A COPREHENSIVE PROJECT REPORT ON

RELIANCE MONEY
ANIL DHIRUBHAI AMBANI GROUP

Whenever its a question of your money

SUBMITTED TO SHREE LEUVA PATEL TRUST MBA MAHILA COLLEGE (AMRELI)

AFFILIATED TO SAURASTRA UNIVERSITY, (RAJKOT)

SUBMITTED BY BINAL N. KACHHELA ROLL NO.20 MBA (SEM III) ACADEMIC YEAR: 2007-2008 GUIDED BY .BHARGAV PANDYA

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INDEX
COMPANY OVERVIEW INDUSTRY OVERVIEW PRODUCT DETAILS COMPETITORS DETAIL REGULATORY DEATAIL RESEARCH RESEARCH METHODOLOGY BANKING INDUSTRY DATA ANALYSIS FINDINGS APPENDIX BIBLIOGRAPHY

PAGE NO
11 35 51 59 64 67 70 76 90 110 116 120

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SHREE AMRELI JILLA LEUVA PATEL CHARITABLE TRUST

PLACE: - SMT SHANTABEN HARIBHAI GAJERA SHAIKSHINK SANKUL Chakkargadh Road, Amreli-365601

SURAT

PRINCIPALS RECOMMENDATION
To, The Registrar Saurashtra University Rajkot. Subject: MBA Comprehensive Project report Respected Sir, I am recommending the Comprehensive Project Report entitled ______________________________________________________prepared by ____________________________________________ at __________________________ as the partial fulfillment of the University requirement for the award of MBA degree of Saurashtra University, Rajkot. Thanking You, Date:Place: - Amreli Your Faithfully Principal

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SHREE AMRELI JILLA LEUVA PATEL CHARITABLE TRUSTSURAT

PLACE: - SMT SHANTABEN HARIBHAI GAJERA SHAIKSHINK SANKUL Chakkargadh Road, Amreli-365601

DIRECTORS RECOMMENDATION
To, The Registrar Saurashtra University Rajkot. Subject: MBA Comprehensive Project report Respected Sir, I am recommending the Comprehensive Project Report Entitled _____________________________________________________________ Prepared by _________________________________________________ at ________________________________________ as the partial fulfillment of the University requirement for the award of MBA degree of Saurashtra University, Rajkot. Thanking You,

Date: Place: - Amreli Yours Faithfully Director

GUIDES CERTIFICATE

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This is to certify that _____________________________________ the student of MBA has carried out the project work as per the syllabus of Saurashtra University. She prepared this Comprehensive Project Study Report on ____________________________________________________ under my guidance and her contribution in making this report during the academic year 2006-2007 is highly appreciated. To the best of my knowledge the details presented by her are original in nature and have not been copied from any other source. Also this report has not been submitted earlier for the award of any degree or Diploma in Saurashtra University or any other University.

Guides Name and Sign Bhargav Pandya Faculty Member

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PREFACE
In todays era of cut-throat competition, Masters of Business Administration (MBA) is sure to have an edge over their counterparts. MBA education brings its students in direct contact with the real corporate world through industrial training. The MBA program provides its students with an in depth study of various managerial activities that are performed in any organization. A detailed analysis of managerial activities conducted in various departments like production, marketing, finance, human resources, exportimports, credit dept, etc. gives the student a conceptual idea of what they are expected to manage , how to manage and how to obtain the maximum output through minimum inputs and how to minimize the wastage of resources. I have undergone my comprehensive training atRELIANCE MONEY. It is one of the leading DPcompanies in the country. I feel great pleasure to present this report work after my training at RELIANCE MONEY that produced to be golden opportunity for me by enriching my knowledge by comparing my theoretical knowledge with the managerial skill and application. Simple language has been used throughout the report. Report is illustrated with figure, charts and diagrams as and when required.

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Acknowledgement
I would like to express my sincere gratitude to Mr. Chandrajeet jadeja (Center manager) and) for constant inspiration and valuable suggestion during my summer internship. I also would like to thank Mr.pinakin jani, Mr. neeraj vyas and Mr. Bhavesh Makkar for providing their valuable time and guiding me for how to do operation work otherwise it would have been difficult to keep the constant high spirit of work. I take the opportunity to thank them for their extensive help and for providing valuable information, suggestion and inputs at various stages of work. I like to thank all of them who have helped me a lot in my training and provided encouragement to me during training. I would also extend my deepest thanks to Ms. Namrata ,Ms. Riddhi of this organization who were taking care of the operations of Reliance Money and gave me right guidance for my internship project.

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DECLARATION
Myself Binal N. Kachhela student of MBA Semester IV of Shree LPT M.B.A MAHILA(AMRELI) College of Management Studies here by declare that the project work presented in this report is my own work and has been carried out under the supervisor of Mr CHANDRAJEET JADEJA (center Manager of RELIANCE MONEYF, Rajkot). My report is submitted as a part of study curriculum and as a partial fulfillment of the degree of M.B.A. (Masters of Business Administration). I am also declaring that I am submitting this report on the training undertaken at RELIANCE MONEY I guarantee that this project report has not been submitted for the awards to any other university for degree, diploma or any other such prizes.

Date: Place: RAJKOT (BINAL KACHHELA)

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Executive summary
As the computer awareness and use of internet are increasing people tend to save the time by using automatic tools for most of their routine and non routine work. The same is the case with the share trading. Online share trading system has entirely changed the scenario of capital market. Reliance Money also provides the online share trading facility. Reliance Money provides online share trading, investments in mutual fund, insurance, post, IPO and national saving certificate. Here there is no need for broker and no need to fill up lengthy physical forms. This is completely paper less procedure. Investor can save a lot of time by using this facility. But as in all the industries online share trading market is also crowded with many competitors like icicidirect.com, HDFC, share khan, India bulls, 5paise.com and Kotak. But still many unique facilities are provided by Reliance Money. Before making investment anywhere we have to first concentrate on risk and return relationship of the investment. There are some tools available with investors which can be used to predict future price movement and subsequently help to reduce risk. Two types of analysis are used by the investors that are fundamental analysis and technical analysis. Here a research is based mainly on secondary data to interpret the tools of fundamental analysis. Fundamental analysis includes economic analysis, industry analysis and company analysis. Fundamental analysis more rely on the companys past financial performance.

On the basis of research found that investors have analyze economic analysis of country in which he/she want to invest, industry analysis in which company is performing and companys performance in which investor want to invest. Fundamental analysis is based on companies past financial performance which give right future value.

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INTRODUCTIO N

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COMPANY DETAILS

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Reliance ADA Group

Figure 1

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Reliance Capital Limited

One of India's leading & fastest growing private sector financial services

companies worth Has an interest in Asset Management and Mutual Funds, Life and General Ranks among the top 3 private sector financial services companies, in terms of net

Insurance, Credit Cards and other activities in financial services.

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Group Philosophy
Vision
To build a global enterprise for all our stakeholders, and A great future for our country, To give millions of young Indians the power to shape their destiny, The means to realize their full potential

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Values
Shareholder Interest
We value the trust of shareholders, and keep their interests paramount in every business decision we make, every choice we exercise

People Care
We possess no greater asset than the quality of our human capital and no greater priority than the retention, growth and well-being of our vast pool of human talent

Consumer Focus
We rethink every business process, product and service from the standpoint of the consumer so as to exceed expectations at every touch point

Excellence in Execution
We believe in excellence of execution in large, complex projects as much as small everyday tasks. If something is worth doing, it is worth doing well. Team Work The whole is greater than the sum of its parts; in our rapidly-changing knowledge economy, organizations can prosper only by mobilizing diverse competencies, skill sets and expertise; by imbibing the spirit of thinking together -- integration is the rule, escalation is an exception

Proactive Innovation
We nurture innovation by breaking silos, encouraging cross-fertilization of ideas & flexibility of roles and functions. We create an environment of accountability, ownership and problem-solving based on participative work ethic and leadingedge research

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Leadership by Empowerment
We believe leadership in the new economy is about consensus building, about giving up control; about enabling and empowering people down the line to take decisions in their areas of operation and competence.

Social Responsibility
We believe that organizations, like individuals, depend on the support of the community for their survival and sustenance, and must repay this generosity in the best way they can

Respect for Competition

We respect competition because theres more than one way of doing things right. We can learn as much from the success of others as from our own failures

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Founders Group

of

Reliance

ADA

As with all great pioneers, there is more than one unique way of describing the true genius of Dhirubhai: The corporate visionary, the unmatched strategist, the proud patriot, the leader of men, the architect of Indias capital markets, the champion of shareholder interest. But the role Dhirubhai cherished most was perhaps that of Indias greatest wealth creator. In one lifetime, he built, starting from the proverbial scratch, Indias largest private sector enterprise. When Dhirubhai embarked on his first business venture, he had a seed capital of barely US$ 300 (around Rs 14,000). Over the next three and a half decades, he converted this fledgling enterprise into a Rs 60,000 crore colossusan achievement which earned Reliance a place on the global Fortune 500 list, the first ever Indian private company to do so. Dhirubhai is widely regarded as the father of Indias capital markets. In 1977, when Reliance Textile Industries Limited first went public, the Indian stock market was a place patronized by a small club of elite investors which dabbled in a handful of stocks. Undaunted, Dhirubhai managed to convince a large number of first-time retail investors to participate in the unfolding Reliance story and put their hard-earned money in the Reliance Textile IPO, promising them, in exchange for their trust, substantial return on their investments. It was to be the start of one of great stories of mutual respect and reciprocal gain in the Indian markets.

