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  • Phase II
  • Phase V
  • 2. Debt / Income Funds
  • 4. Money Market / Liquid Funds
  • 5. Hybrid Funds
  • Asset Allocation Funds –
  • 6. Commodity Funds
  • 7. Real Estate Funds
  • 8. Exchange Traded Funds (ETF)
  • 9. Fund of Funds
  • The role of stock exchanges
  • Trading
  • Circuit breakers:-
  • Leveraged strategies
  • Bombay stock exchange

A project report on

“Analysis of Mutual fund & customer preference towards mutual fund”
With reference to

IL & FS investsmart
Visakhapatnam Submitted in partial fulfillment for the course in

Master of Business Administration-IB (2008-10)
Under the esteemed guidance of Prof. Dr. M.Subramanyam Submitted by


Gitam Institute Of International Business
Rushikonda, Visakhapatnam

OBJECTIVES: To find out percentage of savings in mutual fund.

 To find out the level of satisfaction towards Return on Investment on Mutual fund.

 To find out the factors which are influencing the investors to invest.

METHODOLOGY:Primary Data:- Questionnaire Secondary Data:Magazines, publications, books and Internet

LIMITATIONS: The study is limited to Vishakhapatnam only  This study is done with reference to one Brokerage firm only.

 The sample size is restricted to 100 only which cannot give clear details.


A mutual fund is a mechanism whereby a financial institution or company pools funds from individuals and invests the pooled amounts in stocks, bonds and other securities. In other words, you and some other investors come together, pool your funds and entrust it to a company for profit gaining investments The company in turn invests the collected money in stocks, bonds and other securities. The combined holdings of a mutual fund are its portfolio. Each individual investor is issued units in proportion to the shares owned. Mutual fund investors are known as unit holders. Mutual funds spread the risk of investment by investing in diverse industries. It accommodates investors who can't spend a lot of money for investing individually.

Massachusetts Investors Trust (now MFS Investment Management) was founded on March 21, 1924, and, after one year, it had 200 shareholders and $392,000 in assets. The entire industry, which included a few closedend funds, represented less than $10 million in 1924. The stock market crash of 1929 hindered the growth of mutual funds. In response to the stock market crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the Securities and Exchange Commission (SEC) and provide prospective investors with a prospectus that contains required disclosures about the fund, the securities themselves, and fund manager. The SEC helped draft the Investment Company Act of 1940,

which sets forth the guidelines with which all SEC-registered funds today must comply. With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s, there were approximately 270 funds with $48 billion in assets. The first retail index fund, First Index Investment Trust, was formed in 1976 and headed by John Bogle, who conceptualized many of the key tenets of the industry in his 1951 senior thesis at Princeton University[3]. It is now called the Vanguard 500 Index Fund and is one of the world's largest mutual funds, with more than $100 billion in assets. A key factor in mutual-fund growth was the 1975 change in the Internal Revenue Code allowing individuals to open individual retirement accounts (IRAs). Even people already enrolled in corporate pension plans could contribute a limited amount (at the time, up to $2,000 a year). Mutual funds are now popular in employer-sponsored "defined-contribution" retirement plans such as (401(k)s) and 403(b)s as well as IRAs including Roth IRAs.

HISTORY OF INDIAN MUTUAL FUND:The history of the Indian mutual fund industry can be traced to the formation of UTI in 1963. This was a joint initiative of the Government of India and RBI. It held monopoly for nearly 30 years. Since 1987, non-UTI mutual funds entered the scenario. These consisted of LIC, GIC and publicsector bank backed Indian mutual funds. SBI Mutual fund was the first of this kind. 1993 saw the entry of private sector players on the Indian Mutual Funds scene. Mutual fund regulations were revised in 1996 to accommodate changing market needs.

Fund Structure and Constituents:In USA Mutual funds are investment companies when it comes to UK open ended funds are unit trusts; close ended funds are investment trusts. In case of India Mutual funds are established as trusts and fall under regulatory jurisdiction of SEBI. In India the main fund constituents are :- sponsor - trust – trustees – asset management company – custodian – transfer agent and distributor. In India mutual fund is a pass-through structure. Unit –holders are the beneficial owners of the net assets of the mutual fund scheme. Trustees are the registered owners of the scheme assets and have a fiduciary responsibility.


1) Person or a body that settles/sets up/establishes the mutual fund trust. 2) Appoints the trustee company or board of trustees, AMC, custodian 3) Qualification a) Contribution-40% net worth of AMC
b) Should have firm financial track record for 5 years.

Trust Trustees
1. There can be a trustee company (comes under companies Act, 1956 as well) or board of trustees (comes under Indian Trust Act only) 2. Investments are held by them in fiduciary capacity 3. Appointment of the asset management company (with prior approval of SEBI) and overseeing its functions. 4. All mutual fund schemes to be approved by trustees 5. Right to dismiss AMC (with SEBI approval) 6. Trustees receive fees for services rendered 7. Must furnish half-yearly report to SEBI on fund activities

Asset Management company
1. It is the investment manager 2. Should have a net worth of rs10 cr. All the time 3. Responsible to trustees 4. Submit quarterly report to SEBI on activities. 5. Must comply with SEBI regulations.

Other fund constituents :Custodian:1. Should be independent of the sponsor 2. Appointed by the sponsor either directly or acting through the board of trustees. 3. Safe keeping of physical securities

Participating in cleaning through depository. From then on. This year marked the entry of private sector mutual funds. Should be AMFI registered. May act on behalf of different funds 3. 4. giving the Indian investors a wider choice of selecting mutual funds. The industry has also witnessed several mergers and acquisitions proving it advantageous to the Indian investors. The stock investment scenario till then was restricted to UTI (Unit Trust of India) and public sector. Appointed by AMC 2. the graph of mutual fund players has been on the rise with many foreign mutual funds also setting up funds in India.4. Issue and redeem units on behalf of the fund 2. TURNING POINT:The year 1993 was a remarkable turning point in the Indian Mutual Fund industry. Distribution:1. Transfer Agents:1. Independent individual are appointed as agents. . Other related services such as preparation of transfer documents and updating investor records. Keeping account of securities of the schemes 5.

professionally managed basket of securities at a relatively low cost. There have been revisions and amendments from time to time. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified. Even mutual funds promoted by foreign entities come under the purview of SEBI when operating in India. debentures and other securities. The flow chart below describes broadly the working of a mutual fund: . OVERVIEW OF MUTUAL FUNDS:CONCEPT 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 capital market instruments such as shares. SEBI (The Securities and Exchange Board of India) is the regulating authority that SEBI formulates policies and regulates the mutual funds to protect the interest of the Indian investors. SEBI has revised its regulations to allow Indian mutual funds to invest in both gold and gold related instruments.GOVERNING BODY:In India. The income earned through these investments and the capital appreciation realized is shared by its unit holders in proportion to the number of units owned by them.

