INTRODUCTION

INTRODUCTION
Determination of where, when, how, and how much capital to spend and/or debt to acquire in the pursuit of making a profit. An investment decision is often reached between an investor and his/her investment advisors. Depending on the type of brokerage account an investor has, investment managers may or may not have tremendous leeway in making decisions without consulting the investor himself/herself. Factors contributing to an investment decision include, but are not limited to capital on hand, projects or opportunities available, general market conditions, and a specific investment strategy.

Any investment is a sacrifice of certain present value for the uncertain future. It chiefly entails decision making on type, mix, amount, timing, grade etc., of investment as also disinvestment. We invest for a positive rate of return, suitably adjusted for inflation and risk. All saving must be converted into investment and there must be a balanced approach in selected of securities. Planning is a precursor to any type of investment. Investing without planning entails losing money. Those who invested during the secondary market boom of 1992 and the primary market boom of 1994-95 lost heavily.

OBJECTIVES OF THE STUDY

The main objective of the project is to study the investment decisions process of SHAREKHAN.

To study the different investment options available to the investors.

To know the benefits of investing in each investment option.

To suggest the investors to take decisions regarding different investment options.

NEED OF THE STUDY:

The basic requirements an investor looks for in an investment are safety, returns and liquidity. Some of the investors look for safety, and some of them look for optimum returns, and some of them looks for both i.e. safety as well as returns. Investing in stock market gives the optimum returns and also it will leads to the high risk, so that the reason mutual funds had come into existence. The need for doing this project is to know whether mutual funds are right investment compared to equity or not?

SCOPE OF THE STUDY:

This project focuses on different sectors equities and mutual funds; I have taken five equity s and five mutual funds of various those sectors.

RESEARCH METHODOLOGY
There are two types of data, they are Primary Data Primary data is the data which is collected directly through the interactions with the members. Secondary Data Secondary data is the data which is collected from various sources such as internet, financial magazines and etc. EQUITIES:

RETURNS=(CLOSEPRICEPREVIOUSCLOSE)/PREVIOUSCLOSE*100 RISK()= SQRT(DX2 /N-1) Where dx2= difference2 , dx,dy= difference Difference= (returns-avg.returns) eta= dx*dy/dy2 Coefficient of variation(cov)= risk/return

MUTUAL FUNDS: SHARPE PERFORMANCE INDEX [SPI] = RP-RF/ Where RP= return on portfolio i.e avg.return RF = risk free rate of return = total risk

TREYNORS PERFORMANCE INDEX [TPI] = RP-RF/ Where RP = return on portfolio i.e. avg.return RF= risk free rate of return = systematic risk or market risk

LIMITATIONS OF THE STUDY

The study was limited to only two investment options. Most of the information collected is secondary data. The data is compared and analyzed on the basis of performance of the investment options over the past one year.

While considering the returns from mutual funds only top performing schemes were analyzed.

It was very difficult to complete the project work within 45 days.

LITERATURE REVIEW

LITERATURE REVIEW Definitions:

An investment is a sacrifice of current money or other resources for future benefits. The
benefits I expected in the future and tends to be uncertain. In some investments like government bonds the time element is the dominant attribute. In other investments like stock options the risk element is the dominant another attribute it seeks to improve your abilities in the field of investment.

~ PRASANNA CHANDRA
Investment in various types of assets is an interesting activity that attracts people from all walks of lie irrespective of their occupations, economic status, education and family background. When a person has more money than he requires for current consumption. He would be coined as a potential investor. The investor who is having extra cash could invest it in securities or in any other assets like gold or real estate or could simply deposit it in his bank account. The companies that have extra income may like their money in the extension of the existing firm or undertake new venture. All of these activities in a border sense mean investment.

~PUNITHAVATHY PANDIAN

Investment analysis
Investment analysis is an ongoing process of evaluating current and potential allocations of financial assets and choosing those allocations that best fit the investor's needs and goals. The two opposing considerations in investment analysis are growth rate and risk, which are usually directly proportionate in any given investment vehicle. This means that investments with a high degree of certainty, such as U.S. Treasury securities, offer a very modest rate of return (e.g., 5 percent annually), whereas high-risk stock investments could double or quadruple in value over a few months. Through investment analysis, investors must consider the level of risk they're able to tolerate and choose investments accordingly.

Beyond weighing the return of an individual investment, investors must also consider taxes, transaction costs, and opportunity costs that erode their net return. Taxes, for instance, may be reduced or deferred depending on the type of investment and the investor's tax status. Transaction costs may be incurred each time an individual purchases or sells shares of stock or mutual funds. These fees are usually a percentage of the dollar amount being transferred. Such fees may sift 3-6 percent or more off the initial investment and final return.

For example, low risk comes at a price of low returns, but it may be worth the lost opportunity if the investor is retired and will be depending on the invested funds for living expenses in the near future.

Certainly the simplest (and no doubt earliest) form of investment is that in which each business is funded by one investor (or perhaps one family of investors). The figure below illustrates this, with I representing an Investor and B a Business.

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In this case the problems associated with corporate governance are mitigated, since the Investment Firm is in a position to serve as the exclusive monitor of each of the Businesses. On the other hand, the division of ownership of the Investment Firm among many Investors may lessen incentives for the management of the Investment Firm to act solely in the interests of the Investors.

The figure shows the balance sheets, with assets on the left and claims on assets on the right.

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Investments Decisions
These days almost everyone is investing in something even if its a savings account at the local bank or a checking account the earns interest or the home they bought to live in.

However, many people are overwhelmed when they being to consider the concept of investing, let alone the laundry list of choices for investment vehicles. Even though it may seem the everyone and their brothers knows exactly who, what and when to invest in so they can make killing, please dont be fooled. Majorities of investor typically jump on the latest investment bandwagon and probably dont know as much about whats out there as you think.

