EXECUTIVE SUMMARY:-

‘Perception of Customers Preferences towards Life Insurance, Mutual Fund

and Share Trading’ is the topic head of the project report. In present scenario, is not

only confined to the selling of products, advertisement and sales promotion but it

includes consumer satisfaction as a whole. Marketing is a phenomenon which emphasizes

in making new customers and keeping the relations with the existing customers.

Financial products are those products which have values in monetary terms. The

Financial products are intangible in nature that means the customer cannot even touch,

smell or feel it. In this manner, it becomes a challenge for the sales personnel in financial

sector to convince the customer to invest in it. The sales personnel can only guarantee for

the benefit that the customer will get after a certain period of time span.

The evaluation of financial planning has been increased through decades, which is

best seen in customer rise. Now a day’s investment of saving has assumed great

importance.

According to the study of the Market, it is being observed that markets are doing

well in investments like, Mutual funds, Shares, Life Insurance etc. In near future a proper

financial planning is required to invest money in all type of financial product because

there is good potential in market to invest.

The main objective of this project is to know the Perception of Customers

Preferences towards Life Insurance, Mutual Fund and Share Trading and the people’s

awareness of various instruments available for Tax planning and Personal Financial

Advising facility provided by RELIANCE MONEY LTD.

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RELIANCE CAPITAL

Business overview

Reliance Capital is one of India’s leading private sector financial services companies ,

and ranks among the top 3 private sector financial services and banking companies, in

terms of net worth. Reliance Capital has interests in asset management and mutual funds,

stock broking , life and general insurance , proprietary investments, private equity and

other activities in financial services .

Reliance Capital sees immense potential in the rapidly growing financial services

sector in India and aims to become a dominant player in this industry and offer fully

integrated financial services .

Reliance Life Insurance is an associate company of Reliance Capital Ltd. , a part of

Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of India’s leading

private sector financial services companies, and ranks among the top 3 private sector

financial services and banking companies, in terms of net worth. Reliance Capital has

interests in asset management and mutual funds, stock broking, life and general insurance,

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proprietary investments, private equity and other activities in financial services. Reliance -

Anil Dhirubhai Ambani Group also has presence in Communications, Energy, Natural

Resources, Media, Entertainment, Healthcare and Infrastructure

India ( Mutual Fund ) Regulations, 1996. RCL primarily focuses on funding projects in

the infrastructure sector and supports the growth of its subsidiary companies, Reliance

Capital Asset Management Limited , Reliance Capital Trustee Co. Limited, Reliance

Limited . As of March 31, 2005 , the company’s investment in infrastructure projects

stood at Rs. 1071 Crores. The investment portfolio of RCL is structured in a way that

realizes the highest post- tax return on its investments.

Reliance Capital Ltd According to newspaper

According to newspaper reports, Reliance Capital Limited has decided to convert itself

into a special purpose vehicle cum venture capital outfit. The company plans to develop

infrastructure projects and invest in InfoTech, Internet, media and biotech startup. The

company is also drawing up plans to enter the insurance sector and to expand its mutual fund

business.

Reliance Capital Limited (RCL) is India’s largest private sector financial services company.

RCL has a net worth in excess of Rs. 11 bn. The Reliance group owns a 53% stake in the

company.

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RCL is moving away from the traditional non-banking finance company mould by reducing

business activities pertaining to inter corporate deposits and corporate loans. The company is

setting aside Rs. 10 bn to invest in its new business focus areas.

THE RELIANCE ADA GROUP

The Reliance Group founded by Dhirubhai H. Ambani (1932-2002) is India's largest business

house with total revenues of over Rs 99,000 crore (US$ 22.6 billion), cash profit of Rs 12,500 crore

(US$ 2.8 billion), net profit of Rs 6,200 crore (US$ 1.4 billion) and exports of Rs 15,900 crore

(US$ 3.6 billion).

The Group's activities span exploration and production (E&P) of oil and gas, refining and

marketing, petrochemicals (polyester, polymers, and intermediates), textiles, financial services and

insurance, power, telecom and Communication initiatives.

Setting global benchmarks…

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The largest private sector group in India accounting for 9% of the government’s indirect tax

revenues, about 2.3% of country’s capital formation and 5% of country’s exports.

The company that set up the world’s largest grassroots refinery at Jamnagar in just under 36

months at a cost 30-50% less than that of global undertakings.

The company that set up the world’s largest grassroots multi-feed cracker complex.

The world’s second largest producer of polyester staple fiber and polyester filament yarn.

The world’s largest shareholder family of 5 million.

The only Indian company in Business Week's 1994 listing of the 50 largest companies from

developing countries

Distinction of becoming India’s first private sector company to achieve a ranking in Fortune

Global.

Among the world's top 425 companies by turnover, among world's top 300 companies by net

worth, among world's top 225 companies by net profits

Reliance group's business activities encompass all major growth sectors of the Indian economy:

Oil and gas exploration

Refining and marketing

Petrochemicals including intermediates

Textiles

Power

Telecom

Communication

Insurance

Financial services

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Assets and finance management.

Brokerage firm (Online trade services)

Reliance Money Ltd., an Anil Dhirubhai Ambani Enterprises group company, it’s a part of

Reliance Capital Group. Its India's one of the largest private which provides best services in share

trading and financial services.

It starts business from last 4 months. And millions of people have joined it.

The Anil Dhirubhai Ambani Enterprises group, comprising of Reliance Communication, Reliance

Energy and Reliance Capital are part of the Reliance Group, founded by Shri Dhirubhai H. Ambani

(1932-2002).

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RELIANCE CAPITAL

Reliance Capital is today India's fastest growing financial services powerhouse, with over 5 million

customers. Our customer base is served by one of the most extensive and technologically advanced

distribution networks, comprising over 3,600 outlets in nearly 700 towns and cities across the

country.

An integral member of the Reliance ADA Group, Reliance is the bearers of a proud name, and an

even prouder legacy.

Reliance ADA Group, barely two years in the making, now ranks among India's top 3 business

houses.

We have a strong presence across a wide array of high-growth consumer-facing businesses – from

telecom and financial services to energy and power, from media and entertainment to healthcare.

Across different companies, Reliance ADA group touch the lives of over 100 million customers, or

over 1 in every 10 young and inspirational Indians every single day.

Reliance ADA group enjoys the unparalleled trust, faith and confidence of nearly 7 million

shareowners – the largest such family in India, perhaps even in the world.

Reliance ADA Group is among the largest employers in the country, with a young, highly trained

and motivated workforce approaching 1,00,000-strong.

Reliance have a Group market capitalization of over Rs 1,57,000 crore, having added over Rs

1,42,000 crore or over Rs 300 crore of shareholder wealth creation every single working day over

the past two years.

Reliance ADA group net worth is in excess of Rs 40,000 crore.

It’s cash flows across the Group are approximately Rs 9,000 crore and Net profit is over Rs 5,000

crore.

We have zero net debt at the group level.

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It’s current Group net worth and debt structure gives us the capacity to borrow, on a conservative

basis, over Rs 1,00, 000 crore.

But Reliance Capital, like the Reliance ADA Group, is not just about scale and size. It is also the

about the pursuit of excellence; of values that embody the spirit of New India — the new resurgent

India of the 21st century.

It’s goal is not just to build a great enterprise for its stakeholders, but also to build a great future for

our country: To give millions of young Indians the power to realize their dreams, the opportunities

to shape their own destiny and the means to realize their true and diverse potential.

Performance Review

It’s accounts for the year ended 31st March, 2007, along with the Director's Report, Letter to

Shareholders and Management Discussion and Analysis, have been circulated to you.

• Gross income of Rs.2,158 crore - an increase of 128 per cent

• Net profit of Rs.703 crore - an increase of 23 per cent

• Earnings per share of Rs.30.73 - an increase of 16 per cent

• Book value of Rs. 215.7 per share - an increase of 18 per cent

• Total Assets of Rs. 6,708 crore

Strong Financial Platform

It have created a strong financial platform that will be the bedrock for accelerated future growth.

• It’s net worth now stands at over Rs. 5,297 crore, as on 31st March, 2007, placing us among the

top 3 private sector Indian companies in the financial services sector, after lClCl and HDFC.

• As before, It’s enjoy the highest credit ratings, of `A1' and `F1+', awarded by ICRA and FITCH,

respectively.

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COMPANY PROFILE

Reliance Money is a comprehensive financial solutions provider offering a complete

basket of financial services. Through Reliance Money , currently , a customer will be

able to transact amongst others, in equity and commodity , derivatives , offshore

investments, IPO’s , mutual funds and insurance products.

At present the company has more than 350 employees across 75 locations with a total

number of 42 offices.

Reliance Money can be segregated into 4 main products which include:

1- Reliance Life Insurance Plans

2- Reliance General Insurance policies

3- Reliance Mutul Funds

4- Reliance On line trading facility

Board Of Directors:-

1. Anil Dhirubhai Ambani,Chairman

2. Amitabah Jhunjhunwala,Vice Chairman

3. Rajendra P. Chitale,Director

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4. C.P. Jain,Director

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RELIANCE LIFE INSURANCE

Reliance Life Insurance offers you products that fulfill your savings and protection needs.

Our aim is to emerge as a transnational Life Insurer of global scale and standard.

