BLS INSTITUTE OF TECHNOLOGY

MANAGEMENT

SUMMAR TRAINING IN DESTIMONEY SECURITIES PVT LTD

GURU GOVIND SINGH

INDRAPRASTHA UNIVERSITY

SUMITTED BY MUKESHJOSHI
 Introduction about the Company

Destimoney (erstwhile Dawnay Day AV) is an innovative financial

services provider and advisory firm, formed in the year 2006 as a subsidiary of
Dawnay Day UK. In mid 2008, NSR (New Silk Route) had acquired 100%
stake in the business.

Vivek Vig is the CEO of Destimoney group. He is former Country Head of

Centurion Bank of Punjab. He also worked as the Country Head of Citibank in
Saudi Arabia, Turkey Business Head in Taiwan and Poland.

The Destimoney Group at present has 4 business lines; Destimoney India

Services Pvt Ltd, which provides portfolio management services; Destimoney
Enterprises Pvt Ltd, which provides financial advisory services and distributes
insurance products, loans, fixed deposits, mutual funds, structured products;
Destimoney Securities Pvt Ltd., which deals with broking of stocks & shares;
Decimal Point Analytics, which is into global research outsourcing businesses.

Currently, Destimoney has a network of over 130 branches spread in over 70

locations in 20 states across the country. With an unrelenting focus on our twin
values of "Integrity" and "Client First" Policy, Destimoney, with the help of
over 3000 employees and a strong IT infrastructure, provides advisory services
to individuals and institutional clients in India and abroad.

Our vision is to build a world class customer centric financial services

enterprise that fulfils the financial needs of “Middle India” with “Global
Processes” and focuses on profitable growth. We plan to do this, by distributing
all financial products and manufacturing a select few and building an
organization that unlocks the potential across four dimensions, viz. individual,
team, customer and market place

In providing services to our clients, we take the fiduciary trust they place in us
very seriously. By strictly adhering to our core values, we ensure that our
processes, risk management systems, and staffing are concentrated solely on
preserving and increasing our clients’ hard earned capital within a transparent
and controlled investment process

Our Funding Partner – New Silk Route

New Silk Route is a leading Asia-focused growth capital firm founded in 2006
with over $1.4 billion under management, focused on the Indian subcontinent,
as well as other rapidly growing economies in Asia and the Middle East. The
firm is led by Rajat Gupta - Chairman, Victor Menezes – Senior Advisor, Parag
Saxena - CEO, each of whom has a track record of building and leading global
organizations.

NSR have made 9 Investments to date in sectors of Consumer Services,

Telecom, Manufacturing, Financial Services and Infrastructure. They have a
team of16 Investment Professionals working out of 4 offices; New York,
Mumbai, Dubai, and Bangalore
Our Philosophy

Integrity & Value for our Clients

Sound Research & Advice

Value Investments

1. Building Value for a Lifetime

 Integrity

"Client First" Policy

Our Mission

To forge strong, sustained relationships with our clients by creating value for
them.
WHO WE ARE
Key People

Key Personnel – Destimoney

Name Experience Role
 Former Country Head of Centurion bank of
Punjab
Vivek Vig  Country head of Citibank in Saudi Arabia, MD / Group CEO
Turkey; Business Head in Taiwan and
Poland
 Extensive experience in distribution and assets Business Director -
at Centurion, Standard Chartered and GE Distribution
BrijeshParnami
Capital

 Former group COO for one of the largest

Saurabh Shukla brokerages in the country. CEO - Broking

Jamshed Vakeel  “Former Creative Group Head at Ogilvy &

Mather, London
Specializes in Direct Response
Creative Director
Communication

K. Giri  Former Country Controller – Nestle Group CFO

(Uzbekistan).

 Former HR Head – SBI Funds Management

Viraf Ghyara Pvt. Ltd Head – HR & Admin

 Former Associate, Institutional Broking– KR

Head – Institutional
Kartik Bhansali Choksey
Broking
 INTRODUCTION ABOUT INVESTMENT

Definition:-
Investment is the commitment of money or capital to purchase financial
instruments or other assets in order to gain profitable returns in form of interest,
income, or appreciation of the value of the instrument. The essential quality of
an investment is that involves waiting for reward. It involves the commitment of
resources which have been saved or put away from current consumption in hope
that some benefits will accrue in the future.
According to F. Amling, “Investment may be defined as the purchase by
an individual or institutional investor of a financial or real asset that produces a
return proportional to the risk assumed over some future investment period.

Introduction:-
Investment management is a subject of growing an importance and
interest. Investment is the sacrifice for the future reward. Investment decision is
trade off between risk and return. The entire globe is based on risk and return.
Investing is an activity that is of interest to many individuals regardless of
occupation or income level.
The term investment refers to funds invested in various securities,
consisting of government and semi government securities, loans, debentures of
local authorities, such as port trusts, municipal corporations and debentures and
shares of companies. There are various forms of investments available with
their relative merits and demerits. Investments are freely bought and sold in the
stock exchange through banks and bankers, who charge a small amount of
commission for their services. Investment means the use of money to earn more
by way of interest, dividend or money to earn more by way of interest, dividend
or capital appreciation. Well planned investment alone can ensure regular
income, capital appreciation and can be used to meet financial requirements of
the investors. The dynamics of economic growth provide various opportunities
for investors to invest their money in different types of securities.

