COMPARITIVE STUDY

OF
SHARE MARKET
INSURANCE BASED MUTUAL FUNDS
AND
COMMODITY MARKET

A Report Submitted to FMS, MAIET, Mansarovar, Jaipur is

in partial fulfillment of Full time MBA Course
under the subject
“SUMMER TRAINING REPORT”
in 3nd Semester

Submitted By: Submitted To:

DIVYA PALIWAL Col. C. D. SHARMA
MBA 3rd SEM DEAN - FMS,
Student MAIET, Jaipur
Batch: (2007-09)

Faculty of Management Studies

Maharishi Arvind Institute of Engineering & Technology
Mansarovar, Jaipur

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 A
Project Report
Of

Comparative Study
On
Sharemarket
Insurance based Mutual funds
And
Commodity market”

By

Divya Paliwal

PREFACE

Theories are being developed, designed and stated on the groundwork of their practical
implementation and usage. Work experience seems to be the most effective and

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 indispensable factor of making an individual an adept. This is because one can not do
without being exposed to varying circumstances and possible consequences. Training
not only develops individual skills and abilities but also provides proficiency in work
performance.

The researcher has done research in Religare securities Jaipur, which constitute an
essential part of two years MBA program. The research period consists of 8 weeks .
The researcher selected the project study on the topic “Comparative Study on Share
Market, Insurance based Mutual funds and Commodity Market”. It was really a great
opportunity getting practical insight of the market.

Initially we felt that classroom study was irrelevant and to useless in any concern’s
working, but gradually it was realized that all the basic fundamental concepts studied
are linked in one or the other ways to the organization. Further it could be said that
theory and practical training are supplementary to each other and help in drawing
meaningful conclusion and it’s just a matter of modifying the theory, so as to apply in to
given practical solution.

We sincerely believe that there is no better place to learn the practical side of
management studies than the industry itself.

Table of Contents

● Acknowledgments…………………………………………………

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● Abbreviations……………………………………………………...

● Company Profile…………………………………………………..

● Introduction………………………………………………………..

● Objectives and limitations………………………………………....

● Methodology………………………………………………………

● Findings and conclusions………………………………………….

● Appendices………………………………………………………..

● Bibliography………………………………………………………

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 Acknowledgment

It is my great pleasure to take this opportunity to acknowledge the contribution of

number of people who helped me in successful completing of this project.

Firstly I would like to express my heartily gratitude and sincere thanks to

Col. C.D. Sharma (Dean MAIET) allowing me to do this project and gratefully
acknowledge the contribution by him without his support and valuable suggestion
this project could not be successful.

I express my deep sense of respect to Mr. Mohammad Nayeem(B.M. Religare

Securities Ltd. ) for giving me an opportunity to work under him and allotting me
this project.

I offer my heart self regards to external project guide Mr .Virendra Pandya

(A.R.M. Religare Securities Ltd.) for his continuous guidance, monitoring and
informal discussion which become light for me in the entire duration of this project
in overcoming the barrier and reaching this stage.

My special thanks are due to Mrs. Shikha Sharma (Faculty Guide Maiet) for her
help, kind advice and tips which helped me to improve my work and enlightened
me throughout my project.
Finally I am sincerely thankful to others who have directly or indirectly helped me
in the completion of the project. I would also like to acknowledge the support of
other company members who has helped me to make this project.

(DIVYA PALIWAL)

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 Declaration by the student

This is to certify that the work done on “COMPARATIVE STUDY ON

SHAREMARKE,INSURANCE BASED MUTUAL FUNDS &
COMMODITY MARKET” under the subject ‘SUMMER TRAINING ‘
and a written report submitted by me to Faculty of Management Studies,
Maharishi Arvind Institute of Engineering & Technology, Mansarovar,
Jaipur is in partial fulfillment of the requirement for the award of degree
of MBA. This work has not been submitted anywhere else for any other
degree/diploma.

Declaration by:

(DIVYA PALIWAL)

MBA -3rd sem.

Batch: (2007-09)

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INDUSTRY
PROFILE

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Angel Trade - Part of Angel Group

The Angel Group has emerged as one of the top 5 retail stock broking houses in
India, having memberships on BSE, NSE and the two leading commodity exchanges
in the country i.e. NCDEX and MCX. Angel Broking Ltd is also registered as a
depository participant with CDSL.web site url : http://www.angeltrade.com/

Reliance Money

Reliance Money is part of the Reliance Anil Dhirubhai Ambani Group and promoted
by Reliance Capital, the fastest growing private sector financial service company in
India. Reliance Money, the Broking and Distribution arm of Reliance Capital provides
a single window platform for transacting in a wide range of asset classes, including
Equity, Equity & Commodity Derivatives, IPO’s, Mutual Funds, Life & General
Insurance, Money Changing and Money Transfer, Gold Coins amongst others.web
site url : http://www.reliancemoney.com

Anand Rathi Securities Ltd

Anand Rathi Securities provides financial and advisory services including wealth
management, investment banking, corporate advisory, brokerage & distribution of
equities, commodities, mutual funds and insurance - all of which are supported by
powerful research teams.web site url : http://www.rathi.com/

ICICI Direct

ICICI Direct Online share and mutual funds trading facility by the ICICI group.web
site url : http://www.icicidirect.com/

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India Bulls

Indiabulls is India’s leading retail financial services company with 70 locations

spread across 62 cities. While our size and strong balance sheet allow us to provide
you with varied products and services at very attractive prices, our over 450 Client
Relationship Managers are dedicated to serving your unique needs.web site url :
http://www.indiabulls.com/

Motilal Oswal

Motilal Oswal One of the top-3 stock-broking houses in India, with a dominant
position in both institutional and retail broking, MOSt is amongst the best-capitalized
firms in the broking industry in terms of net worth. Company was founded in 1987 as
a small sub-broking unit, with just two people running the show. Focus on customer-
first-attitude, ethical and transparent business practices, respect for professionalism,
research-based value investing and implementation of cutting-edge technology have
enabled it to blossom into a thousand-member team. web site url :
http://www.motilaloswal.com

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Company Profile

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 Company Profile

Religare Enterprises Limited is Ranbaxy Laboratories Limited promoted

financial product and service Provider Company.
Religare is one of the leading integrated financial services institutions of
India. The company offers a large and diverse bouquet of services ranging
from equities, commodities, insurance broking, to wealth advisory,
portfolio management services, personal finance services, Investment
banking and institutional broking services.
Religare’s retail network spreads across the length and breadth of the
country with its presence through more than 1,217 locations across more
than 392 cities and towns. Having spread itself fairly well across the
country and with the promise of not resting on its laurels, it has also
aggressively started eyeing global geographies
Religare Enterprises is one of the fastest growing and leading integrated
financial services institutions of India. The company offers three kind of
business.
1. Vertical retail,
2. Wealth management and
3. Institutional spectrums.
It offers wide range of services including equities, commodities, insurance
broking, wealth advisory, portfolio management services, personal finance
services, Investment banking and institutional broking services. Religare
retail network spreads across more than 900 locations across more than
300 cities and towns in India.

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 OUR BRAND IDENTITY

NAME

Religare is a Latin word that translates as “to bind together”. This name
has been chosen to reflect the integrated nature of the financial services
the company offers. The name is intended to unite and bring together the
phenomenon of money and wealth to co-exist and serve the interest of
individuals and institutions, alike.

SYMBOL

The Religare name is paired with the symbol of a four-leaf clover. The
four-leaf clover is used to define the rare quality of good fortune that is the
aim of every financial plan. It has traditionally been considered good
fortune to find a single four leaf clover considering that statistically one
may need to search through over 10,000 three-leaf clovers to even find
one four leaf clover.

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Each leaf of the four-leaf clover has a special meaning in the sphere of
Religare.

The first leaf of the clover represents Hope. The aspirations to

succeed. The dream of becoming. Of new possibilities. It is the beginning
of every step and the foundations on which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place
ones own faith in another. To have a relationship as partners in a team. To
accomplish a given goal with the balance that brings satisfaction to all not
in the binding but in the bond that is built.

The third leaf of the clover represents Care. The secret ingredient
that is the cement in every relationship. The truth of feeling that underlines
sincerity and the triumph of diligence in every aspect. From it springs true
warmth of service and the ability to adapt to evolving environments with
consideration to all.

The fourth and final leaf of the clover represents Good Fortune.
Signifying that rare ability to meld opportunity and planning with
circumstance to generate those often looked for remunerative moments of
success.

