KARVY- STOCKBROKING LIMITED

An Project Report
Submitted in the partial fulfillment of the requirement for the award of the
Degree of Bachelor of Business Administration
2008-2011

Submitted by: Under the guidance of: NEERAJ

SAJWAN Mr. Anoop pandey

BHARATI VIDYAPEETH DEEMED UNIVERSITY

INSTITUTE OF MANAGEMENT & RESEARCH, NEW DELHI
An ISO 9001:2008 Certified Institute
NAAC Accredited Grade “A” University
CRISIL Grading – MBA Programme
A* - National Level
A**- State Level

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 ACKNOWLEDGEMENT

I would like to convey my heartiest gratitude to several people, for their support and guidance
which helped me to complete my Summer Internship.

First and foremost I would like to thank KARVY STOCK BROKING LIMITED, for giving
me an opportunity to do my internship in their esteemed organization. I extend to my Guide at
KARVY - Mr. ANAND KHARI, who instructed me about the work procedures and deal with
me with patience at all times.

This internship would not be completed without the support of our Director Sir, Dr.
S.S.Vernekar Who encourages and provided his support to write this project systematically
without which it would not have been possible for me to do justice with my project. I would also
like to thank my Internship Coordinator, Mr. ANOOP PANDEY for their guidance and
unflinching support throughout the phases of my Internship.

My special thanks to my dear friend Mr. RIYAN KHARI who being a part of the same
internship and also to my college friends Mudit , Rahul , Karan and Paras who supported me
throughout my Internship and with whose help I could complete my work efficiently and
effectively. Their consistent help kept me motivated and going.

Last but not the least, my endless appreciation goes to my family who has stood by my side and
given me moral support whenever I was low and boosted my will power.

Thank You!

NEERAJ SAJWAN

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 Student Undertaking

This is to certify that I, NEERAJ SAJWAN had completed the Summer Project titled
ORGANISATIONAL STUDY in KARVY- STOCKBROKING LIMITED under the
guidance of MR. ANOOP PANDEY in the partial fulfillment of the requirement for the award
of Bachelor of Business Administration of BVIMR, New Delhi. This is an original piece of
work & I have neither copied nor submitted it earlier elsewhere.

NEERAJ SAJWAN

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 CONTENTS
PAGE NO.

1) Executive Summary.............................................................................................4
2) Introduction..........................................................................................................5
3) Industry profile.....................................................................................................6
4) Company profile..................................................................................................9
i) Karvy’s Mission and milestones…………...……………………………9
ii) KARVY Credo.........................................................................................11
iii) Quality Policy..........................................................................................12
5) Achievements.......................................................................................................13
6) KARVY Wings....................................................................................................14
7) Product & Services..............................................................................................18
i) Products....................................................................................................18
(a) Mutual Funds...............................................................................18
(b) Insurance......................................................................................26
(c) Equities........................................................................................30
(d) Bonds...........................................................................................33
(e) Derivatives...................................................................................36
ii) Services....................................................................................................38
(a) Depository Participants................................................................40
(b) Distribution of Financial Products...............................................41
(c) Advisory Services........................................................................42
(d) Private client Group OR CPMS...................................................43
8) SWOT Analysis…………………………………………………………………45
9) Marketing Plan.....................................................................................................47
10) Competitors of KARVY.....................................................................................48
11) Finding.................................................................................................................49
12) Learning ..............................................................................................................50
13) Conclusion………………………………………………………………………53
14) Bibliography........................................................................................................54

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 EXECUTIVE SUMMARY

This internship report consists of the overall experience of working as a part of KARVY
STOCKBROKING LIMITED. This experience helped me understand the basic function of the
company.

The best learning experience was that I started from the very basics of getting to that position
and not from the position itself. This helped me get useful insight and understanding of various
financial products, the market details about them and the benefits provided by them to the
customers. Emphasis was given in analysis of the investor behavior of the clients. Another
interesting fact was that all these products were suggested to clients not just based on their
market performance and returns, but on the client’s financial condition as well as their risk taking
capacity.

Training sessions were held to give me insights about the various products that KARVY
STOCKBROKING deals in like: Mutual Funds, Insurance and Bonds. Presentations on the same
after self study and analysis were a part of this internship session.

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 INTRODUCTION

KARVY is a premier integrated financial services provider and ranked among the top five in the
country in all its business segments. It services over 16 million individual investors in various
capacities and provides investor services to over 300 corporate, comprising who is who of
Corporate India.

It is a member of all three:-

 National Stock Exchange (NSE)

 Bombay Stock Exchange (BSE)
 Hyderabad Stock Exchange (HSE)

Karvy utilized its experience and superlative expertise to capitalize on its strengths and better its
service, innovate and provide new ones. It diversified in the process and thus evolved as India’s
premier integrated financial service enterprise.

Karvy has been a customer centric company since its inception. It offers a single platform
servicing multiple financial instruments in its bid to offer complete financial solutions to the
varying needs of both corporate and retail investors, where an extensive range of services are
provided with great volume-management capability.

KARVY covers the entire spectrum of financial services such as Stock broking, Depository
Participants, Distribution of financial products - mutual funds, bonds, fixed deposit, equities,
Insurance Broking, Commodities Broking, Personal Finance Advisory Services, Merchant
Banking & Corporate Finance, placement of equity, IPOs, among others. Karvy has a
professional management team and ranks among the best in technology, operations and research
of various industrial segments.

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 INDUSTRY PROFILE

The Indian middle class is large and growing; wages are low; many workers are well educated
and speak English; investors are optimistic and local stocks are up. Despite political turmoil, the
country presses on with economic reforms. The only cause of worry that India could face is
Infrastructural hassles. The rapid economic growth of the last few years has put heavy stress on
India's infrastructural facilities. The projections of further expansion in key areas could snap the
already strained lines of transportation unless massive programs of expansion and modernization
are put in place. Problems include power demand shortfall, port traffic capacity mismatch, poor
road conditions (only half of the country's roads are surfaced).

