A

SUMMER TRAINING PROJECT REPORT

ON
CAPITAL MARKET OF HCL
IN THE PARTIAL FULLFILMENT FOR THE
DEGREE OF
MASTER OF BUSINESS ADMINISTRATION

SUBMITTED TO:-

SUBMITTED BY:-

MR.RAKESH THAKUR

VIPAN KUMAR
611012028
M.B.A 3rd Sem.

2011-2013
SRI SAI SCHOOL OF MANAGEMENT & COMMERCE
STUDIES
SRI SAI UNIVERSITY
PALAMPUR
1

CERTIFICATE

It is certified that the project work entitled to CAPITAL MARKET OF HCL

done by Vipan Kumar to be submitted to Sri Sai University Palampur in the
partial Fulfillment of the requirement of the reward of the degree of MASTERS
OF BUSINESS ADMINISTRATION has been carried out under my guidance and
Supervision.

PROJECT GUIDE

DECLERATION
I am Vipan kumar student of M.B.A Third semester (university roll
no.611012028) at hereby declare that I have completed my research report
on the topic titled capital market in HCL as a compulsory part of my
course curriculum.
The information provided in the report is original and has not been copied
from anywhere.
This report is not submitted to any other university/institute for the award of
any other degree/diploma.

VIPAN KUMAR

PREFACE
It is my pleasure to be indebted to various people, who directly or
indirectly contributed in the development of this work and who
influenced my thinking, behavior, and acts during the course of study. I
express my sincere gratitude to Mr. Rakesh thakur Asstt. Prof.
Management Sri Sai University, Palampur for his support, cooperation,
and motivation provided to me during the study for constant inspiration,
presence and blessings. I also extend my sincere appreciation to Mr.
bharat chhabra Asstt. finance Manager in HCL. Who provided his
valuable suggestions and precious time in accomplishing my project
report. Lastly, I would like to thank the almighty and my parents for their
moral support and my friends with whom I shared my day-to-day
experience and received lots of suggestions that improved my quality of
work.

VIPAN KUMAR

Acknowledgement
Modern organizations are highly complex ad dynamics systems. They
operate under very turbulent social economic and political environment.
They are required to reconcile several incompatible goals. Conflicting roles
and divergent interest they are also fraught with the use risk and
uncertainties, hence tactful management of such organization to plan to
execute guide, coordination and control the performance of people to
achieve predetermined goals. Management has to keep the organization
vibrant moving and in equilibrium. It has to achieve goal which
themselves are changing it is therefore a problem highly complex and
ticklish.
This information will be asset to the manager in making
effective decision. This research is used to acquire to analyze information
and to make suggestion to management as to how marketing problems
should be solved. The marketing research is the process which links to
individuals through information in important part of the curriculum of MBA
programme is project taken by the students to institute under which he or she
is studying, after completion of the second semester of the programme.
The objective of this project is to enable the students to understand the
application of the academics in the real life. I am fully confident that this
project report will be extremely useful to the management .
We would also like to thank the faculty members and the staff members of
HCL Info systems Ltd. for their kind support and help during the project.
VIPAN KUMAR

Index
Serial No.

Particulars

Page No.

1.

Objective of the company

2.

Hindustan computer limited

3.

Indian Capital market

4.

Types of capital market

5.

Intermediaries of capital market

6.

Investors in Capital market

7.

Growth of Capital market in India

8.

Scenario of Indian capital market

9.

Factor affecting capital market

10.

What are the Sensex & the Nifty?

11.

Classification of Indian Capital Market

12.

SEBI- The Regulator

13.

Questionnaies

OBJECTIVE OF THE STUDY

The main objective of the report is to undertake a comprehensive study of
the capital market. The project contains secondary data to evaluate the
capital market.
Assessment of Performance of Indian Securities Market
Evaluating Book building process in india
Resource Mobilisation by Government and Corporate Sector

HINDUSTAN COMPUTERS LIMITED:

Type

Public
(BSE: 500179,BSE: 532281)

Founded

11th August 1976

Headquarter

Noida, India
(Delhi metropolitan area), India

s
Key People
Industry

Shiv Nadar, Founder, Chairman & CEO

Sanjay Kumar Choudhary , Vineet Nayar
Information Technology Services

Revenue

4.7 billion USD

Employees

~53,000 (as on 31st Dec 2007)

Website

www.hcl.in

Hindustan Computers Limited, also known as HCL Enterprise, is one of

India's largest electronics, computing and information technology company.
Based in Noida, near Delhi, the company comprises two publicly listed
Indian companies, HCL Technologies and HCL Infosystems.
HCL was founded in 1976 by Shiv Nadar, Ajay Choudhary and four of their
colleagues. HCL was focused on addressing the IT hardware market in India
for the first two decades of its existence with some sporadic activity in the
global market. In 1981, HCL seeded a company focused on addressing the
computer training industry, NIIT, though it has currently divested its stake in
the company. In 1991, HP took minority stake in the company (26%) and the
8

company was known as HCL HP for the five years of the joint venture. On
termination of the joint venture in 1996, HCL became an enterprise which
comprises HCL Technologies (to address the global IT services market) and
HCL Infosystems (to address the Indian and APAC IT hardware market).
HCL has since then operated as a holding company.

