AProject Study Report

On Training Undertaken at

“SYSTEMATIC INVESTMENT PLAN”(The better way to invest in mutual funds)

In Partial Fulfillment of Award of Master of Business Administration (2009-2011)

Submitted By:- Submitted To:- Akshay Kumar Singh Prof. Sanjay Srivastava MBA(B.E) 3rd sem ( Director of IBM )

Institute of Business management

Chhatrapati Shahu Ji Maharaj University, Kanpur

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PREFACE

THE CORPORATE PROGRAM of MBA(B.E) course is a well structured and integrated programme. The course of management gives a practical knowledge in our study course. Industries give us much information about the different product and services we use in our day to day life.

It is highly said that “practice makes a man perfect” the summer project training which is a part of MBA to get a practical understanding and training of the business management. Thus the industrial training which is a part of MBA(B.E) course helps the student to get the knowledge about the actual environment of an organization.

Karvy Stock Broking ltd. is one of such company dealing in Share market Derivatives, Commodities, Mutual fund IPO distribution with almost branches in overall India.

It involved the study of Marketing activities of the organization. I have under taken industrial training in Karvy stock broking Limited At Kanpur from25-june-2010 to 10-aug-2010 as a part of my MBA(B.E) course curriculum and I thus, present a project report on it at the best of my ability knowledge and work done.

ACKNOWLEDGEMENT2

I am really happy and exited in representing this summer training project report before you.

I must express my gratitude towards Karvy Stock Broking Ltd, Kanpur

for giving mean opportunity to work with on this report.

And of course I am very much thankful to our honorable (Regional Acquisition Head) Mr Pradip kumar singh for giving me opportunity and his guidance help me through out preparing this report. He has also provided me a valuable suggestions and excellence guidance about this training, which proved very helpful to me to utilize my theoretical knowledge in practical field.

At last I am also thankful to my friends, to all known and unknown individuals who have given me their constructive advise, educative suggestion, encouragement, co-operation and motivation to prepare this report.

Akshay kumar singh

EXECUTIVE SUMMARY

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India’s economy is highly developing. The development is taken place due to the growth in the financial system. This financial system provides the background to various investors regarding varied options to invest. Thus, development of the economy depends on how these investors invest for the well being in long run.

As financial markets become more sophisticated and complex, investors need a financial intermediary who provides the required knowledge and professional expertise on successful investing. Mutual Funds represent perhaps the most appropriate investment opportunity for investors. No wonder the concept of Mutual Fund was initially developed in the U.S. market, but the entry of the concept in the Indian Financial Market was in the year 1964 with the formulation of the UTI, at the initiative of the RBI and Govt. of India.

For most people, money is a delicate matter and when it comes to investing they are wary. Simply because there are many investment options out there, each out promising the other. An important question facing many investors is whether to invest in Banks, National Savings, Post office, Non-banking finance companies, Fixed deposits, Shares etc. or to invest distinctively in Mutual Funds.

I have observed that approximately 40% of the people are unaware of Trading but most of them are interested to know about trading. They are also interested to work with KARVY if sufficient information is provided to them about Trading and KARVY.

People from service class prefers safety of income plus the regular income as well as tax benefits while on the other hand Professional and Businessman focus on high return with some risk.

For growth and development of the Stock Market Industry, the misconception regarding Share Market should be removed & the awareness for the same should be made.

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S. NO. TITLE

1. INTRODUCTION Company Profile Overview of Industry

2. PROCEDURE TO INVEST IN MUTUAL FUND

3. SYSTEMATIC INVESTMENT PLAN (SIP)

4. REASONS TO INVEST IN SIP

5. RISK INVOLVE IN SIP

6. RESEARCH METHODOLOGY

7. SWOT ANALYSIS

8. RECOMMENDATION

9. CONCLUSION

10. BIBLIOGRAPHY

11. ANNEXURE

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OVERVIEW OF INDUSTRY

History of the Indian Mutual Fund Industry

The mutual fund industry in India started in 1963 with the formation of Unit Trust

of India, at the initiative of the Government of India and Reserve Bank of India. The

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

First Phase – 1964-87

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

Reserve Bank of India and functioned under the Regulatory and administrative control of

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 and administrative control in

place of RBI. The first scheme launched by UTI was Unit Scheme in 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)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector

banks and 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 Canbank Mutual Fund (Dec 87), Punjab National

Bank 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 mutual 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.

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

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

industry, giving the 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 the 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 many 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

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

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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, 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, the mutual fund industry has entered its current phase of

consolidation and growth.

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The graph indicates the growth of assets over the years:

OVERVEIW OF ORGANISATION

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COMPANY DETAILS

Breif history

Karvy was started by a group of five chartered accountants in 1979 at Hydrabad. At initial stage it was very small in size. It was started with a capital of Rs. 1,50,000.

In starting it was only offering auditing and taxation services. Later, on The partners decided to offer, other than the audit services, value added services like Financial Product Distribution, Investment Advisory Services, Demat Services, Corporate Finance, Insurance etc to their clients. The first firm in the group, Karvy Consultants Limited was incorporated on 23rd July, 1983. In a very short period, it became the largest Registrar and Transfer Agent in India. This business was spun off to form a separate joint venture with Computershare of Australia, in 2005. Karvy’s foray into stock broking began with marketing IPOs, in 1993. Within a few years, Karvy began topping the IPO procurement league tables and it has consistently maintained its position among the top 5. Karvy was among the first few members of National Stock Exchange, in 1994 and became a member of The Stock Exchange, Mumbai in 2001. In January 1998, Karvy became first Depository Participant in Andhra Pradesh.Today Karvy is among the top 5 Depositary Participant in India.

While the registry business is a 50:50 Joint Venture with Computershare of Australia, we have equity participation by ICICI Ventures Limited and Barings Asia Limited, in Karvy Stock Broking Limited. For a snapshot of our organization structure, please click here.Karvy has always believed in adding value to services it offers to clients. A top-notch research team based in Mumbai and Hyderabad supports its employees to advise clients on their investment needs. With the information overload today, Karvy’s team of analysts help investors make the right calls, be it equities, mf, insurance.

On a typical working day Karvy:

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Has more than 25,000 investors visiting our 575 offices. Publishes / broadcasts at least 50 buy / sell calls Attends to 10,000+ telephone calls Mails 25,000 envelopes, containing Annual Reports, dividend cheques /

advises, allotment / refund advises. Executes 150,000+ trades on NSE / BSE Executes 50,000 debit / credit in the depositary accounts Advises 3,000+ clients on the investments in mutual funds

KARVY Stock Broking Limited is a member of: • National Stock Exchange (NSE) • Bombay Stock Exchange (BSE) • Hyderabad Stock Exchange (HSE)

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Structure of KARVY

Karvy ranks among the top player in almost all the fields it operates. Karvy Computershare Limited is India’s largest Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate, managing over 2 crore accounts. Karvy Stock Brokers Limited, member of National Stock Exchange of India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With over 6,00,000 active accounts, it ranks among the top 5 Depositary Participant in India, registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and MCX ranks among the top 3 commodity brokers in the country. Karvy Insurance Brokers is registered as a Broker with IRDA and ranks among the top 5 insurance agent in the country. Registered with AMFI as a corporate Agent, Karvy is also among the top Mutual Fund mobilizer with over Rs. 5,000 crores under management. Karvy Realty Services, which started in 2006, has quickly established itself as a broker who adds value, in the realty sector. Karvy Global offers niche off shoring services to clients in the US.Karvy has 575 offices over 375 locations across India and overseas at Dubai and New York. Over 9,000 highly qualified people staff Karvy.The company service over 16 million individual investors, 180 corporate and handle corporate disbursements that exceed Rs.2500 Crores.