Indian Bureaucracy
Although the Indian government is well aware of the need for reform and is pushing ahead in
this area, business still has to deal with an inefficient and sometimes still slow moving
bureaucracy.
Diverse Market
The Indian market is widely diverse. The country has 17 official languages, 6 major religions,
and ethnic diversity as wide as all of Europe. Thus, tastes and preferences differ greatly among
sections of consumers. Therefore, it is advisable to develop a good understanding of the Indian
market and overall economy before taking the plunge. Research firms in India can provide the
information to determine how, when and where to enter the market. There are also companies
which can guide the foreign firm through
the entry process from beginning to end --performing the requisite research, assisting with
configuration of the project, helping develop Indian partners and financing, finding the land or
ready premises, and pushing through the paperwork required.

Check on Economic Policies

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The general economic direction in India is toward liberalization and globalization. But the
process is slow. Before jumping into the market, it is necessary to discover whether government
policies exist relating to the particular area of business and if there are political concerns which
should be taken into account.

There are several good reasons for investing in India:

1. One of the largest economies in the world.

2. Strategic location - access to the vast domestic and South Asian market.

3. A large and rapidly growing consumer market up to 300 million people; constitute the market
for branded consumer goods – estimated to be growing at 8% per annum. Demand for several
consumer products is growing at over 12% per annum.

4. Foreign investment is welcome; approval is required but is automatic in sixty

Categories of Industries.

5. Skilled man-power and professional managers are available at competitive cost.

6. One of the largest manufacturing sectors in the world, spanning almost all areas of
manufacturing activities.

7. One of the largest pools of scientists, engineers, technicians and managers in the world.

8. Rich base of mineral and agricultural resources.

9. Long history of market economy infrastructure

10. Sophisticated financial sector.

11. Well developed R&D infrastructure and technical and marketing services.

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12. Policy environment that provides freedom of entry, investment, location, choice of
technology, production, import and export.

13. Well balanced package of fiscal incentives.

14. A sophisticated legal and accounting system.

15. English is widely spoken and understood.

16. Rupee is convertible on Current Account at market determined rate.

17. Free and full repatriation of capital, technical fee, royalty and dividends.

18. Foreign brand names are freely used.

19. No income tax on profits derived from export of goods.

20. Complete exemption from Customs Duty on industrial inputs and Corporate Tax Holiday for
five years for 100 per cent Export Oriented units and units in Export Processing Zones.

21. Corporate Tax applicable to the foreign companies of a country, with which agreement for
avoidance of Double Taxation exists, can be one which is lower between the rates prevailing in
any one of the two countries and the treaty rate.

Company profile

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The flagship company, Karvy Consultants Limited was found with the vision and enterprise of a
group of practicing Chartered Accountants on a modest scale in 1981 in Hyderabad, where it
now has 13 branches. It initiated with just one activity and later carved roads into fields of
registry and share accounting as well. From then there was no stopping at all.
A decade of commitment, professional integrity and vision helped Karvy achieve a leadership
position in its field. It is known to handle the largest number of issues ever in the history of the
Indian stock market in a particular year. Thereafter, Karvy made inroads into a host of capital
market services, corporate and retail which proved to be a sound business synergy.
Today Karvy has access to millions of Indian shareholders, besides companies, banks, financial
institutions and regulatory agencies. Over the past one and half decades, Karvy has involved as a
veritable link between industry, finance and people. In January 1998, Karvy became the first
Depository Participant in Andhra Pradesh.
An ISO 9002 company, Karvy’s commitment to quality and retail reach has made it an integrated
financial services company. A SEBI category 1 registrar, so far Karvy has handled over 675
issues as Registrars to public issues, processed over 52 million applications and is servicing over
16 million investors from various locations spread over 205 cities.

Karvy’s Mission:
“ Our mission is to be a leading and preferred service provider to our customers, and we
aim to achieve this leadership position by building an innovative, enterprising, and
technology driven organization which will set the highest standards of service and business
ethics ”.

KARVY MILESTONES

Karvy has traveled a success route over the past 20 years and positioned itself as an emerging
financial service giant in which embeds the confidence and support of enviable patrons across

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the financial world. Patrons are also of diversified fields which includes over 16 million
individual investors in various capacities and 300 corporate comprising the best out of the whole
lot .Years of experience of holistic financial services and expertise in this industry has helped it
gain the status it enjoys and cherishes today.

KARVY CREDO

Following are the system of principles or beliefs followed by Karvy Group.

“Our Clients, Our Focus”

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“Clients are the reason for our being”
Personalized service, professional care; pro-activeness are the values that helps KARVY nurture
enduring relationships with their clients.

Teamwork
”None of us is more important than all of us”
Each team member is the face of Karvy. Together they offer diverse services with speed,
accuracy and quality to deliver only one product: excellence. Transparency, co-operation,
invaluable individual contribution for a collective goal, and respect for individual uniqueness
within a corporate whole, is what KARVY aims at.

Responsible Citizenship
“A social balance sheet is as rewarding as a business one.”
As a responsible corporate citizen, KARVY believes that its duty is to foster a better
environment in the society where they live and work. To abide by its norms, and to behave in a
responsible manner towards the environment, are some of its growing initiatives towards
realizing this.

Integrity
”Everything else is secondary”
Professional and personal ethics are Karvy’s bedrocks. They take pride in building an
environment that encourages honesty and opportunity to learn from failures than camouflage
them. They insist on consistency between work and actions.