Mutual Fund Operation Flow Chart ORGANIZATION OF A MUTUAL FUND There are many entities involved and the diagram below illustrates the organizational set up of a mutual fund: .

Organisation of a Mutual Fund ADVANTAGES OF MUTUAL FUNDS The advantages of investing in a Mutual Fund are: 1. Tax benefits 11. Transparency 8. Liquidity 7. Flexibility 9. Convenient Administration 4. Well regulated PHASES OF Mutual Fund Industry in India Phase 1:Establishment and Growth of Unit Trust of India . Return Potential 5. Professional Management 2. Choice of schemes 10. UTI was set up by the Reserve Bank of India and it continued to operate .1964-87 Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. Diversification 3. Low Costs 6.

By 1993. GIC Mutual Fund and PNB Mutual Fund. the assets under management of the industry increased seven times to Rs. UTI launched its first scheme in 1964.004 6. six more schemes between 1981-84. UTI's assets under management grew ten times to Rs 6700 crores.under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was tranferred in the hands of Industrial Development Bank of India (IDBI).9% Total 13.05 7 of UTI 38.964 8. In November 1987. Entry of Public Sector Funds . Indian Bank Muatual Fund. which attracted the largest number of investors in any single investment scheme over the years. Bank of India Mutual Fund. Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986.1993-96 The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutal fund . By the end of 1987. However. UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors.1% Phase III. SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. Emergence of Private Sector Funds . Mobilis Amo 199293 unt Mobi lised Assets Under Manage ment ation as % gross Domest ic Savings 11. Mastershare (Inida's first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. 47. named as Unit Scheme 1964 (US-64). Phase II. UTI remained to be the leader with about 80% market share. SBI Mutual Fund was later followed by Canbank Mutual Fund.2% Public Sector 1. It launched ULIP in 1971.004 crores.757 0.247 5. LIC Mutual Fund.02 1 47.1987-1993 The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987.

The mobilisation of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. However. The primary objective behind this was to bring all mutual fund players on the same level.173 59. Phase IV. UTI Mutual Fund is still the largest player in the industry. Growth and SEBI Regulation . UTI was re-organised into two parts: 1.1996-2004 The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. SEBI (Mutual Funds) Regulations.industry in 1993.732 7. Assured Return Schemes) are being gradually wound up. with an objective to educate investors and make them informed about the mutual fund industry.748 .377 13.966 21.039 42. Private funds introduced innovative products. about 11 private sector funds had launched their schemes. 2. In 1999. CRORES) PUBLIC SECTOR PRIVATE SECTOR FROM TO UTI TOTAL 3101-April-98 March99 3101-April-99 March00 11. investment techniques and investorservicing technology. In February 2003. The Specified Undertaking. both by SEBI and AMFI.67 9 1. By 1994-95.The UTI Mutual Fund Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64. provided a wide range of choice to investors and more competition in the industry. Invetors' interests were safeguarded by SEBI and the Government offered tax benefits. there was a significant growth in mobilisation of funds from investors and assets under management which is supported by the following data: GROSS FUND MOBILISATION (RS. Various Investor Awareness Programmes were launched during this phase. the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament.53 6 4.

923 2.246 7.20.613 1.979 * 7. Growth and Consolidation .-03 March03 3101-April-03 March04 3101-April-04 March05 3101-April-05 March06 10.632 5.523 01-April-02 5.83.352 92.14.320 8.2004 Onwards . 53.90.3101-April-00 March01 3101-April-01 March02 31Jan-03 3101-Feb.551 2.505 22. CRORES) T O T A L 6 31March-99 8.03.267 1.860 4 7 2 U AS ON T I PUBLI C SECTO R PRIVAT E SECTO R Phase V.41 3 6.64.192 74.292 6.39.190 - 1.643 13.446 9.21.435 65.36.416 8.259* 58.957 4.694 - 68.558 5.662 - 1.158 ASSETS UNDER MANAGEMENT (RS.

This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players. There were 29 funds as at the end of March 2006. Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. more international mutal fund players have entered India like Fidelity.The industry has also witnessed several mergers and acquisitions recently. Franklin Templeton Mutual Fund etc. Simultaneously. examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life. .

Based on Investment objective: Growth scheme or Equity scheme Income scheme or debt oriented scheme Balanced scheme Money market scheme.Types of Mutual funds Existing types of mutual funds can be classified into three types. They are: Based on Maturity period: Open-ended mutual fund Close-ended mutual funds. . Other Equity-related schemes: Tax savings scheme Index scheme Sectoral scheme.

1. Also. With no fixed maturity period. mutual funds. Open ended mutual funds If you are looking for a scheme that gives you the feasibility for subscription all through the year. . an open-end mutual fund continually issues new shares to investors and does not trade on an exchange. An additional feature of close-ended mutual fund is the option of selling the units back to the mutual fund.the market value is driven by supply and demand for the shares. Close ended mutual funds Unlike an open-ended mutual fund. you can buy and sell units at Net Asset Value (NAV) prices. Once the initial public issue of shares is over. A major difference is that closed-end funds behave more like a stock -. at NAV related prices. and mistakenly called. you can buy or sell the units on the respective stock exchanges. the maturity period is fixed ranging from 3-15 years. you have the option for subscription only during a specified period. normally at the time of public issue of shares or debentures.As a prospective mutual fund investor. Ease of liquidity is the key aspect of open-ended mutual funds. income scheme or balance scheme either as an open-ended or a close-ended mutual fund. On the other hand. 2. an open-ended mutual fund is the appropriate choice. you can decide to invest in growth scheme. Closed-end funds are often confused with.

bonds. If we want to buy shares of the fund.Perhaps the best way to understand a closed-end fund is to compare it with an open-end mutual fund. or a combination of the two Professionally managed by an investment advisor Either actively or passively managed Required to distribute capital gains and dividends to shareholders Regulated by the U. as “closed-ended” because the cash flow door -. The manager only invests a fixed amount of cash that was raised in an initial public offering of the fund’s shares.into and out of the fund -. In other words. Similarities in Closed-End Funds and Mutual Funds Like mutual funds.both into and out of the fund -.is always (with a few exceptions) closed. we buy the shares from another investor via a stock exchange. The number of fund shares do not fluctuate based on investor demand. Closed-End Funds We can think of a mutual fund as “open-ended” because the cash flow door -. Open-End Mutual Funds vs. then.is always open. closed-end funds are: • • • • • A diversified portfolio of stocks.S. the portfolio manager continues to invest new cash from investors. and the fund company continues to offer new shares of the fund to new investors. Securities and Exchange Commission Differences in Closed-End Funds and Mutual Funds Unlike mutual funds. closed-end funds: • • • • • Are traded on a stock exchange (NSYE) or over-the-counter (NASDAQ) Are bought and sold at market price versus the underlying securities’ value Are valued based on supply and demand for the fund Can be purchased and sold throughout the trading day Use leverage (borrow cash to invest in more assets) to enhance their returns Buying and Selling . We can think of a closed-end fund.

