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Project Report 2010
EXECUTIVE SUMMARY
The project ‘Marketing Equity Products to HNI Customers’ is done at Hedge

Equities Limited (mentioned here after as ‘Hedge’). Hedge has internally classified their
target market into nine categories based on two parameters; knowledge level of equity market
and investment capability. Individuals who are capable of investing more than 2 million in
equities are classified as a High Net worth Individual or HNI. Due to the influence of Kerala
cultural traits, equity investment is considered as a gambling and not understood as a real
investment opportunity among the investors. Studies show that only 5% of keralites are
investing in equity. Similar is the case with the HNIs. So here I am trying to find out the
customer preference while they go for an investment decision and the factors influencing the
selection with special reference to the HNI customers in and around Cochin, who are
currently reluctant to equity investments.
But for an efficient study we have to identify whether these factors actually have an
influence on people. So an exploratory research has been conducted and the main factors
which influence the people have been identified and with that further study has been carried
out. The method adopted in the study is mostly of exploratory and analytical. Explorative
research design is flexible enough to permit the consideration of many different aspects of a
phenomenon. It is highly unstructured. Primary data was collected through interviews and
well designed and purposefully created questionnaire Secondary data was collected by means
of magazines, text books, company documents, company website and other related websites.
The sample population to be surveyed was provided from the internal database of Hedge. The
consumer responses are analyzed with the help of tables and are presented graphically.
The results of the study shows that the most preferred investment avenues of the
target group are bank fixed deposits, real estate and gold. The lack of knowledge in the equity
investment is found to be one of the major barriers in investing. The company has to position
itself as a friendly advisor imparting more knowledge to customers. Consumer education
camps and workshops on equity investment can serve these purposes. Empowered customers
can be attracted to invest in equities once the fear factor is eliminated from their minds. Also
it was found that the investment goals of different age group differ. Hence for an effective
marketing and generating consumer interest, the company should design its products to cater
the individual needs of the customers.
School of Management Studies, CUSAT Page | 1

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1.1. Introduction
Wealth management addresses the need of managing the assets of high net-worth
individuals to meet their financial goals. Investment means conversion of cash or money into
a monetary asset or a claim on future money for a return. The return is for saving, parting
with saving or liquidity and for taking a risk involving uncertainty of return, time of waiting
and cost of getting funds back. Financial investment refers to the exchange of financial
claims like stocks, bonds mortgages and real estate.
High Net-worth Individual (HNI) is defined as those people with a potential of more
than INR 2 million to invest in equities alone. These individuals form the top end of market
and exhibits very particular buying behavior. The service delivery standard is as important as
the quality of the offering. It is also important that the offering must be customized to
develop brand loyalty among the customers. Hence marketing is more a relation building
process.
Investment choices or decisions are found to be the outcome of three different but
related classes of factors. They may be described as factual or information premises,
Expectation premise and valuation premise. The factual premise of investment decisions are
provided by many streams of data which taken together, represent to an investor the
observable environment and general as well as particular features of securities and firms and
firms in which they invest. The expectation premise argues that outcomes of alternative
investments are subjective and hypothetical in any case but their foundations are provided by
the environment and the financial facts available to the investor. The valuation premise on the
other hand refers to the structure of subjective for the size and regularity of income to be
received and safety and negotiability of specific investments or combination of investments.
1.2. The Investment Needs of an Investor
By and large, most investors have eight common needs from their investments:
1. Security of Original Capital;
2. Wealth Accumulation
3. Comfort Factor;
4. Tax Efficiency;
5. Life Cover;

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6. Income;
7. Simplicity;
8. Liquidity or Ease of Withdrawal;
1.3. Financial Planning
1.3.1. Need for Financial Planning
Everyone needs to plan for tomorrow. As an individual, every one of us is

often confronted with a number of diverse financial goals. These goals could
include: available cash for emergencies, education for children, care for family
members, retirement, a nest egg to permit a career change, acquiring or selling
business, estate planning, financial independence or personal objectives such
as a special vacation or a second home.
Financial planning helps as individual to develop well-defined goals and to
map out appropriate strategies to turn these dreams into reality. Financial
planning requires a thorough analysis of an individual’s current position
including issues such as your will, marital status, contractual obligations and
any personnel preferences. It also requires an in-depth knowledge of the
various options that are available, and the financial, tax and legal consequence
of each.
1.3.2. Role of Hedge in Investment Advisory
These days many banks are proving investment advisory services to

individuals. The investment advisory services of banks provide the investors
with comprehensive financial advice. This is because most of the private
banks offer advice on a gamut of products right from bank fixed deposits to
equities. Moreover they can be ideal partners in the life cycle financial
planning process of individuals as they can also guide the individual on their
requirements for loans in addition to offering them advice on their assets.
Banks have now become one stop shop for financial services, selling mutual

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funds, insurance policies and brokerage services for equities, derivatives and
commodities
1.3.3. Steps in Financial Planning
a. Identifying investment objectives of an individual
Investment Objectives
Short term goals Medium term goals Long term goals
b. Determining risk tolerance of an individual

c. Evaluating current financial position of the individual in terms of his
income, expenditure, assets and liabilities
d. Current investment portfolio
1.4. Different Investment Avenues
The problem of surplus gives rise to the question of where to invest. In the past
investment avenues were limited to real estate, post office schemes and Banks. At present
wide variety of investment avenues are open for investors to choose from. The knowledge
about the different avenues enables the investor to choose intelligently. The required level
of interest and the risk tolerance level decide the investor’s choice.
Fixed Deposits – They cover the fixed deposits of varied tenors offered by the commercial
banks and other non-banking financial institutions. These are generally a low risk
prepositions as the commercial banks are believed to return the amount due without
default. By and large these FDs are the preferred choice of risk-averse Indian investors
who rate safety of capital & ease of investment above all parameters. Largely, these
investments earn a marginal rate of return of 6-8% per annum.
Government Bonds – The Central and State Governments raise money from the market
through a variety of Small Saving Schemes like national saving certificates, Kisan Vikas
Patra, Post Office Deposits, Provident Funds, etc. These schemes are risk free as the

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government does not default in payments. But the interest rates offered by them are in the
range of 7% - 9%.
Money-back insurance - Insurance in India is mostly sold and bought as investment

products. They are preferred because of their add-on benefits like financial life-cover, tax-
savings and satisfactory returns. Even if one does not manage to save money and invest
regularly in financial instruments, with insurance, the policyholder has no choice. If he
does not pay his premiums on time, his insurance cover will lapse. Money-back Insurance
schemes are used as investment avenues as they offer partial cash-back at certain intervals.
This money can be utilized for children’s education, marriage, etc.
Endowment Insurance – These policies are term policies. Investors have to pay the
premiums for a particular term, and at maturity the accrued bonus and other benefits are
returned to the policyholder if he survives at maturity.
Bullion Market – Precious metals like gold and silver had been a safe haven for Indian
investors since ages. Besides ornamental purpose, these metals are used for investment
purposes also. Since last 1 year, both Gold and Silver have highly appreciated in value
both in the domestic as well as the international markets. In addition to its attributes as a
store of value, the case for investing in gold revolves around the role it can play as a
portfolio diversifier.
Stock Market – Indian stock markets particularly the BSE and the NSE, had been a
preferred destination not only for the Indian investors but also for the Foreign investors.
Although Indian Markets had been through tough times due to various scams, but history
shows that they recovered very fast. Many types of scrip had been value creators for the
investors. People have earned fortunes from the stock markets, but there are people who
have lost everything due to incorrect timings or selection of fundamentally weak
companies.
Real Estate- Returns are almost guaranteed because property values are always on the rise
due to a growing world population. Residential real estate is more than just an investment.
There are more ways than ever before to profit from real estate investment.

