INTRODUCTION

A Mutual Fund pools the money of people with certain investment

goals. The money invested in various securities depending on the objectives
of the mutual fund scheme and the profits (or loss) are shared among
investors in proportion to their investment. Investments in securities are
spread across a wide cross-section of industries and sectors. 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. The profits or losses are shared by the
investors in proportion to their investment. The mutual funds normally come
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
Securities and Exchange Board of India (SEBI) which regulates securities
markets before it can collect funds from the public.
A Mutual fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money collected from investors is
invested in capital market instrument such as shares, debentures and other
securities. The income earned through these investments and the capital
appreciations realized are shared by its units holder in proportion to the
number of units owned by them. Thus a Mutual Fund is the most suitable
investment to the common man as it offers an opportunity, to invest in a
diversified, professionally managed basket of securities at relatively low cost.
Mutual funds can be invested in many different kinds of securities. The
most common are cash, stock, and bonds, but there are hundreds of subcategories. Stock funds invest primarily in the shares of a particular industry,
such as technology or utilities. These are known as sector funds. Bond funds
can vary according to risk (e.g., high-yield or junk bonds, investment-grade
corporate bonds), type of issuers (e.g., government agencies, corporations, or
municipalities), or maturity of the bonds (short- or long-term). Both stock and
bond funds can invest in primarily U.S. securities (domestic funds), both U.S.
and foreign securities (global funds), or primarily foreign securities
(international funds).Most mutual funds' investment portfolios are continually

adjusted under the supervision of a professional manager, who forecasts the

future performance of investments appropriate for the fund and chooses those
which he or she believes will most closely match the fund's stated investment
objective. A mutual fund is administered through a parent management
company, which may hire or fire fund managers. Mutual funds are liable to a
special set of regulatory, accounting, and tax rules. Unlike most other types of
business entities, they are not taxed on their income as long as they distribute
substantially all of it to their shareholders. Also, the type of income they earn
is often unchanged as it passes through to the shareholders. Mutual fund
distributions of tax-free municipal bond income are also tax-free to the
shareholder. Taxable distributions can be either ordinary income or capital
gains, depending on how the fund earned those distributions.
A mutual is a set up in the form of trust, which has sponsor, trustee, assets
management company (AMC) and custodian. Sponsor is the person who acts
alone or in combination with another body corporate and establishes a mutual
fund. Sponsor must contribute at least 40% of the net worth of the investment
managed and meet the eligibility criteria prescribed under the Securities and
Exchange Board of India (Mutual Funds) regulations, 1996. The sponsor is
not responsible or liable for any loss or shortfall resulting from the operation of
the schemes beyond the initial contribution made by it towards setting up of
Mutual Fund. The Mutual Fund is constituted as a trust in accordance with the
provisions of the Indian Trusts Act, 1882by the Sponsor. Trustee is usually a
company (corporate body) or a board of trustees (body of individuals). The
main responsibility of the trustee is to safeguard the interest of the unit
holders and also ensure that AMC functions in the interest of investors and in
accordance with the Securities and Exchange Board of India (Mutual Fund)
Regulations 1996 the provisions of the Trust deed and the offer Document of
the respective schemes. The AMC is appointed by the Trustees as the
investment Manager of the Mutual Fund. The AMC is required to be approved
by SEBI to act as an asset management company of the Mutual Fund. The
AMC if so authorized by the Trust Deed appoints the Registrar and Transfer
Agent to agent the mutual fund. The registrar processes the application form,
redemption requests and dispatches account statements to the unit holders.

A. HISTORY OF MUTUAL FUND SHOWN IN PHASES

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.
The history of mutual funds in India can be broadly divided into four distinct
phases.
1) First Phase 1964-87
Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It
was set up by the Reserve Bank of India and functioned under the Regulatory
and administrative control of the Reserve Bank of India. In 1978 UTI was delinked 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 cores of assets under management.
2) 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 cores.
3) Third Phase 1993-2003 (Entry of Private Sector Funds)
With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund
families. Also, 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
The number of mutual fund houses went on increasing, with many foreign
mutual funds setting up funds in India and also the industry has witnessed
several mergers and acquisitions. As at the end of January 2003, there were
33 mutual funds with total assets of Rs. 1, 21,805 cores. The Unit Trust of
India with Rs.44, 541 cores of assets under management was way ahead of
other mutual funds.
4) 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 cores as
at the end of January 2003, representing broadly, the assets of US 64
scheme, assured return and certain other schemes. The Specified
Undertaking of Unit Trust of India, functioning under an administrator and
under the rules framed by Government of India and does not come under the
preview of the Mutual Fund Regulations.
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. With the bifurcation of the erstwhile UTI which had in March
2000 more than Rs.76, 000 cores of assets under management and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund
Regulations, and with recent mergers taking place among different private
sector funds, the mutual fund industry has entered its current phase of
consolidation and growth. As at the end of September, 2004, there were 29
funds, which manage assets of Rs.153108 cores under 421 schemes.

B. Types of Mutual Fund Schemes

Types of Mutual Fund

Functional

Open ended fund

Close ended fund

Interval fund

Portfolio
Balanced
fund

Growth/equity fund

Money market MF

Geographical

Domestic fund

Off shore fund

Other

Sectoral fund

Special fund

Gilt fund

Tax saving fund

Load fund

Index fund

Sources:http://portal.amfiindia.com/showhtml.aspx?page=mfconcept#B

1. FUNCTIONAL
i.

Open-ended schemes

Open-ended schemes do not have a fixed maturity period. Investors can buy
or sell units at NAV-related prices from and to the mutual fund on any
business day. These schemes have unlimited capitalization, open-ended
schemes do not have a fixed maturity, there is no cap on the amount
investors can buy from the fund and the unit capital can keep growing. These
funds are not generally listed on any exchange.
Open-ended schemes are preferred for their liquidity. Such funds can issue
and redeem units any time during the life of a scheme. Hence, unit capital of
open-ended funds can fluctuate on a daily basis.
The advantages of open-ended funds over close-ended are as follows:
Any time exit option, the issuing company directly takes the responsibility of
providing an entry and an exit. This provides ready liquidity to the investors
and avoids reliance on transfer deeds, signature verifications and bad
deliveries. Any time entry option, an open-ended fund allows one to enter the
fund at any time and even to invest at regular intervals.
ii.

Close-ended schemes

Close-ended schemes have fixed maturity periods. Investors can buy into
these funds during the period when these funds are open in the initial issue.
After those such schemes cannot issue new units except in case of bonus or
rights issue. However, after the initial issue, investors can buy or sell units of
the scheme on the stock exchanges where they are listed. The market price
of the units could vary from the NAV of the scheme due to demand and
supply factors, investors expectations and other market factors.
iii.

Interval scheme

Interval Scheme combines the features of open-ended and close-ended

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

2. PORTFOLIO CLASSIFICATION
a. Income/ Debt Funds
These funds are low risk-low return funds, where in the investments are made
in income bearing instruments such as bonds, debentures, government
securities, commercial papers etc. The share prices of these funds tend to be
more stable in value and are best suitable for regular income investment
goals, provided minimum investment period is more than one year.

The

leading examples are monthly income funds of UTI, Prudential ICICI Income
Plan, JM Income, Alliance Liquid Fund etc.
b. Growth/Equity Funds
These funds are high risk-high return funds, wherein major chunk of
investment goes in equity shares of companies. The NAV of such funds keep
fluctuating, but the potential to earn in such funds is higher provided they are
invested with long-term (more than 5 years) financial goals.