Mission Statement of ‘Karvy’

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An organization exists to accomplish something or achieve something. The mission statement indicates what an organization wants to achieve. The mission statement may be changed periodically to take advantage of new opportunities or respond to new market conditions.

Karvy’s mission statement is “To Bring Industry, Finance and People together.”

Karvy is work as intermediary between industry and people. Karvy work as investment advisor and helps people to invest their money same way Karvy helps industry in achieving finance from people by issuing shares, debentures, bonds, mutual funds, fixed deposits etc.

Company’s mission statement is clear and thoughtful which guide geographically dispersed employees to work independently yet collectively towards achieving the organization’s goals.

Vision of Karvy

Company’s vision is crystal clear and mind frame very directed. “To be pioneering financial services company. And continue to grow at a healthy pace, year after year, decade after decade.” Company’s foray into IT-enabled services and internet business has provided an opportunity to explore new frontiers and business solutions. To build a corporate that sets benchmarks for others to follow.

Karvy Values:

IntegrityResponsibilityReliabilityUnityUnderstandingExcellenceConfidentiality

Behind the Picture: What Customers matter for KARVY?

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The underlying picture forming answer for above question is given below.

Market Brand CustomerPower Preference Value

RELATIONSHIPS OUR COMPETITIVE ADVANTAGE

[Fig.1 Competitive Advantage of Karvy]

Every year with this picture keeping in mind ‘Karvy accelerate with Recovery, Revival and Reappearance.’ Karvy has started 2004 on a strong note with the realization to signal some of the challenges it faced previous year. In a competitive market and a branded business, Karvy need to carefully manage itself to avoid down trading or brand shifts by consumers.

For Karvy, Kanpur branch was truly exhilarating because of:

Successful implementation of a carefully crafted strategy.Excellence in execution.Immense learning enabling to set up a launch pad for

revitalizing itself.

Some competitive advantages are long lasting. These are intangible, difficult to replicate and thus more sustainable. Karvy has focused on some of these to gain competitive advantages. There are:

Winning culture and a desire to excel in everything Karvy do.Strong meaningful relationships with Customers along with Strategic Partners in which Karvy operate and above all, its own staff.

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Karvy Group Companies

KARVY CONSULTANTS LIMITED

As the flagship company of the Karvy Group, Karvy Consultants Limited has always remained at the helm of organizational affairs, pioneering business policies, work ethic and channels of progress. Having emerged as a leader in the registry business, the first of the businesses that we ventured into, we have now transferred this business into a joint venture with Computershare Limited of Australia, the world’s largest registrar. With the advent of depositories in the Indian capital market and the relationships that we have created in the registry business, we believe that we were best positioned to venture into this activity as a Depository Participant. We were one of the early entrants registered as Depository Participant with NSDL (National Securities Depository Limited), the first Depository in the country and then with CDSL (Central Depository Services Limited). Today, we service over 6 lakhs customer accounts in this business spread across over 250 cities/towns in India and are ranked amongst the largest Depository Participants in the country. With a growing secondary market presence, we have transferred this business to Karvy Stock Broking Limited (KSBL), our associate and a member of NSE, BSE and HSE.

KARVY STOCK BROKING LIMITED

Member - Natio nal Stock Exchange (NSE), The Bombay Stock Exchange (BSE), and The Hyderabad Stock Exchange (HSE). Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the customer through varied services. Creating a plethora of opportunities for the customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal. It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends.  

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Distribution of Financial Products

 

The paradigm shift from pure selling to knowledge based selling drives the

business today. With our wide portfolio offerings, we occupy all segments in the retail

financial services industry.

A 1600 team of highly qualified and dedicated professionals drawn from the best of

academic and professional backgrounds are committed to maintaining high levels of

client service delivery. This has propelled us to a position among the top distributors for

equity and debt issues with an estimated market share of 15% in terms of applications

mobilized, besides being established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets we enhanced the

scope of our retail brand, Karvy – the Finapolis , thereby providing planning and

advisory services to the mass affluent. Here we understand the customer needs and

lifestyle in the context of present earnings and provide adequate advisory services that

will necessarily help in creating wealth. Judicious planning that is customized to meet

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

and the ignorant investors, both find this service very satisfactory. The edge that we

have over competition is our portfolio of offerings and our professional expertise. The

investment planning for each customer is done with an unbiased attitude so that the

service is truly customized.

Our monthly magazine, Finapolis, provides up-dated market information on market

trends, investment options, opinions etc. Thus empowering the investor to base every

financial move on rational thought and prudent analysis and embark on the path to

wealth creation.   

KARVY INVESTOR SERVICES LIMITED

Recognized as a leading merchant banker in the country, we are registered with SEBI as a Category I merchant banker. This reputation was built by capitalizing on opportunities in corporate consolidations, mergers and acquisitions and corporate restructuring, which have earned us the reputation of a merchant banker. Raising resources for corporate or Government Undertaking successfully over the past two decades have given us the confidence to renew our focus in this sector.

Our quality professional team and our work-oriented dedication have propelled us to offer value-added corporate financial services and act as a professional navigator for long term growth of our clients, who include leading corporates,

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State Governments, foreign institutional investors, public and private sector companies and banks, in Indian and global markets. We have also emerged as a trailblazer in the arena of relationships, both at the customer and trade levels because of our unshakable integrity, seamless service and innovative solutions that are tuned to meet varied needs. Our team of committed industry specialists, having extensive experience in capital markets, further nurtures this relationship. Our financial advice and assistance in restructuring, divestitures, acquisitions, de-mergers, spin-offs, joint ventures, privatization and takeover defense mechanisms have elevated our relationship with the client to one based on unshakable trust and confidence.

KARVY Computershare Private Limited

 

We have traversed wide spaces to tie up with the world’s largest transfer agent, the leading Australian company, Computer share Limited. The company that services more than 75 million shareholders across 7000 corporate clients and makes its presence felt in over 12 countries across 5 continents has entered into a 50-50 joint venture with us. With our management team completely transferred to this new entity, we will aim to enrich the financial services industry than before. The future holds new arenas of client servicing and contemporary and relevant technologies as we are geared to deliver better value and foster bigger investments in the business. The worldwide network of Computer share will hold us in good stead as we expect to adopt international standards in addition to leveraging the best of technologies from around the world.Excellence has to be the order of the day when two companies with such similar ideologies of growth, vision and competence, get together.

KARVY GLOBAL SERVICES LIMITED

The specialist Business Process Outsourcing unit of the Karvy Group. The legacy of expertise and experience in financial services of the Karvy Group serves us well as we enter the global arena with the confidence of being able to deliver and deliver well.