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Mutual Funds - There is a collection of investors in Mutual funds that have professional
fund managers that invest in the stock market collectively on behalf of investors. Mutual
funds offer a better route to investing in equities for lay investors. A mutual fund acts like a
professional fund manager, investing the money and passing the returns to its investors. All
it deducts is a management fee and its expenses, which are declared in its offer document.
Unit Linked Insurance Plans - ULIPs are remarkably alike to mutual funds in terms of
their structure and functioning; premium payments made are converted into units and a net
asset value (NAV) is declared for the same. In traditional insurance products, the sum
assured is the corner stone; in ULIPs premium payments is the key component.
Exhibit 1. Types of Investments

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Exhibit 2: Characteristics of Different Investment Avenues
Volatilit
Return Safety Liquidity Convenience
y
Equity High Low High High Moderate
Moderat Moderat
Bonds High Moderate High
e e
Moderat Moderat
Debenture Moderate Low Low
e e
s
Moderat
Co. FDs Low Low Low Moderate
e
Bank
Low High Low High High
Deposits
Moderat
PPF High Low Moderate High
e
Life
Insuranc Low High Low Low Moderate
e
Moderat Moderat
Gold High Moderate Gold
e e
Real
High Moderate High Low Low
Estate
Mutual Moderat
High High High High
Funds e
1.5. Asset Allocation

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An essential ingredient of any model trying to understand the optimum allocation of

assets or trading behavior is an assumption about investor preferences according to well
defined risk profiles or about how investors evaluate risky gambles. The prospect theory
argues that when choosing between gambles, people compute the gains and losses for each
one and select the one with the highest prospective utility. In the financial context, the
potential gains and losses in the value of their holdings and then taking the allocation with
the prospective utility.
Another possibility is that people rationally could consider only consumption related
utility. Some investors know that the right thing to do when considering a stock market that
the right thing to do when considering a stock market investment is to merge the stock
market.
1.5.1. Investor Profiling

Investor profiling consist primarily in understanding a client’s risk tolerance
in relation to his or her current financial situation and future financial needs, and
proposing the most appropriate risk profile and related investment strategy.
Risk profiling is a well established, scientific and robust way of profiling
risk among investors. Research has established clear relationships between
demographic attributes of investors and their investment risk appetite. It aims at
understanding the client’s attitude towards risk and expectations of returns so as
to be able to serve him/her better. Hedge equities have already conducted the
market research and have categorized target customers to 9 categories based on
two parameters; financial background and knowledge in equity investment,
which varies among high, medium and low.
1.5.2. Asset Allocation and Hedge Equities

Hedge equities should act as platform for the investors managing their
assets to meet their needs, in other words Hedge should convert itself as an
investment manager of the investors. The asset allocation decision is the most
crucial one for an investment manager because it plays such an important role in
determining investment performance and shaping the manager client
relationship. The following precepts underlie the asset allocation decision:

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 The client and the manager should decide on it together.

 Risk is a primary determinant of assets mix because it is of great
concern to clients.
 The major role of the advisor is to be able to present the client with
probable risk return characteristics of various asset mixes so that the
client can make an informed decision
It can also be seen that greater is the allocation to the equities, greater is the
volatility of the portfolio.
The asset allocation decision chosen by the individual is generally
influenced by the following factors:
1. The market outlook (a bearish market outlook translates into
conservative asset mix).
2. Time horizon (longer horizons translates into greater equity exposure)
3. If an inherited portfolio is heavily concentrated in a few securities,
begin to diversify immediately
4. Communicate regularly with the client explaining all transactions
especially when losses have occurred.
Thus to perform the asset allocation, the Hedge equities will require the
following information
 The client’s objectives and constraints, including: time horizon,
liquidity needs, tax and regulatory consideration
 Forecast of returns of each asset class
 Estimates of risk for each asset class
 Estimates of correlations between asset classes
1.6. Characteristics of Marketing Financial Products to HNI

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Marketing products to HNIs is one of the hardest hobs of any marketing person. It is
very difficult to convince the target customers and the competition also will be pretty high.
Some of the characteristics and behavior shown by the affluent people is described below.
Expertise – Many affluent individuals are skeptical about the ability of others to
make better decisions than they do. Financial advisors must demonstrate superior knowledge
and experience in their area. Prospects in their 40s are more likely to defer to recognized
authorities; but prospects in their 50s are more likely to see themselves as the best judge. It is
not necessary for an advisor to be an expert in all areas of service to the client. It is necessary
for the advisor to be able to bring in specialized expertise seamlessly when it is needed.
Informed Decision Making – Few affluent individuals want to turn financial
management or decisions over to another party. Many prefer to be educated as to the process
and the choices in a time-efficient manner, and to stay in control of the decision-making
process.
Access to a Wide Variety of Products – Many affluent individuals want access to
the widest possible variety of products and product providers, rather than proprietary
products. The intelligent firm may offer its own funds or products, but will also have the
flexibility to go into the market and access any product the client may desire.
Approach – Introductions by mail are more successful than by phone, but the
approach must be highly personalized, not an obvious form letter. There is some secretarial
screening to be overcome, but widespread warm response to personalized, signed, stamped
letters. Some are receptive to highly targeted, well thought-out brochures – but they must be
brief, direct, to the point. Given their high net worth status, these individuals receive many
solicitations every week from telemarketers who all sound like they went to the same school.
The main point is to differentiate your approach, and to demonstrate sensitivity and
thoughtfulness.
Holistic Orientation – High net worth individuals typically have complex financial
profiles. Most advisors focus on their own functional area of expertise. The advisor who can
integrate and coordinate different aspects of the client’s situation – who can see to the
implementation of recommendations – provides a valuable and rare service.
Seminars – The affluent generally eschew the typical marketing seminars many
professionals use to get clients. The topics are often considered either too simplistic or simply
not applicable. They are receptive, however, to seminars on topics that are tailored to their
unique situation.

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Newsletters – They give a similar response to the average advisor newsletter that they
do to the typical seminar. They do value original research and publications of substance
Relationship with Advisor – The affluent value a strong bond of trust with their
advisors, and turnover can be very touchy. They expect their advisors to act as their
advocates. They also expect the advisor to actively suggest ideas or opportunities and make
them aware of new products or services that may be of benefit to them. For the most part, age
and gender of the advisor does seem not to matter, but affluent women may sometimes feel
patronized by older, male contacts.
1.7. Background of the study

In Kerala, in the influence of some cultural traits, equity investment is considered as a
gambling and not understood as a real investment opportunity among the common masses.
Investment is mainly conformed to bank FD, real estate and gold. Market studies show that
only 5% of keralites are investing in equity. This peculiarity in investment choices is also
exhibited among the HNIs.
Hedge has internally classified their target market into nine categories based on two
parameters; knowledge level of equity market and investment capability. One category
comprises of that category of people who has high fund availability vis. more than 2 million
to invest in equity alone but is not currently investing due to some factors like lack of
confidence in investing, bitter experiences in the past etc. This segment comprises of a major
portion of the HNI population of Kerala. The study was commissioned to study the
investment behavior of the people in this category and formulate an appropriate strategy to
attract them to equity investment
1.8. Nature of the study
The method adopted in the study is mostly of exploratory and analytical. Both
primary and secondary data have been used for the study. The collection of primary data has
been attempted through (i) questionnaires (ii) methods of personal interview and
observations. The secondary data have also been supplemented at appropriate places
In the primary analysis it was seen that the major factor that prevents customers from
investing in equity is the lack of knowledge in the stock market procedures. People tend to
invest in those avenues to which they are familiar. For an efficient study we have to identify

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whether these factors actually have an influence on people. So an exploratory research has
been conducted and the main factors which influence the people have been identified and
with that further study has been carried out.
1.9. Objectives of the study
The present study entitled “Marketing Equity Products to HNI Customers” is

undertaken with the following objectives:
1. To analyze the preferred avenues of investment by HNIs.
2. To identify the factors influencing the investment decision.
3. To formulate a marketing strategy to convert non-investors to investors in equity
market
1.10 Research Methodology
The method adopted in the study is mostly of exploratory and analytical. Both
primary and secondary data have been used for the study. The collection of primary data has
been attempted through
 Methods of personal interview and observations.
 Schedules
The secondary data have also been supplemented at appropriate places.
1.10.1. Tools used for data collection and analysis
1. Interview
Interviews with the top management and the relationship managers of the Hedge was
done to understand the current market scenario
2. Schedule
A schedule was developed in which each question and the options were explained to
the respondents and response was noted.
3. Graph
Pie charts and bar diagrams are used for the present study to summarize the data
collected from the study.
4. Simple percentage analysis

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This method is used to make comparisons between two or more series of data.
Relative differences can be easily found out with this method.
1.10.2. Collection of Data
Primary Data
Primary data was collected through interviews and well designed and purposefully
created schedules.
Secondary Data
Secondary data was collected by means of magazines, text books, company documents,
company website and other related websites.
1.10.3 Sampling Frame

In the current study the sampling frame was the high net-worth or affluent individuals
who are not investing or afraid of investing in equities. It was selected from the internal
database of Hedge.
1.10.4 Sampling Unit

The sampling unit was selected on the basis of proportional stratified sampling. So the
total population is divided into four on the basis of their age. Age was taken as a criterion
because the risk appetite and investment goals of people vary with their age. From each
stratum, the respondents are selected by the convenience sampling method.
1.10.5 Sampling Size

The selected sample size was 50 comprising of 12 people under the age of 30, 13
respondents between 30 & 45, 13 respondents between 45 & 60 and 12 respondents with age
above 60.
1.10.6 Limitations of the study

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1. The analysis of the study has mainly depended on the personal views of the
respondents and as such an element of subjectivity can’t be ruled out
2. For convenience the respondents chosen were those who are residing around
Cochin city limit and the findings can’t be generalised to all areas.
3. The period of the study was limited to two months; this period was too short for
conducting broad and deep study.
4. All limitations pertaining to the schedule method might also affect the study.
5. The sample size is short.

