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A

PROJECT REPORT

ON

SECURITY ANALYSIS AND INVESTMENT MANAGEMENT ININDIA INFOLINE

SUBMITTED TO

M.M.INSTITUTE OF MANAGEMENTMAHARISHI MARKANDESHWAR UNIVERSITY

MULLANA-AMBALA 133207www.mmumullana.org

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INDEX

Table Of Content

Chap. No. Title Page

No.Declaration

Certificate

Acknowledgement

Executive Summary

1. Introduction

1.1 Introduction To The Topic

1.2 Introduction To The Industry

1.3 Introduction To The Company

2. Review of litrature

3. Research Methodology

3.1 Objectives Of The study

3.2 Nature Of The Study

3.3 Sampling Procedure and design

3.4 Methods Of data collection

3.5 Scope Of The Study

3.6 Sampling Method

3.7 Significance Of The Study

3.8 Limitations Of The Study

4. Major Findings And Conclusion

A

5. Suggestions And Recommendations

Annexure

Sample Questionnaire

Bibliography

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DECLARATION

I hereby declare that this project report titled SECURITY ANAYLISIS AND

INVESTMENTMENT MANAGEMENT has been submitted by me for the award of Post

Graduate Diploma in Management, as partial fulfillment of the requirement for the course.

This is the result of the original work carried out by me. This report has not been submitted

anywhere else for the award of any other degree or diploma.

Date: 30th Aug 2012

VARSHA RANI

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CERTIFICATE

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ACKNOWLEDGEMENT

The success behind the completion of job is the support and joint teameffort of a number of people. The satisfaction of the successful completion

of any task wouldnt be complete without the expression of gratitude to the

people who made it possible.

It was a great opportunity for me to work with India Infoline Ltd., pioneers in

the field of Finance Industry. I am extremely grateful to all those who have

shared their expertise and knowledge with me and without whom the

completion of this project would have been virtually impossible.

My deepest sense of gratitude, profound respect and sincere thanks to Mr.

Virander Kashyap, Branch Manager-Sales, my company guide, for his

valuable assistance, keen interest and constant motivation at each step of

the project. He always had the answers to my queries, be it regarding any

concept related to stock trading and De-mat account. His warm support,

practical guidance and easy explanations regarding the project matter addto the success of my project.

I would also like to thank my guide Mr. Ankur Aggarwal for all their

time-to time assistance.

Last but not the least I would like to thank God because without his divine

grace nothing would have been possible.

VARSHA RANI

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EXECUTIVE SUMMARY

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1.INTRODUCTION

This summer project which is on how to create and manage portfolio, and know investor

perception about investment in capital market which is most useful for me. This project

Increase my knowledge and ability to understand external forces of environment.

Have you ever wondered how the rich got their wealth and then kept it growing? Do you dream

of retiring early (or of being able to retire at all)? Do you know that you should invest, but don't

know where to start?

. There are many different ways you can go about making an investment. This includes putting

money into stocks,bonds, mutual funds, or real estate (among many other things), or starting

your own business. Sometimes people refer to these options as "investment vehicles," which is

just another way of saying "a way to invest." Each of these vehicles has positives and

negatives, which we'll discuss in a later section of this tutorial. The point is that it doesn't

matter which method you choose for investing your money, the goal is always to put your

money to work so it earns you an additional profit. Even though this is a simple idea, it's the

most important concept for you to understand.

The world of finance can be extremely intimidating, but we firmly believe that the stock market

and greater financial world won't seem so complicated once you learn some of the language

and major concepts.

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INDUSTRY PROFILE

The Indian broking industry is one of the oldest trading industries that have been around even

before the establishment of the BSE in 1875. Despite passing through number of changes in the

post liberalization period, the industry has found its way onwards sustainable growth. With the

purpose of gaining a deeper understanding about the role of the Indian stock broking industry

in the countrys economy, we present in this section some of the industry insights gleaned from

analysis of data received through primary research.

For the broking industry, we started with an initial database of over 1,800 broking firms that

were contacted, from which 464 responses were received. The list was further short listed based

on the number of terminals and the top 210 were selected for profiling. 394 responses, that

provided more than 85% of the information sought have been included for this analysis

presented here as insights.

All the data for the study was collected through responses received directly from the customers

and employees of broking firms. The insights have been arrived at through an analysis on

various parameters, pertinent to the equity broking industry, such as region, terminal, market,

branches, sub brokers, products and growth areas.

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2.COMPANY PROFILE

The India infoline was founded by a group of professionals in 1995, a seemingly distant past

in the Internet age. Our meticulous research was published and distributed in printed form to a

client base comprising the who's who of Indian business including leading MNCs, investment

banks and consulting firms. The quality of research was highly acclaimed and soon became the

industry benchmark. Over the last few years, our research coverage has grown to cover

practically all companies, economy and financial markets. The breadth and depth of our content

is unmatched - stock markets, mutual funds, personal finance, taxation and economy.

We saw an opportunity to expand our client base, from a few hundreds to several

millions and also to complete the value chain. In early 1999, when Internet penetration in India

was at its infancy and the future unknown, we took the hard decision of killing our earlier

business model and embracing the Internet. We discontinued delivery of reports in printed form

and made available quality research at the click of a mouse. Thus, was born

www.indiainfoline.com? The site has emerged as the most popular website on Indian business

and finance. A publication, no less than Forbes has chosen us in theirBest of the Web under

the Asian Investing category.

The India Info line group, comprising the holding company, Angel Broking Ltd and its

wholly owned subsidiaries offers the entire gamut of investment products ranging fromEquities and derivatives trading, Commodities trading, Portfolio Management Services, Mutual

Funds, Life Insurance, Fixed deposits, GoI bonds and other small savings instruments. Angel

Broking also owns and manages the websites, www.indiainfoline.com and www.5paisa.com.

Angel Broking Ltd is a company listed on both the leading stock exchanges in India namely the

Stock Exchange, Mumbai stock exchange (BSE) and the National Stock Exchange (NSE).

Angel Broking is a forerunner in the field of equity research. Angel Brokings research is

acknowledged by none other than Forbes as Best of the Web and a must read for investors

in Asia.

India Info lines research is available not just over the internet but also on international wire

services like Bloomberg (Code: IILL), Thomson First Call and Internet Securities where it is

amongst the most read Indian brokers. The Angel Broking group has a significant presence

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across the country owing to its 125 offices across 45 cities across India. All these offices are

networked and are connected with the corporate office in Mumbai. The group has invested

significantly in technology and research, the results of which are there for everyone to see. The

5paisa trading interface is one of the most advanced platforms available to retail investor in

India.

The group has memberships on BSE and NSE for equities trading and on MCX and

NCDEX for commodities trading. It has a SEBI license for Portfolio Management under which,

various schemes are offered which have been consistently beating the benchmark indices since

inception. Angel Broking is the one-stop shop for all investment needs for the Indian retail

investor, from advice to execution, from east to west, online or offline.

To be the premier provider of investment advisory and financial planning services in

India

To be a leading investment intermediary for transactions through both online and offline

medium.

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REVIEW OF LITERATURE

21st century the digital revolution has transformed the economy in to a new economy which

empowered the customer with new set of capabilities such as:

1. Access to greater amount of information;

2. Wider variety of available good and services

3. Greater ease of interacting with the service provider.

This new capability in the new economy led the customer to market the marketing and plays a

very vital role in the growth of the market. It is essential in the service industry in particular,

place greater emphasis on the enablers leading to customer satisfaction and customer retention.It is in this context is very important to understand the customer requirements to provide value-

(QSP - Quality, Service and Price) and track and manage the customer satisfaction for retention

and creation of new customers.

