Professional Documents
Culture Documents
On
For
SHAREKHAN ltd.
(In partial fulfillment of Degree of Master of Business Administration, Finance)
DECLARATION
Date-25-july-2008
DEEPAK DHIMAN
7032221160
MBA(finance)
SECTION A
SVIET,
BANUR.
CERTIFICATE
The information presented in this project is true and original to the best of my
knowledge.
Date:
Place: (Ms.PARINEETA )
ACKNOWLEDGEMENT
Words are often to be a mode of expression for one’s deep feelings. I take this
opportunity to express my deepest gratitude to those who have generously helped
me in providing the valuable knowledge and expertise during my training.
At the very outset, I bow my head to thank the God Almighty, whose kind grace has
made it possible for me to bring this report.
I, hereby express my sincere gratitude to my Company Guide, Asst. Mgr. Mr. ATUL
GAURI for the valuable guidance and immense cooperation right from the day 1 st
till the end of the training without which this project would not have become a
successful one. I shall also like to specially thank Mrs. Parineeta (Faculty Guide) for
giving me the required guidance and removing any difficulties faced by me during
training.
Last but not the least I would like to thank Company staff to help me write this
report by providing full cooperation and continuous support during the course of this
assignment.
Thanks to my parents and SVIET , Faculty Members for their belief and constant
support. And finally, I would like to thank each and every person who has
contributed in any of the ways in my training.
Date-25-07-2008
Deepak
Dhiman
PREFACE
ABSTRACT
In the corporate world of today customer is considered as the king and is placed at
the top and if you have won the customer then the gold coin is in your pocket. For
those two rules are to be followed they are:
The project also is an endeavor towards unearthing the psyche of the end-users of
these financial products
For completion of this respective task, personal interaction with the executives was
done so as to get the first hand information.
TABLE OF CONTENTS
1 COMPANY PROFILE 4
INTRODUCTION TO MUTUAL
2 FUNS V/S OTHER INVESTMENT 5
OPTIONS
MUTUAL FUNS V/S OTHER
3 7
INVESTMENT OPTIONS
PEOPLE PERCEPTION ABOUT
4 8
MUTUAL FUNDS
SUGGESTIONS AND
5 10
RECOMMENDATIONS
5.1 QUESTIONAIRRE 14
RETURNS OF VARIOUS
5.2 16
MUTUAL FUNDS
5.3 BIBLIOGRAPHY 20
Sharekhan is one of the leading retail brokerage of SSKI Group which is running
successfully since 1922 in the country. It is the retail broking arm of the Mumbai -based
SSKI Group, which has over eight decades of experience in the stock broking business.
Sharekhan offers its customers a wide range of equity related services including trade
execution on BSE, NSE, Derivatives, depository services, online trading, investment
advice etc.
The content -rich and research oriented portal has stood out among its
contemporaries because of its steadfast dedication to offering customers best -of-breed
technology and superior market information. The objective has been to let customers
make informed decisions and to simplify the process of investing in stocks.
On April 17, 2002 Sharekhan launched Speed Trade and Trade Tiger , are net-
based executable application that emulates the broker terminals along with host of
other information relevant to the Day Traders. This was for the first time that a net -
based trading station of this caliber was offered to the traders. In the last six months
SpeedTrade has become a de facto standard for the Day Trading community over the
net.
With a legacy of more than 80 years in the stock markets, the SSKI group
ventured into institutional broking and corporate finance 18 years ago. Presently
SSKI is one of the leading players in institutional broking and corporate finance
activities. SSKI holds a sizeable portion of the market in each of these segments.
SSKI’s institutional broking arm accounts for 7% of the market for Foreign
Institutional portfolio investment and 5% of all Domestic Institutional portfolio
investment in the country. It has 60 institutional clients spread over India, Far East,
UK and US. Foreign Institutional Investors generate about 65% of the organization’s
revenue, with a daily turnover of over US$ 2 million. The Corporate Finance section
has a list of very prestigious clients and has many ‘firsts’ to its credit, in terms of the
size of deal, sector tapped etc. The group has placed over US$ 5 billion in private
equity deals. Some of the clients include BPL Cellular Holding, Gujarat Pipavav,
Essar, Hutchison, Planetasia, and Shopper’s Stop.
5- Insurance Distribution.
REASONS TO CHOOSE SHAREKHAN LIMITED
Experience
SSKI has more than eight decades of trust and credibility in the Indian stock market. In the
Asia Money broker's poll held recently, SSKI won the 'India's best broking house for
2004' award. Ever since it launched Sharekhan as its retail broking division in February
2000, it has been providing institutional-level research and broking services to individual
investors.
Technology
With our online trading account you can buy and sell shares in an instant from any PC with
an internet connection. You will get access to our powerful online trading tools that will
help you take complete control over your investment in shares.