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Chairmans Profile

Regarded as one of the foremost corporate leaders of contemporary India, Anil Dhirubhai Ambani is the Chairman of all listed Group companies, namely: Reliance Communications, Reliance Capital, Reliance Energy and Reliance Natural Resources Limited. He is also Chairman of the Board of Governors of Dhirubhai Ambani Institute of Information and Communication Technology, Gandhi Nagar, Gujarat. Till recently, he also held the post of Vice Chairman and Managing Director in Reliance Industries Limited (RIL), Indias largest private sector enterprise. Anil D Ambani joined Reliance in 1983 as Co-Chief Executive Officer, and was centrally involved in every aspect of the companys management over the next 22 years. He is credited with having pioneered a number of path-breaking financial innovations in the Indian capital markets. He spearheaded the countrys first forays into the overseas capital markets with international public offerings of global depositary receipts, convertibles and bonds. Starting in 1991, he directed Reliance Industries in its efforts to raise over US$ 2 billion. He also steered the 100-year Yankee bond issue for the company in January 1997. He is a member of:

Wharton Board of Overseers, The Wharton School, USA Central Advisory Committee, Central Electricity Regulatory Commission Board of Governors, Indian Institute of Management, Ahmedabad

I Awards and Achievements

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Conferred the CEO of the Year 2004 in the Platts Global Energy Awards Rated as one of Indias Most Admired CEOs for the sixth consecutive Conferred The Entrepreneur of the Decade Award by the Bombay Awarded the First Wharton Indian Alumni Award by the Wharton India

year in the Business Barons TNS Mode opinion poll, 2004

Management Association, October 2002

Economic Forum (WIEF) in recognition of his contribution to the establishment of Reliance as a global leader in many of its business areas, December 2001

Selected by Asia week magazine for its list of Leaders of the Millennium

in Business and Finance and was introduced as the only new hero in Business and Finance from India, June 1999

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Organizational Chart

Chart 1

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Reliance Capital Ltd is a part of the Reliance - Anil Dhirubhai Ambani Group. Reliance Capital is one of Indias leading and fastest growing private sector financial services companies, and ranks among the top 3 private sector financial services and banking companies, in terms of net worth. Reliance Capital has interests in asset management and mutual funds, life and general insurance, private equity and proprietary investments, stock broking and other activities in financial services.

Business Overview
RCL is registered as a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) under the Securities and Exchange Board of India (Depositories and Participants) Regulations, 1996. RCL has sponsored the Reliance Mutual Fund within the framework of the Securities and Exchange Board of India (Mutual Fund) Regulations, 1996.RCL primarily focuses on funding projects in the infrastructure sector and supports the growth of its subsidiary companies, Reliance Capital Asset Management Limited, Reliance Capital Trustee Co. Limited, Reliance General Insurance Company Limited and Reliance Life Insurance Company Limited. As of March 31, 2005, the companys investment in infrastructure projects stood at Rs. 1071 Crores. The investment portfolio of RCL is structured in a way that realizes the highest post-tax return on its investments.

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Board of Directors

Amitabh Jhunjhunwala, Vice-Chairman

Amitabh Jhunjhunwala, an FCA, has over 23 years of experience in finance and the capital markets. Amitabh is also the Director of Reliance Capital Asset Management Limited.

Rajendra Chitale, Independent Director

Rajendra P. Chitale, an eminent Chartered Accountant, is the Managing Partner of M/s M. P. Chitale & Co. He is a Director on Boards of the National Stock Exchange of India (NSE), Asset Reconstruction Company (India) Ltd, Hinduja TMT Ltd and Gujarat Ambuja Cements Ltd. He is also a member of the Advisory Group on Derivatives and the Takeover Panel, Securities and Exchange Board of India, as well as the Company Law Advisory Committee of the Government of India.He has also served on the boards of Life Insurance Corporation of India, Unit Trust of India, SBI Capital Markets Ltd and Small Industries Development Bank of India.

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Shri C. P. Jain

Shri C.P. Jain, aged 60 years, is the former Chairman and Managing Director of National Thermal Power Corporation (NTPC). Shri Jain has an illustrious career spanning over four decades of contribution in the fields of financial management, general management, strategic management and business leadership. He is a fellow member of the Institute of Chartered Accountants of India with an advanced diploma in Management and is a law graduate. Shri C.P. Jain joined the Board of NTPC in 1993 as Director (Finance) and was elevated as Chairman & Managing Director in September 2000. He was Chairman of the Global Studies Committee of World Energy Council (WEC), worlds largest energy NGO with nearly hundred member-nations. He has been on several important committees of the Government of India, latest being the Adhoc Group of Experts on Empowerment of CPSEs. He was Chairman of Standing Conference of Public Enterprises (SCOPE) between April 2003 and March 2005.

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Reliance Mutual Fund

Reliance Mutual Fund (RMF) is one of Indias leading Mutual Funds, with Assets Under Management (AUM) of Rs. 36,927 crore (AUM as on 31st December 2006) and an investor base of over 2.8 million.

Reliance Mutual Fund, a part of the Reliance - Anil Dhirubhai Ambani Group, is one of the fastest and has growing presence mutual in 95 funds cities in across the the country. country. RMF offers investors a well-rounded portfolio of products to meet varying investor requirements

Reliance Mutual Fund constantly endeavors to launch innovative products and customer service initiatives to increase value to investors.

Reliance Mutual Fund schemes are managed by Reliance Capital Asset Management Ltd., a wholly owned subsidiary of Reliance Capital Ltd.

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Reliance Life Insurance

Reliance Life Insurance is an associate company of Reliance Capital Ltd., which alongwith its associates has acquired 100% shares in AMP Sanmar Life Insurance Co Ltd. Reliance Life Insurance has a pan presence and a range of products catering to individual as well as corporate needs A total of 16 products covering savings, protection & investment requirements

Vision:
Empowering everyone live their dreams

Mission:
Create unmatched value for everyone through dependable, effective, transparent and profitable life insurance and pension plans Reliance Life Insurance would strive hard to achieve the following goals:

Emerge as transnational Life Insurer of global scale and standard Achieve impeccable reputation and credentials through best business Guiding Principles - Customer Care and Satisfaction - Corporate Governance - Creativity and Innovation - Competitiveness

practices

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Reliance General Insurance

Reliance General Insurance, a Subsidiary of Reliance Capital, is one of the first non-life companies to get the license from the IRDA. RGICL offers an exhaustive range of insurance products that covers most risks including Property, Marine, Casualty and Liability.

Vision
To be an insurer of World Standards and the most preferred choice for clientele at the domestic and global level.

Mission
Our Mission is to keep the customer satisfaction as focal point of all our operations, adopt the best international practices in underwriting, claims and customer service, be the most innovative in product development, establish presence all over India, ensure sustained value addition to all stake holders and to uphold Corporate Value & Corporate Governance.

Objectives

Make affordable insurance accessible to all Keep customer as focal point for all operations Protect policy holders interests Adopt best international practices in claims, underwriting and policy Be the most innovative in product development Establish Pan India presence

servicing

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Value propositions

Risk Evaluation: Provide expertise in risk evaluation and risk mitigation

leading to the most appropriate risk transfer solution.

Post sales services: Differentiate on service parameters by ensuring prompt and

correct documentation& fair, transparent, speedy claims settlement.

New products: Introduce innovative products suited to specific market

segments

Training: Extensive training to the employees involved in underwriting and

claims to ensure availability of a varied experienced and competent team to cater to the customer needs.

Technology: Use IT as a means to provide for a far superior customer

experience in terms of access, speed and simplicity

Reinsurance backing: Apart from using capacity of the national reinsurers,

establish relationships with the best reinsurers across the world.

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Reliance Money
Introduction
Reliance Money is a financial transaction platform offering customers a wide range of classes to diversify their portfolio. Through Reliance Money, Customers would be able to transact in Equity, Derivatives, Commodities, Forex, IPOs, Mutual Funds and Insurance. The company is in the process of launching a comprehensive financial portal enabling to carry out on-line trading and investment activities in a secured, costeffective and in convenient manner. To enable wider participation, Reliance Money also offers the convenience of offline trading through its branches, call & trade facility, franchisee network and other technically a user-friendly methods.

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About Company
Reliance Money is a comprehensive financial solution provider offering a complete basket of financial service. Through Reliance Money currently a customer will be able to transact amongst others, in Equity, Equity & Commodity derivatives, Offshore Investment, IPOs, Mutual Funds and Insurance Products. It offers an investment avenue for a wide range of asset classes. It endeavors is to change the way India transacts in financial market and avails financial services. In short, Reliance Money is a Single window for all your financial transaction needs

Reliance Money

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Why Reliance Money?

Reliance Money is the most cost effective, convenient and secures way to transact in wide range of products and services. Highlights of reliance money offering are:

Cost effective
The fee charged by the affiliates of reliance money through whom the transaction can be placed, is among the lowest charge in the present scenario. As an introductory offer, pay a flat fee of just Rs. 500/- valid for 2months or specified transactional value. Illustrative table showing fee structure & validity limits.

Table 1

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Convenience
You have the flexibility to access Reliance Money services in multiple ways: Through Internet, Transactional kiosks, Call and transact (phone) or seek assistance through our business partners.

Figure 4

Security

Reliance Money provides secure access through an electronic token that flashes a unique security number every 32 seconds and ensures that the number used 4 earlier transactions is discarded. The number works as third level password that keeps your account extra safe.

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Single Window for multiple Products.

Reliance Money, through its affiliates/Partners, facilitates transaction in equities, Equity & commodity derivative, Offshore Investments, Mutual Funds, IPOs, Life Insurance & General Insurance Products.

3 in 1 Integrated Access
Reliance Money Integrated access to your banking, trading and demat account you can transact without the hassle of writing cheques.

Demat Account with Reliance Capital

Through Reliance Money, you get a hassle free demat account with reliance capital. Annual maintenance charge for demat account is Rs 50/- per annum.

Other services
Through the portal www.reliancemoney.com it provides: record. Live news form Reuters and Dow Jones. CEOs/ Expert views on economy and financial market. Personnel finance section provides tools that help u plan your investment, Reliable research, including views of external experts with an enviable track

retirement, tax etc. Analyze your risk profile through the risk analyzer. Get suitable investment portfolios using the Asset Allocator

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Reliance Money Snapshot

Reliance Money was registered on 17th June 2005. Currently more then 350 employees across 75 Location spread across the

country. Total no of offices: 42 (going up to 70 branches by march 2007)

Reliance Money Registered office:

Reliance Money Ltd, 6th floor, Nagin Mahal 82, Veer Nariman Road, Church Gate, Mumbai 400 020

Branch Address:
Reliance Money Ltd, Sanjay Raj Complex, Nr. Raymond Showroom, Race course Ring Road, Rajkot 360001

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Important People in the Organization

CEO: Sudip Bandyopadhyay
Sales Head Operation Head CS Head Equity Broking Head Commodity Broking Head Insurance Broking Head Finance & Legal Head IT Head Marketing and Comm. Head Facilities Head Infrastructure Head HR Head : Mr. Kapil Bali : Mr. Pawan Kothari : Mr. Dipankar Mitra, : Mr. Ravi Doshi : Mr. Gurmeet Singh : Mr. S. Ravi : Mr. Jhuma Guha : Mr. Kshitij Shah : Mr. Bosco DMello : Manohar Chhabria, : Mr. Vivek Jalan : Mr. Adrian Williams

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INDUSTRY DETAILS

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Securities Market
Securities Market Past
Pre-demat era (under paper based share certificate environment)The investors can be broadly classified into two groups on the basis of process of acquiring equity shares, viz. investors who get allotment of shares in the primary market and investors who purchase shares from the recognized stock exchanges(secondary market). Some of the risks involved in dealing with physical shares through public issue allotment and secondary market transactions can be identified as follows: Share certificates are sometimes lost in transit. In that scenario, the investors have to give an indemnity bond to Company, which involves a cost to the investor, besides depriving him of the opportunity to sell the shares at the opportune time. Time taken to receive the shares is also quite long compared to the present dematerialized environment. Secondary market operations were fraught with bad paper due to signature differences, forged and fake certificates stolen certificates and delayed transfer resulting in low confidence in the market place. In public issues, Companies were / are incurring several costs in distributing the share certificates to the investors. They are as follows: - Printing of share certificates (@ about Rs 1.00 per certificate), RTA handling charges (@ about Rs 5.50 per folio), actual cost of dispatching by registered post and other expenses. In case of investors purchasing the shares from the secondary market, there are certain costs incurred by the companies. After the shares are transferred into the investors name, the expenses on corporate benefits distribution will be same for all shareholders owning the shares in physical form. Structure and Collection method of charges under paper based share safe-keeping and transfer mechanism.