In Service industry it is not enough if the product meets the functional requirements of the

customer, it should also meet certain other customer expectations like the behaviours /attitude

of the person who provides service. The customer satisfaction is the combination of both

technical features & human behavioural aspects. The quality management only addresses the

systems and processes; service addresses the customer service independently. In todays new

economy, it is essential to address the enablers for customer satisfaction for business growth

with utmost importance as they are interdependent in nature.

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NATURE OF STUDY

Investment management is the professional management of various securities (shares, bonds

and other securities) andassets (e.g., real estate) in order to meet specified investment goals forthe benefit of the investors. Investors may be institutions (insurance companies, pension

funds, corporations, charities, educational establishments etc.) or private investors (both

directly via investment contracts and more commonly via collective investment schemese.g.

mutual funds orexchange-traded The business of investment has several facets, the

employment of professional fund managers, research (of individual assets and asset classes),

dealing, settlement, marketing, internal auditing, and the preparation of reports for clients. The

largest financial fund managers are firms that exhibit all the complexity their size demands.

Apart from the people who bring in the money (marketers) and the people who direct

investment (the fund managers), there are compliance staff (to ensure accord with legislative

and regulatory constraints), internal auditors of various kinds (to examine internal systems and

controls), financial controllers (to account for the institutions' own money and costs), computer

experts, and "back office" employees (to track and record transactions funds).

The term asset management is often used to refer to the investment management ofcollective

investments, while the more generic fund management may refer to all forms of institutional

investment as well as investment management for private investors. Investment managers who

specialize in advisory ordiscretionary management on behalf of (normally wealthy) private

investors may often refer to their services as wealth management or portfolio management

often within the context of so-called "private banking".

The provision of investment management services includes elements offinancial statement

analysis, asset selection, stock selection, plan implementation and ongoing monitoring of

investments. Coming under the remit offinancial services many of the world's largest

companies are at least in part investment managers and employ millions of staff.

Fund manager (orinvestment adviserin the United States) refers to both a firm that provides

investment management services and an individual who directs fund management decisions

and fund valuations for up to thousand s of clincts per institution.)

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http://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Mutual_fundshttp://en.wikipedia.org/wiki/Exchange-traded_fundhttp://en.wikipedia.org/wiki/Exchange-traded_fundhttp://en.wikipedia.org/wiki/Asset_classeshttp://en.wikipedia.org/wiki/Internal_audithttp://en.wikipedia.org/wiki/Internal_audithttp://en.wikipedia.org/wiki/Collective_investmenthttp://en.wikipedia.org/wiki/Collective_investmenthttp://en.wikipedia.org/wiki/Collective_investmenthttp://en.wikipedia.org/wiki/Wealth_managementhttp://en.wikipedia.org/wiki/Private_bankinghttp://en.wikipedia.org/wiki/Financial_statement_analysishttp://en.wikipedia.org/wiki/Financial_statement_analysishttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Investment_adviserhttp://en.wikipedia.org/wiki/Investment_adviserhttp://en.wikipedia.org/wiki/Businesshttp://en.wikipedia.org/wiki/Securitieshttp://en.wikipedia.org/wiki/Assethttp://en.wikipedia.org/wiki/Real_estatehttp://en.wikipedia.org/wiki/Collective_investment_schemehttp://en.wikipedia.org/wiki/Mutual_fundshttp://en.wikipedia.org/wiki/Exchange-traded_fundhttp://en.wikipedia.org/wiki/Exchange-traded_fundhttp://en.wikipedia.org/wiki/Asset_classeshttp://en.wikipedia.org/wiki/Internal_audithttp://en.wikipedia.org/wiki/Collective_investmenthttp://en.wikipedia.org/wiki/Collective_investmenthttp://en.wikipedia.org/wiki/Wealth_managementhttp://en.wikipedia.org/wiki/Private_bankinghttp://en.wikipedia.org/wiki/Financial_statement_analysishttp://en.wikipedia.org/wiki/Financial_statement_analysishttp://en.wikipedia.org/wiki/Financial_serviceshttp://en.wikipedia.org/wiki/Investment_adviserhttp://en.wikipedia.org/wiki/Business


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STOCK MARKET BASICS

Meaning of stock

Stock is a share in the ownership of a company. It represents a claim on the

company's assets and earnings. Whether you say shares, equity or stock, it all means the same thing.

If a company wants to growmaybe build more factories, hire more people or develop

new productsit needs money. It could get a loan from a bank. By issuing stock, a company

can raise money without going into debt. People who buy the stock are giving the company the

money it needs to grow. Not every company can issue stock. A business owned by one person

(a proprietorship) or a few people (a partnership) cannot issue stock. Only a business

corporation can issue stock. A corporation has a special legal status. Like a school, its existence

does not depend on the people who run it.

When the price of a particular stock rises, that stock is said to be "up," meaning up in price.

When the price falls, the stock is said to have gone "down. The terms "up" and "down" are also

used to describe the rise and fall of the market as a whole. Stock market

The stock market is the market for the trading of company stock, both those securities listed on

a stock exchange as well as those only traded privately. Although common, the term 'the stock

market' is a somewhat abstract concept for the mechanism that enables the trading of company

stocks. It is also used to describe the totality of all stocks, especially within one country. In

simple words:

Place where business of buying and selling stock takes place.

The stock market is not a specific place, though some people use the term "Dalaal

Street.

Types of stocks

Equity

Preference

Market segments

Primary market

-Channel for creation of new securities

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Secondary market

-The new securities issued in the primary market are traded the secondary market

Stock exchange

The Bombay Stock Exchange (BSE)

National Stock Exchange of India Ltd (NSE)

NEAT CASH

BOLT

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Market timing

Trading on the equities segment takes place on all days of the week (except Saturdays and

Sundays and holidays declared by the exchange in advance).

The market timings of the equities segment are:

Normal market open : 09:55 hours

Normal market close : 15:30 hours

The closing session is held between 15.50 hours and 16.00 hours in NSE and 15.40 hours and

15.50 hours in BSE

Index

Number which measures the change in a set of values over a period of time.

Stock index represents the change in value of a set of stocks which constitute the index

A good stock market index is one which captures the behavior of the overall equity market

It has to be well diversified yet highly liquid

Important market index

A market index is very important for its use as

A barometer for market behavior

As a benchmark portfolio performance

A passive fund management in index funds

An underlying for index futures and options

Types of indexes

Price weighted index

Equally weighted index

Market capitalization weighted index

Market Segments

Rolling Settlement

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Limited physical market

Institutional Segment

Trade for Trade Segment

Clearing and Settlement

Stock Markets follow a system of settling trades on T+2 basis, which means

Transactions done on Monday are to be settled by Wednesday by way of giving

securities or funds.

Providing of securities or funds to

Exchange / Clearing Corporation is called Pay-In.

Receiving securities or funds from Exchange / Clearing Corporation is called pay-out

Sometimes trades dont get settled because of short or bad delivery or company

objection.

In such cases, trade is settled through auction of securities.

If a trade remains unsettled even after auction, then Exchange carries Close Out

Margins and Risk Management

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It is of paramount importance that investors have faith smooth functioning of stock

Markets.

Exchanges achieve this by putting in place a comprehensive Risk Management system

and margin requirements.

