copyright © 2012 national stock exchange of india ltd. national stock exchange investor awareness

Copyright © 2012 National Stock Exchange of India Ltd.

NATIONAL STOCK EXCHANGEInvestor Awareness

Who is an Investor

An Investor is a person who allocates capital with the expectation of a financial return.

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Income Expenses Savings Investment

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Savings v/s InvestmentSavings Investment

Short term Longer term

Emergency Planned Outlay

Low returns Beating the inflation

Investment & Returns


Why People Invest

• Achieve financial goals

• Increase current income

• Financial security

• Retirement

Investment

Returns

• Interest

• Dividend

• Rent

• Capital Gain

Investment Planning

4

Start of Career RetirementMarriage House Car

Children’s Education

Children’s Marriage

5

Goal SettingWhat are the key financial stages in my life? In how much time will I reach these stages?How much money would I require at these stages?

Assessment

Monitoring

What is my risk taking ability?How much return can I expect with the risk taking ability?How much money do I need to invest each month?

What is the performance of my investments?Have my needs or risk taking capabilities changed?Is there any need to adjust my investment portfolio?

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Investment Avenues


There are many options today to invest your money in

An investor who owns a stock is known as a shareholder

SMALL SAVING SCHEMES

PPF

FD/RD

STOCKS

MUTUAL FUNDS

CORPORATE DEBT

REAL ESTATE

GOLD

EXCHANGE TRADED FUNDS

Traditional Avenues

Modern Avenues

Risk-Return Relationship

High Risk

ModerateRisk

Low Risk

ZeroRisk

6% 18%9% 12% 15%

Govt. Bonds, Post office,

PPF

Bank Fixed Deposits

Corporate bonds, Debt funds

Mutual Fund, ETFs

Equities

Expected return6

Why Capital Markets?


Easy Liquidity

Risk Diversificati

on

Maximum Returns

Tax Benefits

One can easily buy and sell shares and gets quick redemption of investment.

Products available for all classes of investors. Allows investments customized to personal risk appetite.

Historically outperformed all other asset classes – Compound Annual Growth Rate (CAGR) of over 18%.

No Income is payable if shares are sold after 1 year of purchase.

Tax Exemption is also available for investing in ELSS and RGESS schemes.

Price Transparency

Trading is screen based and information about current prices of shares are available easily.

Why NSE


Technology

Innovation

Investor Protection

Transparency

We are the pioneers in developing the latest of technologies to ensure efficiency in markets.

We have a consistent track record of successfully introducing innovative products in the financial markets. We enable you to explore opportunities in the markets.

We have the developed a world class surveillance system that ensures integrity of the markets.• All investors, big and small are now on the same

platform.

• No one has advantages over the other.

• There is an enhanced transparency as you yourself can verify your trades directly on NSE website.

Asset Classes at NSE

AssetClasses

EquityDerivatives

Capital Markets

Other Markets

Other Derivatives

Stock Futures

Stock Options

Index Futures

Index Options

Currency Futures and OptionsInterest Rate Futures

SLBS

Debt Market

MFSS

Equities,Debt, ETFs,

Mutual Funds

IPO


10

Highly liquid Index

Covering more than 24 sectors

Nifty is calculated using free-float market capitalization

method.

Captures the largest market capitalization, represents

about 65% of total free-float market capitalization of

NSE.

Nifty linked Derivatives contracts available for trading

on Singapore Exchange, Chicago Mercantile Exchange

& Osaka Securities Exchange.

Over 30 International and Domestic ETFs/Index Funds

on Nifty.

Structured Products/ Index-linked Debentures issued in

domestic and international market across the Globe.

Our Flagship Index – NIFTY 50


Mutual Funds


A Mutual Fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities.

Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. Investor commits to invest a fixed amount every month.

Currently there are around 45 Mutual Fund Companies.

Introduction to ETFs

An Exchange Traded Fund (ETF) is primarily a mutual fund scheme which is listed and traded on a stock exchange. An ETF can invest in:

Equities – replicating the composition and performance of an equity index.

Commodities – tracking the actual price of a commodity like Gold. Money market instruments like short-term government securities and

call money.

Exchange Traded Fund (ETF)

– Simplicity– Transparency– Lower

Expenses– Diversification– Open-End Fund

– On Exchange– Real time

prices– Trading

flexibility– Trading

strategies

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INDEX MUTUAL FUND

STOCK

EXCHANGE TRADED FUND


What is an ETF?