The leading

examples of such funds are, Kothari Pioneer Prima Fund, Prudential ICICI
Equity Fund, Birla Sun Life Fund, etc.
c. Balanced Funds
These funds invest in both, equity shares and income bearing instruments.
The idea is to reduce volatility of fund, while providing some upside for capital
appreciation. In all, it is a combination of income and growth funds more
return more risk than income funds and less return less risk than growth
funds. They are best suited for people looking for a combination for capital
appreciation and regular income and best time span for such investments is
more than 3 years. The examples are PRUICICI Balanced Fund, IDBIPRINCIPAL Balanced Fund, and IDBI-PRINCIPAL Child Benefit Fund etc.
d. Money Market Mutual Funds
These funds invest in highly liquid instruments such as certificate of deposits
and short-term bonds. They have emerged as an alternative for savings and
short-term fixed deposit accounts.

They are best suited for capital

preservation investment objectives, where time-span is least.

3. GEOGRAPHICAL CLASSIFICATION
a) Domestic Funds
Funds which mobilize resources from a particular geographical locality like a
country or region are domestic funds. The market is limited and confined to
the boundaries of a nation in which the fund operates. They can invest only in
the securities which are issued and traded in the domestic financial markets.
b) Off Shore Funds
These funds will have non-residential investors and are regulated by the
provision of the foreign countries where they are registered. Further these
funds are governed by the rules and procedures laid down for the purpose of
approving and monitoring their performance by the department of economic
affairs, Ministry of Finance and the directions of RBI.

4. OTHER CLASSIFICATION
a. Sector Funds
Sector funds primarily invest in companies of a particular sector/ industry such
as information technology, pharmaceuticals, FMCGs etc.

These types of

funds are subject to more risk as the performance of funds depends on the
performance of the industry as a whole and also because the diversification of
risk is reduced. Also with the new rule of government not allowing investing
more than 10% in a particular company, is a big problem as the number of
companies is not very large and at the same time all of them are not very
successful. It is best suited to people willing to take high risk.
b. Tax Saving Funds (ELSS)
These funds offer tax rebate to the investor along with capital growth and
steady returns.

An Equity United Savings Scheme is available wherein

investments are made primarily in stocks. The investment can be made any
time, but it gets lock-in for a period of 3 years and in return tax rebate @ 20%
is obtained if investments exceed Rs.1, 00,000.

Another such scheme is

pension scheme, wherein tax rebate @ 20% can be obtained for investment
up to Rs.60, 000.
c. Special Funds
Special purpose funds are those funds that target a specific customer
segments, such as children, women, retired people etc. Making their fund
oriented towards the need of the group they are targeting.
d. Gilt Funds
These funds are sort of government funds where in the investments are made
in debt instruments of the government, which carry no risk of non-payment of
interest as the RBI manages the payment of interest and principal on the
instruments. These funds are best suited to the regular income and long-term
investment objectives. The time-span matters a lot as there are chances of
price volatility, which may lead to possibility of loss of principal invested, if
invested for short-term. Examples are PRUICICI Gilt Fund, IDBI-PRINCIPAL
Government Securities Fund etc.
e. Load Funds
Load funds are those funds wherein the investor has to incur a one-time
charge at the time of either entry or exit into the fund. The entry charge is
called front end load, whereas the exit charge is called back end load.
This load is limited to a maximum of 6% of the investment value.
f. Index Funds
Index funds invest only in stocks of a particular index such as BSE, S&P CNX
500 etc. The principle is to duplicate performance of these widely followed
indexes while keeping trading and other costs to a minimum. The returns in
case of such funds depend on the indexs performance. It is best suited to the
investors who are satisfied with the returns of an index.

C. ORGANIZATION STRUCTURE OF THE MUTUAL FUND INDUSTRY

Source: http://portal.amfiindia.com/showhtml.aspx?page=mfconcept#B
Diagram-2:
Mutual fund is set up in the form of a trust, which has sponsor, trustees, Asset
Management Company (AMC) and a custodian. The trust is established by a
sponsor or more than one sponsor who is like a promoter of a company. The
trustees of the mutual fund hold its property for the benefit of the unit-holders.
The AMC, approved by SEBI, manages the funds by making investments in
various types of securities. The custodian, who is registered with SEBI, holds
the securities of various schemes of the fund in its custody. The trustees are
vested with the general power of superintendence and direction over AMC.
They monitor the performance and compliance of SEBI Regulations by the
mutual fund.
A. Sponsors
Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of
the net worth of the Investment Managed and meet the eligibility criteria
prescribed under the Securities and Exchange Board of India (Mutual Funds)
Regulations, 1996.The Sponsor is not responsible or liable for any loss or
shortfall resulting from the operation of the Schemes beyond the initial
contribution made by it towards setting up of the Mutual Fund.

B. Trust
The Mutual Fund is constituted as a trust in accordance with the provisions of
the Indian Trusts Act, 1882 by the Sponsor. The trust need is registered under
the Indian Registration Act, 1908
C. Trustee
Trustee is usually a company (corporate body) or a Board of Trustees (body
of individuals). The main responsibility of the Trustee is to safeguard the
interest of the unit holders and inter alias ensure that the AMC functions in the
interest of investors and in accordance with the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust
Deed and the Offer Documents of the respective Schemes. At least 2/3rd
directors of the Trustee are independent directors who are not associated with
the Sponsor in any manner.

D. Asset management company

The AMC is appointed by the Trustee as the Investment Manager of the
Mutual Fund. The AMC is required to be approved by the Securities and
Exchange Board of India (SEBI) to act as an asset management company of
the Mutual Fund. At least 50% of the directors of the AMC are independent
directors who are not associated with the Sponsor in any manner. The AMC
must have a net worth of at least 10crore at all times.

E. Transfer agent & registrar

The AMC if so authorized by the Trust Deed appoints the Registrar and
Transfer Agent to the Mutual Fund. The Registrar processes the application
form, redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with
investors

F. Custodian
Often an independent organization, it takes custody of securities and other
assets of mutual fund. Its responsibilities include receipt and delivery of
securities, collecting income-distributing dividends, safekeeping of the units
and segregating assets and settlements between schemes. Their charges
range between 0.15-0.2 percent of the net value of the holding. Custodians
can service more than one fund.

D. HOW MUTUAL FUND WORKS?

Passed back
to

Investor

Returns

Pooled their
money with

Fund
Manager

Generates

Security
Invest in

Sources:http://portal.amfiindia.com/showhtml.aspx?page=mfconcept

Diagram-3
A Mutual Fund is a trust that pools the savings of a number of investors who share
a common financial goal. The money thus collected is then invested in shares,
debentures and other securities. The income earned through these investments
and the capital appreciations realized are shared by its unit holders in proportion to
the number of units owned by them. It simply shows the cyclic flow of funds and
how the mutual fund is working.

1. Valuation of units of mutual fund:

The units are available continuously for sale on all working days at NAV
related prices excepting during the period when there is a book closure.
The performance of a particular scheme of a mutual fund is denoted by Net
Asset Value (NAV).
Mutual funds invest the money collected from the investors in securities
markets. In simple words, Net Asset Value is the market value of the
securities held by the scheme. Since market value of securities changes
every day, NAV of a scheme also varies on day to day basis. The NAV per
unit is the market value of securities of a scheme divided by the total number
of units of the scheme on any particular date.
For example, if the market value of securities of a mutual fund scheme is Rs
200 lacs and the mutual fund has issued 10 lacs units of Rs. 10 each to the
investors, then the NAV per unit of the fund is Rs.20. NAV is required to be
disclosed by the mutual funds on a regular basis - daily or weekly - depending
on the type of scheme.
NAV of units under each scheme / plan shall be calculated as shown below:
NAV =

the value of the total assets of the fund

The total number of unit issued by the mutual fund

2. Rights and services of unit holders:

Unit holders may have access to certain services, such as automatic
reinvestment of dividends and systematic withdrawal and systematic
investment plans, inter scheme transfers. This section of the prospectus will
describe these services and how you can take advantage of them.
After reviewing a few prospectuses, youll become accustomed to the
language and be able to reduce the time it takes to find the information you
need to make a sound investment decision.