The financial and economic meaning of investment is related to each

other, because investment is a part of the savings of individuals, which flow in
to capital market either directly or institutions divided in to new and secondary
capital financing. Investors as suppliers & users of long term funds will find
meeting place in the capital market.

Investment will generally be used in its financial sense and as such,

investment is allocation of monetary resources to assets that are expected to
yield some gain or positive return over a given period of time. Investment is
commitment of a person’s funds to derive future income in the form of interests,
dividends, rent, premium, pension benefits or the appreciation of the value of
his investment. In the process of the investment the transfer of financial assets
will be made from one person or institution to investor. Investments will include
various kinds of instruments or securities & institutional media into which
savings are placed.
CONCEPT OF INVESTMENT:-

1. Economic Investment
Economic investment means the net additions to the capital stock of the
society which consists of goods and services. Addition to capital stock means an
increase in buildings, plants, equipments and inventories over the amount of
goods and services that existed.

2. Commitment Investment
Commitment investment refers to money commitment to satisfy personal
desires, since no rate of return is involved in such investment nor capital growth
is expected. For e.g. a commitment of money to a new car is certainly
investment from individual point of view.

3. Financial Investment
It involves investment of funds in various assets, such as stock, bonds,
real estate, mortgage etc. Investment is employment of funds with aim of
achieving additional income or growth in value. It involves commitment of
resources which have been saved or put away from current assumption in hope
some benefits will accrue in future. Investment involves long term commitment
of fund and waiting for reward in the future.

NATURE OF INVESTMENT

Investment requires continuous flow of decisions which can not be

avoided. All investment choices are made out points of time in respect to
personal investments in stock market will from time to time reappraise and
revaluate their various investment commitments in the light of new information
changed expectations and ends. Investment choices are found to be outcomes of
the following related classes of factors.
The investment decisions are based on many streams of data which taken
together represent to investor the observable environment and the general and
particular of the security and enterprises in which he may invest.
Investing has been activity confined to the rich and business class in the
past. This can be attributed to the fact that availability of investible funds is pre-
requisite to deployment of funds but today we find that investment has become
household word and is very popular with people from all walks of life.

HISTORY OF THE STOCK BROKING

INDUSTRY

Indian Stock Markets are one of the oldest in Asia. Its history dates back to
nearly 200 years ago. The earliest records of security dealings in India are
meager and obscure. By 1830's business on corporate stocks and shares in Bank
and Cotton presses took place in Bombay. Though the trading list was broader
in 1839, there were only half a dozen brokers recognized by banks and
merchants during 1840 and 1850. The 1850's witnessed a rapid development of
commercial enterprise and brokerage business attracted many men into the
field and by 1860 the number of brokers increased into 60. In 1860-61 the
American Civil War broke out and cotton supply from United States of Europe
was stopped; thus, the 'Share Mania' in India begun. The number of brokers
increased to about 200 to 250. However, at the end of the American Civil War,
in 1865, a disastrous slump began (for example, Bank of Bombay Share which
had touched Rs 2850 could only be sold at Rs. 87). At the end of the American
Civil War, the brokers who thrived out of Civil War in 1874, found a place in a
street (now appropriately called as Dalal Street) where they would conveniently
assemble and transact business. In 1887, they formally established in Bombay,
the "Native Share and Stock Brokers' Association" (which is alternatively
known as "The Stock Exchange"). In 1895, the Stock Exchange acquired a
premise in the same street and it was inaugurated in 1899. Thus, the Stock
Exchange at Bombay was consolidated. Thus in the same way, gradually with
the passage of time number of exchanges were increased and at currently it
reached to the figure of 24 stock exchanges.

MAIN STOCK EXCHANGE IN INDIA

BSE(BOMBAY STOCK EXCHANGE)

Bombay Stock Exchange 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 4900). 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 1.28 as of Feb,
2010.

The BSE Index, SENSEX, is India's first and most popular Stock Market
benchmark index. Exchange traded funds (ETF) on SENSEX, are listed on BSE
and in Hong Kong. Futures and options on the index are also traded at BSE.

VISION

"Emerge as the premier Indian stock exchange by establishing global

benchmarks"

Board of Directors
 Non-Executive Chairman

Managing Director &

Chief Executive Officer

___________________________
________________________

NSE (NATIONAL STOCK EXCHANGE)

NSE was incorporated in 1992 and was given recognition as a stock exchange
in
April 1993. It started operations in June 1994, with trading on the Wholesale
Debt
Market Segment. Subsequently it launched the Capital Market Segment in
November 1994 as a trading platform for equities and the Futures and
Options
Segment in June 2000 for various derivative instruments.
The following years witnessed rapid development of Indian capital market with
introduction of internet trading, Exchange traded funds (ETF), stock derivatives.