Reliance Life Insurance is an associate company of Reliance Capital Ltd. Which along with

its associates has acquired 100% shares in AMP Samna Life Insurance Co Ltd.

Reliance Life Insurance has a pan presence and a range of products catering to individual

as well as corporate needs. Reliance Life Insurance is another step forward for Reliance

Capital Limited to offer need based life Insurance solution to individuals and corporate .

There are various plans which are offered for individuals & employees by Reliance Life

insurance.

With largest number of life insurance policies in force in the world, Insurance happens to be

a mega opportunity in India. It’s a business growing at the rate of 15-20 per cent annually

and presently is of the order of Rs. 450 billion. Together with banking services, it adds about

7 per cent to the county’s GDP. Gross premium collection is nearly 2 per cent of GDP and

funds available with LIC for investments are 8 per cent of GDP.

A well-developed and evolved insurance sector is needed for economic development as it

provides long-term funs for infrastructure development and at the same time strengthens the

risk taking ability. It is estimated that over the next ten years India would require investments

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of the order of one trillion US dollar. The Insurance sector, to some extent, can enable

investments in infrastructure development to sustain economic growth of the country.

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Historical Perspective

The history of life insurance in India dates back to 1818 when it was conceived

as a means to provide for English Widows. Interestingly in those days a higher

premium was charged for Indian lives than the non-Indian lives as Indian lives were

considered more riskier for coverage.

Insurance regulation formally began in India with the passing of the Life

Insurance Companies Act of 1912 and the provident fund Act of 1912. Several frauds

20’s sullied insurance business in Indian. By 1938 there were 176 insurance companies. The

first comprehensive legislation was introduced with the Insurance Act of 1938 that provided

strict State Control over insurance business. The insurance business grew at a faster pace

after independence. Indian companies strengthened their hold on this business but despite the

growth that was witnessed, insurance remained an urban phenomenon.

The Government of India in 1956 , brought together over 240 private life insurers

and provident societies under one nationalized monopoly corporation and Life Insurance

Corporation (LIC) was born. Nationalization was justified on the grounds that it would

create much needed funds for rapid industrialization . This was in conformity with the

Government’s chosen path of State lead planning and development.

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The (non-life) insurance business continued to thrive with the private sector till 1972.

Their operations were restricted to organized trade and industry in large cities. The general

insurance industry was nationalized in 1972. With this, nearly 107 insurers were

amalgamated and grouped into four companies- National Insurance Company, New India

Assurance Company, Oriental Insurance Company and United India Insurance Company and

United India Insurance Company. These were subsidiaries of the General Insurance

Company (GIC)

Vision & Mission

Vision

Empowering everyone live their dreams.

Mission

Create unmatched value for everyone through dependable, effective, transparent

and profitable life insurance and pension plans.

Our Goal

Reliance Life Insurance would strive hard to achieve the 3 goals mentioned

below:

Emerge as transnational Life Insurer of global scale and standard

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Create best value for Customers, Shareholders and all Stake holders

Achieve impeccable reputation and credentials through best business

practices

Achievements

RLIC has been one of the fast gainers in market share in new business premium

amongst the private players with an incremental market share of 4.1% in the

Financial Year 2007- 08 – from 3.9% in April 07 to 8% in Feb 08. ( Source: IRDA)

Also continues to be amongst the fast growing Private Life Insurance Companies

with a YOY growth of 195% in new business premium as of Mar’08.

A Company that has crossed 1.7 Million policies in just 2 years of operation,

post take over of AMP Sanmar business.

Initiated Express Life – an Unique ’Over the Counter’ sales process for Unit

Linked Insurance Policies in the Industry.

Accomplished a large distribution ramp-up in the Industry in a short span of time

by opening 600 branches in 10 months taking the overall branch network above

740.

RLIC continues to be one of the two Life Insurance companies in India to be certified

ISO 9001:2000 for all the processes.

Awarded the Jamnalal Bajaj Uchit Vyavahar Puraskar 2007-Ceritificate of

Merit in the Financial Services category by Council for Fair Business Practices

(CFBP).

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PRODUCTS

RELIANCE LIFE INSURANCE offers a complete range

of insurance products

INDIVIDUAL PLANS:

SAVING (Endowment)

Reliance Super Invest Assure Plan

Reliance Total Investment Plan Series I

Reliance Wealth + Health plan

Reliance Automatic Investment plan

Reliance Money Guarantee plan

Reliance Cash Flow plan

Reliance Market Return plan

Reliance Endowment plan

Reliance Special Endowment plan

Reliance Whole Life plan

Reliance Connect 2 Life plan

RETIREMENT

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Reliance Total Investment Plan -Pension

Reliance golden years plan

Reliance golden years plan value

Reliance Automatic Investment Plan

Reliance golden years plan plus

UNIT LINKED

Reliance Total investment plan (new)

Reliance automatic investment plan (new)

Reliance money guarantee plan

Reliance market return plan

Reliance child plan

RISK/PROTECTION

Reliance term plan

Reliance simple term plan

Reliance special term plan

Reliance credit guardian plan

Reliance credit guardian plan

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What if customer already has Life Insurance?

As an individual, for the extent of financial protection you need is different from that as a

married man which in turn is different from that as a parent. At each life stage, it is necessary

to re-evaluate the amount of protection and provision you require and adjust for the same.

Below are some of the events in you life for which you should reevaluate and plan your life

insurance needs.

Life Stages

Marriage

Birth of a child

Schooling of child

College education of child

Marriage of child

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ULIP OF RELIANCE LIFE INSURANCE:

Reliance Super InvestAssure Plan:-

RLIC Super Investassure Plan promises guaranteed additions, with a complete

flexibility to gain control our your investments vis – a –vis your finanical needs and yourrisk

appetite.

How do Guaranteed Additions work ?

Get upto 250% of your first year basic premium as Guaranteed Additions. On the

10th policy anniversary, 50% of first year basic premium will be added to the

fund as guaranteed additions. There after on every 5th policy anniversary 50%

will be added to the fund

Who is the Insured?

Proposer or who so ever above age 30 days and up to 60 years at inception of the

policy. However insurance cover depends on entry age of life assured.

 

Flexible Premium

We give you the flexibility to choose your premium amount.  

Who pays the Premium?

Proposer.  

What happens on the Death of Life Assured?

Total Fund Value OR Sum Assured whichever is higher at the time of intimation of

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death is payable to nominee.

 

What happens on Maturity?

On survival up to maturity total fund value is payable.

 

What are the charges applicable under the plan?

The charges applicable under the plan are Premium Allocation charge, Fund

Management charge, Policy Administration charge Miscellaneous charge (based on

Sum Assured), Mortality charge and Service Tax

What are the additional benefits available?

Top up

Switching

Money @ your wish

Flexibility

Premium Redirection

When does risk commence under the plan?

Risk cover depends on the entry age of life assured, not earlier than 6th

year last birthday.

Investment Option

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Unmatched flexibility to choose funds out of eight fund options in order

to suit your risk appetite:

1. Equity Fund

2. Pure Equity Fund

3. Infrastructure Fund

4. Energy Fund

5. Midcap Fund

6. Corporate Bond Fund

7. Money Market Fund

8. Gilt Fund.

What are the tax benefits available under this plan

Tax deduction under Section 80C and premiums paid tax deduction under

Section 80D of the Income Tax Act, 1961.

The benefits under this plan and riders are eligible for tax benefit under

Section 10(10D) subject to conditions.

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Reliance Market Return Plan:-

You have always aspired for the best in life. And we help you achieve just that. With Reliance

Market Return plan you can have the twin advantage of insurance protection as well as

reaping the benefits of investment growth. It is a flexible plan which works all through your

life and meets the changing requirements like additional protection, liquidity through cash,

option to invest in different asset class, steady golden years and many more.

Key Features – Reliance Market Return Plan:

1. Twin benefit of market linked return and insurance protection

2. A Unit Linked Plan, different form traditional Life Insurance products, with

maximum maturity age of 80 years

3. Option to create your own portfolio depending on your risk appetite

4. Choose from 4 different investment funds

5. Flexibility to switch between funds

6. Option to pay regular as well as single premium & Top-ups

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7. Option to package with Accidental riders

8. Flexibility to increase the Sum Assured

9. Liquidity through partial withdrawals

Reliance Automatic Investment Plan :-

The Key benefits of Reliance Automatic Investment Plan are as follows:

A smart plan which adapts to your changing risk profile with increasing age

Option to lower the average cost of units through systematic transfer of your funds

Flexibility to switch between funds and plans

Options for additional Insurance cover available through riders

Key Features Reliance Automatic Investment Plan

Two plan options to choose from Ready-made and Tailor-made

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Life Stage asset allocation to ensure automatic change in investment patterns, under

the Ready-made Plan option

Freedom to decide your own fund mix based on your risk profile under the Tailor-

made Plan

Regular, limited, single premium paying options

Unmatched flexibility through our ‘Exchange Option’

Liquidity in the form of partial withdrawal

Option to avail of Accidental Death Benefit, Accidental Total, Premium Disability

and Term Insurance riders .

