A PROJECT REPORT ON

MUTUAL FUND WITH SPECIAL REFERENCE TO

KARVY (HYDERABAD) (Submitted in Partial Fulfillment of the Award of the Degree

Of

MASTER OF BUSINESS ADMINISTRATION

Submitted By

T.JASWANTHI
M.B.A

H.T NO: 112G1E00A5

Under The Guidance Of Mrs. ANNAPURNA M.B.A (ASST.PROF) DEPARTMENT OF MANAGEMENT STUDIES ANANTHA LAKSHMI INSTITUTE OF SCIENCE&TECHNOLOGY (AFFILIATED TO JNT UNIVERSITY) ANANTAPUR DIST 2011-2013

DECLARATION I here declare that the project report entitled A STUDY ON MUTUAL FUND has been prepared by me in partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION I also declare that this project work is a result of my effort and it has not been submitted to any other university for the award of any degree or diploma. PLACE: DATE:

T.JASWANTHI
H.T NO: 112G1E00A5

ACKNOWLEDGMENT
With a profound sense of thankfulness, I acknowledge my indebtedness to my company guide Mr. SATHISH (RELATIONSHIP MANAGER) Faculty guide Mrs Mrs. ANNAPURNA
M.B.A., for

their

valuable guidance, timely suggestions and constant encouragement. Their insightful criticisms and patience throughout the duration of this project have been instrumental in allowing this project to be completed. My sincere thanks are to the name of Director, Mr. RAMESH NAIDU (M.A) (P.hd)., name of HOD NAGA PRABHAKAR (M.com, M.B.A) and all the staff members of Department of management studies, ANANTHA LAKSHMI INSTITUTE OF SCIENCE&TECHNOLOGY,For their consistent guidance in my project work. Their continual support and careful attention to the details involved in producing a document of this nature are very much appreciated.

T.JASWANTHI
H.T NO: 112G1E00A5

CONTENTS
CH. NO. CHAPTER -1 INTRODUCTION OBJECTIVES OF THE STUDY NEED &IMPORTANT OF THE STUDY SCOPE OF THE STUDY RESEARCH METHODOLOGY LIMITATIONS OF THE STUDY CHAPTER -2 PURTICULARS PAGE NO.

REVIEW OF LETERATURE

CHAPTER -3 INDUSTRY PROFILE COMPANY PROFILE CHAPTER-4 ANALYSIS & INTERRETATION OF THE STUDY CHAPTER -5 FINDINGS SUGGESTIONS CONCLUSIONS CHAPTER-6 BIBLIOGRAPHY APPENDIX CHAPTER-7

CHAPTER -1 INTRODUCTION

INTRODUCTION
SEBI (Mutual Fund) Regulations 1993 defines Mutual Fund as a fund established in the form of a trust by a sponsor to raise money by the trustees through the sale of units to the public under one or more schemes for investing securities in accordance with these regulations The rationale behind a mutual fund is that there a large number of investors who lack the time and or the skills to manage their money. Hence, professional fund managers, acting on behalf of the Mutual Fund, manage the investments (investors money) for their benefit in return for a management fee. The organization that manages the investment is called the Asset Management Company (AMC). Thus, a Mutual Fund is the most suitable investment for the common person as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Anybody with an investible surplus of as little as a few thousand rupees can invest in mutual fund .Each mutual fund scheme has defined investment objective and strategy. A Draft offer documents is to be prepared for launching a fund. Typically, it specifies the investment objectives of the fund, the risk associated, the cost involved in the process and the broad rules for entry into and exit from funds and others areas of operation. As you probably know, mutual funds have become extremely popular over the last couple of decades what was once just another obscure instrument is now part of daily lives. More than 80 million people or one half of the household in America invest in mutual funds. That means that, in the United States alone, trillions of dollars alone are invested in mutual fund. In fact, too many people, investing means buying mutual funds After all, its common knowledge that investing in mutual fund is (or at least should be) better than simply letting cash waste away in a saving account but for most people, thats where the understanding of fund ends.

Mutual fund is a mechanism for pooling the resources by issuing unit to the investors and investing funds in securities in accordance with the objective as disclosed in offer document. Investment in securities is spread across a wide section of industry and sector and the risk is reduced. Diversification reduces the risk because all stock may or may not move in the same direction in the same proportion to their proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investor of mutual are called unit holders.The profit or losses are shared by the investors in proportion to their investment. The mutual fund usually comes out with a number of schemes with different investment objectives which are launched from time to time. A mutual fund is required to be registered with the SEBI, which regulates securities markets before it can collect fund from the public. A mutual fund is nothing more than a collective stock and /or bonds. You can think of a mutual fund as a company that brings together a group of people and invests their money in stock, bonds and other securities Each investors owns shares which represent a portion of holding of the fund. In India, SEBI (Mutual Fund) Regulations, 1996 regulates the structure of mutual funds. Mutual funds in India are constituted in the form of a Public Trust created under The Indian Trusts Act, 1882.

Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. This pool of money is invested in accordance with a stated objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to all investors. The money thus collected is then invested in capital market instruments such as shares, debentures and other securities. The income earned through these investments and the capital appreciations realized are shared by its unit holders in proportion the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A Mutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as needed. The funds Net Asset value (NAV) is determined each day. Investments in securities are spread across a wide cross-section of

industries and sectors and thus the risk is reduced. Diversification reduces the risk because all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with quantum of money invested by them. Investors of mutual funds are known as unit holders. When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the also known as a mutual (the total amount of the fund). Mutual Fund investor is fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors.

ADVANTAGES OF MUTUAL FUND

Portfolio Diversification Professional management Reduction / Diversification of Risk Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes Transparency.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the Industry. In the past decade, Indian mutual fund industry had seen a dramatic improvement, both qualities wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets Under Management (AUM) was Rs67 billion. The private sector entry to the fund family raised the Aum to Rs. 470 billion in March 1993 and till April 2004; it reached the height if Rs. 1540 billion. The Mutual Fund Industry is obviously growing at a tremendous space with the mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

Second Phase 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase 1993-2003 (Entry of Private Sector Funds) 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly, the assets of US 64 scheme, assured return and certain other schemes The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153118 crores under 421 schemes.