Accessibility
Knowledge
In a business where the right information at the right time can translate into direct profits,
you get access to a wide range of information on our content-rich portal,
www.sharekhan.com. You will also get a useful set of knowledge-based tools that will
empower you to take informed decisions.
Convenience
One can call our Dial-N-Trade number to get investment advice and execute your
transactions. We have a dedicated call-center to provide this service via a Toll Free Number
1800-22-7500 & 39707500 from anywhere in India.
Customer Service
Our customer service team will assist you for any help that you need relating to transactions,
billing, demat and other queries. Our customer service can be contracted via a toll-free
number, email or live chat on www.sharekhan.com.
Investment Advice
Sharekhan has dedicated research teams of more than 30 people for fundamental and
technical research. Our analysts constantly track the pulse of the market and provide timely
investment advice to you in the form of daily research emails, online chat, printed reports
and SMS on your mobile phone.
Benefits
CLASSIC ACCOUNT
This is an User Friendly Product which allows the client to trade through website
www.sharekhan.com and is suitable for the retail investor who is risk-averse and hence
prefers to invest in stocks or who do not trade too frequently.
Features
SPEEDTRADE
It is ideal for active traders and jobbers who transact frequently during day’s session to
capitalise on intra-day price movement.
Features
Along with enabling access for your trade online, the CLASSIC and SPEEDTRADE
ACCOUNT also gives you our Dial-n-trade serives. With this service, all you have to do is
dial our dedicated phone lines 1-800-22-7500, 3970-7500.
Beside this, Relationship Managers are always available on Offic Phone and Mobile to
Resolve your querries.
ShareMobile*
Now Track the Market Anywhere..! Sharekhan had introduced ShareMobile, A mobile
based software where you can watch Stock Prices, Intra Day Charts, Reasearch & Advice
and Trading Calls live on the Mobile.
Stay updated with ShareMobile, Sharekhan's new service that lets you to catch the pulse of
the stock market on your mobile phone. All you need is a Sharekhan account and a GPRS
enabled Mobile handset.
* As per SEBI regulations, buying-selling shares through a mobile phone is not yet permitted. So when you place
a buy-sell order on ShareMobile, our Dial-n-Trade executive will call you back and place the order on your
behalf. This service is free and has NO extra fees.
PREPAID Account
Now you can buy Prepaid Account of Sharekhan. Pay Advance Brokerage on your Account
and enjoy uniterrupted trading in your Account. Beside this, get great discount (upto 50%)
on
Brokerage.
You can apply to all the forthcoming IPO online hasselfree, paperless and time saving.
Simply allocate fund to IPO Account, Apply for the IPO and Sit Back & Relax.
You can apply to Mutual Funds of Reliance, Franklin Templeton Investments, ICICI
Prudential, SBI, Birla, Sundaram, HDFC, DSP Merrill Lynch, PRINCIPAL, TATA with
Sharekhan hasselfree, paperless and time saving.
Zero Balance ICICI Saving Account *
Sharekhan had tied-up with ICICI bank for Zero Balance Account for Sharekhan’s Clients.
Now you can have a Zero Balance Saving Account with ICICI Bank after your demat
Account creation with Sharekhan.
CHARGE STRUCTURE
Commitment
Broakerage Intra-day – 0.10 %** Intra-day - 0.10%**
** Condition Apply.
PRODUCT DETAILS
Online Trading:
Rs.300 from 2nd year onwards (Annual Maintenance charges). Trading through website
Live terminal. No brokerage commitment required. NSE and BSE online. Both Cash &
F&O.
(b) SPEED TRADE : Account Opening Fee: Rs. 1000/- Both Cash & F&O.
Monthly Recurring Fee: Rs 500/- per month, which is very nominal if you consider the
benefits of the product. This access charges will be debited to all the new customers signed
up after Sept 15, 2004. And at the end of the month if the client has contributed more than
Rs. 500/- as brokerage the access charges of Rs. 500/- will be credited back to the clients
account. Please note - this credit of Rs. 500/- will be given only to customers who have
contributed more than Rs. 500/- as brokerage during the months.
Brokerage :
0.05 % Plus Taxes for Each leg of Intra-day trade
We have tie up with Twelve Banks for online fund transfering i.e. HDFC, ICICI, IDBI,
CITI, Union Bank of India, Oriental Bank of Commerce, INDUSIND, Yes Bank, Bank
of India, Centurion Bank of Punjab, Bank of Punjab and UTI bank for online money
transfer.
· Leave-Licence/Purchase Agreement
2 (Two no.) Colour Photographs (Passport size & front face)
For Speed Trade:- 1 Account Opening Cheque of Rs. 1000/- in the favour of M/s
Sharekhan Limited
THANKS
So we look forward to your joining in the Sharekhan family and benefitting from the
evergreen posibilities of the stock market.