You can receive prospectuses free from mutual fund companies, their investor
service centers or registrars. Do not hesitate to ask questions on points that
you do not understand.

E. SEBI (MUTUAL FUNDS) REGULATIONS, 1996

The provision of this regulation pertaining to AMC is:
All the schemes to be launched by the AMC need to be approved by the
trustees and copies of offer documents of such schemes are to be field with
SEBI.
The offer documents shall contain adequate disclosures to enable the
investors to make informed decisions.
Advertisements in respects of schemes should be in conformity with the SEBI
prescribed advertisement code, and disclose the method and periodicity of
valuation of investments sales and repurchase in addition to the investment
objectives.
The listing of close ended schemes is mandatory and every close ended
scheme should be listed on a recognized stock exchange within six months
from the closure of subscription. However, listing is not mandatory in case the
scheme provides for monthly income or caters to the special classes of
persons like senior citizens, women, children, and physically handicapped; if
the scheme discloses details of repurchase in the offer document; if the
scheme opens for repurchase within six months of closure of subscription.
Units of a close ended scheme can be opened for sale or redemption at a
predetermined fixed interval if the minimum and maximum amount of sale,
redemption, and periodicity is disclosed in the offer document.
Units of a close ended scheme also be converted into an open ended
scheme with the consent of a majority of the unit holders and disclosure is
made in the offer document and about the option and period of conversion.
Units of a close ended scheme may be rolled over by passing a resolution
by a majority of the shareholders.

No Scheme other than unit linked scheme can be opened for subscription
for more than 45 days.
The AMC must specify in the offer document about the minimum subscription
and the extent of over subscription, which is intended to be retained. In the
case of over subscription, all applicants applying up to 5,000 units must be
given full allotment subject to over subscription.
The AMC must refund the application money if minimum subscription is not
received, and also the excess over subscription within six weeks of closure of
subscription.
Guaranteed returns in such cases, there should be a stated in the offer
document by the AMC or sponsor. In such cases, there should be a statement
indicating the name of the person, and the manner in which the guarantee is
to be made must be stated in the offer document.
A close ended scheme shall be wound up on redemption date, unless it is
rolled over, or if 75 per cent of the unit holders of a scheme pass a
resolution for winding up of the scheme; if the trustees on the happening of
any event, require the scheme to be wound up; or if SEBI, so directs in the
interest of investors.

F. SEBI Guidelines (2001 02) Relating to Mutual Funds

A common format is prescribed for all mutual fund schemes to disclose their
entire portfolios on half yearly basis so that the investors can get meaningful
information on the deployment of funds, Mutual funds are also required to
disclose the investment in various types of instruments and percentage of
investment in each scrip to the total NAV, illiquid and non performing assets,
investment in derivatives and in ADRs and GDRs.
To enable the investors to make informed investment decisions, mutual funds
have been directed to fully revise and update offer document and
memorandum at least once in two years.

Mutual funds are also required to bring uniformity in disclosures of various

categories of advertisements, with a view to ensuring consistency and
comparability across schemes of various and mutual funds reduce initial offer
period from a maximum of 45 days to 30 days.
Dispatch statements of account once the minimum subscription amount
specified in the offer document is received even before the closure of the
issue. Invest in mortgaged backed securities of investment grade given by
credit rating agency.
Identify and make provisions for the non performing assets (NPAs)
according to criteria for classification of NPAs and treatment of income
accrued on NPAs and to disclose NPAs ion half yearly portfolio reports.
Disclose information in a revised format on unit capital, reserves, performance
in terms of divided and rise / fall in NAV during the half year period,
annualized yields over the last 1, 3, 5, years in addition to percentage of
management fees, percentage of recurring expenses to net assets,
investments made in associate companies, payment made to associate
companies for their services and details of large holdings, since their
operation.
Declare their NAVs and sale / repurchase prices of all schemes updated daily
on regular basis on the AMFI websites by 8.00 p.m. and declare NAVs of their
close ended schemes on every Wednesday. The format for unaudited half
yearly results for the mutual funds has been revised by SEBI. These results
are to b published before the expiry of one month from the close of each half
year as against two months period earlier. These results shall also be put in
their website by mutual funds.
All the schemes by mutual funds shall be launched within six months from
the date of the letter containing observations from SEBI on the scheme
offer document. Otherwise, a fresh offer document along with filling fees
shall be filled with SEBI. Mutual funds are required to disclose large unit
holdings in the scheme, which are over 25 percent of the NAV.

Stock Exchange Profile

OVERVIEW OF INDIAN STOCK MARKET
The working of stock exchanges in India started in 1875. BSE is the
oldest stock market in India. The history of Indian stock trading starts with 318
persons taking membership in Native Share and Stock Brokers Association,
which we now know by the name Bombay Stock Exchange or BSE in short. In
1965, BSE got permanent recognition from the Government of India. National
Stock Exchange comes second to BSE in terms of popularity. BSE and NSE
represent themselves as synonyms of Indian stock market. The history of
Indian stock market is almost the same as the history of BSE.

The 30 stock sensitive index or Sensex was first compiled in 1986. The
Sensex is compiled based on the performance of the stocks of 30 financially
sound benchmark companies. In 1990 the BSE crossed the 1000 mark for the
first time. It crossed 2000, 3000 and 4000 figures in 1992. The reason for
such huge surge in the stock market was the liberal financial policies
announced by the then financial minister Dr. Man Mohan Singh.

The up-beat mood of the market was suddenly lost with Harshad
Mehta scam. It came to public knowledge that Mr. Mehta, also known as the
big-bull of Indian stock market diverted huge funds from banks through
fraudulent means. He played with 270 million shares of about 90 companies.
Millions of small-scale investors became victims to the fraud as the Sensex
fell flat shedding 570 points.
To prevent such frauds, the Government formed The Securities and
Exchange Board of India, through an Act in 1992. SEBI is the statutory body
that controls and regulates the functioning of stock exchanges, brokers, subbrokers, portfolio managers investment advisors etc. SEBI oblige several rigid
measures to protect the interest of investors. Now with the inception of online
trading and daily settlements the chances for a fraud is nil, says top officials of
SEBI.

Sensex crossed the 5000 mark in 1999 and the 6000 mark in 2000.
The 7000 mark was crossed in June and the 8000 mark on September 8 in
2005. Many foreign institutional investors (FII) are investing in Indian stock
markets on a very large scale. The liberal economic policies pursued by
successive Governments attracted foreign institutional investors to a large
scale. Experts now believe the Sensex can soar past 14000 marks before
2010.
The unpredictable behavior of the market gave it a tag a volatile
market. The factors that affected the market in the past were good monsoon,
Bharatiya Janatha Partys rise to power etc. The result of a cricket match
between India and Pakistan also affected the movements in Indian stock
market. The National Democratic Alliance led by BJP, during 2004 public
elections unsuccessfully tried to ride on the market sentiments to power. NDA
was voted out of power and the Sensex recorded the biggest fall in a day
amidst fears that the Congress-Communist coalition would stall economic
reforms. Later prime minister Man Mohan Singhs assurance of reforms with
a human face cast off the fears and market reacted sharply to touch the
highest ever mark of 8500.