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Here we offer several delivery models on the understanding that business needs are unique and therefore only a customized service could possibly fit the bill. Our service matrix has permutations and combinations that create several options to choose from. Be it in re-engineering and managing processes or delivering new efficiencies, our service meets up to the most stringent of international standards. Our outsourcing models are designed for the global customer and are backed by sound corporate and operations philosophies, and domain expertise. Providing productivity improvements, operational cost control,cost savings, improved accountability and a whole gamut of other advantages.We operate in the core market segments that have emerging requirements for specialized services. Our wide vertical market coverage includes Banking, Financial and Insurance Services (BFIS), Retail and Merchandising, Leisure and Entertainment, Energy and Utility and Healthcare.

Karvy Comtrade Limited

 

At Karvy Commodities, we are focused on taking commodities trading to new dimensions of reliability and profitability. We have made commodities trading, an essentially age-old practice, into a sophisticated and scientific investment option.Here we enable trade in all goods and products of agricultural and mineral origin that include lucrative commodities like gold and silver and popular items like oil, pulses and cotton through a well-systematized trading platform. Our technological and infrastructural strengths and especially our street-smart skills make us an ideal broker. Our service matrix is holistic with a gamut of advantages, the first and foremost being our legacy of human resources, technology and infrastructure that comes from being part of the Karvy Group.

Karvy Insurance Broking Limited

At Karvy Insurance Broking Limited., we provide both life and non-life insurance products to retail individuals, high net-worth clients and corporates. With the opening up of the insurance sector and with a large number of private players in the business, we are in a position to provide tailor made policies for different segments of customers. In our journey to emerge as a personal finance advisor, we will be better positioned to leverage our relationships with the product providers and place the requirements of our customers appropriately with the product providers. With Indian markets

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seeing a sea change, both in terms of investment pattern and attitude of investors, insurance is no more seen as only a tax saving product but also as an investment product. By setting up a separate entity, we would be positioned to provide the best of the products available in this business to our customers.

KARVY REALTY&SERVICES(INDIA)Limited

KARVY Realty & Services (India) Limited (KRSIL) is engaged in the business of real estate and property services offering value added property services and offers individuals and establishments a myriad of options across investments, financing and advisory services in the realty sector.

KARVY Realty & Services (India) Limited …………………………………Take a Realty Byte !!!Promoted by the KARVY Group of companies, India’s largest integrated financial services company. KARVY Realty & Services India Limited carries forward its legacy of trust and excellence in investor and customer services delivered with a passion for services and the highest level of quality that align with global standards.KARVY Realty & Services (India) Limited welcomes you to take a reality check on realty options that you can be rest assured of and of course profit from.

. PERFORMANCE OF KARVY

WHERE KARVY STAND IN THE MARKET?

KARVY is a legendary name in financial services, Karvy’s credit is defined by its mission to succeed, passion for professionalism, excellent work ethics and customer centric values.

Today KARVY is well known as a premier financial services enterprise, offering a broad spectrum of customized services to its clients, both corporate and retail. Services that KARVY constantly upgrade and improve are because of company’s skill in leveraging technology. Being one of the most techno-savvy organizations

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around helps company to deliver even more cost effective financial solutions in the shortest possible time.

What bears ample testimony to Karvy’s success is the faith reposed in company by valued investors and customers, all across the country. Indeed, with Karvy’s wide network touching every corner of the country, even the most remote investor can easily access Karvy’s services and benefit from company’s expert advice.

Some key points about KARVY : Every 50th Indian is serviced by karvy. Every 20th trade in stock is done by Karvy. Indian’s no.1 registrar and transfer agent. Every 6th investor in India invest through karvy. Every 10th Demat account is held at Karvy.

KARVY’S PRODUCT & SERVICES AN OVERVIEW

SERVICES OF KARVY

Stock broking Demat services Investment product distribution Investment advisory services Corporate finance & Merchant banking Insurance Broking services

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Mutual fund services IT enabled services Registrars & Transfer agents Loans Reality services Portfolio management services BPO & KPO services Corporate advisor Currency derivatives Bonds and Deposits Depository services Commodities Investment Banking Advisory service

PRODUCT OF KARVY

Now the Karvy groups brings this expertise to investors, with KARVY IZONE + . It is a powerful Expert Advisory based trading system for those who are relatively new to online investing. A unique integrated account, which integrates your securities, online stock-broking, and Demat accounts. A comprehensive trading service, which allows you to invest in equities, mutual funds, SIP, commodity and derivatives. KARVY I -Zone+ trading platform allows you the flexibility of trading on any internet capable system, with access to both the NSE and BSE.

KARVY I-ZONE +ADVANTAGE----

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1. Free online Stock-Broking and attractive Margin funding option

available

2. Free Demat account

3. Free online Commodities –Broking account

4. Option to buy unlimited mutual funds or SIP without any transaction

charges

5. Loan against securities

6. Regular Portfolio Statement for better planning of future investment

7. Free financial advice to better distribute your assets between Mutual

Fund, Equity, Debt, Commodity and Insurance.

Free subscription to KARVY Finapolis Magazine

Competitors of KARVY :-

KOTAK SECURITIES:

Kotak securities ltd is India leading stock broking house with a market share of close to 9% as on 31 march 2007. kotak securities ltd has been the largest in IPO distribution.The company has a full fledged research division involved in macro economic studies sect oral research and company specific equity research combined with a strong and well networked sales force which helps deliver current and up to date market information and news

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Kotak securities ltd is also a depository participant with national securities depository limited and central depository service limited .providing dual benefits services where in the investor can use the brokerage services of the company for executing the transactions and the depository service for settling them.

Kotak securities have 813 outlets servicing more than 315000 customers and a coverage of 277 cities. Kotak securities com the online division of kotak securities limited offers internet broking services and also online IPO and mutual fund investment A Kotak security limited manages assets around 2300 crores of assets under management. The portfolio management service provides top class service catering to the high end of the market. Portfolio management from kotak securities comes as an answer to those who would like to grow from exponentially on the crest of the stock market, with the backing of an expert.

Sharekhan, the retail broking arm of SSKI group and one of the largest stock broking house in the country has won the prestigious awaaz consumer vote awards 2005 for the most preferred stock broking brand in India, in the investment advisors category

Share khan equity related services include trade execution on BSE,NSE derivatives commodities depository services online trading and investment advice ,.sharekhan online trading and investment site www.sharekhan.com was launched in 2000 . Sharekhan Bag round network includes over 250 centers across 123 cities in India and having around 120000 customers and equal number of demat customers.

Sharekhan won the award by vote of customer around the country, as part of India largest consumer study cover 7000 respondents 21 product and service across 21 major cities. the study initiated by awaaz India first dedicated consumer channel and member of the world wide CNBC network and ac Nielsen org marg was aimed at understanding the brand preference of the consumer and

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to decipher what are the most important loyalty criteria for the consumer in each vertical

In order to select the award recipient spontaneous responses rather than prompted responses were garnered with an intention to glean unbiased preferences.