SYNOPSIS
Objective: Experts generally says that mutual says that mutual fund is the best
investment option. My objective is to
Scope: Scope of my study in Chandigarh only. I have only studied people perception
of Chandigarh people.
Data Analysis: Analysis is done by using various statistical tools such as graphs,
averages, charts, etc. From the data collected, analysis & conclusion have been
made.
INTRODUCTION TO MUTUAL FUNDS
For decades, the middle class had an ideological bias against having too much
wealth. Money was seen only as a means for meeting basic needs. The risk and
low returns provided by other investment schemes accompanied by high
inflation and decreasing interest rates gave birth to Mutual Funds.
A ‘mutual Fund’ is an investment vehicle for investors who pool their savings
for investing in diversified portfolio of securities with the aim of attractive yields
and appreciation in their value. A mutual fund is a trust that pools together the
savings of a number of investors who share a common financial goal.
Pooling is the key to mutual fund investing. Through pooling the financial
resources of thousand of investors, each with a different amount to invest,
investors gain access to the expertise of the qualified and experienced fund
managers, wide diversification of ownership in securities market and a variety of
services, otherwise available only to institutions. Through diversification in
portfolio, mutual funds spread out inherent risks in securities and can earn a
more stable return. Individuals are free from the time consuming mechanics
involved in the direct purchase of securities in their portfolio. Professional fund
managers take pool of money and invest in a variety of securities selected from a
broad range of industries. They select securities that best meet their funds
investment objectives. They make decision when to buy, when to sell and when
to hold based on their extensive research and experience. The investment
objective set forth by the fund is important both to managers and investors.
These objectives guide the manager to plan the portfolio of the schemes. On the
other hand investors are guided by these objectives to select most suitable
scheme. A scheme is most suitable whose objectives are compatible to investor’s
targets. The concepts is explained in Fig. 1
Investors
Passed Pool their
back to money with
Generates invest in
Securities
2) Close-Ended Funds: A close ended fund means any scheme of mutual fund
in which the period of maturity of the scheme is specified . The corpus of the
close-ended scheme is fixed and an investor can subscribe directly to the scheme
only at the time of initial issue. These schemes are listed at the secondary market
i.e. stock exchanges. The price in the secondary market is determined on the
bases of demand & supply.
3) Interval Funds: scheme is a scheme of mutual funds which is kept open for
specific interval and after that it operates as close scheme. Thus it combines the
features of both ended & close-ended funds. The scheme is open for sale or
repurchase at fixed predetermined interval, which are disclosed in the offer
document. The units of the scheme are also traded in the stock exchange.
1) Equity funds: These funds mainly invest in shares of the companies. The
investments may vary from ‘blue-chip’ companies to newly established
companies. They undertake risk associated with investment in equity shares of
companies. Equity funds may have further sub-divisions such as income fund &
growth fund.
3) Balanced Funds: Balanced funds spend both on common stock and preferred
stock. Some part of the funds is pent on buying equity which other part is used in
acquiring interest bearing debentures and preference shares ensuring certain
amount of dividend. Some funds generally spend half the funds on equity stock
while the other half is pent on preferred stock. Balanced Funds ensure both
appreciation in stock as well as regular return in the shape of interest &
dividend. The investors have advantages of regular income and appreciation in
value of securities. These funds are also known as ‘ Conservative Funds’ or’
Income & Growth Funds’.
6) Taxation Funds: Mutual Funds may be designed to suit the taxpayers. The
contributors to such funds get some concession in income tax. These schemes
are also known as Equity linked Saving Schemes (ELSS). The investors are
required to keep the money with the fund for a period of 3 years. The Amount
collected by these funds is used to acquire shares and interest bearing securities.
1) Domestic Funds: These are the funds which mobilizes savings of people with
in the country where investments are made.
2) Off-Shore Funds: Off-Shore mutual funds are those funds which raise or
mobilize funds in those countries other than where investments are to be made.
These funds attract foreign savings for investments in India.
Other Types: There can be some other types of Mutual Fund also, such as ‘Loan
Funds’ and Non-Loan Funds’ based on the expense / fees to be charged. “ Hub &
Spoke
funds’ which are basically fund of funds invests in other mutual funds.
5) Tax Advantage: There are certain schemes of mutual funds which provide tax
advantage under the Income Tax Act liability of an investor is also reduced
when he invests in these schemes of the mutual funds.
6) Low Operating Costs: Mutual Funds Have large investible funds at their
disposal and thus can avail economies of large scale. This reduces their
operating costs by way of brokerage, fees, commission, etc. Thus a small
investor also gets the benefits of large scale economies and low operating costs.