Margin Requirement

MTM- Mark to Market margin

Volatility Margin

Gross Exposure Margin

SPAN margin

Risk Management

Capital Adequacy requirement.

Additional Base Capital

Intra-Day Trading and Exposure limits

On-line Exposure monitoring

Settlement Guarantee Fund

Inspection of Books

Penalties

Frequently used terms

Margin Money

Bull and Bear

Settlement Cycle

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Squared transaction

Delivery Transaction

Positions - + (buy) & - (sell)

Prices- Last traded price, closing price, opening price, average price

Pay-in & pay-out

Bid and offer

Short selling

Long position

Auction

Settlement Number

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B. CAPITAL MARKETS

Segments of the Capital Market

Primary market

-Channel for creation of new securities

Secondary market

-The new securities issued in the primary market are traded the secondary market.

Primary Market

This is part of the financial market where enterprises issue their new shares and bonds. It is

characterized by being the only moment when the enterprise receives money in exchange for

selling its financial assets. In simple words:

The primary market provides the channel for creation of new securities.

Primary market provides opportunity to issuers of securities; Government as well as

corporates, to raise resources to meet their requirements of investment.

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Classification of Issues

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Initial Public Offer

Initial Public Offering (IPO) is when an unlisted company makes either a fresh

issue of securities or an offer for sale of its existing securities or both for the first timeto the public. This paves way for listing and trading of the issuers securities.

A follow on public offering (Further Issue)is when an already listed company

makes either a fresh issue of securities to the public or an offer for sale to the public,

through an offer document.

Pricing of an Issue Fixed Price

Price discovery through Book Building Process

Book Building Process

Book Building is basically a process used in IPOs for efficient price discovery.

It is a mechanism where, during the period for which the IPO is open, bids are collected

from investors at various prices, which are above or equal to the floor price. The offer

price is determined after the bid closing date.

Rights Issue

Rights Issue is when a listed company which proposes to issue fresh securities to its

existing shareholders as on a record date.

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The rights are normally offered in a particular ratio to the number of securities held

prior to the issue and generally issued at a price lower than the currently traded market

price of the share

Preferential Issue

A Preferential issue is an issue of shares or of convertible securities by listed

companies to a select group of persons which is neither a rights issue nor a public issue.

This is a faster way for a company to raise equity capital.

Private placement can be done with a maximum of 50 investors.

Secondary Market

The market where securities are traded after they are initially offered in the primary market.

Most trading is done in the secondary market. In simple words:

Secondary market refers to a market where securities are traded after being initially

offered to the public in the primary market and/or listed on the Stock Exchange.

Majority of the trading is done in the secondary market.

Secondary market comprises of equity markets and the debt markets.

Role of Secondary Market For the general investor, the secondary market provides an efficient platform for trading

of his securities.

For the management of the company, secondary equity markets serve as a monitoring

and control conduitby facilitating value-enhancing control activities

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C-Capital Market Instruments

Equity shares

Preference shares

Futures and Options

Debentures/Bonds

Government securities

Equity Shares

Equity shares represent proportionate ownership in a company. Investors who own

equity shares in a company are entitled to ownership rights such as

Share in the profits of the company ( in the form of dividends )

Share in the residual funds after liquidation / winding up of the company

Voting rights

Reasons for buying equities

Owning equity in a company means owning part of that company. Each part is known

as a share.

If a company has issued 100 shares of stock, and you bought one, you own 1% of that

company. People who own stock are called stockholders, or shareholders.

Stockholders hope the company will earn money as it grows. If a company earns

money, the stockholders share the profits. Over time, people usually earn more from

owning stock than from leaving money in the bank, buying bonds, or making otherinvestments.

Preference Shares

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Preferential shareholders enjoy a preferential right over equity shareholders with

regards to :

Receipt of dividend

Receipt of residual funds after liquidation

Futures and Options

Future and Options are derivative products whose value is derived from the value of one

or more basic variables

Underlying Asset can be Equity, Forex, commodity or any other asset.

Debentures/ Bonds

Debt instruments issued by corporate and government

Debentures and bonds can have many variations depending upon redemption, charge,

convertibility etc.

Government Securities

The Central Government and the State Governments issue securities periodically for the

purpose of raising loans from the public. There are two main types of Government

securities:

Dated Securities: These securities have a maturity period of more than 1 year

Treasury Bills: These have a maturity period of less than 1 year

Regulatory Framework

Main legislations governing the capital market

Securities Contract (Regulations) Act,1956

Companies Act, 1956

Securities Exchange Board of India Act, 1992

Depositories Act,1996

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Role of SEBI

SEBI was set up to

develop and regulate capital market

protect interest of investors

register various participants

make rules for participants

regulate stock exchanges

promote investors education

LISTING REQUIREMENTS

[I] Minimum Listing Requirements for new companies

(A) Minimum Capital:

1. New companies can be listed on the Exchange, if their issued & subscribed equity

capital after the public issue is Rs.10 crores. In addition to this the issuer company

should have a post issue net worth (equity capital + free reserves excluding revaluation

reserve) of Rs.20 crores.

2. For new companies in high technology ( i.e. information technology, internet, e-

commerce, telecommunication, media including advertisement, entertainment etc.) the

following criteria will be applicable regarding there hold limit:

i. The total income/sales from the main activity, which should be in the field of

information technology, internet, e-commerce, telecommunication, media

including advertisement, entertainment etc. should not be less than 75% of the

total income during the two immediately preceding years as certified by the

Auditors of the company.

ii. The minimum post-issue paid-up equity capital should be Rs.5 Crores.

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iii. The minimum market capitalization should be Rs.50 Crores. (The capitalization

will be calculated by multiplying the post issue subscribed number of equity

shares with the Issue price).

iv. Post issue net worth (equity capital + free reserves excluding revaluation

reserve) of Rs.20 Crores.

(B) Minimum Public offers:

As per Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957, securities of

a company can be listed on a Stock Exchange only when at least 25% of each class or kind of

securities is offered to the public for subscription.

In case of IPOs by unlisted companies in the IT& entertainment sector, at least 10% of the

securities issued by the company may be offered to the public subject to the following:

Minimum 20 lakhs securities are offered to the public (excluding reservation, firm

allotment and promoters contribution)

The size of the offer to the public is minimum 50 crores.

For this purpose, the term "offered to the public" means only the portion offered to the

public and does not include reservations of securities on firm or competitive basis.

SEBI may, however, relax this condition on the basis of recommendations of stock

exchange(s), only in respect of a Government company defined under Section 617 of the

Companies Act, 1956.

[II] Minimum Listing Requirements for companies listed on other stock

exchanges

1. The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the

direct listing norms for companies listed on others The Company should have minimum

issued and paid up equity capital of Rs. 3 crores.

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2. The Company should have profit making track record for last three years. The

revenues/profits arising out of extra ordinary items or income from any source of non-

recurring nature should be excluded while calculating distributable profits.

3. Minimum networth of Rs. 20 crores (networth includes Equity capital and free reserves

excluding revaluation reserves).

4. Minimum market capitalization of the listed capital should be at least two times of the paid

up capital.

5. The company should have a dividend paying track record for the last 3 consecutive years

and the minimum dividend should be at least 10%.