Before you can confidently choose an investment path that will help you achieve your personal goals and objectives, its vitally important that you understand the basics about the types of investments available. Knowledge is your strongest assistant when it comes to weeding out bad investment advice and is crucial to successful investing whether you go at it alone or use a professional. The investment option before you are many. Pick the right investment tool based on the risk profile, circumstance, time available etc. if you feel the market volatility is something, which you can live with then buy stocks. If you do not want risk, the volatility and simply desire some income, then you should consider fixed income securities. However, remember that risk and returns are directly proportional to each other. Higher the risk, higher the returns.

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TYPES OF INVESTMENT OPTIONS

A brief preview of different investment options is given below: Equities: Investment in shares of companies is investing in equities. Stocks can be brought/sold from the exchanges (secondary market) or via IPOs Initial Public Offerings (primary market). Stocks are the best long-term investment options wherein the market volatility and the resultant risk of losses, if given enough time, are mitigated by the general upward momentum of the economy. There are two streams of revenue generation from this from of investment. 1.Dividend: Periodic payments made out of the companys profits are termed as dividends. 2.Growth: The price of the stock appreciates commensurate to the growth posted by the company resulting in capital appreciation. On an average an investment in equities in India has a return of 25%. Good portfolio management, precise timing may ensure a return of 40% or more. Picking the right stock at the right time would guarantee that your capital gains i.e. growth in market value of stock possessions, will rise. Bonds: It is a fixed income (debt) instrument issued for a period of more than one year with the purpose of raising capital. The central or state government, corporations and similar institutions sell bonds. A bond is generally a promise to repay the principal along with fixed rate of interest on a specified date, called as the maturity date. Other fixed income instruments include bank deposits, debentures, preference shares etc. The average rate of return on bond and securities in India has been around 10-13% p.a. Mutual Fund: These are open and close-ended funds operated by an investment company, which raises money from the public and invests in a group of assets, in accordance with a stated

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set of objectives. It is a substitute for those who are unable to invest directly in equities or debt because of resource, time or knowledge constraints. Benefits include diversification and

professional money management. Shares are issued and redeemed on demand, based on the funs net asset value, which is determined at the end of each trading session. The average rate of return as a combination of all mutual funds put together is not fixed but is generally more than what earn is fixed deposits. However, each mutual fund will have its own average rate of return based on several schemes that they have floated. In the recent past, Mutual Funs have given a return of 18 35%. Real Estate: For the bulk of investors the most important asset in their portfolio is a residential house. In addition to a residential house, the more affluent investors are likely to be interested in either agricultural land or may be in semi-urban land and the commercial property. Precious Projects: Precious objects are items that are generally small in size but highly valuable in monetary terms. Some important precious objects are like the gold, silver, precious stones and also the unique art objects. Life insurance: In broad sense, life insurance may be reviewed as an investment. Insurance premiums represent the sacrifice and the assured the sum the benefits. The important types of insurance policies in India are: Endowment assurance policy. Money back policy. Whole life policy. Term assurance policy. Unit-linked insurance plan.

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ALL ABOUT EQUITY INVESTMENT

Stocks are investments that represent ownership --- or equity --- in a corporation. When you buy stocks, you have an ownership share --- however small --- in that corporation and are entitled to part of that corporations earnings and assets. Stock investors --- called shareholders or stockholders --- make money when the stock increases in value or when the company the issued the stock pays dividends, or a portion of its profits, to its shareholders. Some companies are privately held, which means the shares are available to a limited number of people, such as the companys founders, its employees, and investors who fund its development. Other companies are publicly traded, which means their shares are available to any investor who wants to buy them.

The IPO
A company may decided to sell stock to the public for a number of reasons such as providing liquidity for its original investor or raising money. The first time a company issues stock is the initial public offering (IPO), and the company receives the proceeds from that sale. After that, shares of the stock are treaded, or brought and sold on the securities markets among investors, but the corporation gets no additional income. The price of the stock moves up or down depending on how much investors are willing to pay for it. Occasionally, a company will issue additional shares of its stocks, called a secondary offering, to raise additional capital.

Types Of Stocks
With thousands of different stocks trading on U.S. and international securities markets, there are stocks to suit every investor and to complement every portfolio. 15

For example, some stocks stress growth, while others provide income. Some stocks flourished during boom time, while others may help insulate your portfolios value against turbulent or depressed markets. Some stocks are pricey, while others are comparatively inexpensive. And some stocks are inherently volatile, while others tend to be more stable in value.

Growth & Income

Some stocks are considered growth investments, while others are considered value investments. From an investing perspective, the best evidence of growth is an increasing price over time. Stocks of companies that reinvest their earnings rather than paying them out as dividends are often considered potential growth investments. So are stocks of young, quickly expanding companies. Value stocks, in contrast, are the stocks of companies that problems, have been under performing their potential, or are out of favor with investors. As result, their prices tend to be lower than seems justified, though they may still be paying dividends. Investors who seek out value stocks expect them to stage a comeback.

Market Capitalization
One of the main ways to categorize stocks is by their market capitalization, sometimes known as market value. Market capitalization (market cap) is calculated by multiplying a companys current stock price by the number of its existing shares. For example, a stock with a current market value of $30 a share and a hundred million shares of existing stock would have a market cap of $3 billion.

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P/E ratio
A popular indicator of a stocks growth potential is its price-to-earnings ratio, or P/E or multiple can help you gauge the price of a stock in relation to its earnings. For instance, a stock with a P/E of 20 is trading at a price 20 times higher than its earnings. A low P/E may be a sign that a company is a poor investment risk and that its earnings are down. But it may also indicate that the market undervalues a company because its stock price doesnt reflect its earnings potential. Similarly, a stock with a high P/E may live up to investor

expectations of continuing growth, or it may be overvalued.