10) Transparency: You will always have access to up-to-date information on the
value of your investment in addition to the complete portfolio of investments,
the proportion allocated to different assets and the fund managers investment
strategy.
DISADVANTAGES:
Mutual funds are good investment vehicles to navigate the complex & unpredictable
world of investments. However, even mutual funds have some inherent drawbacks.
These
are:
For example, say, Reliance appreciated 50 percent. A direct investment in the stock
would appreciate by 50 percent, But your investment in the mutual fund, which had
invested 10 percent of its corpus in Reliance, will see only a 5 per cent appreciation.
1986 UTI Mastershare India’s first true ‘mutual fund’ scheme, launched.
1987 PSU banks and insurers allowed to float mutual funds; State Bank of India
first
off the blocks.
1992 The Harshad Mehta fuelled bull market arouses middle-class interest in
shares
and mutual funds.
1993 Private sector and foreign players allowed; Kothari Pioneer first private
fund
house to start operations; SEBI set up to regulate industry.
1994 Morgan Stanley is the first foreign player.
1996 SEBI’s mutual fund rules and regulation, which form the basis of the most
current laws, came into force.
1998 UTI Master Index Fund is the country’s first index fund.
1999 The takeover of 20 Century AMC by Zurich Mutual Fund is the first
acquisition
in the mutual fund industry.
2000 The industry assets under management crosses Rs. 1,00,000 crore.
2002 UTI bifurcated, comes under SEBI purview; Mutual fund distributors
banned
form giving commissions to investors; floating rate funds and foreign
debt
funds debut.
2003 AMFI certification made compulsory for new agents; fund of funds
launched.
In today’s world, every individual is trying to accumulate lots and lots of wealth.
The objective of average Indian changed from ‘finding a good job’ to become a
crorepati. But to become a crorepati one has to plan his investments carefully. The
basic step for creating wealth revolve around the concept of asset allocation,
systematic investments and taking a long term approach towards investments.
These days their are many investment option available like Post Office Schemes,
Mutual Funds. Bank Fixed Deposits. Share. Etc. Before investing one has to be very
clear about his financial goals and pros & cons of each investment option.
1. Risk
2. Returns
3. Liquidity
4. Inflation Protection
5. Option of Borrowing
6. Tax Implications
An open-ended mutual fund is the one whose units can be freely sold and
repurchased by the investors. Such funds are not listed on bourses since the Asset
Management Companies (AMCs) provide the facility for buyback of units form
unit-holders either at the NAV, or NAV-linked prices. Open Ended Mutual Funds
are of many types and the returns form them are also different: The major types
being:
Balanced Funds
Gilt funds
Debt Funds
RETURN
Fig.2
LIQUIDITY: Instant Liquidity is the USP of open ended funds. Units of open-
ended mutual funds can be redeemed on weekdays (Monday-Friday) at NAV or at
NAV plus a small exit load. There is a concept of Contingent Deferred Sales
Charge where the exit load is charged only if the redemption takes place before a
specified time period or above a specified amount. A majority of open-ended mutual
funds allow switching among the various funds of the same AMC without any load.
You generally get your redemption requests processed promptly, and received the
cheque in 3-4 days. However, in case of Equity Linked Savings Schemes (ELSS)
there is a lock in period of three years.
OPTION OF BORROWING: - There are some banks that offer loans against
mutual funds. Different banks have their own criteria on which they approve the
loans.
Closed-ended mutual funds have a fixed umber of units, and a fixed tenure (3, 5, 10
or 15 years), after which their units are redeemed or they are made open-ended.
These funds have various objectives: generating steady income by investing in debt
instruments, capital appreciation by investing in equities, or both by making an
equal allocation of the corpus in debt and equity instruments.
Since units of closed-ended funds rise and fall in the market like any other stock,
they are well suited for an increase in your investment. How ever, a mutual fund is
more influenced by the value of its own portfolio than any other factor. Units of an
equity fund are more frequently traded than a debt fund. Also, the NAV of an equity
fund rises and falls at a much faster pace. One the other hand, equity provided
healthy appreciation in NAV in the long term. Closed-ended debt funds, with their
conservative investment approach are best suited for income. These funds declare
dividend annually or semi-annually.
One cannot be completely sure of getting your full investment back. Depending on
their investment objective and under laying portfolio, closed-ended funds can be
very volatile or be fairly stable. Hence, principal is not assured.
LIQUIDITY: The Indian stock markets lack depth and, thus, the closed-ended
mutual funds are illiquid where they are listed and trade with heavy discount to their
NAVs. Besides listing, some mutual funds also offer repurchase option in there
closed-ended funds at an NAV-linked price after a certain lock-in period.