The reason behind the preferences for brands were unveiled by examines the following:

Tangible features of product /service Softer, intangible features like imagery, equity driving preference Tactical measures such as promotional /pricing schemes

The India Infoline group, comprising the holding company, India Infoline Limited and its wholly-owned subsidiaries, straddle the entire financial services space with offerings ranging from Equity research, Equities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments to loan products and Investment banking. India Infoline also owns and manages the websites http://www.indiainfoline.com/and http://www.5paisa.com/

The company has a network of 758 business locations (branches and sub-brokers) spread across 346 cities and towns. It has more than 800,000 customers

India Infoline Limited is listed on both the leading stock exchanges in India, viz. the Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE) and is also a member of both the exchanges. It is engaged in the businesses of Equities broking, Wealth Advisory Services and Portfolio Management Services. It offers broking services in the Cash and Derivatives segments of the NSE as

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well as the Cash segment of the BSE. It is registered with NSDL as well as CDSL as a depository participant, providing a one-stop solution for clients trading in the equities market. It has recently launched its Investment banking and Institutional Broking business.

Religare Enterprises Limited (REL), is one of the leading integrated financial services groups of India. REL’s businesses are broadly clubbed across three key verticals, the Retail, Institutional and Wealth spectrums, catering to a diverse and wide base of clients.

REL offers a multitude of investment options and a diverse bouquet of financial services and has a pan India reach in more than 1550 locations across more than 460 cities and towns.

As part of its recent initiatives, the group has also started expanding globally and has acquired London’s oldest brokerage & investment firm, Hichens, Harrison & Co. plc. Following this acquisition Religare now proposes to operate out of 10 countries. With a view to expand, diversify and introduce offerings benchmarked

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against global best practices, Religare has entered into joint ventures with the global major- Aegon for its Asset Management and Life Insurance businesses in India.

Religare’s wealth management subsidiary is now rechristened as Religare Macquarie Wealth Management Limited, following a joint venture with the Australia based financial services major, Macquarie Bank. Religare has also partnered with Vistaar Entertainment to launch India’s first Film Fund.

The vision is to build Religare as a globally trusted brand in the financial services domain and present it as the ‘Investment Gateway of India’. All employees of the group guided by an experienced and professional management team are committed to providing financial care, backed by the core values of diligence and transparency.

ABOUT INDIABULLS

Indiabulls is India’s leading Financial Services and Real Estate company having over 640 branches all over India. Indiabulls serves the financial needs of more than 4,50,000 customers with its wide range of financial services and products from securities, derivatives trading, depositary services, research & advisory services, consumer secured & unsecured credit, loan against shares and mortgage & housing finance. With around 4000 Relationship Managers, Indiabulls helps its clients to satisfy their customized financial goals. Indiabulls through its group companies has entered Indian Real Estate business in 2005. It is currently evaluating several large-scale projects worth several hundred million dollars.

“Indiabulls Financial Services Ltd is listed on the National Stock Exchange, Bombay Stock Exchange and Luxembourg Stock Exchange. The market capitalization of Indiabulls is around USD 6,300 million (31st December, 2007). Consolidated net worth of the group is around USD 905 million (31st December, 2007). Indiabulls and its group companies have attracted more than USD 800 million of equity capital in Foreign Direct Investment (FDI) since March 2000. Some of the large

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shareholders of Indiabulls are the largest financial institutions of the world such as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon Capital.

Business of the company has grown in leaps and bounds since its inception. Revenue of the company grew at a CAGR of 159% from FY03 to FY07. During the same period, profits of the company grew at a CAGR of 184%.

Indiabulls became the first company to bring FDI in Indian Real Estate through a JV with Farallon Capital Management LLC, a respected US based investment firm. Indiabulls has demonstrated deep understanding and commitment to Indian Real Estate market by winning competitive bids for landmark properties in Mumbai and Delhi.”Indiabulls Financial Services Ltd

The Angel Group of Companies was brought to life by Mr. Dinesh Thakkar. He

ventured into stock trading with an intention to raise capital for his own

independent enterprise. However, he recognised the opportunity offered by the

stock market to serve individual investors. Thus India’s first retail-focused stock-

broking house was established in 1987. Under his leadership, Angel became the

first broking house to embrace new technology for faster, more effective and

affordable services to retail investors.

Mr. Thakkar is valued for his understanding of the economy and the stock-

market. The print and electronic media often seek his views on the market trend

as well as investment strategies.

Angel Broking's tryst with excellence in customer relations began in 1987. Today, Angel has emerged as one of the most respected Stock-Broking and Wealth Management Companies in India. With its unique retail-focused stock trading

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business model, Angel is committed to providing ‘Real Value for Money’ to all its clients.

The Angel Group is a member of the Bombay Stock Exchange (BSE), National Stock Exchange (NSE) and the two leading Commodity Exchanges in the country: NCDEX & MCX. Angel is also registered as a Depository Participant with CDSL.

PROCEDURE TO INVEST IN MUTUAL FUND

CONCEPT OF MUTUAL FUND

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

common financial goal. The money thus collected is then invested in capital market

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

these investments and the capital appreciation realized are shared by its unit holders in

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

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

diversified, professionally managed basket of securities at a relatively low cost. The flow

chart below describes broadly the working of a mutual fund:

28

Mutual Fund Operation Flow Chart

Constitution of a Mutual Fund:

There are a number of bodies that form a part of the mutual fund, they are as follows:  

Sponsors The sponsor is the company which sets up the mutual fund. It means anybody corporate acting alone or in combination with another body corporate established a mutual fund after initiating and completing the formalities.

Trustees The management of the mutual fund is subject to the control of the board of trustees of the fund. They guide the operations of

29

the fund and carry the crucial responsibility to see that AMC always act in the best interest of the investors .  

Asset Management Company The mutual fund is operated by a separately established asset management company (AMC).It manages the funds of the various schemes. It is entrusted with the specific task of mobilizing funds under the scheme.  

Custodian

A custodian is a person carrying on the activities of the

safekeeping of the securities or participating in any clearing

system on behalf of the clients to effect deliveries of the

securities.

ORGANIZATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the

organizational set up of a mutual fund:

30

ADVANTAGES OF MUTUAL FUNDS:

Professional Management

Diversification

Convenient Administration

Return Potential

Low Costs

31

Liquidity

Transparency

Flexibility

Choice of schemes

Tax benefits

Well regulated

TYPES OF MUTUAL FUND SCHEMES

Wide variety of Mutual Fund Schemes exists 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.

32

33

Risk Return Hierarchy of Different Funds

FREQUENTLY USED TERMS

Net Asset Value (NAV):

34

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The

per unit NAV is the net asset value of the scheme divided by the number of units

outstanding on the Valuation Date.

Sale Price:

Is the price you pay when you invest in a scheme. Also called Offer Price. It may include

a sales load.

Repurchase Price:

Is the price at which units under open-ended schemes are repurchased by the Mutual

Fund. Such prices are NAV related.

Redemption Price:

Is the price at which close-ended schemes redeem their units on maturity. Such prices are

NAV related.

Sales Load:

Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’ load.

Schemes that do not charge a load are called ‘No Load’ schemes.

Repurchase or ‘Back-end’ Load:

Is a charge collected by a scheme when it buys back the units from the unit holders.