AN OVERVIEW ABOUT THE COMPANY

HCL Infosystems is no flash in the Information Technology pan. Founded in
1976, the firm has climbed into pantheon of India's corporate giants on the
strength of its IT products and services. HCL Infosystems specializes in IT
hardware (PC's and servers, as well as networking, imaging and
communications products), and system integration services serving the
domestic Indian market. In addition to its consumer products, the company
provides commercial IT products, facilities management, network services,
and IT security services for clients in such industries as government,
financial services, and education. HCL Corporation owns significant stakes
in HCL Infosystems (about 44%) and sister company HCL Technologies.
HCL Infosystems Ltd, a listed subsidiary of HCL, is an India-based
hardware and systems integrator. It claims a presence in 170 locations and
300 service centre. Its manufacturing facilities are based in Chennai,
Pondicherry and Uttarakhand .Its headquarters is in Noida.
HCL Peripherals (A Unit of HCL Infosystems Limited) Founded in the year
1983, has established itself as a leading manufacturer of computer
peripherals in India, encompassing Display Products, Thin Client solutions,
9

Information and Interactive Kiosks. HCL Peripherals has two Manufacturing

facilities, one in Pondicherry (Electronics) and the other in Chennai
(Mechanical) .The Company has been accredited with ISO 9001:2000, ISO
14001, TS 16949 and ISO 13485.

HISTORY
HCL Infosystems Ltd is one of the pioneers in the Indian
IT market, with its origins in 1976. For over quarter of a
century, we have developed and implemented solutions for
multiple market segments, across a range of technologies
in India. We have been in the forefront in introducing new
technologies and solutions. The highlights of the HCL
saga are summarized below:

YE
AR

HIGHLIGHTS

1976

- Foundation of the Company laid

- Introduces microcomputer-based programmable calculators
with wide acceptance in the scientific / education community

1977

- Launch of the first microcomputer-based commercial computer

with a ROM -based Basic interpreter
- Unavailability of programming skills with customers results in
HCL developing bespoke applications for their customers

1980

- Formation of Far East Computers Ltd., a pioneer in the

Singapore IT market, for SI (System Integration) solutions

1983

- HCL launches an aggressive advertisement campaign with the

10

theme ' even a typist can operate' to make the usage of

computers popular in the SME (Small & Medium Enterprises)
segment. This proposition involved menu-based applications for
the first time, to increase ease of operations. The response to the
advertisement was phenomenal.
-HCL develops special program generators to speed up the
development of applications

1986

- Zonal offices of banks and general insurance companies adopt

computerization
- Purchase specifications demand the availability of RDBMS
products on the supplied solution (Unify, Oracle). HCL arranges
for such products to be ported to its platform.
- HCL assists customers to migrate from flat-file based systems
to RDBMS

1991

- HCL enters into a joint venture with Hewlett Packard

- HP assists HCL to introduce new services: Systems Integration,
IT consulting, packaged support services ( basic line, team line )

1994

- HCL acquires and executes the first offshore project from IBM
Thailand
- HCL sets up core group to define software development
methodologies

1995

- Starts execution of Information System Planning projects

- Execution projects for Germany and Australia
- Begins Help desk services

1996

- Sets up the STP ( Software Technology Park ) at Chennai to

execute software projects for international customers
- Becomes national integration partner for SAP

1997

- Kolkata and Noida STPs set up

- HCL buys back HP stake in HCL Hewlett Packard
11

1998

- Chennai and Coimbatore development facilities get ISO 9001

certification

1999

- Acquires and sets up fully owned subsidiaries in USA and UK

- Sets up fully owned subsidiary in Australia
- HCL ties up with Broadvision as an integration partner

2000

- Sets up fully owned subsidiary in Australia

- Chennai and Coimbatore development facilities get SEI Level 4
certification
- Bags Award for Top PC Vendor In India
- Becomes the 1st IT Company to be recommended for latest
version of ISO 9001 : 2000
- Bags MAIT's Award for Business Excellence
- Rated as No. 1 IT Group in India

2001

-Launched Pentium IV PCs at below Rs 40,000

-IDC rated HCL Infosystems as No. 1 Desktop PC Company of
2001

2002

-Declared as Top PC Vendor by Dataquest

-HCL Infosystems & Sun Microsystems enters into a Enterprise
Distribution Agreement
- Realigns businesses, increasing focus on domestic IT,
Communications & Imaging products, solutions & related
services

2003

- Became the first vendor to register sales of 50,000 PCs in a

quarter
- First Indian company to be numero uno in the commercial PC
market
- Enters into partnership with AMD
- Launched Home PC for Rs 19,999