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Reliance Total Investment Plan Series 2:-

Often we notice in our own lives and those of others, how the smallest alteration

makes us change our dreams. And sometimes , we are even forced to let go of these

very dream that have been the cause of hope and happiness in our lives. All of us

desire a security, a security that will not just help us hold on to our dreams, but also make

them larger and fulfill them. It is this security that Reliance Life Insurance Company

Limited promises to bring to you with its Total Investment Plan Series II Pension. To

know more, read further…

We value your dreams in this journey of life. Reliance Total Investment Plan

Series- II Pension (TIPS-II Pension) are the eye to let you see them becoming reality.

Your need for investment keeps changing at different stages of life.

We promise to walk through every need with you in the span spent with us and ever

beyond that and so on…

Whether it is start of your career, your marriage, birth of child, education of

children, their marriage, your old age requirements everywhere you would find

Reliance Total Investment Plan Series II- Pension assisting you financially and

thereby providing relief mentally too in totality .Utilize our multifarious flexibility

options at par as per your convenience. As you progress on this ladder of life we

provide you the platform to increase your investment component. With the

Reliance TIPS- II Pension you can meet all your financial needs, without the

complexity of managing multiple products.

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Key Features:-

This is a Single premium unit linked pension plan with options to purchase the same plan ith

reduced allocation charges in subsequent policy years. Since more premium is allocated

towards investment due to lower allocation charges on subsequent purchases greater would

be the returns. Purchasing the same plan in the subsequent years is an option.

1st purchase would be called as “Classic”

2nd purchase would be called as “Silver”

3rd purchase would be called as “Gold”

4th purchase would be called as “Diamond”

5th purchase would be called as “Platinum”

Once the client purchases the first policy there will full flexibility for the client as to when

second and subsequent purchase can be made and how much premium should be paid for

each purchase subject to the following -

1. The minimum premium on each purchase should be at least Rs. 25,000.

2. The maturity date on each purchase cannot exceed 70 years.

3. All the polices should mature on maturity date of the First purchase.

4. The term of the polices purchased during second , third , Fourth and fifth policy

years will be 9, 8, 7 and 6 respectively.

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Plan Objectives:-

1. Tax benefit undr Sec. 80CCC of Income Tax Act 1961.

2. Investment opportunity with flexibility.

3. Control over your investments.

Reliance Child Plan:-

As a parent, it is only natural to dream of a smooth and blissful life for your child. Which is

exactly why you need to secure your child’s tomorrow, today.

Reliance Child Plan helps you save systematically so that you can give your child the much-

needed financial security in the future. Simply put, Reliance Child Plan gives you the

freedom to enjoy every moment with your child today, without worrying about his/her

tomorrow.

Key Features:-

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Risk protection for you during the term of the Policy

Accumulated bonus at the end of the Policy Term

25% of Sum Assured payable every year as lump sum benefit during the last four

Policy anniversaries

All future premiums are waived in the event of unfortunate loss of life

Guaranteed Fixed Benefits continue even after loss of life of the Policyholder

More value for your money by way of High Sum Assured Rebate

Choose to add the benefit of two riders – Critical Illness Rider and Accidental Death

Benefit & Accidental Death Benefit & Total and Permanent Disablement Rider

Policy participates in profit even after the loss of life of the Life Assured

Reliance Golden Year Plan:-

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Retirement means different things to different people, while some want to relax and take a

trip around the world, some want to start up a venture of their own, and pursue a dream

harnessed for years.

The power to make your autumn years special lies only with you. The Reliance Golden Years

Plan gives you the power and the right kind of solution - A retirement plan that allows you to

save systematically and generate the much-needed corpus to make your olden years look

golden.

UNDER THIS PLAN THE INVESTMENT RISK IN THE INVESTMENT

PORTFOLIO IS BORNE BY THE POLICYHOLDER.

Key Features :-

Invest systematically and secure your golden years

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A flexible unit-linked pension product that is different from traditional life insurance

products with Vesting Age between 45 and 70 years

Four different investment funds to choose from

Flexibility to switch between funds

Option to pay Regular, Single as well as Top-up Premiums

Flexibility to advance/extend your Vesting Age

Tax free commutation up to one third of Fund Value at Vesting Age.

Reliance Golden years plan Plus:-

There will come a day when you will hang up your boots and relax. But in order to achieve

that ultimate stress free mind set for your autumn years, it is important that you plan now!

Fulfill your dream of building up a minimum desired retirement fund which will ensure the

independence you deserve.

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Key Features:-

A flexible Unit-linked Pension product, different from traditional products with

Vesting Age between 45 and 64 years

Invest systematically and secure your golden years

Four different investment funds to choose from

Choose to switch between funds

Flexibility to advance your Vesting Age

Tax free commutation up to one third of fund value at Vesting Age .

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Fund Performance

Fund Performance

Fund Name NAV per Unit

GG - Balanced Fund 10.5562

GG - Capital Secure Fund 11.1466

GG - Growth Fund 10.0422

GLE - Corporate Bond Fund 10.2861

GLE - Equity Fund 6.5224

GLE - Gilt Fund 10.1693

GLE - Money Market Fund 10.5236

GSA - Balanced Fund 13.4130

GSA - Capital Secure Fund 10.1979

GSA - Growth Fund

AIP - Corporate Bond Fund 10.7679

AIP - Equity Fund 8.7013

AIP - Fund A 9.1736

AIP - Fund B 9.8436

AIP - Fund C 10.3985

AIP - Gilt Fund 10.3582

AIP - Money Market Fund 10,8559

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MAJOR PLAYERS OF LIFE INSURANCE IN INDIA:-

1. Life Insurance Corporation of India

2. ICICI prudential Life Insurance

GYP - Balanced Fund 13.5755

GYP - Capital Secure Fund 12.3290

GYP - Equity Fund 10.2406

GYP - Growth Fund 11.8946

MGP - Fund D 10.5308

MGP - Fund E 10.4514

MGP - Fund F 10.4340

MGP - Return Shield Fund 10.7290

MRP - Balanced Fund 13.5666

MRP - Capital Secure Fund 12.2918

MRP - Equity Fund 20.6010

MRP - Growth Fund 14.9157

SCP - Equity Fund 6.6446

SCP - Fund G 9.4353

SCP - Fund H 8.6480

SCP - Return Shield Fund 10.1227

SIP - Corporate Bond Fund 9.9022

SIP - Energy Fund 9.5228

SIP - Equity Fund

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3. HDFC Standard Life Insurance

4. Max New York Life Insurance

5. Birla Sun Life Insurance

6. Om Kotak Mahindra Life Insurance

7. Reliance Life Insurance

8. Allianz Bajaj Life Insurance

9. Ing Vyasa Life Insurance

10. SBI Life Insurance

11. Metlife Insurance

12. Sahara Life Insurance

13. Aviva Life Insurance

14. TATA Aig life Insurance

MUTUAL FUNDS

A Mutual Fund is 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

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instrument such as shares , debentures and other securities . The income earned through these

investments and the capital appreciation realized are shared buy its unit holders in proportion

to the number of unit 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 describe broadly

the working of a mutual fund :

The history of mutual funds in India can be broadly divided into four distinct phases .

First Phase-1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament . It was set up by

the Reserve Bank of India . In 1978 UTI was de linked from the RBI and the Industrial

Development Bank of India (IDBI) took over the regulatory administrative control in place

of RBI . The first scheme launched by UTI was unit Scheme 1964 .At the end of 1988 UTI

had Rs. 6,700 crores of assets under management .

Second Phase–1987–1993(Entry of Public Sector funds )

The year 1987 marked the entry of non – UTI , public sector mutual funds set up by public

sector banks a Life Insurance Corporation of India (LIC) and General Insurance Corporation

of India (GIC) .SBI Mutual Fund was the first non-UTI Mutual Fund established in June

1987 followed by Cenrabank Mutual Fund ( Dec 87 ) , Punjab National Bank

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Mutual Fund ( Aug 89 ) ,Indian Bank Mutual Fund (Nov 89 ), Bank of India

(Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its fund in

June 1989 while GIC had set up its mutual fund in December 1990.

At the end of 1993 , the mutual fund industry had assets under management of Rs.

47,004 crores and then the mutual funds industry flourished further.

Third Phase – 1993-2003 ( Entry of Private Sector Funds )

With the entry of private sector funds in 1993, a new era started in Indian mutual

fund industry, giving he Indian investors a wider choice of fund families. Also, 1993, was

the year in which the first Mutual Fund Regulations came into being , under which all

mutual funds, except UTI were to be registered and governed. The erstwhile Kothari

Pioneer (now merged with Franklin Templeton ) was he first private sector mutual fund

registered in July 1993.

The 1993 SEBI ( Mutual Fund ) Regulations were substituted by a more

comprehensive and revised Mutual Fund Regulations in 1996. The industry now

functions under the SEBI ( Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing , with foreign mutual funds

setting up funds in India and also the industry has witnessed several mergers and

acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets

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of Rs. 1,21,805 crores. The Unit Trust of India with Rs. 44,541, crores of assets of assets

under management was way ahead of other mutual funds .

Fourth Phase – since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI

was bifurcated into two separate entities . One is the Specified Undertaking of the Unit

Trust of India with assets under management of Rs. 29,835 crores as at the end of

January 2003, representing broadly , the assets of US 64 scheme, assured return and

certain other schemes. The Specified Undertaking of Unit Trust of India, functioning

under an administrator and under the rules framed by Government of India and does not

come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC, it

is registered with SEBI and functions under the Mutual Fund Regulations. With the

bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of

assets under management and with the setting up of a UTI Mutual fund, conforming to the

SEBI Mutual Fund Regulations, and with recent mergers taking place among different

private sector funds.

