CHAPTER -1

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COMPANY INTRODUCTION
Religare is driven by ethical and dynamic process for wealth creation. Based on this, the company started its Endeavour in the financial market. Religare Enterprises Limited (A Ranbaxy Promoter Group Company) through Religare Securities Limited, Religare Finvest Limited, Religare Commodities Limited and Religare Insurance Advisory Services Limited provides integrated financial solutions to its corporate, retail and wealth management clients. Today, we provide various financial services which include Investment Banking, Corporate Finance, Portfolio Management Services, Equity & Commodity Broking, Religare is proud of being a truly professional financial service provider managed by a highly skilled team, who have proven track record in their respective domains. Religare operations are managed by more than 2000 highly skilled professionals who subscribe to Religare philosophy and are spread across its country wide branches. Today, we have a growing network of more than 150 branches and more than 300 business partners spread across more than 180 cities in India and a fully operational international office at London. However, our target is to have 350 branches and 1000 business partners in 300 cities of India and more than 7 International offices by the end of 2006. Unlike a traditional broking firm, Religare group works on the philosophy of partnering for wealth creation. We not only execute trades for our clients but also provide them critical and timely investment advice. The growing list of financial institutions with which Religare is empanelled as an approved broker is a reflection of the high level service standard maintained by the company. A diversified financial services group with a pan-India presence and presence in multiple international locations, Religare Enterprises Limited ("REL") offers a comprehensive suite of customer-focused financial products and services targeted at retail investors, high net worth individuals and corporate and institutional clients. REL, along with its joint venture partners, offers a range of products and services in India, including asset management, life insurance, wealth management, equity and commodity broking, investment banking, lending services, private equity and venture capital. Religare has also ventured into the alternative investments sphere through its holistic arts initiative and film fund. With a view to expand and diversify, REL operates in the life insurance space under 'AEGON Religare Life Insurance Company Limited' and has launched India's first wealth management joint venture under the brand name 'Religare Macquarie Private Wealth'.
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REL, through its subsidiaries, has launched India's first holistic arts initiative with a gallery - as well as the first SEBI approved film fund, which is an initiative towards innovation and spotting new opportunities for creation and maximization of wealth for investors. REL operates from seven domestic regional offices, 43 sub-regional offices, and has a presence in 498* cities and towns controlling 1,837* business locations all over India. A diversified financial services group with a pan-India presence and presence in multiple international locations, Religare Enterprises Limited (―REL‖) offers a comprehensive suite of customer-focused financial products and services targeted at retail investors, high net worth individuals and corporate and institutional clients. Religare is one of the leading integrated financial services institutions in the country today, backed by a blue chip promoter pedigree and a proven track record. The Religare promoter family is the same that has promoted Ranbaxy, Fortis Hospitals and other diversified globally present business models The Financial services businesses are broadly clubbed across 3 key verticals, the retail, institutional and wealth spectrums, catering to a diverse and wide base of clients spread across the length and breadth of the country. Structurally all businesses are operated through various subsidiaries held throe The rights issue is generally kept open for one month. A person entitled to the rights is at a liberty to apply for the whole or a part of his entitlement. He is also allowed to transfer or renounce the whole or a part of the entitlement to any other person at a price. During the period immediately preceding the rights issue or during the early part of the same, the shareholder receives a rights form that has four parts. An investor wanting to apply to his entitlement without renunciation should fill in Part A of the form. If he prefers to renounce his entire entitlement, he should fill in part B. The renounce should fill in Part C. In case, the holder wants to renounce a part and apply to the other part, he must fill in Part D appropriately. Part D is the instruction to the company to supply split forms. the holding company Religare Enterprises Limited, which recently concluded its resoundingly successful public offer and was oversubscribed a record 161 times.Religare offers a diverse bouquet of services ranging from equities, commodities and insurance broking to wealth management, portfolio management services, personal financial services, investment banking and institutional broking services. Religare‘s retail network spreads across the length and breadth of the country with its presence in more than 1300 locations across more than 400 cities and towns. As part of its recent initiatives the group has also started expanding globally. Religare has also successfully partnered with AEGON, one of the global leaders to launch Life Insurance and Mutual fund products in India and with Macquarie, Bank of Australia for a wealth management joint venture. The vision is to build Religare as a globally trusted brand in the financial services domain and present it as the ‗Investment Gateway of India‘. All employees of the group, currently more than
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9,500 in number, ceaselessly strive to provide financial care driven by the core values of diligence and transparency.

