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 .
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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
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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
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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
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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
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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
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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.
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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.
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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
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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
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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
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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.
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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.
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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
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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: [email protected]
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
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