90. in case the proportion of investment is higher in equities than in fixed income securities. The cost of the transaction for a closed-end fund is similar to the cost of a stock trade.these are key aspects of . but the change in interest rates (as and when it become effective) is likely to have an impact on returns. Based on Investment objective: Growth scheme or Equity scheme If you do not expect immediate liquidity and willing to gain over a period of time. You can buy both types of funds through a broker. Balanced scheme Investing in balanced fund. money market instruments and government securities. at the same time. corporate debentures. This means. The net asset value of your funds is likely to increase or decrease with corresponding changes in interest rates. the prices for both would be different. corporate debentures and government securities). Under the growth scheme. political and economic factors.A closed-end fund trades like a stock -.10 difference is known as the bid-ask spread and is considered the cost of doing business on the exchange or over the counter. Over a long period of time they promise increased return on investments but are exposed to high risks given the perennial fluctuation in equity markets. Money Market schemes Easy liquidity. you might sell at the bid price of $9. The broker processes the transaction on the stock exchange in the case of closed-ends. mutual funds invest a majority of funds in equities (shares) and a small portion in money market instruments. There are also internal management fees paid to the fund company to manage the fund. Investments are made in fixed income securities such as bonds. In other words. this involves investing in income funds that can fetch you regular and steady income. This is possible as the funds are invested both in equities (shares) and fixed income securities (such as bonds. If you place an order to buy a closed-end fund and.on a stock exchange or over-the-counter -while an open-end mutual fund is bought and sold directly with the fund company. which is influenced by external factors such as social. Another cost to be aware of is the bid-ask spread. you enjoy the twin benefits of growth and a regular income. Income scheme Also termed as monthly income scheme. You may not benefit from capital appreciation as it is very limited but the risks are much lower compared to the growth fund. For instance. This $. Fluctuations in the equity market may not affect you. or with the fund company in the case of mutual funds. as an investor you would be exposed to higher risks. preservation of capital and moderate income. growth scheme could be your preferred choice. while you would buy at the ask price of $10. your cost to buy the fund and the price you would get for selling the fund would be different. place an order to sell the fund.

for 3 years or more. you cannot assign/transfer/pledge/redeem/switch the units purchased under this scheme until completion of 3 years from the date of allotment of individual units. Index schemes Under this scheme. Governed by the provisions of the Income Tax Act. It is advisable that an investor looking to invest in an equity fund should invest for long term i. Sectoral schemes You can decide to invest in specific sectors namely. your funds are invested exclusively in shortterm instruments such as treasury bills. or a specific sector is assessed. it is less volatile compared to other funds. Because of these speculative investments Aggressive Growth Funds become more volatile and thus. This is because the portfolio is less diversified and very specific. Subscriptions to the units not more than Rs. Commercially safe. . the performance of the market as a whole. Other Equity-related schemes: Tax Savings scheme Equity linked savings schemes (ELSS) and pension schemes are the two schemes that offer tax rebates or tax benefits.In Aggressive Growth Funds. you can enjoy Tax incentives for investments in specified avenues. 000 would be eligible to a deduction from Income tax.money market schemes. In the order of decreasing risk level. are prone to higher risk than other equity funds.10. Under this scheme. Banking. Equity Funds:Equity funds are considered to be the more risky funds as compared to other fund types. Sectoral schemes pose high risk as compared to equity schemes. commercial paper. certificates of deposit and interbank call money. fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. there are following types of equity funds: Aggressive Growth Funds . However. Pharmaceuticals etc. You can select money market schemes for its short period and less risks. Information Technology. FMCG. This helps you to decide on whether to invest on the market as a whole or in any specific fund.e. There are different types of equity funds each falling into different risk bracket. government securities etc. concentrating on selected industrial group. but they also provide higher returns than other funds.

These funds invest in big. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. blue chip companies (less than Rs. which is otherwise considered as a risky instrument. However. Option Income Funds write options on a large fraction of their portfolio. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. Proper use of options can help to reduce volatility. Speciality funds are concentrated and thus. Banking. investment gets risky. Growth Funds invest in those companies that are expected to post above average earnings in the future. Speciality Funds .Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. are comparatively riskier than diversified funds. Option Income Funds*: While not yet available in India. 500 crores) and Small-Cap companies have market capitalization of less than Rs. Auto. The exposure of these funds is limited to a particular sector (say Information Technology. Pharmaceuticals or Fast Moving Consumer Goods) which is why they are more risky than equity funds that invest in multiple sectors. high dividend . Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. 500 crores. 2500 crores but more than Rs.Growth Funds ..Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Without entirely adopting speculative strategies. There are following types of speciality funds: Sector Funds: Equity funds that invest in a particular sector/industry of the market are known as Sector Funds. Market capitalization of Mid-Cap companies is less than that of big. foreign securities funds are exposed to foreign exchange rate risk and country risk.

Value stocks are generally from cyclical industries (such as cement. steel. Sensex) are less risky than equity index funds that follow narrow sectoral indices (like BSEBANKEX or CNX Bank Index etc).) which make them volatile in the short-term. to a large extent. Value Funds .Value Funds invest in those companies that have sound fundamentals and whose share prices are currently under-valued. like all other funds diversified equity funds too are exposed to equity market risk. sugar etc. However. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. and then sell options against their stock positions. These funds are well diversified and reduce sector-specific or company-specific risk.Equity Index Funds have the objective to match the performance of a specific stock market index. a minimum of 90% of investments by ELSS should be in equities at all times. The portfolio of these funds comprises of shares that are trading at a low Price to Earning Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Diversified Equity Funds . Therefore. Equity Index Funds . diversified equity funds invest mainly in equities without any concentration on a particular sector(s). Equity index funds that follow broad indices (like S&P CNX Nifty. which generate stable income for investors. are more risky. it is advisable to invest in Value funds with a longterm time horizon as risk in the long term. . As per the mandate. is reduced. Narrow indices are less diversified and therefore. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or speciality funds. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past.Except for a small portion of investment in liquid money market. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return.yielding companies.