QUALITY POLICY:

To achieve and retain leadership, Karvy aims for complete customer satisfaction, by combining
its human and technological resources, to provide superior quality financial services. In the
process, Karvy strives to exceed Customer's expectations.

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As per the Quality Policy, Karvy will:

 Build in-house processes that will ensure transparent and harmonious relationships with
its clients and investors to provide high quality of services.
 Establish a partner relationship with its investor service agents and vendors that will help
it in keeping up to its commitments to the customers.
 Provide high quality of work life for all its employees and equip them with adequate
knowledge & skills so as to respond to customer's needs.
 Continue to uphold the values of honesty & integrity and strive to establish unparalleled
standards in business ethics.
 Use state-of-the art information technology in developing new and innovative financial
products and services to meet the changing needs of investors and clients.
 Strive to be a reliable source of value-added financial products, services and constantly
guide the individuals and institutions in making a judicious choice of same.
 Strive to keep all stake-holders (shareholders, clients, investors, employees, suppliers and
regulatory authorities) proud and satisfied.

ACHIEVEMENTS

 Among the top 5 stock brokers in India (4% of NSE volumes)

 India's No. 1 Registrar & Securities Transfer Agents

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  Among the top 3 Depository Participants

 Largest Network of Branches & Business Associates

 Among top 10 Investment bankers

 Largest Distributor of Financial Products

 Adjudged as one of the top 50 IT uses in India by MIS Asia

 Full Fledged IT driven operations

KARVY WINGS

As discussed earlier, KARVY offers a single platform servicing multiple financial instruments in
its bid to offer complete financial solutions to the varying needs of both corporate and retail
investors. The range of products and services are provided by the following wings.

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This is the flagship company of Karvy Group and it controls the organizational affairs, channels
of progress, work affairs and pioneering business policies. This was the first business the
KARVY group ventured into, but now they have transferred it into a joint venture with computer
share limited of Australia, the world’s largest registrar. This company services around 6 lakh
customer accounts in a spread of 250 cities/towns in India.

This wing of Karvy is registered with SEBI as a category 1 merchant banker and is also
recognized as a leading merchant banker of the country. It has built its reputation by capitalizing
the opportunities as and when it comes, be it in corporate consolidations, mergers and
acquisitions or corporate restructuring. Involvement in raising resources for corporate or
government undertaking successfully over the past two decades has given it a tremendous
confidence boost.

This wing of Karvy has traversed wide spaces to tie up with the world’s largest transfer agent,
the leading Australian company Computershare Limited. This company services more than 75
million shareholders across 7000 clients and makes its presence felt in over 12 countries across 5
continents. It has also entered into a 50-50 joint venture with Karvy. After transferring
completely to this new entity it has tried to enrich the financial services industry as a whole. The

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worldwide network of Computershare helps it to adapt to the international standards in addition
to leveraging the best technologies from all over the world.

This is a specialist Business Process Outsourcing unit of the Karvy Group. The legacy of
experience in financial services of Karvy Group acts as a big support for entering the global
arena with confidence of delivering the best. This wing offers several models on the
understanding of business needs that are unique and therefore only a customized service could
possibly fit the bill. Their service matrix has permutations and combinations that create several
options to choose from. Its Services meet the most stringent International standards, be it re-
engineering and managing processes or delivering new efficiencies.

Karvy Commodities focuses on taking commodities trading to new dimensions of reliability and
profitability. They have made commodities trading, an essentially age-old practice, into a
sophisticated and scientific investment option. It helps in enabling trade in all goods and
products of agricultural and mineral origin that include lucrative commodities like gold and
silver and popular items like oil, pulses and cotton through a well-systematized trading platform.

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Karvy Insurance Broking Pvt. Ltd., provides both life and non-life insurance products to retail
individuals, high net-worth clients and corporate. With the opening up of the insurance sector
and entry of a large number of private players in the business, it is in a position to provide tailor
made policies for different segments of customers.

KARVY STOCK BROKING LIMITED (KSBL)

It is undisputable fact that the stock market is unpredictable and volatile, but despite this KSBL
enjoys a high success rate as a wealth management option. Karvy Stock Broking Limited offers
services that are much beyond serving just as a medium for buying and selling stocks and shares.
Instead it provides multi dimensional and multi focused services. It offers trading facilities for
National Stock Exchange, Bombay Stock Exchange and Hyderabad Stock Exchange and tries to

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make trading safe to maximum possible extent. For this they are assisted by their in depth
research team for constant feedback and sound advices.

The Finapolis is the monthly magazine that is published by this wing. It analyzes the latest stock
market trends and takes a close look at the various investment options and products available in
the market. A weekly report, called Karvy Bazaar Baatein, keeps people informed on the
immediate trends in the stock market.

In addition, the specific industry reports give more comprehensive information on various
industries. It also offers special portfolio analysis packages that provide daily technical advice on
scrip for successful portfolio management. It provides customized advisory services to help the
client make right financial moves which specifically suits their portfolios.

PRODUCT & SERVICES

PRODUCTS

MUTUAL FUNDS:

CONCEPT:

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A Mutual Fund is a form of collective investment that pools money from many investors, who
share common financial goals and invests their money in stocks, bond, short term money market
instruments and/or other securities.

The income earned through these investments and the capital appreciations realized are shared
by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is
the most suitable investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a relatively low cost.

The flow chart below describes broadly the working of a mutual fund:

INDIAN MUTUAL FUND INDUSTRY:

The rising Indian mutual funds industry probably never had it better, as far as the entry of
individual or retail investors is concerned. The industry’s total AUM in December 2006 stood at
a hefty Rs 3, 23,597 crore, with a total of 2.79 crore depositor folios, of which 2.31 crore
depositor folios had invested in equity schemes. The share of direct investors, on the other hand,
has been dropping, stating that more retail investors see mutual funds as a preferred route for
investing in the markets.