Structure of the Indian mutual fund industry:

The Indian mutual fund industry is dominated by the Unit Trust of India and which has a total corpus of Rs 700bn collected from more than 20 million investors .The UTI has many fund /schemes in all categories i.e. equity, balanced, income etc with some being open ended and some being closed ended. The United Scheme 1964 commonly referred to as US64, which is a balanced fund, is the biggest scheme with a corpus of about Rs 200bn URI was floated by financial institution and is governed by a special act of the parliament. Most of its investors believe that the UTI is government owned and controlled, which, while legally incorrect, is true for all practical purposes. The second largest categories of mutual funds are the ones floated by nationalized banks. Can bank Asset management floated by Canara Bank and SBI Funds Management floated by the State Bank of India are the largest of these. GIC AMC floated by General Insurance Corporation and Jeevan Bima Sahayog AMC floated by the LIC are some of the prominent

ones. The aggregate corpus of funds managed by this category of AMCs is about Rs 150 billion The third largest categories of the mutual funds are the once floated by the private sector and by the foreign asset management companies. The largest of these are Prudential ICICI AMC and Birla SUN LIFE AMC. The aggregate corpus of the asset managed by this category of AMC s is in excess of Rs 250bn.

Recent trends in the mutual fund industry:

The most important in the mutual fund industry is the aggressive expansion of the foreign owned mutual fund companies and the decline of the companies floated by the nationalized bank and smaller private sector players. Many nationalized banks got into the mutual fund business in the early nineties and go off to a good start due to the stock market boom prevailing then. These banks did not really understand the mutual fund business and they just viewed it as another kind of banking activity. Few hired specialized staff and generally choose to transfer staff from the parent organization. Some schemes had offered guaranteed returns and their patent organization had to bail out these AMCs by paying large amount of money the difference between the guaranteed and actual returns. The service level was also bad. Most of these AMCs have not been able to retain staffs, float, and new schemes etc. and it is doubtful whether barring a few expectations, they have serious plans of continuing the activity in a major way. The experience of some of the AMCs floated by private sector Indian companies was also very similar. They quickly realized that the AMCs business is a business, which makes money in the long term and requires deep pocketed support in the intermediate years. Some have sold out to foreign owned companies, some have merged with the others and there is general restructuring going on.

The foreign owned companies have deep pockets and have come in here with the expectation of a long haul. They can be credited with introducing many new practices such as new product innovation, sharp improvement in the service standards and disclosure, usage of technology, broker education etc. In fact, they have forced the industry to upgrade itself and service levels of the organization like UTI have improved dramatically in the last few years in response to the competition provided by these.

Future scenario:
The asset base will continue to grow at an annual rate of about 30 to 35% over the next few years as investors shift their asset from banks and other traditional avenues. Some of the older public and private sector players will either close or be taken over.Out of ten public sectors players five will sell out, close down or merge with strong players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutter in the near future to come. But this does not mean there is no room for other players. The market will witness a flurry of new players entering the area. There will be a large number of offers from various asset management companies in times to come. Some big names like Fidelity, Principal and Old Mutual etc. are looking at Indian market seriously. The mutual fund industry is awaiting the derivation in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV). SEBI is working out the norms for enabling the existing mutual fund scheme to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the changes that are required to trade in derivates.

Role of SEBI in mutual fund:

In the year 1992 SEBI act was passed. The objectives of SEBI are to protect the interest of investors in securities, to promote the development of, and to regulate the securities market. As far as mutual are concerned, SEBI formulates policies and regulation the mutual fund to protect the interest of the investors. SEBI notified regulation for mutual funds in 1993. Thereafter mutual fund sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and been amended. Therefore, from time to time SEBI has also issued guidelines to the mutual fund from time to time to protect the interest of the investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of regulation. There is no distinction in regulatory requirement of the mutual fund and all are subject to monitoring and inspecting by SEBI. The risks associated with the scheme launched by mutual funds sponsored by these entities are of similar type.

CATEGORIES OF MUTUAL FUND:

Mutual funds can be classified as follow :

Based on their structure: Open-ended funds: Investors can buy and sell the units from the fund, at any point of

time.

Close-ended funds: These funds raise money from investors only once. Therefore, after

the offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently, most of the New Fund Offers of close-ended funds provided liquidity window on a periodic basis such as monthly or weekly. Redemption of units can be made during specified intervals. Therefore, such funds have relatively low liquidity. Based on their investment objective:

Equity funds: These funds invest in equities and equity related instruments. With fluctuating share prices, such funds show volatile performance, even losses. However, short term fluctuations in the market, generally smoothens out in the long term, thereby offering higher returns at relatively lower volatility. At the same time, such funds can yield great capital appreciation as, historically, equities have outperformed all asset classes in the long term. Hence, investment in equity funds should be considered for a period of at least 3-5 years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked. Their portfolio mirrors the benchmark index both in terms of composition and individual

stock weightages. ii) Equity diversified funds- 110% of the capital is invested in equities spreading across different sectors and stocks. iii|) Dividend yield funds- it is similar to the equity diversified funds except that they invest in companies offering high dividend yields. iv) Thematic funds- Invest 110% of the assets in sectors which are related through some theme. e.g. -An infrastructure fund invests in power, construction, cements sectors etc. v) Sector funds- Invest 110% of the capital in a specific sector. e.g. - A banking sector fund will invest in banking stocks. vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors. Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal mutual funds vehicle for investors who prefer spreading their risk across various instruments. Following are balanced funds classes: i) Debt-oriented funds -Investment below 65% in equities. ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

Debt fund: They invest only in debt instruments, and are a good option for investors averse to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-income instruments like bonds, debentures, Government of India securities; and money market instruments such as certificates of deposit (CD), commercial paper (CP) and call money. Put your money into any of these debt funds depending on your investment horizon and needs. i) Liquid funds- These funds invest 110% in money market instruments, a large portion being invested in call money market. ii) Gilt funds ST- They invest 110% of their portfolio in government securities of and T-bills. iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments which have variable coupon rate. iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-pricing between cash market and derivatives market. Funds are allocated to equities, derivatives and money markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage opportunities. v) Gilt funds LT- They invest 110% of their portfolio in long-term government securities. vi) Income funds LT- Typically, such funds invest a major portion of the portfolio in long-term debt papers. vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 11%-30% to equities. viii) FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the fund.

INVESTMENT STRATEGIES:
1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer units when the NAV is high and more units when the NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA) 2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund. 3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can withdraw a fixed amount each month.