Mission

NSE's mission is setting the agenda for change in the securities markets in
India. The NSE was set-up with the main objectives of:

• establishing a nation-wide trading facility for equities, debt instruments

and hybrids,
• ensuring equal access to investors all over the country through an
appropriate communication network,
• providing a fair, efficient and transparent securities market to investors
using electronic trading systems,
• enabling shorter settlement cycles and book entry settlements systems.
Promoters

NSE has been promoted by leading financial institutions, banks, insurance

companies and other financial intermediaries:

• Industrial Development Bank of India Limited

• Industrial Finance Corporation of India Limited
• Life Insurance Corporation of India
• State Bank of India
• ICICI Bank Limited
• IL & FS Trust Company Limited
• Stock Holding Corporation of India Limited
• SBI Capital Markets Limited
• Bank of Baroda
• Canara Bank
• General Insurance Corporation of India
• National Insurance Company Limited
• The New India Assurance Company Limited
• The Oriental Insurance Company Limited
• United India Insurance Company Limited
• Punjab National Bank
• Oriental Bank of Commerce
• Indian Bank
• Union Bank of India
• Infrastructure Development Finance Company Ltd.
 __________________________

___________________

SOURCE OF INVESTMENT INFORMATION

For taking of right investment decision, investors generally need to know

the better source of information to invest. In stock market, information about the
corporate world plays an important role in making decisions. Following are the
best source of information to the intelligent investor.

1. Global affairs
Day to day development around globe are published in news papers like “
Indian Economist, Far Eastern Economic Review, Newyork times, Washington
Post, Economic Times etc. word information is also available with IME
quarterly Journal, IMF News survey, Times Magazine etc.
2. National Economic Affairs
These affairs are covered in all the leading financial news papers like
“The Economic Times, The Business World, Business Today, Southern
Economist, Economic and Political Weekly, the Capital Market, Vikalpa,
Finance India, Indian Management – Fortune India, Dalal Street and Intelligent
Investor etc.”

3. Associations
Almost many daily news papers bring out regularly the result of studies
made on the working of industries and their prospects. In India there are various
associations like “chamber of commerce, FICCI, Trade Associations” and other
agencies publish knowledgeable, analytical data. The reports of Planning
Commission, Government of India, RBI Bulletins, publications contain a good
amount of information.
1. Company Information
At present the companies information is freely available in almost all the
news papers, periodicals, journals and some pages are allotted for the reports
about the business in general and company working results, performance of
companies and other needful data. Besides news papers, the Journals of Capital
Market, Dalal Street, Business India contain a lot of information about the
industries and companies listed on stock exchanges. Annual reports, quarterly
and half- yearly results also form important sources of information.
 Risk in Investment

Analysis of Risk in Investment

Saving is invested in various investment opportunities for earning better
returns. The return of the investment depends upon the risk of such investment.
All investments involve some risk. The objective of any investor is to minimize
the risk and maximize return. The value of financial assets depends on their
return and risk pattern.
Risk may be defined as “the chance of future loss that can be foreseen”.
Risk can be defined as “the chance factor in trading in which expected or
perspective advantage, gain, profit or return may not materialize”.
The actual outcome of investment may be less than the expected out
come. The greater is the variability in the possible outcome, the greater is the
risk. Generally, the variance and standard deviation of return are used as the
alternative statistical measures of the risk of the financial asset. Similarly, co-
variance measures of the risk of the asset, relative to other asset in a portfolio.
Risk free investment means only the certainty of the return of an investment and
not free from all risks. Risk comprises all elements which cause for the
variability in the return. Some risks can be controlled by the investors. Others
cannot be controlled, and they are to be borne compulsorily by the investor.
Risk may be caused by the factors, such as “ wrong decision of investment”,
“wrong timing of investment”, “kinds of instruments”, “maturity period of the
investment”, “amount of investment”, “method of investment”, “nature of the
industry” and “national, international economical factors.” Number of factors
will influence the risk and depending upon the cause, the risk can be classified
in to the following major types:

Types of Risk in Equity Investment

1. Financial Risk
Financial risk refers to the risk on account of pattern of capital structure.
It is usually measured by the debt equity mix of the firm. The higher proportion
of debt in the capital structure, greater is the variability of return and financial
risk. Financial risk is an avoidable risk to the extent that managements have
freedom. A firm with no debt financing has no financial risk. Financial risk is
related to the debt and equity mix of financing in the firm. The Reliance on debt
financing is also called financial leverage. It has an important effect on the
shareholders return.