Taxation of Mutual Fund and investor

Finance Act 1999 radically changed taxation of Dividends received by investors

in Mutual Funds

35

Mutual Fund as an entity is not taxed since it is a Pass through Entity. Section

10(23d) of the IT Act.

Finance Act 1999 made income (dividends) from UNITS totally EXEMPT from

tax u/s 10(33) in the hands of all investors

Income (dividends) distributed by a Debt Fund was made liable to Dividend

Distribution Tax at applicable rate

Open Ended Funds with more than 50% invested in Equity do not pay any DDT

( since changed to 65% in FY 06-07)

Individuals 14.02%. Companies 22.44%.

Security Transaction Tax (STT) is charged as applicable

80 C benefit under ELSS up to Rs. 1 Lac

Restriction on dividend stripping (Sec 94(7))

o Within 3 months prior to record date of dividend distribution and

o Within 3 months after record date for dividend distribution

HOW TO INVEST IN MUTUAL FUND

There are two ways in which you can invest in a mutual fund.

1. A one-time outright payment

36

If you invest directly in the fund, you just hand over the cheque and you get your fund

units depending on the value of the units on that particular day. Let's say you want to

invest Rs 10,000. All you have to do is approach the fund and buy units worth Rs 10,000.

There will be one factor which determine how many units you get.

that is NAV.

NAV

The Net Asset Value is the price of a unit of a fund. Let's say that the NAV on the day

you invest is Rs 50.

So you will get 200 units (Rs 10000 / 50).

2. Periodic investments

This is referred to as a SIP.That means that, every month, you commit to investing,

say, Rs 1,000 in your fund. At the end of a year, you would have invested Rs 12,000 in

your fund. Let's say the NAV on the day you invest in the first month is Rs 20; you will

get 50 units. The next month, the NAV is Rs 25. You will get 40 units. The following

month, the NAV is Rs 18. You will get 55.56 units.

So, after three months, you would have 145.56 units. On an average, you would have

paid around Rs 21 per unit. This is because, when the NAV is high, you get fewer units

per Rs 1,000. When the NAV falls, you get more units per Rs 1,000.

Here are some Facts on the SIP

37

1. Is there a load?

An exit load is a fee you pay the fund when you sell the units, the funds never charged an

entry load on SIPs. An exit load is charged if you stop the SIP mid-way.

Which is 1%. Let's say you have a one-year SIP but discontinue after five months, and

then an exit load will be levied. These conditions will wary between mutual funds.  

2. What is the minimum investment?

If you do a one-time investment, the minimum amount that you have to invest is Rs

5,000.If you invest via an SIP, the amount drops. Each fund has their own minimum

amount. Some may keep it at least Rs 500 per month; others may keep it as Rs 1,000.

3. How often does one have to invest?

It would depend on the fund. Some insist the SIP must be done every month. Others give

you the option of investing once in three months or once in six months.They also give

fixed dates. So you will get the option of various dates and you will have to choose one.

Let's say you are presented with these dates: 1, 10, 20 or 30. You can pick any one date.

If you pick the 10th of the month, then on that day, the amount you have decided to invest

in the fund has to be credited to your mutual fund.

4. How must the payment be made?

You can opt for the Electronic Clearance Service from your bank; this means the

mutual fund will, as per your instructions, debit a certain amount from your account

every month.Let's say you have a SIP of Rs 1,000 every month and you have chosen to

38

invest in it on the 10th of every month. Under this option, you can instruct your mutual

fund to directly debit your bank account of Rs 1,000 on the due date.

If you don't have the required money in your account, then for that month, no units will

be allocated to you. But, if this continues periodically, the mutual fund will discontinue

the SIP. You need to check with each mutual fund what their parameters are.

Alternately, you can give cheques to your mutual fund. In this case, they may ask for five

Post Dated Cheques upfront with your first investment.

Since these cheques are dated ahead of time, they cannot be processed till the date

indicated.

5. Must I state for how long I want the SIP?

Yes. You will have to state whether you want it for a year or two years, etc. If, during the

course of this period, you realize you cannot continue with the SIP, all you have to do is

inform the fund 15 days prior to the payout. The SIP will be discontinued. You can

continue to keep your money with the fund and withdraw it when you want. 

6. Do all funds offer SIP?

No. Liquid funds, cash funds and floating rate debt funds do not offer an SIP. These are

funds that invest in very short-term fixed-return investments. Floating rate debt funds

39

invest in fixed return investments where the interest rate moves in tandem with interest

rates in the economy (just like a floating rate home loan).

All types of equity funds (funds that invest in the shares of companies), debt funds (funds

that invest in fixed-return investments) and balanced funds (funds that invest in both)

offer a SIP.

7. Tax implications

Let's say you have invested in the SIP option of a diversified equity fund.

If you sell the units after a year of buying, you pay no capital gains tax. If you sell if

before a year, you pay capital gains tax of 10%.

Let's say you invest through a SIP for 12 months: January to December 2005. Now, in

February 2006, you want to sell some units.

Will you be charged capital gains tax?

The system of first-in, first-out applies here. So, the amount you invest in January 2005

and the units you bought with that money, will be regarded as the units you sell in

February 2006. For tax purposes, the units that you sell first will be considered as the first

units bought.

8. How will an SIP help?

40

When you buy the units of a fund, you may do so when the NAV is really high. For

instance, let's say you bought the units of a fund when the bull run was at its peak,

leading to a high NAV. 

If the market dips after that, the value of your investments falls and you may have to wait

for a long while to make a return on your investment. But, if you invest via a SIP, you do

not commit the error of buying units when the market is at its peak. Since you are

buying small amounts continuously, your investment will average out over a period of

time.

You will end up buying some units at a high cost and some units a lower price. Over

time, your chances of making a profit are much higher when compared to an one-time

investment.

7 GOOD REASONS TO INVEST IN SYSTEMATIC INVESTMENT PLAN

41

Power of compounding : The power of compounding underlines the essence of making

money work if only invested at an early age. The longer one delays in investing, the

greater the financial burden to meet desired goals. Saving a small sum of money

regularly at an early age makes money work with greater power of compounding with

significant impact on wealth accumulation.

Convenience : SIP can be operated by simply providing post dated cheques with the

completed enrolment form or give ECS instructions. The cheques can be banked on the

specified dates and the units credited into the investor's account. The SIP facility is

available in the Principal Income Fund, Monthly Income Plan, Child Benefit Fund,

Balanced Fund, Index Fund, Growth Fund, Equity fund and Tax Savings Fund.

It’s An Expert’s Field: The Fund Manager who are the expert in management of the

fund and have experience of 8-10 years manages Funds.

Putting Eggs In Different Baskets: The investments are done in diversified sectors,

which reduce the overall impact on the returns from a portfolio on account of a loss in

particular, company or sector.

It’s All Transparent And Well Regulated: The Mutual Fund Industry is well regulated

both by SEBI and AMFI.

42

Rupee Cost Averaging : Timing the market consistency is a difficult task. Rupee cost

averaging is an automatic market timing mechanism that eliminates the need to time

one's investments. Here one need not worry about where share prices or interest are

headed as investment of a regular sum is done at regular intervals; with fewer units being

bought in a declining market and more units in a rising market. Although SIP does not

guarantee profit, it can go a long way in minimizing the effects of investing in volatile

markets.