Hope. Trust. Care. Good fortune. All elements perfectly combine

in the emblematic and rare, four-leaf clover to visually symbolize the
values that bind together and form the core of the Religare vision.

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Religare Group

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Religare Securities Limited is a subsidiary company of Religare
Enterprises Ltd and involve in equity related services include online
trading at BSE and NSE, Derivatives, commodities, IPO, Mutual fund,
Investment banking and institutional broking services.

RELIGARE SECURITIES LIMITED (RSL) is a leading equity and

securities firm in India. The major activities and offerings of the company
today are Equity broking, Depository Participant Services, Portfolio
Management Services, Institutional Brokerage & Research, Investment
Banking and Corporate Finance. RSL is member of national stock
exchange of india, Bombay stock exchange of india, Depository
Participant with National Securities Depository Limited and Central
Depository Services (I) Limited.

Vision and Mission

Vision –
To build Religare as a globally trusted brand in the financial
services domain and present it as the ‘Investment Gateway of India’

Mission –

Providing financial care driven by the core values of diligence

and transparency.

BRAND ESSENCE -
Religare is driven by ethical and dynamic processes for
wealth creation.

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 Client Interface

Retail Spectrum- To cater to a large number of retail clients by offering

all products under one roof through the Branch Network and Online mode

Equity and Commodity Trading

Personal Financial Services
Mutual Funds
Insurance
Saving Products
Personal Credit
Personal Loans
Loans against Shares
Online Investment Portal

Institutional Spectrum- To Forge & build strong relationships with

Corporate Client and Institutions

Institutional Equity Broking

Investment Banking
Merchant Banking
Transaction Advisory
Corporate Finance

Wealth Spectrum - To provide customized wealth advisory services to

High Net worth Individuals
Wealth Advisory Services
Portfolio Management Services

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 MEMBERS OF RELIGARE ENTERPRISE
Board of Directors Religare Enterprises Limited
Mr. Malvinder Mohan Singh Chairman (Non Executive)

Mr. Sunil Godhwani CEO & Managing Director

Mr. Shivinder Mohan Singh Non Executive Director
Mr. Harpal Singh Non Executive Director
Mr.Deepak Ramchand Sabnani Independent Director
Mr.Padam Bahl Independent Director
Mr.J.W. Balani Independent Director
Mr. Baldev Singh Johal Independent Director
Mr. R. K. Shetty Alternate to Mr. J. W. Balani

Capt.G.P.S.Bhalla Alternate to Mr. Deepak Sabnani

International Advisory Fund Management Services
Priority Client Equity Services
Arts Initiative

Key official

Name Designation

Malvinder Mohan Singh Chairman

Sunil Gdhawani Managing Director & CEO

Ravi Batra Company Secretary & Compliance

Officer
Manjeet Singh Sabarwal Zonal Head (Rajasthan)

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STAFF STRENGTH: - The Company has 12staff members in the
Jaipur Vaishali branch(1417). The members include the

Branch manager:
Mohammad Nayeem,

1 Relation Manager:
Harmindra Singh

3 Associated Relation Managers:-

1. Neeraj Jain,
2. Virendra Pandya,
3. Sushil Kumar Meena,

5 Dealers:-
1. Anjani Kumar Sharma
2. Mukesh Sharma
3. Sanjeev Sharma
4. Pankaj Sukhwal
5. Ashok Kumar Jakhar

2 Backoffice employees:
1. Megha Goyal,
2. Amit Lalwani

The sales force includes Dealers and the Relationship managers.

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The company provides facility to trade in equity market online and offline
i.e. you can trade anywhere through internet or can come to the company’s
office and also through the phone.
There are three types of account

R-ALLY (Basic) : It's the basic offline trading account provided by

Religare. Investor can trade and access their account information offline
and over the phone as well.

R-ALLY Lite (Browser Based) : It's the basic online trading

account provided by Religare. Investor can trade and access their account
information online and over the phone as well.This account comes with a
browser based online trading platform and no additional software
installation needed.

R-ALLY Pro (Application Based) : As the name indicates this

account is for high volume traders. Along with the features from above 2
accounts, this account also comes with a Trading Terminal, software
which needs to install on your computer. This terminal directly connects
the investor to stock market and having all industry standard Treading
terminal features including technical charting (intra-day and EOD),
multiple watch list, advanced hot-key functions for faster trading,
derivative chains, futures & options calculator

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 PRICING STRATEGIES
The table below shows the pricing strategies for the products-

PRODUC SUBSCRIPTIO ENROLMEN ACCOUN TOTAL

T NAME N FEES T T CHAGE
DEPOSIT OPENING S
CHARGES
RALLY NIL NIL Rs 352 Rs 352
RALLY NIL 5000 Rs 352 Rs 5352
LITE
RALLY Rs 1800 NIL Rs 352 Rs 2152
PRO

TRADING BROKERAGE INTEREST ON THE

TYPE LOANING AMOUNT
INTRA DAY .03 PAISE Per Hundred NIL
shares
HOLDING .3 PAISE Per Hundred 18%
shares

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 Finance

Balance sheet of Religare securities limited as on march 2007

Liabilities Amount Assets Amount

(Rs. in (Rs. in
cr.) cr.)
Equity of share 64.4 Fixed Assets .01
Reserve & surplus 223.89 Investment 289.81
Secure loan 3.5 Current Assets, loan & 7.53
advances
Current liabilities & 5.56
provision
Total 297.35 297.35

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HIERARCHY OF THE JAIPUR BRANCH

Branch
Head

Relationship
Manager

Dealer

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 MARKETING

Product portfolio, Distribution network, Sales force, Pricing, Customer

service, Market share, Market structure Promotion strategies, Competition,
Measurement metrics

Human Resources:
Organization structure, Organization chart, Senior management,
Departments and Functions, Staff strength, Recruitment,Traning and
Development, Appraisal and Retention practices etc. Retention issues,
Measurement metrics

Operations
Functions, Processes, Facilities, Measurement metrics

Finance :
Capital structure, Financial ratios ,Performances metrics etc.

SWOT ANALYSIS

STRENGTHS:-
1. Brokerage:-In Religare Securities if a person buy any share or sell
same day that is called intraday .In intraday our company charge only .
02%.In case of holding share for next day in that condition brokerage
charge .20% .That is least from other Company.

2.Software:-In our company use Odin software that is approved by

Security exchange board of india.That gives accurate information of
price .Company also give to customer odin diet software for online
trading.

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3.Top Quality research & advisory Services- Only Religare gives top
quality research analysis .That research team give good suggestion and
tips for buy or sell share.

4.Demat a/c and trading Account –Demat a/c and trading a/c is online
share trading with offline trading .Only Religare gives this kind of
services.

WEAKNESS:-

1.low account limit-company gives only 5 days limit for holding share
payment.

OPPORTUNITY:-
1.Service based market.

THREATS:-

1.Government Policy
2. Market Fluctuations

CUSTOMERS
In Religare Securities presently there are every type of customers like,
Business- person, Service – class, students etc. the people who hold their
money in the saving account and in other investment in which the returns
are very less are the main target customers of the company. The executive
performs as a consultant for the customers and if he shows little bit of
interest in Capital Market, he provides him the thorough knowledge about
the investment.
Traditionally the Business firms want to invest their money in stock
market , but now service class person { govt. & private } are also showing
interest in investing their money in share market.
Still the general people don’t know the right way to invest their money.
They are unaware of the trading take place in the market, but they are
interested in Share Market. So those types of people are in target, of the
company to be the future consumer of their products

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 COMPETITORS

1.India infoline

2.Angel broking

3.Reliance Money

4.ICICI Direct.com

5.HDFC Bank

6.Anand Rathi securities Ltd.

7. Systematic Securities Ltd.

8.Swastika Securities

9.Emkay Securities

10.Kotak Securities Ltd.

11.India bulls securities ltd.

12.Karvy securities ltd

13.IDBI bank securities ltd.

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 ON THE JOB TRAINING

Objective:-

The objective of the on the job training are-

• To open Dmat accounts according to target, and do day to day
work of company with it.
• To gain a deeper understanding of the work culture, deadlines,
pressure etc. of an organization.
• To sell an insurance policy.
• To complete the target given as soon as possible

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 TARGET TO BE ACHIEVED

In Executive Training, the target given to me was to open

8 Dmat a/c
10 commodity accounts
one insurance policy of Rs 10000
or
a trump that include two products ie; grand( include advance brokerage of
Rs 50000)
and
super (include advance brokerage of Rs15000).

