[TYPE THE COMPANY NAME]

INVESTMENT IN MUTUAL FUNDS AND

SHARES –PROS AND CONS

FINANCIAL MANAGEMENT

TO, PRATIMA TRIVEDI

12/9/2013

REPORT BY-

PARITOSH SINGH FS35

PRAKRITI FS40

PANKAJ KUMAR SINGH FS34

ROMANSHU VARSHNEY FS64

RAJNEESH SHARMA FS44

F.M Page 1

TABLE OF CONTENTS

Table of Contents ACKNOWLEDGEMENT ................................................................................................................................... 4

A. MUTUAL FUNDS ............................................................................................................................... 5

I. INTRODUCTION ............................................................................................................................ 5

II. ROLE OF MUTUAL FUNDS IN THE FLNANCIAI, MARKET ................................................... 5

III. MUTUAL FUNDS: STRUCTURE IN INDIA............................................................................. 5

IV. GROWTH IN MUTUAL FUND INDUSTRY ............................................................................. 6

V. IMPACT OF THE GLOBAL FINANCIAL CRISIS ...................................................................... 11

VI. GOVERNMENT POLICIES ...................................................................................................... 11

VII. ADVANTAGES OF MUTUAL FUNDS ................................................................................... 12

Diversification. ............................................................................................................................ 12

Expert Management. ................................................................................................................... 12

Liquidity. ..................................................................................................................................... 13

Convenience. ............................................................................................................................... 13

Reinvestment of Income. ............................................................................................................ 13

Range of Investment Options and Objectives. ............................................................................ 13

Affordability. .............................................................................................................................. 13

VIII. DISADVANTAGES OF MUTUAL FUNDS ............................................................................. 14

No Control Over Portfolio. ......................................................................................................... 14

Capital Gains. .............................................................................................................................. 14

Fees and Expenses. ..................................................................................................................... 14

Over-diversification. ................................................................................................................... 14

Cash Drag. ................................................................................................................................... 15

IX. SOME TOP MUTUAL FUND OF INDIAN MARKET ............................................................ 15

SCHEME: ICICI Prudential Focused Blue chip Equity Fund (G).............................................. 15

SCHEME: BIRLA SL INDIA GENNEXT (G) .......................................................................... 15

SCHEME: SBI DYNAMIC BOND FUND (G) ......................................................................... 16

ICICI Prudential Equity - Volatility Advantage Fund ................................................................ 16

B. INVESTMENT IN SHARES.............................................................................................................. 17

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1. INTRODUCTION .......................................................................................................................... 17

2. ADVANTAGES OF INVESTING IN SHARES ........................................................................... 17

i. Inflation Rate: ............................................................................................................................. 17

ii. Protected From The Eyes Of The Public: ................................................................................... 17

iii. Growth Rate: ........................................................................................................................... 17

iv. Dividend: ................................................................................................................................. 17

v. Bonus Issues: .............................................................................................................................. 17

vi. Capital Appreciation: .............................................................................................................. 17

3. DISADVANTAGES OF INVESTING IN SHARES ..................................................................... 18

a. Crash In Share Prices: ................................................................................................................. 18

b. Liquidation: ................................................................................................................................. 18

c. Fraudulent Stock Brokers: .......................................................................................................... 18

4. EXAMPLES OF SHARES TRADED ON NSE ............................................................................. 18

Various sectors in Indian Stock Market and their performance .......................................................... 18

5. REWINDING BACK TO THE STOCK MARKET TRADING HISTORY OF INDIA ............... 21

6. STOCK MARKET MILESTONES ................................................................................................ 21

7. POLICIES FOR SHARE MARKET .............................................................................................. 22

Introduction to SEBI ................................................................................................................... 22

Objectives of the Board were identified as: ................................................................................ 22

Different categories of share market ........................................................................................... 22

How can you qualify the market as bull or bear?........................................................................ 23

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TABLE OF TABLE

Table 1 ......................................................................................................................................................... 18

Table 2 ......................................................................................................................................................... 19

Table 3 ......................................................................................................................................................... 20

Table 4 ......................................................................................................................................................... 20