2004

- 1st to announce PC price cut in India, post duty reduction,

offers Ezeebee at Rs. 17990
- Maintains No.1 position in the Desktop PC segment for year
2003
- Becomes the 1st company to cross 1 lac unit milestone in the
Indian Desktop PC market
12

- Partners with Union Bank to make PCs more affordable,

introduces lowest ever EMI for PC in India
- Registers a market share of 13.7% to become No.1 Desktop PC
company for year 2004
- Crosses the landmark of $ 1 billion in revenue in just nine
months

2005

- Launch of HCL PC for India, a fully functional PC priced at

Rs.9,990/- Rated as the No.1 Desktop PC company by IDC India
-Dataquest
- 'Best Employer 2005' with five star ratings by IDC India
-Dataquest.
- 'The Most Customer Responsive Company 2005'
-IT Hardware Category by The Economic Times -Avaya Global
Connect.
-Top 50 fastest growing Technology Companies in India' & 'Top
500 fastest Growing Technology Companies in Asia Pacific' by
'Deloitte & Touche'. by 'Deloitte & Touche'
-'7th IETE -Corporate Award 2005' for performance excellence in
the field of Computers & Telecommunication Systems by IETE.
-India 's 'No.1 vendor' for sales of A3 size Toshiba Multi
Functional Devices for the year '04 -'05 by IDC.
-Toshiba 'Super Award 2005 towards business excellence in
distribution of Toshiba Multifunctional products,
-Strategic Partners in Excellence' Award by In focus Corporation
for projectors.
-'Most valued Business Partner' Award for projectors by In focus
Corporation in 2005

2006

- 75, 000+ machines produced in a single month

- HCL Infosystems in partnership with Toshiba expands its retail
(till
presence in India by unveiling 'shop Toshiba'
June) - HCL Infosystems & Nokia announce a long term distribution
strategy
- HCL the leader in Desktops PCs unveils India's first segment
13

specific range of notebooks brand - 'HCL Laptops'

- IDBI selects HCL as SI partner for 100 branches ICT
infrastructure rollout
- HCL Infosystems showcases Computer Solutions for the Rural
Markets in India
- HCL Support wins the DQ Channels-2006 GOLD Award for
Best After Sales Service on a nationwide customer satisfaction
survey conducted by IDC
- HCL Infosystems First in India to Launch the New Generation
of High Performance Server Platforms Powered by Intel Dual Core Xeon 5000 Processor

INDIAN
CAPITAL
MARKET- AN
OVERVIEW

INDIA

CAPITAL

14

MARKET

Put not your trust in money, but

put your money in trust. -Oliver
Wendell Holmes

Introduction-Capital

Market is a broad term which includes Primary

Market, Secondary Market, Term leading Institutions, Banks and anybody

which is engaged in providing long term Capital. It is a market in which
money is lent for periods longer than a year. In other words, capital market is
a mechanism through which debtors receive long-term funds and creditors
invest their funds in long-term securities.
15

The capital market includes the stock market and the bond
market. Financial regulators, such as the Securities and Exchange Board of
India. The capital markets in their designated countries to ensure that
investors are protected against fraud. The capital markets consist of the
primary market and the secondary market. The primary markets are where
new stock and bonds issues are sold (underwriting) to investors. The
secondary markets are where existing securities are sold and bought from
one investor or speculator to another, usually on an exchange.
Money Market however includes all agencies providing short term (working
capital) to the industry.
Investors in the capital market
1. Individuals.
2. Corporate.
3. Governments.
4. Foreign countries.
5. Banks.
6. Provident Funds.
7. Financial Institutions.

Rights and responsibilities of investors

16

Investor Rights
The right to get:
The best price
Proof of price/brokerage charged
Your money/ shares on time
Shares through auction where delivery is not receivedamount
Square up amount where delivery not received in auction
Statement of accounts from trading member
The right for redressal against
Fraudulent price
Unfair brokerage
Delay in receipt of money or shares
Investor unfriendly companies

Investor Obligations
The obligation to:
Sign a proper member constituent agreement
Possess a valid contract or purchase/sale note
Deliver securities with valid documents and proper signatures
The obligations to ensure
To make payment on time

17

 To deliver shares on time

To send securities for transfer to the company on time
Forwarding all the papers received from the company under
objections to the broker on time

Indian capital market since independence

Before independence, the capital market was not properly developed.
As very few companies engaged in the trading in the stock market thus
the growth of industrial securities market was very much limited.
Most of British Companies in India had then base in London capital
market, instead of Indian capital market.
After independence, the Indian Capital market started to
enlarge its activity with increase in the volume of savings and
investment in the economy particularly since 1951. One of the
important indicators of the growth of Indian capital market is the
expansion and growth of corporate enterprises. In India total number
of public limited and pvt. limited companies has increased from 28500
in 1951 to 50000 in 1990 and their total paid up capital has also
increased from Rs 775 crore in 195,1 to Rs. 20000 crore in 1990,
another pointes the volume of investment has also grown in years.