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Under this method companies used to incur all expenses pertinent to share transfer in the name of the buyer. These could be classified into two broad categories on the basis their nature: (a) (b) Variable expenses (I)Share Transfer(ii)Maintenance of folio records. Event Specific Expenses (i) Issue of duplicate certificates (ii) Adhoc (iii)Custody of physical shares, etc.,(iv)Dividend and other corporate actions reports, etc. Individual investor/Institutional investor was required to pay 0.5 percent of purchase value of share as stamp duty under physical environment which has been totally removed under demat conditions. Further, issues pertaining to bad paper like, signature difference, fake or forged certificate, etc. besides delay in transfer, are eliminated and thus investor is a direct beneficiary. The price risk faced by the investor has also been eliminated. As per some unofficial estimates, the cost related to the bad paper was to the extent of about 20 percent of the market value of shares. Currently this figure is estimated to be almost nil. Post-trade activities: The post trade activities of the stock exchanges are handled by their respective Clearing house/corporation. In the physical environment, the Clearinghouse/corporation incurred several expenses on various heads as follows: Physical space required collecting share certificates- Sorting them with respect to receiving member. Safekeeping of share certificates delivered at the Clearinghouse/corporation. Insurance costs. Huge human costs incurred for executing pay-in and pay-out activities. Transportation costs incurred in movement of physical share certificates from one metro to other metro for pay-in and pay-out. On the basis of informal discussion, it can be stated that there is drastic reduction in cost of pay-in and payout facility. A part of it might have been passed on to brokers/ dealers of the stock exchanges.

Further, as it has been observed in the study of M.T. Raju (2000), the brokerage fell significantly during this period for high net worth investors. For small investor, the fall in the brokerage is not proportional even though there is a decline in the brokerage. Early period of demat the regulator, SEBI, had played a significant role in nurturing the promotion and growth of dematerialization for the benefit of all

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investors and for the cause of developing efficient securities market in India. During the initial period, the depositories used to collect transaction charges as well as custodial charges on ad valorem basis. This is directly related to the value of securities bought or sold and held in custody. Higher values attracted higher fees and vice-versa. There was a feeling under this system that the payment by the high net worth investors and institutions was disproportionate to services received by them. In the demat environment, to a large extent, services rendered are invariant to value of transaction. In many other markets, the charges are levied on the basis of number of transactions which is also known as flat fee structure. In India, depositories subsequently switched over to flat fee structure of charges on transactions. . However, notwithstanding this, in India the share ownership pattern is quite different from what it is, in the developed markets, as well as in some of the emerging markets. Considering the role of small investors in Indian capital market, we need to have a cost effective system which will address many of the issues concerning small investors. The dematerialization success story could be partly attributed to individual investor for his full support to the regulatory direction. As it was mentioned in the study of M.T. Raju and Prabhakar Patil (2001), Indian stock markets had taken significantly less time to complete the Herculean task of dematerialization as compared to some of the developed markets like USA, UK, etc. Depository Participants Depository participants (DPs) impose various charges on the institutional as well as on individual clients under various heads for providing services.

The services available in dematerialized environment that are extended to the clients are as follows: Dematerialization Rematerialization Custodial services Debit or Credit facility Hypothecation Speed-e along with smart card Corporate benefits like bonus, stock split, dividend payment, etc This is an illustrative list of services available. The system of charging a fee forth services extended to an investor is in two-layers. The Depository charges the DPs and DPs in turn collect fee/charges from the investor. Each DP uses different norms to classify charges depending on the extent of services rendered. NSDL has a provision for collecting a one-time fee of 0.05 percent of market capitalization of the company, as custody

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fees for life. For these companies, no custody charge is supposed to be charged from the investors for life. The list of55 companies that had paid this one time fee is enclosed in Annexure I. However, it is not clear whether DPs are passing this benefit to investors or not for these 55 companies.VI. Charges under the present method FFSThe depositories started charging DPs on FFS basis since May, 2002 and DPs in turn started charging on FFS basis to investors. This system is tilted in favour of high net worth and institutional investors who trade in large quantities. The long-term small investor who trade less frequently feel the unwanted burden of heavy outgo on account of FFS.Custody charges are levied on the basis of ISIN numbers, irrespective of the value of shares in custody. As a result, there is a piquant situation, wherein on one side, the value of shares may be getting eroded while on the other hand the investors are required to pay custody charges that some times exceed the value of shares held in custody. This has been a very sour point. As the value of the holding is small, the charges paid as percentage of value of their holding work out to be very high.

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The DPs are generally required to pay the following as one time charges to NSDL, under the following heads: Non-refundable entry fee - Rs 25,000 Minimum fee per year - Rs 1,50,000, irrespective of business volume Interest free refundable fee of Rs 10,00,000Further, the DP will be incurring fixed and variable costs on account of establishment, staff, computers, WAN connectivity, stationary, postal or courier expenses and telephone. These costs will vary according to the size of operations, place of operations etc. The companies have an opportunity to make one time payment of custody fee of0.05 percent or five basis points on the market value of the shares computed on previous 26 weeks average of market price of the equity. In these cases investors are not required to pay any custodial charges. This seems to be available alternate/solution since the custodial charges will then be nil for the investors, for ever. VII. Analysis and Discussion Table 1 A shows some of the basic costs involved in physical and demat environment for different sizes of share folios. The costs taken into consideration are from a leading RTA and the size is hypothetical for computational purposes. It is clearly evident from the table that as the number of folios increases, the benefits, in the form of reduction in Companys costs, also increase. Thus, the size and costs are inversely related and benefits positively related.

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Current and future

It is needless to say that the financial markets (banks and the securities markets) finance economic growth. They canalize savings to investments and thereby decouple these two activities. As a result, savers and investors are not constrained by their individual abilities, but by the economys ability to invest and save respectively, which inevitably enhances savings and investment in the economy. To the extent the growth of an economy depends on the rate of savings and investment, financial markets promote economic growth. The banks and securities markets are two competing mechanisms to channel savings to investment. The securities markets score over banks in the allocation efficiency, as it allocates savings to those investments which have potential to yield higher returns. This inevitably leads to higher returns to savers on their savings and higher productivity on investments to enterprises. Hence to the extent economic growth depends on the rate of return on investments, securities market promotes economic growth. With this brief background, I propose to talk first about functions of the securities market, then its role and importance in the growth of an economy, then how a liberalized securities market promotes economic growth, then talk about its significance in the Indian economy and finally, significance of the market in the growth of Indian economy.

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Functions of Securities Market

The securities market allows people to do more with their savings than they would otherwise. It also allows people to do more with their ideas and talents than would otherwise be possible. The peoples savings are matched with the best ideas and talents in the economy. Stated formally, the securities market provides a linkage between the savings and the preferred investment across the entities, time and space. It mobilizes savings and canalizes them through securities into preferred enterprises. The securities market enables all individuals, irrespective of their means, to share the increased wealth provided by competitive enterprises. The securities market allows individuals who can not carry an activity in its entirety within their resources to invest whatever is individually possible and preferred in that activity carried on by an enterprise. Conversely, individuals who can not begin an enterprise they like can attract enough investment form others to make a start and continue to progress and prosper. In either case, individuals who contribute to the investment share the fruits. The securities market also provides a market place for purchase and sale of securities and thereby ensures transferability of securities, which is the basis for the joint stock enterprise system. The liquidity available to investors does not inconvenience the enterprises that originally issued the securities to raise funds. The existence of the securities market makes it possible to satisfy simultaneously the needs of the enterprises for capital and of investors for liquidity. The liquidity the market confers and the yield promised or anticipated on security encourages people to make additional savings out of current income. In the absence of the securities market, the additional savings would have been consumed otherwise. Thus the provision of securities market results in net savings. The securities market enables a person to allocate his savings among a number of investments. This helps him to diversify risks among many enterprises, which increases the likelihood of long term overall gains.

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Securities Market and Economic Growth

It is strongly believed that a well functioning securities market is conducive to sustained economic growth. There have a number of studies, starting from World Bank and IMF to various scholars, which have established robust relationship not only one way, but also the both ways, between the development in the securities market and the economic growth. An important study by Ross Levine and Sara Zervos (1996) finds that the stock market development is highly significant statistically in forecasting future growth of per capita GDP. Their regressions forecast that if Mexico or Brazil were to obtain stock markets as advanced as Malaysia, then they might obtain an additional per capita GDP growth per year of 1.6%. This happens, as market gets disciplined / developed/ efficient, it avoids the allocation of scarce savings to low yielding enterprises and forces the enterprises to focus on their performance which is being continuously evaluated through share prices in the market and which faces the threat of takeover. Thus securities market converts a given stock of invest resources to a larger flow of goods and services. The securities market fosters economic growth to the extent that it-(a) augments the quantities of real savings and capital formation from any given level of national income, (b) increases net capital inflow from abroad, (c) raises the productivity of investment by improving allocation of invest able funds, and (d) reduces the cost of capital. It is reasonable to expect savings and capital accumulation and formation to respond favorably to developments in securities market. The provision of even simple securities decouples individual acts of saving from those of investment over both time and space and thus allows savings to occur without the need for a concomitant act of investment. If economic units rely entirely on self-finance, investment is constrained in two ways: by the ability and willingness of any unit to save, and by its ability and willingness to invest.