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2.1. INTRODUCTION
In general, the financial market divided into two parts, Money market and capital
market. Securities market is an important, organized capital market where transaction of
capital is facilitated by means of direct financing using securities as a commodity. Securities
market can be divided into a primary market and secondary market.
PRIMARY MARKET
The primary market is an intermittent and discrete market where the initially listed
shares are traded first time, changing hands from the listed company to the investors. It refers
to the process through which the companies, the issuers of stocks, acquire capital by offering
their stocks to investors who supply the capital. In other words primary market is that part of
the capital markets that deals with the issuance of new securities. Companies, governments or
public sector institutions can obtain funding through the sale of a new stock or bond issue.
This is typically done through a syndicate of securities dealers. The process of selling new
issues to investors is called underwriting. In the case of a new stock issue, this sale is called
an initial public offering (IPO). Dealers earn a commission that is built into the price of the
security offering, though it can be found in the prospectus.
SECONDARY MARKET
The secondary market is an on-going market, which is equipped and organized with a
place, facilities and other resources required for trading securities after their initial offering. It
refers to a specific place where securities transaction among many and unspecified persons is
carried out through intermediation of the securities firms, i.e., a licensed broker, and the
exchanges, a specialized trading organization, in accordance with the rules and regulations
established by the exchanges.
A bit about history of stock exchange they say it was under a tree that it all started in
1875.Bombay Stock Exchange (BSE) was the major exchange in India till 1994.National
Stock Exchange (NSE) started operations in 1994.
NSE was floated by major banks and financial institutions. It came as a result of
Harshad Mehta scam of 1992. NSE was the first to introduce electronic screen based trading.
BSE was forced to follow suit. The present day trading platform is transparent and gives

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investors prices on a real time basis. With the introduction of depository and mandatory
dematerialization of shares chances of fraud reduced further. A typical trading day starts at 9
ending at 3.30, Monday to Friday. BSE has 30 stocks which make up the Sensex .NSE has 50
stocks in its index called Nifty. FII s Banks, financial institutions mutual funds are biggest
players in the market. Then there are the retail investors and speculators. The last ones are the
ones who follow the market morning to evening; Market can be very addictive like blogging
though stakes are higher in the former.
2.2. BRIEF HISTORY OF STOCK EXCHANGES

The origin of India's premier stock exchange Bombay Stock Exchange (BSE) trace
back to as far as 125 years when it started as a voluntary non-profit making association.
Stocks of public limited companies are bought and sold at a stock exchange. A stock
exchange is an organized marketplace for securities (like stocks, bonds, options) featured by
the centralization of supply and demand for the transaction of orders by member brokers, for
institutional and individual investors. The exchange makes buying and selling easy.
ORIGIN OF INDIAN STOCK MARKET

The origin of the stock market in India goes back to the end of the eighteenth century
when long-term negotiable securities were first issued. However, for all practical purposes,
the real beginning occurred in the middle of the nineteenth century after the enactment of the
companies Act in 1850, which introduced the features of limited liability and generated
investor interest in corporate securities.
An important early event in the development of the stock market in India was the
formation of the native share and stock brokers 'Association at Bombay in 1875, the
precursor of the present day Bombay Stock Exchange. This was followed by the formation of
associations/exchanges in Ahmedabad (1894), Calcutta (1908), and Madras (1937). In
addition, a large number of ephemeral exchanges emerged mainly in buoyant periods to
recede into oblivion during depressing times subsequently.
Stock exchanges are intricacy inter-woven in the fabric of a nation's economic life.
Without a stock exchange, the saving of the community- the sinews of economic progress
and productive efficiency- would remain underutilized. The task of mobilization and
allocation of savings could be attempted in the old days by a much less specialized institution
than the stock exchanges. But as business and industry expanded and the economy assumed

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more complex nature, the need for 'permanent finance' arose. Entrepreneurs needed money
for long term whereas investors demanded liquidity – the facility to convert their investment
into cash at any given time. The answer was a ready market for investments and this was how
the stock exchange came into being.
Stock exchange means a body of individuals, whether incorporated or not, constituted
for the purpose of regulating or controlling the business of buying, selling or dealing in
securities. These securities include:
(i) Shares, scrip, stocks, bonds, debentures stock or other marketable securities of a like
nature in or of any incorporated company or other body corporate;
(ii) Government securities; and
(iii) Rights or interest in securities.
The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Ltd
(NSE) are the two primary exchanges in India. In addition, there are 22 Regional Stock
Exchanges. However, the BSE and NSE have established themselves as the two leading
exchanges and account for about 80 per cent of the equity volume traded in India. The NSE
and BSE are equal in size in terms of daily traded volume. The average daily turnover at the
exchanges has increased from Rs 851 crore in 1997-98 to Rs 1,284 crore in 1998-99 and
further to Rs 2,273 crore in 1999-2000 (April - August 1999). NSE has around 1500 shares
listed with a total market capitalization of around Rs 9, 21,500 crore.
The BSE has over 6000 stocks listed and has a market capitalization of around Rs 9,
68,000 crore. Most key stocks are traded on both the exchanges and hence the investor could
buy them on either exchange. Both exchanges have a different settlement cycle, which allows
investors to shift their positions on the bourses. The primary index of BSE is BSE Sensex
comprising 30 stocks. NSE has the S&P NSE 50 Index (Nifty) which consists of fifty stocks.
The BSE Sensex is the older and more widely followed index.
Both these indices are calculated on the basis of market capitalization and contain the heavily
traded shares from key sectors. The markets are closed on Saturdays and Sundays. Both the
exchanges have switched over from the open outcry trading system to a fully automated

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computerized mode of trading known as BOLT (BSE on Line Trading) and NEAT (National
Exchange Automated Trading) System.
It facilitates more efficient processing, automatic order matching, faster execution of

trades and transparency; the scrip's traded on the BSE have been classified into 'A', 'B1', 'B2',
'C', 'F' and 'Z' groups. The 'A' group shares represent those, which are in the carry forward
system. The 'F' group represents the debt market (fixed income securities) segment. The 'Z'
group scrip's are the blacklisted companies. The 'C' group covers the odd lot securities in 'A',
'B1' & 'B2' groups and Rights renunciations. The key regulator governing Stock Exchanges,
Brokers, Depositories, Depository participants, Mutual Funds, FIIs and other participants in
Indian secondary and primary market is the Securities and Exchange Board of India (SEBI)
Ltd.
2.3. REGULATION OF BUSINESS IN THE STOCK EXCHANGES

Under the SEBI Act, 1992, the SEBI has been empowered to conduct inspection of
stock exchanges. The SEBI has been inspecting the stock exchanges once every year since
1995-96. During these inspections, a review of the market operations, organizational structure
and administrative control of the exchange is made to ascertain whether: the exchange
provides a fair, equitable and growing market to investors the exchange's organization,
systems and practices are in accordance with the Securities Contracts (Regulation) Act
(SC(R) Act), 1956 and rules framed there under the exchange has implemented the
directions, guidelines and instructions issued by the SEBI from time to time. The exchange
has complied with the conditions, if any, imposed on it at the time of renewal/ grant of its
recognition under section 4 of the SC(R) Act, 1956.
During the year 1997-98, inspection of stock exchanges was carried out with a special
focus on the measures taken by the stock exchanges for investor's protection. Stock
exchanges were, through inspection reports, advised to effectively follow-up and redress the
investors' complaints against members/listed companies. The stock exchanges were also
advised to expedite the disposal of arbitration cases within four months from the date of
filing.
During the earlier years' inspections, common deficiencies observed in the
functioning of the exchanges were delays in post trading settlement, frequent clubbing of
settlements, delay in conducting auctions, inadequate monitoring of payment of margins by