18

Assessment of Performance of Indian Securities Market during

2000-2010
Parameters
Resource
Markets
Resource

Mobilisation
mobilization

Compound
in

annual

Rate(2000-2010)
Primary 17.15%

through

Euro43.89%

Issues
All-India Market Capitalisation
23.15%
All-India Equity Market Turnover
19.94%
All-India Equity derivatives turnover
132.19%
Assets under Management of Mutual 18.99%
Funds
Net Investments by Foreign Institutional 30.53%
Investors
Net Investments by Mutual Funds
Returns on Nifty

54.07%
13.13%

SEGMENTS OF STOCK MARKET

19

growth

PRIMARY MARKET SEGMENT

SECONDARY MARKET SEGMENT

PRIMARY MARKET
Provides channel for sale of new securities. Issue the securities at face value
or at a discount/ premium. Issuance is done either through public/ private
placement

Features of primary markets are:

20

This is the market for new long term capital. The primary market is

the market where the securities are sold for the first time. Therefore it is also
called the new issue market (NIM).

In a primary issue, the securities are issued by the company directly to

investors.

The company receives the money and issues new security certificates

to the investors.

Primary issues are used by companies for the purpose of setting up

new business or for expanding or modernizing the existing business.

The primary market performs the crucial function of

facilitating

capital formation in the economy.

The new issue market does not include certain other sources of new

long term external finance, such as loans from financial institutions.

Borrowers in the new issue market may be raising capital for converting
private capital into public capital; this is known as "going public."

The financial assets sold can only be redeemed by the original holder

21

ualPrefivFthInQdcmp(ogO)bs
Methods of issuing securities in the primary market are:
KINDS OF ISSUE

BOOK BUILDING IN INDIA

22

Parties associated are the issuer company, the Book Runner Lead Manager
(BRLM) and the syndicate members

23

INVESTMENTS IN IPOS IN THE INDIAN CAPITAL MARKET

The existence of the phenomenon of underpricing is a well-established
fact for the common stock initial public offerings (IPOs). Research
concerning the primary capital market is found to be unequivocal in its
conclusion that initial public offerings are offered at a discount. It has been
found that an average firm goes public with an offer price that is lower than
the price that prevails in the immediate aftermarket. As a result, IPOs
register significant excess returns on the first day of trading. Under pricing is
a phenomenon that is largely restricted to the opening transaction. And
hence, the under pricing is almost entirely corrected by the market at the

24

opening transaction. A worldwide survey of literature on the phenomenon of

Under pricing of IPOs exhibit three fundamental characteristics:
(a) The initial price reaction phenomenon or in other words under pricing:
the immediate after market price, on average is significantly higher than
price at which the initial offer was made;
(b) The Hot Issue Phenomenon: there are distinct cycles outlined, both in the
number of issues that come to the market and the level of initial price
reactions;
(c) The long-run Underperformance phenomenon: initial offers are said to
perform dismally in the long-run compared to the industry counterparts for
the same period.
Studies on the Indian capital market also confirm the phenomenon of under
pricing of IPOs. Most of the Studies on the Indian primary market
concerning the phenomenon of under pricing are found to be in the postliberalisation period i.e. after the abolition of the CCI. The initial excess
return on IPOs in the Indian primary capital market are very high as
compared to the experience of the capital markets of countries abroad.

Significant Developments in IPO Markets

The world financial markets (USA & UK) have come a long way. In the US
markets, the IPO market has grown manifold in number and volume. The
25

NYSE and the AMEX did not allow for transactions in equity securities of
small companies. Smaller companies, that naturally imply smaller trading
volumes, led to the development of a separate market to foster dealing of
securities of these companies. The NASD, therefore, established the market
for securities in the year 1971. There was demand for capital from the high
growth-high risk medium sized companies. The expansion of the market for
IPOs indicates that this expectation has, by and large, been fulfilled.
In the UK capital market, the Big Bang (1985) constituted a fundamental
revolution for the LSE. Post Big Bang, the daily turnover in equities
almost doubled in value and in volume of transactions; the average rates of
commission came down for almost all clients, particularly for institutional
investors; though, for small deals, the small investor lost out.
The Big Bang brought about fundamental changes on the securities market,
changing every aspect of the market: the participants, the transactions, the
competition factor and of course, the gains. The initiation of the process of
reform in India also would not have been possible without changes in the
regulatory framework. The New Economic policy (1991) led to a major
change in the regulatory framework of the capital market in India. The
Capital Issues (Control) Act 1947 was repealed and the Office of the
Controller of Capital Issues (CCI)
was abolished. The Securities and Exchange Board of India (SEBI),
established in 1988 and armed with statutory powers in 1992, came to be
established as the regulatory body with the necessary authority and powers
to regulate and reform the capital market. The Controller of Capital Issues
(CCI) has been the regulatory body for the Indian capital market for over
26