Unlike diversified debt funds. Debt funds that target high returns are more risky. Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds. Some examples of focused debt funds are sector. High Yield Debt funds . focused debt funds are narrow focus funds that are confined to investments in selective debt securities. Debt / Income Funds Funds that invest in medium to long-term debt instruments issued by private companies. . funds that invest only in Tax Free Infrastructure or Municipal Bonds. debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade".Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. is shared by all investors which further reduces risk for an individual investor. To minimize the risk of default. In order to ensure regular income to investors. they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. debt (or income) funds distribute large fraction of their surplus to investors. focused debt funds are more risky as compared to diversified debt funds. Although not yet available in India. although they may earn at times higher returns for investors.As we now understand that risk of default is present in all debt funds.) are known as Debt / Income Funds. But. banks. Although debt securities are generally less risky than equities. and therefore. Any loss incurred. specialized and offshore debt funds. financial institutions. High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". Based on different investment objectives. these funds are conceivable and may be offered to investors very soon.The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction.Equity Income or Dividend Yield Funds . issued by companies of a specific sector or industry or origin. there can be following types of debt funds: Diversified Debt Funds . The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk. debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". 2. Because of their narrow orientation. governments and other entities belonging to various sectors (like infrastructure companies etc. Focused Debt Funds* . on account of default by a debt issuer.

thus making money market / liquid funds the safest investment option when compared with other mutual fund types.Assured Return Funds . Fixed Term Plan Series . Gilt Funds Also known as Government Securities in India. These securities are highly liquid and provide safety of investment. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction. In the past. 4. but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. However. hybrid funds are those funds whose portfolio includes a blend of . However. no AMC in India offers assured return schemes to investors. the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). However. fixed term plans are not listed on the exchanges. Issued by the Government of India.e. even money market / liquid funds are exposed to the interest rate risk. Eventually. Currently. government had to intervene and took over UTI's payment obligations on itself.Although it is not necessary that a fund will meet its objectives or provide assured returns to investors. Fixed term plan series usually invest in debt / income schemes and target short-term investors. Money Market / Liquid Funds Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. though possible.Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. UTI was not able to fulfill its promises and faced large shortfalls in returns. Unlike closed-end funds. Hybrid Funds As the name suggests. These funds are generally debt funds and provide investors with a low-risk investment opportunity. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period. Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. To safeguard the interests of investors. SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. Monthly Income Plans of UTI) that assured specified returns to investors in the future. 3. these investments have little credit risk (risk of default) and provide safety of principal to the investors. Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). The typical investment options for liquid funds include Treasury Bills (issued by governments). like all debt funds. 5. UTI had offered assured return schemes (i. gilt funds too are exposed to interest rate risk.

The level of risks involved in these funds is lower than growth funds and higher than income funds.) or commodity companies or commodity futures contracts are termed as Commodity Funds. money market or non-financial (physical) assets like real estate.. 6.Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. Commodity Funds Those funds that focus on investing in different commodities (like metals. debt. Asset Allocation Funds – Mutual funds may invest in financial assets like equity. .The portfolio of balanced funds include assets like debt securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India: Balanced Funds . These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. the success of these funds depends upon the skill of a fund manager in anticipating market trends. moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. commodities etc. crude oil etc. In other words. 7. Growth-and-Income Funds . and equity and preference shares held in a relatively equal proportion. gold futures or shares of gold mines) are common examples of commodity funds. Real Estate Funds Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies. "Precious Metals Fund" and Gold Funds (that invest in gold. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers to switch over from one asset class to another at any time depending upon their outlook for specific markets.equities. and therefore. are known as Specialized Real Estate Funds. debts and money market securities. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets. The objectives of balanced funds are to reward investors with a regular income. food grains. The objective of these funds may be to generate regular income for investors or capital appreciation. convertible securities.

the extent of investment and the duration of investment. 9. 7. flexibility of holding a single share (tradable at index linked prices) at the same time. set your objectives. these funds are quite popular abroad. are known as Fund of Funds. fees and company profile should be given due importance. Recently introduced in India. Advantages of professional expertise . Every investor must carefully read the prospectus to check the goals of the particular mutual fund. Check the market ratings for debt oriented schemes 6. 2. Assess the returns in the NAV. expenses. risk factors. Check out the advisors to the mutual fund and who manages it. just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Exchange Traded Funds (ETF) Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. 1.8. This will also throw light on the fees. size of the asset and liquidity features. Features of scheme. Fund of Funds Mutual funds that do not invest in financial or physical assets. 3. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes. * Funds not yet available in India Guide for selecting a mutual fund Before deciding to invest in a mutual fund. The biggest advantage offered by these funds is that they offer diversification. but do invest in other mutual fund schemes offered by different AMCs. which further helps in diversification of risks. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment. Compare with other schemes with similar investment objective 5. Seek expert opinions Advantages of investment in mutual funds 1. Consider past performance of all the schemes of the mutual fund 4. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices.

[1] The total world derivatives market has been estimated at about $791 trillion face or nominal value. To be able to trade a security on a certain stock exchange.2. Low costs/Affordability 7. 2. 4. in trading company stocks and other securities. The securities traded on a stock exchange include: shares issued by companies. 4. Ease of liquidity 5. Absence of guarantee on returns Extra fees and commissions (Ex: loads) Tax on profit made Discretion of fund's manager (not for index funds) STOCK EXCHANGE Stock exchange or bourse is a mutual organization which provides facilities for stock brokers and traders. Diversified investment options 3. these are securities listed on a stock exchange as well as those only traded privately. phone or the internet) Disadvantages of investment in mutual funds 1. Flexibility to achieve financial goals. Ease of operation (by mail. Electronic networks run modern markets are. unit trusts and other pooled investment products and bonds. The Demand and Supply in the stock markets is attracted by number of factors that affect the price of stocks. Governed by regulations for investors. Usually there is a central location at least for recordkeeping. Tax benefits 6. The size of the world stock market was estimated at about $36. it has to be listed there. 8. A stock market is a public market for the trading of company stock and derivatives at an agreed price. Stock exchange is often called the most important element of a stock market. providing them great speed and cost of transactions. 3. but trade is less linked to such a physical place. [3] .6 trillion US at the beginning of October 2008. [2] 11 times the size of the entire world economy. and for the issue of redemption of securities and other financial tools and capital events like the payment of income and dividends.