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Strategy:-
The Strategies employed to achieve the proposal target are: -

• Generate the leads by work in branch and talk to the target

customer and take their contact no. and address.
• Call the customers on the given contact no. And take
appointment and meet them personally and convince them to
open demat a/c.

• Arrange canopy and contact the customer.

• Visit any corporate office and take where H.R. manager

appointment and given all detail about the schemes which is
offer by the religare like open a/c free of cost.trumps

• Use the references of the existing customers.

• Use personal contacts.

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ACHIEVEMENTS DURING THE COURSE OF THE STP

Week – 1 Collected data of the customers who are interested in investing

in the stock market and also who are currently investing in the stock
market. Usually data of 20-30 prospects are collected in a week.
Collected data of the competitors their strategies cost and services attached
to the product.
The data of the competitors are given below-

Company A/C Broker Limits Interest % Software Charges

Name Charges age On
Holding

SHARE 300 / .04/.40 4Time 24% 1500

KHAN 300(A) , s
160 /450
(DMAT)
ANANDR 325(A) .05/.50 10Ti 21% NA
ATHI , mes
200(tradin
g),
100(PA)
ANGLE 300(A) .03/.30 5Time NA NA

Get the knowledge about the market like how prices get affected of the
shares, impact of the foreign markets on the Indian stock market. .
I HAVE ACHIEVED MY TARGET IN GIVEN TIME:

I have opened 8 Dmat account n 10 commodity accounts with one

insurance policy of Rs 10000 in Religare Branch(1417).
Contributed effectively for Religare securities towards providing business

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 METHODOLOGY TO
ACHIEVE THE TARGET

My training includes the following stages:

• In the first phase we are trained and they taught us different things about
capital market as well as share market.

• After that they conduct a mock viva & asked about the real life problems
faced by the customers and our understanding with the services offered by
RELIGARE.

• I got practical understanding of the services by the seniors.

• They provide leads and I have tried converting them into clients.

• Providing them live information about stock trading.

• Understanding of technical as well as fundamental research reports.

• Help company in its promotional activities, as company is an expansion

mode.

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 RESEARCH METHODOLOGY

The study will be carried on in a proper planned and systematic

manner. This methodology includes

(i) Familiarization with the Stock Exchanges

(ii) Observation and collection of data.

(iii) Analysis of data.

(iv) Conclusion and suggestion based on analysis.

SOURCES OF DATA COLLECTION:

The primary as well as the secondary sources will be used for collection of

data. In primary source of data collection the interview schedule opinion

survey will be used and in secondary source of data collection relevant

records, books, diary and magazines were used.

RESEARCH INSTRUMENTS:
The research instrument was structured questionnaire and personal interviews.

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 QUESTIONNAIRE

Name of the Person____________________________________________________

________

Address______________________________________________________

_____________________________________________________________________

Contact No._________________________Email______________________________

Q1. (a) Do you invest in share market?

Yes No

(b) Which type of trading you are involved in?

Online Offline

(c) Which is your broker/broking house?

Sharekhan Indiabulls 5 Paisa

Religare ICICI HDFC

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Q.2 (a) If No,

What is the reason behind this?

High risk factor No knowledge Time constraints

(b) Would you like to trade in share market within one year?

Yes No

Q.3 How many times do you trade?

Once-week Once- month 2-3 times-week

2-3 times-month daily

Q.4 How much do you trade in one transaction?

0-5000 5000-10000 10000-20000

20000-50000 50000-500000 More than 500000

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Q.5 Please provide your preference (1-5)

(a) Brokerage

(b) Goodwill of broking house

(c) Features offered by broker

(d) Customer service

(e) Convenience

Thank you,

Date_______________ Signature__________

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 ACCOUNT OPENING
The investor can open an account with any depository participant of NSDL. An
investor may open an account with several DPs or he may open several accounts
with a single DP. There are several DPs offering various depository-related services.
Each DP is free to fix its own fee structure.

Investors have the freedom to choose a DP based on criteria like convenience,

comfort, service levels, safety, reputation and charges. After exercising this
choice, the investor has to enter into an agreement with the DP. The form and
contents of this agreement are specified by the business rules of NSDL

1. TYPE OF ACCOUNT

Type of depository account depends on the operations to be performed. There are

three types of Demat accounts, which can be opened with a depository participant
viz.

(a) . R-ALLY (Basic)

(b) R-ALLY Lite (Browser Based)
(c) R-ALLY Pro (Application Based

2. DOCUMENT FOR VERIFICATION

For the purpose of verification, all investors have to submit the following documents
along with the prescribed account opening form.

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2.1 PROOF OF IDENTITY

A beneficiary account must be opened only after obtaining a proof of identity of the
applicant. The applicant's signature and photograph must be authenticated by an
existing account holder or by the applicant's bank or after due verification made with
the original of the applicant's
• Valid passport,
• Voter ID, driving license
• PAN card with photograph;
• And further,

2.2 PROOF OF ADDRESS

The account opening form should be supported with proof of address such as
• Verified copies of ration card
• Passport
• Voter ID
• PAN card
• Driving license
• Bank passbook.
An authorized official of the Participant, under his signature, shall verify the original
documents. In case any account holder fails to produce the original documents for
verification within the aforesaid period of 30 days, it must be immediately brought to
the notice of NSDL.

Failure to produce the original documents within the prescribed time would invite
appropriate action against such account holders, which could even include freezing
of their accounts.

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 STEPS FOLLOWED TO OPEN AN
ACCOUNT

Step: 1 Step: 2

Get the Leads Make calls

Step: 4 Step: 3

Attend the Appointment Fix the Appointment

Step: 5 Step: 6

Documentations Account Opened

Step: 8 Step: 7

Make the client traded Trading Kit

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 CONCLUSION

Indian economy has been globalizes and the capital market has been linked to
the international financial market. Foreign individuals and institutional investors
have encouraged participating into it. So, there is a need for raising the Indian
Capital market in to the international standards in terms of efficiency and
transparency. One such measure is the passing out of the Depository Act during
the year 1996.
Dematerialization of securities and under this system is one of the major steps
aimed at improving and modernizing the capital market and enhancing the
levels of investor’s protection measures which aims at eliminating the bad
deliveries and forgery of shares and expediting the transfer of shares.
During this whole process of training I came to learn a lots of new thing regarding
The demat-process, how it works & what is the future aspect of it.
This part of the project is purely learning processes, which make me teach on the
following:
• Concept of Tele-Marketing
• Concept of Financial Product Selling
• Customer Handling
• “Day to day Fluctuation in Stock Market” --- Why?
• Major Players in this field
• Potentiality of this market
• How to analyze the Research Report
• Finally, practical knowledge of Group Activity

So, to conclude I want to say that these two months of summer training is very
much beneficial for me that enriches my knowledge at a greater level?

- 38 -
 Project Title

COMPARITIVE STUDY
ON
SHAREMARKET
INSURANCEBASED MUTUAL
FUNDS
AND
COMMODITY MARKET

- 39 -
DESCRIPTION OF

SHARES

MUTUALFUNDS

COMMODITY MARKET

- 40 -
 WHAT IS SHARE?

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.

- 41 -
What is share market?

A market where dealing of securities is done is known as share market.

There are basically two types of share market in India:

Bombay Stock Exchange (BSE)

National Stock Exchange (NSE)

- 42 -
Difference Between Primary And Secondary Markets

In the primary market securities are issued to the public and the
proceeds go to the issuing company. Secondary market is a term used
for stock exchanges, where stocks are bought and sold after they are
issued to the public.

Primary Market

Individuals
apply to get
shares of the
company
Company
IPO
Companies share ownership by issuing shares

Company Owners
Companies allocate shares to individuals and those who get
the shares become part owners of the company.

- 43 -
Secondary Market

Broker
Stock
Company
Exchange Individual
Investors

Companies get themselves listed on popular stock exchanges like

BSE and NSE

- 44 -
 Dynamics of the Share Market

Buyer Broker Seller

Stock Broker
He pays the His broker Exchange
money to pays it to the Seller’s broker
his broker exchange The exchange finally pays the
pays it to the money to the
seller’s broker seller

Similar process happens for the transfer of shares from the seller’s end.