fifty years. The CCI has had a strong control over the Indian capital market
as a regulatory authority. Guidelines for issue of capital and pricing of
securities has been rigid. SEBI came to be recognized as a regulatory body
for the capital market after the abolition of the CCI. The control on pricing
of capital issue has been abolished
and easy access is provided to the capital market. The objectives of the SEBI
are: (i) To protect the interest of the investors
(ii) To promote and develop the capital market and
(iii) To regulate the securities market. SEBI is set up on the lines of the SEC
in the US and the SIB in the UK. The SEBI has taken over all the functions
of the Office of the Controller of Capital Issues.
This paper aims
(1) To look at the behaviour of IPOs in the primary capital market in the pre
and post Liberalization Era:
(a) Extent of under pricing during the CCI & SEBI times and
(b) The influence on returns considering various factors such as Issue Size,
Age,
Foreign Equity, Issue Rating, and Issued Capital.
(2) To assess the long-run performance of IPOs for a period of five years
after listing & Performance of IPO vis--vis Stock Index & Industry Index

27

Behaviour of IPOs
Issue Price:
A negative relationship exists between return on listing and the issue price
i.e. lower the issue price higher is the return accrued. The relationship is
found to be statistically significant (0.01level). R2 is found to be low. Issue
price is one of the factors to influence return, but it is not the only factor.
Issue Size:
There is a negative relation that exists between return on listing and the issue
size. However, the relationship is found to be statistically significant at 10%
level.
Return is found to be higher in case of small-size issues in comparison to
large-size
issues. There is a gradual fall in the initial return on listing across issue-size.
Initial
return on listing is as high as 226.1% for issue-size of less than 1 crore and
as low as 36.4% for issue-size more than 50 crores.
Age of the Company:
There is a negative relation that exists between return on listing and the age
of the company at the time of issue. The relationship is found to be
statistically significant (0.01 level). In both the cases: return on listing and
daily return, a chi-square test indicates of a strong influence of age on the
initial returns. The results are found to be significant (0.01 level).

28

Foreign Equity:
A positive relation is established between return on listing and the foreign
equity holding present in the total equity of the company. The relationship is
found to be statistically significant (0.03 level). Return are found to be
higher for the companies with foreign equity holding of 26% & above; and
very low in case of the companies with foreign equity holding of below
26%.
Issue Rating:
There is a positive relation that exists between return on listing and the issue
rating for the said initial public offer made by the company. The relationship
is found to be statistically significant (0.01 level). The issue rating assigned
to the IPO is found to significantly influence the initial return on the IPO. A
high rating assigned to the initial public offer is found to be significantly
influence the return on listing.
Issued Capital:
There is a negative relation that exists between return on listing and the
issued capital of the company at the time of issue. The relationship is found
to be statistically insignificant.

List Delay:
The average time taken for listing is 125 days; almost 68% of the IPOs got
listed within this time frame. The minimum time taken for listing is 11 days
while the maximum is 888 days. Listing delay and the return on listing
29

exhibit a negative relation; i.e. less the amount of time taken to list at the
stock exchange, higher is the initial return. The relationship is found to be
statistically significant (0.01 level).

Resource Mobilisation by Government and Corporate Sector

Issues

(Rs)

($)

2010-11

2011-12

2010-11

2011-12

Corporate Securities 2222040

3838912

43612

85045

Domestic Issues

2174160

3679242

42672

81507

-Public Issues

146710

254790

2879

5644

-Private Issues

2027450

3424452

39793

75863

Euro Issues

47880

159670

940

3537

Government

4366880

623190

85709

138152

-Central3185500

4924970

62522

109104

Government
-State Government 1181380

1311220

23187

29048

10075102

129321

223197

Securities

TOTAL

6588920

SECONDARY MARKET
30

The secondary market, also known as the aftermarket, is the financial

market where previously issued securities and financial instruments such as
stock, bonds, options, and futures are bought and sold.
With primary issuances of securities or financial instruments, or the
primary market, investors purchase these securities directly from issuers
such as corporations issuing shares in an IPO or private placement, or
directly from the federal government in the case of treasuries. After the
initial issuance, investors can purchase from other investors in the secondary
market. The secondary market for a variety of assets can vary from
fragmented to centralized, and from illiquid to very liquid. The major stock
exchanges are the most visible example of liquid secondary markets - in this
case, for stocks of publicly traded companies.
Functions of secondary market
Secondary marketing is vital to an efficient and modern capital market.
In the secondary market, securities are sold by and transferred from one
investor or speculator to another. It is therefore important that the secondary
market be highly liquid.
Constituents of capital market
1. Stock Exchanges.
2. Merchant Banks.
3. Underwriters.
4. Stock Brokers and Sub Brokers.
5. Custodians.
31

6. Depositories and Depository Participants.

7. Financial Institutions.
8. Investors etc.
Market participants
Issuer of securities.
Investors of securities
Intermediaries.
Stock market products.
Role of capital market
The primary role of the capital market is to raise long-term funds for
governments, banks, and corporations while providing a platform for the
trading of securities.
This fundraising is regulated by the performance of the stock and bond
markets within the capital market. The member organizations of the capital
market may issue stocks and bonds in order to raise funds. Investors can
then invest in the capital market by purchasing those stocks and bonds.
The capital market, however, is not without risk. It is important for
investors to understand market trends before fully investing in the capital
market. To that end, there are various market indices available to investors
that reflect the present performance of the market.
.
32

Economic growth and Development of capital market

Economic growth
An efficient capital market is an essential perquisite of
economic development. The capital market fosters the economic
growth to the extent that it:1.