Investor demand
People buy a stock when they believe its a good investment, driving the stock price up. But if people think a companys outlook is poor and either dont invest or sell shares they already own, the stock price will fall. In effect, investor expectations determine the price of a stock. For example, if lots of investors buy stock A, its price will be driven up. The stock becomes more valuable because there is demand for it. But the reverse is also true. If a lot of investors sell stock Z, its price will plummet. The further the stock price falls, the more investors sell it off, driving the price down even more.

The Dividends
The rising stock price and regular dividends that reward investors and give them confidence are tied directly to the financial health of the company. Dividends, like earnings, often have a direct influence on stock prices. When dividends are increased, the message is that the company is prospering. This in turn stimulates greater enthusiasm for the stock, encouraging more investors to buy, and riving the stocks price

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upward. When dividends are cut, investors receive the opposite message and conclude that the companys future prospects have dimmed. One typical consequence is an immediate drop in the stocks price. Companies known as leaders in their industries with significant market share and name recognition tend to maintain more stable values than newer, younger, smaller, or regional competitors.

Earnings and Performance

Investor enthusiasm for a stock can sometimes take on a momentum of its own, driving prices up independent of a companys actual financial outlook. Similarly, disinterest can drive prices down. But to a large extent, investors base their expectations on a companys sales and earnings as evidence of its current strength and future potential. When a companys earnings are up, investor confidence increases and the price of the stock usually rises. If the company is li9sin g moneyor not making as much as anticipated -- the stock price usually falls, sometimes rapidly.

Intrinsic Value
A companys intrinsic value, or underlying value, is closely tied to its prospects for future success and increased earnings. For that reason, a companys future as well as its current assets contributes to the value of its stock. You can calculate intrinsic value by figuring the assets a company expects to receive in the future and subtracting its long-term debt. These assets may include profits, the potential for increased efficiency, and the proceeds from the sale of new company stock. The potential for

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new shares affects a companys intrinsic value because offering new shares allows the company to raise more money. Analysts looking at intrinsic value divide a companys estimated future earnings by the number of it s existing shares to determine whether a stocks current price is a bargain. This measure allows investors to make decisions based on a companys future potential independent of short term enthusiasm or market hype.

Stock Splits
If a stocks price increases dramatically the issuing company may split the stock to bring the price per share down to a level that stimulates more trading. For example, a stock selling at $100 a share may be split 2 for 1 doubling the number of existing shares and cutting the price in half. The split doesnt change the value of your investment, at least initially. If you had 100 shares when the price was $100 a share, youll have 200 shares worth $50 a share after the split. Ei ther way, thats $10000. But if the price per share moves back toward the pre-split price, as it may do your investment will increase in value. For example if the price goes up to $75 a share your stock will be worth $15000, a 50% increase. Investors who hold a stock over many years, through a number of splits, may end up with a substantial investment even if the price per share drops for a time. A stock may be split 2 for 1, 3 for 1, or even 10 for 1 if the company wishes, though 2 for 1 is the most common.

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Stock Research and Evaluation

Before investing in a stock, its important to research the issuing company and understand how the investment is likely to perform, for example, youll want to know ahead of time whether you should anticipate a high degree of volatility, or more stable slower growth. A good place to start is the companys 10 k report, which it must file with the Securities and Exchange Commission (SEC) each year. Its extremely detailed and quite dry, but it is through. Youll want to pay attention to the footnotes as well as the main text, since they often provide hints of potential problems.

Company News and Reports

Companies are required by law to keep shareholders up to date on how the business is doing. Some of that information is provided in the firms annual report, which summarizes the companys operations for individual investors. A summary of current performance is also provided in the companys quarterly reports.

Buying and Selling Stock

To buy or sell a stock you usually have to go through a broker. Generally the more guidance you want from your broker the higher the brokers fee. Some brokers usually called full -service brokers provide a range of service beyond filling buy and sell orders for clients such as researching investments and helping you develop long and short-term investment goals. Discount brokers carry out transactions for clients at lower fees than full-service brokers but typically offer more limited services. And for experienced investors who trade often and in large blocks of stock there are deep-discount brokers whose commissions are even lower.

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Online Trading is the cheapest way to trade stocks. Online brokerage firms offer substantial discounts while giving you fast access to your accounts through their Web Sites. You can research stocks track investments and you to trade before and after normal market hours. Most of todays leading full-service and discount brokerage firm make online trading available to their customers. Online trading is an extremely cost-effective option for independent investors with a solid strategy who are willing to undertake their own research. However the ease of making trades and the absence of advice may tempt some investors to trade in and out of stocks too quickly and magnify the possibility of locking in short-term losses.

Volatility
One of the risks youll need to plan for as a stock investor is volatility. Volatility is the speed with which an investment gains or loses value. The more volatile an investment is the more you can potentially make or lose in the short term.

Managing Risk
One thing for certain: Your stock investment will drop in value at some point. Thats what risk is all about. Knowing how to tolerate risk and avoid selling your stocks off in a panic is all part of a smart investment strategy. Setting realistic goals allocating and diversifying your assets appropriately and taking a longterm view can help offset many of the risks of investing in stocks. Even the most speculative stock investment with its potential for large gains may play an important role in a welldiversified portfolio.

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ALL ABOUT MUTUAL FUND INVESTMENT

A Mutual Fund is an entity that pools the money of many investorsits Unit-Holders -- to invest in different securities. Investments may be in shares, debt securities, money market securities or a combination of these. Those securities are professionally managed on behalf of the Unit-Holder and each investor hold a pro-rata share of the portfolio i.e. entitled to any profits when the securities are sold but subject to any losses in value as well. Mutual Funds and sell stocks, bonds or other securities. A Fund raises money to make its purchases, known as its underlying investments by selling shares in the fund. Earnings the fund realizes on its investment portfolio, after the trading costs and expenses of managing and administering the fund are subtracted are paid out to the funds shareholders.