- 45 -
 Multi Channel Access to the Stock Market

Relationship Manager
Live chat

Call centre
SMS

Website Email
CUSTOMER SUPPORT

Multi Channel
Investment Option

Share Shops Dial n Trade

Online Trading

- 46 -
Transaction Cycle in share market

- 47 -
Terminology used in share market
Stock Broker / Sub – Broker: -

People like you and me cannot just go to a stock exchange and buy and
sell shares. Only the members of the stock exchange can. These members
are called stockbrokers and they buy and sell shares on our behalf. So, if
you want to start investing in shares, you can do it only through a broker.
Every stockbroker has to be registered with the Securities and Exchange
Board of India, which is the stock market regulator. You can either choose
a broker (who is directly registered with SEBI) or a sub-broker (people
licensed by brokers to work under them).

Demat Account: -
Gone are the days when shares were held as physical certificates. Today,
they are held in an electronic form in demat accounts. Demat refers to a
dematerialized account.

Let's say your portfolio of shares looks like this: 40 shares of Infosys, 25
of Wipro, 45 of HLL and 100 of ACC. They will show in your demat
account. You don't have to possess any physical certificates showing you
own these shares. They are all held electronically in your account.
Periodically, you will get a demat statement telling you what shares you
have in your demat account.

How to get a Demat account

To get a demat account, you will have to approach a Depository

Participant. A depository is a place where an investor's stocks are held in
electronic form. There are only two depositories in India -- the National
Securities Depository Ltd and the Central Depository Services Ltd.
The depository has agents who are called Depository Participants. In
India, there are over a hundred DPs. Think of it like a bank. The head
office, where all the technology rests and the details of all the accounts are
held, is like the depository. The DPs are like the branches of banks that
cater to individuals.

- 48 -
A broker, however, is not similar to a DP. A broker is a member of the
stock exchange and he buys and sells shares for his clients and for himself.
A DP, on the other hand, gives you an account where you can hold those
shares.
To get a list of the registered DPs, visit the NSDL and CDSL Web sites.

Get a PAN: - The taxman demands that you get yourself a Permanent
Account Number. This is a unique 10-digit alphanumeric number
(AABPS1205E, for example) that identifies and tracks an individual in the
taxman's database. Almost every money transaction demands the use of a
PAN.

Trading / Square off Transaction:-

Whenever a trader / investor buys or sells a security and on the same day
before the market closes, he sells or buys that particular security (in the
same quantity), the transaction is called as square off transaction or a
trading transaction. Shares lying in the T, TS and T are not square off the
same day.

Delivery Transaction:-

Delivery transactions are those transactions which are not squared off at
the day end, and the investor/trader is ready to take / give the delivery of
the security.
Charges such as brokerage, service tax on brokerage, STT, stamping
charges etc. are very high on the delivery transactions.

- 49 -
Settlement Period :-

Currently the settlement period is T+2. Settlement period i.e. T+2 means
one has to give the delivery of the shares sold within 2 days of the date of
the transaction. In case of purchase transaction, one will get the delivery
within 2 days of the date of transaction.

Shares Category:-

The stock exchange has divided the shares into the categories according to
the performance of the company.
The different categories are A, B1, B2, S (BSE Indonext), T, TS, Z

Auction:-

In case of failure of delivery of shares for sale transaction within the

stipulated time period, the BSE auction those shares as per the rules and
regulations.
Close Out:-
In case of failure of delivery of shares for purchase transaction within the
stipulated time period, the person buying the shares gets the benefit in the
form of Close Out as per the BSE’s rules and regulations.

- 50 -
 Role of Stock Exchange

• Raising capital for business.

• Mobilizing saving for investment.

• Facilitate Company growth.

• Redistribution of wealth.

• Corporate governance.

• Create investment opportunities for small investors.

• Government raises capital for development projects.

- 51 -
 Market Participants in Securities Market

Depositories 2

Regulators 4

Stock exchange with equity trading 23

Brokers 9519

Sub- brokers 13291

Securities Appellate Tribunal 1

- 52 -
 Listing of Securities
Listing means admission of the securities to dealings on a recognized
stock exchange. The securities may be of any public limited company,
Central or State Government, quasi-governmental and other financial
institutions/corporations, municipalities, etc.

The objectives of listing are mainly to:

1. Provide liquidity to securities;

2. Mobilize savings for economic development;

3. Protect interest of investors by ensuring full disclosures.

4. The Exchange has a separate Listing Department to grant approval

5. for listing of securities of companies in accordance with the
provisions of the Securities Contracts (Regulation) Act, 1956,
Securities Contracts (Regulation) Rules, 1957, Companies Act,
1956, Guidelines issued by SEBI and Rules, Bye-laws and
Regulations of the Exchange.

6. A company intending to have its securities listed on the Exchange

has to comply with the listing requirements prescribed by the
Exchange.

- 53 -
[I] Minimum Listing Requirements for new companies

(A) Minimum Capital:

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.
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
threshold limit:
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.
The minimum post-issue paid-up equity capital should be Rs.5 Crores.
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).
Post issue net worth (equity capital + free reserves excluding revaluation
reserve) of Rs.20 Crores.

(B) Minimum Public offer:

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 lac 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.

- 54 -
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
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.
The company should have minimum issued and paid up equity capital of
Rs. 3 crores.
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.
Minimum networth of Rs. 20 crores (networth includes Equity capital and
free reserves excluding revaluation reserves).
Minimum market capitalisation of the listed capital should be at least two
times of the paid up capital.
The company should have a dividend paying track record for the last 3
consecutive years and the minimum dividend should be at least 10%.
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.
The company should have at least two years listing record with any of the
Regional Stock Exchange.
The company should sign an agreement with CDSL & NSDL for demat
trading.

- 55 -
[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
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

- 56 -
Exchange nearest to its Registered Office for approval of the basis of
allotment.

[VII] Trading Permission

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
finalisation 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:

- 57 -
SCHEDULE OF LISTING FEES FOR THE YEAR 2005-
2006
1. Initial Listing Fees - 20,000

2. Annual Listing Fees

(i) Companies with paid-up capital* upto Rs. 5 crores - 10,000

(ii) above 5 crores and upto Rs. 10 crores - 15,000

(iii) Above Rs. 10 crores and upto Rs. 20 crores 30,000

3. Companies which have a paid-up capital* of more than Rs. 20 crores

will pay additional fee of Rs. 750/- for every increase of Rs. 1 crores or
part thereof.

4. In case of debenture capital (not convertible into equity shares) of

companies, the fees will be charged @ 25% of the fees payable as per the
above mentioned scales.

[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

- 58 -
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 was 1,475.
The number of companies listed at the Exchange as at the end of May
2001 was 5,874. This is the highest number among the Stock Exchanges in
the country and in the world

- 59 -
What is a Mutual Fund?
A Mutual Fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money thus collected is invested
by the fund manager in different types of securities depending upon the
objective of the scheme. These could range from shares to debentures to
money market instruments. The income earned through these investments
and the capital appreciations realized by the scheme are shared by its unit
holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it
offers an opportunity to invest in a diversified, professionally managed
portfolio at a relatively low cost. The small savings of all the investors are
put together to increase the buying power and hire a professional manager
to invest and monitor the money. Anybody with an investible surplus of as
little as a few thousand rupees can invest in Mutual Funds. Each Mutual
Fund scheme has a defined investment objective and strategy.

- 60 -
Types of Mutual Fund Scheme
Mutual fund schemes may be classified on the basis of its structure and its
investment objective.

By Structure

1.Open-end Funds

An open-end fund is one that is available for subscription all through the
year. These do not have a fixed maturity. Investors can conveniently buy
and sell units at Net Asset Value ("NAV") related prices. The key feature
of open-end schemes is liquidity.

2.Closed-end Funds

A closed-end fund has a stipulated maturity period which generally

ranging from 3 to 15 years. The fund is open for subscription only during
a specified period. 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 they 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.

3.Interval Funds

Interval funds combine the features of open-ended and close-ended

schemes. They are open for sale or redemption during pre-determined
intervals at NAV related prices.

- 61 -
By Investment Objective

1.Growth Funds

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

medium to long term. Such schemes normally invest a majority of their
corpus in equities. It has been proved that returns from stocks, have
outperformed most other kind of investments held over the long term.
Growth schemes are ideal for investors having a long-term outlook
seeking growth over a period of time.

2.Income Funds

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 and Government securities. Income Funds
are ideal for capital stability and regular income.

3.Balanced Funds

The aim of balanced funds is to provide both growth and regular income.
Such schemes periodically distribute a part of their earning and invest both
in equities and fixed income securities in the proportion indicated in their
offer documents. In a rising stock market, the NAV of these schemes may
not normally keep pace, or fall equally when the market falls. These are
ideal for investors looking for a combination of income and moderate
growth.