India, after United States hosts the largest number of listed companies.
Global investors now ardently seek India as their preferred location for
investment. Once viewed with skepticism, stock market now appeals to
middle class Indians also. Many Indians working in foreign countries now
divert their savings to stocks. This recent phenomenon is the result of opening
up of online trading and diminished interest rates from banks. The
stockbrokers based in India are opening offices in different countries mainly to
cater the needs of Non Resident Indians. The time factor also works for the
NRIs. They can buy or sell stock online after returning from their work places.
The recent incidents that led to growing interest among Indian middle
class are the initial public offers announced by Tata Consultancy Services,
Maruti Udyog Limited, ONGC and big names like that. Good monsoons
always raise the market sentiments. A good monsoon means improved
agricultural produce and more spending capacity among rural folk.

The bullish run of the stock market can be associated with a steady
growth of around 6% in GDP, the growth of Indian companies to MNCs, large
potential of growth in the fields of telecommunication, mass media, education,
tourism and IT sectors backed by economic reforms ensure that Indian stock
market continues its bull run.

History of the Indian Stock Market - The Origin

Stock markets refer to a market place where investors can buy and sell
stocks. The price at which each buying and selling transaction takes is
determined by the market forces (i.e. demand and supply for a particular
stock.

Let us take an example for a better understanding of how market

forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence
and there is an anticipation of an upward movement in its stock price. More
and more people would want to buy this stock (i.e. high demand) and very few
people will want to sell this stock at current market price (i.e. less supply).
Therefore, buyers will have to bid a higher price for this stock to match the ask
price from the seller which will increase the stock price of ABC Co. Ltd. On the
contrary, if there are more sellers than buyers (i.e. high supply and low
demand) for the stock of ABC Co. Ltd. in the market, its price will fall down.

In earlier times, buyers and sellers used to assemble at stock

exchanges to make a transaction but now with the dawn of IT, most of the
operations are done electronically and the stock markets have become almost
paperless. Now investors dont have to gather at the Exchanges, and can
trade freely from their home or office over the phone or through Internet.

One of the oldest stock markets in Asia, the Indian Stock Markets has
a 200 years old history.

Achievements and milestones

Year

Descriptions

1850

Shares of banks and securities of East India Company traded

in Mumbai under a sprawling banyan tree in front of Town Hall,
which is now in the Horniman Circle Park.

1875

Brokers organized an association known as the Native Share

Brokers Association, and the countrys first stock exchange the
Bombay Stock Exchange (BSE), set up in Mumbai with 318
members. The membership fee gradually increased from Re 1
in 1887 to Rs 1,000 in 1896, and Rs 48,000 in 1920.

1880

Development of cotton mills industry and set up of many others

1880 - 90

Sharp increase in share prices of jute industries in 1870's was

followed by a boom in tea stocks and coal.

1894

Establishment of "The Ahmadabad Share and Stock Brokers'

Association"

1908

"The Calcutta Stock Exchange Association" was formed

1920

Madras witnessed boom and business at "The Madras Stock

Exchange" was transacted with 100 brokers.

1923

When recession followed, number of brokers came down to 3

and the Exchange was closed down

1934

Establishment of the Lahore Stock Exchange

1936

Merger of the Lahore Stock Exchange with the Punjab Stock

Exchange

1937

Re-organization and set up of the Madras Stock Exchange

Limited (Pvt.) Limited led by improvement in stock market
activities in South India with establishment of new textile mills
and plantation companies

1940

Uttar Pradesh Stock Exchange Limited and Nagpur Stock

Exchange Limited was established

1944

Establishment of "The Hyderabad Stock Exchange Limited"

1947

"Delhi Stock and Share Brokers' Association Limited" and "The

Delhi Stocks and Shares Exchange Limited" were established

and later on merged into "The Delhi Stock Exchange
Association Limited"
1956

Securities Contract Regulation Act passed

1957

The BSE and eight other stock exchanges registered under the
Securities Trading Contract Act.

1982

The BSE classifies scripts into Group A for carry forward, and
Group B for cash transactions.

1986

The BSE 30-share Sensitivity Index (Sensex) compiled;

updated every two minutes.

1987

Stock Holding Corporation of India set up.

1992

Ordinance promulgated for granting statutory powers to the

SEBI. The Over-The-Counter Exchange of India begins
operations. The National Stock Exchange incorporated.

1995

The BSE computerizes its trading operations, signaling the end

of 120 years of floor-trading with 1994 The NSEs debt
segment begins operations on June 30; and the capital market
segment open out-cry system of share-trading and the
beginning of screen-based trading on the BSE.

1996

NSE 50 index launched April 22. NSDL set up as the first

depository in India, and the NSE commences trading in
dematerialized securities on December 26.

2000

The SEBI approves the report on net trading brought out by the
SEBI committee on Net based trading and services. Pursuant
to the circular, stock exchanges are required to give permission
to members to start Net-based trading after ensuring fulfillment
of the minimum conditions. The NSE is the first exchange to
grant provisional permission to Cochin-based Geojit Securities
to commence Net-based trading.

Indian Stock Market Global Scenario

The recent global economic situation has witnessed immense highs and lows
including some unfortunate happenings related to stock market. This has
surged a debate on is it really that easy to make money in Indian stock market
today. Timing is the most important factor while investing in stock market. This
fluctuates on rapid basis so one cannot be completely dependent on this for
money until and unless you are in this business for a long time.
According to experts most of the time markets have overvalued or
undervalued stocks. This is the reason why you get a wonderful buying and
selling opportunity due to high and low valuations at the time when stocks are
traded. With the help of Indian stock market today you need to test your
financial knowledge, analytical capabilities, thought process and mental
strength. This arena is not for weak and herd people.
The Indian stock exchanges hold a place of prominence not only in Asia but
also at the global stage. The Bombay Stock Exchange (BSE) is one of the
oldest exchanges across the world, while the National Stock Exchange (NSE)
is among the best in terms of sophistication and advancement of technology.
The Indian stock market scene really picked up after the opening up of the
economy in the early nineties. The whole of nineties were used to experiment
and fine tune an efficient and effective system. The badla system was
stopped to control unnecessary volatility while the derivatives segment started
as late as 2000. The corporate governance rules were gradually put in place
which initiated the process of bringing the listed companies at a uniform level.
On the global scale, the economic environment started taking paradigm shift
with the dot com bubble burst, 9/11, and soaring oil prices. The slowdown in
the US economy and interest rate tightening made the equation more
complex. However after 2000 riding on a robust growth and a maturing
economy and relaxed regulations, outside investors- institutional and others
got more scope to operate. This opening up of the system led to increased
integration with heightened cross-border flow of capital, with India emerging