Table 5 ......................................................................................................................................................... 20

TABLE OF FIGURE

Figure 1 ......................................................................................................................................................... 7

Figure 2 ......................................................................................................................................................... 8

Figure 3 ......................................................................................................................................................... 8

Figure 4 ......................................................................................................................................................... 9

Figure 5 ....................................................................................................................................................... 10

Figure 6 ....................................................................................................................................................... 15

Figure 7 ....................................................................................................................................................... 15

Figure 8 ....................................................................................................................................................... 16

Figure 9 ....................................................................................................................................................... 16

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ACKNOWLEDGEMENT

We would like to express our special thanks of

gratitude to my Mam’m PRATIMA TRIVEDIwho

gave us the golden opportunity to do this wonderful

project on the topic “INVESTMENT IN

MUTUAL FUNDS AND SHARES-PROS AND

CONS ”which also helped us in doing a lot of

research and we come to know about so many new

things. I am really thankful to you.

We are making this project not only for marks but

also to increase our knowledge …

Thanking you.

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A. MUTUAL FUNDS

I. INTRODUCTION Mutual funds are investment vehicles that pool money from many different

investors to increase their buying power and diversify their holdings. This

allows investors to add a substantial number of securities to their portfolio for a

much lower price than purchasing each security individually.

A mutual fund is set up in the form of a trust that has a Sponsor, Trustees, Asset

Management Company (AMC). The trust is established by a sponsor(s) who is like

a promoter of a company and the said Trust is registered with Securities and

Exchange Board of India (SEBI) as a Mutual Fund. The Trustees of the mutual

fund hold its property for the benefit of unit holders. An Asset Management

Company (AMC) approved by SEBI manages the fund by making investments in

various types of securities.

The trustees are vested with the power of superintendence and direction over the

AMC. They monitor the performance and compliance of SEBI regulations by the

mutual fund. The trustees are vested with the general power of superintendence

and direction over AMC. They manage the performance and compliance of SEBI

Regulations by the mutual fund.

II. ROLE OF MUTUAL FUNDS IN THE FLNANCIAI,

MARKET The Indian financial institutions have played a dominant role in assets formation

and intermediation contributed substantially in macroeconomic of country. In this

process, Indian mutual funds have emerged as strong financial intermediaries and

are playing a very important role in bringing stability to the financial system and

efficiency to resource allocation Mutual funds have opened new vistas to investors

and imparted much-needed liquidity to the system.

III. MUTUAL FUNDS: STRUCTURE IN INDIA Mutual Funds in India follow a 3-tier structure. There is a Sponsor (the First tier),

who thinks of starting a mutual fund. The Sponsor approaches the Securities

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&Exchange Board of India (SEBI), which are the market regulator and also the

regulator for mutual funds.

Not everyone can start a mutual fund. SEBI checks whether the person is

ofintegrity, whether he has enough experience in the financial sector, his net worth

etc. Once SEBI is convinced, the sponsor creates a Public Trust (the Second tier)

as per the Indian Trusts Act, 1882. Trusts have no legal identity in India and cannot

enter into contracts, hence the Trustees are the people authorized to act on behalf

of the Trust. Contracts are entered into in the name of the Trustees. Once the Trust

is created, it is registered with SEBI after which this trust is known as the mutual

fund.

IV. GROWTH IN MUTUAL FUND INDUSTRY The Indian Mutual fund industry has witnessed considerable growth since its

inception in 1963. The assets under management (AUM) have surged to Rs 4,173

bn in Mar-09 from just Rs. 250 mn in Mar-65. In a span of 10 years (from 1999 to

2009), the industry has registered a CAGR of 22.3%, albeit encompassing some

shortfalls in AUM due to business cycles.

The impressive growth in the Indian Mutual fund industry in recent years can

largely be attributed to various factors such as rising household savings,

comprehensive regulatory framework, favorable tax policies, introduction of

several new products, investor education campaign and role of distributors.

In the last few years, household’s income levels have grown significantly, leading

to commensurate increase in household’s savings. Household financial savings (at

current prices) registered growth rate of around 17.4% on an average during the

period FY04-FY08 as against 11.8% on an average during the period FY99-FY03.