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Existing and new market players as well as Exchange Traded Funds are likely to hit the market
in the coming months with a flurry of new Mutual Funds schemes. An action packed first quarter
of 2007 was forecasted to witness at least 20 new schemes which are waiting on the sidelines to
be launched.

TYPES OF MUTUAL FUNDS:

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 Types of Mutual Funds

By Structure By Investment Objective Other Schemes

Open Ended Schemes

Tax Saving Schemes (ELSS)
Growth Schemes

Close Ended Schemes

Income Schemes Special Schemes

Interval Schemes
Balanced Schemes Index Schemes

Sector Specific Schemes

Money Market Schemes

EXPLAINATION:

Open ended Mutual Funds:

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It is a type of mutual fund where there are no restrictions on the amount of shares the fund will
issue. If demand is high enough, the fund will continue to issue shares no matter how many
investors there are. Open-end funds also buy back shares when investors wish to sell. Most of the
mutual funds available in the marketplace are open-end funds. Open-end funds are generally
managed actively and are priced according to their net asset value (NAV). Open-end funds are
wide-ranging. Some Open-end funds are more conservative and provide consistent returns with
low risk, and some are more aggressive in seeking to make capital gains through constant
trading.

Close ended Mutual Funds:

When an investment company issues a fixed number of shares in an actively managed portfolio
of securities, it is referred to as close ended mutual funds. The shares are traded in the market
just like common stock. The main difference with closed-end funds is that market price of the
shares is determined by supply and demand and not by net-asset value (NAV).Its stipulated
maturity period ranges from 3 to 15 years.

Interval Schemes:

It is a fund that combines the features of open-ended and closed-ended schemes, making the fund
open for sale or redemption during pre-determined intervals. In other words, this is a mutual fund
with redemption features in between those of closed-end and open-end funds.

Growth Schemes:

It is a diversified portfolio of stocks that has capital appreciation as its primary goal, and it
thereby invests in companies that reinvest their earnings into expansion, acquisitions, and/or
research and development. Most growth funds offer higher potential growth but usually at a
higher risk.

Income Schemes:

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This scheme seeks to provide stable current income by investing in securities that pay interest.
Income funds typically invest in utility stocks and blue chips.

Balanced Scheme:
It is a type of mutual fund that invests its assets into the money market, bonds, preferred stock,
and common stock with the intention to provide both growth and income. A balanced fund is
geared towards investors looking for a mixture of safety, income, and capital appreciation. The
amount the mutual fund invests into each asset class usually must remain within a set minimum
and maximum. It is also known as “Asset Allocation Fund”.

Money Market Schemes:

Money Market Schemes aim to provide easy liquidity, preservation of capital and moderate
income. These schemes generally invest in safer, short-term instruments, such as treasury bills,
certificates of deposit, commercial paper and inter-bank call money.

Tax Saving Schemes:

Tax-saving schemes offer tax rebates to the investors under tax laws prescribed from time to
time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings
Scheme (ELSS) are eligible for rebate @20% to a maximum of Rs10, 000 per financial year.

Index Schemes:

It is a portfolio of investments that is weighted the same as a stock-exchange index in order to

mirror its performance. This process is also referred to as "indexing". Investing in an index fund
is a form of passive investing. The primary advantage to such a strategy is the lower
management expense ratio on an index fund. Also, a majority of mutual funds fail to beat broad
indexes such as the S&P 500.

Sector Specific Schemes:

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It is an investment fund that makes investments solely in businesses that operates in a particular
industry or sector of the economy. Since the holdings of this type of fund are in the same
industry, there is an inherent lack of diversification by sector associated with these funds. These
funds tend to increase substantially in price when there is an increased demand for the product or
service offering provided by the businesses in which the funds invest. On the other hand, if there
is a downturn in the specific sector in which a sector fund invests, the fund will face heavy losses
due to the lack of diversification in its holdings.

SELECTION CRITERIA FOR MUTUAL FUNDS:

I gave suggestions for Mutual Funds based on the following parameters:

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 Investment Objective of the client:

Whether the client is looking for long term investment or short, they require high returns or tax
savings etc, had to be analyzed. The investment objective of the client should match with that of
the particular Mutual Fund Scheme.

 Past performance:

The previous returns of the funds mentioned in the investment brochures were seen and the funds
which have performed well and given high returns were preferred and suggested to clients.

 Consistency in returns:

The returns are not just expected to be high but a consistency should be observed in the fund’s
performance and returns. The previous year return for a particular fund may be high but if it is
not consistent in its performance then that is a risky deal. Consistent funds are more suitable for
risk averse clients.

 Tax benefits:

The investors whose objective was tax saving were advised to invest in Tax saving Mutual
Funds.

 Fund Manager:

An investor will trust and invest his money in the funds which are managed by well reputed fund
managers. Thus this criterion is also of utmost importance.

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I made suggestions to the clients after taking into consideration the above mentioned criterions
and based on the mutual consent of the client as well, the investment decision was then taken.
The procedure for filling forms etc followed.

If the investor had already invested in equities but wanted to open a Trading and DMAT account,
I had to explain them the charges and procedures for the same.

INSURANCE:

CONCEPT:

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Insurance, in law and economics, is a form of risk management primarily used to hedge against
the risk of a contingent loss. Insurance is defined as the equitable transfer of the risk of a
potential loss, from one entity to another, in exchange for a premium.

Insurer, in economics, is the company that sells the insurance.

Insurance rate is a factor used to determine the amount, called the premium, to be charged for a
certain amount of insurance coverage. Risk management, the practice of appraising and
controlling risk, has evolved as a discrete field of study and practice.