as an investment hot spot resulting in our stock exchanges being impacted

by global cues like never before.
The study pertains to comparative analysis of the Indian Stock Market with
respect to various international counterparts. Exchanges are now crossing
national boundaries to extend their service areas and this has led to crossborder integration. Also, exchanges have begun to offer cross-border trading
to facilitate overseas investment options for investors. This not only increased
the appeal of the exchange for investors but also attracts more volume.
Exchanges regularly solicit companies outside their home territory and
encourage them to list on their exchange and global competition has put
pressure on corporations to seek capital outside their home country. The
Indian stock market is the world third largest stock market on the basis of
investor base and has a collective pool of about 20million investors. There are
over 9,000 companies listed on the stock exchanges of the country. The
Bombay Stock Exchange, established in 1875, is the oldest in Asia. National
Stock Exchange, a more recent establishment which came into existence in
1992, is the largest and most advanced stock market in India is also the third
biggest stock exchange in Asia in terms of transactions. It is among the 5
biggest stock exchanges in the world in terms of transactions volume.
Origin of various stock exchanges:
The origin of the New York Stock Exchange (NYSE) is dated back to May 17,
1792, when the Buttonwood Agreement was signed by twenty-four stock
brokers outside of 68 Wall Street in New York under a buttonwood tree. Also
called the Big Board, it is the largest stock exchange in the world in terms of
dollar volume and second largest in terms of number of companies listed. The
Tokyo stock exchange was established on May 15, 1878 and trading began
on June 1, 1878. In 1943, the exchange was combined with ten other stock
exchanges in major Japanese cities to form a single Japanese Stock
Exchange. It is the second largest stock exchange market in terms of
monetary volume and currently has 2302 listed companies. The Hong Kong
stock exchange is the 8th largest stock exchange in the world in terms of
Market capitalization. The Hang Sang Index (HIS), was started on November

24, 1969. The Russian stock exchange was established in 1995 by

consolidating the separate regional stock exchanges into one uniformly
regulated trading floor. The Korea stock exchange was created by the
integration of the three existing of the Korean Spots and Futures exchanges
(Korean stock exchange, Korean futures exchange & KOSDAQ).The following
table gives the country and the exchange with the name of its indices.

NSE (National Stock Exchange)

The National Stock Exchange (NSE) is a stock exchange located at Mumbai,
Maharashtra, India. It is the 9th largest stock exchange in the world by market
capitalization and largest in India by daily turnover and number of trades, for
both equities and derivative trading.
NSE has a market capitalization of around US$1.59 trillion and over 1,552
listings as of December 2010. Though a number of other exchanges exist,
NSE and the Bombay Stock Exchange are the two most significant stock
exchanges in India and between them are responsible for the vast majority of
share transactions. The NSE's key index is the S&P CNX Nifty, known as the
NSE NIFTY (National Stock Exchange fifty), an index of fifty major stocks
weighted by market capitalization.
NSE is mutually-owned by a set of leading financial institutions, banks,
insurance companies and other financial intermediaries in India but its
ownership and management operate as separate entities. There are at least 2
foreign investors NYSE Euro next and Goldman Sachs who have taken a
stake in the NSE. As of 2006, the NSE VSAT terminals, 2799 in total, cover
more than 1500 cities across India. NSE is the third largest Stock Exchange in
the world in terms of the number of trades in equities. It is the second fastest
growing stock exchange in the world with a recorded growth of 16.6%.
The National Stock Exchange of India was promoted by leading financial
institutions at the behest of the Government of India, and was incorporated in
November 1992 as a tax-paying company. In April 1993, it was recognized as
a stock exchange under the Securities Contracts (Regulation) Act, 1956. NSE
commenced operations in the Wholesale Debt Market (WDM) segment in
June 1994. The Capital market (Equities) segment of the NSE commenced
operations in November 1994, while operations in the Derivatives segment
commenced in June 2000.
NSE's normal trading sessions are conducted from 9:15 am India Time to
3:30 pm India Time on all days of the week except Saturdays, Sundays and

Official Holidays declared by the Exchange (or by the Government of India) in

advance. This timing is not valid for currency segment of National Stock
Exchange.
There were System Testing going on and opinions, suggestions or feedback
on the New Proposed Timings are being invited from the brokers across India.
And finally on 18 November 2009 regulator decided to drop their ambitious
goal of longest Asia Trading Hours due to strong opposition from its members.
On 16 December 2009, NSE announced that it would advance the market
opening to 9:00 am from 18 December 2009. So NSE trading hours will be
from 9.00 am till 3:30 pm India Time. However, on 17 December 2009, after
strong protests from brokers, the Exchange decided to postpone the change
in trading hours till 4 Jan 2010.
NSE new market timing from 4 Jan 2010 is 9:00 am till 3:30 pm India Time.

Objective of NSE:

To establish a nationwide trading facility for equities, debt instruments

and hybrids.

To ensure equal access to investors all over the country through an

appropriate communication network.

To provide fair, efficient and transparent securities market to investors

using electronic trading systems.

To enable shorter settlement cycles and book entry settlement system.

To meet the current industrial standards of securities market.

BSE (BOMBAY STOCK EXCHANGE)

BSE Limited is the oldest stock exchange in Asia what is now popularly
known as the BSE was established as "The Native Share & Stock Brokers'
Association" in 1875. Over the past 135 years, BSE has facilitated the growth
of the Indian corporate sector by providing it with an efficient capital raising
platform.
Today, BSE is the world's number 1 exchange in the world in terms of
the number of listed companies (over 5112). It is the world's 5th most active in
terms of number of transactions handled through its electronic trading system.
And it is in the top ten of global exchanges in terms of the market
capitalization of its listed companies (as of December 31, 2009). The
companies listed on BSE command a total market capitalization of USD
Trillion 1.6 as of DEC, 2011.
BSE is the first exchange in India and the second in the world to obtain
an ISO 9001:2000 certifications. It is also the first Exchange in the country
and second in the world to receive Information Security Management System
Standard BS 7799-2-2002 certification for its BSE On-Line trading System
(BOLT). Presently, we are ISO 27001:2005 certified, which is a ISO version
of BS 7799 for Information Security.
The BSE Index, SENSEX, is India's first and most popular Stock
Market benchmark index. Exchange traded funds (ETF) on SENSEX, an
index of THIRTY (30) major stocks weighted by market capitalization are
listed on BSE and in Hong Kong. Futures and options on the index are also
traded at BSE. The exchange, in association with BSE (Bombay Stock
Exchange Ltd.), is thinking of revising its timings from 9.00 am India Time to
3:30 pm India Time.
Objectives of BSE

To provide liquidity to securities.

To mobilize savings for economic development.

To protect interest of investors by ensuring full disclosures.

To measure market movements.

PESTEL ANALYSIS
1. POLITICAL:
The Capital market of India is very vulnerable. India has been politically
instable in the past but it is a little politically stable now-a-days.the political
instability of the country has a very strong impact on the capital market. The
share market of India changes as the political changes took place. The BSE
Index, SENSEX goes up and down with any kind of small and big political
news, like, if there is news that a particular political party has withdrawn its
support from the ruling party, and then the capital market will go down with a
bang. The capital market of India is too weak and is based on speculations.
The political stability of the country is very important for the stability and
growth of capital market in India. The political imbalance or balance of the
country is the major factor in deciding the capital market of India. The political
factors include:

Employment laws

Tax policy

Trade restrictions and tariffs

Political stability

2. ECONOMICAL:
The economic measures taken by the government of India has a very strong
relationship with the capital market. Whenever the annual budget is
announced the capital market goes up and down with the economic policies of
the government .If the policies are supportive to the companies then the
capital market takes it positively and if there is any other policy that is not
supportive and it is not welcomed then the capital market goes down. Like, in
the case of allocation of 3-G spectrum, those companies that got the license
for 3-G, they witnessed sharp growth in their share values so the economic
policies play a major part in the growth and decline of the capital market and
again if there is relaxation on any kind of taxes on items of automobile
industry then the share of automobile sector goes up and virtually strengthen
the capital market .The economic factors include:

Inflation rate

Economic growth

Exchange rates

Interest rates

3. SOCIAL:
India is a country of unity in diversity .India is socially rich but the capital
market is not very attached with the social factors .Yes, there is some relation
between the social factors with the capital market. If there is any big social
factor then to some extent it affects the capital market but small social factors
dont impact at all. Like, there was opposition of reliance fresh in many cities
and many stores were closed. The share prices of the reliance fresh went
down but the impact was on and individual firm there was not much impact on
the capital market on a whole the social factors have not much of impact on
the capital market in India. The social factors include:
Emphasis on safety
Career attitudes
Population growth rate
Age distribution
4. TECHNOLOGICAL:
The technological factors have not that much effect on the capital market.
India is technological backward country. Same as social factors, technological
factor can have an effect on an individual form but it cannot have a big impact
on a whole of capital market. The Bajaj got a patent on its dts-i technology,
and launched it in its new bike but it does not effect on capital market. The
technological change in India is always on a lower basis and it doesnt effect
on country as a whole. The technological factors include
R&D activity
Technology incentives
Rate of technological change
Automation

5. ENVIORNMENTAL FACTORS:
Initially the environmental factors dont play a vital role in the capital market.
But the time has changed and people are more eco-friendly. This is really
bothering them that if any firm or industry is environment friendly or not. An
increasing number of people, investors, and corporate executives are paying
importance to these facts; the capital markets still see the environment as a
liability. They belie that it is of no use for their strategy. The environmental
performance is even under-valued by the markets.
6. LEGAL FACTORS:
Legal factors play an important role in the development and sustain the capital
market. Legal issues relating to any industry or firm decides the fate of the
capital market. If the govt. of India or the parliament introduces a new law that
can affect the running of the industry then the industry will be de-motivated
and this demonization will lead to the demonization of the investors and will
result in the fall of capital market. Like after the Hardhat Mehta scam, new
rules and regulations were introduced like PAN card was made necessary for
trading, if any investor was investing too much money in a small firm, then the
investors were questioned etc.
These regulations were meant to maintain transparency in the capital market,
but at that time, investment was discouraged. Legal factors are necessary for
the improvement and stability of the capital market.
Domestic Stock Exchanges:
In the year 1956, the government came out with a comprehensive legislation
called the Securities Contract (Regulation) Act to regulate the functioning of
stock exchanges. The legislation made it compulsory on the part of the stock
exchanges to secure recognition from the Central Government. More stock
exchanges were recognized subsequently. At present there are 23 stock
exchanges in India including the OCTEI and NSE. The recognition accorded
to a stock exchange is normally valid for a period of 5 years or a shorter as
prescribed. The names of these stock exchanges with their geographical

location, and the date of receiving government recognition are given in the
following table:

Types of groups in stock market:

Groups

Descriptions

A group

Its share capital is more than 100 crores. It is known as

Blue chip companies.

B1,B2 group

Very popular company whos trading is possible in any

situation of the market. Estimably 1000 companies.

T group
TS group

It includes companies whose trading is on T to T basis.

Trading of these companies is not possible on same
day.

S group

Trading of these companies can possible on same day.

Z group

It include companies which have failed to comply with

listing requirements and/or failed to resolve investors
companies or have not made the required arrangements
with both the depositories i.e. NSDL and CDSL.

F,G group

Besides these equity groups there are two other groups

i.e. Fixed Income Securities (Group F) and Government
Securities (Group G).

TRADING PATTERN ON INDIAN STOCK EXCHANGE

Trading in Indian stock exchanges are limited to listed securities of public
limited companies. They are broadly divided into two categories, namely,
A) Specified securities:Equity shares of dividend paying, growth-oriented companies with a paid-up
capital of at least Rs.50 million and a market capitalization of at least Rs.100
million. it has more than 20000 shareholders normally.
B) Non-specified securities:Having less than 20,000 shareholders are, normally, put in non-specified
group.

TYPES OF TRANSACTIONS ON INDIAN STOCK EXCHANGE

I.

Spot delivery transactions:"For delivery and payment within the time or on the date stipulated when
entering into the contract which shall not be more than 14 days following the
date of the contract.

II.

Forward transactions:"Delivery and payment can be extended by further period of 14 days each so

that the overall period does not exceed 90 days from the date of the contract".
The latter is permitted only in the case of specified shares. The brokers who
carry

over

the

outstanding

pay

carry

over

charges

(cantango

or

backwardation) which are usually determined by the rates of interest

prevailing.
A member broker in an Indian stock exchange can act as an agent, buy and
sell securities for his clients on a commission basis and also can act as a
trader or dealer as a principal, buy and sell securities on his own account and
risk, in contrast with the practice prevailing on New York and London Stock
Exchanges, where a member can act as a jobber or a broker only.

MAJOR PLAYERS
India Infoline
ICICI Direct
Angel Broking
Geojit
HDFC Securities
Kotak Securities
Reliance Money

COMPANY PROFILE

1.1. About Advan Stock Broking Pvt. Ltd.

Advan is Private Limited Broking Company. It was established in 22 nd
August 2011.Founded by Mr. Ghanshyam Dudhat, Founder of Advan & has
dreamed to remove thought from investors mind that trading in stock market is
speculative activity. Advan is master Franchisee of Market Hub stock Broking
Pvt. Ltd
Advan Stock Broking Pvt.Ltd. is a recent entrant in the already
overcrowded Financial Market and Brokerage Industry. It is the desire to do
something different and do it in innovative ways has given Advan Stock
Broking Pvt.Ltd. A confidence to earn a respectable place in the financial
market.
The desire to redefine the way money is made in the market and the
desire to bring in professionalism in the financial market is the core of
Advan Stock Broking Pvt.Ltd Philosophy.
Advan Stock Broking Pvt.Ltd. is the creation of collaboration between
four friends having rich experience, well-set establishment, long standing
reputation in the capital market and expertise in the various fields of
brokerage industry.
Such a competent team has given Advan Stock Broking Pvt.Ltd. a
distinct advantage maintaining sharper focus on all the important activities
by the owner themselves. The clear-cut work allocation among this team
helps not only in growing the company with the faster pace but also in
providing their clients faster and unmatched services. The dedication foe
value addition and commitment for innovation is also a result of well
integrated co-ordination of the team.

This systematic presence-building and efficient delivery of service has

put Market-hub among the fastest growing retail broking houses in the
country, with memberships in:

The National Stock Exchange of India (NSE)

The Bombay Stock Exchange (BSE)

The Multi Commodity Exchange (MCX)

The Depository Participant of CDSL

1.2. Vision & Mission

Our Vision:

To be a hub for building professionals that build profit for clients.

Our Mission:

we will leverage all our resources and energy for converting the brokerage
into a dignified profession by bringing in innovative ideas for generating profits
from the market for our clients and putting in whole hearted efforts for making
our associates skilled and successful entrepreneurs.

Core purpose:

To continuously raise the standard of living of people who are associated with
us

Core Values:
Commitment
Constant learning
Risk taker

Moral Values:
Our Moral Values to our esteemed customers who are working
with us:
1. Complete Customer Satisfaction.
2. Quality Assurance.
3. Transparency.
4. Ethical Practices.
5. High Integrity.
6. Personalized Investment Strategies.
7. Trustworthiness.
8. Unity.

BHAG (Big Hairy Audacious Goal):

To be the top 5 Indian company of stock market by 2029.

Corporate action:

An approach to business that reflects Transparency, Responsibility and

Ethical behavior.
Respect for employee client and stake holder group.