RISK V/S. RETURN:

MAJOR PLAYERS 1. Bank Sponsored 1. Joint Ventures - Predominantly Indian 1. SBI Funds Management Private Ltd. 2. Others 1. BOB Asset Management Co. Ltd. 2. Canbank Investment Management Services Ltd. 3. UTI Asset Management Co. Private Ltd. 2. Institutions 1. Jeevan Bima Sahayog Asset Management Co. Ltd. 3. Private Sector 1. Indian 1. Benchmark Asset Management Co. Private Ltd. 2. Cholamandalam Asset Management Co. Ltd. 3. Credit Capital Asset Management Co. Ltd. 4. Escorts Asset Management Ltd. 5. J. M. Financial Asset Management Private Ltd. 6. Kotak Mahindra Asset Management Co. Ltd. 7. Reliance Capital Asset Management Ltd. 8. Sahara Asset Management Co. Private Ltd 9. Sundaram Asset Management Co. Ltd. 10. Tata Asset Management Ltd. 2. Joint Ventures - Predominantly Indian 1. Birla Sun Life Asset Management Co. Ltd.

2. DSP Merrill Lynch Fund Managers Ltd. 3. HDFC Asset Management Co. Ltd. 4. Prudential ICICI Asset Management Co. Ltd. 3. Joint Ventures - Predominantly Foreign 1. ABN AMRO Asset Management (India) Ltd. 2. Deutsche Asset Management (India) Private Ltd. 3. Fidelity Fund Management Private Ltd. 4. Franklin Templeton Asset Management (India) Private Ltd. 5. HSBC Asset Management (India) Private Ltd. 6. ING Investment Management (India) Private Ltd. 7. Morgan Stanley Investment Management Private Ltd. 8. Principal Pnb Asset Management Co. Private Ltd. 9. Standard Chartered Asset Management Co. Private Ltd

Who can invest?

Who can invest in Mutual

Funds in India:

First of all, distributors need to be aware of who mutual fund units. Mutual funds in India are open to investment by
1) Residents including: a) b) c) Resident Indian Individuals. Indian Companies/Partnership Firms. Indian Trust/Charitable Institutions.

d) e) f) g) h)

Banks/Financial Institutions. Non-Banking Finance Companies. Insurance Companies. Provident

funds.

Mutual funds.

2)

Non-Residents including:
Non-Resident Indians, and Persons of Indian Origin. Overseas Corporate Bodies (OCBs) and

3) Foreign entities, viz. Foreign Institutional Investors(FII) registered with SEBI. Foreign citizens/ entities are not allowed to invest in mutual funds in India.

OBJECTIVES OF THE STUDY

1. 2. 3. 4. 5. To find out the Preferences of the investors for Asset Management Company. To know the Preferences for the portfolios. To know why one has invested or not invested in Mutual fund To find out the most preferred channel. To find out what should do to boost Mutual Fund Industry.

SCOPE OF THE STUDY

A big boom has been witnessed in Mutual Fund Industry in recent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The research was carried on in Aurangabad. I had been sent at one of the branch of KARVY where I completed my Project work. I surveyed on my Project Topic A study of Mutual Fund Industry on the visiting to individual & government offices employee. The study will help to know the interest & preferences of the customers, which company, portfolio, mode of investment, option for getting return and so on they prefer. This project report may help the company to make further planning and strategy.

RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones. Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites. Duration of Study: The study was carried out for a period of two months, from 7th June to 30th July 2012. Sampling: Sampling procedure:

The sample was selected of them who are the Businessman/govt. employee, irrespective of them being investors or not or availing the services or not. It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using mathematical/Statistical tool.

Sample size:

The sample size of my project is limited to 110 people only. Out of which only 11 people had invested in Mutual Fund. Other 90 people did not have invested in Mutual Fund. Sample design:

Data has been presented with the help of bar graph, line graphs etc. * Rising inflation could reduce savings and investments

LIMITATION:
Some of the persons were not so responsive. Possibility of error in data collection because many of investors may have not given

actual answers of my questionnaire. The sample size may not adequately represent the whole market. Some respondents were reluctant to divulge personal information which can affect the

validity of all responses. The research is confined to a certain Govt. Dept. & part of KARVY

CHAPTER-3
INDUSTRY &COMPANY PROFILE

INDUSTRY PROFILE

INDUSTRY PROFILE
The Indian trader is being fancied by the democratized world of online trading or also known as ebroking. The regular and attractive advertisements in the print media and electronic media have added to this fancy world But as we compare to the Western countries, in India online trading has not still grasped the market , but has done a very important amount of progress in the past years and the future of online trading is bright. That is why many new companies are coming into this form of business structure and the existing companies are changing to this new format besides offline and other traditional forms of business. With only a mere share of 11% online trading a combined gross turnover of around Rs. 12000-13,000 cores handled by the BSE and NSE together there is a much greater scope for online trading.
The various players whos offering and facilities is different according to the individual investors. This will help us understand what processes and strategies competitors have adopted to attract and retain investors and satisfy their investments needs.

Resolved between the Department of Telecommunications (Dot) and the Finance Ministry around 1998 and after that soon came the online trading portals like IL&FS invest smart, ICICIDirect.com, motilaloswal.com, sharekhan.com etc. Connectivity related issue was perhaps the most important technological factor.RBI made regulation that it is mandatory for company to store at least 7 year financial and transactional data. In the non-stop, 24 hours a day, seven days a week world of investing, we are able to
Obtain investment news around the clock Check quotes on exchanges all over the world day or night Easily compare one investment to another via numerous ratios, charts, graphs, and tables Screen for the best investments to fit our individual goals and requirements Trade stocks as easily and quickly as professional traders Calculate retirement needs based on various scenarios Regularly monitor portfolios and make necessary changes quickly and almost effortlessly Control the routing of individual trades for the best possible price and execution

Even many years after the launch of the first online brokerage firm, there remain a large contingent of individual investors who still pick up the phone and call their stock broker to buy and sell investments. However, every year a growing number of investors are placing their trades using online brokers. INDIAN EXCHANGES: NSE and BSE The NSE and BSE are among the largest exchanges in the country handling very large daily trading volumes, support large amounts of data traffic, and have a very large nationwide network. The trading volume in year 2000 was huge with the average daily turnover in the capital markets

Segment at NSE is around Rs 2300 crore and in the derivatives segment, around Rs 1300 crore. The average daily traffic volume was around one million trades per day in the capital markets segment and around 50,000 trades per day in the derivatives segment and there were around 13,000 registered users in both segments and an average of around 9500 users is logged in at a time. At BSE the average daily turnover in 2001-2002 (April-March) was Rs 1244.11 crore and the number of average daily trades was Rs 5.17 lakh. THE NETWORK DESIGN Any online exchange should always be-on, safe, secure, redundant and should have adequate backup & recovery processes. The Vice President of NSE-IT G.M Shenoy tells that the basic design objective of NSE was to provide fair, equal and transparent access across all NSE nationwide locations and to provide connectivity to the trading members as soon as possible. RECOMMENDATIONS OF SEBI The SEBI has also played an important role in the issue of the guidelines regarding online trading so that the chances of fraud and misrepresentation are minimized.The stock brokers which are being registered with Securities Exchange Board of India (SEBI) will have to apply to stock exchanges for a formal permission. The following conditions must be fulfilled The online trading company must have a minimum net worth of Rs 50 lakh The encryption technology should be there in the system used by the brokers to ensure the provision for confidentiality ,security ,justifiability and reliability of data .The user id, first level and second level password, automatic expiry of passwords at the end of a reasonable period, The brokers must maintain adequate back-up systems and data storage capacity which must be checked by the stock exchanges.