4.Money Market Funds

The aim of money market funds is to provide easy liquidity, preservation

of capital and moderate income. These schemes generally invest in safer
short-term instruments such as treasury bills, certificates of deposit,
commercial paper and inter-bank call money. Returns on these schemes
may fluctuate depending upon the interest rates prevailing in the market.
These are ideal for Corporate and individual investors as a means to park
their surplus funds for short periods.

- 62 -
Other Schemes

1. Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions
of the Indian Income Tax laws as the Government offers tax incentives for
investment in specified avenues. Investments made in Equity Linked
Savings Schemes (ELSS) and Pension Schemes are allowed as deduction
u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities
to investors to save capital gains u/s 54EA and 54EB by investing in
Mutual Funds.

2.Special Schemes

Index Schemes
Index Funds attempt to replicate the performance of a particular index
such as the BSE Sensex or the NSE 50
Sectoral Schemes
Sectoral Funds are those that invest exclusively in a specified sector. This
could be an industry or a group of industries or various segments such as
'A' Group shares or initial public offerings.

- 63 -
How to invest in Mutual Fund
Step one –

Identify YOUR INVESTMENT NEEDS

Your financial goals will vary, based on your age, lifestyle, financial
independence, family commitments, and level of income and expenses
among many other factors. Therefore, the first step is to assess your needs.
You can begin by defining your investment objectives and needs, which
could be regular income, buying a home or finance a wedding or educate
your children or a combination of all these needs, the quantum of risk you
are willing to take and your cash flow requirements.

Step Two –

CHOOSE THE RIGHT MUTUAL FUND

The important thing is to choose the right mutual fund scheme, which suits
your requirements. 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 factors to
evaluate before choosing a particular Mutual Fund are the track record of
the performance of the fund over the last few years in relation to the
appropriate yardstick and similar funds in the same category. Other factors
could be the portfolio allocation, the dividend yield and the degree of
transparency as reflected in the frequency and quality of their
communications.

Step Three –

SELECT THE IDEAL MIX OF SCHEMES

Investing in just one Mutual Fund scheme may not meet all your
investment needs. You may consider investing in a combination of
schemes to achieve your specific goals.

- 64 -
Step four –

INVEST REGULARLY

The best approach is to invest a fixed amount at specific intervals, say

every month. By investing a fixed sum each month, you buy fewer units
when the price is higher and more units when the price is low, thus
bringing down your average cost per unit. This is called rupee cost
averaging and do investors all over the world follow a disciplined
investment strategy. You can also avail the systematic investment plan
facility offered by many open-end funds.

Step Five-

START EARLY

It is desirable to start investing early and stick to a regular investment

plan. If you start now, you will make more than if you wait and invest
later. The power of compounding lets you earn income on income and
your money multiplies at a compounded rate of return.

- 65 -
 ADVANTAGES OF MUTUAL FUNDS
Diversification:
The best mutual funds design their portfolios so individual
investments will react differently to the same economic conditions. For
example, economic conditions like a rise in interest rates may cause
certain securities in a diversified portfolio to decrease in value. Other
securities in the portfolio will respond to the same economic conditions
by increasing in value. When a portfolio is balanced in this way, the
value of the overall portfolio should gradually increase over time, even
if some securities lose value.

Professional Management:
Most mutual funds pay topflight professionals to manage their
investments. These managers decide what securities the fund will buy
and sell.

Regulatory oversight:
Mutual funds are subject to many government regulations that
protect investors from fraud.

Liquidity:
It's easy to get your money out of a mutual fund. Write a check,
make a call, and you've got the cash.

Convenience:
You can usually buy mutual fund shares by mail, phone, or over
the Internet.

Low cost:
Mutual fund expenses are often no more than 1.5 percent of your
investment. Expenses for Index Funds are less than that, because index
funds are not actively managed. Instead, they automatically buy stock
in companies that are listed on a specific index
Transparency
Flexibility
Choice of schemes
Tax benefits

- 66 -
 DRAWBACKS OF MUTUAL FUNDS
No Guarantees:
No investment is risk free. If the entire stock market declines in value,
the value of mutual fund shares will go down as well, no matter how
balanced the portfolio. Investors encounter fewer risks when they
invest in mutual funds than when they buy and sell stocks on their own.
However, anyone who invests through a mutual fund runs the risk of
losing money.

Fees and commissions:

All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to
compensate brokers, financial consultants, or financial planners. Even
if you don't use a broker or other financial adviser, you will pay a sales
commission if you buy shares in a Load Fund.

Taxes:
During a typical year, most actively managed mutual funds sell
anywhere from 20 to 70 percent of the securities in their portfolios. If
your fund makes a profit on its sales, you will pay taxes on the income
you receive, even if you reinvest the money you made.
Management risk: When you invest in a mutual fund, you depend on
the fund's manager to make the right decisions regarding the fund's
portfolio. If the manager does not perform as well as you had hoped,
you might not make as much money on your investment as you
expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers.

- 67 -
 Results and Findings

The feedback of 300 customers has been taken and the findings along
with its analysis are as follows: -

I asked from the customers about the securities in which they invest
there savings.

70
59 EQUITY
60

50
Percentage

MUTUAL FUND
40

30 25
FIXED DEPOSITS
20
9 7
10 INSURANCE
0
Sector

- 68 -
Which sector is more secure.

5%

40%

55%

S h are m arket M u tu al fu n d s B o th

- 69 -
Which sector gives more return.

2 3%

77%

S h a re m a rk e tM u tu a l fu n d s

- 70 -
Investment decisions of the customers are influenced on the basis of
following grounds.

40 36
Oneself
35
30
B rokers
24
25
Percentage

20
20 Eco. Policies
15
8 Market R amous
10
5 Friends/Relatives
0

Investment Decisions

- 71 -
Are you satisfied with your current investment?

42%

58%

Yes N o

- 72 -
What are the factors which you considered before investing in
particular company?

40 36 Financial
35 Positions
30 Current market
24 Positions
Percentage

25
20 Goodwill
20
15 12 Future Prospects
10 8

5 Any other
0
factors

- 73 -
 ULIPS

Introduction

Life insurance is a contract between the policy owner and the insurer, where
the insurer agrees to pay a sum of money upon the occurrence of the insured
individual's or individuals' death or other event, such as terminal illness or
critical illness. In return, the policy owner (or policy payer) agrees to pay a
stipulated amount called a premium at regular intervals or in lump sums.

History of insurance
Insurance began as a way of reducing the risk of traders, as early as 5000
BC in China and 4500 BC in Babylon. Life insurance dates only to ancient
Rome; "burial clubs" covered the cost of members' funeral expenses and
helped survivors monetarily. Modern life insurance started in late 17th
century in England, originally as insurance for traders: merchants, ship
owners and underwriters met to discuss deals at Lloyd's Coffee House,
predecessor to the famous Lloyd's of London.

Costs, insurability, and underwriting

The insurer (the life insurance company) calculates the policy prices with intent
to fund claims to be paid and administrative costs, and to make a profit. The
cost of insurance is determined using mortality tables calculated by actuaries.
Actuaries are professionals who employ actuarial science, which is based in
mathematics (primarily probability and statistics). Mortality tables are
statistically-based tables showing expected annual mortality rates. It is possible
to derive life expectancy estimates from these mortality assumptions. Such
estimates can be important in taxation regulation. The three main variables in a
mortality table have been age, gender, and use of tobacco.

Life Insurance in India was nationalised by incorporating Life Insurance

Corporation (LIC) in 1956. All private life insurance companies at that time
were taken over by LIC.

- 74 -
In 1993 the Government of Republic of India appointed RN Malhotra
Committee to lay down a road map for privatisation of the life insurance sector.

While the committee submitted its report in 1994, it took another six years
before the enabling legislation was passed in the year 2000, legislation
amending the Insurance Act of 1938 and legislating the Insurance Regulatory
and Development Authority Act of 2000. The same year that the newly
appointed insurance regulator - Insurance Regulatory and Development
Authority IRDA -- started issuing licenses to private life insurers.

INDIAN LIFE INSURANCE INDUSTRY OVERVIEW

All life insurance companies in India have to comply with the strict regulations
laid out by Insurance Regulatory and Development Authority of India (IRDA).
Therefore there is no risk in going in for private insurance players. In terms of
being rated for financial strength like international players, only ICICI
Prudential is rated by Fitch India at National Insurer Financial Strength Rating
of AAA(Ind) with stable outlook indicating the highest claims paying ability
rating.