6. Minimum 25% of the company's issued capital should be with Non-Promoters shareholders

as per Clause 35 of the Listing Agreement. Out of above Non Promoter holding no single

shareholder should hold more than 0.5% of the paid-up capital of the company individually

or jointly with others except in case of Banks/Financial Institutions/Foreign Institutional

Investors/Overseas Corporate Bodies and Non-Resident Indians.

7. The company should sign an agreement with CDSL & NSDL for demat trading.

[III] Minimum Requirements for companies delisted by this Exchange

seeking relisting of this Exchange

The companies delisted by this Exchange and seeking relisting are required to make a

fresh public offer and comply with the prevailing SEBI's and BSE's guidelines regarding initial

public offerings.

[IV] Permission to use the name of the Exchange in an Issuer Company's

prospectus

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The Exchange follows a procedure in terms of which companies desiring to list their

securities offered through public issues are required to obtain its prior permission to use the

name of the Exchange in their prospectus or offer for sale documents before filing the same

with the concerned office of the Registrar of Companies. The Exchange has since last three

years formed a "Listing Committee" to analyse draft prospectus/offer documents of the

companies in respect of their forthcoming public issues of securities and decide upon the matter

of granting them permission to use the name of "Bombay Stock Exchange Limited" in their

prospectus/offer documents. The committee evaluates the promoters, company, project and

several other factors before taking decision in this regard.

[V] Submission of Letter of Application

As per Section 73 of the Companies Act, 1956, a company seeking listing of its

securities on the Exchange is required to submit a Letter of Application to all the Stock

Exchanges where it proposes to have its securities listed before filing the prospectus with the

Registrar of Companies.

[VI] Allotment of Securities

As per Listing Agreement, a company is required to complete allotment of securities

offered to the public within 30 days of the date of closure of the subscription list and approach

the Regional Stock Exchange, i.e. Stock Exchange nearest to its Registered Office for approval

of the basis of allotment. In case of Book Building issue, Allotment shall be made not later than

15 days from the closure of the issue failing which interest at the rate of 15% shall be paid to

the investors.

[VII] Trading Permission

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As per Securities and Exchange Board of India Guidelines, the issuer company should

complete the formalities for trading at all the Stock Exchanges where the securities are to be

listed within 7 working days of finalization of Basis of Allotment.

A company should scrupulously adhere to the time limit for allotment of all securities

and dispatch of Allotment Letters/Share Certificates and Refund Orders and for obtaining the

listing permissions of all the Exchanges whose names are stated in its prospectus or offer

documents. In the event of listing permission to a company being denied by any Stock

Exchange where it had applied for listing of its securities, it cannot proceed with the allotment

of shares. However, the company may file an appeal before the Securities and Exchange Board

of India under Section 22 of the Securities Contracts (Regulation) Act, 1956.

[VIII] Requirement of 1% Security

The companies making public/rights issues are required to deposit 1% of issue amount

with the Regional Stock Exchange before the issue opens. This amount is liable to be forfeited

in the event of the company not resolving the complaints of investors regarding delay in

sending refund orders/share certificates, non-payment of commission to underwriters, brokers,

etc.

[IX] Payment of Listing Fees

All companies listed on the Exchange have to pay Annual Listing Fees by the 30th

April of every financial year to the Exchange as per the Schedule of Listing Fees prescribed

from time to time.

The schedule of listing fees for the year 2004-2005, prescribed by the Governing Board

of the Exchange and approved by the Securities and Exchange Board of India is given

hereunder tock Exchange(s) and seeking listing at BSE. These norms are applicable with

immediate effect.

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[X] Compliance with Listing Agreement

The companies desirous of getting their securities listed are required to enter into an

agreement with the Exchange called the Listing Agreement and they are required to make

certain disclosures and perform certain acts. As such, the agreement is of great importance and

is executed under the common seal of a company. Under the Listing Agreement, a company

undertakes, amongst other things, to provide facilities for prompt transfer, registration, sub-

division and consolidation of securities; to give proper notice of closure of transfer books and

record dates, to forward copies of unabridged Annual Reports and Balance Sheets to the

shareholders, to file Distribution Schedule with the Exchange annually; to furnish financial

results on a quarterly basis; intimate promptly to the Exchange the happenings which are likely

to materially affect the financial performance of the Company and its stock prices, to comply

with the conditions of Corporate Governance, etc.

The Listing Department of the Exchange monitors the compliance of the companies with the

provisions of the Listing Agreement, especially with regard to timely payment of annual listing

fees, submission of quarterly results, requirement of minimum number of shareholders, etc. and

takes penal action against the defaulting companies.

[XI] "Z" Group

The Exchange has introduced a new category called "Z Group" from July 1999 for

companies who have not complied with and are in breach of provisions of the Listing

Agreement. The number of companies placed under this group as at the end of May, 2001

New Direct listing norms

The Governing Board of the Exchange at its meeting held on 6th August, 2002 amended the

direct listing norms for companies listed on other Stock Exchange(s) and seeking listing at

BSE. These norms are applicable with immediate effect.

1. The company should have minimum issued and paid up equity capital of Rs. 3 crores.

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4. Minimum market capitalization of the listed capital should be at least two times of the

paid up capital.

5. The company should have a dividend paying track record for the last 3 consecutive

years and the minimum dividend should be at least 10%.

6. Minimum 25% of the company's issued capital should be with Non-Promoters

shareholders as per Clause 35 of the Listing Agreement. Out of above Non Promoter

holding no single shareholder should hold more than 0.5% of the paid-up capital of the

company individually or jointly with others except in case of Banks/Financial

Institutions/Foreign Institutional Investors/Overseas Corporate Bodies and Non-

Resident Indians.

7. The company should have at least two years listing record with any of the Regional

Stock Exchange.

8. The company should sign an agreement with CDSL & NSDL for demat trading.

9. The company should have minimum issued and paid up equity capital of Rs. 3 crores.






12. Minimum market capitalization of the listed capital should be at least two times of the

paid up capital.

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13. The company should have a dividend paying track record for the last 3 consecutive

years and the minimum dividend should be at least 10%.

[XII] Cash Management Services (CMS) - Collection of Listing Fees

As a further step towards simplifying the system of payment of listing fees, the

Exchange has entered into an arrangement with HDFC Bank for collection of listing fees, from

141 locations, situated all over India. Details of the HDFC Bank branches, are available on our

website sitewww.bseindia.comas well as on the HDFC Bank website www.hdfcbank.com The

above facility is being provided free of cost to the Companies.

C.INVESTMENT BASICS

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TYPES OF SECURITIES TRADED IN COMPANY

Shares

Commodities

Mutual fund

Life insurance

SHARES

Meaning: -A share or stock is a document issued by a company, which entitles its holder to

be one of the owners of the company. A share is issued by a company or can be purchased from

the stock market.

By owning a share you can earn a portion and selling shares you get capital gain. So,

your return is the dividend plus the capital gain. However, you also run a risk of making a

capital loss if you have sold the share at a price below your buying price.

Procedure for doing trading in shares:

Every transaction in the stock exchange is carried out through licensed members calledbrokers.

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To trade in shares, you have to approach a broker However, since most stock exchange

brokers deal in very high volumes, they generally do not entertain small investors. These

brokers have a network of sub-brokerswho provide them with orders.

The general investors should identify a sub-broker for regular trading in shares and

place his order for purchase and sale through the sub-broker. The sub/broker will transmit the

order to his broker who will then execute it

.

Derivatives

Introduction

A derivative is a contract/product that has no independent value i.e.: it derives its valuefrom the underlying asset. Underlying asset can be securities, commodities, bullion, currency,

live stock or anything else.