2. Business Risk
Business risk arises due to the uncertainty of return which depends upon
the nature of business. It will influence for the firm’s operating income. It
relates to the variability of the business, sales, income, expenses, and profits. It
depends upon the market conditions for the product mix, input supplies,
strength of the competitor etc. The business risk may be classified into two
kinds’ viz., internal risk and external risk. Internal risk is related to the operating
efficiency of the firm. This is manageable within or by the firm. Internal
business risk leads to fall in revenues and profit of the companies. External risk
refers to the policies of Government or strategies of competitor or unforeseen
situation in market. This risk may not be controlled and corrected by the firm.

3. Interest Rate Risk

It is the difference between the expected interest rates and the current
market interest rate. The markets will have different interest rate fluctuations,
according to market situation, supply and demand position of cash or credit. If
the maturity period is long, the market value of the security may fluctuate
widely. Further, the market activity and investor perceptions change with the
change in the interest rates and interest rate also depend upon the nature of
instruments such as bonds, debentures, loans and maturity period, credit
worthiness of the security issues.
4. Inflation Risk
Inflation risk is also called as purchasing power risk. It is closely related
to interest rate risk since interest rates generally rise when inflation occurs.
Inflation risk is more relevant in case of fixed income securities; shares are
regarded as hedge against inflation. It is the risk that the real rate of return on
security may be less than the nominal return. There is always a chance that the
purchasing power of invested money will decline or that the real return will
decline due to inflation. The return expected by investor will change due to
change in real value of returns. Cost push and pull forces operate to increase
prices due to inadequate supplies and raising demand.
5. Currency Risk / Exchange Rate Risk
 Exchange rate risk is also called as currency risk. It is associated with the
exchange rate fluctuation of foreign exchange on international transactions. The
risk is faced by the limited organizations which are involved in export or import
business. This risk will arise due to changes in currency exchange rates, may
have an unfavorable impact on costs or revenues. There is no exchange rate risk
under the fixed exchange rate system.

RISK DISCLOSURE DOCUMENT

This document is issued by the National Stock Exchange of India

(hereinafter referred to as "NSE") in coordination with the Securities and
Exchange Board of India (hereinafter referred to as "SEBI") and contains
important information on trading in the Equities Segment of NSE. All
constituents are urged to read it before making a purchase or a sale in any
security being traded on NSE.

NSE/SEBI does neither expressly nor impliedly guarantee nor make any
representation concerning the completeness, the adequacy or accuracy of this
disclosure document nor has NSE/SEBI endorsed or passed any merits of
participating in this trading segment. This brief statement does not disclose all
the risks and other significant aspects of trading.

In the light of the risks involved, you should undertake transactions only if you
understand the nature of the contractual relationship into which you are entering
and the extent of your exposure to risk.

You must know and appreciate that investment in Equity shares or other
instruments traded on the Stock Exchange, known as risk capital, is generally
not an appropriate avenue for someone of limited resources/limited investment
and/or trading experience and low risk tolerance. You should therefore carefully
consider whether such trading is suitable for you in the light of your financial
condition. In case you trade on NSE and suffer adverse consequences or loss,
you shall be solely responsible for the same and NSE, its Clearing Corporation
and/or SEBI shall not be responsible, in any manner whatsoever, for the same
and it will not be open for you to take a plea that no adequate disclosure
regarding the risks involved was made or that you were not explained the full
risk involved by the concerned member. The constituent shall be solely
responsible for the consequences and no contract can be rescinded on that
account. You must acknowledge and accept that there can be no guarantee of
profits or no exception from losses while executing orders for purchase and/or
sale of a security being traded on NSE.

It must be clearly understood by you that your dealings on NSE through a

trading member shall be subject to your fulfilling certain formalities set out by
the trading member, which may interlaid include your filling the know your
client form, client registration form, execution of an agreement, etc., and are
subject to the Rules, Byelaws and Regulations of NSE and its Clearing
Corporation, guidelines prescribed by SEBI and in force from time to time and
Circulars as may be issued by NSE or its Clearing Corporation and in force
from time to time.

NSE does not provide or purport to provide any advice and shall not be
liable to any person who enters into any business relationship with any trading
member and/or sub-broker of NSE and/or any third party based on any
information contained in this document. Any information contained in this
document must not be construed as business advice/investment advice. No
consideration to trade should be made without thoroughly understanding and
reviewing the risks involved in such trading. If you are unsure, you must seek
professional advice on the same.
 BASIC RISKS INVOVLED IN TRADING ON THE
STOCK EXCHANGE (EQUITY AND OTHER
INSTRUMENTS)
1. Risk of Higher Volatility:
Volatility refers to the dynamic changes in price that securities undergo
when trading activity continues on the Stock Exchange. Generally, higher the
volatility of a security, greater is its price swings. There may be normally
greater volatility in thinly traded securities than in active securities. As a result
of volatility, your order may only be partially executed or not executed at all, or
the price at which your order got executed may be substantially different from
the last traded price or change substantially thereafter, resulting in notional or
real losses.