Life Insurance Corporation of India (LIC), the state owned behemoth, remains
by far the largest player in the market. Among the private sector players, ICICI
Prudential Life Insurance(JV between ICICI Bank and Prudential PLC) is the
largest followed by Bajaj Allianz Life Insurance Company Limited (JV
between Bajaj Group and Allianz). The private companies are coming out with
better products which are more beneficial to the customer. Among such
products are the ULIPs or the Unit Linked Investment Plans which offer both
life cover as well as scope for savings or investment options as the customer
desires.Further, these type of plans are subject to a minimum lock-in period of
three years to prevent misuse of the significant tax benefits offered to such
plans under the Income Tax Act. Hence, comparison of such products with
mutual funds would be erroneous.

- 75 -
Life Insurer in Public Sector

1. Life Insurance Corporation of India

Life Insurers in Private Sector

1. Bajaj Allianz Life, Pranav,Surat 1

2. MNYL Life Insurance
3. ICICI Prudential Life Insurance
4. Sahara Life Insurance
5. Tata AIG Life
6. HDFC Standard Life
7. Birla Sunlife
8. SBI Life Insurance
9. Kotak Mahindra Old Mutual Life Insurance
10.Aviva Life Insurance
11. Reliance Life Insurance Company Limited - Formerly known as AMP
Sanmar LIC
12.Metlife India Life Insurance
13.ING Vysya Life Insurance
14. Max Newyork Life Insurance
15.Shriram Life Insurance
16.Bharti AXA Life Insurance Co Ltd
17.Future Generali Life Insurance Co Ltd
18.IDBI Fortis Life Insurance Co Ltd
19.Aegon Religare Life Insurance Co Ltd

- 76 -
ULIPs

Unit-linked life insurance products are those where the benefits are expressed in
terms of number of units and unit price. They can be viewed as a combination
of insurance and mutual funds. The number of units, which the customer would
get, would depend on the unit price when he pays his premium. The daily unit
price is based on the market value of the underlying assets (equities, bonds,
government securities etc.) and computed from the net asset value.

According to the IRDA, a company offering unit linked plans must give the
investor an option to choose among debt, balanced and equity funds. If you opt
for a unit-linked endowment policy, you can choose to invest your premiums in
debt, balanced or equity plans. If you choose a debt plan, the majority of your
premiums will get invested in debt securities like gilts and bonds. If you choose
equity, then a major portion of your premiums will be invested in the equity
market. The plan you choose would depend on your risk profile and your
investment need.

If one invests in a unit-linked pension plan early on, say 25, one can afford to
take the risk associated with equities, at least in the plan's initial stages.
However, as one approaches retirement the quantum of returns should be
subordinated to capital preservation. At this stage, investing in a plan that has
an equity tilt may not be a good idea.

Key features

Premiums paid can be single, regular or variable. The payment period too can
be regular or variable. The risk cover (insurance cover) can be increased or
decreased.

As in all insurance policies, the risk charge (mortality rate) varies with age.
However, for an individual the risk charge is always based on the age of the
policyholder in the year of commencement of the policy.

These charges are normally deducted on a monthly basis from the unit value.
For instance, if there is an increase in the value of units due to market
conditions, the sum at risk (sum assured less the value of investments) reduces
and so the risk charges are lower.

- 77 -
The maturity benefit is not typically a fixed amount and the maturity period can
be advanced (early withdrawal) or extended.

Investments can be made in gilt funds (government securities), balanced funds

(part debt, part equity), money-market funds; growth funds (equities) or bonds
(corporate bonds).

The policyholder can switch between schemes (for instance, balanced to debt or
gilt to equity). The investment risk is transferred to the policyholder.

Charges in ULIPs:

Administration charges: This ranges between Rs 15 per month to Rs 60 per

month and is levied by cancellation of units.

Risk charges: The charges are broadly comparable across insurers.

Asset management fees: Fund management charges vary from 0.6 per cent to
0.75 per cent for a money market fund, and around 1.5 per cent for an equity-
oriented scheme. Fund management expenses and the brokerage are built into
the daily net asset value.

Switching charges: Some insurers allow four free switches in every year but
link it to a minimum amount. Others allow just one free switch in each year and
charge Rs 100 for every subsequent switch. Some insurers don't charge
anything.

Top-ups: Usually attracts 1 per cent of the top-up amount. Top-up normally
goes directly into your investment account (units) unless you specifically ask
for an increase in the risk cover.

Surrender value of units: Insurers levy certain charges if the policy is

surrendered prematurely. This levy varies between insurers and could be around
75 per cent in the first year, 60 per cent in the second year, 40 per cent in the
third year and nil after the fourth year.

Mortality Charges: These are the charges which are paid by an individual in
consideration of the Risk Cover.

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Tax Benefits
Proceeds from ULIPs are tax-free under section 80C & section 10(10D) unlike
those from a mutual fund which attract capital gains tax.

ANALYSIS & COMPARISON OF

ULIPS
High Risk Cover Plans

Features Birla Sun Life –Dream HDFC Standard Life –

Plan Enhanced Life Protection II

Entry Age 18 – 60 Years 18 – 45 Years

Term Period 5 – 25Years 10 – 30 Years

Premium Paying Regular Regular

Period

Premium Paying Monthly, Quarterly, Monthly, Half Yearly,

Option Half Yearly, Annually Annually

Death Benefit Sum Assured + Fund Sum Assured/ Fund Value

Value (whichever is higher)

Lock in Period 3 Years 5 Years

Maximum Sum Enhanced Sum Assured 20*Annual Premium + 5%

Assured (ESA) increment of original sum
assured p.a. till it doubles

1% of fund value p.a. 1.25% of fund Value p/a.

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 FMC
35% - 1st Year
Premium Allocation No Allocation Charges 35% - 2nd Year
Charges 2% - 2nd Year
onwards

Features Birla Sun Lifeinstruments,

Debt – HDFC Standard Life
Debt instruments,Kotak – Headstart
Money
Investment FundsChildrenMoney
Dreammarket
Plan &–Cash
Young Star Plus II Future
market & Cash – Min 0% Protect
Entry Age 18 – 60 Years
– Min 90% 18 – 65 Years Max 100%18 – 60 Years
Term Period Max 100% 10 – 25 Equity
5 – 18 Years Years & equity 10 related
– 25 Years
Equity & equity related securities – Min 0%
Premium Paying Regular
securities – Min 0% Regular Max 100% Regular
Period Max 35%
Death Benefit Sum Assured paid Double Benefit: Sum Assured paid
upfront, policy Sum Assured paid upfront, policy
continues &Max future
25% of upfront, Max 25% of cumulative & future
policy continues
Top ups premiums paid by continues & future premiums paid by
cumulative annual annual premium
BSLI, Fund value at
premium premiums paid by Kotak, Fund value at
maturity HDFC Standard Life, maturity
Fund value at
maturity
Tax Benefit Section 80C, 10(10D) Section 80C, 10(10D) of
Triple Benefit:
of Income Tax Act, Income Tax Act, 1961
Sum Assured paid
1961
upfront, policy
continues, 50%
premium p.a. will be
Withdrawal Facility After 3 Years After 5 Years Min Rs.
paid to the
Min Rs. 5000 10000
beneficiary, 50% will
be invested, Fund
value at maturity
Switching Free switches - 4 Free switches - 24
Rs. 100/Switch Rs. 100/Switch afterwards
Lock in Period 3 Years 5 Years 3 Years
afterwards
Maximum Sum Enhanced Sum 40*Annual Premium Rs.25,00,000
Assured Assured (ESA)
FMC 1% of fund valueADD p.a. 1.25% of fund ValueADD 0.6% - 1.75%
Riders p/a. depending on the
fund

Guaranteed Maturity 3% No Guarantee

Value

High Returns Plan

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 Features Birla Sun Life – HDFC Standard Life Kotak – Smart
Saral Jeevan – Endowment Plus II Advantage Plan

Entry Age 18 – 55 Years 18 – 65 Years 0 – 65 Years

Term Period 10, 15, 20 Years 10 – 30 Years 10, 15, 20, 25, 30
Years

Premium Paying Regular Regular Regular

Period

Death Benefit Cover + Fund Value Sum Assured/ Fund Sum Assured/ Fund
Value (whichever is Value (whichever is
higher) higher)