Affordable exposure

Real time prices

Real time trading

Full transparency

No entry and exit fees

What makes it attractive?

ETFs have been pioneered in India by NSE

Exposure to an index or a basket of securities

Lists and trades on a stock exchange

Not actively managed

What is an ETF?

GOLD

NIFTY

CPSE

LIQUID

ETFs: BENEFITS FOR THE RETAIL INVESTOR

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1

2

3

4

5

Very Simple to Trade: Can be traded on NSE like any stock

Quick Diversification: Opens up multiple asset classes are affordable costs

Economical: Lowest expense ratio amongst all equity mutual funds

Only brokerage payable in buying or selling on exchange

You can track your investment value in real time

Safe

Sim

ple

Fast


Gold ETF


Typically,

ETFs are safe and secureThey hold physical gold

But then why ETFs?

You can buy just one unit It is very easy to buy Buy it unit by unit as you want

and build wealth

SIMPLE

You can be assured of quality Demat holding allows security

SAFE

Accepted as collateral for loansTRUSTEDGOLD V/s GOLD ETF

Quality risk No quality risk

Less price transparency

High level of transparency

Very high bid-ask spread Low bid-ask spread

Not tax efficient Tax Efficient

1 ETF unit ≈1g of Gold in spot

JUST REMEMBER

ETF is an easier and more secure way to buy gold.

NIFTY ETF


Instant Diversification Affordable Diversification No bias towards sectors or

stocks Minimum expense ratio

Nifty ETF is the simplest and safest

way to enter into equity markets

Narrow Broad Broad

High Low Low

Low High Low

High Low Low

Market Rates NAV at EOD Market Rates

EXPOSURE

VOLATILITY

COST OF MAINTENANCE

CAPITAL REQ

PRICE

STOCKS NIFTY MUTUAL FUND NIFTY ETF

CPSE ETF

Central Public Sector Enterprises (CPSE) ETF is a part of the Government of India initiative to dis-invest some of its stake in selected CPSEs through the ETF route.

The ETF was opened for subscription in March 2014 and the same was listed on NSE in the first week of April 2014.

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Ability to participate in the long-term development of India.

Instant Diversification: Single scrip to trade in diverse set of PSEs.Economical: Lowest expense ratio amongst all equity mutual funds.Enables large investment in blue chip Public Sector enterprises without the constraint of market liquidity on the underlying individual stock.

KEY BENEFITS OF CPSE ETF


Liquid ETF

Liquid ETFs are funds whose unit price is derived from money market securities comprising of Government bonds, treasury bonds, call money market, etc.”

Benefits of Liquid ETFs: • NAV per unit is maintained at Rs.1000/-• Daily returns are passed on as dividend• The dividend after Dividend Distribution Tax in units• No STT• Listed and Traded on the NSE with a minimum lot size of 1 unit

Liquid ETFs listed on NSE


Symbol Underlying Asset Unit Price AMC Name

LIQUIDBEES Government Securities

Rs.1000(Face value)

Goldman Sachs Mutual Fund

Regulatory/Safety Measures

Unique Client Code, KYC, PAN

Client code at the time of order entry

Price Time Priority

Contract Notes, Quarterly Statement

Stringent Compliance on members in respect of dealings

with investors

Trade Verification

Direct information to investors on random basis

SMS Notification to Investors

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Investor, Information, Awareness

Information dissemination through multiple

channels

Key information on Corporate entities,

Members, Complaints on Exchange website

Programs on products, safety aspects

Investor related alerts

Rumor verification

20 NATIONAL STOCK EXCHANGE OF INDIA LTD.

Takeaways


• Clear Understanding of various asset classes in terms of risks and returns

• Historically Stock Market provides best return on investment in the long term

• NSE aspires to Educate, Empower and Protect all Investor

• Stock Exchanges are highly regulated and ensure investor protection

• However the decision of Investing is solely of the Investor

• Stock Markets are market driven and are subject to market risks


THANK YOU

copyright © 2012 national stock exchange of india ltd. national stock exchange investor awareness

Documents

financial markets

investment planning

investment portfolio

financial return

personal risk appetite

classes of investors

quick redemption of

financial goals