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brokers, non-adherence to Capital Adequacy Norms etc. It was observed during the
inspections conducted in 1997-98 that there has been considerable improvement in most of
the areas, especially in trading, settlement, collection of margins etc.
Dematerialization
Dematerialization in short called as 'demat' is the process by which an investor can get
physical certificates converted into electronic form maintained in an account with the
Depository Participant. The investors can dematerialize only those share certificates that are
already registered in their name and belong to the list of securities admitted for
dematerialization at the depositories.
Depository: The organization responsible to maintain investor's securities in the electronic

form is called the depository. In other words, a depository can therefore be conceived of as a
"Bank" for securities. In India there are two such organizations viz. NSDL and CDSL. The
depository concept is similar to the Banking system with the exception that banks handle
funds whereas a depository handles securities of the investors. An investor wishing to utilize
the services offered by a depository has to open an account with the depository through
Depository Participant.
Depository Participant: The market intermediary through whom the depository services can
be availed by the investors is called a Depository Participant (DP). As per SEBI regulations,
DP could be organizations involved in the business of providing financial services like banks,
brokers, custodians and financial institutions. This system of using the existing distribution
channel (mainly constituting DPs) helps the depository to reach a wide cross section of
investors spread across a large geographical area at a minimum cost. The admission of the
DPs involves a detailed evaluation by the depository of their capability to meet with the strict
service standards and a further evaluation and approval from SEBI. Realizing the potential,
all the custodians in India and a number of banks, financial institutions and major brokers
have already joined as DPs to provide services in a number of cities .
Advantages of a depository services:

Trading in demat segment completely eliminates the risk of bad deliveries. In case of
transfer of electronic shares, you save 0.5% in stamp duty. Avoids the cost of courier/

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notarization/ the need for further follow-up with your broker for shares returned for company
objection No loss of certificates in transit and saves substantial expenses involved in
obtaining duplicate certificates, when the original share certificates become mutilated or
misplaced.
Lower interest charges for loans taken against demat shares as compared to the
interest for loan against physical shares. RBI has increased the limit of loans availed against
dematerialized securities as collateral to Rs 20 lakh per borrower as against Rs 10 lakh per
borrower in case of loans against physical securities. RBI has also reduced the minimum
margin to 25% for loans against dematerialized securities, as against 50% for loans against
physical securities. Fill up the account opening form, which is available with the DP. Sign the
DP-client agreement, which defines the rights and duties of the DP and the person wishing to
open the account. Receive your client account number (client ID)
This client id along with your DP id gives you a unique identification in the
depository system. Fill up a dematerialization request form, which is available with your DP,
Submit your share certificates along with the form; write "surrendered for demat" on the face
of the certificate before submitting it for demat) Receive credit for the dematerialized shares
into your account within 15 days.
2.4. MARKET CAPITAL OF INDIAN STOCK MARKET

With over 20 million shareholders, India has the third largest investor base in the
world after the USA and Japan. Over 9,000 companies are listed on the stock exchanges,
which are serviced by approximately 7,500 stockbrokers. The Indian capital market is
significant in terms of the degree of development, volume of trading and its tremendous
growth potential.
There are 23 recognized stock exchanges in India, including the Over the Counter
Exchange of India (OTCEI) for small and new companies and the National Stock Exchange
(NSE) which was set up as a model exchange to provide nation-wide services to investors.
NSE, which in the recent past has accounted for the largest trading volumes, has a fully
automated screen based system that operates in the wholesale debt market segment as well as
the capital market segment.
India's market capitalization was amongst the highest among the emerging markets.
Total market capitalization of the BSE as on July 31, 1997 was Rs 5,573.07 billion growing

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by 18 percent over a period of twelve months and as of August 2007 was over $1090 billion
(over Rs 43 lakh crores).
India has emerged as the world’s 10th largest equity market after it added several
companies to the billion dollar club in terms of capitalization, taking the total to 81
companies. India has become the third largest Asian market (excluding Japan and Australia)
after having toppled Korea, China and Singapore that have 80, 50 and 47 firms with billion-
dollar market capitalization respectively. India is also inching closer to outpacing Taiwan that
has 84 such companies but lags far behind Hong Kong which has 107, the highest in Asia.
2.5. MAJOR STOCK BROKERS IN KERALA
Geojit BNP Paribas

Geojit BNP Paribas today is a leading retail financial services company in India with
a growing presence in the Middle East. The company rides on its rich experience in the
capital market to offer its clients a wide portfolio of savings and investment solutions. The
gamut of value-added products and services offered ranges from equities and derivatives to
Mutual Funds, Life & General Insurance and third party Fixed Deposits. The needs of over
495,000 clients are met via multichannel services - a countrywide network of over 500
offices, phone service, dedicated Customer Care centre and the Internet.
Geojit BNP Paribas has membership in, and is listed on, the National Stock Exchange
(NSE) and the Bombay Stock Exchange (BSE). In 2007, global banking major BNP Paribas
joined the company’s other major shareholders - Mr. C.J.George, KSIDC (Kerala State
Industrial Development Corporation) and Mr.Rakesh Jhunjhunwala – when it took a stake to
become the single largest shareholder.
Strategic joint ventures and business partnerships in the Middle East has provided the
company access to the large Non-Resident Indian(NRI) population in the region. Now, as a
part of the BNP Paribas global network, Geojit BNP Paribas is well positioned to further
expand its reach to NRIs in 85 countries. Barjeel Geojit Securities is the joint venture with
the Al Saud group in the United Arab Emirates that is headquartered in Dubai with branches
in Abu Dhabi, Ras Al Khaimah, Sharjah and Muscat. Aloula Geojit Brokerage Company
headquartered in Riyadh is the other joint venture with the Al Johar group in Saudi Arabia.
The company also has a business partnership with the Bank of Bahrain and Kuwait, one of
the largest retail banks in Bahrain and Kuwait.

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At the forefront of the many fruitful associations between Geojit BNP Paribas and
BNP Paribas is their joint venture, namely, BNP Paribas Securities India Private Limited.
This JV was created exclusively for domestic and foreign institutional clients. An industry
first was achieved when Geojit BNP Paribas became the first broker in India to offer full
Direct Market Access (DMA) on NSE to the JV’s institutional clients.
A strong brand identity and extensive industry knowledge coupled with BNP Paribas’
international expertise gives Geojit BNP Paribas a competitive advantage.
JRG
JRG is one of the foremost brokerage houses, being a member of various exchanges
in the capital and commodity markets and the insurance sector. JRG is a member of the
National Stock Exchange of India (NSE), the Bombay Stock Exchange, the National Multi
Commodity Exchange of India Ltd (NMCEIL), the National Commodities Derivatives
Exchange Ltd (NCDEX), the Multi Commodity Exchange of India Ltd (MCX) and the Indian
Pepper and Spices Trades Association (IPSTA). JRG is a full-fledged depository participant
of the National Securities Depository Ltd and Central Depository Services (India) Limited.
JRG is also one of southern India's leading Insurance Brokers. JRG constantly infuses quality
into service. JRG provides clients full expertise to play in the market with confidence by
availing full-fledged trading facilities and services through its nation-wide offices in
securities and in commodities.
Karvy
The Karvy group was formed in 1983 at Hyderabad, India. Karvy ranks among the
top player in almost all the fields it operates. Karvy Computershare Limited is India’s largest
Registrar and Transfer Agent with a client base of nearly 500 blue chip corporate, managing
over 20 million accounts. Karvy Stock Brokers Limited, member of National Stock Exchange
of India and the Bombay Stock Exchange, ranks among the top 5 stock brokers in India. With
over 6,00,000 active accounts, it ranks among the top 5 Depositary Participant in India,
registered with NSDL and CDSL. Karvy Comtrade, Member of NCDEX and MCX ranks
among the top 3 commodity brokers in the country. Karvy Insurance Brokers is registered as
a Broker with IRDA and ranks among the top 5 insurance agent in the country. Registered
with AMFI as a corporate Agent, Karvy is also among the top Mutual Fund mobilizer with
over Rs. 5,000 crores under management. Karvy Realty Services, which started in 2006, has
quickly established itself as a broker who adds value, in the realty sector. Karvy Global offers

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niche off shoring services to clients in the US. Karvy has 575 offices over 375 locations
across India and overseas at Dubai and New York. Over 9,000 highly qualified people staff
Karvy.
Doha Brokerage & Financial Services