Lock in Period 3 Years 5 Years 3 Years

Maximum Sum Enhanced Sum 40*Annual Premium Any multiple of

Assured Assured (ESA) premium, subject to
underwriting
100% - 1st Year
Premium Allocation No Allocation 60% - 1st Year 0 - 2% - 2nd-5th
Charges Charges 7% - 2nd Year Year
2% - 2nd Year 0 – 1% - 6th – 10th
onwards Year
(Depending on term
and premium)
Investment Funds Debt instruments, Debt instruments, Debt instruments,
Money market & Money market & Money market &
Cash – Min 0% Cash – Min 0% Cash – Min 0%
Max 100% Max 100% Max 100%
Equity & equity Equity & equity Equity & equity
related securities – related securities – related securities –
Min 0% Min 0% Min 0%
Max 100% Max 100% Max 100%

Top ups Max 25% of Max 25% of Max 30% of

cumulative annual cumulative annual cumulative annual
premium premium premium

Tax Benefit Section 80C, Section 80C, Section 80C, 10(10D)

10(10D) of Income 10(10D) of Income of Income Tax Act,
Tax Act, 1961 Tax Act, 1961 1961

Withdrawal Facility After 3 Years - 81 - After 5 Years After 3 Years

Min Rs. 5000 Min Rs. 10000
Risk Cover Plans
After analyzing and comparing different risk cover plans, Birla Sun Life’s
Dream Plan is a better plan than the plans of HDFC & Kotak, as it provides
enhanced sum assured option and there are less premium allocation charges. It
also provides guarantee maturity value of 3%. It provides Sum Assured + Fund
Value as death benefit which is its main USP.

Children Plans

In this category HDFC’s Young Star Plus II is better than Birla Sun Life &
Kotak, as it is providing double & triple benefit option as death benefit. HDFC
is the only co. which is providing loyalty benefit in the industry. There are 24
free switches in HDFC Standard Life which is maximum as compared to Birla
Sun Life & Kotak.

High Return Plans

Kotak’s Smart Advantage Plan is considered as better investment option as it is

providing more returns; less entry age and premium allocation charges depend
on premium amount & policy term.

ULIP VS MUTUAL FUND

ULIPs
Unit Linked Insurance Policies (ULIPs) as an investment avenue are closest to
mutual funds in terms of their structure and functioning. As is the case with
mutual funds, investors in ULIPs is allotted units by the insurance company and
a net asset value (NAV) is declared for the same on a daily basis.

Similarly ULIP investors have the option of investing across various schemes
similar to the ones found in the mutual funds domain, i.e. diversified equity
funds, balanced funds and debt funds to name a few. Generally speaking, ULIPs
can be termed as mutual fund schemes with an insurance component.
In short, ULIP = Insurance + Mutual Fund.

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ULIPs are hybrid products. that means, they have insurance and investment
component.ULIPs offer insurance at a very cheaper rate than term insurance, as
others say, I don't agree to the point that term insurance + mutual fund is better.

In ULIP, you can switch between Equity fund to Debt fund and vice versa
without any entry/exit charges but you can't do that in Mutual funds. in MFs,
there will be entry/exit charges if you do that.

In ULIP, money is invest for atleast 3 years, but not in MFs.ULIPs are eligible
for Section 80C tax rebate. MFs are not (except tax saving MFs). ULIPs have
lock-in period of 3 years where as MFs are not (except tax saving MFs).
Returns on ULIPs are not taxable, but returns on MFs are taxable if you
withdraw within 1 year.You can invest surplus amount in ULIP with minimal
entry load or charge, where as there is nothing like surplus in MFs.. in MFs
everything is considered as plain investment with same charge. ULIPs may or
may not disclose the holding portfolio but mutual funds have to disclose where
they are investing. ULIPs generally have low Fund Management
Expense(FMC) ratio than MFs. ULIPs have additional charges on insurance
where as MFs doesn't have any insurance component.ULIPs have additional
charges called "Allocation charges".

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 ULIPs vs. Mutual Funds
ULIPs Mutual Funds
Minimum
Determined by investment
the investor and amounts are
Investment can be modified determined by the
amounts as well fund house
No upper limits, Upper limits for
expenses expenses
determined by chargeable to
the insurance investors have been
Expenses company set by the regulator
Quarterly
Portfolio disclosures are
disclosure Not mandatory* mandatory
Generally
permitted for free Entry/exit loads
Modifying asset or at a nominal have to be borne by
allocation cost the investor
Section 80C Section 80C
benefits are benefits are
available on all available only on
ULIP investments in tax-
Tax benefits investments saving funds

ULIPs can be differentiated from MFs on following points:

1. Mode of investment/ investment amounts

Mutual fund investors have the option of either making lump sum investments
or investing using the systematic investment plan (SIP) route which entails
commitments over longer time horizons. The minimum investment amounts are
laid out by the fund house.
ULIP investors also have the choice of investing in a lump sum (single
premium) or using the conventional route, i.e. making premium payments on an
annual, half-yearly, quarterly or monthly basis. In ULIPs, determining the
premium paid is often the starting point for the investment activity.
This is in stark contrast to conventional insurance plans where the sum assured
is the starting point and premiums to be paid are determined thereafter.
ULIP investors also have the flexibility to alter the premium amounts during the
policy's tenure. For example an individual with access to surplus funds can
enhance the contribution thereby ensuring that his surplus funds are gainfully
invested; conversely an individual faced with a liquidity crunch has the option

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of paying a lower amount (the difference being adjusted in the accumulated
value of his ULIP). The freedom to modify premium payments at one's
convenience clearly gives ULIP investors an edge over their mutual fund
counterparts.

2. Expenses

In mutual fund investments, expenses charged for various activities like fund
management, sales and marketing, administration among others are subject to
pre-determined upper limits as prescribed by the Securities and Exchange
Board of India.
For example equity-oriented funds can charge their investors a maximum of
2.5% per annum on a recurring basis for all their expenses; any expense above
the prescribed limit is borne by the fund house and not the investors.
Similarly funds also charge their investors entry and exit loads (in most cases,
either is applicable). Entry loads are charged at the timing of making an
investment while the exit load is charged at the time of sale.
Insurance companies have a free hand in levying expenses on their ULIP
products with no upper limits being prescribed by the regulator, i.e. the
Insurance Regulatory and Development Authority. This explains the complex
and at times 'unwieldy' expense structures on ULIP offerings. The only restraint
placed is that insurers are required to notify the regulator of all the expenses
that will be charged on their ULIP offerings.
Expenses can have far-reaching consequences on investors since higher
expenses translate into lower amounts being invested and a smaller corpus
being accumulated. ULIP-related expenses have been dealt with in detail in the
article "Understanding ULIP expenses".

3. Portfolio disclosure

Mutual fund houses are required to statutorily declare their portfolios on a

quarterly basis, albeit most fund houses do so on a monthly basis. Investors get
the opportunity to see where their monies are being invested and how they have
been managed by studying the portfolio.
There is lack of consensus on whether ULIPs are required to disclose their
portfolios. During our interactions with leading insurers we came across
divergent views on this issue.
While one school of thought believes that disclosing portfolios on a quarterly
basis is mandatory, the other believes that there is no legal obligation to do so
and that insurers are required to disclose their portfolios only on demand.

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Some insurance companies do declare their portfolios on a monthly/quarterly
basis. However the lack of transparency in ULIP investments could be a cause
for concern considering that the amount invested in insurance policies is
essentially meant to provide for contingencies and for long-term needs like
retirement; regular portfolio disclosures on the other hand can enable investors
to make timely investment decisions. There is lack of consensus on whether
ULIPs are required to disclose their portfolios. While some insurers claim that
disclosing portfolios on a quarterly basis is mandatory, others state that there is
no legal obligation to do so.

4. Flexibility in altering the asset allocation

As was stated earlier, offerings in both the mutual funds segment and ULIPs
segment are largely comparable. For example plans that invest their entire
corpus in equities (diversified equity funds), a 60:40 allotment in equity and
debt instruments (balanced funds) and those investing only in debt instruments
(debt funds) can be found in both ULIPs and mutual funds.
If a mutual fund investor in a diversified equity fund wishes to shift his corpus
into a debt from the same fund house, he could have to bear an exit load and/or
entry load.
On the other hand most insurance companies permit their ULIP inventors to
shift investments across various plans/asset classes either at a nominal or no
cost (usually, a couple of switches are allowed free of charge every year and a
cost has to be borne for additional switches).
Effectively the ULIP investor is given the option to invest across asset classes
as per his convenience in a cost-effective manner.
This can prove to be very useful for investors, for example in a bull market
when the ULIP investor's equity component has appreciated, he can book
profits by simply transferring the requisite amount to a debt-oriented plan.