Mutual Fund Set Up

A Mutual Fund is set up in the form of a trust, which has Sponsor, Trustees, Asset Management Company (AMC), and custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are invested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of Trustee Company or board of trustee must be independent. I.e. they should not be associated with the sponsors. Also 50% of the directors of ANC must be independent. All mutual funds are required to be registered with

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SEBI before they launch any scheme. However, Unit Trust of India (UTI) is not registered with SEBI (as on January 15, 2002).

Types of Funds
Stock funds also called equity funds- invest primarily in stocks. Bond funds invest primarily in corporate or government bonds Balanced funds invest in both stocks and bonds. Money market funds make short-term investment and try to keep their share value fixed at $1 a share. Every fund in each category has a price known as its net asset value (NAV) and each NAV differs based on the value of the funds holdings and the number of shares investors own. The price changes once a day, at a 4 pm EST, when the markets close for the day. All transactions for the day buys and sells are executed at that price.

Schemes According to Maturity Period

A mutual fund scheme can be classified into open-ended scheme or close-ended scheme depending on its maturity period.

Open Ended Fund/Scheme

An open-ended fund or scheme is one that is available for subscription and repurchase one continuous basis. These schemes do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices, which are declared on a daily basis. The key feature of Open-End Schemes is liquidity.

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Close-Ended Fund / Scheme

A Close-Ended Fund or Scheme has a stipulated maturity period e.g. 5-7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the mutual fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

Schemes according to Investment Objective

A Scheme can also be classified a growth scheme, income scheme or balanced scheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows.

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation etc. And the investors may choose an option depending on their preference. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time. 24

Income /Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures, Government securities and money market instruments. Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. However opportunities of capital appreciation are also limited in such funds. The NAVs of such funds are affected because of change in interest rates in the country. If the interest rates fall, NAVs of such funds are likely to increase in the short run and vice versa. However long term investors may not bother about these fluctuations.

Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 40%60% in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

Sector specific Funds/\schemes

These are the funds/schemes, which invest in the securities of only those sectors or industries as specified in the offer documents. E.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks etc. the returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are more risky compared to diversified funds. Investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time. They may also seek advice of an expert. 25

Tax Saving Schemes

These schemes offer tax rebates to the investors under specific provisions of the Income Tax Act, 1961 as the Government Offers Tax Incentives for investment in specified avenues. E.g. Equity Linked Savings Schemes (ELSS). Pension schemes launched by the mutual funds also offer tax benefit. These schemes are growth oriented and invest pre-dominantly in equities. Their growth opportunities and risks associated are like any equity-oriented scheme.

The Appeal of Mutual Funds

Mutual Funds simplify what you may find most complicated about investingfiguring out what to buy and when to sell to meet your particular goals or objectives. For example, if you are seeking growth by investing in blue chip stocks, there are a wide variety of funds to chose from that pursuing precisely this strategy. To chose the fund that will help you meet a specific goal, you can compare its long-term performance over 5 or 10 years to other funds with similar objectives learn about whom the manager is and how the fund is run and check out its fee structure. You can use the funds prospectus, information on the fund companys Web Sites and professi0onal advice. Mutual funds can help you diversify your portfolio or spread out the money you have to invest to meet different goals. One way to diversify is to chose funds with different objectives aligned with your own, or representing different segments of the market. For example, you might buy a blue-chip fund, a small company growth fund, an international stock fund and a government fund.

Diversification
Most expert agrees that its more effective to invest in a variety of stocks and bonds than to depend on a strong performance of just one or two securities. But diversifying can be a challenge

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because buying a portfolio of individual stocks and bonds can be expensive. And knowing what to buy and when taken time and concentration. Mutual funds can offer solution. When you put money in to a fund, its pooled with money from other investors to create much greater buying power than you build a diversified portfolio. Since a fund may own hundreds of different securities, its success isnt dependent on how one or two holding do.

Investment objectives
To achieve its investment objective whether it is long term growth or capital preservation or anything in between the funds manager invests in securities he or she believes will provide the result the fund seeks. To identify those securities, a funds research staff often uses whats known as a bottom up style, which involves a detailed analysis of the individual companies issuing the securities. When the object is small company growth or the focus is on emerging markets, the process can be more difficult because theres limited information available. You may choose mutual funds with specific investment objectives to round out your portfolio of individual holdings. Or you may choose a number of mutual funds with different objectives creating a diversified portfolio in that way.

Professional management
Another reason investors are attracted to mutual funds is that each fund has a professional manager who sets its investment buying style and directs the key buy and sell decisions. A buying style defines the particular investments or types of investments a fund makes from the pool that may be appropriate for meeting its objective. For example, in seeking long-term capital appreciation, some equity fund managers stress value investments, which mean they buy stocks whose prices are lower than might be expected. Others stress growth investments; often younger, 27

dynamic companies the manager believes will become major players in their industry or in the economy as a whole. Some experts believe that a funds manager has a major role in determining the results a fu nd achieves. They advise that you confirm that a successful manager is still with the fund before you invest and that you consider selling your shares if that manager leaves.

Reinvestment
Being able to reinvest your distributions to buy additional shares is another advantage of investing in mutual funds. You can choose that option when you open a new account, or at any time while you own shares. And of course you also have the option to receive your distributions if you need the income the fund would provide. By investing regularly, you build the investment base on which future earnings will be able to accumulate, a process known as compounding. The more you have invested, the greater youre potential for future growth. And because the fund handles the process, rolling over distributions into new shares as they are paid, you dont have to budget for investing or remember to write the check.

Risk
There is always the risk that a mutual fund wont meet its investment objective or provide the return you are seeking. And some funds are by definition, riskier than others. For example a fund that invests in small new companies-whether for growth or value exposes you to the risk that the companies will not perform as well as the fund manager expects. And in market downturns, falling prices for a funds underlying investment may produce a loss rather than a gain for the fund.