Retail Business:

Retail offerings of Advan Stock Broking Pvt.Ltd. seek to cover all financial
planning requirements of individuals, which include providing personalized
investment management services including planning, advisory, and execution
and monitoring of the full range of investment services.
Broadly the retail services are divided into two broad categories.

Advisory Services:
Portfolio Management Services

Trading Services:
Equities,
Derivatives,
IPOs

1.3. Products & Services:-

Equity

Derivatives

Commodity

Depository

Portfolio Advisory
Services

NRI Services

Advisory Services

We have a wide range of products specially designed to meet financial

requirements of individual and corporate investors, both Indians and Non
Resident Indians

1. Equities:

Equity is the backbone of stock markets and for investors it offers best
returns. No doubt, it is risky instrument but more the risk more the return. For
making trading activities in to the stock market via equity the investors have to
just open a trading A/C. with MHSBPL. The trading activity can be available
with us via telecalling as well as having own Trading Terminal at your place.
Our advisory team has highly Qualified & Trained financial professionals, who
act as your Advisor for the purpose of making decisions regarding
investments in the equity markets for building wealth. The advisory team will
provide the investors with the best possible portfolio to invest in the equity
market.

MHSBPL will provide Analysis & Advisory Services for investment Decisions:
1. Volumetric Analysis.
2. Technical Analysis.
3. Investment Advisory services
4. Dedicated Relationship Advisors.

2. Derivatives:

Derivatives are generally placed in the realm of advanced or technical

investing, but there is no reason why they should remain a mystery to
common investors. Derivatives are financial products with value that stems
from an underlying asset or set of assets. These can be stocks, debt issues,
or almost anything. A derivative's value is based on an asset, but ownership
of a derivative doesn't mean ownership of the asset. With the Derivatives
Segment the investors who are willing to make profits (sometimes Losses) at
a very lower amount of Margin Money they can enter into the forward as well
as future & options contract with MHSBPL. (Member of NSE F&O Segment
and BSE Derivatives Segment) Derivatives as Hedging tool will also be a
much known concept in the Derivative Market. The investors who will join
MHSBPL will be provided with all kind of advisory about the Derivatives with
the Hedging Facility. So, investors can be at the edge of profit booking without

the risk of major loss in the Portfolio or the Equity Stock maintained by them
and the investors will create the secured interest on their investment by
Hedging in to the Derivatives Market.

3. Commodities:

Commodities Market is the best market after the Stock Market & Bond Market
to gain a wealth by investing in different kind of Commodities in Derivatives
Segment with a Minimal Amount of investments. Commodities form a
separate asset class offering investors and speculators highest potential to
earn returns by applying the simple economic rules of Demand and Supply.
MHCPL will provide the investors with standalone Platform for making
investment into the recognized Commodities Exchanges. MHCPL will also
provide all the assistance to the investors via Customer Care Centre at the
Desk of the Companys Office.

4. Depository:

MHSBPL is registered as a Depository Participant with CDSL. We are also a

member of the Bombay Stock Exchange (BSE) and National Stock Exchange
(NSE). As both the Trading as well as Depository Services are provided by
MHSBPL investors may expect a fast and hassle free services towards
trading and clearing.

MHSBPL Benefits:

1. Statements on demand
2. Quarterly Demat statements
3. Nominal Transaction Charges
4. Dedicated Customer Care

Enjoy the Advantages of Registering with MHSBPL:

1. No need to remember record dates of various companies

2. Reduced transaction cost
3. Nomination facility available
4. Immediate transfer of securities
5. Automatic credit of Dividend / bonus shares
6. Investment in various Mutual Funds may also be held in Demat
A/Cs.

5. Portfolio Advisory Services(PAS):

PAS is designed for investors who want to maintain, manage and multiply
their investments with sound fundamental investment strategy with personal
touch. Portfolio Advisor not only advices but also gives reason of our
recommendation which helps you to make a more knowledgeable investment
decision in the future also. Portfolio Advisors does continuous monitoring of
the portfolio and advices accordingly throughout the year. You will be not only
advised for buying, but also for exit from the existing investment. Hence, you
dont have to spend time or worry for your investment.

6. NRI Services:
MHSBPL will provide all the Services like trading & clearing of stocks
traded in the BSE, NSE and MCX (MHCPL) to all the Indian People as well as
all other Indian people who resides abroad and want to invest in the India.

7. Advisory Service
IPO:
MHSBPL will not only provide guidance on trading in the current
market but will also advice the investors about the future offerings from the
companies who are coming into the market by introducing their equities and
registering with Recognized Stock Exchanges. An investor can gain estimable
returns by investing early in a company through an Initial Public Offering (IPO)

Mutual Funds:
In India Mutual Funds are major players in the Capital market and they
are having lot of interest in the Stocks of Major Companies. And the Mutual
Funds are also very safe from the risk point of view. So, if an investor wants to
invest in the Mutual Fund, MHSBPL will guide them in that direction. Our
Team of Mutual Fund Advisors will guide the investors in the proper manner
with the portfolio development in the Mutual funds.
Life Insurance:
MHSBPL will also take care of the public at large who wants to invest
in the capital market and also with safe mode as well as Insurance. MHSBPL
will guide the investors in the Life Insurance in proper manner with the best
suitable Policies for their precious life with highest returns on their investment
and also provide them the other benefits of Life insurance like risk cover,
accidental cover as well as the death benefits.

SWOT ANALYSIS
SWOT Analysis
Strength

1. Services offered include Equity Trading, Commodities,

Portfolio Management Services, Mutual Funds, Life
Insurance, IPO, Depository Services, and Investment
Advisory.
2. Innovative range of financial products.
3. Use of intra-day strategies.
4. Emphasis on building stronger relationship with
customers.
5. Co-operative and Experienced Branch Managers

Weakness

1. Less penetration in rural areas.

2. Indians are mostly conservative and prefer investing in
Gold and land.
3. Low awareness due to lack of advertisement.
4. Lesser emphasis on customer retention.

Opportunity

1. High purchasing power and people looking to more

investment opportunities.
2. Growing rural market.
3. High potential growth in stock market.
4. Better governance by SEBI.

Threats

1. Stringent Economic measures by Government and RBI

2. Entry of foreign finance firms in Indian Market.
3. Lack of sufficient branch-offices for speedy delivery of
services.
4. High risk involved in the stock market.
5. Lost in faith in share market after big scams in the
stock market.

Dr. Binod Kumar Singh (2012)

Conduct a study on investors attitude to words the mutual fund as an
investment option. The study shows that most of respondents are still
confused about the mutual funds and have not formed any attitude towards
the mutual fund for investment purpose. It has been observed that most of the
respondents having lack of awareness about the various function of mutual
funds. Moreover, as far as the demographic factors are concerned, gender,
income and level of education have significantly influence the investors
attitude towards mutual funds. On the other hand the other two demographic
factors like age and occupation have not been found influencing the attitude of
investors towards mutual funds. As far as the benefits provided by mutual
funds are concerned, return potential and liquidity have been perceived to be
most attractive by the invertors followed by flexibility, transparency and
affordability. Apart from the above, in India there is a lot of scope for the
growth of mutual fund
Singh (2012)
Conducted an empirical study of Indian investors and observed that most of
the respondents do not have much awareness about the various function of
mutual funds and they are bit confused regarding investment in mutual funds.
The study found that some demographic factors like gender, income and level
of education have their significant impact over the attitude towards mutual
funds. On the contrary age and occupation have not been found influencing
the investors attitude. The study noticed that return potential and liquidity
have been perceived to be most lucrative benefits of investment in mutual
funds and the same are followed by flexibility, transparency and affordability.
Walia and Kiran (2009)
Studied investors risk and return perception towards mutual funds. The study
examined investor's perception towards risk involved in mutual funds, return
from mutual funds in comparison to other financial avenues, transparency and
disclosure

practices.

