR of 31% on net sales CAGR of 37%

over the next three years (FY0810E).

A Mittal bullish on sugar space

Ashok Mittal of Karvy Comtrade is bullish on sugar space.

SpiceJet a marketperformer: Karvy Stock Broking

Karvy Stock Broking has maintained its market performer rating on

SpiceJet with a target price of Rs 33. During 1QFY09, SpiceJet reported

net losses of Rs 1292 million as against our estimate of Rs 778 million.

Crude prices to bounce back in Oct: Experts

Ashok Mittal of Karvy Comtrade feels that the crude undertone is bearish.

But he sees support at USD 100 per barrel levels. Kishore Narne,

VicePresident of Anand Rathi Commodities expects crude to bounce in

nearterm on short covering. He sees doubledigit figures for crude over the

next quarter.

Nifty has support at 4440: Karvy

According to Karvy Stock Broking Technical Analysis report, 14800/4440

levels are supports for the day while 15100/4545 will serve as resistance

points.

Nifty may go up to 46004650 levels: Karvy Stock Broking

Ambareesh Baliga of Karvy Stock Broking feels that the market will move

up from 4500 levels in two weeks or so. The Nifty will consolidate from

this range and it can go upto 46004650 to may be 4850 levels.

Buy Kalpataru Power; Tgt Rs 1030: Karvy

Karvy Stock Broking has recommended a buy rating on Kalpataru Power

with a target of Rs 1030 in its report on 1st September, 2008.

Buy Lupin; tgt Rs 930: Karvy Stock Broking

Karvy Stock Broking has recommended buy rating on Lupin, with price

target of Rs 930, in its report dated September 2, 2008.

Stay with Punj Lloyd: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can stay

invested in Punj Lloyd. Over the next eightnine months we should see

levels of closer to Rs 373380 because clearly the order book position is

extremely good and the fixed price contract in that order book is just about

10%.

Exit Moser Baer, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can exit

Moser Baer. The optical media, which was the main business of the

company earlier is not doing well in fact they are suffering losses there and

at the same time the new business of photo voltaic sales is yet to takeoff

and show performance.

Hold Firstsource Solutions, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can hold

Firstsource Solutions for possibly the next twothree weeks by which one

should see levels of Rs 4850.

SBI can test Rs 16001650: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that SBI can test

Rs16001650. If one sees level closer to around Rs 1,2501,275, should be

utilize to average out and possibly over the next sixseven months one

should be able to get out of this stock at Rs 1,6001,650.

Buy Opto Circuits, target of Rs 531: Karvy

Karvy Stock Broking has maintained its buy rating on Opto Circuits India

with a target price of Rs 531. Opto Circuits is planning to raise fund of Rs

10 billion for future expansion, joint ventures, acquisition, research

development and other purposes.

Nifty has resistance at 43004350: Karvy

According to Karvy Stock Broking Technical Analysis report, Resistances

post yesterday’s sell off are placed at the 1430014350/43004350 levels

STRUCTURE OF 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 funds/schemes in all categories ie

equity, balanced income etc with some being 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

200 bn. UTI was floated by financial institutions and is governed by a

special act of Parliament. Most of its investors believe that the UTI is

government owned and controlled, which, while legally incorrect, is true

for all practical purposes.

The second largest category of mutual funds are the ones floated by

nationalized banks. Canbank Asset Management floated by Canara Bank

and SBI Funds Management floated by the State Bank of India are the

largest of these. GIC AMC floated by General Insurance Corporation and

Jeevan Bima Sahayog AMC floated by the LIC are some of the other

prominent ones. The aggregate corpus of funds managed by this category

of AMCs is about Rs 150 bn.

The third largest category of mutual funds is the ones floated by the private

sector and by foreign asset management companies. The largest of these

are Prudential ICICI AMC and Birla Sun Life AMC>The aggregate corpus

of assets managed by this category of AMCs is in excess of Rs 250 bn.

Some of the AMCs operating currently are :

Name of the AMC Nature of

ownership

Alliance Capital Asset management (I) Private Limited Private foreign

Birla Sun Life Asset Management Company Limited Private Indian

Mank of Baroda Asset management Company Limited Banks

Bank of India Asset Management Company Limited Banks

Canbank Investment Management Servies Limited Banks

Cholamanadalam Cazenove Asset Management Company Private foreign

Limited

Dundee Asset Management Company Limited Private foreign

DSP Merrill Lynch Asset Management Company Limited Private foreign

Escorts Asset Management Limited Private Indian

First India Asset Management Limited Private Indian

GIC Asset Management Company Limited Institutions

IDBI Investment Management Company Limited Institutions

Indfund Management Limited Banks

ING Investment Asset Management Company Private Private foreign

limited

JM Capital Management Limited Private Indian

Jardine Fleming (I) Asset Management Limited Private foreign

Kotak Mahindra Asset Management company Limited Private Indian

Jeevan Bima Sahayog Asset Management Company Institutions

Limited

Morgan Stanley Asset Management Company Private Private foreign

Limited

Punjab National Bank Asset Management Company Banks

Limited

Reliance Capital Asset Management Company Limited Private Indian

State Bank of India Funds Management Limited Banks

Shriram Asset Management company Limited Private

Indian

Sun F and C Asset Management (I) Private Limited Private

foreign

Sundaram Newton Asset Management Company Limited Private

foreign

Tata Asset Management Company Limited Private

Indian

Credit Capital Asset Management Company Limited Private

Indian

Templeton Asset Management (India) Private Limited Private

foreign

Unit Trust of India Institutions

Zurich Asset management Company (I) Limited Private

foreign

Global Scenario

Some basic facts:

The money market mutual fund segment has a total corpus of $ 1.48

trillion in the U.S. against a corpus of $ 100 million in India.