Verona. which traditionally refers to an actual value. The First Stock Exchanges In 11th century France the courtiers de change were concerned with managing and regulating the debts of agricultural communities on behalf of the banks. . Venetian bankers began to trade in government securities. In the middle of the 13th century.). it is more likely that in the late 13th century commodity traders in Bruges gathered inside the house of a man called Van der Burse. they could be called the first brokers. Muslim and Jewish merchants had already set up every form of trade association and had knowledge of many methods of financial dealings. disproving the belief that these were originally invented later by Italians. cannot be directly compared to a stock or a fixed income security. Some stories suggest that the origins of the term "bourse" come from the Latin bursa meaning a bag because. However. hung on the front of the house where merchants met. This was only possible because these were independent city states ruled by a council of influential citizens. Belgium. Moreover.The value of the derivatives market. and in 1309 they institutionalized this until now informal meeting and became the "Bruges Bourse". As these men also traded in debts. the sign of a purse. a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring. The idea spread quickly around Flanders and neighboring counties and "Bourses" soon opened in Ghent and Amsterdam. Historian Fernand Braudel suggests that in Cairo in the 11th century. There were people in Pisa. House Ter Beurze in Bruges. In 1351.e. not by a duke. in 13th century Bruges. the vast majority of derivatives 'cancel' each other out (i.. the Venetian Government outlawed spreading rumors intended to lower the price of government funds. Genoa and Florence who also began trading in government securities during the 14th century. because it is stated in terms of notional values.

1792. for instance. This is an attractive feature of investing in stocks. and can influence or be an indicator of social mood. twenty-four supply brokers signed the Buttonwood Agreement outside 68 Wall Street in New York underneath a buttonwood tree. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. In 1602. exchanges (generally famous as futures exchanges) got substantiated to trade futures contracts and then choices contracts. tend to be associated with increased business investment and vice versa. or raise additional capital for expansion by selling shares of ownership of the company in a public market. the trading of stocks began on a stock exchange in London. Share prices also affect the wealth of . An economy where the stock market is on the rise is considered to be an up and coming economy. On March 8.The Dutch later started joint stock companies. On May 17. properties got renamed to New York Stock & Exchange Board. This allows businesses to be publicly traded. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity. In the 19th century. In 1688. Rising share prices. New York Stock Exchange Importance of stock market Function and purpose The stock market is one of the most important sources for companies to raise money. In fact. the Dutch East India Company issued the first shares on the Amsterdam Stock Exchange. compared to other less liquid investments such as real estate. the stock market is often considered the primary indicator of a country's economic strength and development. It was the first company to issue stocks and bonds. 1817. which let shareholders invest in business ventures and get a share of their profits—or losses.

which could have been consumed.households and their consumption. will share in the wealth of profitable businesses. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion. through dividends and stock price increases that may result in capital gains. this may include the following: Raising capital for businesses The Stock Exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public. or acquire other necessary business assets. or kept in idle deposits with banks. resulting in stronger economic growth and higher productivity levels and firms. meaning that they collect and deliver the shares. increase its market share. it leads to a more rational allocation of resources because funds. In this way the financial system contributes to increased prosperity. Therefore. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. central banks tend to keep an eye on the control and behavior of the stock market and. hedge against volatility. in general. Financial stability is the raison d'être of central banks. . The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. The role of stock exchanges Stock exchanges have multiple roles in the economy. Exchanges also act as the clearinghouse for each transaction. Profit sharing Both casual and professional stock investors. are mobilized and redirected to promote business activity with benefits for several economic sectors such as agriculture. Mobilizing savings for investment When people draw their savings and invest in shares. on the smooth operation of financial system functions. Facilitating company growth Companies view acquisitions as an opportunity to expand product lines. and guarantee payment to the seller of a security. commerce and industry. increase distribution channels.

Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors. Creating investment opportunities for small investors As opposed to other businesses that require huge capital outlay. companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. largely. or financial crisis could .Corporate governance By having a wide and varied scope of owners. Webvan (2001). Barometer of the economy At the stock exchange. These bonds can be raised through the Stock Exchange whereby members of the public buy them. on market forces. Consequently. American International Group (2008). An economic recession. Parmalat (2003). The dot-com bubble in the early 2000s. Tel (2001). share prices rise and fall depending.com (2000). Lehman Brothers (2008). Companies like Pets. However. Sunbeam (2001). depression. MCI WorldCom (2002). some well-documented cases are known where it is alleged that there has been considerable slippage in corporate governance on the part of some public companies. it is alleged that public companies tend to have better management records than privately-held companies . investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. One. The issuance of such bonds can obviate the need to directly tax the citizens in order to finance development. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. Government capital-raising for development projects Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. thus loaning money to the government. Enron Corporation (2001). Adelphia (2002). and the subprime mortgage crisis in 2007-08. are classical examples of corporate mismanagement. the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature. and Satyam Computer Services (2009) were among the most widely scrutinized by the media. although by securing such bonds with the full faith and credit of the government instead of with collateral.

thus providing a marketplace. Circuit breakers:The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. by a method known as open outcry. . Participants in the stock market range from small individual stock investors to large hedge fund traders. who executes the order.eventually lead to a stock market crash. Their orders usually end up with a professional at a stock exchange. who can be based anywhere. It was introduced to control into the stock market in an attempt to prevent a re-occurrence of the events of Black Monday. Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accurate and controlled manner. When the bid and ask prices match. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of stock exchange is a virtual kind. composed of a network of computers where trades are made electronically via traders.The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers. Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy Trading The London Stock Exchange. The circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed amount of time. facilitating price discovery. The exchanges provide real-time trading information on the listed securities. a sale takes place on a first come first served basis if there are multiple bidders or askers at a given price. Some exchanges are physical locations where transactions are carried out on a trading floor.

.% drop time of drop 10% drop 10% drop 10% drop 20% drop 20% drop 20% drop 30% drop close trading for before 2PM one hour halt 2PM .2PM halt for one hour after 2PM close for the day any time during day close for the day .2:30PM half-hour halt after 2:30PM market stays open before 1PM halt for two hours 1PM .