Established in 1992, as one of the first corporate brokerages in India, The Doha
Brokerage & Financial Services Ltd (formerly Select Securities Ltd), is the flagship company
of the DBFS group. Doha Brokerage & Financial Services Ltd is focused on creating utmost
value for its customers, consistently by drawing on our collective expertise, resources and
global exposure.
To serve customers better, the company has gone beyond the traditional brokerage
business, and offers a wide range of services, which include total wealth management and
investment solutions. With a pan Indian presence, which comprises over 180 branches across
major cities, as well as in Dubai and Doha in the Middle East, DBFS is always closer to its
customers. DBFS is always keen in stretching its horizons to explore into newer areas of
services and solutions. Because, in a fast paced world, customer expectations and
requirements are growing, at an equal pace. To take on the challenging needs, DBFS is
rolling out a host of new products and services. The company is gearing up to widen its
presence, both in India and overseas, with the support of its strategic partner

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3.1 HEDGE EQUITIES

Hedge Equities is one of the leading Financial Services Company in Kerala,
specialized in offering a wide range of financial products, tailor made to suit individual
needs. As a first step to make our presence Global, Hedge Equities have initiated operations
in Middle East to cater to the vast Non Resident Indian (NRI) population in that region. Ever
since its inception in May 2008 in the midst of global recession, Hedge has spanned its
presence all over India through meticulous research, high brand awareness, intellectual
management and extensive industry knowledge. Hedge believes in creating a new breed of
Investors who take judicious decisions through its well timed and effective investment
advices.
3.2 VISION
‘Evolving into a financial supermarket which will be a one stop shop for all financial
solutions’
3.3 MISSION
To create an ethical and sustainable financial services platform for our customers and
partner them to build business, to provide employees with meaningful work, self-
development and progression, and to achieve a consistent and competitive growth in profit
and earnings for our shareholders and staff
3.4 SERVICES OFFERED
3.4.1 Equity and Derivatives

Equity is an investment area which you can capitalize on with proper assistance
regardless of the market circumstances. Hedge Equities opens the door to this highly lucrative
investment opportunity that could provide a feasible solution for all your financial queries.
Hedge also deals in Futures and Options (F&O). F&O are derivatives that use equity as their
base.
3.4.2 Commodities

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Commodity trading is an area which has gained prominence ever since the dawn of
civilization. It can be attributed to the fact that commodities are an integral part of our lives.
Over these years there has been a tremendous growth in this segment which in turn has acted
as the pillar of strength for the development of our economy. This had made it an attractive
investment avenue for investors. Earlier we witnessed lot of money being invested in those
companies which specialized in the production of commodities. Now we have a trend
reversal; commodities have gained popularity over the times.
3.4.3 Currency
Investments in Currency Derivatives can help the customers to diversify their
portfolio from traditional asset classes. Any individual or corporate, expecting to receive or
pay certain amounts in foreign currencies at future date can avail these products to opt for a
fixed rate - by which the currencies can be exchanged at current levels. Currency derivative
serves the purpose of financial risk management encompassing various market risks.
Currency Futures will bring in more transparency and efficiency in price discovery,
elimination of counterparty credit risk, providing access to all types of market participants,
offering standardized products and transparent trading platforms.
3.4.4 Mutual Funds and Insurance

Risk appetite differs from one person to another. For a person with mediocre risk
taking capacity, Mutual Funds is an experimental investment avenue. The main focal point of
Mutual Funds is ‘not to lay all the eggs in one basket’. Mutual Funds make it possible for
individual investors to achieve more diversification with minimal effort when compared to
investing in individual stocks. At Hedge Equities, funds are professionally scrutinized by an
investment research team. Based on their advice and suggestions investments are made by
taking the client’s needs into account. Mutual Funds can be seen as an unperturbed
investment with large amount of transparency and flexibility, amplified by high tax benefits.
Hedge Equities not only focuses on wealth creation activities but also concentrates on
wealth protection activities through its various Insurance schemes in practice.
3.4.5 Depository
Hedge Equities is an electronic custodian registered with Central Services Depository
Ltd (CSDL) with utmost focus given to enhance customer comfort by enabling paperless

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trading across the country. This allows non trading members to open demat accounts with
Hedge and receive regular reports as per the rules of NSE. A team of professional and the
latest technological expertise allocated exclusively to the Hedge’s demat division makes the
response time quick and delivery impeccable.
3.4.6 PMS and Research Reports

A new feather in Hedge Equities’ cap, Portfolio Management Services helps investors
who need personal experts to manage their investments. Having to make a right investment
decision with key focus on safety and sizable return is a herculean task. This is where
investors require professional help and that’s when an expert like Hedge Equities comes into
picture. Hedge Equities constantly strive to deliver insightful research to enable pro-active
investment decisions. The Research Department is broadly divided into two divisions –
Fundamental Analysis Group (FAG) and Technical Analysis Group (TAG). Hedge is
equipped with cutting-edge technologies for technical charting which provides assistance to
technical analysts to predict both upside and downside movements efficiently for the benefit
of the clients. Hedge Equity research products include sector reports, weekly technical
reports, monthly research report, SMS alerts, daily morning brief, stock tips etc.
3.5 DIRECTORS AND TOP MANAGEMENT OF HEDGE EQUITIES
Team Hedge is a balanced mix of more than 15 years of experience cutting across
various industries with a strong background in the financial markets. The board comprises of
six power houses in their respective fields - Fedex Securities, Baby Marine Exports, Thakker
Developers, Smart financial, SM Hegde (CFO, Videocon Industries) and Padmashree
MohanLal
List of Directors and Top Management Executives:
Managing Director : Mr. Alex K. Babu

Directors : Mr. Mohanlal
: Mr. Krishnadas
: Mr. Pradeep Kumar C
Chief Executive Officer : Mr. Bhuvanendran
Chief Operations Officer : Mr. Bobby J Arakunnel

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The data analysis and the findings are derived from the data prepared on the basis of
the experience obtained from the exposure with the management and the sales team of Hedge
and the market survey conducted with the help of questionnaires which are given in the
appendix.
The first step in the study was to identify the existing market conditions and the
methodology of marketing at Hedge. At Hedge, HNI clients are dealt directly from the head
office. Head office employs a customer relations wing (CRW) and an HNI desk for providing
necessary services to the target customers. The data of the clients are collected by the branch
offices in the respective areas, through referrals, social gatherings and other external
databases like club member database etc. The CRW contacts the customers and fix an
appointment for the marketing team comprising of top executives and relationship managers.
The past experiences show that the company is very successful in obtaining the data
of potential customers through its marketing channels and has been consistently achieving a
very high conversion rate once the appointment is fixed with the customer. The problem
occurs when the CRW executives call for appointment. More than 90% of the calls are not
converted into appointments. These customers are reluctant to equity investment due to
various reasons.
The executives at hedge found that the main reasons for the reluctance are
a. Lack of knowledge about the equity market.
b. Loss of money in any previous instance of investing.
c. Orientation towards more traditional avenues of investing like fixed deposits,
real estate etc.
Based on the inputs and insights given by the Hedge team a questionnaire was
framed. The questionnaire is provided in appendix 1. The total population is divided into four
on the basis of their age. Age was taken as a criterion because the risk appetite and
investment goals of people vary with their age.
The selected sample size was 50 comprising of 12 people under the age of 30, 13
respondents between 30 & 45, 13 respondents between 45 & 60 and 12 respondents with age
above 60.

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4.1. Most Preferred Investment Options

The knowledge of the current choice of investment avenues are to be known to
formulate an appropriate marketing strategy by positioning the product well in the market.
The respondents were requested to give their choice of top three choices of investment from a
list of 6 major investment options in the market viz. Fixed Deposit, Mutual fund, Real Estate,
Gold, Insurance, Equity Investment.
4.1.1 Investment Choice No:1

The investment avenues chosen as the most preferred investment option is given in
the table below:
Sl. No: of
%
No. Investment Option Respondents
1 Fixed Deposit 21 42
2 Mutual fund 0 0
3 Real Estate 11 22
4 Gold 12 24
5 Insurance 6 12
6 Equity Investment 0 0
Table 4.1.1: First priority Investment choice
42% of the respondents chose fixed deposits as their most favorite investment option,
mainly attributed to the security and liquidity it offers. Gold and real estate was chosen by
24% and 22% of the respondents respectively. Insurance by 6 respondents and none has
chosen both equity and mutual funds. This shows the accuracy of the sampling done in the
research.
The results of the study has been graphically represented in the pie chart below

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option 1
Insurance
12%
Fixed Deposit
Gold 42%
24%
Real Estate
22%
Chart: 4.1.1 First priority Investment choice

After the first choice of investment avenues, second most preferred investment option
chosen by the respondents was taken and is given in the table below
Sl. No: of
%
No. Investment Option Respondents
2 Mutual fund 3 6
3 Real Estate 13 26
4 Gold 16 32
5 Insurance 8 16
Table 4.1.2: Second priority Investment choice
18% of the respondents chose fixed deposits as their second most favorite investment
option. Gold and real estate was chosen by 32% and 26% of the respondents respectively.
Insurance by 16 respondents, while 3 respondents ie 6% has chosen to go for mutual funds
and none has chosen equity. This again demonstrates the accuracy of the sampling done in
the research concentrating on HNI who are reluctant to invest in equities.