The considerable rise in household’s financial savings, point towards the huge

market potential of the Mutual fund industry in India.

Besides, SEBI has introduced various regulatory measures in order to protect the

interest of small investors that augurs well for the long term growth of the industry.

The tax benefits allowed on mutual fund schemes (for example investment made in

Equity Linked Saving Scheme (ELSS) is qualified for tax deductions under section

80C of the Income Tax Act) also have helped mutual funds to evolve as the

preferred form of investment among the salaried income earners.

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Besides, the Indian Mutual fund industry that started with traditional products like

equity fund, debt fund and balanced fund has significantly expanded its product

portfolio. Today, the industry has introduced an array of products such as

liquid/money market funds, sector-specific funds, index funds, gilt funds, capital

protection oriented schemes, special category funds, insurance linked funds,

exchange traded funds, etc. It also has introduced Gold ETF fund in 2007 with an

aim to allow mutual funds to invest in gold or gold related instruments. Further, the

industry has launched special schemes to invest in foreign securities. The wide

variety of schemes offered by the Indian Mutual fund industry provides multiple

options of investment to common man.

With a strong growth in the AUM of domestic Mutual fund industry, the ratio of

AUM to GDP increased gradually from 4.7% in 2001 to 8.5% in 2009. The share

of mutual funds in households’ financial savings also witnessed a substantial

increase to 7.7% in 2008 as against 1.3% in 2001.

Figure 1

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Figure 2

Figure 3 The investor-wise pattern of asset-holding as well as investors accounts reveals

that individual investors account for almost 96.75% of total investors account and

contribute Rs 1552.8 bn which is 37.0% of the total net assets as on March 31,

2009. The comparatively lower share of net assets of individual investors in total

net assets is mainly because of lower penetration of mutual fund as an investment

instrument among working population (age group 18-59 years). A majority of

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investors in the age group 18-59 years are not aware of mutual funds or of

investing in mutual funds through Systematic Investment Plan (SIP). However,

take up of mutual fund as an investment opportunity by individual investors,

particularly in Tier 2 and Tier 3 towns, is expected to increase in the near future.

Corporate/institutions sector on the other hand, though account for only 1.2% of

the total number of investors’ accounts in Mutual funds industry contributes as

much as 56.3% to the total net assets of the industry as on March 31, 2009. Despite

a rise in net FII inflows in the domestic mutual funds, FIIs constitute a very small

percentage of investors’ accounts (0.0003%) and contribute Rs 49.83 bn to the

total net assets (1% of total net assets of the Indian Mutual fund industry as on

March 31, 2009).

Figure 4

The net resource mobilization of domestic mutual funds which registered strong

growth in FY2000 due to the tax incentives announced in the Union Budget for

FY2000, witnessed a sharp decline in FY01. The decline in resource mobilization

in FY01 was primarily due to the bearish trend in the domestic stock markets and

problems in UTI. The resource mobilization continued to remain at low level up to

FY05. In FY05 resource mobilization by mutual funds declined by almost 95.3%

on account of redemption pressures on income, gilt and equity-linked saving

schemes subsequent to shift of resources in favor of small saving schemes that

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offered attractive tax adjusted rates of return. Mutual funds mobilized huge amount

of resources under liquid/money market schemes & growth/equity oriented

schemes, while resource mobilization under debt schemes experienced sharp fall

due to change in interest rate scenario. While, the resource mobilization by mutual

funds witnessed strong growth during FY06-FY07 and in the period Apr-Aug 07

due to buoyant capital market conditions, the eruption of sub-prime mortgage crisis

during Sep-07 and consequent volatility witnessed in the domestic stock markets

led to decline in resource mobilization. The net resource mobilization of mutual

funds turned negative as there was a net outflow of Rs 282.97 bn during FY09 as

against a net inflow of Rs 1,538.01 bn during FY08. The uncertain conditions in

stock markets coupled with redemption pressures from banks and corporates

amidst tight liquidity conditions resulted in significant outflows during the months

of Jun-08 (Rs 392.3 bn), Sep-08 (Rs 456.5 bn) and Oct-08 (458 bn). This led the

RBI to announce various liquidity augmentation measures to provide liquidity

support to mutual funds through banks. With the easing of overall liquidity

conditions, net resource mobilization by mutual funds again turned positive

between the periods Dec-08 to Feb-09. Further, with liquidity conditions remaining

comfortable and stock markets registering strong gains, the net resource

mobilization by mutual funds grew considerably during the first quarter of FY10.