Rupee Cost Averaging is an effective market-timer mechanism that eliminates the need to

time the markets. All one has to do is to invest a fixed, pre-decided amount of money on

a regular basis over a long period of time. Since the amount invested per month is

constant, one buys more units when the price is low and fewer units when the price

is high. As a result the average unit cost will always be less than the average sale price

per unit, irrespective of the market rising, falling or fluctuating.

Let's take an example of Mr. X, wherein he started investing Rs. 4,000 every month in

the Maximiser Fund of the Lifetime Super Plan.

The table related to this is given in next page:

43

44

 Period Invested

Premium (Rs.)

 NAV of Maximiser Fund

(Rs. Per unit)

Units

allocated 

7th Apr

'03 4,000 11.34 352.73

7th May

'03 4,000 11.01 363.31

9th Jun

'03  4,000 12.05 331.95

7th Jul

'03  4,000 13.13 304.65

7th Aug

'03 4,000 13.67 292.61

8th Set

'03  4,000 15.81 253.00

7th Oct

'03 4,000 16.78 238.38

7th Nov

'03 4,000 18.28 218.82

8th Dec

'03  4,000 18.71 213.79

7th Jan

'04  4,000 21.48 186.22

S9th Feb

'04 4,000 21.49 186.13

8th Mar

'04 4,000 21.98 181.98

Total 48,000    

Actual Average NAV = (11.34 + 11.01 + 12.05 + 13.13 + 13.67 + 15.81 + 16.78 + 18.28

+ 18.71 + 21.48 + 21.49 + 21.77) / 12 = Rs.16.29.

 

 NAV for Mr. X = (4,000 * 12) / (352.73 + 363.31 + 331.95 + 304.65 + 292.61 + 253.00

+ 238.38 + 218.82 + 213.79 + 186.22 + 186.13

+ 183.74) = Rs.15.36 

  Based on the historical analysis for BSE Sensex for last ten years (1-Jan-1994 to 1-Jan-

2004) we find that if an individual had invested Rs. 1000 ever year (SIP) he would have

earned a return of 9% vis-à-vis 5% earned by an individual who had invested Rs. 1000 at

the beginning of 10 year period. Similarly over a five-year period (1-Jan-1994 to 1-Jan-

1999) SIP investment return would have been 16.52% compared to 14.09% for a one-

time investment at the beginning of the period.

 

Thus Rupee Cost Averaging smoothens out the market ups and downs and reduces

the risk of investing in volatile markets. However, rupee cost averaging does not

guarantee a profit, as this depends on the performance of the market.

Does Not Strain Our Day-to-Day Finances: It allows us to invest very small amounts

(Rs. 500 – Rs. 1000) As against the larger one time investment, which makes easier to the

investor.

Top 5 schemes of mutual fund

45

Category wise

Absolute Returns (in %)  as on Jun 30, 2010

 Equity Diversified Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

ICICI Pru Discovery Fund (G)

1,083.58 45.37 -0.8 2.9 5.3 12.9 65.8 89.5 57.5

IDFC Small Midcap Eqty -G

686.89 17.38 0.8 4.8 7.1 14.9 54.7 103.7 _

IDFC Premier Equity - A (G)

1,376.30 29.65 -0.3 6.4 7.6 13.5 51.2 63.6 67.8

Birla SL Dividend Yield (G) 384.83 79.54 1.0 5.2 10.0 15.2 54.2 96.5 68.6

DSP-BR Small & Mid Cap -RP (G)

847.67 16.59 -0.5 5.1 8.4 12.9 62.5 75.5 42.8

 Equity Tax Saving Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

Can Robeco Eqty TaxSaver (G)

174.14 24.48 0.4 2.9 5.1 12.9 42.9 83.0 58.4

ICICI Pru Tax Plan (G) 1,159.48 131.15 -0.5 3.4 3.0 8.5 52.6 56.8 40.7

HDFC Tax Saver (G) 2,465.31 216.61 0.2 4.2 5.2 10.4 47.6 71.3 37.8

Religare Tax Plan (G) 97.58 16.57 -0.2 4.7 5.5 9.9 45.2 67.7 50.5

Fidelity Tax Advantage (G) 1,155.62 20.39 0.1 4.8 7.8 12.5 44.3 60.8 42.5

Balanced Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

46

ICICI Pru CCP - Gift Plan 161.19 56.47 -0.4 3.7 7.8 15.2 53.0 38.9 28.9

HDFC Prudence Fund (G) 4,113.52 195.13 0.5 3.4 7.4 12.1 44.1 73.2 55.3

Reliance RSF - Balanced (G)

539.15 21.09 0.2 2.9 2.3 9.2 31.7 67.8 70.7

HDFC Balanced Fund (G) 155.77 50.54 0.4 4.1 6.7 13.3 40.4 60.8 55.5

HDFC Childrens Gift (Inv) 234.41 37.14 -0.3 4.5 7.9 14.5 39.5 52.0 39.6

 Monthly Income Plan Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

Reliance MIP (G) 4,771.44 20.69 -- 0.9 2.4 3.7 15.5 46.4 50.3

HDFC MIP - LTP (G) 6,397.61 21.72 0.2 1.3 3.1 4.8 15.2 39.9 40.3

LIC MF Floater MIP-Plan A (G)

120.05 17.49 -0.1 0.9 1.9 4.0 9.7 22.8 31.3

Tata MIP Plus Fund (G) 78.45 15.58 -0.1 1.2 3.7 4.9 10.6 23.0 25.1

HSBC MIP - Savings Plan (G)

414.36 18.60 -0.2 0.9 1.2 2.2 12.5 26.9 32.9

 Money Market Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

IDFC Savings Adv. Fund (G)

1,159.52 1,311.80 0.1 0.5 1.5 2.6 4.5 11.0 19.8

Tata Treasury Manager-RIP (G)

60.17 1,234.95 0.1 0.4 1.2 2.3 4.7 14.0 --

HDFC CMF-Treasury Advg (G)

6,023.68 20.23 0.1 0.4 1.2 2.3 4.6 12.7 21.8

LIC MF Liquid Fund (G) 2,639.66 17.06 0.1 0.4 1.2 2.2 4.6 13.5 22.8

HDFC Cash Mgmt - SP (G)

3,149.10 19.47 0.1 0.4 1.2 2.2 4.5 12.8 22.0

 Debt – Short Term Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

47

IDFC SSIF -MTP – RP A (G)

58.92 16.08 0.1 0.5 2.7 4.9 9.4 24.1 32.3

Kotak Bond (Deposit) (G) 40.80 25.23 -0.1 -0.4 3.2 4.2 6.1 25.5 33.9

Can Robeco Income (G) 215.44 19.95 0.1 0.3 2.6 3.0 4.9 37.2 47.4

Fortis Flexi Debt Fund-RP (G)

322.72 16.16 0.1 0.2 1.5 2.8 4.9 25.5 36.7

HDFC High Interest - STP (G)

3,891.48 18.71 0.1 0.4 1.7 3.3 7.0 21.9 33.9

 Debt - Long Term Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

Birla Sun Life GSec - LTF (G)

86.42 27.46 0.1 0.3 5.7 7.0 11.8 37.2 36.5

ICICI Pru Gilt Inv Plan - PF 79.17 18.52 0.2 0.3 1.4 1.9 1.8 44.8 54.8

Templeton (I) ST Income (G)

4,991.56 1,878.17 0.1 0.4 1.7 3.4 8.6 22.9 33.3

DSP-BR Govt. Sec. (G) 68.75 32.71 0.1 0.3 3.1 3.8 4.2 33.1 39.6

Birla SL Dynamic Bond -RP (G)

8,611.67 15.73 0.2 0.4 1.5 3.4 6.8 21.2 34.6

 Debt - Floating Rate Asset Size 

(Rs. cr.) 