Sum Assured:
It is the amount of money an insurance policy guarantees to pay before any bonuses are added.
Factors included in the calculation of sum assured are:

 Date of birth
 Gender
 Duration
 Health conditions
 Job profile

TYPES OF INSURANCE:

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 Types of Insurance

Life Insurance Non Life/

General Insurance

-Term -Property
-Whole life -Personal
-Money back -Lifestyle
-Endowment Assurance -Package
-Pension Plan
-Unit Linked Product (ULIP)

Life Insurance:
All policies are not the same. Some give coverage for your lifetime and others cover you for a
specific number of years.

Following are the different types of life insurances:

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  Whole life
 Term policy
 Money pack
 Endowment
 Pension plan
 ULIP

General Insurance:

General insurance typically comprises any insurance that is not determined to be life insurance.
It is called property and casualty (P&C) insurance in the U.S. General insurance policies,
including automobile, accidents and homeowner’s policies, provide payments depending on the
loss from a particular financial event.

Following are the different types of general insurances:

 Property
 Personal
 Lifestyle
 Package

PRESENT SCENARIO & FUTURE EXPECTATIONS:

Expansion, product innovations and reforms are three themes that are and will dominate the
life insurance business in 2007. Life insurance companies are expected to record a 100 per cent
increase in new business in financial year 2007, and this growth is not going to taper off.

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According to experts, the industry is confident of maintaining the rate, typical of a flourishing
industry. The fundamentals of the economy are good and the life insurance industry is riding this
boom.

The rise in disposable income of individuals has increased the need for investment options. With
aggressive sales and the two-in-one proposition of unit-linked insurance plans (ULIPs), insurers
are swooping in on this opportunity, especially during the period preceding policy changes in
ULIPs so as to strengthen their insurance orientation.

EQUITIES:

CONCEPT:

An equity share, commonly referred to as ordinary share, represents the form of fractional
ownership in a business venture.

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Stockholders' equity is often referred to as the book value of the company, and it comes from
two main sources. The first and original source is the money that was originally invested in the
company, along with any additional investments made thereafter.

The second comes from retained earnings that the company is able to accumulate over time
through its operations. In most cases, especially when dealing with older companies that have
been in business for many years, the retained earnings portion is the largest component.

FACTORS THAT INFLUENCE THE PRICE OF THE STOCK:

Broadly there are two factors:

(1) Stock specific

(2) Market specific

The stock-specific factor is related to people’s expectations about the company, its future
earnings capacity, financial health and management, level of technology and marketing skills.
The market specific factor is influenced by the investor’s sentiment towards the stock market as
a whole. This factor depends on the environment rather than the performance of any particular
company.

Events favorable to an economy, political or regulatory environment like high economic growth,
friendly budget, stable government etc. can fuel euphoria in the investors, resulting in a boom in
the market. On the other hand, unfavorable events like war, economic crisis, communal riots,
minority government etc. depress the market irrespective of certain companies performing well.
However, the effect of market-specific factor is generally short-term.

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Despite ups and downs, price of a stock in the long run gets stabilized based on the stock specific
factors. Therefore, a prudent advice to all investors is to analyze and invest and not speculate in
shares.

ACQUIRING EQUITY SHARES:

There are two methods:

 You may subscribe to issues made by corporate in the primary market. In the primary
market, resources are mobilized by the corporate through fresh public issues (IPOs) or
through private placements.
OR
 You may purchase shares from the secondary market. To buy and sell securities you
should approach a SEBI registered trading member (broker) of a recognized stock
exchange.

The documents required for opening an account with KARVY are:

 PAN card no.

 Address proof
 Passport size photos
 Cheque (initial one time investment amount)

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BONDS:

CONCEPT:

A Bond is a long term contract under which a borrower agrees to make payments of interest and
principal, on specific dates, to the holders of the bond.

32
The organization that sells a bond is known as the issuer. Of course, no one would loan his or her
hard-earned money for nothing. The issuer of a bond must pay the investor something extra for
the privilege of using his or her money. This "extra" comes in the form of interest payments,
which are made at a predetermined rate and schedule

Bonds are known as "fixed-income" securities because the amount of income the bond will
generate each year is "fixed," or set, when the bond is sold. No matter what happens or who
holds the bond, it will generate exactly the same amount of money.

CLASSIFICATION OF BONDS:

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L
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SLR is the percentage of deposits that has to be invested in certain designated securities. The
current SLR is 25%. Also, in SLR Banking system is very important.

SLR Bonds constitute of:

 Government securities/ Gilt/GOI (govt. of India) Bonds

 SDL( State Development Loans)
 T- Bills (Treasury Bills)
 Designated SLR Bonds

Non SLR Bonds constitute of:

Public sector units bonds like:

 IRFC (Indian Railway Finance Corporation)
 Power Finance Corporation
 NHAI
 Bank Bonds
 State Guarantee Bonds

Rating of Bonds:

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Bonds are rated by various rating agencies on the basis of the balance sheet of the companies,
macro economic factors, risk of the bonds. On the basis of these ratings, companies set the
coupon rate. High quality bonds have the benchmark index and if the quality of the bonds
decreases the return increases because of the higher risk.

Following are the Bonds Rating starting from the best quality:

AAA
AA+
Quality
AA
A- Decreasing
BB
BBB

Rating Agencies:
CRISIL - Credit Rating Information Services of India Limited
ICRA - Indian Credit Rating Agency
CARE - Credit Analysis and Research Limited
MOODYS - (International Agencies)
FITCH - (International Agencies)

Some bonds available in the market:

Coupon Interest
8.07 GS 2017: 8.1367 - 8.1667 Rate
91 day T - Bills 7.3521
182 day T - Bills 7.7487
364 day T - Bills 7.745
Call Rates 5.5 to 9.45

DERIVATIVES:

CONCEPT
35
As the name suggests, derivative is a financial instrument that offers a return based on the return
of some other underlying asset. In this sense, its return is derived from another instrument.