OPTION OF BORROWING: Closed end funds are treated as shares for the
purpose of raising loans in which the market value of the fund is considered.
However, there are few listed closed-ended fund that may be acceptable by banks.
SHARES
Shares, also called scrips, are the basic building blocks of a company. A company’s
ownership is determined on the basis of its shareholding,. Shares are, by far, the
most glamorous investment option for the simple reason that, over the long term,
they offer the highest returns. Predictably, they’re also the riskiest investment
option.
Shares are meant to be long-term investments. Three golden rules for investment in
equity- Diversity, Average out & most importantly stay invested. Shares do generate
income form dividend as well as capital appreciation and have a strong potential to
increase value of investment. But shares are risky – share prices are affected by
factors beyond anyone’s control and hence one needs to have an appetite for that
kind of risk.
LIQUIDITY: Shares are the most liquid financial instruments as long as there is
a buyer for shares on the stock exchange. Most shares belonging to the A Group on
the BSE are among the most liquid. However, shares of some companies may not
witness any trading for many days altogether. In such a case, you will not be able to
sell your shares. So, the liquidity factor varies to a large extent.
INFLATION PROTECTION: Shares do provide for some protection
although share prices have no relation to inflation. The price may crash or rise far
beyond the inflation rate.
OPTION OF BORROWING: You can pledge shares with a bank for raising a
loan. The banks have their list of approved shares that they accept as a security.
Generally, shares of well known and respectable companies are accepted a security.
When you deposit a certain sum in a bank with a fixed rate of interest and a
specified time period, it is called a Bank Fixed Deposit (FD). At maturity, you are
entitled to receive the principle amount as well as the interest earned at the pre-
specified rate during that period. The rate of interest for Bank Fixed Deposits varies
between 4 and 6 per cent, depending on the maturity period of the FD and the
amount invested. The interest can be calculated monthly, quarterly, half-yearly, or
annually, and varies form bank to bank. They are one the most common savings
avenue, and account for a substantial portion of an average investor’s savings. The
facilities vary form bank to bank. Some services offered are withdrawal through
cheques on maturity, break deposit through premature withdrawal, and overdraft
facility etc. Fig 2.1 shows the return on FD’s
Bank Deposits are the safest investment option after post-office schemes since the
banks function according to the parameters set by the Reserve Bank of India (RBI),
which frames regulations keeping in mind the interest of the investors.
LIQUIDITY: Bank FDs are liquid to the extent that premature withdrawal of a
bank FD is allowed. However, that involves a loss of interest.
INFLATION PROTECTION: With a fixed return, which is lower than other
assured return options, banks cannot guard against inflation. In fact, this is the main
problem with Bank FDs as any return has to be calculated keeping inflation in mind.
BONDS
Bond is a loan given by the buyers to the issuer of the instrument. Bonds can be
issued by companies, financial institutions, or even the government. Over and above
the scheduled interest payments as and when applicable, the holder of a bond is
entitled to received the par value of the instrument at the specified maturity date.
Selling in the debt market is an obvious option. Some issues also offer what is
known as ‘Put and Call option.’ Under the Put option, the investor has the option to
approach the issuing entity, after a specified period (say, three years), and sell back
the bond to the issuer. In the Call option, the company has the right to recall its debt
obligation after a particular time frame. For instance, a company issues a bond at an
interest rate of 12 per cent . After 2 years, it finds it can raise the same amount at 10
per cent. The company can now exercise the Call option and recall its debt
obligation provided it has declared so in the offer document. Similarly, an investor
can exercise his Put option if interest rates have moved up and there are better
options available in the market.
TAX IMPLICATIONS: There are specific tax saving bonds in the market that
offer various concessions and tax-breaks. Tax free bonds offer tax relief under
Section 88 of the Income Tax Act, 1961. Interest income form bonds, upto a limit of
Rs. 12000, are exempt under section 80 L of the Income tax Act, plus Rs. 3,000
exclusively for interest from government securities. However, if you sell bonds in
the secondary market, any capital appreciation is subject to the Capital Gains Tax.
A public Providend Fund (PPF) is a long-term savings plan with powerful tax
benefits. Your money grows @ 8 per cent per annum, and this is guaranteed by the
Government of India (GOI). You may consider this option if you are not looking for
short-term liquidity or regular income. Normal maturity period is 15 years from the
close of the financial year in which the initial subscription was made.
You can safety put your money in a PPF Scheme as it is risk-free. Although factors
like inflation and interest rate fluctuations may determine whether you opt for a PPF
Account or not, the decision to invest in a PPF account is based on the twin benefits
of long-term savings and tax incentives. But if the interest rates will be applicable to
your account.
Subsequent interest calculations will be on the new rate of interest.