Figure 5

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The data reveals that the increase in revenue and profitability of the Mutual fund

industry has not been commensurate with the AUM growth in past few years. The

increased expenditure on marketing, distribution and administration exerted

upward pressure on the operating expenses, thereby impacting AMC’s margins.

The operating expenses as a percentage of AUM rose from 41 basis points in FY04

to 113 basis points in FY08.

V. IMPACT OF THE GLOBAL FINANCIAL CRISIS

Deepening of the global financial crisis during September 2008, which resulted in

liquidity crunch world-over, had dampening impact of the Indian Mutual fund

industry. With the drying up of credit inflows from banks and external commercial

borrowings route, mutual funds witnessed redemption pressure from corporates.

Although the mutual funds promised immediate redemption, their assets were

relatively illiquid. Besides, mutual funds faced problems such as maturity

mismatches between assets & liabilities of mutual funds, shift from mutual funds

to bank deposits in view of the comparatively higher interest rates being offered by

banks and freezing up of money markets due to lack of buyers for assets like

certificates of deposits of private sector banks.

During Apr-Sep 08, net mobilization of funds by mutual funds declined sharply by

97.7% to Rs 24.8 bn due to uncertain conditions prevailing in the domestic stock

markets. The redemption pressures witnessed by mutual funds led to net outflows

under both the income/debt-oriented schemes and growth/equity-oriented schemes.

Further, the AUM of Mutual fund industry contracted by 20.7% from Rs 5,445.4

bn as on August 31, 2008 to Rs 4,319.0 bn as on October 31, 2008. During the

same period, liquid and debt schemes which contribute more than 65% to the total

AUM witnessed a decline of 19% in AUM.

VI. GOVERNMENT POLICIES The RBI decided to conduct a special 14 day repo at 9% per annum for a notified

amount of Rs 200 bn from October 14, 2008 with a view to enable banks to meet

the liquidity requirements of mutual funds.

Scheduled Commercial Banks (SCBs) and All India term lending and refinancing

institutions were allowed to lend against and buy back CDs held by mutual funds

for a period of 15 days.

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As a temporary measure, banks were allowed to avail of additional liquidity

support exclusively for the purpose of meeting the liquidity requirements of mutual

funds to the extent of up to 0.5% of their net demand and time liabilities (NDTL).

Accordingly on November 1, 2008, it was decided to extend this facility and allow

banks to avail liquidity support under the LAF through relaxation in the

maintenance of SLR to the extent of up to 1.5% of their NDTL. This relaxation in

SLR was provided for the purpose of meeting the funding requirements of NBFCs

and mutual funds.

The borrowing limit prescribed in Regulation 44(2) of SEBI (Mutual Fund)

Regulations, 1996 was enhanced from 20% of net asset of the scheme to 40% of

net asset of the scheme to those mutual funds who approached SEBI. This

enhanced borrowing limit was made available for a period of six months and could

be utilized for the purpose of redemptions/ repurchase of units.

In order to moderate the exit from close ended debt schemes and in the interest of

those investors who choose to remain till maturity and with a view to ensure that

the value of debt securities reflects the current market scenario in calculation of

NAV, the discretion given to mutual funds to mark up/ mark down the benchmark

yields for debt instruments of more than 182 days maturity was enhanced from 150

basis points to 650 basis points.

VII. ADVANTAGES OF MUTUAL FUNDS

Diversification.

Mutual funds spread their holdings across a number of different investment

vehicles, which reduces the effect any single security or class of securities will

have on the overall portfolio. Because mutual funds can contain hundreds or

thousands of securities, investors aren’t likely to be fazed if one of the securities

doesn’t do well.

Expert Management.