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The unequal distribution of entrepreneurial talents and risk taking proclivities in any economy means that at one extreme there are some whose investment plans may be frustrated for want of enough savings, while at the other end, there are those who do not need to consume all their incomes but who are too inert to save or too cautious to invest the surplus productively. For the economy as a whole, productive investment may thus fall short of its potential level. In these circumstances, the securities market provides a bridge between ultimate savers and ultimate investors and creates the opportunity to put the savings of the cautious at the disposal of the enterprising, thus promising to raise the total level of investment and hence of growth. The indivisibility or lumpiness of many potentially profitable but large investments reinforces this argument. These are commonly beyond the financing capacity of any single economic unit but may be supported if the investor can gather and combine the savings of many. Moreover, the availability of yield bearing securities makes present consumption more expensive relative to future consumption and, therefore, people might be induced to consume less today. The composition of savings may also change with fewer saving being held in the form of idle money or unproductive durable assets, simply because more divisible and liquid assets are available. The securities market facilitates the internationalization of an economy by linking it with the rest of the world. This linkage assists through the inflow of capital in the form of portfolio investment. Moreover, a strong domestic stock market performance forms the basis for well performing domestic corporate to raise capital in the international market. This implies that the domestic economy is opened up to international competitive pressures, which help to raise efficiency. It is also very likely that existence of a domestic securities market will deter capital outflow by providing attractive investment opportunities within domestic economy. Any financial development that causes investment alternatives to be compared with one another produces allocation improvement over a system of segregated investment opportunities.

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The benefits of improved investment allocation is such that Mc Kinnon defines economic development as reduction of the great dispersion in social rate of return to existing and new investments under domestic entrepreneurial control. Instead of emphasizing scarcity of capital, he focuses on the extra-ordinary distortions commonly found in the domestic securities markets of the developing countries. The distortions in the real sectors such as monopoly power, tariff protection, import quotas, credit rationing and so forth add salt to injury. In the face of great discrepancies in rate of return, the accumulation of capital does not contribute much to development. A developed securities market successfully monitors the efficiency with which the existing capital stock is deployed and thereby significantly increases the average return. In as much as the securities market enlarges the financial sector, promoting additional and more sophisticated financing, it increases opportunities for specialization, division of labour and reductions in costs in financial activities. The securities market and its institutions help the user in many ways to reduce the cost of capital. They provide a convenient market place to which investors and issuers of securities go and thereby avoid the need to search a suitable counterpart. The market provides standardized products and thereby cuts the information costs associated with individual instruments. The market institutions specialize and operate on large scale which cuts costs through the use of tested procedures and routines. There are also other developmental benefits associated with the existence of a securities market. First, the securities market provides a fast-rate breeding ground for the skills and judgment needed for entrepreneurship, risk bearing, portfolio selection and management. Second, an active securities market serves as an engine of general financial development and may, in particular, accelerate the integration of informal financial systems with the institutional financial sector.

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Securities directly displace traditional assets such as gold and stocks of produce or, indirectly, may provide portfolio assets for unit trusts, pension funds and similar FIs that raise savings from the traditional sector. Third, the existence of securities market enhances the scope, and provides institutional mechanisms, for the operation of monetary and financial policy. While the above indicate that the securities market promotes economic growth, it is not one way relation. The economic growth also promotes securities market, which I am not discussing now. Liberalized Securities Market and Economic Growth Now let me explain how a liberalized securities market helps promote economic growth. The more liberalized a securities market is, the better is its impact on economic growth. Interventions in the securities market were originally designed to help governments expropriate much of the seignior age and control and direct the flow of funds for favored uses. These helped governments to tap savings on a low or even no-cost basis. In some economies governments used to allocate funds from the securities market to competing enterprises and decide the terms of allocation. The result was channelisation of resources to favored uses rather than sound projects. In such circumstances accumulation of capital per se meant little, where rate of return on some investments were negative while extremely remunerative investment opportunities were foregone. This kept the average rate of return from investment lower than it would otherwise have been and, given the cost of savings, the resulting investment was less than optimum. This led mainstream development economists to argue that liberalization of securities market is the road to higher levels of domestic savings/investment and more efficient allocation of capital. The implication of intervention is illustrated in figure 1. The vertical axis represents cost of capital and rate of return on investment and the horizontal axis represents the amount of capital raised from the securities market. With intervention, the demand for investment is represented by DyD, which indicates lower average rate of return corresponding to sub-optimal resource allocation.

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As the level of investment increases to OD, the maximum permitted by the authorities, the average rate of return decreases as relatively less remunerative investments are approved. SS represents the supply of capital. This results in an investment of K. If, however, intervention is withdrawn, rate of return will go up causing a shift in demand for investment schedule to D1D1, which will be down ward sloping through out. This would result in higher investment and consequently income which would shift supply schedule of capital to S1S1. The investment would further increase to K* and rate of return would improve to r*. Rate of return improves because removal of intervention rations out low yielding investments. As the cost of capital goes up, the entrepreneurs are likely to switch to less capitalintensive technologies. Such technologies may not only raise the average productivity of capital, but also represent appropriate technology provided by relative availability and cost of labour and capital in the economy. Letting rate of return be determined by the market mechanism would reduce or even eliminate the costs involved in credit rationing arrangements and thereby enhance the efficiency of the economy as a whole. High rate of return would stimulate demand for financial assets and expand financial sector one of the bitter fruits of intervention has been the shrinkage of the securities market. When subject to effective expropriation through suppressed return on investment, people naturally seek a proper reward elsewhere, either through capital flight, through a retreat to under ground or through the hoarding of goods. People keep their savings out of the markets. The underground sector allocates the resources, but relatively inefficiently. Another major consequence has been insulation of developing countries from international capital markets. The domestic market is shielded from competition. Misallocation of resources can result because of distorting interventions or the presence of market failure either in the goods market or in the securities market, which are interlinked. Improvement in allocation efficiency, therefore, requires removal of distortions from both the markets.

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Significance in Indian Economy

Three main sets of entities depend on securities market. While the corporate and governments raise resources from the securities market to meet their obligations, the households invest their savings in the securities. I will now dish out a few statistics, mostly taken from the Indian Securities Market Review, a publication of the National Stock Exchange, to indicate the level of significance. While corporate sector and governments together raised a total of Rs. 226,911 crore from the securities market during 2001-02, there are about 20 million investors who have invested in the securities. Tables 1 and 2 indicate the significance of the securities market in Indian economy. The Indian economy witnessed a descent growth of 6% per year in 1990s against euphemistically described as Hindu Growth Rate of 3.5% over preceding four decades. This was possible by contributions mostly by the organized secondary and tertiary sectors (industry and service). The securities market helped these organized sectors, corporate and government, to raise resources to realize a growth rate of 6%. Of late the activity in the securities market has slowed down, so also the level of activity in the economy.

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SWOT Analysis
Every company does SWOT Analysis for monitoring their current position in the market. They do this analysis for the purpose of identifying their strengths, weaknesses, opportunities and threats.

Reliance Money SWOT Analysis can be elaborated as follows:

Strengths:
1. 2. 3. 4. Strength of reliance money is its strong features like 3 in 1 account. Online trading even in non-working hours. Apart from this product strength reliance money has a very strong work It considers security token as its main strength.

force that continuously monitors the activities of trading

Weakness:
1. Still many people are not aware about Reliance Money. So they need to

focus on its advertising.

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Opportunities:
1. Opportunity for Reliance Money will be uncovered segments of the

markets. There are about 42 branches of it spread across 75 locations across the country. 2. But its planning to have 70 branches by March 2007.

Threats:
1. Threats are always at your doorsteps when you are being placed as best. So

is the case with Reliance Money. The major threat is from ICICI web trade, HDFC security, 5 paisa and Marwadi group. They are the share trading firms who provide online trading. 2. So Reliance Money has to be always aware about them and not only these three but also other competitors like Stockholding Corporation, Karvy, etc.

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PRODUCT DETAILS

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Product:Physical products vary in their potential for differentiation. At one extreme we find products that allow little variation where some differentiation is possible. A product is anything that can be offered to a market to satisfy a want or need. Products that are marketed include physical goods, services, experiences, events, persons, places, properties, organizations, information, and ideas.

Product Offerings
1. a. b. c. 2. a. 3. 4. a. b. 5. 6. 7. 8. Equity Cash Trading Margin Trading Buy today Sell tomorrow Derivatives Futures & Options Commodity Offshore Investment Forex Trading Contracts for Difference (CFD) Trading Life Insurance General Insurance Mutual Funds IPO

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Equity
Reliance Money offers you various options while trading in shares. Cash Trading : This is a delivery based trading system, which is generally done with the intention of taking delivery of shares or monies. Margin Trading : You can also do an intra-settlement trading up to 3 to 4 times your available funds, wherein you take long buy/ short sell positions in stocks with the intention of squaring off the position within the same day settlement cycle. BTST : Buy Today Sell Tomorrow (BTST) is a facility that allows you to sell shares even on 1st and 2nd day after the buy order date, without you having to wait for the receipt of shares into your demat account.

Trading on NSE/BSE:
Through reliancemoney.com, you can trade on NSE as well as BSE. Market Order: You could trade by placing market orders during market hours that allows you to trade at the best obtainable price in the market at the time of execution of the order. Limit Order: Allows you to place a buy/sell order at a price defined by you. The execution can happen at a price more favorable than the price, which is defined by you, limit orders can be placed by you during holidays & non market hours too.

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Derivatives
FUTURES
Through reliancemoney.com, you can now trade in index and stock futures on the NSE. In futures trading, you take buy/sell positions in index or stock(s) contracts having a longer contract period of up to 3 months. Trading in FUTURES is simple! If, during the course of the contract life, the price moves in your favour (i.e. rises in case you have a buy position or falls in case you have a sell position), you make a profit. Presently only selected stocks, which meet the criteria on liquidity and volume, have been enabled for futures trading. Calculate Index and Know your Margin are tools to help you in calculating your margin requirements and also the index & stock price movements.

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OPTIONS
An option is a contract, which gives the buyer the right to buy or sell shares at a specific price, on or before a specific date. For this, the buyer has to pay to the seller some money, which is called premium. There is no obligation on the buyer to complete the transaction if the price is not favorable to him. To take the buy/sell position on index/stock options, you have to place certain % of order value as margin. With options trading, you can leverage on your trading limit by taking buy/sell positions much more than what you could have taken in cash segment. The Buyer of a Call Option has the Right but not the Obligation to Purchase the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Call has the obligation of selling the Underlying Asset at the specified Strike price. The Buyer of a Put Option has the Right but not the Obligation to Sell the Underlying Asset at the specified strike price by paying a premium whereas the Seller of the Put has the obligation of Buying the Underlying Asset at the specified Strike price. By paying lesser amount of premium, you can create positions under OPTIONS and take advantage of more trading opportunities.