SEBI has recently announced that to reduce the fraud cases each and every broking house has to give back the full amount of customer after each three month, they will have to show the zero balance of every customers account at the end of every 3 month
The minimum qualification must be laid down by the stock exchange to ensure that the persons hired by the brokers must have the proper qualification regarding trading so as to guide the clients and he can communicate regarding trading instructions. To ensure the authenticity and accuracy of data a certification agency must be appointed using the certification technologies when notified by the government or the SEBI. The better client and the broker relationship to be maintained. To determine the risk associated with the clients the brokers must have the have sufficient verifiable information about clients and the stock exchange must ensure it.

The clients must be taken into an agreement stating about all the obligations and rights including the minimum service standards to be maintained by the service provider broker for services specified by SEBI/exchanges for Internet-based trading from time to time. The web site of the broker providing the online trading facility should contain information rules and regulations affecting client broker relationship, arbitration rules, investor protection rules, etc meant for investor protection. It should also provide and display prominently hyper link to the web site/page on the web site of the relevant stock exchange(s) displaying rules/ regulations/circulars. Ticker/quote/order book displayed on the web site of the broker should display the time stamp as well as the source of such information. An e-mail should be sent to he investor for the confirmation of his Order or trade. The limits of trading and exposure provided to the client must be set on system-based control and brokers and exchanges must ensure it. The limits must be predefined by the broker on the exposure and turnover of each client. The system of broker should be such that it is capable of assessing the risk of the client as soon as the order comes in. The system should inform the clients client the reports on margin requirements, payment and delivery obligations etc. As per the regulations the Contract Notes must be issued to clients within 24 hours of the trade execution. Cross trades of the clients will not be allowed with each other to the brokers using Internet-based systems for routing client order and all orders must be offered to the market for matching.

A separate working group has been set up to look into the surveillance and enforcement-related issues arising due to Internet-based securities trading. However, general anti-fraud provisions (SEBI

Fraudulent and Unfair Trade Practices Regulations, 1995) will apply to all transactions involving securities or financial services, regardless of the medium

FEATURES

Instant Loading Works behind a Proxy Live Streaming quotes Multiple Watch lists NSE& BSE Access

 Single order form for Cash and FnO Point and Click order entry Hot Key Functions Market Depth Window Back Office access

SYSTEM REQUIREMENT

Browser Type Internet Connection System Pentium Operating System

Microsoft Internet Explorer 6.0 or higher (Java enabled) Broadband/Dial-Up connection (Modem at a minimum of 28.8/33.6 Kbps) 3 or 4 GHz or best available at market RAM (Physical) 128 MB or better Windows 98/2000 or Windows XP

BENEFITS

Instant Loading The browser-based applet system allows you instant access to your account with no wait time, unlike other systems that take a few minutes to load. Works behind a Proxy This platform can be accessed on any Internet enabled network. You can access it even from your place of work Live Streaming quotes Keep an eye on the stocks you care about most with streaming, real-time quotes and customizable market data. Color-coded price changes help you to spot trends and react to them quickly

Multiple Watch lists The new watch list option allows you to create upto 11 watch lists. Each watch list can be personalized by inserting securities which you would like view as a group NSE& BSE Access Flexibility of trading on both the NSE & BSE via a single screen

Single order form for Cash and FnO Single order form offers you the convenience of transacting in various segments of the market without having to switch between multiple windows Point and Click order entry Makes order entry quick and simple with a click on the security the same gets inserted into the order form on your trade screen Hot Key Functions Using a single keystroke (Hot Key) function you can achieve important tasks very similar to a broker's terminal. Accessing important reports is also one keystroke away Market Depth Window It gives an immediate "at a glance" info about the stock you are following. The view provides the best 5 bid and offer quotes and the outstanding order quantities Back Office access View segment wise ledger bills and contract notes, trades, positions, account balance, realized/unrealized profit & loss, and buying power all in real time

Smart TRADE

SmartTrade is an EXE based desktop software designed for active traders who transact frequently to capture favorable short-term price movements. The platform offers active traders the tools they need to make critical decisions with confidence. SmartTrade is designed and built from the ground up to address the needs of active traders. SmartTrade makes the most of state-of the-art technology to deliver power, speed and reliability. Through an easy-to-use interface, users are provided with the same tools and advantages that the professionals enjoy.

COMPANY PROFILE
KARVY Stock Broking Limited, one of the cornerstones of the KARVY edifice, flows freely towards attaining diverse goals of the customer through varied services. It creates a plethora of opportunities for the customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal. KARVY Stock Broking Limited is a member of: 1) National Stock Exchange (NSE) , 2) Bombay Stock Exchange (BSE), 3) MCX Stock Exchange(MCX-SX) Karvy Stock Broking Limited, one of the cornerstones of the Karvy edifice, flows freely towards attaining diverse goals of the customer through varied services. Creating a plethora of opportunities for the customer by opening up investment vistas backed by research-based advisory services. Here, growth knows no limits and success recognizes no boundaries. Helping the customer create waves in his portfolio and empowering the investor completely is the ultimate goal. Stock Broking Services It is an undisputed fact that the stock market is unpredictable and yet enjoys a high success rate as a wealth management and wealth accumulation option. The difference between unpredictability and a safety anchor in the market is provided by in-depth knowledge of market functioning and changing trends, planning with foresight and choosing one's options with care. This is what we provide in our Stock Broking services. We offer services that are beyond just a medium for buying and selling stocks and shares. Instead we provide services which are multi dimensional and multi-focused in their scope. There are several advantages in utilizing our Stock Broking services, which are the reasons why it is one of the best in the country.