Exiting a short position by buying back the stock is called "covering a short position. A bull market is also sometimes described as a bull run. This is especially relevant to participants in bull markets since bulls are herding animals. A margin call is made if the total value of the investor's account cannot support the loss of the trade Before that. making money if the price fell in the meantime or losing money if it rose. margin buying may be used to purchase stock with borrowed funds. motivating investors to buy in anticipation of future price increases and future capital gains. Other rules may include the prohibition of free-riding: Bull market A bull market tends to be associated with increasing investor confidence. In describing financial market behavior. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. Most industrialized countries have regulations that require that if the borrowing is based on collateral from other stocks the trader owns outright. Short selling:In short selling. derivatives may be used to control large blocks of stocks for a much smaller amount of money than would be required by outright purchase or sale." This strategy may also be used by unscrupulous traders to artificially lower the price of a stock. The trader eventually buys back the stock. . The practice of naked shorting is illegal in most stock markets. it can be a maximum of a certain percentage of those other stocks' value. the trader borrows money to buy a stock and hopes for it to rise. metaphorically. as a herd. speculators typically only needed to put up as little as 10 percent of the total investment represented by the stocks purchased. Dow Theory attempts to describe the character of these market movements. or. Margin buying:In margin buying.Leveraged strategies Stock that a trader does not actually own may be traded using short selling. the trader borrows then sells it on the market. the largest group of market participants is often referred to. hoping for the price to fall.

Bear market A bear market is a steady drop in the stock market over a period of time. BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act. Investors anticipating further losses are often motivated to sell. as its strategic partners. "While there’s no agreed-upon definition of a bear market. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. now spanning three centuries in its 133 years of existence. Over the past 133 years." Bombay stock exchange Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. one generally accepted measure is a price decline of 20% or more over at least a two-month period. was in a bull run for almost five years from April 2003 to January 2008 as it increased from 2. but a substantial drop in the prices of the majority of stocks over a defined period of time. Earlier an Association of Persons.900 points to 21. Prices fluctuate constantly on the open market. 1956. SENSEX. With demutualisation. 2005 notified by the Securities and Exchange Board of India (SEBI). What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875.000 points. with negative sentiment feeding on itself in a vicious circle. it is not a simple decline. BSE is the first stock exchange in the country which obtained permanent recognition from the Government of India under the Securities Contracts Act 1956. BSE has two of world's best exchanges. Deutsche Borse and Singapore Exchange. pursuant to the BSE Scheme. According to The Vanguard Group. [3] It is described as being accompanied by widespread pessimism.India's Bombay Stock Exchange Index. To take the example of a bear stock market. BSE has facilitated the growth of the Indian corporate sector by .

including 12 sectoral indices.providing it with an efficient access to resources. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. debt instruments and derivatives. BSE has always been at par with the international standards. S. Today. BSE offers 21 indices. 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). The market capitalization as on December 31. BSE is the world's number 1 exchange in terms of the number of listed companies and the world's 5th in transaction numbers. The SENSEX is constructed on a 'free-float' methodology. 25 crore. it has become the first national level stock exchange to launch its website in Gujarati and Hindi to reach out to a larger number of investors. It has a nation-wide reach with a presence in more than 359 cities and towns of India. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certifications. Companies have been classified as large cap companies and small cap companies. 2007 stood at USD 1. B. BSE provides an efficient and transparent market for trading in equity. BSE continues to innovate. and is sensitive to market sentiments and market realities. which for easy reference. through Initial Public Offerings (IPOs) & Follow-on Public Offerings (FPOs): 1. In recent times. Apart from the SENSEX. An investor can choose from more than 4. The BSE Index. is India's first stock market index that enjoys an iconic stature. Minimum Listing Requirements for New Companies The following eligibility criteria have been prescribed effective August 1. It is an index of 30 stocks representing 12 major sectors. and is tracked worldwide. There is perhaps no major corporate in India which has not sourced BSE's services in raising resources from the capital market.700 listed companies. . T and Z groups. 10 crore and market capitalization of not less than Rs. SENSEX. A small cap company is a company other than a large cap company. It has successfully launched a reporting platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-cum-screen aptly named 'BSE Broadcast'.79 trillion. A large cap company is a company with a minimum issue size of Rs. 2006 for listing of companies on BSE. are classified into A.

vi. 2. iv. The minimum post-issue paid-up capital of the applicant company (hereinafter referred to as "the Company") shall be Rs. shall not be in default in compliance of the listing agreement. 3 crore. 3 crore.a. In respect of Large Cap Companies i. iii. v. 3 crore. The requirement of a due diligence study may be waived if a financial institution or a scheduled commercial bank has appraised the project in the preceding 12 months. ii. The minimum post-issue paid-up capital of the Company shall be Rs. 3 crore in each of the preceding three 12-months period. ii. and The minimum income/turnover of the Company shall be Rs. In respect of Small Cap Companies i. b. In respect of the requirement of paid-up capital and market capitalization. and The minimum number of public shareholders after the issue shall be 1000. promoters and/or group companies. iii. the cost of which will be borne by the company. The applicant. the securities of the issuer would not be listed on BSE. For all companies : a. and The minimum issue size shall be Rs. 25 crore (market capitalization shall be calculated by multiplying the postissue paid-up number of equity shares with the issue price). A due diligence study may be conducted by an independent team of Chartered Accountants or Merchant Bankers appointed by BSE. and The minimum market capitalization of the Company shall be Rs. and The minimum issue size shall be Rs. 10 crore. . 5 crore (market capitalization shall be calculated by multiplying the postissue paid-up number of equity shares with the issue price). the issuers shall be required to include in the disclaimer clause forming a part of the offer document that in the event of the market capitalization (product of issue price and the post issue number of shares) requirement of BSE not being met. and The minimum market capitalization of the Company shall be Rs. b.

10 crore Rs.000. Rs. No. crore 30. 2000. the fees will be 25% of the above fees. The cap on the annual listing fee of debt instruments per issuer is Rs.00 (iii)Above Companies which have a listed capital* of more than Rs.) 20. partly convertible debentures and any other security convertible into equity shares.000.7.00 (ii)Above Rs. No.00 2 (iii)Above Rs. 1 crore or part thereof.20 crore Above Rs.00 with 5 10 listed crore crore Listing capital* and and upto upto upto Rs. preference shares.200.000. 750 for every additional Rs.00 per annum. 1 Particulars Initial Listing Fees Amount (Rs. The above eligibility criteria would be in addition to the conditions prescribed under SEBI (Disclosure and Investor Protection) Guidelines. 5 10 20 Fees crore 10. Particulars 1 Initial Listing Fees 2 Annual (i) Companies (ii) AboveRs. SCHEDULE OF LISTING FEES FOR THE YEAR 2008-09 Securities *other than Privately Placed Debt Securities Sl. Rs.1 crore or part thereof Subject to a maximum of Rs. Rs. 20 crore are required to pay an additional fee @ Rs.00 (i)Issue size up to Rs.20 crore Additional fee of Rs.10 crore and up to Rs. Amount (Rs.c. fully convertible debentures.750. NOTE: In case of debenture capital (not convertible into equity shares) .30.500. *includes equity shares.) NIL Annual Listing Fees Rs.00 per instrument.5 crore Rs.500.2.00 for every additional Rs.5 crore and up to Rs.00 crore 15. National Stock exchange The National Stock exchange is the largest Stock exchange of the country and the third largest in the world. the Indian securities industry was inefficient due to lack .5.3. Before the NSE.00. Privately Placed Debt Securities Sl.