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Reliance Mutual Fund (RMF)

Reliance Mutual Fund, a part of the Reliance – Anil Dhirubhai Ambani Group (R-ADAG)

is one of the fastest growing mutual funds in the country . Reliance Mutual Fund offers

investors a well rounded portfolio of products of meet varying investor requirements .

Reliance Mutual Fund has a presence in over 115 cities across the country , an investor

base of over 3.1 Million and manages assets over Rs. 39019 crore as on 31st

Jan 2007.

Reliance Mutual Fund constantly endeavors to launch innovative products and customer

service initiatives to increase value to investors.

Reliance Mutual Fund schemes are managed by Reliance Capital Asset

Management Ltd. A wholly owned subsidiary of Reliance Capital Ltd. Reliance Capital

is one of India’s leading and fastest growing private sector financial services companies,

and ranks among the top 3 private sector financial services and banking companies, in

terms of net worth . Reliance Capital has interests in asset management and mutual funds ,

life and general insurance , private equity and proprietary investments , stock broking and

other financial services .

39

There are three types of schemes which are provided to the investors under these

mutual funds and they are as follows.

Equity / Growth Schemes.

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

term. Such schemes normally invest a major part of their corpus un equities . Such funds

have comparatively high risks. These schemes provide different options to the investors

like dividend option , appreciation , etc. and the investors may choose an option

depending on their preferences. The investors must indicate the option in the application

form . the mutual funds also allow the investors to change the options at a later date.

Growth schemes are good for investors having a long – term outlook seeking

appreciation over a period of time .

Debt/ Income Schemes

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,

Government securities an money market instruments . Such funds are less risky

40

compared to equity schemes. These funds are not affected because of fluctuations in

equity markets. However, opportunities of capital appreciation are also limited in

such funds . The NAV’s of such funds are affected because of change in interest rates

in the country. If the interest rates fall, NAV’s of such funds are likely to increase in the

short run and vice versa. However, long term investors may not bother about these

fluctuations.

Sector Specific Schemes

These are the funds / schemes which invest in the securities of only those sectors or

industries as specified in the offer documents . e.g. Pharmaceuticals, Software, Fast

Moving Consumer Goods ( FMCG), Petroleum stocks, etc. The returns in these funds are

dependent on the respective sectors / industries.

ADVANTAGES OF MUTUAL FUND :-

Mutual Funds are of great importance to the investors. Some of the advantages of

mutual funds could be summarized as follows:

The advantages of investing in a Mutual Fund are

Professional Management

Diversification

Convenient Administration

41

Return Potential

Low Costs

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated

TYPES OF MUTUAL FUND SCHEMES;-

Wide variety of Mutual Fund Schemes exist to cater to the needs such as financial

position , risk tolerance and return expectations etc. The table below gives an overview

into the existing types of schemes in the Industry .

TYPES OF MUTUAL FUND SCHEMES :-

BY STRUCTURE

Open – Ended Schemes

Close – Ended Schemes

Interval – Schemes

42

BY INVESTMENT OBJECTIVE

Growth Schemes

Income Schemes

Balanced Schemes

Money Market Schemes

OTHER SCHEMES

Tex Saving Schemes

Special Schemes

Index Schemes

Sector Specifies Schemes

Demat Account

Demat account allows you to buy, sell and transact shares without the endless

paperwork and delays. It is also safe , secure and convenient .

What is Demat account ?

Demat refers to a dematerialized account.

Just as you have to open an account with a bank if you want to save your money,

make cheque payment etc, you need to open a Demat account If you want to buy or sell

stocks. So it is just like a bank account where money is replaced by shares. You have

43

to approach the DPs ( remember, they are like bank branches ) , to open your Demat

account.

Let’s say your portfolio of shares looks like this : 40 of Infosys, 25 of Wipro , 45 of

HLL and 100 of ACC. All these will show in your Demat account . So you don’t have

to possess any physical certificates showing that you own these shares. They are all

held electronically in your account As you buy and sell the shares, they are adjusted in

your account . Just like a bank passbook or statement, the DP will provide you with

periodic statements of holdings and transactions .

Is a Demat account a must ?

Nowadays, practically all trades have to be settled in dematerialized form . Although

the market regulator, the Securities and Exchange Board of India (SEBI) , has allowed

trades of upto 500 shares to be settled in physical form , nobody wants physical shares

any more . So a Demat is a must for trading and investing.

Why Demat ?

The Demat account reduces brokerage charges , makes pledging / hypothecations of

shares easier, enables quick ownership of securities on settlement resulting in increased

44

liquidity , avoids confusion in the ownership title of securities , and provides easy receipt

of public issue allotments .

It also helps you avoid bad deliveries caused by signature mismatch, postal delays and

loss of certificates in transit , Further, it eliminates risks associated with forgery ,

counterfeiting and loss due to fire, theft or mutilation . Demat account holders can also

avoid stamp duty ( as against 0.5 per cent payable on physical shares ), avoid filling up of

transfer deeds , and obtain quick receipt of such benefits as stock splits and bonuses.

Demat Benefits ;-

The benefits are enumerated below –

A safe and convenient way to hold securities ;

Immediate transfer of securities;

No stamp duty on transfer of securities

Elimination of risks associated with physical certificates such as bad delivery ,

fake securities , delays , thefts etc.

Reduction in paperwork involved in transfer of securities;

Reduction in transaction cost;

No odd lot problem , even one share can be sold;

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Nomination facility.

Change in address recorded with DP gets registered with all companies in which

investor holds securities electronically eliminating the need to correspond with

each of them separately;

Transmission of securities Is done by DP eliminating correspondence with

companies;

Automatic credit into Demat account of shares , arising out of bonus / split /

consolidation / merger etc.

Holding investments in equity and debt instruments in a single account.

46

Standard document require to open an Online

Trading Account

1- Proof of residence ( Address proof)

o Driving license

o Voter’s ID

o Passport

o Photo credit card

o Utility Bill ( Telephone, Electricity etc)

o

Bank Statement

2- Proof of identity

o Driving license

o Voter’s ID

o Passport

o Photo ration card

3- PAN Card

4- Three photographs

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Brokerage and fees :

Reliance Money is offering lowest brokerage rates in today’s online stock trading

industry . The brokerages are as low as 0.075% for delivery based trading and 0.02

for now delivery .

Note: The above figures may not accurate , pleases contact your nearest Reliance

Money broker to check the brokerages they are offering .

Advantages of Reliance Money :-

1- Extra security features with “Security Token” which is the most secure and tested

technology in computer world .

2- Simple, easy and fast online stock trading .

3- Almost all investment options are available under one account including Equity

Trading , Derivatives , Forex, Commodity , IPO Mutual Funds and Insurance.

4- Branches are now available in all major cities and the number is growing

Branches are open from 9 am to 9pm.

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Benefits of having a Reliance Money Account

1- It’s Cost – effective

You pay comparatively lower transaction fees. As an introductory offer, we

invite you to pay a flat fee of Just Rs. 500/ and transact through Reliance Money

. This fee is valid for two months or a specified transaction value. See the

Table for details .

Validity (whichever is

earlier )

Turnover limit

Access Fee Time

Validity

Turnover

Validity

Non-deliver

turnover

Delivery

turnover

500 2 months Rs. 1Cr. Rs.90 Lac Rs. 10 Lac

1350 6 months Rs. 3Cr. Rs.2.7 Cr. Rs. 30 Lac

2500 12 months Rs. 6Cr. Rs.5.4 Cr. Rs. 60 Lac

2- It’s offers Single- Window Access

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Through Reliance Money’s associates you can transact in Equity, equity

& Commodity Derivatives , Offshore Investments , Mutual Funds , IPOs ,

Life Insurance , Money Transfer, Money Changing and Credit Cards , amongst other.

3- Its Covenient

You can assess Reliance Money’s services through

1- The Internet ,

2- Transaction Kiosks,

3- The phone (Call & Transact ) and through

4- Our all – India network of associates On an assisted trade ( through the Call

Centre or our network of associates ) a charge of Rs. 12 per executed trade will be

applicable.

4- It’s Safe

Your account is safe guarded with a unique security number that changes every 32

seconds. This number works as a dynamic password to keep your account extra safe.

5- It provides you a Demat Account

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You get your own Demat Account with Reliance Capital at an annual fee of just Rs.

50/-

6- It provides you a 3… in … I facility

You can access your Banking, Trading and Demat Account through a single window and

transfer funds across accounts seamlessly !

7- It provides you value – added services

At www.reliancemoney.com you get

1- Reliable research, including views of external experts with an enviable track

record.

2- Live news updates from Reuters and Dow Jones.

3- CEOs/ Epert views on the economy and financial markets.

4- Tools that help you plan investments , tax retirement, etc , in the personal

finance section .

5- Risk Analyzer for analysis of your risk profile .

6- Asset allocates to bold an appropriate investment portfolio.