We offer trading on a vast platform National Stock Exchange and Bombay Stock Exchange. More importantly, we make trading safe to the maximum possible extent, by accounting for several risk factors and planning accordingly. We are assisted in this task by our in-depth research, constant feedback and sound advisory facilities. Our highly skilled research team, comprising of technical analysts as well as fundamental specialists, secure result-oriented information on market trends, market analysis and market predictions. This crucial information is given as a constant feedback to our customers, through daily reports delivered thrice daily ; The Pre-session Report, where market scenario for the day is predicted, The Mid-session Report, timed to arrive during lunch break , where the market forecast for the rest of the day is given and The Post-session Report, the final report for the day, where the market and the report itself is reviewed. To add to this repository of information, we publish a monthly magazine "Karvy The Finapolis", which analyzes the latest stock market trends and takes a close look at the various investment options, and products available in the market, while a weekly report, called "Karvy Bazaar Baatein", keeps you more informed on the immediate trends in the stock market. In addition, our specific industry reports give comprehensive information on various industries. Besides this, we also offer special portfolio analysis packages that provide daily technical advice on scrips for successful portfolio management and provide customized advisory services to help you make the right financial moves that are specifically suited to your portfolio. Our Stock Broking services are widely networked across India, with the number of our trading terminals providing retail stock broking facilities. Our services have increasingly offered customer oriented convenience, which we provide to a spectrum of investors, high-networth or otherwise, with equal dedication and competence.

But true to our spirit, this success is not our final destination, but just a platform to launch further enhanced quality services to provide you the latest in convenient, customer-friendly stock management. Over the years we have ensured that the trust of our customers is our biggest returns. Factors such as our success in the Electronic custody business has helped build on our tradition of trust even more. Consequentially our retail client base expanded very fast. To empower the investor further we have made serious efforts to ensure that our research calls are disseminated systematically to all our stock broking clients through various delivery channels like email, chat, SMS, phone calls etc. Our foray into commodities broking has been path breaking and we are in the process of converting existing traders in commodities into the more organized mainstream of trading in commodity futures, both as a trading and risk hedging mechanism. In the future, our focus will be on the emerging businesses and to meet this objective, we have enhanced our manpower and revitalized our knowledge base with enhances focus on Futures and Options as well as the commodities business. The onset of the technology revolution in financial services Industry saw the emergence of Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL) and Central Securities Depository Ltd (CSDL) in 1998. Karvy set standards enabling further comfort to the investor by promoting paperless trading across the country and emerged as the top 3 Depository Participants in the country in terms of customer serviced. Offering a wide trading platform with a dual membership at both NSDL and CDSL, we are a powerful medium for trading and settlement of dematerialized shares. We have established live DPMs, Internet access to accounts and an easier transaction process in order to offer more

convenience to individual and corporate investors. A team of professional and the latest technological expertise allocated exclusively to our demat division including technological enhancements like SPEED-e, make our response time quick and our delivery impeccable. A wide national network makes our efficiencies accessible to all. The paradigm shift from pure selling to knowledge based selling drives the business today. With our wide portfolio offerings, we occupy all segments in the retail financial services industry. A 1600 team of highly qualified and dedicated professionals drawn from the best of academic and professional backgrounds are committed to maintaining high levels of client service delivery. This has propelled us to a position among the top distributors for equity and debt issues with an estimated market share of 15% in terms of applications mobilized, besides being established as the leading procurer in all public issues. To further tap the immense growth potential in the capital markets we enhanced the scope of our retail brand, Karvy - the Finapolis , thereby providing planning and advisory services to the mass affluent. Here we understand the customer needs and lifestyle in the context of present earnings and provide adequate advisory services that will necessarily help in creating wealth. Judicious planning that is customized to meet the future needs of the customer deliver a service that is exemplary. The market-savvy and the ignorant investors, both find this service very satisfactory. The edge that we have over competition is our portfolio of offerings and our professional expertise. The investment planning for each customer is done with an unbiased attitude so that the service is truly customized. Our monthly magazine, Finapolis, provides up-dated market information on market trends, investment options, opinions etc. Thus empowering the investor to base every financial move on rational thought and prudent analysis and embark on the path to wealth creation.

Under our retail brand "Karvy the Finapolis", we deliver advisory services to a cross-section of customers. The service is backed by a team of dedicated and expert professionals with varied experience and background in handling investment portfolios. They are continually engaged in designing the right investment portfolio for each customer according to individual needs and budget considerations with a comprehensive support system that focuses on trading customers' portfolios and providing valuable inputs, monitoring and managing the portfolio through varied technological initiatives. This is made possible by the expertise we have gained in the business over the years. Another venture towards being investor-friendly is the circulation of a monthly magazine called "Karvy - the Finapolis". Covering the latest of market news, trends, investment schemes and research-based opinions from experts in various financial fields.

www.thefinapolis.com This specialized division was set up to cater to the high net worth individuals and institutional clients keeping in mind that they require a different kind of financial planning and management that will augment not just existing finances but their life-style as well. Here we follow a hardnosed business approach with the soft touch of dedicated customer care and personalized attention. For this purpose we offer a comprehensive and personalized service that encompasses planning and protection of finances, planning of business needs and retirement needs and a host of other services, all provided on a one-to-one basis.

VISION&MISION We
are a company that has a mission to provide you with the best of web design and

development services. We aim at helping you create the optimum website which will offer your rival and competition websites the competition they need.

Our vision is made possible through the technical knowledge we know and use, the tools we use and the software that is used in creating your website. Emphasis is always placed on creating a website that is not only great in visual appeal, structure and corporate identity, is also user friendly. To ensure that you get the website that you want, we work with you, blending all your thoughts and wants in your website design. It is based on your concept that our staff uses their skills and ideas in implementing flash, animation, e-commerce, sound, custom graphics, simple text images and other forms in your website. We don?t just forget you after creating your website. We know the importance of a fully functional website, 24 hours a day, 7 days a week. This is why we ensure that we provide 24 hours service to websites created for anyone, from anywhere in the world with our efficient after sales services. Not only do we have a competent staff to provide you with graphic, web, brochure and logo designing and flash presentation services, we can help you with software development. Our vision lies in satisfying all your web development needs so that your company gets the identity it deserves in the corporate and internet world. To help you create a website that you are comfortable with, you can not only choose from the various packages we have to offer you, but we can also give you a web design proposal that will surely fit the fixed budget that you specify. We take pride in having provided our services to so many webmasters during the span of our company. With so much of experience in our hands, it is not surprising that we seldom get unhappy and unsatisfied customers. All this is made possible with our mission and vision to provide you with the best web designing services possible on the internet