Increases the quantities of real savings and capital formation

from any given level of national income.

2.

Increases the net capital inflow from abroad.

3.

Raises the productivity of investment by improving allocation

investible funds.

Economic development
Capital markets play an important role in the economic development of
emerging capital markets. Well functioning markets insure that both
corporations and investors get or receive fair prices for their securities. This
ensures that valuable projects will be financed and negative value projects
will be rejected. Most importantly, we argue that integration into world
capital markets will accelerate the growth process. A country that erects to
international participation will face a higher cost of capital. This discourages
domestic investment and diminishes foreign direct investment.
33

Nature of Indian capital market

The capital market in India can be classified into two categories
namely:1)

Organized sector

2)

Unorganized Sector

In the Organized sector, the demand for capital comes mostly from
corporate enterprises and government and semi government institution
and the supply comes from household savings, institutional investors
like

banks,

investment

trusts,

insurance

companies,

Finance

corporations, Government etc.

The

unorganized

sector

consists

of

indigenous

bankers

and

moneylenders on the supply side and demand for funds is mostly for
consumption purposes. In this market the rate of interest charged by
lenders is exorbitant.

Indian Capital Market System and Capital Market Structure of India

Indian Capital Market System is the key structure to all Economic and
Financial transaction in India. This entry provides some simple and
important organizational structure details of Capital Market organization
structure of India.

34

Capital Market System and Structure in India

Structure
Institution
Government
Government securities market. Reserve Bank of India
Securities

(RBI) controls all transactions of government securities,

Industrial securities divided into Primary market (New
issues like IPO) and Secondary market (Market for

Industrial

trading the Equity shares through stock exchange).

Securities

Popular national level stock exchanges in India, National

Stock Exchange (NSE) and Bombay Stock Exchange
(BSE).
Financial institutions provide financial aid to develop
special

sectors.

Financial

institutions

like IFCI

Development

( Industrial Finance Corporation of India ), ICICI

Financial

( Industrial Credit and Investment Corporation of India),

Institutions (DFI) SFC ( State Finance Corporations ), IDBI ( Industrial

development Bank of India ), UTI ( Unit Trust of India ),
Financial

etc.
All other state controlled finance intermediaries like,
35

Merchant banking, Mutual funds, Leasing finance

Intermediaries

companies, Venture capital funds, etc.

Indian capital market institutions

1

Commercial banks in India.

Insurance companies like LIC and GIC have also

attained growing importance in Indian capital market
and are mostly investing in government securities.

Various special institutions like IDBI, IFCI, ICICI, UTI

etc giving long form capital to the private sector of the
country.

Investment choices in securities market

Securities is defined in the Securities Contracts (Regulation) Act,
1956
It includes
Shares, scrips, stocks, bonds, debentures, debenture stocks or
other marketable securities
Derivative
Government Securities
Mutual Funds etc.
Shares
Equity Shares- ownership interest in a company of holders
Holders of shares are members of company and have voting rights
36

Various kinds of equity shares

Right shares, bonus shares, preferred shares etc.
Mutual funds
Pooling of resources by issuing units to the investors
Profit and loss shared by investors in proportion to the investment
Set up in the form of a trust and has a sponsor, trustees, asset
management company and custodian.
Derivatives
Derivative means a forward future, option or any other hybrid contract
of pre determined fixed duration
Included in the definition of securities with Securities Laws (Second
Amendment) Act, 1999
Challenges
Education of Investors:
As new instruments likes derivates are being introduced in the market, the
emphasis on investor education should also be enhanced.
2)

Accounting

and

financial

reporting

norms:

Financial disclosure requirements in India are not at par with international

accounting practices in spite of attempts made by the institute of chartered
accountants of India.
3)

Corporate Governance:

With sophistication in the market place, demand for improved corporate

governance by public companies will also increase. Ensuring high

37

confidence of the investors in the business so as to improve investment

levels through good governance is must.