Out of the top 10 mutual funds worldwide, eight are bank-

sponsored. Only Fidelity and Capital are non-bank mutual funds in

this group.

In the U.S. the total number of schemes is higher than that of the

listed companies while in India we have just 277 schemes

Internationally, mutual funds are allowed to go short. In India fund

managers do not have such leeway.

In the U.S. about 9.7 million households will manage their assets

on-line by the year 2003, such a facility is not yet of avail in India.

On- line trading is a great idea to reduce management expenses

from the current 2 % of total assets to about 0.75 % of the total

assets.

72% of the core customer base of mutual funds in the top 50-

broking firms in the U.S. are expected to trade on-line by 2003.    

(Source: The Financial Express September, 99)

Internationally, on-line investing continues its meteoric rise. Many have

debated about the success of e- commerce and its breakthroughs, but it is

true that this aspect of technology could and will change the way financial

sectors function. However, mutual funds cannot be left far behind. They

have realized the potential of the Internet and are equipping themselves to

perform better.

In fact in advanced countries like the U.S.A, mutual funds buy- sell

transactions have already begun on the Net, while in India the Net is used

as a source of Information.

Such changes could facilitate easy access, lower intermediation costs and

better services for all. A research agency that specializes in internet

technology estimates that over the next four years Mutual Fund Assets

traded on- line will grow ten folds from $ 128 billion to $ 1,227 billion ;

whereas equity assets traded on-line will increase during the period from $

246 billion to $ 1,561 billion. This will increase the share of mutual funds

from 34% to 40% during the period.

(Source: The Financial Express September ,99)

Such increases in volumes are expected to bring about large changes in the

way Mutual Funds conduct their business.

Here are some of the basic changes that have taken place since the advent

of the Net.

Lower Costs: Distribution of funds will fall in the online trading

regime by 2003 . Mutual funds could bring down their

administrative costs to 0.75% if trading is done on- line. As per

SEBI regulations , bond funds can charge a maximum of 2.25% and

equity funds can charge 2.5% as administrative fees. Therefore if

the administrative costs are low , the benefits are passed down and

hence Mutual Funds are able to attract mire investors and increase

their asset base.

Better advice: Mutual funds could provide better advice to their

investors through the Net rather than through the traditional

investment routes where there is an additional channel to deal with

the Brokers. Direct dealing with the fund could help the investor

with their financial planning.

In India , brokers could get more Net savvy than investors and

could help the investors with the knowledge through get from the

Net.

New investors would prefer online : Mutual funds can target

investors who are young individuals and who are Net savvy, since

servicing them would be easier on the Net.

India has around 1.6 million net users who are prime target for

these funds and this could just be the beginning. The Internet users

are going to increase dramatically and mutual funds are going to be

the best beneficiary. With smaller administrative costs more funds

would be mobilized .A fund manager must be ready to tackle the

volatility and will have to maintain sufficient amount of

investments which are high liquidity and low yielding investments

to honor redemption.

Net based advertisements: There will be more sites involved in ads

and promotion of mutual funds. In the U.S. sites like AOL offer

detailed research and financial details about the functioning of

different funds and their performance statistics. A is witnessing a

genesis in this area. 

Future Scenario

The asset base will continue to grow at an annual rate of about 30 to 35 %

over the next few years as investor’s shift their assets from banks and other

traditional avenues. Some of the older public and private sector players will

either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with

stronger players in three to four years. In the private sector this trend has

already started with two mergers and one takeover. Here too some of them

will down their shutters in the near future to come.

But this does not mean there is no room for other players. The market will

witness a flurry of new players entering the arena. There will be a large

number of offers from various asset management companies in the time to

come. Some big names like Fidelity, Principal, Old Mutual etc. are looking

at Indian market seriously. One important reason for it is that most major

players already have presence here and hence these big names would

hardly like to get left behind.

In the U.S. most mutual funds concentrate only on financial funds like

equity and debt. Some like real estate funds and commodity funds also take

an exposure to physical assets. The latter type of funds are preferred by

corporate’s who want to hedge their exposure to the commodities they deal

with.

For instance, a cable manufacturer who needs 100 tons of Copper in the

month of January could buy an equivalent amount of copper by investing

in a copper fund. For Example, Permanent Portfolio Fund, a conservative

U.S. based fund invests a fixed percentage of it’s corpus in Gold, Silver,

Swiss francs, specific stocks on various bourses around the world, short –

term and long-term U.S. treasuries etc.

In U.S.A. apart from bullion funds there are copper funds, precious metal

funds and real estate funds (investing in real estate and other related assets

as well.).In India, the Canada based Dundee mutual fund is planning to

launch a gold and a real estate fund before the year-end.

In developed countries like the U.S.A there are funds to satisfy

everybody’s requirement, but in India only the tip of the iceberg has been

explored. In the near future India too will concentrate on financial as well

as physical funds.

The mutual fund industry is awaiting the introduction of DERIVATIVES

in the country as this would enable it to hedge its risk and this in turn

would be reflected in it’s Net Asset Value (NAV).

SEBI is working out the norms for enabling the existing mutual fund

schemes to trade in Derivatives. Importantly, many market players have

called on the Regulator to initiate the process immediately, so that the

mutual funds can implement the changes that are required to trade in

Derivatives.