The definition states, a derivative's performance is based on the performance of an underlying

asset. This underlying asset is often referred to simply as the underlying. It trades in a market in
which buyers and sellers meet and decide on a price; the seller then delivers the asset to the
buyer and receives payment. The price for immediate purchase of the underlying asset is called
the cash price or spot price.

A derivative also has a defined and limited life: A derivative contract initiates on a certain date
and terminates on a later date. Often the derivative's payoff is determined and/or made on the
expiration date, although that is not always the case. In accordance with the usual rules of law, a
derivative contract is an agreement between two parties in which each does something for the
other. In other words, no money need change hands up front.

Types of Derivatives

 Over-the-counter (OTC) derivatives are contracts that are traded (and privately
negotiated) directly between two parties, without going through an exchange or other

36
 intermediary. Products such as swaps, forward rate agreements, and exotic options are
almost always traded in this way. The OTC derivatives market is huge. According to the
Bank for International Settlements, the total outstanding notional amount is USD 298
trillion (as of 2005).

 Exchange-traded derivatives are those derivatives products that are traded via
specialized Derivatives exchanges or other exchanges. A derivatives exchange acts as an
intermediary to all related transactions, and takes Initial margin from both sides of the
trade to act as a guarantee.

There are 3 kinds of Derivative contracts:

 Futures Contract
 Forward Contract
 Options Contract

SERVICES

KSBL (KARVY STOCKBROKING LIMITED), offer services that are beyond just a medium
for buying and selling stocks and shares. Instead KSBL provide services which are multi

37
dimensional and multi-focused in their scope. There are several advantages in utilizing Karvy’s
Stock Broking services, which are the reasons why it is one of the best in the country.

Its highly skilled research team, comprising of technical analysts as well as fundamental
specialists, secure result-oriented information on market trends, market analysis and market
predictions. Crucial information regarding customer individual account balances are given as a
constant feedback to them, through daily reports delivered thrice in a day.

 The Pre-session Report, where market scenario for the day is predicted.
 The Mid-session Report, timed to arrive during lunch break, where the market forecast
for the rest of the day is given.
 The Post-session Report, the final report for the day, where the market and the report
itself is reviewed.

In addition, the specific industry reports prepared by Karvy Stock broking Limited give
comprehensive information on various industries. They also offer special portfolio analysis
packages that provide daily technical advice on scrip for successful portfolio management and
provide customized advisory services to help investors make the right financial moves that are
specifically suited to their portfolio.

These services have increasingly offered customer oriented convenience, which KSBL provides
to a spectrum of investors, high-net worth or otherwise, with equal dedication and competence.
But this is not the final destination and just a pathway to reach there.

Over the years KSBL have ensured that the trust of its customers is their biggest returns. Factors
such as its success in the Electronic custody business has helped build on its tradition of trust
even more. Consequentially its retail client base has expanded very fast.

38
To empower the investor further KSBL have made serious efforts to ensure that their research
calls are disseminated systematically to all its stock broking clients through various delivery
channels like: e-mails, chat, SMS, phone calls etc.

Their foray into commodities broking has been path breaking and KSBL is in the process of
converting existing traders in commodities into the more organized mainstream of trading in
commodity futures, both as a trading and risk hedging mechanism.

In the future, its focus will be on the emerging businesses and to meet this objective, KSBL has
enhanced its manpower and revitalized its knowledge base with enhanced focus on Futures and
Options as well as the commodities business.

DIPOSITORY PARTICIPANTS

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The onset of the technology revolution in financial services Industry saw the emergence of
Karvy as an electronic custodian registered with National Securities Depository Ltd (NSDL)
and Central Securities Depository Ltd (CSDL) in 1998. Karvy has further set standards
enabling comfort to the investor by promoting paperless trading across the country and emerged
as the Top 3 Depository Participants in the country in terms of customer service.

KSBL has established live DPMs (Depository Participant Modules), Internet access to accounts
and an easier transaction process in order to offer more convenience to individual and corporate
investors. A team of professional and the latest technological expertise allocated exclusively to
the demit division including technological enhancements like SPEED-e, makes the response time
quick and delivery impeccable. A wide national network makes efficiencies accessible to all.

DISTRIBUTION OF FINANCIAL PRODUCTS

40
The paradigm shift from pure selling to knowledge based selling drives this industry today. With
its wide portfolio offerings, Karvy occupies all segments in the retail financial services industry.

The team of 1600 highly qualified and dedicated professionals, drawn from the best academic
and professional backgrounds is committed to maintaining high levels of client service delivery.
This has propelled this wing to grab a position among the top distributors for equity and debt
issues with an estimated market share of 15% in terms of applications mobilized, besides being
established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets it has enhanced the scope of
its retail brand, Karvy – the Finapolis, thereby providing planning and advisory services to the
mass affluent. Here they understand the customer needs and lifestyle in the context of present
earnings and provide adequate advisory services that will necessarily help in creating wealth.
Judicious planning that is customized to meet the future needs of the customer deliver a service
that is exemplary. The market-savvy and the ignorant investors, both find this service very
satisfactory.

ADVISORY SERVICES

41
Karvy’s retail brand ‘Karvy – the Finapolis', deliver advisory services to a cross-section of
customers. The service is backed by a team of dedicated and expert professionals with varied
experience and background of handling investment portfolios. They are continually engaged in
designing the right investment portfolio for each customer according to individual needs and
budget considerations with a comprehensive support system that focuses on trading customers'
portfolios and providing valuable inputs, monitoring and managing the portfolio through varied
technological initiatives. This is made possible by the expertise Karvy has gained in the business
over the years.

Another venture towards being investor-friendly is the circulation of a monthly magazine called
‘Karvy - the Finapolis'. It covers the latest market news, trends, investment schemes and
research-based opinions from experts in various financial fields.