4)

Technology:

Regulators most keep up with the sophistication in market technology and

new market structure. As market manipulation and cyber crimes are
increasing. A system ensuring close observation against cyber crime should
be updated from time to time.
5)

Integration with other financial markets:

The adoption of international best practices, sharing information with the

regulatory bodies globally and co-operation with international bodies is
important. Global bench-marks should be adopted to remove weaknesses in
market difficulties in surveillance and increase investor risk aversion.
Indian brokerages must be strengthen as despite the growth of
market, there hasn't been enough consolidation within the stock broking
community to create large and effective broking houses which can fight in
market place. The three fourth of NSEs total turnover comes from just three
centers, brokers have no idea how to widen their reach to touch

38

FINDINGS
The share of resource mobilization has tremendously increased from
the year 2000 to 2010
The compound annual growth of All India Market Capitalization has
increased
Net investments from foreign institutional investors has show an
increments
It has been found that mainly all the companies are using this book
building process which has been evaluated
Corporate Securities resource mobilization has shown a positive
growth with respect to International market
In Domestic Issues mainly Private issues has taken over the Public
issues
In case of Government securities, Central Government has show
better results as compared to the state Government resource mobi

39

FORMULATE HYPOTHESIS
Types of Hypothesis
1. Null Hypothesis
2. Alternative Hypothesis
3. Working Hypothesis

Null Hypothesis
There is no difference between M one and M two. In
which hypothesis tested for possible rejection is known as null hypothesis.
Alternative Hypothesis
It is denoted by Ha. It is desirable to formulate
several hypothesis in beginning and then to select one that explain the
phenomena.
Working Hypothesis
It is hypothesis which is provisionally adopted
to explain certain facts and to guide a researcher in the investigation of other.
I used null hypothesis for preparing my research report capital markit of
HCL .

40

RESEARCH METHODOLOGY
Research Methodology is a way to systematically solve the research
problem. The Research Methodology includes the various methods and
techniques for conducting a Research. Marketing Research is the
systematic design, collection, analysis and reporting of data and finding
relevant solution to a specific marketing situation or problem. D. Slesinger
and M.Stephenson in the encylopedia of Social Sciences define Research as
the manipulation of things, concepts or symbols for the purpose of
generalizing to extend, correct or verify knowledge, whether that knowledge
aids in construction of theory or in the practice of an art.
Research is, thus, an original contribution to the existing stock of
knowledge making for its advancement. The purpose of Research is to
discover answers to the Questions through the application of scientific
procedures. Our project has a specified framework for collecting data in an
effective manner. Such framework is called Research Design. The
research process followed by us consists of following steps:

Descriptive Research:-A type of conclusive research which has as its

major objective the description of something-usually market
characteristics or functions. In other words descriptive research is a
research where in researcher has no control over variable. He just
presents the picture which has already studied.

41

 Conclusion Oriented Research:-Research designed to assist the

decision maker in the situation. In other words it is a research when
we give our own views about the research.

Sample Design-Sampling can be defined as the section of some part of an

aggregate or totality on the basis of which judgement or an inference about
aggregate or totality is made. The sampling design helps in decision making
in the following areas: Universe of the study-The universe comprises of two parts as
theoretical universe and accessible universe.
Sample frame-Sample frame refers from where the questionnaires are
to be filled.
Sample size- Sample size is the number of elements to be included in
a study.
Sample unit- Sampling unit is the basic unit containing the elements
of the universe to be sampled.
Sampling Techniques- The sampling techniques used are convience
technique and simple random sampling technique.

Methods of Data Collection- Research work is exploratory in nature.

Information has been collected from both Primary and Secondary data.

42

 Primary sources- Primary data are those, which are collected are
fresh and for the first time, and thus happen to be original in
character. Primary data has been collected by conducting surveys
through questionnaire, which include both open- ended and closeended questions and personal and telephonic interview.
Secondary sources- Secondary data are those which have already
been collected by someone else which already had been passed
through the statistical process. Secondary data has been collected
through magazines, websites, newspapers and journals.
Tools of AnalysisTo analyse the data obtained with the help of questionnaire, following tools
were used.
Likert Scale : These consist of a number of statements which express
either a favourable or unfavourable attitude towards the given object
to which the respondents are asked to react. The respondent responds
to in terms of several degrees of satisfaction or dissatisfaction.

43

SCOPE OF THE STUDY

This project is vital to us in a significant way. It does have some
importance for the company too. These are as follows

This project will be a learning device for the finance student.

Through this project we would study the various methods of the capital
market.
The project will be a learning of planning and financing capital market.
The project would also be an effective tool for credit policies of the
companies.
This will show different methods of holding inventory and dealing with
cash and receivables.
This will show the liquidity position of the company and also how do
they maintain a particular liquidity position.

44

LIMITATIONS OF THE STUDY

Due to constraints of time and resources, the study is likely to suffer from
certain limitations. Some of these are mentioned here under so that the
findings of the study may be understood in a proper perspective.
The limitations of the study are:
The research was carried out in a short period. Therefore the sample
size and the parameters were selected accordingly so as to finish the
work within the given time frame.
The information given by the respondents might be biased some of
them might not be interested to give correct information.
Some of the respondents could not answer the questions due to lack of
knowledge.