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Short-Term Gains
Each time a mutual fund sells an investment for more than the fund paid to buy it, the fund realizes a capital gain. And those gains are passed along to the funds investors in proportion to the number of shares in the fund that investor owns. Most actively managed funds dont wait more than a year before selling investments. That means that any profit on the sale is a short-term capital gain, which is taxed at your regular tax rate. And since a fund typically doesnt withhold taxed on your behalf, as an employer does, you must come up with the amount your owe from other sources if you dont want to sell shares -at a potential additional gain to raise the money you owe.

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INDUSTRY PROFILE

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INDUSTRY PROFILE: Bombay Stock Exchange is the oldest stock exchange in Asia with a rich heritage, now
spanning three centuries in its 133 years of existence. What is now popularly known as BSE was established as "The Native Share & Stock Brokers' Association" in 1875. BSE is the first stock exchange in the country which obtained permanent recognition (in 1956) from the Government of India under the Securities Contracts (Regulation) Act 1956. BSE's pivotal and pre-eminent role in the development of the Indian capital market is widely recognized. It migrated from the open outcry system to an online screen-based order driven trading system in 1995. Earlier an Association Of Persons (AOP), BSE is now a corporatised and demutualised entity incorporated under the provisions of the Companies Act, 1956, pursuant to the BSE (Corporatisation and Demutualisation) Scheme, 2005 notified by the Securities and Exchange Board of India (SEBI). With demutualisation, BSE has two of world's best exchanges, Deutsche Brse and Singapore Exchange, as its strategic partners. Over the past 133 years, BSE has facilitated the growth of the Indian corporate sector by providing it with an efficient access to resources. There is perhaps no major corporate in India which has not sourced BSE's services in raising resources from the capital market. Today, 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 market capitalization as on December 31, 2007 stood at USD 1.79 trillion . An investor can choose from more than 4,700 listed companies, which for easy reference, are classified into A, B, S, T and Z groups. The BSE Index, SENSEX, is India's first stock market index that enjoys an iconic stature , and is tracked worldwide. It is an index of 30 stocks representing 12 major sectors. The SENSEX is constructed on a 'free-float' methodology, and is sensitive to market sentiments and market 31

realities. Apart from the SENSEX, BSE offers 21 indices, including 12 sectoral indices. BSE has entered into an index cooperation agreement with Deutsche Brse. This agreement has made SENSEX and other BSE indices available to investors in Europe and America. Moreover, Barclays Global Investors (BGI), the global leader in ETFs through its iShares brand, has created the 'iShares BSE SENSEX India Tracker' which tracks the SENSEX. The ETF enables investors in Hong Kong to take an exposure to the Indian equity market. BSE has tied up with U.S. Futures Exchange (USFE) for U.S. dollar-denominated futures trading of SENSEX in the U.S. The tie-up enables eligible U.S. investors to directly participate in India's equity markets for the first time, without requiring American Depository Receipt (ADR) authorization. The first Exchange Traded Fund (ETF) on SENSEX, called "SPICE" is listed on BSE. It brings to the investors a trading tool that can be easily used for the purposes of investment, trading, hedging and arbitrage. SPICE allows small investors to take a long-term view of the market. BSE provides an efficient and transparent market for trading in equity, debt instruments and derivatives. It has a nation-wide reach with a presence in more than 450 cities and towns of India. BSE has always been at par with the international standards. The systems and processes are designed to safeguard market integrity and enhance transparency in operations. BSE is the first exchange in India and the second in the world to obtain an ISO 9001:2000 certification. 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). BSE continues to innovate. In recent times, 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

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successfully launched a reporting platform for corporate bonds in India christened the ICDM or Indian Corporate Debt Market and a unique ticker-***-screen aptly named 'BSE Broadcast' which enables information dissemination to the common man on the street. In 2006, BSE launched the Directors Database and ICERS (Indian Corporate Electronic Reporting System) to facilitate information flow and increase transparency in the Indian capital market. While the Directors Database provides a single-point access to information on the boards of directors of listed companies, the ICERS facilitates the corporates in sharing with BSE their corporate announcements. BSE also has a wide range of services to empower investors and facilita smooth transactions. Investor Services: The Department of Investor Services redresses grievances of investors. BSE was the first exchange in the country to provide an amount of Rs.1 million towards the investor protection fund; it is an amount higher than that of any exchange in the country. BSE launched a nationwide investor awareness programme- 'Safe Investing in the Stock Market' under which 264 programmes were held in more than 200 cities. The BSE On-line Trading (BOLT): BSE On-line Trading (BOLT) facilitates on-line screen based trading in securities. BOLT is currently operating in 25,000 Trader Workstations located across over 450 cities in India. BSEWEBX.com: In February 2001, BSE introduced the world's first centralized exchange-based Internet trading system, BSEWEBX.com. This initiative enables investors anywhere in the world to trade on the BSE platform. Surveillance: BSE's On-Line Surveillance System (BOSS) monitors on a real-time basis the price movements, volume positions and members' positions and real-time measurement of default risk, market reconstruction and generation of cross market alerts.

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BSE Training Institute: BTI imparts capital market training and certification, in collaboration with reputed management institutes and universities. It offers over 40 courses on various aspects of the capital market and financial sector. More than 20,000 people have attended the BTI programmes.

National stock exchange:

The National Stock Exchange of India Limited is the largest stock exchange of the country. NSE has been setting the agenda for change in the securities markets in India. The last decade has seen us play a major role in bringing investors from various cities and towns online, ensuring complete transparency, introducing financial guarantee of settlements, ensuring scientifically designed and professionally managed indices and introducing dematerialisation in the country. NSE's wholly-owned subsidiaries, National Securities Clearing Corporation Ltd. (NSCCL) provides clearing and settlement of securities, India Index Services and Products Ltd. (IISL) provides indices and index services, NSE.IT Ltd. and NSE Infotech Services Ltd. forms the technological strength. Today, we are the Third largest exchange in the world in terms of the number of transactions executed on a stock exchange, and still forging ahead. At NSE, we are constantly working towards creating a more transparent, vibrant & innovative capital market. This invariably implies that our need for competent people is continuous. As the leading stock exchange and fiscal entity in the country, we believe in recruiting the finest of talent in the industry.