PRIVATE CLIENT GROUP

OR
CUSTOMIZED PORFOLIO MANAGEMNET SERVICES
(CPMS)

42
Extending the expertise in personal financial advisory services, KARVY STOCKBROKING
LIMITED has now launched CPMS, a discretionary portfolio management service for retail
investors.

This specialized division is set up to cater to the high net worth individuals and institutional
clients keeping in mind that they require a different kind of financial planning and management
that augments not just existing finances but their life-style as well.

Each investor is a client who has unique parameters:

 Return goals and objectives

 Time horizon
 Liquidity constraints
 A distinctive tax status
 Personal risk tolerances

Thus, the primary focus of CPMS is to provide individualized portfolio management services for
clients, personalized portfolios designed to fit a specific investor’s investment parameters.

Each portfolio contains individually selected securities, which are not commingled (pooled) with
those of other investors, ensuring transparency and flexibility in operations. There is also the
benefit of investing in other asset classes to suit client’s needs like Mutual Funds, Derivatives,
Insurance and even Real Estate.

A hard-nosed business approach with the soft touch of dedicated customer care and personalized
attention is followed here. A comprehensive and personalized service that encompasses planning
and protection of finances, planning of business needs and retirement needs and a host of other
services, is provided on a one-to-one basis for this purpose.

43
Karvy’s research reports have been widely appreciated by this segment, and have proved to be
very useful at the same time. The delivery and support modules have been fine tuned by giving
the clients access to online portfolio information, constant updates on their portfolios as well as
value-added advice on portfolio churning, sector switches etc. The investment recommendations
given by research team enjoy a high success rate in the cash market.

SWOT Analysis

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SWOT ANALYSIS:

Strength:
 Good research team.

45
 Dedicated employees.
 Strong customer relationship.
 Strong brand name.
 Wide spread branches and brokers network.

Weakness:
 Technology need to be upgraded.
 Not enough advertisement.

Opportunity:
 Growing IPO issues.
 Positive outlook of people towards financial products.
 Growing consumer awareness about equity related product.

Threat:
 Market uncertainty.
 Galloping competition.
 Broad economic factors like inflation etc

MARKETING PLAN

TARGET MARKET:

The main target customers for this segment are:

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  Small and Medium Enterprise
 High Net worth Individuals (HNIs)

The Small and Medium Enterprises are contacted through e-mails. KARVY keeps updating its
database which consists of contact numbers and e-mail addresses of the Financial Heads of the
corporate. Though these it is able to contact the concerned person and send them all the details of
the products and services which KARVY deals in and are beneficial to them, from time to time.
It also plans Company visits occasionally wherein the Senior Relationship Managers visit the
companies and gives presentations on the market updates and the best investment options
available to the corporate.

The High Net worth Individuals are also contacted through e-mails and calls. This includes the
ones who already have a fair idea of the investment options and investing as well as the new
budding investors who have little knowledge.

MARKETING PROBLEMS:

The basic problem in marketing for this segment is that though it has a sound customer base it is
not taking much efforts or steps to expand it with immediate effects.

According to my observation during the tenure of my internship I noticed that the major part of
marketing for this segment is from the word of mouth. The satisfied customers refer their peer
groups an option to invest with Karvy.

COMPETITORS OF KARVY

KARVY serves a vast range of all financial products like advisory services, Mutual funds,
Bonds, Insurances etc, so all the companies who offer these services are the competitors of the

47
Karvy. There are many competitors for KARVY on this basis and almost all of them offer the
services which Karvy offers.

Few Major competitors are:

1. India bulls
2. Motilal oswal securities
3. IL & FS investsmart Ltd.
4. SSKI Ltd. (Share khan)
5. Bonanza securities
6. Kodak Securities
7. CIL Securities
8. Eastern Financiers
9. Anand Rathi Securities
10. JRG Securities.

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FINDINGS

1. KARVY IS ONE OF THE LEADING BROKING HOUSE IN THE EQUITY

MARKET.

2. KARVY HAS GOOD SUCCESS RATE AS LEAD MANAGERS.

3. IT HAS BRANCHES ALL OVER COUNTRY.

4. ITS BIGGEST STRENGTH IS THER PRESENCE IN THE FIELD OF

FINANCE FOR A LONG TIME.

49
 LEARNINGS

Working at KARVY STOCKBROKING LIMITED was largely an overwhelming

experience with gaining insights to a number of new things. The On-The Job experience
made it a worthwhile Internship, which gave me a great real time Industry experience.

All is not the same in real life as we read in books and on net about the working methods
of different divisions and segments. Each segment in an organization has its own work
culture followed by the members and same was the case with SME segment at Karvy
Stock Broking Ltd. I had to put in my own efforts and take initiative to learn and gain
maximum knowledge possible during this period.

Primarily, the description of my work as a Management Trainee was to assist the wealth
managers by understanding the needs of the individual investors and corporate houses
and expanding the customer base of Karvy- SME Segment where I interned. The work
assigned definitely required awareness and understanding of the all the financial products
Karvy Stock broking dealt in. It also required me to know the procedures and documents
involved in purchase of any product by the client. I just had a basic idea of the products
KARVY dealt in prior internship, thus, acquiring knowledge about the same was very
exciting.

There were training sessions held on various financial products like MF, insurance, and
bonds which helped me get more insight in these topics. Interactive session was held by
the Mutual Fund expert, which proved quite useful but still Mutual Funds is a vast topic
and it is possible to gain full knowledge about it only after practically dealing in it.

Having knowledge about the product was just the initial step which prepared me to face
the questions asked by the inquisitive clients we targeted. Every step I had a new lesson
to learn.