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The results of the study has been graphically represented in the pie chart below
option 2
Equity Investment
2%
Insurance Fixed Deposit
16% 18% Mutual fund
6%
Gold Real Estate

32% 26%
Chart: 4.1.2 Second priority Investment choice

The third and final preference in the investment options chosen by the respondents are
given in the table below
Sl. Investment Option No: of %

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No. Respondents
2 Mutual fund 7 14
3 Real Estate 14 28
4 Gold 10 20
5 Insurance 9 18
Table 4.1.3: Third priority Investment choice
20% of the respondents chose fixed deposits as their second most favorite investment
option. Gold and real estate was chosen by 20% and 28% of the respondents respectively.
Insurance by 19(18) respondents, while 7 respondents i.e. 14% has chosen to go for mutual
funds and none has chosen equity. This again demonstrates the accuracy of the sampling
done in the research concentrating on HNI who are reluctant to invest in equities.
option 3
Insurance
18% Fixed Deposit
20%
Mutual fund
Gold 14%
20%
Real Estate
28%
Chart: 4.1.3 Third priority Investment choice
4.1.4 Summary of Responses

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A summary of responses in all three investment options is given below
Sl No. investment option No: of Respondents %

2 Mutual fund 10 20
3 Real Estate 38 76
4 Gold 38 76
5 Insurance 23 46
Table 4.1.4: Investment choices
The table shows that 80% of the respondents opted bank FD as one of their
investment choices. 76% of the respondents chose real estate and gold deposits to be in their
investment portfolio. 46% of the respondents chose insurance while 20% opted for mutual
funds and only 2% of the respondents are interested in equity.
4.1.4 Analysis of Data

The data shows that the most preferred investment option of the customers is fixed
deposit. 80% of the respondents prefer to invest in FD. The main reason for the trend is the
security and liquidity offered by the FD. Fixed deposit was chosen by most of the people as
their most preferred option. The main drawback of FD, perceived by the respondents, is its
low rate of return. A further analysis of data has shown that 100% of those who are above the
age of 45 and salaried employees prefer fixed deposits because it match with their risk
profile.
Real estate and gold are the next preferred option of investors, both chosen by 76% of
the respondents. Both are very traditional avenues of investment and offer a promising return.
Real estate field has shown a setback in last couple of years due to economic recession, but
booming economy has raised hope of the investors. This makes real estate a promising
investment. Gold is a very established investment for ages. Price of gold is touching new
limits day after day, making it a shining investment option. Gold offers high liquidity for
investors, making it more attractive. Another reason for investment in these assets is the
advantage of possession it is offering. Unlike equity, these investments offer a strong tangible
presence.

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Mutual fund and insurance has attracted 20% and 46% of the respondents. Only 2%
of the respondents expressed interest in equities. It is clearly visible that there is a trend for
investing in established modes of investing.

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4.2. Knowledge in Preferred Investment Options

Knowledge in the technical aspects of an investment option may motivate to invest in
that. This may serve as a reason for non-participating behavior of this segment in equity
investments. To analyze this, the knowledge of the respondents in their chosen investment
options was enquired. Knowledge in this context means a more detailed awareness about the
functioning of the option like the factors may affect gold prices in case they have chosen gold
as an investment option.
4.2.1. Knowledge in Preferred Investment Option No:1
The response of level of knowledge in the first preferred option is given below
Knowledge in option #1 %
1 Very high 41 82
2 High 6 12
3 Average 3 6
4 Low 0 0
5 very low 0 0
Table 4.2.1Knowledge in Preferred Investment Option No: 1
Most of the respondents (82%) have very good knowledge in their first chosen
investment opportunity. 12% have fairly good knowledge and 6% has an average knowledge
about the investment option they preferred. The significance of the result is that none of them
has chosen an investment option in which they don’t have a significant knowledge

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high
12% average
6%
Very high
82%
Chart 4.2.1Knowledge in Preferred Investment Option No: 1
4.2.2. Knowledge in Preferred Investment Option No: 2
1 Very high 32 64
2 High 9 18
3 Average 6 12
4 Low 3 6
5 very low 0 0
The response of level of knowledge in the second preferred option is given below
An almost same trend continued in the case of second investment option also but
exhibited a downward trend also. 64% has recorded that their knowledge level in the second
investment option is very high, while 18% and 16% has a high and average level of
knowledge in the options selected. It must be noted that 6% has rated their knowledge in the
preferred investment as low and none rated very low.
Table 4.2.2: Knowledge in Preferred Investment Option No: 2

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average
12% low
6%
high
18%
Very high
64%
Chart 4.2.2: Knowledge in Preferred Investment Option No: 2
4.2.3. Knowledge in Preferred Investment Option No: 3
The response of level of knowledge in the third preferred option is given below
1 Very high 16 32
2 High 15 30
3 Average 10 20
4 Low 7 14
5 very low 2 4
The downward trend in the level of knowledge was clear in this response. 32% have
expressed that they have very high knowledge in the third preferred option of investment.
30% and 20% of the respondents rated their knowledge level in the third avenue as high and
Table 4.2.3: Knowledge in Preferred Investment Option No: 3

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average respectively. 14% of the people have rated their knowledge in this option as low and
a 4% of the respondents found their knowledge in the investment option as very low.
low
14% very low
4% Very high
32%
average
20%
high
30%
Chart 4.2.3: Knowledge in Preferred Investment Option No: 3
4.2.4. Analysis of data

The response to the knowledge level in the investment shows that knowledge in any
investment avenues positively influences the investor’s feelings towards investing. Of the
respondents 82% has very high knowledge in their most preferred investment and none of
them are unaware about their first choice on investment. A very low knowledge to a preferred
investment mode was shown only in third investment option that too a very low response of
4%.
There is a notable case in the responses that there is a decrease in knowledge in the
investments options 2 and it further decreases in investment choice 3. This shows that most of
the respondents are not very sure about their investment preferences. This shows that
majority of the people has a strong knowledge only in one investment option. Investing the
bulk of one’s saving in a particular mode is very risky. It is essential to have a diversified

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portfolio of investment to reduce risk of failure of a particular medium of investment. This

provides an opportunity to develop regular customers by educating the potential customers.
Hence the results of the survey shows that the customers tend to invest more in those
areas where they have more knowledge. So an intense effort should be initiated by the
organization to educate the customers and convert them to equity investors.

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4.3. Risk Perception on Equity Investment

Since the target customer group is negligent to the equity investments at present, basic
reason of this behavior has to be found out. Equity has a widespread image as a very risky
investment among masses. This has been made very strong by the recent recession. Reports
of stock market crashes are heavily celebrated by the media making it somewhat a nightmare
for public and also for those who has experienced the darker side of stock trading.
For a detailed analysis of the behavior of the target segment we should understand the
risk perception on the equity investments. The respondents was requested to rate how they
feel about the risk factor involved with the equity investments on a five point scale.
Is equity risky %
1 strongly agree 28 56
2 Agree 16 32
3 Neutral 5 10
4 Disagree 1 2
5 strongly disagree 0 0
Table 4.3 Risk Perception on Equity Investment
No wonder in the outcomes of the result, 56% of the respondents strongly agreed that
the equity investments are risky and 32% agreed it as risky combined to get a total of 88% of
the respondents finding it risky. 10% of the respondents take neutral stand on the question.
Only 1 respondent has a disagreement with the question and nobody strongly disagreed to it.
The responses have been plotted on a pie chart and presented below

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IS EQUITY RISKY?
disagree
neutral 2%
10%
strongly agree
agree 56%
32%
Fig: 4.3 Risk Perception on Equity Investment
4.3.1. Analysis of Data

No surprise in the outcome of the survey, none of the respondents strongly disagree
that equity investment is risky. As high as 88% of the respondents founds it very risky to
invest in equities and this forms a major influence for the target group’s reluctance to invest
in equity. A combined effort by the industry will be more appropriate and effective to
overcome this marketing barrier rather than an individual effort by Hedge alone. This
requires a high level collaboration between the firms.