A derivative is a financial instrument whose value depends on other, more basic,

underlying variables. The variables underlying could be prices of traded securities and stock,

prices of gold or copper, prices of oranges to even the amount of snow that falls on a ski resort.

Derivatives have become increasingly important in the field of finance. Options and

futures are traded actively on many exchanges. Forward contracts, swaps and different types of

options are regularly traded outside exchanges by financial institutions, banks and their

corporate clients in what are termed as over-the-counter markets i.e. there is no single market

place or an organized exchange

In other words, derivatives means forward, futures, option or any other hybrid contract

of pre determined fixed duration, linked for the purpose of contract fulfillment to the value of

specified real or financial asset or to index of securities.

In the international market, various derivatives products are traded. To start with, we

need to understand three products, namely forward, futures and options.

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Concept

Derivative is a product whose value is derived from the value of one or more basic

variables. Underlying Asset can be Equity, Forex, commodity or any other asset.

Types of Derivatives

Forwards

Futures

Options

SWAPS

Forwards

A forward contract is a customized contract between two entities, where settlement takes

place on a specific date in the future at todays pre-agreed price. Forward contract is a one

to one bipartite contract, which is to be performed in future at the terms decided today.

Forward contracts are being used in India on large scale in the foreign exchange market to

cover the currency risk.

Forward contracts being negotiated by the parties on one to one basis, offer the

tremendous flexibility to them to articulate the contract in terms of price, quantity, quality,

delivery time and place. However, forward contracts suffer from poor liquidity and default

risk

Futures

Future contracts are the organized/standardized contracts in terms of quantity, quality,

delivery time and place for settlement on any date in future. These contracts are traded on

exchanges. Futures trading entail liquid investments that allow investors to purchase or sell

assets at specified prices or at later dates. Based upon the anticipated price of the future,

futures contracts can be drawn up for various markets. In simple words:

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A future is contracting to buy or sell an underlying asset at a specified future date, at a

specified price.

These contracts are traded and settled on exchanges.

Future contracts can be on individual scrips or indices.

Reasons for buying Futures contracts

Procedure for work in future

Futures trading occur on exchange, allowing investors the right and obligation to buy

and sell. The contracts are regulated so the investors can turn their investments into money

right away. Some standard conditions include guaranteeing the delivery month and location, the

quantity and quality of the commodities, as well as the last day to trade. In order to end the

futures contract, the holder must either sell the long position or purchase back the short

position. Cash settlement, expiry, and physical delivery are three ways to complete the

transaction of a futures contract.

Futures terminology

Reasons for BUYING futures

contracts

Reasons for SELLING futures

contracts

Hedgers To lock in a price and thereby obtain

protection against rising prices

To lock in a price and thereby obtain

protection against declining prices

Speculators To profit from rising prices To profit from declining prices

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Spot Price

Futures Price

Expiry Date

Contract Cycle -One month

-Two month

-Three month

Options

An option is a contract, which gives the buyer (holder) the right, but not the obligation, to

buy or sell specified quantity of the underlying assets, at a specific (strike) price on or before a

specified time (expiration date). The underlying may be physical commodities like wheat/ rice/

cotton/ gold/ oil or financial instruments like equity stocks/ stock index/ bonds etc. In simple

words:

Options are derivative instruments where one party has a right to buy/sell the

underlying while the other party has an obligation to buy/sell

The person with the right is called the buyer of the option. The person with the

obligation is called the writer of the option.

Risks in Options

The risk/ loss of an option buyer is limited to the premium that he has paid. An option

holder who neither sells his option in the secondary market nor exercises it prior to its

expiration loses his entire investment (Premium), in the option. The risk of an Options Writer

however is unlimited where his gains are limited to the Premiums earned. The writer of an

uncovered call is in an extremely risky position and may incur large losses if the value of theunderlying asset increases above the exercise price. The potential loss is unlimited for the

writer of an uncovered call. When a physical delivery uncovered call is assigned an exercise,

the writer will have to purchase the underlying asset to meet his call obligation and his loss will

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be the excess of the purchase price over the exercise price of the call reduced by the premium

received for writing the call. (In the case of a cash-settled option, the loss will be the cash

settlement amount reduced by the premium.) As with writing uncovered calls, the risk of

writing put options is substantial. The writer of a put option bears a risk of loss if the value of

the underlying asset declines below the exercise price, and such loss could be substantial if the

decline is significant. The writer of a put bears the risk of a decline in the price of the

underlying interest-potentially to zero. Since the leverage inherent in an option can cause the

impact of price changes in the underlying asset to be magnified in the price of the option, a

writer of an option that is uncovered and unhedged may have a significantly greater risk than a

short seller of the underlying interest.

Types of Options

Based on the right:

- Call option

- Put option

Call Option: A call option gives the holder (buyer/ one who is long call), the right to

buy specified quantity of the underlying asset at a specified price on or before aspecified time. The seller (one who is short call ) however, has the obligation to sell the

underlying asset if the buyer of the call option decides to exercise his option to buy. The

buyer of a call option acquires the right but not the obligation to purchase a particular

futures contract at a stated price on or before a particular date.

Put Option: A Put option gives the holder (buyer/ one who is long Put), the right to

sell specified quantity of the underlying asset at a specified price on or before a

specified time. The seller (one who is short Put) however, has the obligation to buy the

underlying asset if the buyer of the put option decides to exercise his option to sell.

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CALL OPTIONS PUT OPTIONS

Option buyer or option holder Buys the right to buy the

underlying asset at the specified

price

Buys the right to sell the

underlying asset at the specified

price

Option seller or option writer Has the obligation to sell the

underlying asset (to the option

holder) at the specified price

Has the obligation to buy the

underlying asset (to the option

holder) at the specified price.

Based on the exercise:

- American ( Individual Securities)

- European (S&P CNX Nifty)

Procedure for using Options

If you anticipate a certain directional movement in the price of a stock, the right to buy or sell

that stock at a predetermined price, for a specific duration of time can offer an attractive

investment opportunity. The decision as to what type of option to buy is dependent on whether

your outlook for the respective security is positive (bullish) or negative (bearish). If your

outlook is positive, buying a call option creates the opportunity to share in the upside potential

of a stock without having to risk more than a fraction of its market value. Conversely, if you

anticipate downward movement, buying a put option will enable you to protect against

downside risk without limiting profit potential. Purchasing options offer you the ability to

position yourself accordingly with your market expectations in a manner such that you can both

profit and protect with limited risk. Once you have purchased an option contract, you can do

one of the following:

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You can sell an option of the same series as the one you had bought & close out your

position in that option at any time, or;

You can exercise the option on the expiration day in case of European Option or on or

before the expiration day in case of an American option.

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ITM/ATM/OTM:

CALL OPTION PUT OPTION

In-the-money Strike price < Spot price of

underlying asset

Strike price > Spot price o

underlying asset

At-the-money Strike price = Spot price of

underlying asset

Strike price = Spot price o

underlying asset

Out-of-the-money Strike price > Spot price of

underlying asset

Strike price < Spot price o

underlying asset

Futures V/s Options

The major differences in Futures and Options are as under:

Futures Options

Futures are agreements/contracts to buy or sell

specified quantity of the underlying assets at a

price agreed upon by the buyer & seller, on or

before a specified time. The buyer is obligated to

buy/sell the underlying asset.

Unlike futures, the buyer in case of options

enjoys the right & not obligation, to buy or sell

the underlying asset.