2. Risk of Lower Liquidity:

Liquidity refers to the ability of market participants to buy and sell
securities expeditiously at a competitive price and with minimal price
difference. Generally, it is assumed that more the numbers of orders available in
a market, greater is the liquidity. Liquidity is important because with greater
liquidity, it is easier for investors to buy or sell securities swiftly and with
minimal price difference, and as a result, investors are more likely to pay or
receive a competitive price for securities purchased or sold. There may be a risk
of lower liquidity in some securities as compared to active securities. As a
result, your order may only be partially executed, or may be executed with
relatively greater price difference or may not be executed at all.

Buying/selling without intention of giving and/or taking delivery of a

security, as part of a day trading strategy, may also result into losses, because in
such a situation, stocks may have to be sold/purchased at a low/high prices,
compared to the expected price levels, so as not to have any obligation to
deliver/receive a security.

3. Risk of Wider Spreads:

Spread refers to the difference in best buy price and best sell price. It
represents the differential between the price of buying a security and
immediately selling it or vice versa. Lower liquidity and higher volatility may
result in wider than normal spreads for less liquid or illiquid securities. This in
turn will hamper better price formation.

4. Risk-reducing orders:
Most Exchanges have a facility for investors to place "limit orders, "stop
loss orders" etc". The placing of such orders (e.g., "stop loss orders, or "limit"
orders) which are intended to limit losses to certain amounts may not be
effective many a time because rapid movement in market conditions may make
it impossible to execute such orders.

A "market" order will be executed fully and promptly without regard to

price and that, while the customer may receive a prompt execution of a
"market" order, the execution may be at available prices of outstanding orders,
which satisfy the order quantity, on price time priority. It may be understood
that these prices may be significantly different from the last traded price or the
best price in that security.

A "limit" order will be executed only at the "limit" price specified for the
order or a better price. However, while the customer receives price protection,
there is a possibility that the order may not be executed at all.

A stop loss order is generally placed "away" from the current price of a
stock, and such order gets activated if and when the stock reaches, or trades
through, the stop price. Sell stop orders are entered ordinarily below the current
price, and buy stop orders are entered ordinarily above the current price. When
the stock reaches the pre-determined price, or trades through such price, the stop
loss order converts to a market/limit order and is executed at the limit or better.
There is no assurance therefore that the limit order will be executable since a
stock might penetrate the pre-determined price, in which case, the risk of such
order not getting executed arises, just as with a regular limit order.

5. Risk of News Announcements:

Issuers make news announcements that may impact the price of their
securities. These announcements may occur during trading, and when combined
with lower liquidity and higher volatility, may suddenly cause an unexpected
positive or negative movement in the price of the security.

6. Risk of Rumours:
Rumours about companies at times float in the market through word of
mouth, financial newspapers, websites or news agencies, etc. The investors
should be wary of and should desist from acting on rumours.

7. System Risk:
High volume trading will frequently occur at the market opening and
before market close. Such high volumes may also occur at any point in the day.
These may cause delays in order execution or confirmation.

During periods of volatility, on account of market participants

continuously modifying their order quantity or prices or placing fresh orders,
there may be delays in order execution and its confirmations.

Under certain market conditions, it may be difficult or impossible to

liquidate a position in the market at a reasonable price or at all, when there are
no outstanding orders either on the buy side or the sell side, or if trading is
halted in a security due to any action on account of unusual trading activity or
stock hitting circuit filters or for any other reason.
8. System/Network Congestion:
Trading on NSE is in electronic mode, based on satellite/leased line based
communications, combination of technologies and computer systems to place
and route orders. Thus, there exists a possibility of communication failure or
system problems or slow or delayed response from system or trading halt, or
any such other problem/glitch whereby not being able to establish access to the
trading system/network, which may be beyond the control of and may result in
delay in processing or not processing buy or sell orders either in part or in full.
You are cautioned to note that although these problems may be temporary in
nature, but when you have outstanding open positions or unexecuted orders,
these represent a risk because of your obligations to settle all executed
transactions.
 INVESTMENT IN EQUITY

EQUITY OVERVIEW
Equity shares are usually regarded as corner stone of corporate financial
resources. The ordinary shares provide a cushion of safety against temporary
unfavorable developments as the payment of dividends is not compulsory and is
depend on the discretion of management.
The reason for wide public interest in these securities is the possibility of
trading in stock exchange, free transferability, and marketability. Equity shares
constitute the ownership capital of a company and the equity holders have the
right of voting and sharing in profits and assets in proportion to his holding in
the total net assets of the company. He is entitled to all rights and obligations as
an owner and to residual profits. The dividend distributed to them may be
uncertain, variable and fluctuating. The equity holder gets his return in the form
of dividends distributed plus capital appreciation on his shares. The dividends
distributed depend upon the net earnings of the company after meeting all
expenses. This would influence the share price in the market, which may lead to
fluctuations in the prices either upward or downward and in turn capital
appreciation or depreciation.
Definition of Share:
According to section 2 (46) of the Indian Companies Act a share can be
defined as “The capital of a company and includes stock except where a
distinction between stock and share is expressed or implied.”
Farewell says that “The interest of a shareholder in the company is measured by
a sum of money, for the purpose of liability in the first place and of interest in
the second but also consisting of a series of mutual convenient entered into by
all the shareholders interest.
Merit of Equity Shares