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Mutual funds:
Reliancemoney.com brings you the same convenience while investing in Mutual funds also - Hassle free and Paperless Investing. You can invest in mutual funds without the hassles of filling application forms or any other paperwork. You need no signatures or proof of identity for investing. Once you place a request for investing in a particular fund, there are no manual processes involved. Your bank funds are automatically debited or credited while simultaneously crediting or debiting your unit holdings. You also get control over your investments with online order confirmations and order status tracking. Get to know the performance of your investments through online updating of MF portfolio with current NAV. Reliancemoney.com offers you various options while investing in Mutual Funds:

Purchase:
You may invest/purchase Reliance MF, Prudential ICICI MF, JM MF, Alliance MF, Franklin Templeton MF, Sundaram MF, Birla Sun Life MF, HDFC MF, Principal MF, IL & FS MF and Standard Chartered MF without the hassles of filling application forms.

Redemption:
In addition to giving hassle-free paperless redemption, it offers faster liquidity. You 3 can redeem after the the mutual order fund units through date. reliancemoney.com. The money will be credited to your bank account automatically days placement

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Switch:
To suit your changing needs you may wish to shift monies between different schemes. You can switch your monies online from one scheme to another in the same fund family without any hassles.

Systematic Investment plans (SIP):

SIP allows you to invest a certain sum of money over a period of time periodically. Just fill in the investment amount, the period of investment and the frequency of investing and submit. Reliancemoney.com will do the rest for you automatically investing periodically for you.

Systematic withdrawal plan:

This allows you to withdraw a certain sum of money over a period of time periodically

Transfer-in: You can convert your existing Mutual funds into

electronic mode through a transfer-in request.

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IPOs and Bonds Online:

You could also invest in Initial Public Offers (IPOs) and Bonds online without going through the hassles of filling ANY application form/ paperwork. Get in-depth analyses of new IPOs issues (Initial Public Offerings) which are about to hit the market and analysis on these. IPO calendar, recent IPO listings, prospectus/offer documents, and IPO analysis are few of the features, which help you, keep on top of the IPO markets.

Personal Finance:
Use our Personal Finance section and get hold of tools that can help you plan your investments, retirement, tax etc. Analyze your risk profile through the Risk Analyzer and get a suitable investment portfolio plan using Asset Allocator.

Customer Service Features:

With reliancemoney.com you can trouble shoot all your problems online. Address your trading queries on-line through "Easy Mail". You can view and change your profile or password on-line through General Profile option. Get details of Reliance money Centers, our sales and service offices, across India through branch locator.

View your Account Statement and Bill Summary of your transactions online using bills & accounts. View your Digital Contract Notes instantly. View various charges through the Fee Schedule option. Give your feedback or viewpoint through the Viewpoint online. Enroll yourself for various reliance direct Workshops through Register for Customer Sessions.

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COMPETITORS DETAILS

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Competitors
Reliance money has many competitors in the market. These competitors are always there to stop it from progressing. Some of the competitors are as follows

1. ICICI securities 2. H. D.F.C. securities 3. Marwadi 4. 5 Paisa.com 5. Karvy

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ICICI Securities Limited is Indias leading full service investment bank with a dominant position in all segments of its operations - Corporate Finance, Fixed Income and Equities. It is a subsidiary of ICICI Bank, the largest private sector bank in India and operates out of Mumbai with offices in New Delhi, Chennai, Kolkata, New York, London and Singapore. Under the able leadership of Mr. Mukherji, Managing Director and CEO, ICICI Securities continues to grow as reflected in its performance over the past couple of years.

The Corporate Finance team has consistently been among the top players in M&As and fund raising from domestic and international capital markets. The Equities team is a major Indian brokerage house and its research covers over 90% of Sensex market capitalization. The bond research of the Fixed Income team is a benchmark for the industry. The eminent position of ICICI Securities is reflected in the number of awards that our teams in the Fixed Income, M&A and Equity Capital Markets win. Our Fixed Income team for the last two years (CY04 and CY05) has been adjudged as the Best Bond House in India by both Asiamoney and Finance Asia. The Equities team was adjudged as the Best Indian Brokerage House-2003 by Asiamoney. The Corporate Finance team tops the M&A/Capital markets league tables regularly. Our wholly owned subsidiary, ICICI Brokerage Services Limited (IBSL), buys and sells equities for our institutional clients. ICICI Securities has a U.S. subsidiary, ICICI Securities Inc., which is a member of the National Association of Securities Dealers, Inc. (NASD). As a result of this membership, ICICI Securities Inc. can engage in permitted activities in the U.S. securities markets. These activities include dealing in securities markets transactions in the United States and providing research and

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investment

advice

to

US

investors.

HDFCsec is a

brand brought to

you by HDFC Securities Ltd, which has been promoted by the HDFC Bank & HDFC with the objective of providing the diverse customer base of the HDFC Group and other investors a capability to transact in the Stock Exchanges & other financial market transactions.

HDFCsec will equip you with the necessary tools to allocate, select and manage your investments wisely, and also support it with the highest standards of service, convenience and hassle-free trading tools. Our mission is to provide our customers with the most useful investment guidance and investment-related services available in the country. We want to become a one-stop solution for all your investment needs, one that will help you get the most out of your money.

We are one of the leading online broking houses in India, with a dominant position in both institutional and retail broking,

Our Products & Services

Online trading for Resident & Non Resident Indians. Cash-n-Carry on both NSE and BSE. Day trading on both NSE and BSE. Trade on Futures & Options on the NSE. Online IPO's. Telephone-based Broking (Equity & Derivatives).

Later, our service range will be enhanced to include the following:

Online Buying and selling of select mutual funds units Online Purchase of insurance policies 62

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Facilitating asset financing (house and car loans for instance).

Marwadi Group is a decade old financial service group offering Stock-broking and Commodity broking through NSE, BSE, NCDEX and MCX. We also offer depository services as DP of NSDL and CDSL. We spread through out India with our 33 plus branches, 400 plus business associates and manpower strength of over 300 employees. We firmly believe in customer centric and transparent approach which is backed up by strong technological support. About 1,00,000-customer base, whose various investment needs are served indicates our index of customer credibility. We have always been driven by a desire to create values for our customers-First approach, ethical and transparent business practices, reverence for professionalism and implementation of cutting edge technology. We strive to provide with the best services and make our clients' life as simple as possible. And this has enabled us to flourish into one of the top50 stock broking houses in India.

A convincing index of our customer loyalty is that nearly 75% of our customers have been with us for a period of more than three years. This means that a bulk of our customers have subscribed to our services on a long term-basis.

Marwadi Group strength lies in its team of confident, young, talented, qualified and experienced professionals to carry out different functions under the able leadership of its management.

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REGULATORY ENVIRONMEN T DETAILS

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Regulatory Environment
The regulation of the Indian securities market is one of the best frame works of regulation among the world. The securities and exchange board of India is the main regulatory body for Indian securities market. SEBI was formed under the SEBI Act, 1992 for the purpose of protecting the small investors rights and this organization has been working for this purpose very efficiently and hardly. It has formed many rules and by laws for efficient regulation of Indian securities market. Some of the regulations for the securities market are highlighted below.

SEBI Act, 1992

CHAPTER I (Preliminary) CHAPTER II (Establishment Of The Securities And Exchange Board Of India) CHAPTER III (Transfer Of Assets, Liabilities, etc. Of The Existing Securities And Exchange Board To The Board) CHAPTER IV (Powers And Functions Of The Board) CHAPTER V (Registration Certificate) CHAPTER VI (Finance, Accounts And Audit) CHAPTER VIA (Penalties and Adjudication) CHAPTER VIB (Establishment, Jurisdiction, Authority and Procedure of Appellate Tribunal CHAPTER VII (Miscellaneous)

Depositories act, 1996

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CHAPTER I (Preliminary) CHAPTER II (Certificate Of Commencement Of Business) CHAPTER III (Rights And Obligations Of Depositories, Participants, Issuers And Beneficial Owners) CHAPTER IV (Inquiry And Inspection) CHAPTER V (Penalty) CHAPTER VI (Miscellaneous)

In addition to above mentioned acts, Securities Contracts (Regulation) Act, 1956 is there for regulation.

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RESEARCH

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INTRODUCTION TO RESEARCH

ALL PROGRESS IS BORN OF INQUIRY

Research inculcates scientific and inductive thinking and it promotes the development of logical habits of thinking and organization. The research methodology has gone through which path to solve the research problem and which tools have been adopted to achieve the desired objective and more importantly it tells why only that path or tools have been chosen and not other? Many marketing writers confuse the term 'market research' with the term 'marketing research', and sometimes these two terms are used interchangeably. Thus, it is important to differentiate between the two terms. Marketing research is defined as "the function that brings the consumer, customer and public to the market through information - information used to identify and define marketing objectives and problems; generate, refine and evaluate marketing actions, monitor marketing performance; and improve understanding of the marketing process". This clearly shows that marketing research is wide ranging in its concerns. The term 'market research' according to Adcock et al is "used to define the specialist activities involved in collecting information directly through the use of questionnaires and other associated techniques". They then emphasize that "it is useful to consider market research as a specialist activity which is within the scope of the marketing research function" and that it is "concerned with collecting primary information".

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Research Objective
Any activity done without any objective in a mind cannot turn fruitful. An objective provides a specific direction to an activity. Objectives may range form very general to very specific, but they should be clear enough to point out with reasonable accuracy what researcher wants to achieve through the study and how it will be helpful to the decision maker in solving problem.

Primary Objective
How fundamental analysis helps in purchasing banking stocks?

Secondary Objective
1. How fast is the company growing? 2. How profitable is the company? 3. How is the companys financial health? 4. How has the stock performed? 5. What is its yearly high low?

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RESEARCH METHODOLO GY

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Research Design
A research design is pattern or an outline of a research projects working. It is a statement of only the essential elements of a study, those that provide the basic guidelines for the details of the project. It comprises a series of prior decisions that taken together provide a master plan for executing a research project. A research design serves as a bridge between what has been established i.e. the research objective and what is to be done, in conduct of the study to realize those objectives. If there were no research design, the research would have only foggy notion about what is to be done. There are numerous specific designs, which can be classified into three broad categories. Research design is the conceptual structure within which the research would be conducted. In fact, it is the general blueprint for the collection, measurement and analysis of data.