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STOCK BROKING…

Bombay Stock Exchange (BSE)

Heritage

The oldest exchange in Asia and the first exchange in the country to be granted permanent

recognition under the Securities Contract Regulation Act, 1956, Bombay Stock Exchange

Limited (BSE) has had an interesting rise to prominence over the past 130 years.

While the BSE is now synonymous with Dalal Street, it wasn’t always so. In fact the first

venues of the earliest stock broker meetings in the 1850s were amidst rather natural environs

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- under banyan trees - in front of the Town Hall, where Horniman Circle is now situated. A

decade later, the brokers moved their venue to another set of foliage, this time under banyan

trees at the junction of Meadows Street and Mahatma Gandhi Road. As the number of

brokers increased, they had to shift from place to place, and wherever they went, through

sheer habit, they overflowed in to the streets. At last, in 1874, found a permanent place, and

one that they could, quite literally, call their own. The new place was, aptly, called Dalal

Street.

The Journey Of BSE

The journey of BSE is as eventful and interesting as the history of India’s securities markets.

India’s biggest bourse, in terms of listed companies and market capitalisation, BSE has

played a pioneering role in the Indian Securities Market - one of the oldest in the world.

Much before actual legislations were enacted, BSE had formulated comprehensive set of

Rules and Regulations for the Indian Capital Markets. It also laid down best practices

adopted by the Indian Capital Markets after India gained its Independence.

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54

The Bombay Stock Exchange Building

Perhaps, there would not be any leading corporate in India, which has not sourced BSE’s

services in resource mobilization.

BSE as a brand is synonymous with capital markets in India. The BSE SENSEX is the

benchmark equity index that reflects the robustness of the economy and finance. At par with

international standards, BSE has been a pioneer in several areas. It has several firsts to its

credit even in an intensely competitive environment. They are: -

First in India to introduce Equity Derivatives

First in India to launch a Free Float Index

First in India to launch US$ version of BSE Sensex

First in India to launch Exchange Enabled Internet Trading Platform

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First in India to obtain ISO certification for Surveillance, Clearing & Settlement

BSE On-Line Trading System’ (BOLT) has been awarded the globally

    recognized the Information Security Management System standard

    BS7799-2:2002.

First to have an exclusive facility for financial training

Moved from Open Outcry to Electronic Trading within just 50 days

An equally important accomplishment of BSE is the launch of a nationwide investor

awareness campaign - Safe Investing in the Stock Market - under which nationwide

awareness campaigns and dissemination of information through print and electronic medium

was undertaken. BSE also actively promoted the securities market awareness campaign of

the Securities and Exchange Board of India.

In 2002, the name The Stock Exchange, Mumbai, was changed to BSE. BSE, which had

introduced securities trading in India, replaced its open outcry system of trading in 1995,

when the totally automated trading through the BSE Online trading (BOLT) system was put

into practice. The BOLT network was expanded, nationwide, in 1997. It was at the BSE's

International Convention Hall that India’s 1st Bell ringing ceremony in the history Capital

Markets was held on February 18th, 2002. It was the listing ceremony of Bharti Tele

ventures Ltd.

BSE with its long history of capital market development is fully geared to continue its

contributions to further the growth of the securities markets of the country, thus helping India

increase its sphere of influence in international financial markets.

56

SENSEX Calculation Methodology

SENSEX is calculated using the "Free-float Market Capitalization" methodology. As per this

methodology, the level of index at any point of time reflects the Free-float market value of 30

component stocks relative to a base period. The market capitalization of a company is

determined by multiplying the price of its stock by the number of shares issued by the

company. This market capitalization is further multiplied by the free-float factor to determine

the free-float market capitalization.

The base period of SENSEX is 1978-79 and the base value is 100 index points. The notation

1978-79=100 often indicates this. The calculation of SENSEX involves dividing the Free-

float market capitalization of 30 companies in the Index by a number called the Index

Divisor. The Divisor is the only link to the original base period value of the SENSEX. It

keeps the Index comparable over time and is the adjustment point for all Index adjustments

arising out of corporate actions, replacement of scripts etc. During market hours, prices of the

index scripts, at which latest trades are executed, are used by the trading system to calculate

SENSEX every 15 seconds and disseminated in real time.

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National Stock Exchange (NSE)

The Organization

The National Stock Exchange of India Limited has genesis in the report of the High Powered

Study Group on Establishment of New Stock Exchanges, which recommended promotion of

a National Stock Exchange by financial institutions (FIs) to provide access to investors from

all across the country on an equal footing. Based on the recommendations, NSE was

promoted by leading Financial Institutions at the behest of the Government of India and was

incorporated in November 1992 as a tax-paying company unlike other stock exchanges in the

country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act, 1956

in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM) segment

in June 1994. The Capital Market (Equities) segment commenced operations in November

1994 and operations in Derivatives segment commenced in June 2000.

NSE Group

The group of National Stock Exchange Of India comprises of the following organizations:-

NSCCL

IISL

NSE.IT

NSDL

DOTEX INTL LTD.

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The logos of these subsidiaries of NSE are: -

NSCCL IISL NSDL NSE

NSE.IT DotEx Intl. Ltd.

IMPACT OF TECHNOLOGY ON BROKERAGE BUSINESS

The trading on stock exchanges in India used to take place through open outcry without use

of information technology for immediate matching or recording of trades. This was time

consuming and inefficient. This imposed limits on trading volumes and efficiency. In order

to provide efficiency, liquidity and transparency, NSE introduced a nation-wide on-line fully-

automated screen based trading system (SBTS) where a member can punch into the computer

quantities of securities and the prices at which he likes to transact and the transaction is

executed as soon as it finds a matching sale or buy order from a counter party. SBTS

electronically matches orders on a strict price/time priority and hence cuts down on time, cost

and risk of error, as well as on fraud resulting in improved operational efficiency. It allows

faster incorporation of price sensitive information into prevailing prices, thus increasing the

informational efficiency of markets. It enables market participants, irrespective of their

59

geographical locations, to trade with one another simultaneously, improving the depth and

liquidity of the market. It provides full anonymity by accepting orders, big or small, from

members without revealing their identity, thus providing equal access to everybody. It also

provides a perfect audit trail, which helps to resolve disputes by logging in the trade

execution process in entirety. This sucked liquidity from other exchanges and in the very first

year of its operation, NSE became the leading stock exchange in the country, impacting the

fortunes of other exchanges and forcing them to adopt SBTS also. Today India can boast that

almost 100% trading take place through electronic order matching.

Technology was used to carry the trading platform from the trading hall of stock exchanges

to the premises of brokers. NSE carried the trading platform further to the PCs at the

residence of investors through the Internet and to handheld devices through WAP for

convenience of mobile investors. This made a huge difference in terms of equal access to

investors in a geographically vast country like India.

The trading network is depicted in Figure below NSE has main computer which is connected

through Very Small Aperture Terminal (VSAT) installed at its office. The main computer

runs on a fault tolerant STRATUS mainframe computer at the Exchange. Brokers have

terminals (identified as the PCs in the Figure 1) installed at their premises, which are

connected through VSATs/leased lines/modems. An investor informs a broker to place an

order on his behalf. The broker enters the order through his PC, which runs under Windows

NT and sends signal to the Satellite via VSAT/leased line/modem. The signal is directed to

mainframe computer at NSE via VSAT at NSE's office. A message relating to the order

activity is broadcast to the respective member. The order confirmation message is

immediately displayed on the PC of the broker. This order matches with the existing passive

order(s), otherwise it waits for the active orders to enter the system. On order matching, a

message is broadcast to the respective member. The trading system operates on a strict price

60

time priority. All orders received on the system are sorted with the best priced order getting

the first priority for matching i.e., the best buy orders match with the best sell order. Similar

priced orders are sorted on time priority basis, i.e. the one that came in early gets priority

over the later one.

Figure: Trading Network

The computer keeping the system transparent, objective and fair matches orders

automatically. Where an order does not find a match, it remains in the system and is

displayed to the whole market, till a fresh order comes in or the earlier order is cancelled or

modified. The trading system provides tremendous flexibility to the users in terms of kinds of

orders that can be placed on the system. Several time-related (good till cancelled, good till

day, immediate or cancel), price-related (buy/sell limit and stop loss orders) or volume

related (all or none, minimum fill, etc) conditions can be easily built into an order. The

trading system also provides complete market information on-line. The market screens at any

point of time provide complete information on total order depth in a security, the five best

buys and sells available in the market, the quantity traded during the day in that security, the

61

high and the low, the last traded price, etc. Investors can also know the fate of the orders

almost as soon as they are placed with the trading members. Thus the NEAT system provides

an Open Electronic Consolidated Limit Order Book (OECLOB). Limit orders are orders to

buy or sell shares at a stated quantity and stated price. If the price quantity conditions do not

match, the limit order will not be executed. The term “limit order book” refers to the fact that

only limit orders are stored in the book and all market orders are crossed against the limit

orders sitting in the book. Since the order book is visible to all market participants, it is

termed as an ‘Open Book’.

ACHIEVING AN INDIVIDUAL INVESTOR FRIENDLY SYSTEM

USING THE POWER OF THE INTERNET

Some key alterations to the existing system of investor education and protection can

introduce a lot of transparency and efficiency into it. The way to do this will be to introduce a

major leveling agent, which will do away with the opaqueness that the existing system is

shrouded with. This leveling agent is the internet.