COMPANY PROFILE

Overview: -

KARVY, is a premier integrated financial services provider, and

ranked among the top five in the country in all its business segments,

services over 16 million individual investors in various capacities, and

provides investor services to over 300 corporates, comprising Corporate

India. KARVY covers the entire spectrum of financial services such as

Stock broking, Depository Participants, Distribution of financial products –

mutual funds, bonds, fixed deposit, equities, Insurance Broking,

Commodities Broking, Personal Finance Advisory Services, Merchant

Banking & Corporate Finance, placement of equity, IPOs, among others.

Karvy has a professional management team and ranks among the best in

technology, operations and research of various industrial segments.

Karvy – Early Days:

The birth of Karvy was on a modest scale in 1981. It began with the

vision and enterprise of a small group of practicing Chartered Accountants

who founded the flagship company, Karvy Consultants Limited. They

started with consulting and financial accounting automation, and carved

inroads into the field of registry and share accounting by 1985. Since then,

they have utilized their experience and superlative expertise to go from

strength to strength…to better their services, to provide new ones, to

innovate, diversify and in the process, evolved Karvy as one of India’s

premier integrated financial service enterprise.

Thus over the last 20 years Karvy has traveled the success route,

towards building a reputation as an integrated financial services provider,

offering a wide spectrum of services. And it has made this journey by

taking the route of quality service, path-breaking innovations in service,

versatility in service and finally…totality in service.

Highly qualified manpower, cutting-edge technology,

comprehensive infrastructure and total customer-focus has secured the

position of an emerging financial services giant enjoying the confidence

and support of an enviable clientele across diverse fields in the financial

world.

Its values and vision of attaining total competence in its servicing

has served as the building block for creating a great financial enterprise.

The Karvy Credo:-

Its Clients & Its Focus:-

Clients are the reason.

Personalized service, professional care, pro-activeness are the

values that help to nurture enduring relationships with the clients.

Respect for the individual:-

Each and every individual is an essential building block of the

organization.

Karvy Group is the kiln that hones individuals to perfection.

Be they are employees, shareholders or investors. It do so by

upholding their dignity & pride, inculcating trust and achieving a

sensitive balance of their professional and personal lives.

Teamwork:-

None of us is more important than all of us.

Each team member is the face of Karvy. Together we offer

diverse services with speed, accuracy and quality to deliver only

one product: excellence. Transparency, co-operation, invaluable

individual contributions for a collective goal, and respecting

individual uniqueness within a corporate whole, is how we deliver

again and again.

Responsible Citizenship:-

A social balance sheet is as rewarding as a business one.

As a responsible corporate citizen, our duty is to foster a better

environment in the society where we live and work. Abiding by its

norms, and behaving responsibly towards the environment, is some

of our growing initiatives towards realizing it.

Integrity:-

Everything else is secondary.

Professional and personal ethics are our bedrock. It take pride

in an environment that encourages honesty and the opportunity to

learn from failures than camouflage them. It insists on consistency

between works and actions.

Milestones: -

Product Profile :-

Karvy Consultants Limited: -

As the flagship company of the Karvy Group, Karvy Consultants

Limited has always remained at the helm of organizational affairs,

pioneering business policies, work ethic and channels of progress.

Having emerged as a leader in the registry business, the first of the

businesses that have now transferred into a joint venture with Computer

share Limited of Australia, the world’s largest registrar. With the advent of

depositories in the Indian capital market and the relationships that have

created in the registry business. Karvy was one of the early entrants

registered as Depository Participant with NSDL (National Securities

Depository Limited), the first Depository in the country and then with

CDSL (Central Depository Services Limited). Today, it service over 6

lakhs customer accounts in this business, spread across over 250

cities/towns in India and are ranked amongst the largest Depository

Participants in the country. With a growing secondary market presence,

this business of Karvy was then decided to transferred into Karvy Stock

Broking Limited (KSBL), our associate and a member of NSE, BSE and

HSE.

IT enabled services:-

Technology Services division forms the ideal platform to unleash

our technology initiatives and make our presence felt on the Internet. Past

achievements include many quality websites designed, developed and

deployed. Karvy Group also possesses own web hosting facilities with

dedicated bandwidth and a state-of-the-art server farm (data center) with

services functioning on a variety of operating platforms such as Windows,

Solaris, Linux and Unix.

The corporate website of the company, “www.karvy.com”, gives

access to in-depth information on financial matters including Mutual

Funds, IPOs, Fixed Income Schemes, Insurance, Stock Market and much

more. A link called ‘Resource Center’, devoted solely to research

conducted by the team of experts on various financial aspects like ‘Sector

Research’, deals exclusively with in-depth analysis of the key sectors of the

Indian economy. Besides, a host of other links like ‘My Portfolio’ which

acts as a personalized and customized financial measure, makes this site

extremely informative about investment options, market trends, news as

also about the company and each of the services offered here.

Karvy Stock Broking Limited: -

Member - National Stock Exchange (NSE), The Bombay Stock

Exchange (BSE), and The Hyderabad Stock Exchange (HSE).

Karvy Stock Broking Limited, one of the cornerstones of the

Karvy edifice, flows freely towards attaining diverse goals of the customer

through varied services. Creating a plethora of opportunities for the

customer by opening up investment vistas backed by research-based

advisory services. Here, growth knows no limits and success recognizes no

boundaries. Helping the customer create waves in his portfolio and

empowering the investor completely is the ultimate goal.