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About the National Stock Exchange of India :

In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced exchange with 1016 companies listed and 726 trading members.

The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance Corporation of India. However, in the totally de-mutualised Exchange, the ownership as well as the management does not have a right to trade on the Exchange. Only qualified traders can be involved in the securities trading.

The NSE is one of the few exchanges in the world trading all types of securities on a single platform, which is divided into three segments: Wholesale Debt Market (WDM), Capital Market (CM), and Futures & Options (F&O) Market. Each segment has experienced a significant growth throughout a few years of their launch. While the WDM segment has accumulated the annual growth of over 36% since its opening in 1994, the CM segment has increased by even 61% during the same period.

The National Stock Exchange of India has stringent requirements and criteria for the companies listed on the Exchange. Minimum capital requirements, project appraisal, and company's track record are just a few of the criteria. In addition, listed companies pay variable listing fees based on their corporate capital size.

The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The 35

advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform.

Stock Market History

The World's Market - Stock Market History

When people talk about the Stock Market, it's no always immediatedly clear what they're referring to. Is the Stock Market a place? Or is it something different? To many people it is an abstract idea. They buy stocks in "the stock market" without ever leaving the comfort of their computer terminal. But the stock market is indeed a physical place with buildings and addresses, a place you can go visit.

Wall Street is the Place

Many folks think of Wall Street and the Stock Market as one in the same, and that view isn't really far from the truth. Wall Street is the place where it all started and where the world's largest financial market was born and prospered. From Wall Street sprang a new industry with it's own language and terminology.

The History
Wall Street can trace its name back to 1653. Originally it was set up for defense and not for commerce. Settlers of Dutch descent, who were always on the lookout from attacks by Native Americans and the British built a 12 foot stockade fence. Little did they know that this fence would go on to become the center of financial activity in the world. The wall lasted a good while,

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until 1685. At that point the wall was torn down and a new street was built. The British called it Wall Stree.

The Rise of the Stock Exchanges

What helped Wall Street rise to pre-eminence was the emergence of two great Stock Exchanges, which gave order to the chaotic trading and gave birth to the financial markets as we know them today.

The year was 1790. The place was Philadelphia. The occasion was the founding of the first stock exchange in America. Two years later a group of New York merchants met to discuss how to take command of the securities business. The merchants, a group of 24 men, founded what is now known as the New York Stock Exchange. But in early 1817, the merchant group from New York, distressed at the sorry state of their stock exchange, sent a representative to Philadelphia to observe how things were being done. Upon arriving with news about the robust exchange in Philadelphia, the New York Stock and Exchange Board was soon formally organized.

The exchange opened up shop on Wall Street. As for the New York Stock Exchange, it has since moved past its humble beginnings to the point where its system now facilitates billions of dollars worth of trades each day. But there was a gradual build up to this sort of status. In the early 1900s massive amounts of money were made on Wall Street. But the boom period could not be sustained indefinitely. And in 1929 this principle came front and center as the stock market crash of 1929 seared the national.nay, global.psyche and triggered what was to be called the Great Depression.

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While many of the powers that be realized that the markets could not sustain a boom forever, very few publicized this view, choosing instead to let the market be its own judge, jury and executioner. As a result of the laissez-faire attitude, many people.rich and poor alike.lost a lot of money.

Since then, the government and the industry have tried to put measures in place to curtail, if not entirely eliminate, the possibility of such a large-scale crash. The stock markets are now an integral part of the global economy, and so proper safeguards to reduce the risks of another disastrous crash are necessary.

But while efforts have been made to reduce the risk, the possibility for another stock market crash can never be ruled out.

Current Stock Market

The current "stock market" is comprised of 300,000 computers situated on pro trader's desks. These computers are networked together using sophisticated protocols. This level of information sharing makes pricing an almost exact science.

These 300,000 computers are further linked to another 26 million computers worldwide. These computers are located in banks, small businesses, and large corporations. These computers comprise the banking networks which make computerized transactions possible.

Finally, these computers are connected to another 300 million+ computers which connect and disconnect from the financial markets daily. In New York City alone, these transactions amount to over $2.2 trillion dollars daily 38

Trends of stock market:

Markets Crash! Dow Jones Falls 500 Points- At this point in time, it seems like the Dow Jones Industrial Average (the main stock index) is falling off in record losses every day. Its almost a weekly habit that we see the biggest decline in history in the markets, only to have this loss dwarfed by next weeks action. Commodities are the Next Bull Market- The first two quarters of the 2008 fiscal year proved to be stellar for anything and everything tied to commodities, the third quarter was anything but. As things continue to fall, we get analysts calling for the next bull market in oil or another commodity like wheat or ethanol. Blue Chips Produce Superior Earnings Numbers- If you are an investor, you have probably heard time and time again that you NEED to be in a massive company in order to reduce your portfolio risk. This is actually not true at all. Dont always believe that these blue chip big boys are going to save you from loss. Ben Bernanke and Federal Reserve in Talks to Cut Rates- As our overall economy spirals, a lot of focus has been put on Ben Bernanke and Henry Paulson. The Federal Reserve and the U.S. Treasury are in the international spotlight as American financial systems are now a gauge for the global economy. Almost every time the market takes a hit, there is a new discussion of the Fed cutting rates or making borrowing cheaper in laymans terms. United States Meltdown has Become Global- Globalization is real, and weve seen this firsthand as the United States recession has now spread into international markets. The Asian and European indices now track what the U.S. exchanges are doing, and act accordingly. When we had a +1000 point day, Asian markets took off. This may not 39