It has to be understood that the internet is primarily an information transfer agent and has a

very vital role in our proposed system. However, my system is not restricted to a mere

website and an email address. The website will act as a facilitator, very much like a

lubricating system, but needless to say, human will and effort have to be the key forces that

will make it a success.

62

This system will have the following functions :

1. To effectively inform, educate and support the investor through his business dealings.

The information will have an encouraging tone rather than the unsympathetic and cold legal

and financial chatter that is generally found in support documentation. This is not a rule

booklet but a resource for the layman.

2. To give prior warnings to an investor about any investment or any financial firm to which

he might be investing his money in where such a warning is required. For example, his

investment profile may not match his choice of investment or his financial firm may have a

long record of ill treatment of investors.

3. To give the small investor the power to fight back any threat to his hard earned money.

This will be achieved by the Reputation Rating System (RRS), which is explained later. This

particular rating system would also ensure that the opportunities for ill-treating or harassing

investors diminish with the growing popularity of reputation ratings.

4. To modify the arbitration and dispute resolution system so that even smaller investors

with very low net worth can also seek & obtain expedited justice.

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Stock Broking

You can invest your money in stock market in two ways:

1. Primary Market

2. Secondary Market

Primary market

Primary markets bring together buyers and sellers - either directly or through intermediaries -

by providing an arena in which sellers’ investment propositions can be priced, brought to the

marketplace, and sold to buyers. In this context, the seller is called the issuer and the price of

what’s sold is called the issue price. 

It is the initial market for any item or service. It also signifies an initial market

for a new stock issue. The jargon also means a firm, trading market held in a security by a

trader who performs the activities of a specialist by being ready to execute orders in that

stock.

Secondary Market

Secondary Markets are the stock exchanges and the over-the-counter market. Securities are

first issued as a primary offering to the public. When the securities are traded from that first

holder to another, the issues trade in these secondary markets.

64

Top five shares traded at Bombay stock exchange are:

1. Tata Steel

2. Dr.reddy

3. Ranbaxy

4. ONGC

5. BHEL

Basic Information

Besides familiarity with the stock market, the transaction process, and having an account at a

broker or sub-broker, knowledge of basic investment information is also important to making

investment decisions. In this section, you can read about the basics of investment that often

appear in stock market reports and discussions.

1. Market information

Important data and information about the overall market situation that you often come across

include:

Stock market index :-

There are a number of stock market indices but the most widely used is the SET Index,

which calculates the average price of all listed shares weighted by the number of registered

shares. Thus, price movements of large capitalization stocks have a greater influence on the

movement of the SET Index than price changes of small capitalization stocks. Besides the

SET Index , other stock price indices have been constructed to track market trends, for

65

example the SET50 Index, Book Club Index, TISCO Price Index, and Sector Indices to track

the price movements of individual sectors.

Market turnover :-

It's often quoted together with the SET Index to indicate how active the trading activities are.

In a bullish market, turnover is high as investors trade actively.

2. Stock information

In addition to the market information above, it's essential to understand how to pick good

stocks. Here are some basic investment principles.

Price:-

Stock price is an important factor to investors, as buying and selling influence stock price

movements. At the end of the day, investors like to know how their stocks fared. Did they

close higher? Lower? And by how much? The change in price of a stock also reflects the

amount of money for investor decision-making whether to buy, sell, or hold. In stock

valuation, price has to be considered in conjunction with other performance variables such as

earnings per share and dividends. Stock price is therefore only one factor in your initial

investment consideration.

Price-Earnings Ratio (P/E Ratio): -

The ratio is derived by comparing the Close Price (P) with Earnings per share (E). It is a

measure of the stock's fundamental value.

P/E Ratio is calculated by dividing the Close Price (P) with Earnings per share (E).

                

P/E = Close price or market price (P)

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               12-month earnings per share (E)

P/E ratio tells you how many years it will take the company's earnings to add up to its

stock price at the time of calculation.

For example, if the close price of stock ABC (P) is 100 Rs and its earnings per share

(E) is 20 Rs, then its P/E Ratio equals 100/20 = 5. That is, at the time of calculation, it

will take only 5 years of company ABC's earnings to equal its stock price

A stock with low P/E ratio is preferable to one with a high P/E. Conversely, suppose

stock DEF closes at 200 Rs and its earnings per share (E) is 20 Rs, its P/E Ratio

equals 200/20 = 10. At the time of calculation, it will take 10 years of company DEF's

earnings to equal its stock price. Comparing stock ABC with stock DEF, we can draw

an initial conclusion that stock ABC is more attractive than stock DEF.

In brief, a low P/E stock has more earnings potential or is cheaper than a high

P/E stock, considering its earnings ability.

Dividend Yield: Rate of dividend return, shown in percentage form.

A stock with a high Dividend Yield is more attractive because you get a Higher rate of

return in the form of dividends.

The formula for calculating Dividend Yield is

               Dividend Yield = Dividend x 100                                         Stock Price

For example, if stock ABC has a market price of 20 Rs and pays a 2 baht dividend, its

dividend yield is

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2 x 100 = 10%

20

Trading Volume: -

Trading volume or liquidity of a stock is important. It's easier to trade in/out of a stock with

high liquidity or large trading volume. It's difficult to buy a stock which has a low liquidity or

low trading volume because there are few sellers. And selling is difficult if there are few or no

buyers when you want to sell because you urgently need the cash.

Financial Analysis:-

Analysis of a company's growth potential, stability, financial and management strengths, and

profit potential for its investors. Financial analysis is a rather complex exercise and can be

left until you've mastered more basic investment knowledge. Besides market conditions and

individual stock factors, a myriad of other variables influence stock market and stock price

movements Investors can follow them in various media reports

What is a Stock Share?

Corporations issue official-looking sheets of paper that represent ownership of the company.

These are called stock certificates, and each certificate represents a set number of shares.

Why invest in the stock market?

When you buy stock in a corporation, you own part of that company. This gives you a vote at

annual shareholder meetings, and a right to a share of future profits.

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Why Sell Stock?

The reasons people sell their stock are more complex. A person may just need the money. He

or she may have watched the price go up, and have a hunch this is a good time to lock in their

profit and sell some or all their shares.

How are shares bought and sold on the NASDAQ?

If an investor asked his or her broker to buy shares in a company, the broker would call a few

dealers, known as market makers, finding the best price for the customer.

How are stocks traded on the New York Stock Exchange?

Stocks that are bought and sold on the NYSE and the American Stock Exchange (AMEX)

use an auction system.

What are ECNs?

Mutual Funds do much of their trading among themselves and with other institutional

investors directly through electronic computer networks (ECNs), the largest being Instinet.

Supply and Demand

A stock's price movement, up and down until the end of the trading day, is strictly a result of

supply and demand. The SUPPLY is the number of shares offered for sale at anyone one

moment. The DEMAND is the number of shares investors wish to buy at exactly that same

time.

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American Stock Exchanges

American stock exchanges by year of inception.

International Stock Exchange

International stock exchanges by location.

What fuels demand for a stock?

Wall Street has said for years that the market is efficient, and the price of a stock represents

everything that is known about a company up to that moment. Wrong, stock prices over-react

to news, both good and bad.

More to Know About Stock Trading

Probably the first thing you must understand, is that with any investment, there is always

some risk. Even your savings account, insured by the United States Government, has the very

real risk of inflation rising faster than the interest the bank pays you.

What is a Limit Order?

Most new investors place market orders, just buying or selling at the moment's current price.

But you can place a limit order, in which you name the price that triggers your order to buy

or sell.

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Preferred Stock

When I was about 13 and first heard about ?preferred Investors that buy preferred stock are

generally the conservative type, who are looking for a steady dividend that may be higher

than they can achieve with A-rated bonds.

How to Buy Stock?

Buying stocks is not as simple as walking into a stockbroker's office and buying shares like

you would a pair of shoes from a store. You are required to open an account with the

brokerage, like opening an account at a bank.

How much money do you need to open a brokerage account?

Although most traditional full-service brokerage houses such as Merrill Lynch, Dean Witter,

and Paine-Webber, and giant "discount" brokers such as Fidelity and Charles Schwab require

a $2,000 ($1,000 for IRA's) opening balance, I have located 10 brokers who will establish

your account with no money - $0.00!

Money Market Funds

Investments such as bank certificates of deposit (CDs) which are insured by the federal

government, sound pretty good. You agree to tie up your money for anywhere from 30 days

to 5 years to earn a guaranteed rate of interest.

Margin Loans and Investment

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If you have at least $5,000 in cash and investments in your account, you can use available

margin to increase your profits. But using margin doubles your risk!

Useful links about Reliance Money

1- Reliance Money Website: www.reliancemoney.com

2- Branch Locator : Reliance Money Branch Locator

Contact Information –

1- Website : www.reliancemoney.com

2- Email: CustomerCare@relianceMoney.com

3- Phone : 022-39886000

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METHODOLOGY

SAMPLING

In Sampling the random sampling method is selected .

SAMPLE SIZE

In the sample there are 45 Remisers, 8 Franchisees, 4 Web World and 20 Web

Express, and 23 Direct Channel taken as samples and these the studied.

RESARCH DESIGN

It is a descriptive research design.