In context of this project study

The object of study is to gain familiarity with a phenomenon or to achieve new insights into it. So, the research design is EXPLORATORY type.

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Sources of Data
Collecting the required information from the right source is very important. Sources from which the data are collected differ as per the required of researcher. Basically there are two types of data collection sources:

1) Primary data source

This data is gathering for the first time for the problem solution. Primary data has to be collected through well-equipped instruments, as they are first hand information collected for the research.

2) Secondary data source

It refers to already gathered and collected data. These may be internal sources within the clients firms. Externally, these sources may include books or periodicals, data services, reports and computer data banks.

In context of this project study

Secondary data about BANKING STOCK have been collected from
various websites. Information is also gathered from various books, magazines.

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Unit of Analysis
Collecting the required information from the right source is very important. Sources from which the data are collected differ as per the required of researcher. Basically there are two types of data collection sources:

1) Sampling Unit:
The sampling unit consists of banking stocks

2) Sample Size:
Here I have collected the data using stocks of 3 banks. They are as follows. 1. ICICI BANK 2. HDFC BANK 3. SBI BANK

3) Sampling Method:
Stratified random sampling method of choosing the samples has been adopted.

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Sampling Design
A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting items for the sample. Sample design may as well lay down the number of items to be included in the sample i.e. the size of sample. Sample design is determined before the data are collected. There are many sample designs from which a researcher can choose. Some designs are relatively more precise and easier to apply than others. Researcher must select the sample design, which should be reliable and appropriate for his research study. There are different types of sample design based on two factors namely: the representation basis and element selection technique. On the representation basic, the PROBABILITY SAMPLING OR NON PROBABILITY SAMPLING.

In context of this project study

A random sample gives every unit of the population a known and non-zero probability of being selected. Since random sampling equal probability to every unit in the population, it is necessary that the selection of the sample must be free from human judgment. So the sampling procedure that selected for research is PROBABILITY sampling.

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Data Collection Methods

Data, which is required for any research, is to be collected very systematically. Data collection procedure is carried out into order to know the exact information for the research work.

In context of this project study

For the purpose of gathering the data, different websites and magazines were used.

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BANKING INDUSTRY

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1. Brief History of industry

The Reserve Bank of India is the central bank of the country. Central banks are a relatively recent innovation and most central banks, as we know them today, were established around the early twentieth century. The Reserve Bank of India was set up on the basis of the recommendations of the Hilton Young Commission. The Reserve Bank of India Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank, which commenced operations on April 1, 1935. The Bank was constituted to regulate the issue of banknotes. Maintain reserves with a view to securing monetary stability and to operate the credit and currency system of the country to its advantage. The Bank began its operations by taking over from the Government the functions so far being performed by the Controller of Currency and from the Imperial Bank of India, the management of Government accounts and public debt. The existing currency offices at Calcutta, Bombay, Madras, Rangoon, Karachi, Lahore and Cawnpore (Kanpur) became branches of the Issue Department. Offices of the Banking Department were established in Calcutta, Bombay, Madras, Delhi and Rangoon. An interesting feature of the Reserve Bank of India was that at its very inception, the Bank was seen as playing a special role in the context of development, especially Agriculture. When India commenced its plan endeavors, the development role of the Bank came into focus, especially in the sixties when the Reserve Bank, in many ways, pioneered the concept and practice of using finance to catalyze development. The Bank was also instrumental in institutional development and helped set up institutions like the Deposit Insurance and Credit Guarantee Corporation of India, the Unit Trust of India, the Industrial Development Bank of India, the National Bank of Agriculture and Rural Development, the Discount and Finance House of India etc. to build the financial infrastructure of the country. With liberalization, the Bank's focus has shifted back to core central banking functions like Monetary Policy, Bank Supervision and Regulation, and Overseeing the Payments System and onto developing the financial markets. The Reserve Bank of India was JVIMS JAMNAGAR 77

nationalized with effect from 1st January 1949 on the basis of the Reserve Bank of India (Transfer to Public Ownership) Act, 1948. All shares in the capital of the Bank were deemed transferred to the Central Government on payment of a suitable compensation. The image is a newspaper clipping giving the views of Governor CD Deshmukh, prior to nationalization. In the year 1969 and 1980 RBI went for nationalization of banks step by step. First in 1969 six banks were nationalized and subsequently in 1980 14 other banks were nationalized. But since globalization, privatization & liberalization took place in 1991, foreign banks have also entered into the Indian markets. Banks like standard chartered, HSBC, etc. have entered Indian markets. So in order to survive against these banks the Indian banks had to change its working style. Some of the financial institutions, which were established for the well being of the society, like ICICI, HDFC, etc. have also entered merchant banking field. And hence started the fierce battle between the commercial banks for getting highest net profits and to provide the most advanced services.

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2. Current status of the industry

Currently India is in an investment mode. India is the fastest developing economies of the world. Banking sector is in boom nowadays because of the growing industrial sector and the service sector. As more and more economic growth is there in India the people are trying more to invest their money and more than only investment they want more services provided by the private banks nowadays. Due to the nationalization of the banks the efficiency of the banks have increased, and due to the more competitive services provided by the nationalized banks the private banks are trying more and more to get maximum customers and earn like anything. Currently SBI is the leading bank in the Indian market, according to Business Indias panel on 17th July. This panel comprised eminent personalities from the field of finance. The panel included vice-chairman of DSP Merrill Lynch Mr. Shitin Desai, vicechairman of JM Morgan Stanley Mr. P. Krishnamurthy, Chairman of Lazard Capital (India) Mr. Udayan Bose, Clearing Corporation of India chairman R.H. Patil, the Birla groups finance director S.K. Mitra, and Mecklai Financial Services MD Jamal Mecklai. Second came ICICI bank, third were Punjab National Bank, fourth Canara Bank and Bank of Baroda came fifth. The current scenario of the banking sector is such that co-operative banks are proved inefficient and unable to render competitive services. After Madhavpura bank many other banks succumbed due to rising NPA and decreasing net profits. Banks are striving very hard to get more profits. After liberalization and globalization many foreign banks also entered the Indian markets. They proved to be a threat for the domestic banks. Banks like ABN Amro, bank of England, bank of Nova Scotia, etc. are the foreign banks that have penetrated the Indian markets.

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3. Future of the industry

Greater flexibility in banking regulations are allowing competitors to streamline operations and ultimately serve customers better and provide more capital for economic development in India. Despite the successes of past reform, future changes remain uncertain. Future of the banking sector is very bright. Because India is second in terms of the population after china. And not only the number of people is the prospects but the purchasing power of the people is also increasing day by day. Per capita income is increasing and due to this the share of service sector in the GDP is increasing in Indian economy.

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Trends
The Indian banking industry is currently in a transition phase. On the one hand, the public sector banks, which are the mainstay of the Indian banking system, are in the process of consolidating their position by capitalising on the strength of their huge networks and customer bases. On the other, the private sector banks are venturing into a whole new game of mergers and acquisitions to expand their bases. The system is slowly moving from a regime of large number of small banks to small number of large banks. The new era will be one of consolidation around identified core competencies. In India, one of the largest financial institutions, ICICI, took the lead towards universal banking with its reverse merger with ICICI Bank a couple of years ago. Another mega financial institution, IDBI, has also adopted the same strategy and has already transformed itself into a universal bank. This trend may lead to promoting the concept of a financial super market chain, making available all types of credit and non-fund facilities under one roof or specialised subsidiaries under one umbrella organisation.

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Growth statistics
Scheduled Commercial Banks (SCBs) in India are categorised into five different groups according to their ownership and / or nature of operation. These bank groups are (i) State Bank of India and its associates (ii) other nationalised banks (iii) regional rural banks(iv) foreign banks and (v) other Indian SCBs (in the private sector). The banking sector witnessed strong growth in deposits and advances during the year 2004-05. As of March 2005, the number of commercial banks stood at 289. The aggregate deposits of SCBs increased from US$ 331 billion in March 2004 to US$ 374 billion in March 2005; credit increased from US$ 185 billion to US$ 242 billion; and investments swelled from US$ 149 billion to US$ 162 billion. Net domestic credit in the banking system has witnessed a steady increase of 17.5 per cent from US$ 445 billion on January 21, 2005 to US$ 523 billion on January 20, 2006. The growth in net domestic credit during the current financial year up to January 20, 2006 was 14.4 per cent. Nationalised banks were the largest contributors to total bank credit at 47.8 per cent as of September 2005. While foreign banks' contribution to total bank credit was low at 6.7 per cent, the contribution of State Bank of India and its associates accounted for 23.8 per cent of the total bank credit. Credit extended by other SCBs stood at 18.9 per cent.

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Brief Introduction about the company

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ICICI BANK
ICICI Limited was established in 1955 by the World Bank, the Government of India and the Indian Industry, for the promotion of industrial development in India by giving project and corporate finance to the industries in India. ICICI Bank has grown from a development bank to a financial conglomerate and has become one of the largest public financial institutions in India. ICICI Bank has financed all the major sectors of the economy, covering 6,848 companies and 16,851 projects. As of March 31, 2000, ICICI had disbursed a total of Rs. 1, 13,070 crores , since inception.