Many investors lack the financial know-how to manage their own portfolio.

However, non-index mutual funds are managed by professionals who dedicate

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their careers to helping investors receive the best risk-return trade-off according to

their objectives.

Liquidity.

Mutual funds, unlike some of the individual investments they may hold, can be

traded daily. Though not as liquid as stocks, which can be traded intraday, buy and

sell orders are filled after market close.

Convenience.

If you were investing on your own, you would ideally spend time researching

securities. You’d also have to purchase a huge range of securities to acquire

holdings comparable to most mutual funds. Then, you’d have to monitor all those

securities. Choosing a mutual fund is ideal for people who don’t have the time to

micromanage their portfolios.

Reinvestment of Income.

Another benefit of mutual funds is that they allow you to reinvest your dividends

and interest in additional fund shares. In effect, this allows you to take advantage

of the opportunity to grow your portfolio without paying regular transaction fees

for purchasing additional mutual fund shares.

Range of Investment Options and Objectives.

There are funds for the highly aggressive investor, the risk averse, and the middle-

of-the-road investor – for example, emerging markets funds, investment-grade

bond funds, and balanced funds, respectively. There are also life cycle funds to

ramp down risk as you near retirement. There are funds with a buy-and-hold

philosophy and others that are in and out of holdings almost daily. No matter your

investing style, there’s bound to be a perfect fund to match it.

Affordability.

For as little as $50 per month, you can own shares in Google (NASDAQ: GOOG),

Berkshire Hathaway (NYSE: BRK.A), and a host of other expensive securities via

mutual funds. At the time of this writing, a share of Berkshire Hathaway costs over

$119,000 a share.

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VIII. DISADVANTAGES OF MUTUAL FUNDS Although mutual funds can be beneficial in many ways, they are not for everyone.

No Control Over Portfolio.

If you invest in a fund, you give up all control of your portfolio to the mutual fund

money managers who run it.

Capital Gains.

Anytime you sell stock, you’re taxed on your gains. However, in a mutual fund,

you’re taxed when the fund distributes gains it made from selling individual

holdings – even if you haven’t sold your shares. If the fund has high turnover, or

sells holdings often, capital gains distributions could be an annual event. That is,

unless you’re investing via a Roth IRA, traditional IRA, or employer-sponsored

retirement plan like the 401k.

Fees and Expenses.

Some mutual funds may assess a sales charge on all purchases, also known as a

“load” – this is what it costs to get into the fund. Plus, all mutual funds charge

annual expenses, which are conveniently expressed as an annual expense ratio –

this is basically the cost of doing business. The expense ratio is expressed as a

percentage, and is what you pay annually as a portion of your account value. The

average for managed funds is around 1.5%. Alternatively, index funds charge

much lower expenses (0.25% on average) because they are not actively managed.

Since the expense ratio will eat directly into gains on an annual basis, closely

compare expense ratios for different funds you’re considering.

Over-diversification.

Although there are many benefits of diversification, there are pitfalls of being over-

diversified. Think of it like a sliding scale: The more securities you hold, the less

likely you are to feel their individual returns on your overall portfolio. What this

means is that though risk will be reduced, so too will the potential for gains. This

may be an understood trade-off with diversification, but too much diversification

can negate the reason you want market exposure in the first place.

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Cash Drag.

Mutual funds need to maintain assets in cash to satisfy investor redemptions and to

maintain liquidity for purchases. However, investors still pay to have funds sitting

in cash because annual expenses are assessed on all fund assets, regardless of

whether they’re invested or not.

IX. SOME TOP MUTUAL FUND OF INDIAN MARKET

SCHEME: ICICI Prudential Focused Blue chip Equity Fund

(G)

Fund returns v/s Category average (Large Cap)

Figure 6

SCHEME: BIRLA SL INDIA GENNEXT (G)

Fund returns v/s Category average (Diversified Equity)

Figure 7

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SCHEME: SBI DYNAMIC BOND FUND (G)

Fund returns v/s Category average (Debt Long Term)

Figure 8

ICICI Prudential Equity - Volatility Advantage Fund

Figure 9

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B. INVESTMENT IN SHARES

1. INTRODUCTION A unit of ownership that represents an equal proportion of a company's capital. It

entitles its holder (the shareholder) to an equal claim on the company's profits and

an equal obligation for the company's debts and losses.