National Savings Certificates (NSC) are an assured return scheme, armed with
powerful tax rebates under Section 88 of the Income Tax Act, 1961. Interest is
payable at 8 per cent, compounded half-yearly for a duration of 6 years. NSC
combines growth in money with reductions in tax liability as per the provisions of
the Income Tax Act, 1961. The scheme offers a coupon of 8 per cent, compounded
semi-annually. So, Rs 1,000 invested in NSCs become Rs. 1,601 on maturity after 6
years.
The NSC has the backing of the Government of India. Since the NSC has the
backing of the Government of India, your income at the prescribed rate of interest is
assured. This is a safe long-term savings option. There are no risks associated with
your investment in the NSC.
TAX IMPLICATIONS: NSCs offer tad benefits as per the provisions of the
Income Tax Act, 1961. Rebates are available under Section 88 of the Income Tax
Act, 1961 on both the principal as well as the interest income. Under the provisions
of this Section, an investor can reduce his tax liability by Rs. 12,000 by investing the
maximum permissible sum of Rs. 60,000 in one financial year. Moreover, the annual
interest income ( till five years) is deemed reinvested under Section 88, and is
eligible for tax rebate.
Moreover, the annual interest income ( till five years) is deemed reinvested under
Section 88, and is eligible for a 20 per cent tax rebate. The rebate is calculated @ per
cent if your gross annual salary is upto Rs. 1,00,000. However, the interest income
at the end of the sixth year is not eligible for tax breaks. The interest income every
year also qualifies for exemption under Section 80L of the Income Tax act, which
means that interest income upto Rs. 12,000 is tax-exempt. Thus, while you can
claim 20 percent tax rebate on reinvested interest income, the entire interest income
will be tax-free if it is lower than Rs. 9,000. An added advantage is that TDS ( Tax
Deductible at Source) is not applicable on the NSC.
The post-office monthly income scheme (MIS) provides for monthly payment of
interest income to investors. It is meant for investors who want to invest a lump-sum
amount initially and earn interest on a monthly basis for their livelihood. The
scheme is,
therefore, a boon for retired persons. The post-office MIS gives a return of 8 per
cent plus a bonus of 10 per cent on maturity. However, this 10 per cent bonus is not
available in case of premature withdrawals.
Like all post-office schemes, the MIS has the backing of the Government of India,
and is, therefore, a safe investment. You can be assured of getting your full
investment back. Your monthly interest income is assured at the specified rate of
interest. Since this scheme ha the backing of the Government of India, it is a sage
investment channel.
LIQUIDITY: You can buy a post office MIS at any post-office in India. The
duration of the MIS is six years. Investors can withdraw money before three years,
but at a discount of 5 percent. No such deduction will be made if an account is
closed after three years. Premature closure of the account is permitted any time after
the expire of a period of one year of opening the account. Deduction of an amount
equal to5 per cent of the deposit is to be made when the account is prematurely
closed.
INFLATION PROTECTION: With a fixed rate of return, the MIS does not
provide adequate safeguards against high inflation rates.
TAX IMPLICATIONS: The interest income accruing from a post office MIS
is exempt for tax under Section 80L of the Income Tax Act, 1961. Moreover, no
TDS is deductible on the interest income. The balance is exempt form Wealth Tax.
TAX IMPLICATIONS: Interest income upto Rs. 9,000 from Time Deposits is
exempt under section 80L of the Income Tax Act, 1961, and no tax is deducted at
source, i.e., the interest income form a Time Deposit is also exempt form TDS.
INVESTMENT AT A GLANCE
Fig. 2.2
Here, Character ‘H’ means “High”, ‘L’ “Low” & ‘A’ means “ Adequate”
PEOPLE PERCERTION ABOUT MUTUAL FUND
AGE GROUP
15% 5%
1-18 years
18-35 years
35-45 years
45%
45 & above
35%
Fig. 3.1
Fig. 3.2
Male / Female
Sex No. of Respondents Percentage
Male 26 65%
Female 14 35%
Total 40 100%
Table .3.3
SEX
100%
65%
50%
35%
0%
Male
Female
Fig. 3.3
Marital Status
Married No of Respondents Percentage
Married 28 70%
Single 12 30%
Total 40 100%
Table 3.4
Marital Status
80%
70%
60%
40%
20%
30%
0%
Married Single
Fig 3.4
40%
15%
20%
0%
Yes No
Fig. 3.5
I conducted my research on 40 respondents, out of which 34 respondents are aware
about mutual funds i.e. 85%. Only 15 % of the respondents are not at all aware
about mutual funds. It suggests that there is awareness amount people about mutual
funds which is good for the mutual funds industry.