5. Tax benefits

ULIP investments qualify for deductions under Section 80C of the Income Tax
Act. This holds good, irrespective of the nature of the plan chosen by the
investor. On the other hand in the mutual funds domain, only investments in
tax-saving funds (also referred to as equity-linked savings schemes) are eligible
for Section 80C benefits.
Maturity proceeds from ULIPs are tax free. In case of equity-oriented funds (for
example diversified equity funds, balanced funds), if the investments are held

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for a period over 12 months, the gains are tax free; conversely investments sold
within a 12-month period attract short-term capital gains tax @ 10%.
Similarly, debt-oriented funds attract a long-term capital gains tax @ 10%,
while a short-term capital gain is taxed at the investor's marginal tax rate.
Despite the seemingly similar structures evidently both mutual funds and ULIPs
have their unique set of advantages to offer. As always, it is vital for investors
to be aware of the nuances in both offerings and make informed decisions.

FINDINGS & RECOMMENDATIONS

REGARDING INVESTMENTS

Findings

 An earning person should adopt for Pension Plan first to ensure his/her
better retirement life.

 A person should have at least 40times Risk Cover of his income who is in
age group of 20 – 30 Years. Risk cover should increase with increase in
number of dependents.

 High return plans in ULIPs generate disposable returns only if invested

for long term, as expenses reduces with number of years.

"If you want some insurance at cheaper

price and also want to investment in

- 87 -
mutual funds, ULIPs are the best
instruments to invest in"
RECOMMENDATIONS FOR INVESTORS:

Try to understand where the money is going

It is important to identify the nature of investment and to know if one is

compatible with the investment. One can lose substantially if one picks the
wrong kind of mutual fund. In order to avoid any confusion it is better to go
through the literature such as offer document and fact sheets that mutual fund
companies provide on their funds.

Invest Don’t speculate

A common investor is limited in the degree of risk that he is willing to take. It is
thus of key importance that there is thought given to the process of investment
and to the time horizon of the intended investment. One should abstain from
speculating which in other words would mean getting out of one fund and
investing in another with the intention of making quick money. One would do
well to remember that nobody can perfectly time the market so staying invested
is the best option unless there are compelling reasons to exit.

Don’t put all the eggs in one basket

This old age adage is of utmost importance. No matter what the risk
profile of a person is, it is always advisable to diversify the risks
associated. So putting one’s money in different asset classes is
generally the best option as it averages the risks in each category.
Thus, even investors of equity should be judicious and invest some
portion of the investment in debt. Diversification even in any
particular asset class (such as equity, debt) is good. Not all fund

- 88 -
managers have the same acumen of fund management and with
identification of the best man being a tough task; it is good to place
money in the hands of several fund managers. This might reduce the
maximum return possible, but will also reduce the risks.

Be regular
Investing should be a habit and not an exercise undertaken at one’s wishes, if
one has to really benefit from them. As we said earlier, since it is extremely
difficult to know when to enter or exit the market, it is important to beat the
market by being systematic. The basic philosophy of Rupee cost averaging
would suggest that if one invests regularly through the ups and downs of the
market, he would stand a better chance of generating more returns than the
market for the entire duration. The SIPs (Systematic Investment Plans) offered
by all funds helps in being systematic. All that one needs to do is to give post-
dated cheques to the fund and thereafter one will not be harried later. The
Automatic investment Plans offered by some funds goes a step further, as the
amount can be directly/electronically transferred from the account of the
investor.

Find the right funds

Finding funds that do not charge much fees is of importance, as the

fee charged ultimately goes from the pocket of the investor. This is
even more important for debt funds as the returns from these funds
are not much. Funds that charge more will reduce the yield to the
investor. Finding the right funds is important and one should also use
these funds for tax efficiency. Investors of equity should keep in mind
that all dividends are currently tax-free in India and so their tax
liabilities can be reduced if the dividend payout option is used.
Investors of debt will be charged a tax on dividend distribution and so
can easily avoid the payout options.

Keep track of your investments

Finding the right fund is important but even “more important is to

keep track of the way they are performing in the market. If the market
is beginning to enter a bearish phase, then investors of equity too will

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benefit by switching to debt funds as the losses can be minimized.
One can always switch back to equity if the equity market starts to
show some buoyancy.

Know when to sell your Holding

Knowing when to exit too is of utmost importance. One should book profits
immediately when enough has been earned i.e. the initial expectation from the
fund has been met with. Other factors like non-performance, hike in fee charged
and change in any basic attribute of the fund etc. are some of the reasons for to
exit.

“Investments are like children they grow by time”

Invest for Long Period of Time

Always invest for long period of time to enjoy the disposable returns. Never
panic from up’s and down’s of the market, these are natural movements of
market. Never sell the stock which delivery good numbers in panic situation.

“Fear and Greed are two things which an

Investor should avoid”

Fear will stop you from riding the Momentum and Greed will make you
unaware of peak which is certain.

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Commodities Trading
Religare Commodities Limited (RCL), an effort of the Religare Group
was initiated to spearhead Exchange based Commodity Trading. RCL is
not only a trade facilitator but also caters to the unique needs of exchange
based commodity trading with its -
Highly process driven, diligent approach
Powerful Research & Analytics
One of the "best in class" dealing rooms

RCL also provides

Dedicated Corporate Desk

The Corporate Desk educates the producers and consumers about the
available opportunities and the benefits of hedging. We already have more
than 100 corporate clients registered with us.

Dedicated Arbitrage Desk

The concept of Commodity Spot-Futures Arbitrage is based on the price

discrepancies of a particular commodity in two different markets. One
needs to take delivery of the commodity from one market (Spot/Mandis)
and then deliver it to the other market (Futures market) as and when the
prices are sufficiently less in Spot compared to the Futures platform.
Religare Arbitrage Desk has its eye every second on the movement of the
different Markets. As soon as the Desk notices any opportunity, we
disseminate the same suitably to capitalize on it.
Nationwide presence in Mandi Locations

Aims at getting the actual producer (farmer) directly to the market by

taking the market to him and enables him to hedge his risk. Religare’s
presence in all the Mandis is helping give practical solutions and platforms
to manage price-risk.

- 91 -
Presently, Religare has more than 50 operational Mandi branches
(essentially in market areas) across India and going forward it looks at
expanding this presence aggressively.

The Religare Edge

Pan India footprint
Ethical business practices
Nationwide presence including Mandi Locations for in-depth and firsthand
information
Offline/Online delivery models
Powerful research and analytics supported by a pool of highly skilled
Research Analysts
Single window for all investments needs through you unique Customer
Relationship Number

- 92 -
 Conclusion

The strategy adopted by me in completion of this project help me a lot till

now in making comparison between share market and mutual funds. From
the analysis we can say that if there is more risk there is more return and
we can say that share market is totally dependent on the risk taken by the
investors in investing in shares. And in mutual funds there is less risk as
the money of investors invested in different sectors so it can divide the
risk in different portfolio adopted by mutual funds companies.
At last I can say that money invested in this rise and fall market it is better
to invest in mutual funds for those investors who are risk adverse and for
those who are risk taker it is better for them to invest in share market.
We can also say that in share market customers is decision maker while in
mutual funds investors is totally dependent on assets management
company, investors do not have active control on money invested by
him/her.

In OJT the strategy adopted by me in achieving my target helped me a lot.

This strategy helped me in knowing the customer reaction towards share
market, customer’s attitude towards share broking firms and in this I
helped how to interact with the customers which is beneficial for me in
future.

- 93 -
 Bibliography

www.religare.in
www.inforeligare.in
www.mutualfunds.com
www.amfi.com
www.google.com
Members of Religare securities
Members of Maiet faculty

- 94 -
 Abbreviations

NSE – National Stock Exchange

BSE – Bombay Stock Exchange

NSDL – National Securities Depositories ltd.

CDSL – Central Depositories Securities ltd.

SEBI – Securities Exchange Board of India

NEAT- National Exchange Automated Trading

DP – Depository Participants

FII – Foreign Institutional Investors

MCX -Multi Commodity Exchange

NCDEX- National Commodity & Derivatives Exchange

NMCE- National Metal Commodity Exchange

- 95 -
THANK YOU

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