The

study

investigated

problems

of

investors

encountered with due to unprofessional services of mutual funds. The study

found that majority of individual investors doesnt consider mutual funds as
highly risky investment. In fact on a ranking scale it is considered to be on

higher side when compared with other financial avenues. The study also
reported that significant relationship of interdependence exists between
income level of investors and their perception for investment returns from
mutual funds investment.
Singh and Jha (2009)
Conducted a study on awareness & acceptability of mutual funds and found
that consumers basically prefer mutual fund due to return potential, liquidity
and safety and they were not totally aware about the systematic investment
plan. The invertors will also consider various factors before investing in
mutual fund.
Akhilesh Mishra (2008)
Has done a study on the topic Mutual Fund as a Better Investment Plan and
states that many of the people have the fear of Mutual Funds. They think
their money will not be secure in Mutual funds, says Mishra. He also says
that the investors need the knowledge of Mutual Funds and its related terms.
Many of the people have not invested in Mutual funds due to lack of
Awareness although they have money to invest, he adds. Mishra also points
out that Brand plays an important role for the investment. Only people who
invest directly know well about the Mutual fund and its operations, he adds
Yash Pal Davar and Suveera Gill (2007)
In their paper on investment decision making revealed that the class of
investors (undoubtedly) with growing age develop maturity and experience for
making decisions about the usage of their surplus and available funds in the
light of overall economic needs of the family.
Design et al (2006)
conducted a study on women investors perception towards investment and
found that women investors basically are indecisive in investing in mutual
funds due to various reasons like lack of knowledge about the investment
protection and their various investment procedures, market fluctuations,
various risks associated with investment, assessment of investment and
redressed of grievances regarding their various investment related problems.
Even in the past, when women mainly depended on their spouses income,

they used to save to meet emergencies as well as for future activities. In

those days, women did not have any awareness about various investment
outlets. But as time passed, the scenario has totally changed.

Ramamurthy and Reddy (2005)

Carried out a study to analyze recent trends in the mutual fund industry and
concluded that the major benefits delivered to the small investors by mutual
funds are professional management, diversification of investment, convenient
administration, return potential, liquidity, transparency, flexibility, affordability,
wide choice and proper regulation. They also analyzed certain recent trends
in the mutual fund industry such as, entry and exit of mutual fund companies,
compulsory certification of mutual fund sales/marketing personnel, mutual
fund schemes related to real estate, commodity, bullion and precious metals,
etc., shift from income funds to money market funds, shift from banks to
mutual funds and buying and selling of mutual fund online.
An and Murugaiah (2004)
Had studied various strategic issues related to the marketing of financial
services. They found that recently this type of industry requires new strategies
to survive and for operation. For surviving they have to adopt new marketing
strategies and tactics that enable them to capture maximum opportunities with
the lowest risks in order to enable them to survive and meet the competition
from various market players globally.
Summary
From the above reviews we have find that every report came with the different
views and opinion. So, from the above all reviews I have conclude some
results as given below and try to evaluate on that basis.
Dr. Binod Kumar Singh(2012) conduct a study on investors attitude to words
the mutual fund as an investment option. It has been observed that most of
the respondents having lack of awareness about the various function of
mutual funds.
Saini et., al. (2011) analyzed investors behavior, investors opinion and
perception relating to various issues like type of mutual fund scheme, its

objective, role of financial advisors / brokers, sources of information,

deficiencies in the provision of services, investors opinion relating to factors
that attract them to invest in mutual and challenges before the Indian mutual
fund industry etc.
Walia and Kiran (2009) studied investors risk and return perception towards
mutual funds. The study examined investor's perception towards risk involved
in mutual funds, return from mutual funds in comparison to other financial
avenues, transparency and disclosure practices.

PROBLEM STATEMENT
Investors

attitude

study

occupies

significant

place

for

asset

management companies offering investment products. Attitude of the

investors can be defined as the attitude, which the investors display in
searching for purchasing; using, evaluating and disposing of products and
services that they expect will satisfy their needs. As a lot of options are there
before the investors to invest their surplus in order to make it grow.
The study examines the factors influencing the attitude of investors while
making decisions related to mutual fund investment. Further, it also evaluates
investment objectives of investors, factors i.e. fund/scheme quality, fund
sponsor quality and the investors expected services that could influence their
fund/scheme selection decisions and the features that investors look for in a
mutual fund products. The main focus of the study is to know the attitude of
investors towards mutual funds as an investment option.

A. OBJECTIVES OF STUDY
To study and analyze the impact of various demographic factors on
investors attitude towards mutual fund.
To study about the factors responsible for the selection of mutual funds
as an investment option
Find out the proportion of various schemes invested in Mutual Funds.
To find out the awareness level of investors

Dear sir/madam,
I PIYUSH PIPALIYA student of Master of Business Administration at
S. R. LUTHRA INSTITUTE OF MANAGEMENT am conducting a survey on
STUDY ON INVESTORS ATTITUDE TOWARDS MUTUAL FUND. This
questionnaire will be utilized for academic research only. The responses will
be kept strictly confidentially and will not be revealed to anybody. I seek your
support for successful completion of this research looking forward to your
positive response.

Name:

____________________________________________________________
Age

Up to 25

25-35

35-45

Above

45
Gender

Male

Education

Female

Up to high school
Postgraduate

Graduate
Other(please

mention_______)
Occupation
Student

Businessmen

Professional

Other

salary

Annual Income
Below 1, 50,000

1, 50,000 5, 00,000

5, 00,000 10, 00,000

Above 10, 00,000

1) Have you invested in mutual fund?

Yes

No

2) How long would you like to hold your Mutual Funds' Investments?
1 to 3 year

4 to 6 year

7 to 10 year

More than 10 year

3) In which of the following mutual fund have you invested?

UTI mutual fund
ICICI mutual fund

SBI mutual fund

TATA mutual fund

HDFC mutual fund

Kotak mutual fund

Reliance mutual fund

Standard chartered mutual fund

Other mutual fund

4) What is your objectives for investing in mutual fund
Tax Benefits

Children education

Diversification of risk

Purchase assets

Retirement benefits

Emergencies

5) How did you come to know about the mutual fund you have invested in?
electronic meadia

Newspaper

investment adviser

Friends and relatives

Other (please mention__________)

6) Which type of mutual fund scheme do you prefer?

Open ended scheme

Close ended scheme

interval scheme

7) Which types of mutual funds schemes select for investment? (Multiple tick
possible)
Equity fund

Index fund

Debt fund

Asset fund

Liquid fund

Balance fund

Bond or Gift fund

Sectorial and industrial fund

8) Indicate your risk preference towards invested in mutual fund?

Very high risk

High risk

Low risk

Very low risk

Moderate risk

9) Reveal your level of importance for following factors affecting investment

in mutual fund.
(On scale of 1 to 5, 1being least important and 5 being most important
factors.)
FACTORS
Return
marketability
Reputation of AMC
Availability of various Schemes
Tax Benefits

Risk
Liquidity

10) Indicate your overall attitude towards investment in mutual fund.

Positive

Natural

Negative

11) Give your opinion about investment in mutual fund.

___________________________________________________________
___________________________________________________________
___________________________________________________________
______________________________