(i) Financing through equity shares does not impose any burden on the
company, since payment of dividend on these shares depends on the
availability of profits and the discretion of the directors.
(ii) Capital raised through equity shares is perpetual source for the company
since it is not repayable during the life time of the company. It is repayable
only in the event of company’s winding up and that too only after the
claims of preference shareholders have been met in full.
(iii) Equity shares do not carry any charge against the assets of the company
hence the capacity of the company to raise additional funds through
borrowing on the security of its assets is in no way diminished.
(iv) Financing through equity shares also provides the company with
sufficient flexibility in the utilization of its profits and funds, since neither
the payment of dividend is compulsory nor any provision is to be made for
repayment of capital.

Demerit of Equity Shares

1. Financing through equity shares is costly as compared to financing

through preference shares or debentures; on account of greater risk
expectation of the equity shareholders is also high as compared to
preference shares or debentures. Moreover, the dividend on equity shares
is not deductible as an expense out of profits for taxation purpose.
2. The control of the company can be easily manipulated through converting
of shares by a group of shareholders for their personal advantage at the
cost of company’s interest.
3. Conservative management often avoids issue of addition equity shares to
raise additional funds. Since the new shareholders are entitled to vote at
 par with the existing shareholders, this increases the possibility of
transferring of control form the existing holder to new holders of equity
shares.
4. Excessive reliance on financing through equity shares reduces the
capacity of the company to trading on equity. This may ultimately result
in over capitalization of the company.
5. The cost of underwriting and distributing the equity share capital is
generally higher than preference share capital or debentures.
 Investment Decision

It is important to save, but it is more important to invest money

effectively. Inflation is the deadly eroding your wealth. The power of
compounding over time is really magical. Lastly, by hording cash, you’re
actually losing money. Not to mention the cost of opportunities foregone.

Planning for investment

1. Invest in few Scripps
In order to get the best returns on investment with spread of risk,
investors need to invest in multiple companies. So, investors have number of
companies in their portfolio. If numbers of companies are single digit, spread of
risk is not minimum, and various sectors cannot be properly represented. On the
other hand, if such number is too large, say 50-100; it is difficult to monitor
such a size of portfolio. As a result, some of the investment gets devalued
without coming to the notice of investors. Ideally, number of Scripps in a
portfolio should be about 15-20. We always advise to choose from high market
capitalization companies.
2. Selection of Scripps
In selection of Scripps, investors should apply two criterions: Sector and
Company. Higher weightage should be assigned to sunrise industries followed
by growth industries. Low growth sectors should be ignored in formation of a
portfolio. Once proportion of investment in particular industry is decided, one
should look for good companies within that segment. Selection of Scripps is not
a one-time decision. It is a continuous process of selection and review regularly.
Numbers and title of the companies should be reviewed and reshuffled from
time to time.
 3. Purchase in phases
It has become a practice of many persons to invest whenever they funds
in their hands, ignoring the timings; and sell whenever funds are required.
Purchases should be made gradually, once broad parameters of portfolio are
considered. Whenever there is a bearish trend, likely to be reversed, investor
should take position in steps. Purchases should be made when there is a decline
in the market. Those who have earned maximum have purchased at the time of
panic sale situations. This is a systematic and regular exercise.
4. Sell in stages
Many investors have good judgment for entering the market, but do not
make sale decisions at appropriate time. They feel that one should sell only
when funds are required, and just hold them for long time. In fact, for earning
good returns, it is equally necessary that one make sale decisions also regularly.
When there is increase in the prices by 15-20%, one should unload the shares in
steps. When one is selling shares, it is not because the company is not good or
he is in need of funds. Sale decisions on one hand helps the investors to
capitalize gains, and provide opportunity on the other hand; to cover them up at
level at the time of correction in trends. With better sale decisions, the returns
can be maximized.
5. Regular monitoring
Once a portfolio is formed, it requires regular monitoring. This can be
done in two ways. By keeping separate files of companies in the portfolio.
Investor should prepare company wise files, and file annual reports, quarterly
results, and other relevant headings in the file. This will help to develop vital
insight into the companies, whose shares are held.
By keeping tab on prices, investors should note down prices of various
index and shares at regular interval, say weekly of fortnightly; in a
notebook or a diary. Now there are number of web sites available like
www.walletwatch.com, www.indiainvest.com ,www.bloomberg.com where
such details can be placed.
When to buy & sell shares:

With high volatility prevailing in the market, major price fluctuations in equities
are not uncommon. Therefore, apart from ascertaining ‘which’ stock to buy or
sell, it becomes equally important to consider ‘when’ to buy or sell. Any
investor should be aware of the fact where all the investor is following i.e., Buy
Low. Sell High.
That means we should buy stocks at a low price and sell them at a high price.