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4.4. Influence of Knowledge
In an interaction with the relationship managers at Hedge, it was found that when they are
able to educate a customer about the stock market activities, they were able to attract the
customer to invest in equities. This shows that knowledge building may serve as a motivating
factor to invest. The results of the survey are shown in the table
More knowledge may motivate %
1 Strongly agree 15 30
2 Agree 18 36
3 Neutral 7 14
4 Disagree 8 16
5 Strongly disagree 2 4
Table 4.4 Knowledge as a motivator
30% of the respondents strongly believe that more knowledge in the equity
investment may motivate them to invest in equities and 36% of the respondents also agreed to
it. 14% remained neutral in their approach. 16% have disagreed to invest in equities and 4%
strongly disagreed.

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more knowledge may motivate

disagree strongly disagree
16% 4% strongly agree
30%
neutral
14%
agree
36%
Fig: 4.4 Knowledge as a motivator
4.4.1. Analysis of Data

The survey shows that 66% respondents feel that more knowledge may motivate them
to invest in equities. This is a very promising result and it combined with the analysis in the
section 4.2 shows that knowledge can certainly be motivating factor for investing in the
equities. The company has to concentrate on consumer education campaigns to attract them
to equity investments. Hedge has already launched a strong ad campaign on this respect.

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4.5. Investment Goals of the Target Group

Investment is made by a person to meet some requirement that may arise in the future.
The requirements are called investment goals. The investment goals are classified into two
based on the time span: short term and long term. If the goals are to be achieved in less than 6
years they are classified short term else long term.
Investment goal of a customer is very important in every investment decision.
Choosing an inappropriate investment alternative may not meet the objectives of the investor.
Here an attempt is made to understand the investment goals of the respondents
Investment goal %
1 Short term 28 44
3 Long term 22 56
Table 4.5. Investment Goals of the Target Group
44% of the respondents said that their investment goals are short term while 56% have
responded that they have long terms goals as their priority. For a detailed analysis age-wise
distribution of the investment goals are taken.
The general investment goals of the respondents are plotted below in a pie chart:
INVESTMENT GOAL
Short term
44%
Long term
56%
Chart4.5. Investment Goals of the Target Group

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4.5.1. Age Wise Investment Goals

For a detailed analysis of the investment goals and for identifying the needs of
customers, an age wise distribution of investment goals is generated from the responses. The
results are given below
Short Term Long Term

Invest goal
Number % Number %
UPTO 30 9 75 3 25
UPTO 45 2 15.38 11 84.62

Age
UPTO 60 3 23.08 10 76.92
ABOVE 60 8 66.67 4 33.33

Table 4.5.1 Age Wise Investment Goals
75% of the respondents up to 30 years of age has pointed that they have short term
investment goals while 25% have long term goals. The goals included new car, starting new
business etc. The majority of respondents in the age group up to 45 and up to 60 (85% and
77% respectively) have recorded that they have long term goals like life after retirement and
kid’s education etc. Only a minority (15% and 23% respectively) in this group have short
term goals. In the group of customers above the age of 60 67% have short term goals while
33% have long term goals.
The age-wise distribution of the investment goals are plotted in the graph below

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90
80
70
60
Age UPTO 30
50 Age UPTO 45
Age UPTO 60
40 Age ABOVE 60
30
20
10
Chart4.5.1. Age Wise Investment Goals

The every age group has shown considerable interest in both long term security and
short term objectives. The customers of age less than 30 and above 60 have shown a major
interest in short term objectives. But it cannot be forgotten that 25% and 33% of the
respective age group has shown interest in long term goals.
Respondents between the age of 30 and 60 have shown a major interest in long term
investment goals especially income after retirement, higher education of wards etc. But a
considerable percent, 15% under 45 and 23% under 60, have short term goals.
The survey shows that the company has to focus on investment portfolios that will
give short term returns and long term returns. The product package that must be offered to the
customers should be customized on the basis of their risk appetite and goals. A personal
touch should be given to the customer to develop confidence in the company.

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4.6. Influence of Friends/Relatives

Investment decision may be one of the most informed decisions made by a person.
Friends and family members may have wide influence in making the investment. If a family
member has got a fortune from an investment then it may drive others to invest in similar
avenues. Similarly a negative impression about any mode of investment by an individual may
de motivates others close to him from investing. To understand this enquiry was made in the
respondents. The results are given below.
Friend/relative suggestion %
1 strongly agree 17 34
2 Agree 19 38
3 Neutral 7 14
4 Disagree 5 10
5 strongly disagree 2 4
Table: 4.6 Influence of Relatives
The results of the survey shows that 34% of the respondents strongly agree that they
listen to their friends/relatives opinions or value their experiences while choosing an
investment avenue. 38% of the respondents also agree to this making total of those who listen
to their friend/relative while making an investment decision to72%. 14% of the respondents
remain neutral to this and another 14% disagree to it, in which 4% strongly disagree to this
situation.
The results are plotted in a pie chart and presented below:

Project Report 2010
disagree strongly disagree

10% 4%
strongly agree
neutral 34%
14%
agree
38%
Fig: 4.6 Influences of Relatives

72% of the participants have said that the experiences or suggestions of their friends
or relatives count while making investment decisions. Hence the personal relations have an
important role in shaping the customers behavior.
This brings out the importance of referrals to obtain new customers from existing
customers. In order to make existing customers refer the company to others, a high degree of
customer satisfaction should be attained for all the customer segments, not only HNIs.
Company should position itself as a customer centric organization and should communicate
that well to the customers and also potential customers.
The company should project itself as a friendly investment advisor and the behavior
of the executives should attribute this feature of the company. While maintaining a high level
of respect and courtesy to the customers, the executives should be able to establish a personal
relation with the customer.

Project Report 2010

Project Report 2010
4.7. Channels to Reach Customers

In marketing, it is important to identify the suitable channels that provide an efficient
reach to the target customers. The suitability of medium depends on the life style, education
level and other behavioral factors of the target group. Here an attempt to identify the most
used mediums used by HNIs. The respondents were requested to choose as many mediums as
per their life style.
Media %
1 Magazines 29 58
2 Newspapers 38 76
3 Business dailies 34 68
4 Internet 15 30
5 TV Shows 25 50
Table 4.7. Channels to Reach Customers
The results are plotted on the chart below:
80 Newspapers; 76
70 Business dailies; 68
60 Magazines; 58
TV Shows; 50
50
40
Internet; 30
30
20
10
0
Magazines Newspapers Business dailies Internet TV Shows
Chart 4.7. Channels to Reach Customers

Project Report 2010

The result of the survey shows that there is almost an equal preference to all medium
among the customers. Hedge has a very strong presence on business dailies and TV shows.
But since majority of the target customers (76%) have given preference to news dailies and
magazines have reach to a very considerable amount of customers (58%), focus should also
be given to ad campaign through dailies and magazines. These campaigns can also benefit the
company in many other modes viz. improving the brand knowledge among general public
and hence an increased goodwill which will benefit the company’s major priority – retail
investments.