73

FINDINGS

AGE 18-25

Income No.As a % of

totalabove5 6 0.25b/w 2-5 14 0.58below 2 4 0.17

24 1

INCOME

25%

58%

17%above5

b/ w 2-5

below 2

Life Insurance Cover No.

As a % of total

Yes 10 0.42No 14 0.58

24 1

LIFE INSURANCE COVER

42%

58%

Yes

No

74

Invest or Not No. As a % of total

Yes 13 0.54No 11 0.46

24 1

INVEST OR NOT

54%

46% Yes

No

Reasons for Investment No.

As a % of total

Asset Purchase 8 0.470588235Building Cash

Reserves 4 0.235294118Retirement 3 0.176470588

Others 2 0.11764705917 1

REASONS FOR INVESTMENTS

46%

24%

18%12%

Asset Purchase

Building CashReserves

Retirement

Others

75

PORTFOLIO No.As a % of

totalMutual Funds 10 0.344827586Fixed

Deposits 5 0.172413793ULIP 4 0.137931034Share

markets 7 0.24137931Others 3 0.103448276

29 1

PORTFOLIO

35%

17%14%

24%

10% Mutual Funds

Fixed Deposits

ULIP

Share markets

Others

ULIP Scheme No.

As a % of total

ICICI 2 0.5LIC 1 0.25

AVIVA 1 0.254 1

ULIP SCHEME

ICICI50%

LIC25%

AVIVA25% ICICI

LIC

AVIVA

76

M.F Co. No. As a % of total

Franklin 4 0.25ICICI 2 0.125

Fidelity 2 0.125Reliance 4 0.25Others 4 0.25

16 1

MUTUAL FUNDS

Franklin24%

ICICI13%Reliance

25%

Others25%

Fidelity13%

Franklin

ICICI

Fidelity

Reliance

Others

RETURNS ON M.F. No.As %

of total10%-20% 5 0.520%-30% 3 0.3above 30% 2 0.2

10 1

RETURNS ON M.F.

50%30%

20%10%-20%

20%-30%

above 30%

77

AGE 25-35

Income No. As a % of totalabove5 11 0.314285714b/w 2-5 19 0.542857143below 2 5 0.142857143  35 1

Income

31%

55%

14%above5

b/ w 2-5

below 2

Invest or Not No.As a % of total

Yes 26 0.74285714No 9 0.25714286    0  35 1

INVEST OR NOT

74%

26%

Yes

No

78

Life Insurance Cover

No. As a % of total

Yes 25 0.71428571No 10 0.28571429    0  35 1

LIFE INSURANCE COVER

71%

29%Yes

No

Reasons for Investment No. As a % of totalIncome replacement 4 0.090909091Asset Purchase 6 0.136363636Building Cash Reserves 16 0.363636364Retirement 7 0.159090909Funding for Children 9 0.204545455Others 2 0.045454545

  44 1

REASONS FOR INVESTMENT

14%

36%16%

20%5%

IncomereplacementAsset Purchase

Building CashReservesRetirement

Funding forChildrenOthers

79

PORTFOLIO No. As a % of totalMutual Funds 13 0.213114754Fixed Deposits 14 0.229508197ULIP 16 0.262295082Share markets 10 0.163934426Others 8 0.131147541  61 1

PORTFOLIO

21%

23%27%

16%13%

Mutual Funds

Fixed Deposits

ULIP

Share markets

Others

ULIP Scheme No.

As a % of total

ICICI 6 0.285714286LIC 7 0.333333333Bajaj Allianz 4 0.19047619Others 4 0.19047619  21 1

ULIP Scheme

29%

33%19%

19% ICICI

LIC

Bajaj Allianz

Others

80

Type of Fund No.

As a % of Total

Equity 13 0.619047619Balanced 3 0.142857143Cash 5 0.238095238  21 1

Type of Fund

62%14%

24% Equity

Balanced

Cash

Returns No.As a % of Total

Below 10% 2 0.12510%-20% 7 0.437520%-30% 3 0.1875Above 30% 4 0.25  16 1

Returns

13%

43%19%

25% Below 10%

10%-20%

20%-30%

Above 30%

M.F Co. No. As a % of

81

totalFranklin 3 0.115384615ICICI 3 0.115384615Fidelity 5 0.192307692Reliance 5 0.192307692HDFC 3 0.115384615

Others 7 0.269230769

M.F Co.

12%12%

19%19%

12%

26%

Franklin

ICICI

Fidelity

Reliance

HDFC

Others

RETURNS ON M.F. No. As % of total10%-20% 3 0.23076923120%-30% 4 0.307692308above 30% 6 0.461538462  13 1

RETURNS ON M.F.

23%

31%

46%10%-20%

20%-30%

above 30%

AGE 35- 45

82

Invest  No 1Yes 7

Invest

13%

87%

No

Yes

Life Insurance  No 1Yes 9

Life Insurance

10%

90%

No

Yes

Investment reasons

83

Asset Purchase 2Building Cash reserves 6Funding for children 4Income replacement 2Retirement 2

Investment Reasons

13%

37%24%

13%

13%

Asset Purchase

Building Cashreserves

Funding forchildren

Incomereplacement

Retirement

Most Important  High returns 5Safety 7Liquidity 4Tax free proceeds 3Flexibility 1

Most Important

012345678

Hig

h re

turn

s

Safe

ty

Liq

uidi

ty

Tax

fre

e pr

ocee

ds

Fle

xibi

lity

Series1

84

Portfolio  Government securities 4Mutual funds 5ULIP 7Share Markets 3Fixed Deposits 1Bonds 3

Portfolio

17%

22%

31%

13%

4%

13%

Governmentsecurities

Mutual funds

ULIP

Share Markets

Fixed Deposits

Bonds

ULIP SCHEME  ICICI 2LIC 3UTI 2Others 0

ULIP SCHEME

29%

42%

29%0%

ICICI

LIC

UTI

Others

85

Returns  Below 10% 110%-20% 420%-30% 1Above 30 % 1

Return in ULIP

14%

58%

14%

14% Below 10%

10%-20%

20%-30%

Above 30 %

MUTUAL FUND CO. Reliance 2ICICI 2HDFC 1SBI 1GLSS 1

Mutual Fund Co.

29%

29%14%

14%

14% Reliance

ICICI

HDFC

SBI

GLSS

45 AND ABOVE

86

Life InsuranceNo 4Yes 20

Invest  No 7Yes 17

Portfolio  

Life Insurance

17%

83%

NoYes

Invest

29%

71%

NoYes

87

Government securities 8Mutual funds 5ULIP 9Share Markets 6Fixed Deposits 13Bonds 5

Portfolio

17%

11%

20%13%

28%

11%

Governmentsecurities

Mutual funds

ULIP

Share Markets

Fixed Deposits

Bonds

Investment reasonsAsset Purchase 3Building Cash reserves 11Funding for children 6Income replacement 1Retirement 5

Investment Reasons

12%

42%23%

4%

19%

Asset Purchase

Building Cashreserves

Funding forchildren

Incomereplacement

Retirement

Most Important

88

High returns 12Safety 16Liquidity 6Tax free proceeds 10Flexibility 6

Most Important

05

101520

Hig

hre

turn

s

Safe

ty

Liqu

idity

Tax

free

proc

eeds

Flex

ibili

ty

Series1

ULIP SCHEME  ICICI 1LIC 4UTI 4Aviva 2

ULIP SCHEME

9%

37%36%

18% ICICI

LIC

UTI

Aviva

89

FUNDS  Equity 2Balanced 7Debt 0Cash 0

Returns  Below 10% 210%-20% 6Above 30 % 1

Returns in ULIP

22%

67%

11%Below 10%

10%-20%

Above 30 %

FUNDS

22%

78%

0%

0%

Equity

Balanced

Debt

Cash

90

MUTUAL FUND CO. Reliance 1ICICI 2HDFC 1Franklin 1Fidelity 1UTI 1IDBI 1

Mutual Fund Co.

12%

24%

12%13%

13%

13%

13%

Reliance

ICICI

HDFC

Franklin

Fidelity

UTI

IDBI

BUSINESS

INCOME No.As a % of Total

Below 2 3 0.16667b/w 2-5 9 0.5Above 5 6 0.33333  18 1

INCOME

17%

50%

33% Below 2

b/ w 2-5

Above 5

91

Invest or Not No.As a % of Total

Yes 13 0.72222No 5 0.27778    0  18 1

Invest or Not

72%

28%Yes

No

Life Insurance Cover No.

As a % of Total

Yes 15 0.83333No 3 0.16667

018 1

Life Insurance Cover

83%

17%

Yes

No

Reasons for Investment No.

As a % of total

92

Asset Purchase 7 0.26923Building Cash Reserves 8 0.30769Retirement 3 0.11538Others 8 0.30769

  26 1

Reasons for Investment

27%

30%12%

31%

Asset Purchase

Building CashReserves

Retirement

Others

 Investment Factors

Very Important

Important

Somewhat Important

Less Important

High returns 10 1 1 1Safety 8 4 1 0Liquidity 3 6 3 1Tax free proceeds 6 3 2 2Flexibility 5 3 3 2

Investment Factors Rating

0%20%40%60%80%

100%

Hig

hre

turn

s

Saf

ety

Liqu

idity

Tax

free

proc

eeds

Fle

xibi

lity

Less Important

SomewhatImportant

Important

Very Imporant

PORTFOLIO No. As a

93

% of total

Mutual Funds 60.187

5

Fixed Deposits 70.218

75

ULIP 50.156

25

Share markets 70.218

75Government Securities 5

0.15625

Others 20.062

5

  320.843

75

PORTFOLIO

19%

21%

16%22%

16%6% Mutual Funds

Fixed Deposits

ULIP

Share markets

Government Securities

Others

ULIP Scheme No.