2. ADVANTAGES OF INVESTING IN SHARES There are several benefits derived from investment in shares. Below are some of

them:

i. Inflation Rate:Inflation rate is higher than commercial banks interest rate

but lower than equity price appreciation.

ii. Protected From The Eyes Of The Public:Nobody knows your worth

except you tell him/her. In other investments, people can easily look at the

assets of the business or your property (real estate) and come up with

approximate worth of it.

iii. Growth Rate:The rate of growth is far beyond the bank interest rate.

iv. Dividend:This is cash reward given to shareholders as part of the profit

made by the company at the end of each financial year. It is declared at the

annual general meeting (AGM) of the company. The larger the units of your

shareholding, the more money you receive at the end of each financial year.

There are companies that have yearly dividend policy. Your financial

adviser should be able to tell you some of them.

v. Bonus Issues:This is free shares given to existing shareholders of a

company. Sometimes, company declares bonus instead of dividend or both.

For instance, in the third quarter of the year 2007, First Bank of Nigeria

declared one-for-one bonus. This means a unit for every unit you already

hold. For example, a man who holds 100,000 units previously will be given

an additional 100,000 units free after the declaration of the First Bank bonus

making the values of his shares 200,000 units.

vi. Capital Appreciation:Price of shares move up or down responding to

the forces of demand and supply. For instance, few months ago there was a

high demand of the shares of Benue Cement Company of Nigeria which

traded for about N6.00 per share. Due to scarce nature of it and the good

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performance of the company, a unit of it now costs about N 48.oo This

implies that there is about 700% increment in the value of the stock. If you

had bought N50, 000 units of the shares at N6.00 per share, it means that

you spent 300,000.00 buying the shares. Now, that it costs N48.00 per share,

if you are to self your shares, your returns would be 48x50,000,which is

equal to 2.4 million naira. Thus your capital has appreciated from N300,

000.00 to 2.4 millionaires. Indeed stock business has the potential of making

you a millionaire overnight.

3. DISADVANTAGES OF INVESTING IN SHARES The benefits of investing in share are many but there are few pitfalls to

avoid.These include:

a. Crash In Share Prices:Due to one reason or the other, sometimes share

prices drop so much. A discerning investor should know what to do at any

point in time.

b. Liquidation:Sometimes companies go into liquidation thereby eroding the

investments of ordinary shareholders. For example, some banks in Nigeria

that did not meet up with the N25 billion minimum capitals as directed by

the central Bank of Nigeria (CBN) died with investors’ money. You must be

vigilant to watch over your investment if you consider it important to you.

c. Fraudulent Stock Brokers:some stockbrokers are unfaithful to their

clients. They may collect your money when there is perceived information

that the shares of a particular company is a good one and instead of making

the transactions in your name may divert the money for their selfish interest,

may be use it to make their own investments. When the company has closed

her book, they may call you for refund or may embezzle your money like

that. You must be careful in selecting your stockbroker.