NAV (Rs./Unit) 

1wk  1mth  3mth  6mth  1yr  2yr  3yr 

Birla SL FRF - LTP - RP (G)

233.48 15.98 0.1 0.4 1.3 2.9 7.2 16.4 26.6

HDFC Float Rate Inc-LTP (G)

1,490.80 16.05 0.1 0.5 1.6 2.6 6.1 16.7 27.3

LIC MF Floating Rate (G) 5,102.00 15.32 0.1 0.4 1.3 2.6 5.4 14.7 25.2

Templeton FRIF – LTP (G) 412.85 17.04 0.1 0.4 1.2 2.3 5.1 14.6 23.4

Kotak Floater LTP (G) 10,000.00 14.80 0.1 0.4 1.3 2.5 5.0 13.9 24.1

RISKS IN SYSTEMATIC INVESTMENT PLAN

In this competitive world the risk is common in almost all the business. The basic

objective of a mutual fund is to provide a diversified portfolio so as to reduce the risk in

48

investments at a low cost. Investors who take up mutual fund route for investments

believe that their risk is minimized at low costs, and they get an optimum portfolio of

securities that match their risk appetite. A mutual fund investor is exposed to a variety of

risks. Among these, there are four major ones:

Market Risk:

It refers to the extent to which fluctuations in the return are caused by broad market

factors.

Regulatory Risk:

It is the result of unexpected changes in the regulation.

Industry Risk :

The returns of a particular scheme may be adversely affected by the poor performance of

a particular sector.

Company Risk:

If a particular fund scheme has made substantial investments in the stocks of a particular

company; risks may arise as a result of below par performance of that particular

company.

49

50

RESEARCH METHODOLOGY

OBJECTIVE OF THE STUDY

The purpose of choosing this project is to know:

Investors’ option for entry into a Mutual Fund.a) Lump sumb) SIP

Comparative analysis between SIP and Lump sum.

Investors Delight when investment is through SIP.

Procedure for investment in SIP.

SCOPE OF THE STUDY

Since the summer internship training is done in Kanpur, so the universe taken is from

Kanpur only.

This project will help existing/prospective investor to understand what are the various mode of investment in Mutual Fund and why Systematic Investment Plan gives better returns than Lump sum. So that investors can do better use of their hard earned money to earn more profit.

TYPES OF DATA

There are two types of data:1. Primary Data

2. Secondary Data

Primary Data is that data which is collected by the researcher as per his/her needs.

Secondary Data is that data which is collected through references as websites, journals,

books, newspapers, magazines etc.

51

SOURCES OF DATA COLLECTION

The data for research is collected in two ways: -

Primary source

Secondary source

Primary Data is collected through Questionnaire and interviewing the investors

directly.

Secondary data which is used just for reference, is collected through magazines,

FACTSHEET of ICICI PRU AMC namely “The PRUDENT”.

RESEARCH DESIGNThis research is Explorative and conclusive in nature because it aims to collect the data

about the behavior of investors in which way they invest in Mutual Funds. The research

approach used is survey based and the analysis is largely based on the primary data.

RESEARCH INSTRUMENTStructured questionnaire: open- ended and close- ended.

CONTACT METHODPersonal interview

RESEARCH APPROACHAny methodology includes the overall research design, the sampling procedure and data

collection method. The methodology adopted by me for purpose of finding the

investment behavior of investors was DIRECT SURVEY METHOD.

52

RESEARCH TYPEConclusive and explorative approach has been adopted in the study. As here the topic of

research problem has been explored so that hidden facts can come into the light and then

the final conclusion is given.

POPULATION

Kanpur City

SAMPLE SIZE

A sample size of 50 investors was chosen to meet the earlier mentioned objectives. The

selection of sample was based on the following criteria: -

People belonging to different strata of society.

Servicemen working in government organization & private organization.

Professionals who includes doctors, lawyers, teachers etc.

FINDINGS

The analysis is done based on the structured questions and we got following points: 55% investor invests in SIP mode.

84% got more profit in SIP.

The maximum duration of investment in SIP is 3 years i.e. 34%.

The maximum allocation criteria in SIP are Rs. 1000-3000 i.e. 45%.

53

ANALYSIS

The analysis is done on the basis of the response of respondents, which is

collected through the questions present in questionnaire.

Q 1: In which Financial Instrument do you invest into?

Ans:Financial Instrument Investment in %

Mutual Funds 76

Bond 15

Online Trading 7

Derivatives 2

Interpretation: From above pie chart, I have analysed that 75% of investors invest in

Mutual Funds. Rest of the investors invest in Bond (i.e. 16%), Online Trading (i.e. 7%)

and Derivatives (i.e. 2%).

54

Q 2: By structure in which type of schemes have you invested?

Ans:

Type of schemes on the Basis of Structure Investment in %

Open-ended funds 66

Close-ended funds 22

Interval Funds 12

Interpretation: The above pie chart depicts that 66% investors invest in Open-ended

funds, 22% in close-ended funds and 12% in interval funds.

55

Q 3: By investment objective in which schemes have you invested?

Ans:Type of schemes on the Basis of Investment Objective Investment in %

Growth Schemes 55

Income Schemes 13

Balanced Schemes 32

Interpretation: From above pie chart, I conclude that there are 55% investors who invest

in Growth Schemes, 13% investors invest in Income Schemes and 32% investors invest

in Balanced Schemes.

Q 4: In which type of fund you want to invest?

56

Ans:Types of Funds Investment in %

Index Fund 41

Tax saver Fund 15

Sectorial Fund 44

Interpretation: The above chart depicts that the maximum no. of investors i.e.41%

investors invest in Sectorial Funds, 44% in Index funds and 15% in Tax saver funds.

Q 5: Did you repeat your investment after the initial investments?

Ans:

57

Repeatition of Investment Investers In %

Yes 68

No 32

Interpretation: The above pie chart depicts that 68% of investors invest again after the

initial investments.

Q 6: What percentage of your earnings do you invest in Mutual Funds?

Ans:% Of earnings invested in MF Investors in %

Up to 10% 43

58

Up to 25% 32

Up to 50% 15

Above 50% 10

Interpretation: The above chart depicts that 43% investors invest up to 10% of their

earnings in Mutual Funds.

Q 7: How many investors invested in SIP, Lumpsum or Both?