happen the other way around all the time, but we can clearly see that the American markets have adversely effected the overall investing conditions. Financials Underwrite Massive Amounts of Debt- When markets began turning on banks, debt became unpayable and financial institutions had to start underwriting the bad bookings to clear their balance sheets. This has continued for about a year to this point, and the trend is not going to reverse any time soon as European and Asian economies start to struggle. Foreign Exchange Markets Heat Up- what is the deal with Forex? Forex, or the Foreign Exchange, is the global exchange market for currency. You can trade spreads between economies by using the countrys currency (e.g. U.S. Dollar, Euro, Japanese Yen, Chinese Juan) and trading them based on strength. Foreign exchange markets have really heated up as of late, as they are a place of relative safety when put in comparison to the stock market. The difference between the two is that in Forex, there is a winner and a loser. In the stock market, everyone can win and everyone can lose right now the latter is more true. Worldwide Consolidation Has M&A Activity Reeling- As global markets continue to struggle in dealing with credit problems and consumer spending cuts, it is important to keep an eye on the consolidating markets. As competition dwindles and the weak companies are pushed out of the marketplace, we have an area where mergers and acquisitions (M&A) are alive and well. When things are cheap, more things are bought so maybe the financial turmoil isnt always a negative thing if you are a large multinational corporation.

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 Emerging Markets Boost Growth Overseas- While 2007 may have been the year of growth in China, many of these popular growth havens have been picked apart by an international market slowdown sparked by the United States economy. Crude Oil and Natural Gas Stage Big Movements - Going with the commodity theme, it seems that high/low crude oil is mentioned every day. Keep an eye on the trends in stock market news that talk about moves in the energy commodities, and you may find yourself ahead!

We want to thank you for checking out BullishBankers.com. With a chance to outperform the research firms that charge you high fees to see the same quality investment rationale we are giving you complimentary, every little bit helps.

Future outlook
The views expressed below are the opinions of the author based on the principles of technical analysis, a science that has been tested and proven for more than hundred years. The views are unbiased and informative in nature. These do not constitute an offer to buy or sell stocks. Every effort has been made by the author to ensure correctness of the information presented. The author cannot be held responsible for omissions, mistakes etc. Investing or trading in stock markets is a high risk activity. Those who cannot afford to risk their money should refrain from dealing in stocks. The author has no vested interest in any of the stocks mentioned. He and/or his close associates may or may not be having positions at the time of writing this article. The reader needs to understand that this article is purely for informative purposes only and all transactions, if entered into by him will be solely at his risk. The author does not guarantee that the projected targets will be achieved within the stipulated time frame. 41

Source for the price data displayed in graphics and tables: National Stock Exchange of India Limited, Mumbai, India (www.nseindia.com)

What is the reason behind this huge rise in index?

Like all other financial markets, Indian markets are also governed by the fundamental principles of demand and supply gap. When interest rates were lowered, stock market looked an attractive option and investors began to look for opportunities. Huge foreign funds are another reason for the upsurge. Liquidity is one more factor one can easily transact with a click of a mouse unlike the old days when physical share certificates were in use. It should be noted here, that the performance in stock market by a scrip has nothing to do with the financial performance of the company.

It just implies that the investors have chased this stock more strongly compared to the rest.

What could be the reason for the uneven performance?

The price of a particular stock on a given day is decided by the market participants. They are FIIs or the foreign institutional investors FIs or the financial institutions MFs or the mutual funds Long term investors Medium term investors Short term investors Day traders 42

Speculators Derivative traders

When thousands of people are trading a particular stock, no one can be very clear of what the other trader thinks. This leads to volatility and uncertainty in the markets.

When one person buys a stock, obvious reason is that he thinks that it will go up. The person who sold the stock thought that it would either go down or he had enough profit or loss.

In a complex scenario like this, price fluctuations happen regularly. The investor needs to take advantage of the situation by buying when the demand just starts picking up for the stock and sell when it just starts diminishing.Having said that it is difficult for an ordinary investor to completely understand and assess the market status.

What can the investor do now?

Ideally, one would like to take some money home. If one has remained a long term investor and likely to get some profit, he can book it.

Remember that the chance of the profit going down may increase with the time a stock being held.For the one who wants to invest for long term in stocks, he has to be cautious, as can be seen from the charts and tables provided.

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COMPANY PROFILE

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COMPANY PROFILE SHAREKHAN

SSKI, a veteran equities solutions company with over 8 decades of experience in the Indian stock markets. The SSKI Group companies of institutional Broking and Corporate Finance. The institutional broking division caters to domestic and foreign institutional investors, while the Corporate Finance Division focuses on niche areas such as infrastructure, telecom and media, SSKI has been voted as the Top Domestic Brokerage House in the research category, by the Euro Money survey and Asia Money survey.
Share khan is also about focus. Sharekhan does not claim expertise in too many things. Sharekhans exoertise lies in stocks and thats what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is some thing that is spoken with years of focused learning and experience in the stock markets. And these beliefs are reflected in everything Sharekhan does for you! Share khan Indias leading stockbroker is the retail arm of SSKI, An organization with over eighty years experience in the stock market. With over 240share shops in 110Cities, and Indias premier online trading destinations-www.sharekhan.com, ours customer enjoy multi-channel access at the stock markets, share khan offer u trade execution facilities for cash as well as derivatives on the BSE &NSE and most importunity we bring you investment advice tempered by eighty years of broking experience. Through our portal Sharekhan.com, weve been providing investors a powerful online trading platform, the latest news, research and other knowledge-based tools for over 5years now. We have dedicated terms for fundamental and technical research so that you get all the information your need to take the right investment decisions. With branches and outlets across the country , our ground network is one of the biggest in India. We have a talent pool of experienced professionals specially designated to guide you when you need assistance, which is why investing with us is bound to be a hassle-free experience for you 45