. and in the middle of 1993 it came into existence. Japan became share holder of IIL in January 2002. IIL has owned subsidiary IL&FS to carry on share and stock broking activities. One can obtain the entire market information. The basic idea of setting up the NSE was facilitating computerized market trading. which is dynamically updated. The trading is entirely screen based with automatic order processing. IIL was incorporated as Investsmart India Limited on September 01. at the click of a button. The fully automatic screen based trading system is based on the principle of an order driven market which provides complete flexibility to the participants. There was a great resistance to setting up modern facilities and innovative infrastructure. 1997. It has received certificate of commencement of business on October 07. The trading started in the middle of 1994. banks and other financial intermediaries.Orix corporation. This was done by competitively harnessing the latest technology and adapting a new system of operations through the VSAT (Very Small Earth Based Aperture Terminals) terminals.The NSE is jointly owned by a group of financial institutions. Corporate and Investment Banking. The system also conceals the identity of the market operators.of proper infrastructure and a few select brokerage firms controlling the industry. and each member receives the market information at the same COMPANY PROFILE IL&FS Investsmart Limited IL&FS Investsmart (IIL) which stands for Infrastructure Leasing and Financial Services is known for its innovative and pioneering initiatives in the areas of Infrastructure. they have all the facilities of back office support. The connection with other traders through the satellite link is established. GROWTH and Corporate Events:IIL has started broking activity in NSE on February 1998 and in BSE in August 1999. As the market investors can sit and operate from their own houses and homes. There are no trading floors as in conventional stock exchanges. 1997. The intention was to set up a vibrant and viable debt market. Name of the company was changed from Investsmart India Limited to IL&FS InvestSMART in March 2003. IL&FS Merchant Banking Services Limited (IMBSL) and Debt on net India Limited (DIL)merged with IIL. Insurance companies.

IL&FS Investsmart is one of India's leading financial services organizations providing varied range of Financial Services for corporates and individuals. In India.The company is now held by HSBC. institutional brokerage. An opportunity to satisfy economic needs consistent with the prevalent business environment . retail and private banking. dynamism. Its products:1. Our team is spread over 300 offices in India and overseas. Retail offerings 2. trust & human values. Following a successful Initial Public Offer IPO). IL&FS Investsmart Ltd has an all India presence through its network of branches and franchisees over 126 cities. It actively seeks a diverse range of professionals to deliver specialized services to its clients across the globe. commercial. one of the world's largest banking and financial services organizations. co-operation. Investsmart has a strong presence across wide range of products and operates in the areas of Investment Management and Advisory Services. It also provides software development expertise and global services facilities for the HSBC Group's operations worldwide. through its specialists in the aforesaid areas.A performance driven work culture and open to new ideas and suggestions from all Team Members. custodial services. Institutional offerings . investment banking. IIL is geared towards understanding and achieving the financial goals of all its customers. Project Syndication. Broking Services. HSBC holds 93%of share. insurance. The HSBC Group offers a range of financial services including corporate. asset management. IIL has been listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). customer centricity and high-energy to continuously nurture an enjoyable professional culture. skill. Work culture :Friendly & formal work culture founded on principles of mutual respect. Commodity Broking and Distribution of Financial Products. Equity and Debt Broking. Merchant Banking. equities and capital markets. What it look for are personal values. IL&FS Investsmart group engages nearly 2000 professionals across various areas of financial services and corporate functions.

This is precisely the reason why IIL has been recognized as Best Performing Financial Advisor by CNBC TV 18 for two years in a row 2005-06 and 2006-07. goals and risks. B.3. Mutual fund advisory services- IIL team of experts across India helps customers in selecting the right scheme from over 500 offerings. Portfolio Management Services (PMS):- Financial markets today offer enormous growth potential. this has ensured that we constantly figure . Online products. IPO Advisory & Distribution Services:- IL&FS Investsmart (IIL) is one of India's leading companies engaged in the activity IPO Advisory and Distribution. a Discretionary Portfolio Management Service. we offer you just the solution that allows you to relax as we put your money to work through the IIL-PMS. At IL&FS Investsmart. RETAIL OFFERINGS:- A.ADVISORY PRODUCTS:- I. matching their needs. II. keeping abreast of latest corporate developments and financial analysis all adds up. Advisory products Trading products A. Our pan India reach helps us in mobilizing large number of applications across India during public offerings. But managing investors own investments can be an extremely challenging task. III. making changes according to their changing needs as per the market scenario. Anticipating market trends. In addition to this IIL also help customers constantly monitor their MF portfolio. assessing the impact of socio-economic changes on investor investments. Managing one’s investments has become nearly a full-time affair that requires considerable time and expertise. I. in order to make customer money work for them. Our primary markets division does a comprehensive research before recommending issues to clients.

Equities & Derivatives:. knowledge and expertise on a regular basis. . customers can invest in IPO's not only through our branches but also through our website. measurement and assessment of the risk and handling of the risk. We deal into both life insurance and general insurance products for all insurance companies across India.IL&FS Investsmart is a full service broking house offering services across both the Cash and F&O segments.amongst the top ranking performers in the primary market distribution space. which also provides you with regular updates on the IPO scenario. hedging with Nifty and other product and opportunities of risk-less arbitrage between various segments. Insurance Advisory Services:- We are a composite insurance broker providing comprehensive risk management solutions. IV. As a part of our online offering. Open IPO's as well as all the forthcoming IPO's at any given point of time. Our solutions include identification. We would constantly help you with strategies for investments in equities. of which insurance is an integral part. Our experienced team of Research Analysts and Advisory Managers guide you with appropriate solutions. recommendations for trading on futures & options. backed by in-depth research. both for corporates as well as individuals.TRADING PRODUCTS:- 1. Our key service features include the following:• • • • • Risk management solutions for all Comprehensive research for all policies available on a regular basis Recommendations on a comprehensive insurance cover based on clients needs Maintain proper records of client policies Continuous monitoring of client account B.