As a % of total

ICICI 1 0.16667LIC 3 0.5Others 2 0.33333  6 1

94

ULIP Scheme

17%

50%

33% ICICI

LIC

Others

Type of Fund

83%

17%

Equity

Balanced

M.F Co. No.As a % of total

Franklin 1 0.08333ICICI 3 0.25Reliance 4 0.33333Others 4 0.33333

  12 1

95

M.F Co.

8%

25%

34%

33% Franklin

ICICI

Reliance

Others

SERVICE

Income No.As a % of total

above5 150.28301886

8

b/w 2-5 320.60377358

5

below 2 60.11320754

7  53 1

Income

28%

61%

11%above5

b/ w 2-5

below 2

96

Invest or Not No. As a % of totalYes 36 0.679245283No 17 0.320754717    0  53 1

Invest or Not

68%

32%Yes

No

Life Insurance Cover No. As a % of totalYes 34 0.641509434No 19 0.358490566    0  53 1

Life Insurance Cover

64%

36% Yes

No

Reasons for Investment No.

As a % of total

Income replacement 2

0.036363636

97

Asset Purchase 90.16363636

4Building Cash Reserves

22 0.4

Retirement 9 0.163636364

Funding for Children

9 0.163636364

Others 4 0.072727273

  55 1

Reasons for Investment

4% 16%

41%16%

16%7%

Incomereplacement

Asset Purchase

Building CashReserves

Retirement

Funding forChildren

Others

PORTFOLIO No.As a % of total

Mutual Funds 190.22619047

6

Fixed Deposits 190.22619047

6

ULIP 180.21428571

4

Share markets 150.17857142

9Government Securities 6

0.071428571

Others 70.08333333

3

  840.92857142

9

98

PORTFOLIO

23%

23%21%

18%

7% 8%

Mutual Funds

Fixed Deposits

ULIP

Share markets

GovernmentSecuritiesOthers

Investment Concerns

Very Imporant

Important

Somewhat Important

Less Important

High returns 23 9 4 2Safety 20 13 4 1Liquidity 12 18 6 2Tax free proceeds 7 19 8 4Flexibility 14 15 5 4

Investment Factor Rating

0%20%40%60%80%

100%

Hig

hre

turn

s

Sa

fety

Liq

uid

ity

Ta

x fr

ee

pro

cee

ds

Fle

xib

ility

Less Important

SomewhatImportant

Important

Very Imporant

ULIP Scheme No.

As a % of total

ICICI 80.363

64

LIC 80.363

64Reliance 3 0.136

99

36

Others 30.136

36  22 1

Type of Fund

54%32%

14%Equity

Balanced

Cash

Returns on ULIP No.

As a % of Total

Below 10% 40.181

82

ULIP Scheme

36%

36%

14%14% ICICI

LIC

Reliance

Others

100

10%-20% 11 0.5

20%-30% 40.181

82

Above 30% 30.136

36  22 1

Returns on ULIP

18%

50%

18%

14% Below 10%

10%-20%

20%-30%

Above 30%

M.F Co. No.

As a % of total

Franklin 7

0.22581

ICICI 40.129

03Fidelity 5

0.16129

Reliance 5

0.16129

Others 10

0.32258

  31 1

M.F Co.

23%

13%16%16%

32%

Franklin

ICICI

Fidelity

Reliance

Others

101

Learnings

Based on the work done in the company major findings of the study have been highlighted

below….

1. Most of the people are satisfied with the extent of their life insurance cover. They

are not interested in buying more life insurance.

2. People do not consider life insurance as a good savings because of low returns.

3. As life insurance is a long-term contract. Maximum people do not have faith on

private life insurance companies, they still prefer LIC.

4. Because of less advertising not many people are aware about private life insurance

companies.

5. Most of the people do not know about broker, corporate agents and banc assurance,

they rely on their agents only

6. The most preferred type of plan is money back. The reason being availability of

funds after every five years, which can be used for paying further premium, thus

saving the regular income. Some people have no idea about what type of cover they

have.

7. Most of the people feel that life insurance is essential but they think returns are low.

8. Some people have their doubts on the credibility and long stay of private insurance

companies.

102

Suggestions

1. Advertising of the insurance product should stress on the need of security.

2. Insurance should be popularized as the means of securing future rather than saving

tax.

3. New entrants should come out with innovative riders.

4. Policies should be issued quickly and with less formalities

5. Other service should also be improved.

6. Newspaper/Magazines and television are the most effective medium of advertising

life insurance.

7. Insurance agents should be well trained.

103

S.W.O.T. ANALYSIS

STRENGTH:

1. Multi-channel distribution and one of the largest distribution networks in India.

2. Customer centric product and services.

3. Superior investment and risk management framework.

4. Company has maximum number of MDRT as well as good number of advisers.

5. Training process of the company is very strong.

6. Different plans for different peoples.

7. According to the change in surrounding environment like change in customer

requirement.

WEAKNESS:

1. Companies are not focusing on outskirt and remote areas and villages.

2. There is no plan for the low-income group.

3. Fees of the adviser are high than the other company.

104

OPPORTUNITY:

1. Insurance market is very big where company can expand its horizon in insurance

industry.

2. Through good investment and insurance it is easy to top Indian customers.

3. The huge insurance market (77%) is left so company has opportunity to expand

out products.

THREATS:

1. Its still difficult task to win the confidence of public towards private company.

2. The companies are facing major threats LIC that is an only government company.

3. Plans for all income groups are not available which can create adverse effect later

on the market share of the company.

105

CONCLUSION

After having done all the analysis we come to the conclusion that customers who are

businessman prefer demat account . By analyzing the various results obtained from the

market survey following points van concluded about Reliance Money.

1- Customers are preferring Reliance Money for opening Demat Account because of

less brokerage charges.

2- Some customers preferring Reliance Money because of their brand image and

credibility in the market .

3- From all the products of Reliance Money customers prefer to buy Mutual Funds.

4- Customer are preferring investing in shares in Delivery form .

5- Maximum no. of customer are not aware about the share trading .

6- Company needs more advertisement to aware people about the products of

Reliance Money .

7- Concept of fixed coupon based brokerage has good and satisfactory acceptance in

market and will become popular in near future like pre paid mobiles.

106

RECOMMENDATIONS

1- One of the major factors on which the company should really put there efforts is

in improvement of the services .

2- The company should try to enhance its image among the customers by increasing

advertisement in print and mass media which will help in making its brand image.

3- The company should take feed back from customer.

4- The company should make provisions frequent visits to the Customer . This

would increase communication between Consumer and Company.

5- The company should come with attractive schemes like lucky draws , gifts,

discount , etc.

6-

Company should bring new feature based product according the need and

requirement of economy class segment.

107

BIBLIOGRAPHY

1.BOOK

Marketing Management

By- Philip Kotler

Research Methodology

By- C.R Kothari

2.MAGAZINE

Business Today

Business India

Business World

3.NEWSPAPER

The Economic Times

108

QUESTIONNAIRE

Name: ______________ Contact No. ___________ Age: ______

1. Occupation: Government Salaried Business Others (specify) ____

2. What is Your Family‘s Annual Income (Rs. Lakhs): Below 2 2 -5 above 5

3. How many dependents you have? None 1 2 More than 2

4. Do you have a Life Insurance Cover? Yes No

5. Do you invest? Yes No if yes, what is your investment concerns?

Income replacement at death/disability Building Cash reserves Retirement

Asset Purchase Funding for children Others_____________________

(If ‘No’ - proceed to Q.13)

6. Rate the following investment factors in your order of importance.

Very Important ‘1’ Important ‘2’ Somewhat Important ‘3’ Less Important ‘4’

7. Your current portfolio consists of?

Share Markets Fixed Deposits Government Securities Mutual Funds Bonds

ULIP Others (Please specify) ____________

S.NO PARAMETERS RATING

1. High Returns 1 2 3 42. Safety 1 2 3 43. Liquidity 1 2 3 44. Tax Free Proceeds 1 2 3 45. Flexibility 1 2 3 4

109

Attempt (Q.8 – Q. 10) if you invest in ULIP schemes

8. With which company do you have the ULIP scheme? LIC RELIANCE ICICI

PRUDENTIAL BAJAJ ALLIANZ OTHERS _________

9. Which type of fund you invest in? Equity Debt Balanced Cash

10. How much returns are you getting on your ULIP investments annually (approximately)?

Below 10% 10% - 20 % 20%-30% above 30%

Attempt (Q.11 – Q. 12) if you invest in Mutual Funds

11. Which mutual funds are you investing in presently? _______________________

12. How much returns are you getting on your investments annually (approximately)?

Below 10% 10% - 20 % 20%-30% above 30%

13. Reliance Money is offering an opportunity to participate in investment schemes

generating high returns, would you like to avail it? Yes No

THANK YOU!!!!!

110