SHARE KHAN, Indias leading stockbrokers the real arm of SSKI, an Organization with over eight decades of stock market experience. With more than 175 share shops in over 80 cities, and a presence on internet through www.sharekhan.com, Indias premier online trading destination, we reach out to customers like no one else. Share khan offers you trade execution facilities on the BSE and the NSE, for cash as well as derivates, depositary services and most importantly, investment advice tempered by 80 years of research and broking experience. To ensure that your trading experience with share khan is fast, secure and hassle free. We offer a suite of products and services, providing you with a multi-channel access to the stock markets. SSKI group also comprises institutional broking and corporate finance. While the institutional broking division caters to the largest domestic and foreign institutional investors. The corporate finance division focuses on niche areas such as infrastructure, Telecom and media. SSKI holds a sizeable portion of the market in each of these segments. As the forerunner of investment research in the India market, we provide the best research coverage amongst broking houses in India. Our research team is rated as one of the best in the country. Voted four times as the top domestic brokerage house by Asia money survey. SSKI is consistently ranked almagest the top domestic brokerage houses in India. Dematerialization in short called as D-mat is the process by which an investor can get physical certificates converted into electronic form, Rs 20 per scrip per day ( the brokerage per scrip will be charged for the trades resulting in delivery on actual or Rs. 20 whichever is more). ( For e.g. If a customer buys 100 shares of sail, total delivery value =2200. Brokerage @ 0.5% = Rs 11, but the min chargeable amt per scrip per day = Rs 20), so additional Rs 9 will be charged as min delivery handling charges)

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COMPANY BACKGROUND:
1. Share khan is the retail broking arm of SSKI, securities Pvt ltd. SSKI owns 56% in share khan, balance ownership is HSBC, First Caryle, and Intel pacific. 2. Into broking since 80 years. 3. Focused on providing equity solutions to every segment. 4. Largest ground network of 210 branded share shops in 90 cities.

Reason why you should choose Share Khan

1. Experience: SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia Money Brokers poll held recently, SSKI won the Indias best broking division in February 2000, it has been providing institutional-level research and broking services to individual investors.

2.Technology: With our online trading account you can buy and sell shares in an instant from any PC with an Internet connection. You will get access to our powerful inline trading tools that will help you take complete control over your investment in shares.

3.Accessibility: In addition to our online and phone trading services, we also have a ground network of 240 share shops across 110 cities in India where you can get personalized services.

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4.Knowledge: In a business where the right information at the right time can translate into direct profit, you get access to wide range of information on our content- rich portal, Sharekhan.com. You will also get a useful set of knowledge-based tools that will empower you to take informed decisions.

5.Convenience: You can all our Dial-n-Trade number to get investment and execute your transaction. We have a dedicated call-center to provide this service via a toll-free number from anywhere in India.

6.Customer service:
Our customer service team will assist you for any help that you need relating to transactions, billing, demat and other queries, our customer service can be contacted via a tollfree number, email or live chat on sharekhan.c 7.Investment Advice: Sharekhan has dedicated research teams for fundamental and technical research. Our analysts constantly track the pulse of the market and provide timely investment advice to you in the form of daily research emails, online chat, printed reports on SMS on your phone. Customers of Share Khan Experience language, presentation style, content or for that matter the online trading facility find a common thread; one that helps the customers make informed decisions and simplifies investing in stocks. The common thread of empowerment is what Sharekhans all about! Sharekhan is also about focus. Share khan does not claim expertise in too many things. Sharekhans expertise lies in stocks and thats what he talks about with authority. So when he says that investing in stocks should not be confused with trading in stocks or a portfolio-based strategy is better than betting on a single horse, it is something that is spoken with years of focused learning and experience in the stock markets. And these everything Sharekhan does for customers. 48 beliefs are reflected in

To sum up, Sharekhan brings to customers a user-friendly online trading facility, coupled with a wealth of content that will help customers stalk the right shares.

Those of customers who feel comfortable dealing with a human being and would rather visit a brick-and-mortar outlet than talk to a PC; Sharekhan offers customers the facility to visit (or talk to) any of sharekhans share shops across the country. In fact Sharekhan runs Indias largest chain of share shops with over hundred outlets in 80 cities!

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Sharekhan services:
Sharekhan, one of Indias leading brokerage houses, is the retail arm of SSKI. With over 510 share shops in 170 cities, and Indias premier online trading portal www.sharekhan.com, sharekhans customers enjoy multi-channel access to the stock markets.

Figure 3.1

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Online Services to Suit customers Needs: With a Sharekhan online trading account, customers can buy and sell shares in an instant! Anytime customers like trading account that suits customers trading habits and preferences the Classic Account for most investors and Speed trade for active day traders. Customers Classic Account also comes with Dial-n-Trade completely free, which is an exclusive service for trading shares by using customers telephone. When beginning customers foray in investing in shares, customers need a lot of things from the right information at customers disposal, to assistance when customers need it and advice on investing. Sharekhan have been in this business for over 80 years now, and with sharekhan customers get a host of services and tools that are difficult to find in one place anywhere else. The Sharekhan First Step program, built specifically for new investors. All customers have to do is walk into any of sharekhans 510 share shops across 170 cities in India to get a host of trading related services sharekhans friendly customer service staff will also help customers with any accounts related queries customers may have. A Sharekhan outlet offers the following services: Online BSE and NSE execution (through BOLT & NEAT terminals)Free access to investment advice from Sharekhan value line (a monthly publication with reviews of recommendations, stocks to watch out for etc)

Daily research reports and market review(High Noon & Eagle Eye) Pre-market Report (Morning Cuppa) Daily trading calls based on Technical Analysis Cool trading products(Darling Derivatives and Market Strategy) Personalised Advice Live Market Information Depository Services: D-mat & Remat Transactions Derivatives Trading (Futures and Options) Commodities Trading IPOs & Mutual Funds Distribution

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