Name C. Parthasarathy 29 Relationships Karvy Consultants Limited M. S. Ramakrishna 18 Relationships KARVY Stock Broking Limited Meka Yugandhar B.Com., Fca 14 Relationships Karvy Consultants Limited Sudhir Variyar 4 Relationships Multiples Alternate Asset Management Private Limited Jimmy Mahtani 23 Relationships Sharekhan Limited

Board Relationships

57

58

61

--

CHAPTER-4 Data Analysis & Interpretation

1. Birla Sun Life Tax Plan (Growth)

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 7.13 - 8.65 8.65 - 11.66 11.66 - 11.28 11.28 - 11.44 11.44 - 11.44 11.44 - 12.19 12.19 - 11.42 11.42 - 12.24 12.24 - 12.87 12.87 - 12.15 12.15 - 12.12 12.12 - 12.85 AVERAGE RETURN Monthly Return 21.3184 23.2370 -3.5647 11.2840 0.0000 6.5559 -6.3167 7.1804 5.1471 -5.5944 -0.4938 6.2862 5.4199 %

Calculation of Sharpe Index: Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

5.4199% 3.55% 9.60 S t = 0.1947

Interpretation of the Funds Performance

Particular Birla Sun Life Equity Fund-Growth Birla Sun Life Income Fund -Growth Birla Sun Life Tax Plan (Growth) Average Return 6.8383 % 0.4806 % 5.4199 % Sharpe Index Ratio 0.235 -3.259 0.1947 Rank I III II

Averag eReturn
8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% BirlaSun Life Equity Fund-Growth BirlaSun Life Income Fund -Growth BirlaSun Life Tax Plan (Growth)

Kotak Mahindra Mutual Fund

The fund is promoted by Kotak Mahindra Bank, one of India's leading financial institutions that offer financial solutions ranging from commercial banking, stock broking, life insurance and investment banking. Kotak Mahindra Asset Management Company Limited, a wholly owned subsidiary of Kotak Mahindra Bank, is the asset manager for Kotak Mahindra mutual fund. The company is headed by Uday Kotak of Kotak Bank as chairman and the fund management function is headed by Sandesh Kirkire, chief executive officer. Kotak Mahindra mutual fund launched its schemes in December 1998 and today manages assets of 4, 34,504 investors in various schemes. Kotak Mahindra mutual fund was the first fund house in the country to launch a dedicated gilt scheme investing only in government securities. No. of schemes No. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes Equity & Debt Money Market Gilt Fund 50 119 22 74 8 1 0 7

Corpus Under Management: Rs.36776.2375 Crs. as on May 31, 2011 Key Personnel: Uday S Kotak (Chairman), Sandesh Kirkire (CEO), Alroy Lobo (Chief Strategist & Global Head Equities Asset Mgmt), V R Narasimhan (CCO), R. Krishnan (COO, Sandeep Kamath (Compliance), R. Chandrasekaran (IRO)

For Performance Comparison we take three Mutual Fund Schemes of Company:

 Kotak Equity-FOF-Growth Kotak Income Plus-(Growth) Kotak Tax Saver-Scheme-Growth

1. Kotak Equity-FOF-Growth
Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 18.755 - 20.77 20.77 - 27.76 27.76 - 27.516 27.516 - 30.134 30.134 - 30.134 30.134 - 32.362 32.362 - 31.2190 31.2190 - 33.2560 33.2560 - 34.354 34.354 - 33.1150 33.1150 - 32.9911 32.9911 - 34.8960 AVERAGE RETURN 5.7127% Monthly Return 11.7438 33.6543 -0.8790 9.5145 0.0000 7.3936 -3.5319 6.5249 3.3017 -3.6357 -0.3444 5.7743

Calculation of Sharpe Index: Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

5.709% 3.55% 10.06 S t = 0.2144

2. Kotak Income Plus-Growth

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 12.8357 - 13.1126 13.1126 - 13.736 13.736 - 13.6629 13.736 - 14.1237 14.1237 - 14.1237 14.1237 - 14.1651 14.1651 - 14.2771 14.2771 - 14.5153 14.5153 - 14.6471 14.6471 14.5702 14.5702 - 14.5597 14.5597 - 14.8148 AVERAGE RETURN Monthly Return 2.0794 4.8342 -0.5249 3.1455 0.0000 0.5066 0.7907 1.6684 0.9080 -0.5250 -0.0721 1.7521 1.2136%

Calculation of Sharpe Index: Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

1.2136% 3.55% 1.59 S t = 1.4634

3. Kotak Tax Saver Scheme-Growth

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 9.122 - 9.98 9.98 - 13.789 13.789 - 13.447 13.447 - 14.894 14.894 - 14.894 14.894 - 15.918 15.918 - 14.9270 14.9270 - 16.06 16.06 - 16.675 16.675 - 15.85 15.85 - 15.8111 15.8111 - 17.1180 AVERAGE RETURN (in %age) Monthly Return 9.4058 38.1663 -2.4802 11.7608 0.0000 6.8753 -6.2257 7.5903 3.8294 -4.9475 -0.2461 8.2031 5.9111%

Calculation of Sharpe Index: Sharpe Index = Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

5.911% 3.55% 11.66 S t = 0.1637

Interpretation of the Funds Performance

Particular Average Sharp Index Rank

Kotak Equity-FOFGrowth Kotak Income Plus(Growth) Kotak Tax SaverScheme-Growth

Return 5.7127 % 1.2136 % 5.9111 %

Ratio 0.2144 - 1.4634 0.1637

I III II

Escorts Mutual Fund

Escorts Mutual Fund is promoted by the business conglomerate Escorts group. Escorts Asset Management Limited acts as the AMC to the mutual fund. Escorts Mutual Fund usually offers open ended schemes and the fund category is Equity- balanced fund. The fund is a member of the Escort Group of Companies, which deals with a number of high growth industries like construction and material handling equipment, farm machinery, two wheelers, auto ancillary products and financial Services.

No. of schemes No. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes Equity & Debt Money Market Gilt Fund

13 30 13 7 4 4 0 2

Corpus Under Management: Rs.195.75 Crs. as on May 31, 2011 Key Personnel: Rajan Nanda (Chairman & MD), Lalit K Khanna (CEO & Compliance), Sanjay Arora (CIO), Mohini Sharma (IRO). Fund Managers: Mr. Jagveer Singh Fauzdar , Mr. Sanjeev Sharma.