When to buy
Three ways by which we can figure that out what it is about this stock that
makes it hot.
1. Earnings per Share (EPS): How well the company is doing
EPS is the total earning or profits made by company (during a given period of
time) calculated on per share basis. It aims to give an exact evaluation of the
returns that the company can deliver.

Example:
Company XYZ Ltd. Capital: Rs 100 crore (Rs 1 billion).
Capital is the amount the owner has in the business. As the business grows and
makes profits, it adds to its capital. This capital is subdivided into shares (or
stocks). The capital is divided into 100 million shares of Rs 10 each.
Net Profit in 2003-04: Rs 20 crore (Rs 200 million).
EPS is the net profit divided by the total number of shares.
EPS = net profit/ number of shares
EPS = Rs 20 crore (Rs 200 million)/ 10 crore (100 million) shares = Rs 2 per
share
Lesson to be learnt
1. If a company's EPS has grown over the years, it means the company is doing
well, and the price of the share will go up. If the EPS declines, that's a bad sign,
and the stock price falls.
2. Companies are required to publish their quarterly results. Keep an eye out for
these results; check for the trend in their EPS.
3. Price earnings ratio (PE ratio): How other investors view this share
An indicator of how highly a share is valued in the market. It arrived at by
dividing the closing price of a share on a particular day by EPS. The ratio tends
to be high in the case of highly rated shares. The average PE ratio for companies
in an industry group is often given in investment journal. Two stocks may have
the same EPS. But they may have different market prices. That's because, for
some reason, the market places a greater value on that stock. PE ratio is the
market price of the stock divided by its EPS.
PE = market price/ EPS
let’s take an example of two companies.
Company XYZ Ltd
Market price = Rs 100
EPS = Rs 2
PE ratio = 100/ 2 = 50
Company ABC Ltd
Market price = Rs 200
EPS = Rs 2
PE ratio = 200/ 2 = 100
In the above cases, both companies have the same EPS. But because their
market price is different, the PE ratio is different.
Lesson to be learnt
· In the case of EPS, it is not so much a high or low EPS that matters as the
growth in the EPS. The company's PE reflects investors' expectations of future
growth in the EPS. A high PE company is one where investors have hopes that
earnings will rise, which is why they buy the share.
3. Forward PE: Looking ahead
The stock market is not nostalgic. It is forward looking. For instance, it
sometimes happens that a sick company, that has made losses for several years,
gets a rehabilitation package from its bank and a new CEO. As a consequence,
the company's stock shoots up. Because investors think the
company will do better in the future because of the package and new leadership,
and its earnings will go up. And we think it is a good time to buy the shares of
the company now. Suddenly, the demand for the shares has gone up. Because
stock prices are based on expectations of future earnings, analysts usually
estimate the future earnings per share of a company. This is
known as the forward PE. Forward PE is the current market price divided by the
estimated EPS, usually for the next financial year.
Forward PE = Current market price/ estimate EPS for the next financial
year.
To illustrate what we have been talking about, let's take the example of Infosys
Technologies.
Trailing 12-month EPS = Rs 56.82 (EPS of the last four quarters)
Closing price on January 6 = Rs 2043.15
PE = Price/EPS = 2043.15/ 56.82 = 35.95
Estimated EPS for 2004-05 = Rs 67
Estimated EPS for 2005-06 = Rs 90
these figures are according to brokers' consensus estimates.
Forward PE = current market price/ estimated EPS for next financial year
Forward PE for 2004-05 = 2043.15/ 67 = 30.49
Forward PE for 2005-06 = 2043.15/ 90 = 22.70
With an EPS growth of over 30%, a forward PE of 22.7 is not high, indicating
that there is scope
to be optimistic about the stock's price.
Lesson to be learnt
· Sometimes, investors look out for a low PE stock, expecting that its price will
rise in the future. But sometimes, low PE stocks may remain low PE stocks for
ages, because the market doesn't fancy them.
· Keep tab on the business news to check out the company's prospects in the
future.

When to sell
Stock Reaches Fair Value or Target Price
This is the easiest part of selling. We should sell when a stock reaches its fair
value. It is the main reason why we chose to buy it on the first place.
The target price can be computed by assessing the company’s estimated
financial performance over the next 3 to 5 years, computing its EPS and using
an acceptable P/E ratio to compute the future market price. Based on this future
estimated price and our required return on our investment, compute our target
price.