Stock Broking Services:-

It is an undisputed fact that the stock market is unpredictable and

yet enjoys a high success rate as a wealth management and wealth

accumulation option. The difference between unpredictability and a safety

anchor in the market is provided by in-depth knowledge of market

functioning and changing trends, planning with foresight and choosing

one’s options with care. This is what we provide in our Stock Broking

services.

We offer services that are beyond just a medium for buying and

selling stocks and shares. Instead we provide services, which are multi

dimensional and multi-focused in their scope. There are several advantages

in utilizing our Stock Broking services, which are the reasons why it is one

of the best in the country.

We offer trading on a vast platform – National Stock Exchange,

Bombay Stock Exchange and Hyderabad Stock Exchange. More

importantly, we make trading safe to the maximum possible extent, by

accounting for several risk factors and planning accordingly. We are

assisted in this task by our in-depth research, constant feedback and sound

advisory facilities. Our highly skilled research team, comprising of

technical analysts as well as fundamental specialists, secure result-oriented

information on market trends, market analysis and market predictions. This

crucial information is given as a constant feedback to our customers,

through daily reports delivered thrice daily – The Pre-session Report,

where market scenario for the day is predicted, The Mid-session Report,

timed to arrive during lunch break , where the market forecast for the rest

of the day is given and The Post-session Report, the final report for the

day, where the market and the report itself is reviewed. To add to this

repository of information, we publish a monthly magazine “Karvy – The

Finapolis”, which analyzes the latest stock market trends and takes a close

look at the various investment options, and products available in the

market, while a weekly report, called “ Karvy Bazaar Baatein”, keeps you

more informed on the immediate trends in the stock market. In addition,

our specific industry reports give comprehensive information on various

industries. Besides this, we also offer special portfolio analysis packages

that provide daily technical advice on scripts for successful portfolio

management and provide customized advisory services to help you make

the right financial moves that are specifically suited to your portfolio.

Our Stock Broking services are widely networked across India,

with the number of our trading terminals providing retail stock broking

facilities. Our services have increasingly offered customer oriented

convenience, which we provide to a spectrum of investors, high-net worth

or otherwise, with equal dedication and competence.

But true to our spirit, this success is not our final destination, but

just a platform to launch further enhanced quality services to provide you

the latest in convenient, customer-friendly stock management.

Over the years we have ensured that the trust of our customers is

our biggest returns. Factors such as our success in the Electronic custody

business has helped build on our tradition of trust even more.

Consequentially our retail client base expanded very fast.

To empower the investor further we have made serious efforts to

ensure that our research calls are disseminated systematically to all our

stock broking clients through various delivery channels like email, chat,

SMS, phone calls etc.

Our foray into commodities broking has been path breaking and we

are in the process of converting existing traders in commodities into the

more organized mainstream of trading in commodity futures, both as a

trading and risk hedging mechanism.

In the future, our focus will be on the emerging businesses and to

meet this objective, we have enhanced our manpower and revitalized our

knowledge base with enhances focus on Futures and Options as well as the

commodities business.

Depository Participants:-

The onset of the technology revolution in financial services

Industry saw the emergence of Karvy as an electronic custodian registered

with National Securities Depository Ltd (NSDL) and Central Securities

Depository Ltd (CSDL) in 1998. Karvy set standards enabling further

comfort to the investor by promoting paperless trading across the country

and emerged as the top 3 Depository Participants in the country in terms

of customer serviced.

Offering a wide trading platform with a dual membership at both

NSDL and CDSL, we are a powerful medium for trading and settlement of

dematerialized shares. We have established live DPMs, Internet access to

accounts and an easier transaction process in order to offer more

convenience to individual and corporate investors. A team of professional

and the latest technological expertise allocated exclusively to our demat

division including technological enhancements like SPEED-e, make our

response time quick and our delivery impeccable. A wide national network

makes our efficiencies accessible to all.

www.karvydp.com

Distribution of Financial Products:-

The paradigm shift from pure selling to knowledge based selling

drives the business today. With our wide portfolio offerings, we occupy all

segments in the retail financial services industry.

A 1600 team of highly qualified and dedicated professionals drawn

from the best of academic and professional backgrounds are committed to

maintaining high levels of client service delivery. This has propelled us to a

position among the top distributors for equity and debt issues with an

estimated market share of 15% in terms of applications mobilized, besides

being established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets

we enhanced the scope of our retail brand, Karvy – The Finapolis , thereby

providing planning and advisory services to the mass affluent. Here we

understand the customer needs and lifestyle in the context of present

earnings and provide adequate advisory services that will necessarily help

in creating wealth. Judicious planning that is customized to meet the future

needs of the customer deliver a service that is exemplary. The market-

savvy and the ignorant investors, both find this service very satisfactory.

The edge that we have over competition is our portfolio of offerings and

our professional expertise. The investment planning for each customer is

done with an unbiased attitude so that the service is truly customized.

Our monthly magazine, Finapolis, provides up-dated market

information on market trends, investment options, opinions etc. Thus

empowering the investor to base every financial move on rational thought

and prudent analysis and embark on the path to wealth creation.

http://mfportfolio.karvy.com

Advisory Services

Under our retail brand ‘Karvy – The Finapolis’, we deliver advisory

services to a cross-section of customers. The service is backed by a team of

dedicated and expert professionals with varied experience and background

in handling investment portfolios. They are continually engaged in

designing the right investment portfolio for each customer according to

individual needs and budget considerations with a comprehensive support

system that focuses on trading customers' portfolios and providing valuable

inputs, monitoring and managing the portfolio through varied technological

initiatives. This is made possible by the expertise we have gained in the

business over the years. Another venture towards being investor-friendly is

the circulation of a monthly magazine called ‘Karvy - the Finapolis'.