For Performance Comparison we take three Mutual Fund Schemes of Company

Escorts Growth Plan (Growth) Escorts Income Plan (Growth) Escorts Tax Plan (Growth) 1. Escorts Growth Plan (Growth)
Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 34.8155 - 36.6330 36.6330 - 56.9001 56.9001 - 55.5782 55.5782 - 60.7149 60.7149 - 60.7149 60.7149 - 63.0134 63.0134 - 60.7351 60.7351 - 64.4480 64.4480 - 68.3673 68.3673 - 65.7441 65.7441 - 64.8682 64.8682 - 70.1250 AVERAGE RETURN Monthly Return 5.2204 55.3247 -2.3232 9.2423 0.0000 3.7857 -3.6156 6.1133 6.0813 -3.8369 -1.3323 8.1138 6.8970%

Calculation of Sharpe Index:

Sharpe Index =

Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

6.897% 3.55% 15.252 S t = 0.210

2. Escorts Income Plan (Growth)

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 27.1535 - 28.2081 28.2081 - 27.8613 27.8613 - 28.1730 28.1730 - 28.1160 28.1160 - 28.1160 28.1160 - 28.3370 28.3370 - 28.4620 28.4620 - 28.9679 28.9679 - 28.9170 28.9170 - 29.0567 29.0567 - 29.0088 29.0088 - 29.2065 AVERAGE RETURN Monthly Return 3.8838 -1.2294 1.1188 -0.2023 0.0000 0.7860 0.4411 1.7775 -0.1757 0.4831 -0.1649 0.6815 0.6167 %

Calculation of Sharpe Index:

Sharpe Index =

Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

0.6167 3.55% 1.28 S t = 2.289

3. Escorts Income Plan (Growth)

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11 Net Assets Value 25.9839 - 27.2905 27.2905 - 37.1172 37.1172 - 38.6629 38.6629 - 40.8944 40.8944 - 40.8944 40.8944 - 42.8570 42.8570 - 41.6245 41.6245 - 44.1556 44.1556 - 45.8891 45.8891 - 44.3687 44.3687 - 42.6067 42.6067 - 45.3606 AVERAGE RETURN Monthly Return 5.0285 35.9711 4.1924 5.7717 0.0000 4.7992 -2.8758 6.0808 3.9259 -3.3132 -3.9713 6.4635 5.1727 %

Calculation of Sharpe Index:

Sharpe Index =

Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

5.1727 3.55% 10.449 S t = 0.155

Interpretation of the Funds Performance

Particular Escorts Growth Plan (Growth) Escorts Income Plan (Growth) Average Return 6.8970 % 0.6167 % Sharp Index Ratio 0.211 -2.289 Rank I III

Escorts Tax Plan (Growth)

5.1727 %

0.155

II

ICICI Prudential Mutual Fund

Prudential ICICI Mutual Fund is the largest private sector mutual fund in India with assets of over Rs.34,119 crore under management as of Aug 2006. The asset management company, Prudential ICICI Asset Management Company Limited, is a joint venture between Prudential Plc, Europe's leading insurance company and ICICI Bank, India's premier financial institution. Prudential Plc holds 55 per cent of the asset management company and the balance by ICICI Bank.

No. of schemes No. of schemes including options Equity Schemes Debt Schemes Short term debt Schemes Equity & Debt Money Market Gilt Fund

98 317 59 213 23 4 0 7

Corpus Under Management: Rs.68324.057017781 Crs. as on May 29, 2012 Key Personnel: Ms. Chanda Kochhar (Chairman), Nimesh Shah (CEO & CIO), Supriya Sapre (Compliance), Kamaljeet Saini (IRO)

For Performance Comparison we take three Mutual Fund Schemes of Company

ICICI Prudential Growth Plan-(Growth Option) ICICI Prudential Income Plan- (Growth Option) ICICI Prudential Tax Plan-(Growth Option)

1. ICICI Prudential Growth Plan-(Growth Option)

Month Apr-12 May-12 Net Assets Value 72.94 - 79.73 79.73 - 99.72 Monthly Return 9.3120 25.0721

Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11

99.72 - 98.41 98.41 - 117.67 117.67 - 117.67 117.67 - 116.39 116.39- 111.17 111.17 - 118.36 118.36 - 123.01 123.01 - 116.67 116.67 - 116.96 116.96 - 125.02 AVERAGE RETURN

-1.3137 9.4126 0.0000 8.1288 -4.4849 6.4676 3.9287 -5.1541 0.2486 6.8912 4.8727%

Calculation of Sharpe Index:

Sharpe Index =

Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

4.8727% 3.55% 8.189 S t = 0.1615

2. ICICI Prudential Income Plan- (Growth Option)

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12

Net Assets Value 27.7341 - 29.4577 29.4577 - 29.0718 29.0718 - 29.4018 29.4018 - 29.2732 29.2732 - 29.2732 29.2732 - 29.3743 29.3743 - 29.5396

Monthly Return 6.2147 -1.3110 1.1351 -0.4374 0.0000 0.3454 0.5627

Nov-12 Dec-12 Jan-11 Feb-11 Mar-11

29.5396 30.0600 29.8737 29.9950 29.7611

30.0600 29.8737 29.9950 29.7611 29.9240

1.7617 -0.6198 0.4060 -0.7801 0.5477 0.6522 %

AVERAGE RETURN

Calculation of Sharpe Index:

Sharpe Index =

Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

0.6522% 3.55% 1.9472 S t = 1.488

3. ICICI Prudential Tax Plan- (Growth Option)

Month Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-11 Feb-11 Mar-11

Net Assets Value 56.88 - 63.84 63.84 - 85.02 85.02 - 85.95 85.95 - 110.63 110.63 - 110.63 110.63 - 117.97 117.97 - 116.29 116.29 - 113.55 113.55 - 121.69 121.69 - 118.88 118.88 - 120.47 120.47 - 127.34 AVERAGE RETURN

Monthly Return 12.2363 33.1767 1.1239 17.0797 0.0000 7.2940 -1.5560 6.8304 7.1686 -2.3121 1.3375 5.7027 7.3379 %

Calculation of Sharpe Index:

Sharpe Index =

Portfolio average return - Risk free rate of return

Standard Deviation

S t= St =

Rp R f

7.3379% 3.55% 9.9567 S t = 0.3804

Interpretation of the Funds Performance

Particular
ICICI Prudential Growth Plan(Growth Option) ICICI Prudential Income Plan(Growth Option) ICICI Prudential Tax Plan(Growth Option)

Average Return 4.8724 % 0.6522 % 7.3379 %

Sharpe Index Ratio 0.1615 -1.488 0.3804

Rank II III I

Interpretation: According to this chart out of 11 Mutual Fund investors of Auranagabad the most are in the age group of 31-35 yrs. i.e. 40%, the second most investors are in the age group of 36-40yrs i.e. 30% and the least investors are in the age group of below 46-50 yrs. 2. Occupation of the investors of Aurangabad.