4. EXAMPLES OF SHARES TRADED ON NSE

Various sectors in Indian Stock Market and their performance

Banks

Table 1

Axis Bank

1365.35 1399.90 1418.60 953.40 1212.00 1085.55 1155.30 1,280.65

F.M Page 19

-6.20% -8.52% -9.72% 34.32% 5.66% 17.97% 10.85%

HDFC Bank

694.00

-1.69%

630.65

8.19%

683.00

-0.10%

616.30

10.71%

668.05

2.13%

637.65

7.00%

661.20

3.19% 682.30

ICICI Bank

1135.05

0.68%

1106.35

3.29%

1153.60

-0.94%

959.00

19.16%

1080.25

5.79%

1029.70

10.98%

1067.90

7.01% 1,142.75

Bank of Baroda

791.60

-13.79%

730.15

-6.53%

674.50

1.18%

488.55

39.69%

642.30

6.25%

607.60

12.32%

644.60

5.87% 682.45

Bank of India

294.10

-25.11%

314.75

-30.02%

294.15

-25.12%

145.00

51.90%

230.70

-4.53%

213.70

3.07%

217.20

1.40% 220.25

PNB

822.45

-27.41%

809.25

-26.23%

774.85

-22.95%

446.45

33.72%

559.90

6.63%

517.60

15.34%

549.75

8.59% 597.00

SBI

2307.25

-19.31%

2166.20

-14.05%

2049.15

-9.14%

1633.25

13.99%

1809.60

2.88%

1760.10

5.78%

1821.50

2.21% 1,861.80

IT

Table 2

HCL Tech

625.55

80.18%

755.75

49.14%

747.60

50.76%

1016.40

10.89%

1084.85

3.89%

1063.10

6.02%

1086.55

3.73% 1,127.10

Infosys

2338.50

42.25%

2966.45

12.14%

2427.50

37.04%

3020.85

10.12%

3305.90

0.63%

3347.35

-0.62%

3353.50

-0.80% 3,326.60

Mindtree

686.05

98.13%

874.45

55.44%

819.10

65.94%

1034.85

31.35%

1378.25

-1.38%

1409.65

-3.58%

1391.15

-2.29% 1,359.25

TCS

1282.40

55.95%

1557.80

28.38%

1471.85

35.88%

1987.55

0.62%

2091.75

-4.39%

1989.55

0.52%

2004.60

-0.23% 1,999.95

Tech Mahindra

881.90

89.90%

1079.45

55.14%

925.10

81.03%

1358.55

23.27%

1572.95

6.47%

1659.50

0.92%

1698.10

-1.38% 1,674.70

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Infrastructure

Table 3

BHEL

241.05

-28.92%

203.10

-15.63%

192.20

-10.85%

141.55

21.05%

140.45

22.00%

137.15

24.94%

156.05

9.80% 171.35

GMR Infra

19.80

7.32%

19.45

9.25%

20.95

1.43%

15.36

38.35%

23.20

-8.41%

21.65

-1.85%

20.45

3.91% 21.25

JaiprakashAsso

104.55

-47.11%

74.25

-25.52%

66.75

-17.15%

37.95

45.72%

47.70

15.93%

46.60

18.67%

53.80

2.79% 55.30

Pharmaceuticals

Table 4

Glenmark

430.85

21.88%

505.20

3.94%

579.10

-9.32%

528.80

-0.70%

520.15

0.95%

509.05

3.15%

515.90

1.78% 525.10

Lupin

593.50

44.54%

598.15

43.42%

753.50

13.85%

839.00

2.25%

873.75

-1.82%

846.45

1.35%

855.45

0.28% 857.85

Ranbaxy Labs

510.75

-14.94%

400.80

8.40%

378.80

14.69%

444.50

-2.26%

407.90

6.51%

415.50

4.56%

421.70

3.02% 434.45

Auto

Table 5

Bajaj Auto

1951.10

-0.03%

1974.60

-1.22%

1748.40

11.56%

1911.45

2.04%

2078.25

-6.15%

1935.05

0.80%

1974.75

-1.23% 1,950.50

Hero Motocorp

1823.35

15.10%

1646.50

27.46%

1642.95

27.74%

1928.95

8.80%

2106.25

-0.36%

1998.20

5.03%

2050.60

2.35% 2,098.70

M&M

930.00

1.69%

878.35

7.67%

989.55

-4.43%

771.10

22.65%

898.50

5.26%

933.15

1.35%

945.60

0.02% 945.75

Maruti Suzuki

1481.25

14.64%

1422.05

19.41%

1587.20

6.99%

1290.25

31.61%

1616.00

5.08%

1647.60

3.07%

1677.40

1.23% 1,698.10

F.M Page 21

5. REWINDING BACK TO THE STOCK MARKET

TRADING HISTORY OF INDIA In the earlier days, stockbrokers kept scouting for 'natural' sites to conduct their

trading activities, shifting from one set of Banyan trees to another. As the number

of brokers kept increasing and the streets kept overflowing, they simply had no

choice but to relocate from one place to another.