67.65
%
Fig 3.6
20.00% HSBC
0.00% 1
SBI Magnum
Fig 3.7
Only 5.88 % of respondents knows only one AMC i.e. UTI. Majority of AMC’s
knows about 4-5 AMC’s. Moving onto which AMC is known to people, most of the
respondents knows about UTI & Pru ICICI, expressed in percentage as 88.23%.
88.35% of the respondents knows about Franklin Templeton shares 70.59% of
respondents are aware of Birla Sunlife. HSBC & SBI are also popular. This clearly
shows that UTI & Pru ICICI are the most popular AMC’s.
Fig 3.8
Percentage of Savings
0 – 10%
17.39% 0.00%
10% - 25%
25% - 50%
17.39%
65.22% 50% & above
Fig 3.9
67.64% of respondents have invested their savings in mutual funds. Only 32.36% of
respondents are there who have not invested in mutual funds. 67.22% People have
invested 10-25% of their savings while 17.39% of respondents have invested
25.50% & 50 % and above in mutual funds.
This suggests that lots of people of Chandigarh have invested in mutual funds.
POPULARITY OF OPEN-ENDED MUTUAL FUND SCHEMES
82.60%
Equity
90.00% 69.56%
80.00%
Debt
70.00%
60.00%
50.00% 30.43% Balanced funds
21.74%
40.00%
30.00% Fund of Funds
20.00%
10.00%
0.00%
1
Percentage
Fig 3.10
Balanced funds are more popular as 82.60% of people have invested in these
schemes followed by equity funds where 69.56% of respondents have invested.
People have also invested their savings in debt funds expressed in percentage as
30.43%. Popularity of funds of fund is really low as only 21.74% of respondents
have invested in them. Thus we can say, Balanced Funds are the most popular as
they have both equity and debt portfolio.
Low
13.05% High
30.43%
Good
56.52%
Fig. 3.11
56.52% of people have enjoyed good returns from their investments in mutual funds
whereas 30.43% have earned handsome high return. 13.05% of respondents got low
returns. By looking at the above figures, we can predict that returns form mutual
funds are good.
70.00%
60.87%
60.00%
50.00%
40.00%
30.00%
21.74%
20.00% 17.39%
10.00%
0.00%
High Low Adequate
Fig. 3.12
People of Chandigarh (60.87%) who have invested in mutual funds see adequate
risk in mutual funds. 17.39% of respondents perceives mutual funds as very risky
option where as 21.74% of respondents think that there is low risk associated with
mutual funds.
MAIN REASON FOR INVESTMENT IN MUTUAL
FUNDS
Tax Benefits S1
Higher
Returns Liquidity
Fig. 3.13
40.00% 2nd
30.00%
20.60% 3rd
20.00% 14.70% 14.70%
10.00%
4th & above
0.00%
1
Percentage
Fig.3.14
The above data clearly indicates that mutual funds standing vs. other option is good.
The experience of investors about mutual funds industry is quite good. 60.87% of
respondents agrees with it whereas 39.13% have bad experience in mutual fund.
Conclusion: From above data, we can conclude that people that people of
Chandigarh are aware of mutual funds and understands what mutual funds are. They
have also invested their savings in various mutual funds schemes. AMCs like Pru
ICICI, UTI & Franklin Templeton are popular amongst the people of Chandigarh.
People’s experience about mutual funds is good. They have also earned a very
handsome return which is more than other investment options. But risk associated
with mutual funds is one the higher side, but people invests because of various
reasons like tax benefits, liquidity, higher returns better returns. People of
Chandigarh invests about 10-50% of their savings in mutual funds. They think that
mutual funds provide better returns over a longer period of time. People of
Chandigarh expects high returns, low risks, professional management, transparency,
easy availability, after sales service and liquidity, from an investment option
As an investment options, Mutual Funds provide high returns with risk associated
with it, better liquidity, tax benefits, inflation protection, option of borrowing,
professional management, power of diversification etc. All these qualities are not
generally present in single investment option, which is present in mutual funds.
IDEAL RETURNS
TRANCPARENCY
SAFETY
CONTROL OF MONEY
Investment Planning is necessary for all individuals to achieve their financial goals.
One has to plan his limited resources to avail maximum benefit about of them.
People should plan their investments to fulfill major needs like:
Financial Protection
Career Building
Assets Purchase
Marriage
Children’ Education
Retirement Funding
So, before investing one has to be vary sure about his financial goals and risk taking
capacity. To do this, one should check his risk taking capacity with ‘ Investment
Style Check’ enclosed in Annexure IV. After checking his score, one can know what
kind of investor he or she is.
The recommended asset allocation for different kind of investors is given below in
graphical form:
Equity Cash
0% 20%
Debt
80%
2) Conservative Investor:
Equity
10%
Cash
10%
Debt
80%
3) Moderate Investor:
Equity
30%
Debt
60% Cash
10%
4) Aggressive Investor:
Equity
40%
Debt
50%
Cash
10%
Debt
10%
Equity
Cash 50%
40%
It is not difficult to become a crorepati with mutual funds, provided one invest
according to the above portfolio.