Occupation Govt. Service Pvt. Service Business Agriculture Others

No. of Investors 3 4 2 0 1

5 No. of Investors 4 3 2 1 0 Govt. Service Pvt. Service Business 3 4 2 0 Agriculture 1 Others

Occupation of the customers

Interpretation: In Occupation group out of 11 investors, 40% are Pvt. Employees, 20% are Businessman, 30% are Govt. Employees, 0% are in Agriculture and 11% are in others.

(3) Investors invested in different kind of investments of Aurangabad. Priority of Investments Saving A/C Fixed deposits Insurance Mutual Fund RD Real Estate No. of Respondents % 98 50 99 11 45 35

p riority of in vestm en t

3 5 R D 1 0 Insura nce 5 0 S a vingA/c 0 2 0 4 0 6 0 8 0 9 8 1 0 0 1 2 0 9 9 4 5

No.of Respondents%

Interpretation: From the above graph it can be inferred that out of 200 people, 98 % people have invested in Saving A/c, 91.6% in Insurance, 51.6% in Fixed Deposits, 11% in Mutual Fund, 43% in RD and 21.6% in Real Estate.

4. Educational Qualification of investors of Aurangabad.

Educational Qualification Graduate/ Post Graduate Under Graduate Others Total Number of Investors 5 2 3 120

30%

50% 20%

Graduate/Post Graduate Others

Under Graduate

Interpretation:
Out of 120 Mutual Fund investors 50% of the investors in Aurangabad are Graduate/Post Graduate, 20% are Under Graduate and 30% are others (under HSC).

4. Preference of factors while investing

Factors

(a) Liquidity

(b) Low Risk

(c) High Return

(d) Trust

No. of Respondents

11

31

40

19

19%

10%

31% 40%
L iquidity L owRisk H ig hReturn T rust

Interpretation:

Out of 110 People, 40% People prefer to invest where there is High Return, 31% prefer to invest where there is Low Risk, 11% prefer easy Liquidity and 19% prefer Trust

Preference of Investors for future investment in Mutual Fund Name of AMC

SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others

No. of Investors 30 14 11 20 16 6 4

Others K otak Nam e of AMC IC IC I Prudential R eliance H D F C UTI S BIMF 0

4 6 16 20 10 14 30 5 10 15 20 25 30

No. of Inves tors

Interpretation:
Out of 110 investors, 20% prefer to invest in Reliance, 16% in ICICI Prudential, 30% in SBIMF, 4% in Others, 6% in Kotak, 16% in UTI and 11% in HDFC Mutual Fund.

Source of information for customers about Mutual Fund

Source of information Advertisement Peer Group Bank Financial Advisors No. of Respondents 13 25 30 42

5 0 No. of R espondents 4 0 3 0 2 0 1 0 0 Advertis em ent P eer Group 1 3 2 5 3 0 B a nk 4 2

F ina nc ia l Advisors

S ource of Inform a tion

Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. Out of 110 Respondents, 42% know about Mutual fund Through Financial Advisor, 30 % through Bank, 25% through Peer Group and 13% through Advertisement.

Findings and Conclusion

Findings
In Aurangabad in the Age Group of 36-40 years were more in numbers. The second most Investors were in the age group of 41-45 years and the least were in the age group of below 45-50 years. In Occupation group most of the Investors were Private employees., the second most Investors were Govt. employees About all the Respondents had a Saving A/c in Bank, 98% Invested in Fixed Deposits,50% Invested in insurance, Only 99% Respondents invested in Mutual fund 11%. Among 110 Respondents only 11% had invested in Mutual Fund. Out of 90 Respondents 61% were not aware of Mutual Fund, 39% told there is not any specific reason for not invested in Mutual Fund. For Future investment the maximum Respondents preferred SBI Mutual Fund, the second most preferred Reliance , ICICI Prudential has been preferred after them. Mostly Respondents preferred High Return while investment, the second most preferred Low Risk then trust and the least preferred Liquidity. Only 61% Respondents were aware about Mutual fund and its operations and 39% were not. Among 110 Respondents only 11% had invested in Mutual Fund and 40% did not have invested in Mutual fund.

 Most of the Investors had invested in SBI or Reliance Mutual Fund, ICICI Prudential has also good Brand Position among investors. 60% Investors preferred to Invest through Financial Advisors, 30% through AMC (means Direct Investment) and 11% through Bank.

Conclusion
Running successful Mutual Funds requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. This study has made an attempt to understand the financial behavior of Mutual Fund investors in connection with the preferences of Brand (AMC), Products, Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Aurangabad but only some are performing well due to Brand awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are well known Brand, they are performing well and their Assets Under Management is larger than others whose Brand name are not well known like Principle, Sunderam, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the investment in mutual fund. They can change investors mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.

Suggestions and Recommendations

The most vital problem spotted is of ignorance. Investors should be made aware of the

benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Mutual funds offer a lot of benefit which no other single option could offer. But most of

the people are not even aware of what actually a mutual fund is? They only see it as just another

investment option. So the advisors should try to change their mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors

about the Fund/Scheme and its objective, because they are the main source to influence the investors. Before making any investment Financial Advisors should first enquire about the

risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into consideration. Younger people aged under 35 will be a key new customer group into the future, so

making greater efforts with younger customers who show some interest in investing should pay off.. Systematic Investment Plan (SIP) is one the innovative products launched by Assets

Management companies very recently in the industry. SIP is easy for monthly salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.

BIBLIOGRAPHY
NEWS PAPERS

TELEVISION CHANNEL

MUTUAL FUND HAND BOOK

FACT SHEET AND STATEMENT

WWW.SBIMF.COM

WWW.MONEYCONTROL.COM

WWW.AMFIINDIA.COM

WWW.ONLINERESEARCHONLINE.COM

WWW. MUTUALFUNDSINDIA.COM

MUTUAL FUND INVESTMENT IS SUBJECT TO MARKET RISKS. PLEASE READ THE OFFER DOCUMENT CAREFULLY BEFORE INVESTING