Project Report 2010
5.1. What customer is looking for:
a. Savings and investments with stabilized returns and low risk exposure.
b. Basic understanding of ‘how the stock market really works.
c. A personal touch in the services offered.
5.2. Positioning Strategy
a. Company positioning
‘Investment advisors’ introducing customers to non traditional forms of
market investments
b. Product positioning
Products must be positioned is terms of ‘quick win investments’ which offer
liquidity and funding controllability unlike fixed deposits which have lock-in periods
c. Service positioning
Personalized services offering high transparency, privacy of investment,
administrative ease for managing investment and rendering taxation advice
Products may include:

i. Basic stable income stocks
ii. Money market instruments
iii. Debt mutual funds
Services may include
i. Administrative convenience for account management
ii. Periodic investment income status updates

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5.3. Consumer Knowledge Building

a) Discussion forums/presentations render opportunities to interact with larger forums,
present Hedge and increase customer touch points – For educated/professional
customers in this segment
b) Campaigns aimed at reaching the ‘novice customer group’ – preferably driven by
testimonials
i. Projection of testimonials and recommendations from existing customers –
Testimonials may include with a similar background (to ensure the testimonial
is relatable to the customer)
c) Education drives to spread basic knowledge of the stock market
d) Hosting Round table events for exclusive groups of like-minded people primarily
targeting the educated/professional persons – Discussion topics on stock market at
investment/trading alternative
e) Presentations at social clubs/associations (Women’s club, Lion’s club etc)
f) Presentations, meeting and discussions must be aimed at both the customer and
decision making personal advisor to the customer such as:
g) Finance heads of businesses/companies
h) Internal audit advisors
5.4. Relationship Building Phase
a) Customers of this segment must be approached through a referred channel or through

personal contact
b) Meetings with customers in this segment may be personalized but in cases where 2 to
3 customers are closely related/alike, joint meeting/sessions maybe recommended
c) The education phase must not be viewed as a ‘selling’ opportunity. Conversion of the
customer must be attempted only after the customer has been educated and convinced
of the stock market opportunity
d) It is imperative to show the ‘ease’ of trading to customers of this segment. Traditional
views of the stock market being for ‘market savvy/financial experts’ must be dispelled

Project Report 2010
e) Branch Managers (or Senior RMs) must render frequent advise to the converted
customers (E.g.: Providing timely investment options for customers to improve
portfolio)
f) Sales pitch activities must be appropriately supported with information collaterals.
They may include:
• Market knowledge booklets and guides
• Testimonials and customer recommendations must always be informed to
target customer
• Free account opening
g) Periodic feedback must be solicited to determine the quality of service and assess the
expectation of the customer
Customer discussion coverage

• Meetings serve as ‘first impressions’. Based on the profile of the customer, the
structure and content of discussions (during any meeting) must be pre-decided. Topics
for discussion may include:
– Facts about the stock market and dispelling common myths
– Relating market information to the industry background/association of the
customer
– Portfolios of similar customers within Hedge and portfolio growth patterns
– Comparison of traditional investment forms against stock market investments
5.5. Sale conversion
a) Intent of this meeting is to convert the potential customer

b) Sales pitch team may present an ideal ‘investment portfolio’ for ‘first time investors’.
The portfolio maybe compared to standard investments such as gold, real estate,
mutual funds and fixed deposits. This is to project the opportunity to benefit from
‘higher returns’ while investing in market stocks as compared standard investment
options

Project Report 2010
c) Customers must be encouraged to invest in ‘small quantities’ during the initial stages.
The objective is to instill confidence in the customer’s mind through experience prior
to committing larger sums of investment
d) Converted customers must be encouraged to ‘review’ their investment portfolio often.
This is create awareness in the customer’s mind on the benefit of the investment
e) Customers of this segment once converted must be made aware of the ‘growth’ and
‘return’ pattern of the stock so as to encourage further investments
5.6. Profile of the Marketing/Sales Team
a) The team should consist of HNI desk Wealth Managers and the respective Branch
Manager/employee with personal contact. The team must be identified based on the
type of customer
– Potential male customers: Male customers in the B6 segment are most likely
from traditional/conservative families belonging to an older generation. In
such instances it may be ideal that the customer be introduced to one of the
pitch team members through existing customers/ recommendatory channels
– Potential female customers: Female customers in the B6 segment tend to be
from conservative families. The pitch team must therefore consist of a female
sales member as women tend to be more relatable to this segment
– Role of HNI Desk Wealth Manager
• Customer introduction meeting and conversion
• Subject Matter Expert role (customer line of business awareness,
market awareness)
• Gratitude call to the customer after conversion
• Overall Relationship Management and periodic feedback solicitation
– Role of the Branch Manager
• Customer introduction meeting, continuous education and conversion
• Portfolio management role projection
• Converted customer sustenance
b) Knowledge and awareness:
– Of the business/industry/profession the customer is associated with

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– Of traditional investment types (cost of investment, rates of return etc)

– Sound fundamental knowledge of the concept of market investment/trading
and products of Hedge
c) Patience, diplomacy and resilience in handling the customer (being long term
conversion targets, customers of this segment usually have negative pre conceived
notions of the stock market which is difficult to convert)
5.7. Conclusion
The study has helped me a great deal in getting through knowledge of marketing,
customer perception and general trends. This study has been useful to acquire a practical
experience apart from the theoretical knowledge and it was very useful to me as a
management student as it gave me a good idea about the consumer behavior.

Project Report 2010
1. Marketing Financial Products and Services to High Net Worth Individuals

- By Kathleen M. Hosfeld
2. http://www.indianmba.com/Faculty_Column/FC316/fc316.html
3. http://www.hedgeequities.com/
4. http://investing.businessweek.com/
5. Overview of Stock market and Stock exchanges in India, By Dr. Vijay Pithadia
6. http://www.sebi.gov.in/
7. INVESTMENT AVENUES BY SHILPA AGRAWAL
8. http://www.diehardindian.com/overview/stockmkt.htm
9. http://www.jrg.co.in/
10. http://www.dbfsindia.com/v04/profile/?PageID=7272009123553PM5
11. http://www.indiainfoline.com/Research/Recommendations/Equity
12. http://www.nseindia.com/
13. www.financialexpress.com
14. Levin and Ruban, 1997, “Statistics for management”, Prentice-Hall of India Ltd.,
Seventh edn, India.
15. V S Ramaswamy and S Namakumari, “Marketing management”, Macmillan India
Ltd., Third edn, India.
16. Kotler, Keller, Koshy, “Marketing management”, Pearson education. 13th edn, India.
17. L.R.Potti,’ Research methodology’, Yamuna Publications
18. http://www.library.ncat.edu/ref/guides/literaturereview03.htm
19. http://www.statistics.com/resources

Project Report 2010
Name : _________________________________ Profession :_____________________
1. Age: 18-30 30-45 45-60 60+
2. “Investing in equities is very risky.” How do you respond to the statement?
Strongly Agree Agree Neutral Disagree Strongly Disagree
3. Your friend/relative’s suggestions or experiences influence while making investment choices
4. You’re given a fortune, how do you prioritize to invest it in following options?
(Fixed Deposit, Mutual fund, Real Estate, Gold, Insurance, Equity Investment)
Investment Option
1.
2.
3.
5. Your knowledge level in investment option #1
Very high High Average Low Very low
8. Your investment goals are mostly:
Short term (up to 5 yrs) long term (more than 5 yrs)
9. More awareness on stock market functioning and equity investment may motivate to invest
in equities

Project Report 2010
10. In which of the following mediums you look for new investment options (choose as many as
applicable)
Newspapers Business dailies Magazines TV Shows Internet

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Project Report 2010

The project ‘Marketing Equity Products to HNI Customers’ is done at Hedge

School of Management Studies, CUSAT Page | 1

1.2. The Investment Needs of an Investor

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1.3. Financial Planning

1.3.1. Need for Financial Planning

Everyone needs to plan for tomorrow. As an individual, every one of us is

1.3.2. Role of Hedge in Investment Advisory

These days many banks are proving investment advisory services to

School of Management Studies, CUSAT Page | 3

Short term goals Medium term goals Long term goals

b. Determining risk tolerance of an individual

1.4. Different Investment Avenues

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Money-back insurance - Insurance in India is mostly sold and bought as investment

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Exhibit 1. Types of Investments

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Exhibit 2: Characteristics of Different Investment Avenues

1.5. Asset Allocation

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An essential ingredient of any model trying to understand the optimum allocation of

1.5.1. Investor Profiling

1.5.2. Asset Allocation and Hedge Equities

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 The client and the manager should decide on it together.

1.6. Characteristics of Marketing Financial Products to HNI

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1.7. Background of the study

1.8. Nature of the study

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1.9. Objectives of the study

The present study entitled “Marketing Equity Products to HNI Customers” is

1.10.1. Tools used for data collection and analysis

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1.10.2. Collection of Data

1.10.3 Sampling Frame

1.10.4 Sampling Unit

1.10.5 Sampling Size

1.10.6 Limitations of the study

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2.2. BRIEF HISTORY OF STOCK EXCHANGES

ORIGIN OF INDIAN STOCK MARKET

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It facilitates more efficient processing, automatic order matching, faster execution of

2.3. REGULATION OF BUSINESS IN THE STOCK EXCHANGES

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Depository: The organization responsible to maintain investor's securities in the electronic

Advantages of a depository services:

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2.4. MARKET CAPITAL OF INDIAN STOCK MARKET

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2.5. MAJOR STOCK BROKERS IN KERALA

Geojit BNP Paribas

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Doha Brokerage & Financial Services

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