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Futures contracts are highly leveraged positions

with unlimited risk for both the buyer as well as

the seller.

In case of options, for a buyer (or holder of the

option), the downside is limited to the premium

(option price) he has paid while the profits may

be unlimited. For a seller or writer of an option,

however, the downside is unlimited while profits

are limited to the premium he has originally

received from the buyer.

The Futures contracts prices are affected only by

the prices of the underlying asset.

The prices of options are however; affected by

prices of the underlying asset, time remaining for

expiry of the contract & volatility of the

underlying asset.

It costs nothing to enter into a futures contract. There is a cost of entering into an options

contract, termed as Premium.

Benefits of trading in F&O

Transfer of risk

Incentive to make profit with minimal amount of risk capital

Lower transaction costs

Liquidity, price discovery

Eliminates security specific risks

Power to leverage

Margin

SPAN Margin

-Initial margin

-Mark to market margin

Exchange requires customer to maintain margin with broker.

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Meaning of commodities

Commodities are broadly defined as natural resources, chemicals and physical

products you can touch, taste, smell, grow, mine, consume or deliver. In simple

words:

Commodity includes all kinds of goods.

FCRA defines "goods" as "every kind of movable property

Other than actionable claims, money and securities".

Goods with commercial value traded widely in bulk; usually a raw material or primary

produce, for processing;

Agricultural commodities: food grains, fibers, oilseeds complex, sugar, plantation crops,

horticulture crops;

Non-agro commodities: Base metals, precious metals; industrial products: crude;

Comparison of India Asset Market

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MUTUAL FUND

History of Mutual Fund in India

Unit Trust of India (UTI) was the first mutual fund set up in India in the year 1963. In

early 1990s, Government allowed public sector banks and institutions to set up mutual funds.

UTI has an extensive marketing network of over 40,000 agents all over the country.

In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The

objectives of SEBI are to protect the interest of investors in securities and to promote the

development of and to regulate the securities market.

In 1995, the RBI permitted private sector institutions to set up Money Market MutualFunds (MMMFs). They can invest in treasury bills, call and notice money, commercial paper,

commercial bills accepted/co-accepted by banks, certificates of deposit and dated government

securities having unexpired maturity up to one year.

As far as mutual funds are concerned, SEBI formulates policies and regulates the

mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual

funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to

enter the capital market. The regulations were fully revised in 1996 and have been amended

thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to

time to protect the interests of investors.

All mutual funds whether promoted by public sector or private sector entities including

those promoted by foreign entities are governed by the same set of Regulations. There is no

distinction in regulatory requirements for these mutual funds and all are subject to monitoring

and inspections by SEBI. The risks associated with the schemes launched by the mutual funds

sponsored by these entities are of similar type.

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MEANING

Mutual fund is Investment Company that pools money from shareholders and invests in

a variety of securities, such as stocks, bonds and money market instruments. Most open-end

mutual funds stand ready to buy back (redeem) its shares at their current net asset value, whichdepends on the total market value of the fund's investment portfolio at the time of redemption.

Most open-end mutual funds continuously offer new shares to investors. Also known as an

open-end investment company, to differentiate it from a closed-end investment company.

Mutual funds invest pooled cash of many investors to meet the fund's stated investment

objective. Mutual funds stand ready to sell and redeem their shares at any time at the fund's

current net asset value: total fund assets divided by shares outstanding.

In Simple Words, Mutual fund is a mechanism for pooling the resources by issuing

units to the investors and investing funds in securities in accordance with objectives as

disclosed in offer document.

In Short, a mutual fund is a common pool of money in to which investors with

common investment objective place their contributions that are to be invested in accordance

with the stated investment objective of the scheme. The investment manager would invest the

money collected from the investor in to assets that are defined/ permitted by the stated

objective of the scheme. For example, an equity fund would invest equity and equity related

instruments and a debt fund would invest in bonds, debentures, gilts etc . Mutual Fund is a

suitable investment for the common man as it offers anopportunity to invest in a diversified,

professionally managed basket of securities at a relatively low cost.

A mutual fund is a group of investors operating through a fund manager to purchase a diverse

portfolio of stocks or bonds. There are myriad kinds of mutual funds, each with its own goals

and methodologies. Whether or not a mutual fund is a good investment is a matter of much

public debate, with many claiming they are excellent for the average person, and others saying

they are simply a poor way to invest.

A mutual fund may be either an actively managed fund or an indexed mutual fund.

Actively managed funds are changed on a regular basis by a fund manager in the attempt to

maximize their profitability. They fund manager looks at the market and the sectors a fund

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invests in and redistributes the fund accordingly. An indexed fund simply takes one of the

major indexes and buys according to that index. Indexed funds change much less frequently

than actively managed funds, but in theory an active fund has more potential for profit.

Many critics of mutual funds point out that scarcely over 20% of mutual funds

outperform the Standard and Poor's 500 Index. This means that nearly 80% of the time, an

investor would have been more profitable by simply buying equal shares in all 500 of the

companies currently on the S&P 500.

Supporters point out that for most people the complications involved in traditional

investment are simply not worth the effort. A mutual fund offers an easy way to invest in

something with a higher return than, say, interest earned at the bank, while keeping funds

somewhat fluid. It also eliminates the need to track the market oneself.

There are more types of mutual fund available than there are publicly traded stocks,

making the process of choosing one a somewhat daunting prospect for most people. In general,

it is good to look at a few types of mutual fund that catch your eye and investigate them to see

if they fit your needs. The length of time you want to remain invested, associated costs, tax

status, and whether a fund is closed- or open-ended may all prove important. The sector of

investment for a mutual fund may also be something you want to look at. Many sector funds

exist, and they are most often the top-performing mutual funds in a given year. The problem, of

course, is guessing which sector will next see uniform growth, and avoiding sectors that can be

hard-hit by single events .

In other words A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. The money thus collected is then invested in

capital market instruments such as shares, debentures and other securities. The income

earned through these investments and the capital appreciation realized is shared by its

unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is

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

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

chart below describes broadly the working of a mutual fund:

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ORGANISATION OF A MUTUAL FUND

There are many entities involved and the diagram below illustrates the organisational set

up of a mutual fund.

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Types of Mutual Fund

Schemes According To Maturity period

Schemes According To Investment Objective

Schemes according to Maturity Period: A mutual fund scheme can be classified into

open-ended scheme or close-ended scheme depending on its maturity period.

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Open-ended Fund:

An open-ended Mutual fund is one that is available for subscription and repurchase on a

continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently

buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis.The key feature of open-end schemes is liquidity.

Close-ended Fund:

A close-ended Mutual fund has a stipulated maturity period e.g. 5-7 years. The fund is

open for subscription only during a specified period at the time of launch of the scheme.

Investors can invest in the scheme at the time of the initial public issue and thereafter they can

buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to

provide an exit route to the investors, some close-ended funds give an option of selling back the

units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations

stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase

facility or through listing on stock exchanges. These mutual funds schemes disclose NAV

generally on weekly basis.

Schemes according to Investment Objective:

A scheme can also be classified as growth fund, income fund, or balanced fund

considering its investment objective. Such schemes may be open-ended or close-ended schemes

as described earlier. Such schemes may be classified mainly as follows:

Growth / Equity Oriented Scheme :

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 in equities. Such funds havecomparatively high risks. These schemes provide different options to the investors like

dividend option, capital 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

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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.