Finally in 1854, trading in India found a permanent address, Dalal Street, now

synonymous with the oldest stock Exchange in Asia, The Bombay Stock

Exchange. With a heritage that goes back to over 130 years, BSE was the first

stock exchange in the country to be granted permanent recognition under the

Securities Contract Regulation Act, 1956. The exchange has played a pioneering

role in the development of the Indian Securities Market - one of the oldest in the

world. After India gained independence, the BSE formulated a comprehensive set

of guidelines adopted by the Indian Capital markets. Even today, the BSE Sensex

remains one of the parameters against which the robustness of the Indian Economy

and finance is measured.

The trading scenario in India then underwent a paradigm shift in 1993, when NSE

or National Stock Exchange was recognized as a Stock Exchange. Within just a

few years, trading on both the exchanges shifted from an open outcry system to an

automated trading environment. Today, the Indian Securities market successfully

keeps pace with its global counterparts through the use of modern day technology.

6. STOCK MARKET MILESTONES

1875: BSE established as 'the native Share and Stock Brokers Association'

1956: BSE became the first stock exchange to be recognized under the Securities

Contract Act.

1993: NSE recognized as a stock exchange.

2000: Commencement of Internet trading at NSE.

2000: NSE commences derivatives trading (Index futures)

2001: BSE commences derivatives trading

F.M Page 22

7. POLICIES FOR SHARE MARKET

Introduction to SEBI

The Government of India established the Securities and Exchange Board of India,

the regulatory body of stock markets in 1988. Within a short period of time, SEBI

became an autonomous body through the SEBI Act passed in 1992, with defined

responsibilities that cover both development & regulation of the market while also

giving the board independent powers. Comprehensive regulatory measures

introduced by SEBI ensured that end investors benefited from safe and transparent

dealings in securities.

Objectives of the Board were identified as:

o To protect the interests of investors in securities

o To promote the development of Securities Market

o To regulate the Securities Market

SEBI has contributed to the improvement of the Securities Market by introducing

measures like capitalization requirements, margining and establishment of clearing

corporations that reduced the risk of credit

Today, the board continues on its two-fold mission of integrating the Securities

Market at the National level and also diversifying the trading products to increase

the number of traders (including banks, financial institutions, insurance companies,

Mutual Funds, primary dealers etc) transacting through the Exchanges. In this

context the introduction of derivatives trading through Indian Stock Exchanges

permitted by SEBI in 2000 AD has been a real landmark.

Different categories of share market

o SMALL-CAP STOCKS

The stocks of small companies that have the potential to grow rapidly are classified

as small-cap stocks. These stocks are the best option for an investor who wishes to

generate significant gains in the long run; as long he does not require current

dividends and can withstand price volatility. Generally companies that have a

market Capitalization in the range of up to 250 Crores are small cap stocks

F.M Page 23

o MID-CAP STOCKS

Mid-cap stocks are typically stocks of medium-sized companies. These are stocks

of well-known companies, recognized as seasoned players in the market. They

offer you the twin advantages of acquiring stocks with good growth potential as

well as the stability of a larger company. Generally companies that have a market

Capitalization in the range of 250-4000 crores are mid cap stocks

o LARGE-CAP STOCKS

Stocks of the largest companies (many being blue chip firms) in the market such as

Tata, Reliance, ICICI are classified as large-cap stocks. Being established

enterprises, they have at their disposal large reserves of cash to exploit new

business opportunities. The sheer volume of large-cap stocks does not let them

grow as rapidly as smaller capitalized companies and the smaller stocks tend to

outperform them over time. Investors, however gain the advantages of reaping

relatively higher dividends compared to small- and mid-cap stocks while also

ensuring the long-term preservation of their capital.

How can you qualify the market as bull or bear?

Bull and Bear markets signify relatively long-term movements of significant

proportion. Hence, these runs can be gauged only when the market has been

moving in its current direction (by about 20% of its value) for a sustained period.

One does not consider small, short-term movements, lasting days, as they may only

indicate corrections or short-lived movements.

F.M Page 24

REFERENCES

www.moneycontrol.com

www.wikipeadia.com

www.rbi.com

www.moneycrashers.com