ICICI Bank Fact Files

Total assets: Rs.146, 214 crore Network: 530branches ATMs: Over1,880 Table 2

Snapshot
Registered Office Landmark Race Course Circle, Vadodra - 390007 Gujarat India Tel. 339923 / 339924 / 339925 Fax 339926 Website www.icicibank.com Chief Executive Name Mr. K V Kamath Secretary Name Mr. Mehta Jyotin Face Value 10 Market Lot 1 Business Group Name ICICI Group Incorporation Date 05/08/1997 Industry Name Finance - Banks - Private Sector Registrar of Company Not Available Listed on National Stock Exchange of India Ltd. The Stock Exchange, Mumbai

Table 3

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Board of Directors
Name Mr. M K Sharma Mr. Nachiket Mor Mr. L N Mittal Mr. K V Kamath Mr. P M Sinha Mr. Vinod Rai Mr. R K Joshi Mr. N Vaghul Mr. Marti G Subrahmanyam Mr. Narendra Murkumbi Ms. Kalpana Morparia Mr. Sridar Iyengar Mr. V Vaidyanathan Mr. Anupam Puri Mr. V Prem Watsa Ms. Lalita D Gupte Mr. T S Vijayan Ms. Chanda D Kochhar Designation Director Deputy Managing Director Director Managing Director & CEO Director Director Director Chairman / Chair Person Director Director Joint Managing Director Director Executive Director Director Director Joint Managing Director Director Deputy Managing Director

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HDFC BANK
Profile
The Housing Development Finance Corporation Limited (HDFC) was amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank was incorporated in August 1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January 1995. Table 4

Snapshot
Registered Office Ramon House H T Parekh Marg 169 Backbay Reclamation Mumbai - 400020 Maharashtra India 22836255 / 22820282 22046758 22046834 www.hdfc.com Mr. K M Mistry Mr. Girish V Koliyote 10 1 HDFC Group

Tel. Fax Website Chief Executive Name Secretary Name Face Value Market Lot Business Group Name

Incorporation Date Not Available Industry Name Registrar of Company Listed on Finance - Housing Not Available National Stock Exchange of India Ltd. The Stock Exchange, Mumbai

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Table 5

Board of Directors
Name Mr. Keshub Mahindra Mr. S Venkitaramanan Mr. N M Munjee Ms. Renu S Karnad Mr. D M Sukthankar Mr. B S Mehta Mr. Shirish B Patel Dr. S A Dave Mr. K M Mistry Mr. D N Ghosh Dr. Ram S Tarneja Mr. D M Satwalekar Mr. Deepak S Parekh Dr. Vijay Kelkar Designation Vice Chairman Director Director Executive Director Director Director Director Director Managing Director Director Director Director Chairman / Chair Person Special Director

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SBI BANK
Table 6

Snapshot
Registered Office State Bank Bhavan Central Office 8th Floor, Madame Cama Marg, Mumbai - 400021 Maharashtra India 22830535 / 2283888 22855348 www.sbi.co.in Mr. Yogesh Agarwal Not Available 10 1 SBI Group 15/12/1993 Finance - Banks - Public Sector M C S LIMITED SHRI PADMAVATI BHAVAN PLOT NO 93 ROAD NO 16 MIDC AREA ANDHERI (E Mumbai , Maharashtra , 400093 Tel :- 8201785 Fax no :- 8201783 National Stock Exchange of India Ltd. The Stock Exchange, Mumbai

Tel. Fax Website Chief Executive Name Secretary Name Face Value Market Lot Business Group Name Incorporation Date Industry Name Registrar of Company

Listed on

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Table 7

Board of Directors
Name Mrs. Shyamala Gopinath Dr. Ashok Jhunjhunwala Mr. Rajiv Pandey Mr. Vinod Rai Mr. Ananta C Kalita Mr. Arun Singh Mr. M S Swaminathan Mr. Yogesh Agarwal Mr. Ajay G Piramal Mr. Piyush Goyal Mr. O P Bhatt Mr. Ashok K Jha Mr. Amar Pal Mr. Suman Kumar Bery Designation Director Nominee Director Director Director Nominee Director Director Director Managing Director Director Director Chairman / Chair Person Director Director Director

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DATA ANALYSIS

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Macro Economic Analysis:Macro economic analysis gives the idea of overall economic environment in which stock of the company operate. There are key variables in macro economy environment which has to be analysis when macro economic analysis undertake and which are affect macro economic analysis. Here in this research this data is analysis.

The political equation

A stable political environment is necessary for steady, balanced growth. If a country is ruled by a stable government which takes decisions for the long-term development of the country, industry and companies will prosper. On the other hand, instability causes insecurity, especially if there is the possibility of a government being ousted and replaced by another that holds diametrically different political and economic beliefs. There are predictions that by 2050, India would be one of the three most powerful nations in the world. This has led to renewed interest in India and investors are back. In conclusion, the political stability of a country is of paramount importance. No industry or company can grow and prosper in the midst of political turmoil.

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Growth Rate of Gross Domestic Product: Gross Domestic Product (GDP) is a measure of the total production of final goods and services in the economy during the specified period. In goods there are two types. Agricultural goods Manufacturing goods Growth rate of GDP is the indicator of the economic environment and for the stock market. If growth rate of GDP is favourable or good or higher than it is more favourable to the stock market.

Industrial Growth Rate: Industrial growth rate decided by the publicly listed company and other factors which are affects to the specific industry. If the all the companies in specific industry have good financial strength and profitability then specific industry growth rate will be high. The higher the industrial growth rate more favourable for specific stock of company in which industry growth rate high and overall stock market condition would be favourable.

Foreign Exchange Reserves

A country needs foreign exchange reserves to meet its commitments, pay for its imports and service foreign debts. Without foreign exchange, a country would not be able to import materials or goods for its development and there is also a loss of international confidence in such a country.

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Foreign Exchange Risk

This is a real risk and one must be cognizant of the effect of a revaluation or devaluation of the currency either in the home country or in the country the company deals in. Devaluation in the home country would make the company's products more attractive in other countries. It would also make imports more expensive and if a company is dependent on imports, margins can get reduced. On the other hand, devaluation in the country to which one exports would make the company's products more expensive and this can adversely impact sales. A method by which foreign exchange risks can be hedged is by entering into forward contracts, i.e. advance purchase or sale of foreign exchange thereby crystallizing the exposure. In India our currency has been appreciating against the dollar. Thus, the threat investors or recipients of dollars face are that the rupees that they finally receive are less than that they expected. This is an about turn from the situation earlier. As a consequence many have begun quoting in rupees.

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Inflation
Inflation has an enormous effect in the economy. Within the country it erodes purchasing power. As a consequence, demand falls. If the rate of inflation in the country from which a company imports is high then the cost of production in that country will automatically go up. This might reduce the cost competitiveness of the product finally manufactured. Conversely, if the rate of inflation in the country to which one exports is high, the products become more attractive resulting in increased sales. Low inflation within a country indicates stability and domestic companies and industries prosper at such times.

The Threat of Nationalization

The threat of nationalization is a real threat in many countries the fear that a company may become nationalized. With very few exceptions, nationalized companies are historically less efficient than their private sector counterparts. If one is dependent on a company for certain supplies, nationalization could result in supplies becoming erratic. In addition, the fear of nationalization chokes private investment and there could be a flight of capital to other countries.

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Interest Rates
A low interest rate stimulates investment and industry. Conversely, high interest rates result in higher cost of production and lower consumption. When the cost of money is high, a company's competitiveness decreases.

Taxation
The level of taxation in a country has a direct effect on the economy. If tax rates are low, people have more disposable income. In addition they have an incentive to work harder and earn more. And an incentive to invest. This is good for the economy. It is interesting to note that in every economy there is a level between 35% to 55% where tax collection will be the highest. While the tax rates may go up, collection will decline.

Government Policy
Government policy has a direct impact on the economy. A government that is perceived to be pro-industry will attract investment. The liberalization policies of the Narsimha Rao government excited the developed world and foreign companies grew keen to invest in India and increase their existing stakes in their Indian ventures. The initiative of the former BJP government in improving the infrastructure grabbed the attention of foreign investors. The present government continues to focus on infrastructure as it is realized progress at a decent rate would not be possible without infrastructure.

Domestic Savings and its Utilization

If utilized productively, domestic savings can accelerate economic growth. It is to be remembered that all investments are born out of savings. Borrowed funds invested have to be returned. Investments from savings lead to greater consumption in the future.

The Infrastructure
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The development of an economy is dependent on its infrastructure. Industry needs electricity to manufacture and roads to transport goods. Bad infrastructure leads to inefficiencies, poor productivity, wastage and delays.

Budgetary Deficit
A budgetary deficit occurs when governmental expenditure exceeds its income. Expenditure stimulates the economy by creating jobs and stimulating demand. However, this can also lead to deficit financing and inflation. Both these, if not checked, can result in spiraling prices. To control and cut deficits governments normally cut governmental expenditure. This would also result in a fall in money supply and a consequent fall in demand which will check inflation.

Monsoons
The Indian economy is an agrarian one and it is therefore extremely dependent on the monsoon. Economic activity often comes to a stand still in late March and early April as people wait to see whether the monsoon is likely to be good or not.

Employment
High employment is required to achieve a good growth in national income. As the population growth is faster than the economic growth unemployment is increasing. This is not good for the economy.

Economic Cycle
Countries go through the business or economic cycle and the stage of the cycle at which a country is in has a direct impact both on industry and individual companies. It affects

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investment decisions, employment, demand and the profitability of companies. While some industries such as shipping or consumer durable goods are greatly affected by the business cycle, others such as the food or health industry are not affected to the same extent. This is because in regard to certain products consumers can postpone their purchase decisions, whereas in certain others they cannot.

The four stages of an economic cycle are:

Depression Recovery Boom Recession

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Depression
At the time of depression, demand is low and falling. Inflation is high and so are interest rates. Companies, crippled by high borrowing and falling sales, are forced to curtail production, close down plants built at times of higher demand, and let workers go.

Recovery
During this phase, the economy begins to recover. Investment begins in a new way and the demand grows. Companies begin to post profits. Conspicuous spending begins once again. Once the recovery stage sets in fully, profits begin to grow at a higher proportionate rate. More and more new companies are floated to meet the increasing demand in the economy.

Boom
In the boom phase, demand reaches an all time high. Investment is also high. Interest rates are low. Gradually as time goes on, supply begins to exceed the demand. Prices that had been rising begin to stabilize and even fall. There is an increase in demand. Then as the boom period matures prices begin to rise again.

Recession
The economy slowly begins to downturn. Demand starts falling. Interest rates and inflation Demand starts falling. Interest rates and inflation are high. Companies start finding it difficult to sell their goods. The economy slowly begins to downturn. Demand starts falling. Interest rates and inflation begin to increase. Companies start finding it difficult to sell their goods.