Income / Debt Oriented Scheme

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 and money market instruments. Such funds are less risky 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 NAVs of

such funds are affected because of change in interest rates in the country. If the interest rates

fall, NAVs of such funds are likely to increase in the short run and vice versa. However, long

term investors may not bother about these fluctuations.

Points should be kept in mind before investing in Mutual Funds

Mutual Fund investment decisions require consistent effort on the part of the investor.

Before investing in Mutual Funds, the following steps must be given due weightage to

decide on the right type of scheme:

(A) Identifying the Investment Objective

(B) Selecting the right Scheme Category(C) Selecting the right Mutual Fund

(D) Evaluating the Portfolio

A) Identifying the Investment Objective

your financial goals will vary, based on your age, lifestyle, financial independence, family

commitments, level of income and expenses, among many other factors. Therefore, the

first step is to assess you needs on the basis of following points:

Needs of an investor to invest

To a regular income

To finance a wedding

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He need to educate my children or

A combination of all the above

Risk potential of an Investor willing to take

The risk-taking capacities of investors vary depending on various factors. Based on their

risk bearing capacity, investors can be classified as:

Very conservative

Conservative

Moderate

Aggressive

Very Aggressive

Cash flow requirements

For example, you may require:

A regular Cash Flow

A lump sum after a fixed period of time for some specific need in the future

Or, you may have no need for cash, but you may want to create fixed assets for the

future

B) Selecting the scheme category

The next step is to select a scheme category that matches your investment objectives:

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For Capital Appreciation go for equity sectoral funds, equity diversified funds or

balanced funds.

For Regular Income and Stability you should opt for income funds/MIPS

For Short-Term Parking of Funds go for liquid funds, floating rate funds,

C) Selecting the right Mutual fund

Once you have a clear strategy in mind, you now have to choose which Mutual fund and

scheme you want to invest in. The offer document of the scheme tells you its objectives and

provides supplementary details like the track record of other schemes managed by the same

Fund Manager. Some important factors to evaluate before choosing a particular Mutual Fund

are:

The track record of performance over that last few years in relation to the appropriate

yardstick and similar funds in the same category.

How well the Mutual Fund is organized to provide efficient, prompt and personalized

service.

The degree of transparency as reflected in frequency and quality of their

communications.

D) Evaluation of portfolio

Evaluation of equity fund involve analysis of risk and return, volatility, expense ratio,

fund managers style of investment, portfolio diversification, fund managers experience. Good

equity fund should provide consistent returns over a period of time. Also expense ratio should

be within the prescribed limits. These days fund house charge around 2.50% as management

fees.

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Evaluation of bond funds involve it's assets allocation analysis, return's consistency, its

rating profile, maturity profile, and its performance over a period of time. The bond fund with

ideal mix of corporate debt and gilt fund should be selected.

DIFFERENT TYPES OF INVESTMENT

The following are brief descriptions for beginning investors to familiarize themselves with

different kinds of investment options:

401K Plans

the easiest and most popular kind of investment is a 401K plan. This is due to the fact that most

jobs offer this savings program where the money can be automatically deducted from your

payroll check and you never realize it is missing

Life Insurance

Life Insurance policies are another kind of investment that is fairly popular. It is a way to

ensure income for your family when you die. It allows you a sense of security and provides a

valuable tax deduction.

Stocks

Stocks are a unique kind of investment because they allow you to take partial ownership in a

company. Because of this, the returns are potentially bigger and they have a history of being a

wise way to invest your money.

Bonds

a bond is basically a promise note from the government or a private company. You agree to

give them a set amount of money as a loan and they keep it for a set number of years with a

predetermined amount of interest. This is typically a safe bet and one that is a good investment

for a first time investor because there is little risk of losing your money.

Mutual Funds

Mutual funds are a kind of investment that are based on the gains and losses of a shareholder.

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Basically one person manages the money of several or many investors and invests in a list of

various stocks to lessen the effect of any losses that may occur.

Money Market Funds

a good short-term investment is a Money Market Fund. With this kind of investment you canearn interest as an independent shareholder.

Annuities

if you are interested in tax-deferred income, then annuities may be the right kind of investment

for you. This is an agreement between you and the insurer. It works to produce income for you

and protect your earning potential.

ON LINE TRADING PLATEFORM

When you place your orders electronically through our revolutionary on-line order entry

system, you can route your orders DIRECTLY to hand-held devices in the trading pit. Your

order is sent directly to the filling broker in the trading pit without any interruption of any kind.

Compare this execution to that of other brokerage firms where your execution may involve up

to six steps:

You call your broker and place the order

Your broker calls his central order desk

The central order desk calls the exchange order desk

The exchange order desk hands your order to a runner

The runner takes your order to a trader in the pit

Your order is finally executed At Farr Financial, your orders are executed like this:

You enter the order on-line over the Internet or place it with the professional trade desk.

The order is instantly received by the filling broker in the pit who immediately executes

it

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Investment process

The investment process involves a service of activity leading to purchase of securities or there

investments alternatives. The investment can be divided in to five stages.

I. Framing of investment policy

II. Investment analysis

III. Valuation

IV. Portfolio contributes

V. Portfolio evolution

Investment Process

Analysis Valuation Portfolio

Construction

- Market

- Industries

- Company

- Intrinsic

Value

- Future

Value

-

-Diversification

-Selection &

Allocation

- Appraisal

- Revision

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Portfolio

Evaluation

Invt. Policy

- Investable

Fund- Objectives

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D-RELATIONSHIP MANAGER

Job Profile of an RM

To offer personalized service based on needs and requirements of each client

One point contact for the client

He is a Financial Advisor will advise the client not only on equity but

MF,PMS,Insurance,

Acquire and Retain clients

The Goal.

CUSTOMER FOR LIFE

Skills required

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P - Polite, patience, perseverance

E - Emotions...ManagingHope, Fear, Greed

O - Openness and honesty

P - Proactive, prepared, professional

L - Listen and learn

E Efficient

Working of HNI desk

Induct and Train RMs

Activation List - RMs

Meeting clients

Welcome note

Special Conditions to be kept confidential

CMR based on profile

References to build client list

Rules to be adhered from Checklist

Error free

Check List

First Meeting with Client- Fill Client Profile Sheet and make meeting Report

Offline and Online client

Attend morning meeting and inform clients accordingly

Know your clients position

Monitor position of clients

Dealing errors

Special Conditions

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Maintain MIS on weekly basis

Acquire new customers acquired from

Natural social circle

Databases and telemarketing leads

References of existing customers

Role of an RM

Role of an RM

ResearchResearch RM ClientClient

InformationRelationship

Execution

Consistency

CostSpeed

Convenience

Confidentiality

Offers DemandsOffers

Investment Story

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RMRM

ConsistencyConsistency InformationInformation

Closing theClosing the

dealdealRelationshipRelationship


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Customer services in broking business

Commoditized business

Quality as differentiator

Top Quality Customer services

Retaining a customer is relatively cheaper

Customer was king, now he is emperor

A bad service experience rankles for long time in memory

A bad service experience can prompt a customer to switch loyalty

The Challenge

How does Company provide top quality customer service?

Basic Principles Of Customer Services

Principle One

Do onto others what you want others to do

onto you

Place yourself in customers shoes

How do you feel when provided with poor

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Customer service?

Principle Two

Dont make customer run from pillar to post

Recall your experience in rationing office.

One single phone call from customer should

Solve his problem.