When the prices reaches Stop loss

It is advisable to always consider the possibility of a loss before making our
investment. We should decide how much loss we are willing to book in the
stock. The lower price i.e., the price at which we are willing curtail our loss, is
called ‘Stop Loss’.
Need the money
The generally happens due to improper planning. However, things happen. Even
the most carefully planned strategy may not work. Catastrophic events may
force investors to sell an investment if his household is affected by it.
The book is unclean
When management left their post abruptly or when the SEBI conduct a criminal
investigation on a company, it may be time to sell. Our assumption may be
inaccurate as a lot of fair value calculation is based on the company's balance
sheet, cash flow or other financial statement published by management.
Takeover news
When one of your stock holding is getting bought by other companies, it may be
time to sell. Sure, you might like the acquiring company but you still need to
figure out the fair value of the common stock of the acquiring company. If the
acquiring company is overvalued, then it is best to sell.
Other Investment Opportunity
Let us consider we bought stock A and it has risen to 10% below its fair value.
Meanwhile, we noticed that stock B fallen to below 50% of our calculated fair
value. This is an easy decision. We will sell our stock A and buy stock B. Our
goal as an investor is to maximize our investment return. Sacrificing a 10% of
return in order to earn a 50% return is a sensible way to do that.
Inaccurate Fair Value Calculation
As investors, we sometimes made errors in our fair value calculation. There are
factors that we might not take into accounts when researching a particular
company. For example, satyam scandal.
New Competitors with Better Products
When new competitors sprung up, the company that you hold might have to
spend more money in order to fend off competition. Recent example includes
the emergence of pay-per click advertising by Google. Any advertising business
such as newspapers or cable network, this new product by Google might hurt
profit margins and eventually the fair value of the stock.
Not having a valid reason to Buy
When we don't know why we bought a particular stock, we won't know how
much our potential return is or when we should sell it. This is the easiest way of
losing money. When we have no valid reason to buy, we should sell
immediately.
 GUIDELINES FOR LONG TERM
INVESTORS:-

• The investor should know how to analyze the share prices of the company &
pickup the undervalued shares.
• He should follow the principle of contrariness. This means that if everyone
buying the script, he should avoid that script buy such a script which
although is deserted but has a good potential in future.
• Before investing he should undertake a deep study on the Net sales, net
profit in relation to equity capital employed and should attempt to forecast
for the coming years.
• He should not rely on tips form friends, family, brokers or they buy and sell
merely on bunches this is usually one of the fastest ways to lose a bundle in
the market.
• If they follow the market trends connately then they can deliver excellent
returns.
• He should not invest his money in one or two company because if the
companies’ prices decline, he will have to bear a huge loss.
• He set his target of minimum profit before starting his operation in the field
of stock market.
 GUIDELINES FOR SPECULATORS
• Plan your trade and trade your plan.
• Avoid getting in or out of the market too often.
• Losses make the speculator studious – not profits. Take advantage of every
loss to improve your knowledge of market action.
• The most profitable trading tool is a simply following the trend.
• The most difficult task in speculation is not predication but self control
successful trading is difficult and frustrating. You are the most important
element in the success equation.
• When a markets gotten away and you’ve missed the first leg. You should
still consider jumping even if it is dangerous and difficult.
• Commodities are never high to being buying or too low to begin selling. But
after the initial transaction, avoid make a second unless the first shows a
profit.
• The clearest and easiest way to determine a trend is from previous highs and
lows. Higher highs and higher lows make a down trend.
 RESEARCH OBJECTIVES
MAIN OBJECTIVE OF THE RESEARCH

The objective of my research is “TO STUDY INVESTORS

INVESTMENT BEHAVIOR IN STOCK MARKET & SUGGESTING
GOOD INVESTMENT STRATEGY “

OTHER OBJECTIVES

 To study the investment habit of the people in the stock market.

 To know about the people’s preference for investment whether

investment or trading.

 To understand the frequency of investment in the market.

 To analyze from total saving how much portion of amount people invest
in stock market.

 To understand how much people invest at a time.

 To know that for how much period people invest in stock market.

 To understand the expected return of people from investment.

 To know on what basis people invest in stock market.

 The preference of people for investment in a particular sector.

 To analyze the preferred price range of share by people.

 To understand the people’s investment strategy.

 To find out the common mistakes made by investors.

 To define certain views for making money in stock market.

 RESEARCH METHODOLOGY

 RESEARCH APPROACH

To achieve this objective I have conducted a survey and then collected data and
analyzed it and lastly find out the needed results

 SAMPLING METHOD

I have used simple random sampling method for my research

 SOURCES OF DATA COLLECTION

Data sources of are two types

1) Primary data sources
2) Secondary data sources

1) Primary data sources

Primary data can be collected through the questionnaire ,calling to clients and others
people. Questionnaire contain the different question about the investment behavior
and investment strategy. Primary data sources are very helpful for research. This
provides information related to the investor’s investment behavior & investment
strategy.

2) Secondary data sources

Secondary data can be collected through e-learning.,newspapers,magzines,internet

etc.

 SAMPLE SIZE

I used 60 samples for my study

 STATISTICAL TOOL USED FOR DATA ANALYSIS

PERCENTILE METHOD

 AREA OF STUDY
Clients, Employees of DESTIMONEY SECURITIES PVT. LTD and peoples from
different places of Delhi regions .