A RANBAXY Promoter Group Comp. Ltd Designation Software Trainee Functional Area IT Software Location Delhi/NCR Job Description Website http://www.religare.in Address Religare Securities Ltd 93, Ashoka Bhawan 4th Floor, Nehru Place New Delhi - Delhi ,INDIA 110019 Board of Directors - Religare Enterprises Limited
     

Mr. Malvinder Mohan Singh Non Executive Chairman Mr. Sunil Godhwani CEO & Managing Director, Religare Enterprises Limited Mr. Shivinder Mohan Singh Non Executive Director Mr. Harpal Singh Non Executive Director Mr. Deepak Ramchand Sabnani Independent Director Mr. Padam Bahl Independent Director

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CHAPTER -2

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BRIEF HISTORY OF COMPANY

RELIGARE SECURITIES LIMITED (RSL)

Religare Securities Limited (RSL) is a leading equity and securities firm in India. The company currently handles sizeable volumes traded on NSE and in the realm of online trading and investments if currently holds a reasonable share of the market the major activities and offerings of the company today are Equity broking, depository participant services, portfolio management services, institutional brokerage and Research Investment Banking and Corporate Finance. To broaden he gamut of services offered to its investors, the company has also recently unveiled a new avatar of its online investment portal armed with a host of revolutionary features. RSL is a member of the National Stock Exchange of India, Bombay Stock Exchange of India, Depository participant with National Securities Depository securities (In) Limited, and SEBI approved portfolio Manager. Religare has been constantly innovating in terms of product and services and to offer such incisive services to specific user segments it has also started the NRI and Corporate Servicing groups. These groups take all the portfolio investment decisions depending upon a client‘s risk / return parameter. Religare has a very credible Research and Analysis division, which not only caters to the need of our Institutional clientele, but also gives their valuable inputs to investment dealers.
Religare is also providing in house Depository services to its clientele and is one of the leading depository service providers in the country. Our customer centric account schemes have been designed keeping in mind the investment psychology. With a competent team of skilled professionals, we manage over 380,000 accounts and have a dedicated customer care centre, exclusively trained to handle queries from our customers. With our country wide network of branches, you are never far from Religare depository services. Religare‘s depository service offers you a secure, convenient, paperless and cost effective way to keep track of your investment in shares and other instruments over a period of time, without the hassle of handling physical documents. Your DP account with us takes care of your depository needs like dematerialization, rematerialisation, transfer and pledging of shares, stock lending and borrowing. 6

Religare Securities Limited (RSL), a 100% subsidiary of Religare Enterprises Limited is a leading equity and securities firm in India. The company currently handles sizeable volumes traded on NSE and in the realm of online trading and investments; it currently holds a reasonable share of the market. The major activities and offerings of the company today are Equity Broking, Depository Participant Services, Portfolio Management Services, International Advisory Fund Management Services, Institutional Broking and Research Services. To broaden the gamut of services offered to its investors, the company offers an online investment portal armed with a host of revolutionary features. RSL is a member of the National Stock Exchange of India, Bombay Stock Exchange of India, Depository Participant with National Securities Depository Limited and Central Depository Services (I) Limited, and is a SEBI approved Portfolio Manager. Religare has been constantly innovating in terms of product and services and to offer such incisive services to specific user segments it has also started the NRI, and Corporate Servicing groups. These groups take all the portfolio investment decisions depending upon a client‘s risk / return parameter. Religare has a very credible Research and Analysis division, which not only caters to the need of our Institutional clientele, but also gives their valuable inputs to investment dealers.

Your demat account is safe and absolutely secure in our hands, every debit instruction is executed only after its authenticity is established. Our hi-tech in-house capabilities cater to the needs of software maintenance, database administration, network maintenance, backups and disaster recovery. This extra cover of security has gained the trust of our clients.

VISION AND MISSION
Vision: To built Religare as a globally trusted brand in the financial service domain and present it as the ―Investment Gateway of India‖.

Mission: Providing financial care driven by the core value of diligence and transparency.

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Brand Essence: Religare is driven by ethical and dynamic processes for wealth creation.

Our Brand Identity
Name Religare is a Latin word that translates as 'to bind together'. This name has been chosen to reflect the integrated nature of the financial services the company offers. Symbol The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000 three-leaf clovers found.For us, each leaf of the clover has a special meaning. It is a symbol of Hope. Trust. Care. Good Fortune.For the world, it is the symbol of Religare. The first leaf of the clover represents Hope. The aspirations to succeed. The dream of becoming. Of new possibilities. It is the beginning of every step and the foundation on which a person reaches for the stars. The second leaf of the clover represents Trust. The ability to place one‘s own faith in another. To have a relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all, not in the binding, but in the bond that is built. The third leaf of the clover represents Care. The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all. The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative moments of success. Hope. Trust. Care. Good Fortune. All elements perfectly combine in the emblematic and rare, four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision.
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Fortis Healthcare Limited, established in 1996 was founded on the vision of creating an integrated healthcare delivery system. With 22 hospitals in India, including multi-specialty & super specialty centers, the management is aggressively working towards to a significant level in the next few years to provide quality healthcare facilities and services acrossnation.