Ans:

59

Type of Investment

Investment in

%

SIP 55

Lumpsum 10

Both 35

Interpretation: From above chart I have analysed that 55% investors have invested in

Systematic Investment Plan, 10% in Lumpsum and 35% in both the category.

Q 8: What is an allocation criterion of investor in SIP?

Ans:

60

Allocation criteria (in Rs.)Investment in %

Less than 1000 9

1000-3000 45

3000-5000 36

Above than 5000 10

Interpretation: From above chart I have analysed that the allocation criteria of

investment is 45% in the range Rs.1000 to Rs.3000.

Q 9: What is time duration of investment?

Ans.

Time Duration Investment in %

Less than equal to 5 years 25

Less than equal to 4 years 8

61

Less than equal to 3 years 34

Less than equal to 2 years 25

Less than equal to 1 years 8

Interpretation: The above bar chart depicts that most of the investors (i.e. 33.33%)

invest in less than 3 years.

Q 10: Which has given more profit according to investors?

Ans.

Investment in Profit in percentage

SIP 84

Lumpsum 16

62

Interpretation: The above Pie chart depicts that 83.33% of investors have got more

profit in Systematic Investment Plan.

Q 11: Are you satisfied with the facilities provided by KARVY ?

Ans:

Satisfaction Level with KARVY Responses of Investors

Yes 65%

No 35%

63

Interpretation: The above chart depicts that 65% investors are satisfied with the

redemption facilities provided by KARVY.

RECOMMENDATION AND SUGGESTIONS:

Though the Karvy Stock Broking Limited have a very good ascribed plan with exclusive band of opportunities but as nothing is free from the hurdles therefore there are few shortcomings which I felt makes Karvy fail to achieve its target.

.There is high potential market for Mutual Fund Advisors in kanpur city, but this market needs to be explored as investors are still hesitated to invest their money in Mutual Funds.

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In Kanpur investors have inadequate knowledge about Mutual Funds, So proper Marketing of various schemes is required, company should arranges more and more seminars on Mutual Funds.

Awareness of MF services among the investors are very low so Asset Management company needs proper marketing of their all services by advertising, distribution of pamphlet, arranging seminars etc.

Most of advisors are not interested in dealing of Mutual Funds because they get very low commission.

Company should also provide knowledge about the growth rate and the expected growth rate of Mutual Fund industry in India.

Most of people aware of life insurance, NSC and PPF for tax saving so, company should market various tax saving schemes of Mutual Funds and their benefits.

The interface among the investors and the Mutual Fund Companies is the agents, so the agents should have proper knowledge about Mutual Funds as well as market so that they can help investors in their investment decisions. The quality of agents performance and investors trust on them can be improved only if they are permanent in nature.

LIMITATIONS TO THE SURVEY

Though research based decision-making is now considered but still there is gap between

the understanding of researcher and users.

Research is there to help in decision-making, not a substitute of decision-making. Some

of the following limitations have restricted the scope of survey to some extent:

Some respondents gave vague information and were not serious while responding.

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Some respondents were hesitant to reveal information about their finances

because of income tax queries.

It was difficult to find whether respondents actually participate in their financial

planning.

Research can provide no. Of facts but it does not provide actionable results.

It cannot provide the answer to any problem but can only provide a set of

guidelines.

Management rely more on the intuitions and judgment rather than research.

Area of research was restricted to some locations of the city and strata.

SWOT ANALYSIS

Strength :

A well-known name in Financial

Companies.

Wide Experience in this field.

Dedicated Employees.

Tie up with many financial

institutions.

Weakness :

No access to rural market.

No direct link between investors

& the AMC.

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Ever growing distribution

network.

Good Infrastructure.

Experienced Fund Managers.

Easy access to the branch.

Opportunity :

Positive outlook of people

towards mutual funds.

Untapped market.

Threat :

Highly volatile and uncertain

market conditions.

Large number of financial giants

present in this field.

.

CONCLUSION

FINDINGS :

Our findings during the training with Karvy Stock Broking Limited, Kanpur

Company’s Plan was good on the following ground:

Karvy is a top-ranked company listed with NSDL and CDSL, provide

trading through both NSE & BSE.

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Karvy is providing software to their prospective sub broker and Remissers.Cheque updating in 15 mins. And the credit limit up to 10 times.

There are some more points

Mutual Fund Advisors give emphasis on mutual funds than other investment options.

Mutual Funds have given a new direction to the flow of personal saving and enable small and medium investors in remote rural and semi urban areas to reap the benefits of the stock market investment. Indian Mutual Funds are thus playing a very important developmental role in allocation of scares resources in the emerging economy.

Karvy is not able to provide sufficient services to the investors due to unawareness among advisors regarding services.

The awareness level of investor is low in advisors are interested in dealing in mutual fund.

Very less advisors are knowing about services provided by karvy.

.

BIBLIOGRAPHY:- Websites:

www.karvy.com www.indiacorporateadvisor.com www.amfiindia.com www.nsdl.co.in www.wikipedia.com www.moneycontrol.com

Books Referred: -

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“Research Methodology” by C.R. KOTHARI

“Mutual Funds” by Akhilesh

Magazines & Journals Referred: -

Business Today

ICICI Prudential AMC’s Fact sheet-“THE PRUDENT”

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QUESTIONNAIRE

(Hello, I am Akshay kumar Singh. I need your spare time to fill up the questionnaire, as this is the part of my Summer Internship Training under MBA curriculum.)

NAME: ______________________________________ __________________ AGE:0-18_____ 18-36_____ 36-54_____ 54-72______ 72 ABOVE______

GENDER: Male [ ]Female [ ]

OCCUPATION: Businessman [ ] Pvt. Employee [ ]Govt. Employee [ ] Professional [ ]Student [ ] Other (specify):________

CONTACT NO: __________________________________

Q1. In which of these Financial Instruments do you invest into? Shares Mutual Funds Bonds Derivatives PPF Gold Property NSC Bank Deposit

Q2 .By structure in which type of schemes did you invested?Open - Ended Schemes [ ]Close - Ended Schemes [ ]Interval Schemes [ ]

Q3.By investment objective in which type of schemes have you invested?Growth Schemes [ ]Income Schemes [ ]Balanced Schemes [ ]

Q4.In which type of funds you want to invest?Tax saver funds [ ]Index funds [ ]Sectorial funds [ ]

Q5. Did you repeat your investment after your initial investments?

Yes No

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Q6. What percentage of your earnings do you invest in Mutual Funds? Up to 10% Up to 25% Up to 50% Above 50%

Q7. In which you have invested?SIP Lumpsum Both

Q8. What is your allocation criterion?<1000 1000-3000 3000-5000 >5000

Q9. For what time period you have invested?<= 1 yr. <= 2 yr. <= 3 yr. <= 4 yr. <= 5 yr.

Q10. Which has given you more profit?SIP Lumpsum

Q11. Are you satisfied with the facilities provided by KARVY?No [ ] Yes [ ]

Q12. What is your opinion on KARVY overall performance? EXCELLENT [ ] GOOD [ ] AVERAGE [ ] UNSATISFIED [ ]

Q13.In what areas do you want KARVY has to improve?

E.g. Customer service

Agents training

Others

(Thanks for your kind support)

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