Covering the latest of market news, trends, investment schemes and

research-based opinions from experts in various financial fields. www.the-

finapolis.com

Research: -

Private Client Group:-

This specialized division was set up to cater to the high net worth

individuals and institutional clients keeping in mind that they require a

different kind of financial planning and management that will augment not

just existing finances but their life-style as well. Here we follow a hard-

nosed business approach with the soft touch of dedicated customer care and

personalized attention.

For this purpose we offer a comprehensive and personalized service

that encompasses planning and protection of finances, planning of business

needs and retirement needs and a host of other services, all provided on a

one-to-one basis.

Our research reports have been widely appreciated by this segment.

The delivery and support modules have been fine tuned by giving our

clients access to online portfolio information, constant updates on their

portfolios as well as value-added advise on portfolio churning, sector

switches etc. The investment recommendations given by our research team

in the cash market has enjoyed a high success rate.

Karvy Investors Service Limited: -

Merchant Banking:-

Recognized as a leading merchant banker in the country, we are

registered with SEBI as a Category I merchant banker. This reputation was

built by capitalizing on opportunities in corporate consolidations, mergers

and acquisitions and corporate restructuring, which have earned us the

reputation of a merchant banker. Raising resources for corporate or

Government Undertaking successfully over the past two decades have

given us the confidence to renew our focus in this sector.

Our quality professional team and our work-oriented dedication

have propelled us to offer value-added corporate financial services and act

as a professional navigator for long term growth of our clients, who include

leading corporates, State Governments, foreign institutional investors,

public and private sector companies and banks, in Indian and global

markets.

We have also emerged as a trailblazer in the arena of relationships,

both at the customer and trade levels because of our unshakable integrity,

seamless service and innovative solutions that are tuned to meet varied

needs. Our team of committed industry specialists, having extensive

experience in capital markets, further nurtures this relationship.

Our financial advice and assistance in restructuring, divestitures,

acquisitions, de-mergers, spin-offs, joint ventures, privatization and

takeover defense mechanisms have elevated our relationship with the client

to one based on unshakable trust and confidence.

Karvy Computer Share Private Limited: -

We have traversed wide spaces to tie up with the world’s largest

transfer agent, the leading Australian company, Computer share Limited.

The company that services more than 75 million shareholders across 7000

corporate clients and makes its presence felt in over 12 countries across 5

continents has entered into a 50-50 joint venture with us.

With our management team completely transferred to this new

entity, we will aim to enrich the financial services industry than before.

The future holds new arenas of client servicing and contemporary and

relevant technologies as we are geared to deliver better value and foster

bigger investments in the business. The worldwide network of Computer

share will hold us in good stead as we expect to adopt international

standards in addition to leveraging the best of technologies from around the

world.

Excellence has to be the order of the day when two companies with

such similar ideologies of growth, vision and competence, get together.

www.karisma.karvy.com

We have attained a position of immense strength as a provider of

across-the-board transfer agency services to AMCs, Distributors and

Investors.

Mutual Fund Services:-

Nearly 40% of the top-notch AMCs including prestigious clients like

Deutsche AMC and UTI swear by the quality and range of services that we

offer. Besides providing the entire back office processing, we provide the

link between various Mutual Funds and the investor, including services to

the distributor, the prime channel in this operation.

Carrying the ‘limitless' ideology forward, we have explored new

dimensions in every aspect of Mutual Fund servicing right from volume

management, cost effective pricing, delivery in the least turnaround time,

efficient back-office and front-office operations to customized service. We

have been with the AMCs every step of the way, helping them serve their

investors better by offering them a diverse and customized range of

services. The ‘first to market' approach that is our anthem has earned us the

reputation of an innovative service provider with a visionary bent of mind.

Our service enhancements such as ‘Karvy Converz', a full-fledged

call center, a top-line website (www.karvymfs.com), the ‘m-investor' and

many more, creating a galaxy of customer advantages.

www.karvymfs.com

Issue Registry:-

In our voyage towards becoming the largest transaction-processing

house in the Indian Corporate segment, we have mobilized funds for

numerous corporate, Karvy has emerged as the largest transaction-

processing house for the Indian Corporate sector. With an experience of

handling over 700 issues, Karvy today, has the ability to execute

voluminous transactions and hard-core expertise in technology applications

have gained us the No.1 slot in the business. Karvy is the first Registry

Company to receive ISO 9002 certification in India that stands testimony to

its stature

Karvy has the backing of skilled human resources complemented by

requisite technological packages to ensure a faster processing capability.

Karvy has the benefit of a good synergy between depositories and registry

that enables faster resolution to related customer queries. Apart from its

unique investor servicing presence in all the phases of a public Issue, it is

actively coordinating with both the main depositories to develop special

models to enable the customer to access depository (NSDL, CDSL)

services during an IPO.

Our trust-worthy reputation, competent manpower and high-end

technology and infrastructure are the solid foundations on which our

success is built. http://karisma.karvy.com

Corporate Shareholder Services:-

Karvy has been a customer centric company since its inception.

Karvy offers a single platform servicing multiple financial instruments in

its bid to offer complete financial solutions to the varying needs of both

corporate and retail investors where an extensive range of services are

provided with great volume-management capability.

Today, Karvy is recognized as a company that can exceed customer

expectations which is the reason for the loyalty of customers towards

Karvy for all his financial needs. An opinion poll commissioned by “The

Merchant Banker Update” and conducted by the reputed market research

agency, MARG revealed that Karvy was considered the “Most Admired”

in the registrar category among financial services companies.