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The whole process started with first hand data collection. For this we visited the
corporate houses in Kormangala as well as collected data from banks, clubs and other
sources. We also collected data from few of our own contacts that we thought could be
useful. Getting the data from corporate houses was difficult as no one really entertained
visitor from stock broking companies for appointments. Moreover it was difficult to get
the contact number of the finance heads of the companies, but we still managed and
managed well.

The next step was tele-calling on the database collected. During telecalling, we learnt the
art of introducing ourselves and the company to the clients. It taught us how to approach
clients and suggest them various investment options. Our main aim was to convince the
prospective clients for appointment. We learnt that to understand the client’s mood at that
point of time was also important. You had to be polite and confident. If a client wanted to
be called back at a specified time, I did so without fail. No negligence was tolerated on
this part as first impression is the last impression and I didn’t want to lose out on any
prospective client

The time given by the client for the meet was given utmost importance. I and my
colleague tried to reach the meeting place in time so that the client didn’t have to wait.
The entire experience of meeting the clients, explaining them the products, and based on
the questions asked by us, as well as the client, analyzing their risk taking capability and
investment capacity was learning in itself.

After gathering above information about the clients, we used to discuss the client’s details
with the Wealth Managers. Based on their investment requirement, investment objective,
risk taking ability and the investment capability we would come up with suggestions as to
where they should invest and how much.

If the client had already invested in any of the financial products, we tried gathering
details about the same. If the client had already invested in equities and wanted to invest

51
in safer investment options, we suggested him to go for Income scheme in Mutual Funds
or Bonds.

There were investors who wanted high returns but didn’t want to take greater risk. To
such investors investments in mutual funds rather than equities was suggested. Investors
wanting to invest for taxes saving purpose were suggested to invest in Tax Saving Mutual
Funds like SBI Magnum Tax Gain, HDFC tax Benefit Scheme.

I also gave a presentation on the basis of self study and trainings provided to me on
Mutual Funds. This helped me improve my presentation skills and knowledge about the
same. As a student, I have given many presentations but this one gave me a chance to
face the corporate heads as evaluators. The feedback for the same was good but scope for
improvement always remains.

Also the deadlines given to me for completion of assignments and reports helped me
experience real time corporate work pressure. My awareness and knowledge on the
investment options, which was minimal prior internship has strengthened and expanded
post internship.

Other than working ‘Live’ at the office I also benefited by assignments given to us such
as visiting other competitors of KARVY STOCKBROKING LIMITED and gathering
investment advices from their side for new and budding investors. Usually for new
investors they either suggest Insurance (if the client doesn’t have one), Mutual Funds or
Equities but for long term.

The experience and know-how gained from this internship, has left me in more compliant
form and stature in order to fare better in areas of similar interest. With an optimistic
view towards future, and with the desire to implement all the knowledge gained, I hereby
conclude my report on my Internship at KARVY STOCKBROKING LIMITED

52
 CONCLUSION:

Investment in India has become more of a security necessity than a business lifestyle. As
the interest rates all over are dropping, people are switching to other avenues which fetch
better results. The risk band that initially existed as been eased out and people are on the
lookout for new and better stuff. In olden days, one could invest only in a few companies,
but the present day has given people to try a wide range of companies. The decision in
regard to investments is based on the sector performance as well as the strong
fundamentals of the company. The act of speculation has considerably been reduced due
to the statistical data and its analysis that companies like karvy do and people have
become intelligent investors rather than mere speculators.
It was a very fruitful experience working in karvy as a management trainee. It offered
exposure to the wide range of investment options available. The risk factors involved
could be understood easily. Not only did it give a learning experience but also gave an
idea on how we could incorporate the various investment options, discovered by the
economists, into a good planning package.

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 BIBLIOGRAPHY

 "Introduction." www.karvy.com.
http://www.karvy.com/contactus/overview

 "History." www.karvy.com.
http://www.karvy.com/contactus/earlydays

 Milestone." www.karvy.com.
http://www.karvy.com/contactus/milestone

 "Achievements." www.karvy.com.
http://www.karvy.com/contactus/achievements

 "Karvy group of Companies." www.karvy.com.

http://www.karvy.com/contactus/karvygroupofcompanies

 "Stock Broking Service." www.karvy.com.

http://www.karvy.com/contactus/karvygroupofcompanies

 "Depository Participants." www.karvy.com.

http://www.karvy.com/contactus/stockbrokingservice

 "Distribution Of Financial Products." www.karvy.com.

http://www.karvy.com/contactus/karvystockbrokingservice

 "Advisory Services." www.karvy.com.

http://www.karvy.com/contactus/karvystockbrokingservice

54
 "Private Client Group." www.karvy.com.
http://www.karvy.com/contactus/karvystockbrokingservice

 "Karvy Alliance." www.karvy.com.

http://www.karvy.com/contactus/karvystockbrokingservice

 "Quality Policy." www.karvy.com.

http://www.karvy.com/contactus/overview

 "Mutual Funds." www.amfiindia.com.

http://www.amfiindia.com/showhtml.asp?page=mfconcept

 "Mutual Funds." www.myiris.com.

http://www.myiris.com/showhtml.asp?page=mf

 "Mutual Funds." www.mutualfundsnavindia.com.

http://www.mutualfundsnavindia.com/rankings2007/showhtml.as
p?page=mf

 "Bonds." www.amfiindia.com.
http://www.investopedia.com/articles/02/120202.asp

 "Insurance." www.amfiindia.com.
http://www.imfiindia.com/articles/02/120247.asp

 "Insurance." www.wikipedia.com.
http://www.Wikipedia.com/articles/02/120247.asp

 "Derivatives." www.finpipe.com.
http://www.finpipe.com/derivglossary.htm

 "Equity." www.wikipedia.com.

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http://en.wikipedia.org/wiki/Equity

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