Principle Three

Under promise and over deliver

Principle Four

Mere smile is not enough, you must deliver solutions.

F. MARKET ANALYSIS

COMMON TRADING MISTAKES

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Lack of Knowledge and No Plan

It amazes us that some people expect to trade the stock market successfully without any effort.

Yet if they want to take up golf, for example, they will happily take some lessons or at least

read a book before heading out onto the course.

The stock market is not the place for the ill informed. But learning what you need is

straightforward you just need someone to show you the way.

The opposite extreme of this is those traders who spend their life looking for the Holy Grail of

trading! Been there, done that!

The truth is, there is no Holy Grail. But the good news is that you don't need it. Our trading

system is highly successful, easy to learn and low risk.

Unrealistic Expectations

Many novice traders expect to make a gazillion dollars by next Thursday. Or they start to write

out their resignation letter before they have even placed their first trade!

Now, don't get us wrong. The stock market can be a great way to replace your current income

and for creating wealth but it does require time. Not a lot, but some. So doesnt tell your boss

where to put his job, just yet!

Other beginners think that trading can be 100% accurate all the time. Of course this is

unrealistic. But the best thing is that with our methods you only need to get 50-60% of your

trades "right" to be successful and highly profitable.

Listening to Others

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When traders first start out they often feel like they know nothing and that everyone else have

the answers. So they listen to all the news reports and so called "experts" and get totally

confused. And they take "tips" from their buddy, who got it from some cab driver

We will show you how you can get to know everything you need to know and so never have to

listen to anyone else, ever again!

Getting in the Way

By this we mean letting your ego or your emotions get in the way of doing what you know you

need to do.

When you first start to trade it is very difficult to control your emotions. Fear and greed can be

overwhelming. Lack of discipline; lack of patience and over confidence are just some of the

other problems that we all face.

It is critical you understand how to control this side of trading. There is also one other key that

almost no one seems to talk about. But more on this another time!

Poor Money Management

It never ceases to amaze us how many traders don't understand the critical nature of money

management and the related area of risk management.

This is a critical aspect of trading. If you don't get this right you not only won't be successful,

you won't survive!

Fortunately, it is not complex to address and the simple steps we can show you will ensure that

you don't "blow up" and that you get to keep your profits.

Only Trading Market in One Direction

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Most new traders only learn how to trade a rising market. And very few traders know really

good strategies for trading in a falling market.

If you don't learn to trade "both" sides of the market, you are drastically limiting the number of

trades you can take. And this limits the amount of money you can make.

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REVIEW OF LITERATURE

21st century the digital revolution has transformed the economy in to a new economy which

empowered the customer with new set of capabilities such as:

1. Access to greater amount of information;

2. Wider variety of available good and services

3. Greater ease of interacting with the service provider.

This new capability in the new economy led the customer to market the marketing and plays a

very vital role in the growth of the market. It is essential in the service industry in particular,

place greater emphasis on the enablers leading to customer satisfaction and customer retention.

It is in this context is very important to understand the customer requirements to provide value-

(QSP - Quality, Service and Price) and track and manage the customer satisfaction for retention

and creation of new customers.

In Service industry it is not enough if the product meets the functional requirements of the

customer, it should also meet certain other customer expectations like the behaviours /attitude

of the person who provides service. The customer satisfaction is the combination of both

technical features & human behavioural aspects. The quality management only addresses the

systems and processes; service addresses the customer service independently. In todays new

economy, it is essential to address the enablers for customer satisfaction for business growth

with utmost importance as they are interdependent in nature.

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RESEARCH METHODOLOGYRESEARCH METHODOLOGY

Research in Common parlance refers to the search for knowledge. One can also define

research as a Scientific and Systematic search for pertinent information of a specifictopic, it is the pursuit of truth with the help of study , observation , comparison and

experiment.

SELECTION OF THE TOPIC

I select this topic because of I like that type of work which is full of interest.

I also consulted my seniors about this topic. Many of the people of india are not aware about

this field like many rural people who are very rich but because of unawareness they lost this

opportunity. I want to make my career in this field for serving my ideas with others.

3. OBJECTIVES OF STUDY

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1. To create the awareness among the people with security analysis and investment

management.

2. To increase profit margin in a risky situation

3. To analysis the profitability of securities in india infoline

NATURE OF STUDY

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SAMPLIN PROCEDURE AND DESIGNSAMPLE DESIGN

Sampling design The sampling method adopted for research work was Convenience

sampling

method.

Sample- The sample was selected from businessman, shopkeepers, professionals, employed

and salaried personnel for their interest in De-mat account; I started interviewing the concernedeither by directly interacting or through tele calling.

Sample size - The sample size selected was 50. The data collection method was based on the

following:

a. Tools: The tool that was used to conduct the study was questionnaire designed by me,

which was mixture of open ended and close ended question. The questionnaire was

designed in such so as to cover the relating to securities and investment.

METHOD OF DATA COLLECTION DATA COLLECTION

The data used for the project can be divided into two major forms:

1) Primary Data

2) Secondary Data

Primary Data was collected by getting the feedback forms filled by the people we met in

the organizations visited. We also used to write our daily reports based on our experiences of

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that particular day and maintained a record of the companys reaction on the product, as well as

the presentation.

Secondary Data was collected by going through several websites of the companies on the

Internet like www.nseindia.com,www.5paisa.com,www.indiainfoline.com etc. Information

about the companies and the industry was also collected by going through financial papers and

magazines like Economic Times,Business World,Business Today.etc.

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Data Analysis and Interpretation

1. Do you have any knowledge about stock market?

Aware of stock market 72%

Unaware of stock market 28%

Interpretation:

With the increase in cyber education, the awareness towards online share trading has increased

by leaps and bounds. This awareness is expected to increase further with the increase in

Internet education.

2. Are you interested in online stock market trading hence opening De-mat account first?

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Scope of Investment Management:-

Portfolio management is a continuous process. It is a dynamic activity. The following are the

basic operations of a portfolio management.

a) Monitoring the performance of portfolio by incorporating the latest market conditions.

b) Identification of the investors objective, constraints and preferences.

c) Making an evaluation of portfolio income (comparison with targets and achievement).

d) Making revision in the portfolio.

e) Implementation of the strategies in tune with investment objective.

SAMPLING METHOD

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SIGNIFICANCE OF THE STUDY

The primary attraction of active management is that it allows selection of a variety of

investments instead of investing in the market as a whole. Investors may have a variety of

motivations for following such a strategy:

1. They may be skeptical of the efficient-market hypothesis, or believe that some

market segments are less efficient in creating profits than others.

2. They may want to manage volatility by investing in less-risky, high-quality

companies rather than in the market as a whole, even at the cost of slightly lower

returns.

3. Conversely, some investors may want to take on additional risk in exchange for the

opportunity of obtaining higher-than-market returns.

4. Investments that are not highly correlated to the market are useful as a portfolio

diversifier and may reduce overall portfolio volatility.

5. Some investors may wish to follow a strategy that avoids or underweights certain

industries compared to the market as a whole, and may find an actively-managed

fund more in line with their particular investment goals. (For instance, an employee

of a high-technology growth company who receives company stock or stock optionsas a benefit might prefer not to have additional funds invested in the same industry.)

Several of the actively-managed mutual funds with strong long-term records invest in value

stocks. Passively-managed funds that track broad market indices such as the S&P 500 have

money invested in all the securities in that index i.e. both growth and value stocks

varsha report 1

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