We have grown from being a pure transaction processing business,

to one of complete shareholder solutions.

http://karisma.karvy.com

 

Karvy Global Service Limited: -

The specialist Business Process Outsourcing unit of the Karvy

Group. The legacy of expertise and experience in financial services of the

Karvy Group serves us well as we enter the global arena with the

confidence of being able to deliver and deliver well.

Here we offer several delivery models on the understanding that

business needs are unique and therefore only a customized service could

possibly fit the bill. Our service matrix has permutations and combinations

that create several options to choose from.

Be it in re-engineering and managing processes or delivering new

efficiencies, our service meets up to the most stringent of international

standards. Our outsourcing models are designed for the global customer

and are backed by sound corporate and operations philosophies, and

domain expertise. Providing productivity improvements, operational cost

control, cost savings, improved accountability and a whole gamut of other

advantages.

We operate in the core market segments that have emerging

requirements for specialized services. Our wide vertical market coverage

includes Banking, Financial and Insurance Services (BFIS), Retail and

Merchandising, Leisure and Entertainment, Energy and Utility and

Healthcare.

Our horizontal offerings do justice to our stance as a

comprehensive BPO unit and include a variety of services in Finance and

Accounting Outsourcing Operations, Human Resource Outsourcing

Operations, Research and Analytics Outsourcing Operations and Insurance

Back Office Outsourcing Operations. www.karvyglobal.com

Karvy Commodities Broking Private Limited: -

At Karvy Commodities, we are focused on taking commodities

trading to new dimensions of reliability and profitability. We have made

commodities trading, an essentially age-old practice, into a sophisticated

and scientific investment option.

Here we enable trade in all goods and products of agricultural and

mineral origin that include lucrative commodities like gold and silver and

popular items like oil, pulses and cotton through a well-systematized

trading platform.

Our technological and infrastructural strengths and especially our

street-smart skills make us an ideal broker. Our service matrix is holistic

with a gamut of advantages, the first and foremost being our legacy of

human resources, technology and infrastructure that comes from being part

of the Karvy Group.

Our wide national network, spanning the length and breadth of India,

further supports these advantages. Regular trading workshops and seminars

are conducted to hone trading strategies to perfection. Every move made is

a calculated one, based on reliable research that is converted into valuable

information through daily, weekly and monthly newsletters, calls and

intraday alerts. Further, personalized service is provided here by a

dedicated team committed to giving hassle-free service while the brokerage

rates offered are extremely competitive.

Our commitment to excel in this sector stems from the immense

importance that commodities broking has to a cross-section of investors –

farmers, exporters, importers, manufacturers and the Government of India

itself.

www.karvycommodities.com

Karvy Insurance Broking Private Limited: -

At Karvy Insurance Broking Pvt. Ltd., we provide both life and

non-life insurance products to retail individuals, high net-worth clients and

corporates. With the opening up of the insurance sector and with a large

number of private players in the business, we are in a position to provide

tailor made policies for different segments of customers. In our journey to

emerge as a personal finance advisor, we will be better positioned to

leverage our relationships with the product providers and place the

requirements of our customers appropriately with the product providers.

With Indian markets seeing a sea change, both in terms of investment

pattern and attitude of investors, insurance is no more seen as only a tax

saving product but also as an investment product. By setting up a separate

entity, we would be positioned to provide the best of the products available

in this business to our customers.

Our wide national network, spanning the length and breadth of

India, further supports these advantages. Further, personalized service is

provided here by a dedicated team committed in giving hassle-free service

to the clients.

Objective of the Study And Methodology: -

Perspective by comparing the investors' preferences for MF

products with their preferences for other major financial products,

including equity shares, bonds, bank FDs and the structure of the Indian

mutual fund industry has been transformed during the last ten years or so

from a monolithic to a highly competitive structure. The investors now

have to choose from amongst a large number of MF organizations and

schemes. An important aspect examined in this study is how far

competition has progressed and what kind of pattern can be discerned in

regard to the investors' preferences among MF organizations/schemes. We

also attempt to examine the MF industry's development against a wider

government savings schemes.

Research Methodology: -

The methodology of the research work for this project includes:

• Literature Research

• Different Mutual Fund Scheme

• Classification of Mutual fund scheme

• Data Collection

Literature Research:-

To study the various aspects of the mutual funds various literature

works has been considered which includes various books related to the

Mutual Funds, AMFI guidelines, SEBI and SBI guidelines, various

business magazines and news papers. All the basic information from this

source regarding the various aspects of Mutual Fund helps in

understanding the Mutual Fund industry. Different Mutual Fund Scheme

Next to the literature work it is important to look over the various Mutual

Fund schemes, the service providers and other related information. This

may be gathered from the prospectus and websites of the Mutual Fund

service providers, various magazines and news papers.

Classification of Mutual fund scheme: -

For the analysis among different mutual fund schemes proper

classification of the schemes is the important. The scheme are available in

various pre classified forms. So for the purpose of analysis here six

different categories of mutual fund schemes have been considered.

• Equity Funds

• Liquid Funds

• Balanced Funds

• Floating Rate Funds

• Gilt Funds

• Monthly Income Plan Funds

Data Collection:-

The main data required for the purpose of the analysis are:

• List of Various Mutual fund schemes:-For the analysis to know the

various mutual funds schemes available for the Indian investors it is

important to look over then various schemes. This information is being

collected from the website

http://www.eastindiavyapaar.com.