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COMPANY S GROWTH
ICICI BANK
Table 8 Year Sales Var % Profit After Tax Var %
2006/03 17,517.83 47.98 2,540.07 26.67 2005/03 11,838.10 2.77 2,005.20 22.48 2004/03 11,518.92 -1.16 1,637.11 35.73 2003/03 11,653.57 330.00 1,206.18 366.97 258.30 2002/03 2,710.13

Y ear w ise profit

20 ,0 00 .0 0 15 ,0 00 .0 0 Amount 10 ,0 00 .0 0 5 ,00 0.00 0.00
/03 /03 /03 /03 05 06 04 03 02 /03

S a le s P ro fit

20

20

20

20

Yea r
Graph 1

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20

HDFC BANK
Table 9 Year Sales Var % Profit After Tax Var %
2006/03 4,264.21 25.42 1,257.30 21.29 2005/03 3,399.88 10.94 1,036.59 21.70 2004/03 3,064.53 3.77 851.78 23.39 2003/03 2,953.10 9.68 690.29 19.01 580.01 2002/03 2,692.41

Year wise Profit

5,000.00 4,000.00 Amount 3,000.00 2,000.00 1,000.00 0.00
20 06 /0 3 20 05 /0 3 20 04 /0 3 20 03 /0 3 20 02 /0 3

Sales Profit

Year
Graph 2

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SBI BANK
Table 10 Year Sales Var % Profit After Tax Var %
2006/03 37,869.52 3.84 4,406.67 2.37 2005/03 36,470.27 -1.45 4,304.52 16.94 2004/03 37,005.81 2.36 3,681.00 18.55 2003/03 36,154.26 7.18 3,105.00 27.69 2,431.62 2002/03 33,733.79

Year w ise P rofit

40,000.00 30,000.00 20,000.00 10,000.00 0.00
20 06 /0 3 20 05 /0 3 20 04 /0 3 20 03 /0 3 20 02 /0 3

Amount

Sales Profit

Ye a r
Graph 3

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COMPANYS PROFIT
ICICI BANK
Table 11 Year Profit After Tax Var %
2006/03 2,540.07 26.67 2005/03 2,005.20 22.48 2004/03 1,637.11 35.73 2003/03 1,206.18 366.97 2002/03 258.30

HDFC BANK
Table 12 Year Profit After Tax Var %
2006/03 1,257.30 21.29 2005/03 1,036.59 21.70 2004/03 851.78 23.39 2003/03 690.29 19.01 2002/03 580.01

SBI BANK
Table 13 Year Profit After Tax Var %
2006/03 4,406.67 2.37 2005/03 4,304.52 16.94 2004/03 3,681.00 18.55 2003/03 3,105.00 27.69 2002/03 2,431.62

Profit Comparision
5,000.00 Amount 4,000.00 3,000.00 2,000.00 1,000.00 0.00
/0 3 /0 3 /0 3 /0 3 06 05 04 03 02 /0 3

ICICI HDFC SBI

20

20

20

20

Year
Graph 4

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20

Companys Financial Health

ICICI BANK
Table 14 Return on Total Assets (ROTA) Return on capital employed (ROCE) Net profit margin 12.45% 1.35% 14.12%

HDFC BANK
Table 15 Return on Total Assets (ROTA) Return on capital employed (ROCE) Net profit margin 2.53% 2.45% 29.38%

SBI BANK
Table 16 Return on Total Assets (ROTA) Return on capital employed (ROCE) Net profit margin 17.03% 1.08% 11.21%

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F in a n c ia l R a tio
2 0 .0 0 % Return on asset 1 5 .0 0 % 1 0 .0 0 % 5 .0 0 % 0 .0 0 % IC IC ID F S B I H C Bank nam e
Graph 5

40.00% 30.00% 20.00% 10.00% 0.00%

R e t u rn o n T o t a l A s s e t s (R O T A ) N e t p ro fit m a rg in

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Stock Performance
ICICI BANK
Table 17 period 3 Months 6 Months 12 Months BSE close price 876.70 609.10 620.15 change -3.52 38.87 36.39 period 3 Months 6 Months 12 Months NSE close price 878.15 609.60 620.40 change -4.01 38.27 35.86

HDFC BANK
Table 18 period 3 Months 6 Months 12 Months BSE close price 1,643.60 1,317.30 1,355.85 change -6.92 16.14 12.84 period 3 Months 6 Months 12 Months NSE close price 1,640.95 1,320.00 1,355.25 change -6.53 16.20 13.18

SBI BANK
Table 19 period 3 Months 6 Months 12 Months BSE close price 1,360.20 931.25 894.25 change -25.86 8.29 12.77 period 3 Months 6 Months 12 Months NSE close price 1,362.65 931.25 894.65 change -26.25 7.91 12.32

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S to ck P erfo rm an ce
2000 Amount 1500 1000 500 0 3 m onths 6 m onths12 m onths D uration
Graph 6

IC IC I HD FC SB I

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Yearly High Low

ICICI BANK
Table 20

Yearly High Lows

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 High
46.40 76.60 285.00 213.80 164.50 309.95 379.90 615.90 925.00

Low
42.50 25.50 65.00 66.50 86.00 119.10 218.00 330.05 440.00

HDFC BANK
Table 21

Yearly High Lows

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 High
3,500.00 2,871.50 577.00 728.90 694.00 699.95 808.00 1,303.50 1,701.00

Low
2,100.00 224.00 275.10 496.00 555.00 295.00 473.00 679.20 962.00

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SBI BANK
Table 22

Yearly High Lows

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 High
307.75 294.50 293.00 276.00 279.35 552.25 689.20 961.95 1,378.70

Low
145.80 146.20 164.00 139.85 182.70 266.65 399.95 552.50 684.15

Y e a r ly H ig h P r ic e
4000 3000 2000 1000 0
19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06

Amount

IC IC I HDFC SBI

Ye a r
Graph 7

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Y e a rly L o w P ric e
3000 Amount 2000 1000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 IC IC I HDFC SBI

Ye a r
Graph 8

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FINDINGS

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FINDINGS
Investors should attempt to determine the stage of the economic cycle the country is in. They should invest at the end of a depression when the economy begins to recover. Investors should disinvest either just before or during the boom, or, at the worst, just after the boom. Investment and disinvestments made at these times will earn the investor greater benefits.

An investor should also be aware that government policy or other events can reverse a stage and it is therefore imperative that investors analyze the impact of government and political decisions on the economy before making the final investment decision.

Figure 5
Investors should determine how changes in the economy and movements in interest rates affect an industry. If the economy is moving towards a recession, investors should disinvest their holdings in cyclical industries and switch to growth or evergreen industries. If interest rates are likely to fall, investors should consider investment in real estate or construction companies. If, on the other hand, the economy is on the upturn, investment in consumer and durable goods industries are likely to be profitable.

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When choosing an industry, it would be prudent for the investor to bear in mind or determine the following details: 1. Invest in an industry at the growth stage.

2. The faster the growth of a company or industry is better. 3. It is safer to invest in industries that are not subject to governmental controls and are globally competitive. 4. It is important to check whether an industry is right for investment at a particular time.

In context of this project,

1. It is found that growth of HDFC Bank is continuously increasing. 2. The profit of SBI Bank is more compared to HDFC & ICICI. So it is well growing company. 3. The return on asset of SBI bank is highest compared to other banks so it is doing maximum utilization of its assets. 4. Regarding performance of stocks 3 months, 6 months and 12 months performance of ICICI Bank is better compare to others. 5. The yearly high of SBI bank is slowly increasing. So it is better for investors to invest in it

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Limitations of the Study

1. This exploratory research is done focusing on the investment scenario of few banking sector stocks and therefore findings are suggestions given on the basis of this research and cannot be considered for the entire Banking Industry.. 2. Due to limitation of time and cost constraints a sample size of only 3 banking stocks are chosen. 3. Data Analysis and interpretation done may not be that strong due to small sample and random sampling method. 4. Major source of data collected is secondary which might limit the study. 5. My own inexperience in the research field might have affected the results.

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Conclusions
1. Strength of fundamental analysis is that an investment decision is arrived at after analyzing information and making logical assumptions and deductions. 2. And this where there can be differences in value - the assumptions made by different analyst would differ. Their reasoning will be based on their exposure to the market, their maturity, their knowledge and their gut feel of the market. 3. Furthermore, fundamental analysis ensures that one does not recklessly buy or sell shares especially buy. 4. One should buy a share only if its future value is higher than its book value. This also protects one against possible loss since one would dispose of a share whose market value is higher than its future value. 5. Hence fundamental analysis supports and encourages safe investing.

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Recommendations
1. Fundamental analysis give the information about the how is economic environment and political environment? Political environment is stable than investor should invest in this country and political environment is not stable than investor should think when before investing in this country. 2. Economy of the country is growing than investors should invest in this country and economy of any country in the depression period than investor should think that divest from this economy. 3. Industry in which company is performing if this industry in growing stage at that time investors should invest in this industry and if industry is in decline stage than investors should divest his/her money. 4. Fundamental analysis gives value on the basis of past financial performance of the company which gives the idea to investors that this company will does good business and give good return in near future. 5. Fundamental analysis includes economic analysis and industry analysis it is very difficult to collect information of economic performance and industry performance for the small investors. 6. Investors want to get benefit from the speculation of the price than he/she should go for the technical analysis. 7. Investors want to get benefit from the long term investment and dividend than he/she should go for the fundamental analysis. 8. Fundamental analysis is on the basis of past performance of the economy, industry, and company, it is not necessary that past performance once again happen in future.

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Appendixes

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LIST OF TABLES
Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Name of Table Fee Structure of Reliance Money ICICI Bank Snapshot ICICI Bank BOD HDFC Bank Snapshot HDFC Bank BOD SBI Bank Snapshot SBI Bank BOD ICICI Bank Growth HDFC Bank Growth SBI Bank Growth ICICI Bank Profit HDFC Bank Profit SBI Bank Profit ICICI Bank Financial Ratio HDFC Bank Financial Ratio SBI Bank Financial Ratio ICICI Bank Stock Performance HDFC Bank Stock Performance SBI Bank Stock Performance ICICI Bank Yearly high low HDFC Bank Yearly high low SBI Bank Yearly high low Page No. 22 76 77 78 79 80 81 91 92 93 94 94 94 95 95 95 97 97 97 99 99 100

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LIST OF GRAPHS
Sr. No. 1 2 3 4 5 6 7 8 Name of Graph ICICI Bank Yearly Profit HDFC Bank Yearly Profit SBI Bank Yearly Profit Profit Comparison Financial Ratios Comparison Stock Performance Comparison Yearly High Price Comparison Yearly Low Price Comparison Page No. 91 92 93 94 96 98 100 101

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LIST OF FIGURES
Sr. No. 1 2 3 4 5 Name of Figure Reliance ADA Group Reliance Capital Group Reliance Money Reliance Money Services Stages of Economic cycle Page No. 4 5 21 23 103

LIST OF CHARTS
Sr. No. 1 Name of Chart Organizational Chart of Reliance Capital Page No. 12

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BIBLIOGRAPHY
Donald R. Cooper & Pamela S. Schindler, Business Research Methods, Ed. 8th (Tata McGraw Hill), New Delhi Luck David J. & Rubin Ronald S., Marketing Research, 7th Edition, Prentice Hall of India, New Delhi. 2003 Malhotra Naresh, Marketing Research, 4th Edition, Pearson Education New Delhi. 2004

www.google.com www.indainfo.com www.sebi.com www.icicidirect.com www.icicibank.com www.hdfcbank.com www.sbi.co.in www.reliancemoney.com

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