Conclusion
45

To sum up , It can be conclude that in last 10 year the Indian Capital

Market has shown a tremendous growth in all the major sectors. On the
other hand the Foreign Institutional Investors and foreign direct investment
has very much increased. As the number of foreign institutional investors
registered with the SEBI rose from none in 1992-93 to 528 in 2000-01, to
about 1000 in 2010-11 and now it is more increased by numbers. Earlier
Government was not one the major player but now the scenario has been
changed and Government has taken up the capital market into consideration.
The last decade (2011-12) was probably one of the best for the Indian capital
markets, even a shade better than the 90s decade which actually established
the base for the 00s decade through economic liberalization .The
performance of the Indian capital market has been impressive with high
returns and a high level of investment from both domestic and foreign
investors. On the other hand, Indias debt market, particularly the corporate
bond market is still underdeveloped. Of late, efforts have been made to bring
regulatory changes to develop the corporate bond market. However,
sustained effort and long-term commitment are needed to realize the true
potential of this segment. The growth of Indias derivatives market has been
significant but needs to develop further in terms of products and investor
base Running a successful Mutual Fund requires complete understanding of
the peculiarities of the Indian Stock Market and also the psyche of the small
investors. This study has made an attempt to understand the financial
behavior of Mutual Fund investors in connection with the preferences of
Brand (AMC), Products, Channels etc. I observed that many of people have
fear of Mutual Fund. They think their money will not be sec

46

BIBLIOGRAPHY
Google
Websites
www.hcl.co.in
www.nseindia.com
www.bseindia.com
www.sebi.gov.in
www.sbimf.com
www.moneycontrol.com

DATA ANALYSIS
&
INTERPRETATION
(1) Investors invested in different kind of investments.
47

Kind of Investments
Saving A/C
Fixed deposits
Insurance
Mutual Fund
Post office (NSC)
Shares/Debentures
Gold/Silver
Real Estate

No. of Respondents
195
148
152
120
75
50
30
65

Interpretation: From the above graph it can be inferred that out of 200
people,
97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed
Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or
Debentures 15% in Gold/Silver and 32.5% in Real Estate.

48

2. Preference of factors while investing

Factor

(a) Liquidity

(b) Low Risk

No. of
Respondents

40

60

(c) High
Return
64

(d) Trust
36

Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return,
30%
prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18%
prefer Trust

3. Awareness about Mutual Fund and its Operations,

Response

Yes

No

49

No. of Respondents

135

65

Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual
Fund and
its operations and 33% are not aware of Mutual Fund and its operations.

4. Source of information for customers about Mutual Fund

Source of information

No. of Respondents

Advertisement

18

Peer Group

25

Bank

30
50

Financial Advisors

62

Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most
important source of information about Mutual Fund. Out of 135
Respondents,
46% know about Mutual fund Through Financial Advisor, 22% through
Bank,
19% through Peer Group and 13% through Advertisement

5. Investors invested in Mutual Fund

Response

No. of Respondents

YES

120

NO
Total

80
200

51

Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have
invested in Mutual Fund.

6. Reason for not invested in Mutual Fund

Reason

No. of Respondents

Not Aware

65

Higher Risk

Not any Specific Reason

10

52

Interpretation:
Out of 80 people, who have not invested in Mutual Fund, 81% are not aware
of
Mutual Fund, 13% said there is likely to be higher risk and 6% do not have
any
specific reason.

7. Mode of Investment Preferred by the Investors

Mode of Investment

No. of Respondents

One time Investment

78
53

Systematic
Investment Plan
(SIP)
42

Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 %
Preferred
through Systematic Investment Plan

8. Preferred Portfolios by the Investors

Portfolio

No. of Investors

Equity

56

Debt

20

Balanced

44
54

9. Preference of Investors whether to invest in Sectorial Funds

Response

No. of Respondents

Yes

25

No

95

55

Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectorial Fund
because there is maximum risk and 21% prefer to invest in Sectorial Fund.

QUESTIONNAIRE

56

1. What kind of investments you have made so far?

a. Saving account

b. Fixed deposits

c. Insurance

d. Mutual Fund

e. Post OfficeNSC,
etc

f.
Shares/Debentures

g. Gold/ Silver

h. Real Estate

2. While investing your money, which factor will you prefer?

(a) Liquidity

(b) Low Risk

(c) High Return

(d) Trust

3.Are you aware about Mutual Funds and their operations?

Yes
No

4. If yes, how did you know about Mutual Fund

a. Advertisement

b. Peer Group

c. Banks

5. Have you ever invested in Mutual Fund? Pl tick (). Yes No

6. If not invested in Mutual Fund then why?

57

d. Financial
Advisors

(a) Not aware of MF (b) Higher risk (c) Not any specific reason
7. When you invest in Mutual Funds which mode of investment will you

prefer? Pl. tick ().

a. One Time Investment

b. Systematic Investment Plan (SIP)

8. When you want to invest which type of funds would you choose?

a. Having only debt

portfolio

b. Having debt & equity

portfolio

c. Only equity portfolio

9. Instead of general Mutual Funds, would you like to invest in sectorial

funds?
Please tick ().

Yes

No

58