• High rated Mutual funds schemes:-The mutual funds schemes

analyzed in for the present analysis are highly rated on annual average till

30 June 2004 as rated by Credit Rating Information Services India Limited

(CRISIL). The data collected for this purpose is sourced from

http://www.infoline.com.

• Various Data Related to Mutual Funds:-Data like monthly

returns, quartly returns, annual returns, corpus size, risks involved,

maturity period, expenses ratio etc. are also important for the analysis of

various mutual funds. Such informations are collected from the prospectus

and websites of various matual funds services providers like Prudential

ICICI Mutual Fund , Tata Mutual Fund, Birla Sun Life Mutual Fund,

Kotak Mutual Fund, Tempelton Mutual Fund, SBI Mutual Fund, UTI

Mutual Fund etc.. The data are also collected from

http://www.mutualfundsindia.com

LIMITATIONS

Like many investments, mutual fund also offer advantages and

disadvantages, which are important to understand before buying them.

Here we explore some of the limitations of mutual funds investment.

No Guarantees: No investment is risk free. If the entire declines in

value, the value of mutual fund shares will go down as well, no

matter how balanced the portfolio. Investors encounter fewer risks

when they invest in mutual funds than when they buy and sell

stocks on their own. However, anyone who invests through a

mutual fund runs the risk of losing money.

Fees and commissions: All funds charge administrative fees to

cover their day-to-day expenses. Some funds also charge sales

commissions or "loads" to compensate brokers, financial

consultants, or financial planners. Even if you don't use a broker or

other financial adviser, you will pay a sales commission if you buy

shares in a Load Fund.

Taxes: During a typical year,most actively managed mutual funds

sell anywhere from 20 to 70 percent of securities in their portfolios.

If your funds makes a profit on its sales, you will pay taxes on the

income you receive, even if you re-invest the money you made.

Management risk: When you invest in a mutual fund, you depend

on the fund's manager to make the right decisions regarding the

fund's portfolio. If the manager does not perform as well as you had

hoped, you might not make as much money on your investment as

you expected. Of course, if you invest in Index Funds, you forego

management risk, because these funds do not employ managers.

CONCLUSION

Therefore after the complete study it is concluded that mutual funds should

create value which can be done through several ways, such as by

(1) adopting a research-driven investment strategy aimed at discovering

value and identifying the best performing companies and stocks,

thereby also putting pressure on company management’s to improve

their performance.

(2) Designing investment products based on a better understanding of the

investor’s needs.

(3) Providing liquidity (through open-ended schemes which are akin to

market-making service) to securities, like bonds or infrequently traded

shares, which may otherwise be liquid.

(4) Providing an easy way to investors to diversity risk.

(5) Improving the reach of investment products to small investors through

widest possible distribution networks.

Mutual funds, as institutional providers of investment products,

have a tremendous advantage over other institutional providers, viz Banks,

insurance to Rs. 15 due to market boom against his purchase price of Rs.

10. He decides to exit from the scheme realizing Rs. 15,00,000 from the

Fund. Subsequently, the NAV falls ro Rs. 12.50 and he re-invests the

whole of Rs. 15,00,000 at the reduced price of Rs. 12.50 per unit, thus

increasing his holding from the original 100,000 units to 1,20,000 units

without having to increase his original investment. This dilutes the earnings

of all the other unit holders who have stayed with the scheme through out.

Tit hurts the scheme for another reason too, because the presence of such

trader-unit holders requires the maintenance of a larger proportion of assets

in low-yielding liquid forms in order to meet the demand for repurchases.

If the Indian mutual fund industry has not been able to achieve a

sustained and fast growth in its savings mobilization role despite the

emergence of so many new mutual fund organizations, it is mainly because

it has been relying more on special tax concessions in order to sell its wares

than on the creation of value for investors through its services. This attitude

has to change.

In order to facilitate a steady growth of the mutual fund industry,

there is also a clear responsibility on the Government, viz. to provide a

rational and stable tax environment relating to mutual funds. The present

tax system is irrational and there is too much adochism Further as the

mutual fund industry’s fortunes are directly linked to the stock market, any

manufacturing of the market impinges on the mutual funds. Ensuring the

stock market’s orderly functioning is also the Government’s regulatory

responsibility. There is much to be done on the Government’s part in

regard to the above.

FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme

minus its liabilities. The per unit NAV is the net asset value of the scheme

divided by the number of units outstanding on the Valuation Date.

Advisor

The organization employed by a mutual fund to give professional

advice on the fund’s investments and to supervise the management of its

assets.

Asked or Offering Price

The price at which a mutual fund’s shares can be purchased. The

asked or offering price means the current net asset value (NAV) per share

plus sales charge, if any. For a no-load fund, the asked price is the same as

the NAV.

Asset Allocation Fund

A fund that spreads its portfolio among a wide variety of investments,

including domestic and foreign stocks and bonds, government securities,

gold bullion and real estate stocks. This gives small investors far more

diversification than they could get allocating money on their own some.

Capital Appreciation Fun

A mutual fund that seeks maximum capital appreciation through the

use of investment techniques involving greater than ordinary risk, such as

borrowing money in order to provide leverage, short-selling and high

portfolio turnover.

Capital Gains Distributions

Payments (usually annually) to mutual fund shareholders of gains

realized on the sale of portfolio securities.

Capital Growth

A rise in market value of a mutual fund’s securities, reflected in its

net asset value per share. This is a specific long-term objective of many

mutual funds.

Certificate of Deposit

Interest-bearing, short-term debt instrument issued by banks and

thrifts.