INSTITUTIONAL OFFERINGS:- A. We also focus on identifying undiscovered value stocks to investors. quality research. Services we specialize in include Management of: • • • • • • • Initial Public Offering (IPOs) Follow-on Offerings Qualified Institutional Placements (QIPs) Buyback of Equities Open Offers Mergers & Acquisitions Private Equity Placements . this division is well-suited to corporate investors. through IPOs.ESOPs B. as well as business standard ethics lend towards our exemplary services to investors. C. Institutional Debt Broking Services:- . financial institutions. Our Institutional Equity Business (IEB) is well positioned to offer support for a complete range of investment banking service to corporates. top quality human resources and complete compliance with stock exchange regulations. banks.2. Through it’s gamut of services. equities. Investment Banking Service IL&FS Investsmart (IIL) offers you extensive range of Investment Banking Services for equity related products and instruments. Our team advises you on transactions like business structuring and capital raising opportunities based on your corporate needs and state of capital markets. Institutional Equity Broking Services:Our efficient execution. derivatives and mutual funds. insurance companies and FII’s.

which allows you to invest in equities and derivatives. mutual funds. large provident funds and in some cases corporate treasuries. • • • • Pre marketing the placement / issuance Selling / placing the issuance Assisting in any related documentation for the issuance Assisting in all other steps to complete the issuance for draw down funds 3. SmartINVEST:SmartInvest is a browser-based system designed for customers who transact occasionally. with access to both the NSE and BSE. SmartInvest sophisticated yet easy to use point and click order entry interface allows you to react more quickly to the markets and make better decisions. SmartStart trading platform allows you the flexibility of trading on any internet capable system. primary market debt placement & distribution and provident fund advisory services. SmartSTART:. broking. you are in the driver's seat when routing your order to the best price on either of the exchanges. B. With access to both the NSE & BSE. Secondary debt broking is the principle service provided by this division. with institutional segments covering banks. A comprehensive trading service. The clients mainly comprise of institutional debt players. such as banks. SmartInvest capability as a browser-based trading platform gives you the benefit of real-time streaming data with the flexibility of trading on any Internet capable system. which integrates your banking. A unique integrated account. .SmartStart is a powerful browser based trading system for those who are relatively new to online investing. primary dealers. On line products: A.Our institutional debt broking division includes secondary market broking. mutual funds etc. The primary market services cover placement of debt paper issued by corporates. and demat accounts. It is ideal for investors who believe in the Buy and Hold approach towards investment in equities.

IPO Mobilisation. Mutual Funds Distribution and other Investment Advisory Services to both retail as well as institutional clients through a network of branches and franchisees across India.The current set up are spread across 11 locations involving dedicated teams doing retail distribution of insurance products. has a quality team of researchers that advise the clients across industries on a regular basis. SmartTrade makes the most of state-of the-art technology to deliver power. As a broker. IL&FS Academy for Insurance & Finance Ltd (IAIFL): . Through an easy-to-use interface.C. IISL also. PMS.It is the wholly owned subsidiary of the IIL and is engaged in Equity market through its memberships on National Stock Exchange (NSE) & Bombay Stock Exchange (BSE) IISL offers Equity & Derivatives Broking. Within a short span of less than 1 year. speed and reliability.SmartTRADE:SmartTrade is an EXE based desktop software designed for active traders who transact frequently to capture favorable short-term price movements. groups as well as corporate clients. IIRMSL has managed be become one of the top 10 insurance broking companies in India. IL&FS Investsmart Insurance & Risk Management Services Ltd (IIIRMSL): IIRMSL is a wholly owned subsidiary of IIL and offers Insurance Broking services for individuals. users are provided with the same tools and advantages that the professionals enjoy. IIL Subsidiary companies:- IL&FS Investsmart Securities Limited (IISL):. SmartTrade is designed and built from the ground up to address the needs of active traders. The platform offers active traders the tools they need to make critical decisions with confidence. we also provide advisory services for all insurance products offered by various insurance companies.

which includes faculty resources. IIAPPL works in close association with both the Retail as Institutional Business Divisions in India IL&FS Investment Financial Services Limited: IL&FS Investsmart Financial Services Limited (IIFSL) (Formerly known as Tajir Investment & Properties Limited) is a Non-Banking Finance company registered with Reserve Bank of India. in view of the buoyancy observed in Indian financial sector and its outlook for the coming years. 2006. IAIFL has till date trained about 40. After reviewing various options. 2006 and the Company is currently offering financing products such as Margin Trade Financing. . IIFSL was engaged in hire purchase activity and sale of properties till June 30. IIFSL has been recently acquired by IL&FS Investsmart Limited (IIL) as a wholly owned subsidiary. the management of the company decided to take up securities financing related activities from July 1. It is the largest training institution in the pre-licensing segment having a national footprint in 30 cities. It has implemented a structured framework for delivery of the 100 hours Agents Training programs. Loan Against Shares.IAIFL is a wholly owned subsidiary of IIL and is one of the first and the largest Insurance Training Institution licensed by the IRDA and has established a first mover advantage in this business. management decided to diversify into financial sector by offering new products. IPO Financing and ESOP Financing. feedback reports to the clients and ongoing program up-gradation to ensure quality and uniformity of approach across multiple locations in the country. However.000 advisors across all the private insurance companies at various parts of the company. IIAPPL is involved in servicing NRI's and FII's from the Asia Pacific region to access the Indian capital markets. IL&FS Investsmart Asia Pacific Private Limited (IIAPPL): IL&FS Investsmart Asia Pacific Private Limited (IIAPPL) is the wholly owned subsidiary of the IIL and is based out of Singapore. institutionalised mechanisms for program evaluation.

1. What is your annual income? Particulars 1 to 2 lacks 2 to 4 lacks 4 to 6 lacks Above 6 lacks No of persons 30 40 20 10 .

2. Saving percentage of your annual income Particulars 0% to 10% 10% to 20% 20% to 30% Above 30% NO of persons 45 32 14 09 .

3. Percentage of savings in the following options Particulars Bank deposits Equity Mutual fund Insurance No of persons 30 18 40 12 .

If Mutual funds.4. why do you prefer Mutual fund? Particulars Low risk To get tax benefit Better portfolio Mgt No of persons 65 14 21 .

5. why do you prefer other? Particulars High return Liquidity Flexibility NO of persons 37 44 19 . If Not.

Are you satisfied with return on investment? Particulars Satisfied Neutral Dissatisfied No of persons 61 18 21 .6.

7. Are you satisfied with protection against Market fluctuations? Particulars Satisfied Neutral Dissatisfied No of persons 76 20 04 .

How do you take investment decision? Particulars By Help of experts On my own Friends & family Papers & net No of persons 39 33 11 17 .8.

9. What is your prefernce next to Mutual funds .

Particulars Bank deposits Equity Post office Gold Real estate insurance NOof persons 38 19 17 08 07 11 .

10.What factors are influencing your investments Particulars Economy Stock market Own finance Return No of persons 16 24 28 22 .

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