Remember:
Mutual funds are subject to market risk and there is no assurance that fund
objective will be achieved.
NAV fluctuates depending on forces affecting capital markets.
Past performance do not indicate future performance.
Returns are not guaranteed and assured
Take long term approach towards investments.
Create an ideal portfolio
By following the above suggestions, one has to plan his investments and as proved
by studies that:
QUESTIONAIRE
Personal Information:
Name :_________________________
Age:___________________________
Address:________________________
_______________________________
Income :
Below Rs. 50,000
Rs. 50,000 – Rs. 1 Lakh
Rs. 1 Lakh – Rs. 3 Lakh
Rs. 3 Lakh & Above
Sex:
Male
Female
Marital Status:
Married
Un- Married
Q-1) Are you aware of Mutual Funds?
a) Yes
b) No
Q-5) How much (%) of your savings have you invested in Mutual Funds?
a) 0 - 10%
b) 10% - 25%
c) 25% - 50%
d) 50% & above
Q-7) What kind of returns have you got from your earlier investments in
Mutual
Funds?
a) High
b) Good
c) Low
Q-9) What is the main reason for your investments in Mutual Funds?
a) Tax Benefits
b) Higher Returns
c) Liquidity
Q-10) What Ranking you give to Mutual Funds in comparisons with other
investment options?
a) 1st
b) 2nd
c) 3rd
d) 4th & More
BALANCED FUNDS
Scheme Fund
Corpu Return % as on 21.12.2004
s in Rs. 7 15 1 3 6 1 2 Since
Crores
days days month month months years year Inception
Alliance 95 fund 137.83 3.59 5.61 10.77 17.95 36.47 27.79 46.76 27.66
Birla Balance Fund 158.37 2.27 4.02 8.54 14.01 28.13 19.08 40.97 11.46
HDFC Prudence Fund 683.34 1.23 3.18 8.02 14.10 34.01 25.28 54.81 27.62
UTI Balanced Fund 459 1.80 2.87 4.78 9.76 29.33 15.47 36.12 13.30
Tata Balanced Fund 93.58 1.62 2.74 6.16 13.51 35.41 17.50 41.10 12.10
GILT FUNDS
Scheme Fund
Corpu Return % as on 21.12.2004
s in Rs. 7 15 1 3 6 1 2 Since
Crores days days month month months years year Inception
Birla Gilt Plus 20.64 0.32 0.41 0.80 1.49 2.30 4.21 6.65 9.50
HSBC Gilt STP 1.24 0.07 0.15 0.32 1.07 1.26 1.63 N.A 1.82
Sahara Gilt Fund 29.50 0.18 0.42 1.16 0.51 -0.93 -1.44 2.51 4.59
Reliance G-Sec Fund 31.02 0.08 0.11 0.52 1.18 0.55 1.98 N.A 3.84
Pru ICICI Gilt Fund 33.98 0.13 0.26 0.55 0.99 1.70 3.67 6.33 9.25
DEBT FUNDS
Scheme Fund
Corpu Return % as on 21.12.2004
s in Rs. 7 15 1 3 6 1 2 Since
Crores
days days month month months years year Inception
Birla Bond Plus 113.29 0.11 0.19 0.65 0.88 2.19 4.25 N.A 5.18
Reliance STP 103.48 0.14 0.28 0.60 1.08 2.35 4.95 6.13 6.13
HDFC STP 263.40 0.12 0.17 0.47 0.72 1.63 3.29 4.61 5.99
SBI Magnum STP 1265.87 0.10 0.21 0.42 1.20 2.36 4.67 N.A 4.65
Templeton India STP 250.61 0.10 0.19 0.62 0.74 1.89 4.01 5.17 6.44
Annexure III
BIBLIOGRAPHY
Books Referred:
Magazines Cited:
Outlook
Layman’s Guide to Mutual Fund
Top Performer
Investors India
Net Watch:
www.moneycontrol.com
www.mutualfundsindia.com
Conference Attended:
Bajaj Capital Investor’s Meet
Annexure IV
Risk and return always go hand in hand. Higher the Risk, Greater the Return & Vice
Versa. To evaluate one’s risk bearing capacity, Investment Style Check is a very
common tool. It is an follows:
1. My age is
a) above 50
b) Between 30-50
c) Between 24-30
8. Imagine that the stock market drops immediately after you invest in it
a) I would withdraw my money
b) I would wait and watch
c) I would invest more in it
Evaluate Yourself
Give 10 points for answer ‘a’ , 20 points for answer ‘b’ , 30 points for answer ‘c’