Closed-End Investment Company

An investment company that offers a limited number of shares.

They are traded in the securities markets, usually through brokers. Price is

determined by supply and demand. Unlike open-end investment companies

(mutual funds), closed-end funds do not redeem their shares.

Commercial Paper

Short-term, unsecured promissory notes with maturates no longer

than 270 days. They are issued by corporations, to fund short-term credit

needs.

Common Stock Fund

An open-end investment company whose holdings consist mainly

of common stocks and usually emphasize growth of these funds keep the

proportions allocated between different sectors relatively constant, while

others alter the mix as market conditions change.

Automatic Reinvestment

A service offered by most mutual funds whereby income dividends

and capital gain distributions are automatically invested into the fund by

buying additional shares and thus building up holdings through the effects

of compounding.

Balanced Fund

A mutual fund that maintains a balanced portfolio, generally 60%

bonds or preferred stocks and 40% common stocks.

Bid or Sell Price

The price at which a mutual fund’s shares are redeemed (bought

back) by the fund. The bid or redemption price means the current net asset

value per share, less any redemption fee or backend load.

Bond Fund

A mutual fund whose portfolio consists primarily of corporate or

Government bonds. These funds generally emphasize income rather than

growth.

Bond Rating

System of evaluating the probability of whether a bond issuer will

default. Various firms analyze the financial stability of both corporate and

government bond issuers. Ratings range from AAA or Aaa (extremely

unlikely to default) to D (currently in default). Bonds rated BBB or below

are not considered to be of investment grade. Mutual funds generally

restrict their bond purchases to issues of certain quality ratings, which are

specified in their prospectuses.

Rupee-Cost Averaging

The technique of investing a fixed sum at regular intervals

regardless of stock market movements. This reduces average share costs to

the investor, who acquires more shares in periods of lower securities prices

and fewer shares in periods of high prices. In this way, investing risk is

spread over time.

Exchange Privilege (Or switching privilege)

The right to transfer investments from one fund into another,

generally within the same fund group, at nominal cost.

Ex-Dividend Date

The date on which a fund’s Net Asset Value (NAV) will fall by an

amount equal to the dividend and/or capital gains distribution (although

market movements may alter the fund’s closing NAV somewhat). Most

publications which list closing NAVs place an “X” after a fund’ name on

its ex-dividend date.

Expense Ratio

The ratio of total expenses to net assets of the fund. Expenses

include management fees, the cost of shareholder mailings and other

administrative expenses. The ratio is listed in a fund’s prospectus. Expense

ratios may be a function of a fund’s size rather than of its success in

controlling expenses.

Fiscal Year

An accounting period consisting of 12 consecutive months.

Global Fund

A fund that invests in both Indian and foreign securities.

Confirm Date

The date the fund processed your transaction, typically the same

day or the day after your trade date.

Contingent Deferred Sales Charge (CDSC)

A fee (or back-end load) imposed by certain funds on shares

redeemed within a specific period following their purchase. These charges

are usually assessed on a sliding scale, such as four percent to one percent

of the amounts redeemed, with the fee reduced each year the units are held.

QUESTIONNAIRE

Q1) Are you trading in Karvy?

Options No. of

Respondents

% of

Respondents

Yes 120 75%

No 40 25%

Interpretation:-

75% of respondents are the customers of karvy, whereas 25% of

respondents are doing trading with some other company or sub broker.

Q2) From how many years you are the customer of Karvy?

Options No. of Respondents % of Respondents

More than 10

years

60 50%

5 – 10 years 30 25%

1 - 5 years 24 20%

Less than 1 year 6 5%

Interpretation: -

Maximum no.of respondents are the customers of Karvy i.e. of the

category lies in the category of More than 10 years

Q3) What are the reason of investing in Mutual Funds in Karvy?

Options No. of Respondents % of Respondents

Very Cheap

Schemes

14 35%

Company’s Brand

Name

16 40%

Tie up with their

bank

10 25%

Any other - -

Interpretation:-

40% of respondents are doing trading with other companies because of their

brand image. Rest are trading with other companies because of tie up with their

banks and innovative schemes provided by them

Q4)Would you like to switch to Karvy if it provide you with some

extra benefits?

Options Number of Respondents

% of Respondents

Yes 90 75%No 10 25%

Interpretation:-

75% of the respondents agree that they will switch over. But still 25% of

the respondents were there who will not switch to any other company.

Q5) In Karvy,are you fully satisfied by the benefits provided

Options Number of Respondents

% of Respondents

Yes 120 100%No - -

Interpretation:-

100% of the customers of Karvy are satisfied by the benefits and services provided.

Q6) If no, then what are the reasons behinds that?

Interpretation:-

Every customer was satisfied. Not a single customer of Karvy was there who was dissatisfied with the services provided .

Q7) Do you invest in mutual fund online?

Options Number of Respondents

% of Respondents

Yes 40 80%No 10 20%

Interpretation:-

80% of respondents are investing in Mutual Fund online, whereas 20% of respondents invest through offline process.

Yes80%

No20%

BIBLIOGRAPHY

A. Books

(1) Pandey I.M. ‘Financial Management’, Eigth Edition,

Vikas Publicating House Pvt. Ltd., pp 1074-1092

(2) Kothari C.R. (1990) ‘Research Methodology’, Second

Edition,

Wishwa Prakashan, pp 39-149.

B. Websites

1. www.businessweek.com

2. www.google.com

3. www.karvy.com

C. Newspapers

1. Business line

2. Economic Times