Super Religare Laboratories Limited (formerly SRL Ranbaxy) within 11 years of inception has become the largest Pathological Laboratory network in South Asia. It started a revolution in diagnostic services in India by ushering in the most specialized technologies, backed by innovation and diligence. The current footprint extends well beyond India in the Middle.

About Stock Market

The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. The liquidity that an exchange provides affords investors the ability to quickly and easily sell securities. This is an attractive feature of investing in stocks, compared to other less liquid investments such as real estate. History has shown that the price of shares and other assets is an important part of the dynamics of economic activity, and can influence or be an indicator of social mood. An economy where the stock market is on the rise is considered to be an up and coming economy. In fact, the stock market is often considered the primary indicator of a country's economic strength and development. Rising share prices, for instance, tend to be associated with increased business investment and vice versa. Share prices also affect the wealth of households and their consumption.
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Therefore, central banks tend to keep an eye on the control and behavior of the stock market and, in general, on the smooth operation of financial system functions. Financial stability is the raison d'être of central banks. Exchanges also act as the clearinghouse for each transaction, meaning that they collect and deliver the shares, and guarantee payment to the seller of a security. This eliminates the risk to an individual buyer or seller that the counterparty could default on the transaction. The smooth functioning of all these activities facilitates economic growth in that lower costs and enterprise risks promote the production of goods and services as well as employment. In this way the financial system contributes to increased prosperity. An important aspect of modern financial markets, however, including the stock markets, is absolute discretion. For example, in the USA stock markets we see more unrestrained acceptance of any firm than in smaller markets. Such as, Chinese firms with no significant value to American society to just name one segment. This profits USA bankers on Wall Street, as they reap large commissions from the placement, and the Chinese company which yields funds to invest in China. Yet accrues no intrinsic value to the long-term stability of the American economy, rather just short-term profits to American business men and the Chinese; although, when the foreign company has a presence in the new market, there can be benefits to the market's citizens. Conversely, there are very few large foreign corporations listed on the Toronto Stock Exchange TSX, Canada's largest stock exchange. This discretion has insulated Canada to some degree to worldwide financial conditions.

Stock Market of India Introduction Stock markets refer to a market place where investors can buy and sell stocks. The price at which each buying and selling transaction takes is determined by the market forces (i.e. demand and supply for a particular stock).Let us take an example for a better understanding of how market forces determine stock prices. ABC Co. Ltd. enjoys high investor confidence and there is an anticipation of an upward movement in its stock price. More and more people would want to buy this stock (i.e. high demand) and very few people will want to sell this stock at current market price (i.e. less supply). Therefore, buyers will have to bid a higher price for this stock to match the ask price from the seller which will increase the stock price of ABC Co. Ltd. On the contrary, if there are more sellers than buyers (i.e. high supply and low demand) for the stock of ABC Co. Ltd. in the market, its price will fall down. In earlier times, buyers and sellers used to assemble at stock exchanges to make a transaction but now with the dawn of IT, most of the operations are done electronically and the stock markets have become almost
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paperless. Now investors don't have to gather at the Exchanges, and can trade freely from their home or office over the phone or through Internet.

Relation of the stock market to the modern financial system
The financial systems in most western countries have undergone a remarkable transformation. One feature of this development is disintermediation. A portion of the funds involved in saving and financing flows directly to the financial markets instead of being routed via the traditional bank lending and deposit operations. The general public's heightened interest in investing in the stock market, either directly or through mutual funds, has been an important component of this process. Statistics show that in recent decades shares have made up an increasingly large proportion of households' financial assets in many countries. In the 1970s, in, deposit accounts and other very liquid assets with little risk made up almost 60 percent of households' financial wealth, compared to less than 20 percent in the 2000s. The major part of this adjustment in financial portfolios has gone directly to shares but a good deal now takes the form of various kinds of institutional investment for groups of individuals, e.g., pension funds, mutual funds, hedge funds, insurance investment of premiums, etc. The trend towards forms of saving with a higher risk has been accentuated by new rules for most funds and insurance, permitting a higher proportion of shares to bonds. Similar tendencies are to be found in other industrialized countries. In all developed economic systems, such as the European Union, the and other developed nations, the trend has been the same: saving has moved away from traditional (government insured) bank deposits to more risky securities of one sort or another.

The stock market, individual investors, and financial risk
Riskier long-term saving requires that an individual possess the ability to manage the associated increased risks. Stock prices fluctuate widely, in marked contrast to the stability of (government insured) bank deposits or bonds. This is something that could affect not only the individual investor or household, but also the economy on a large scale. The following deals with some of the risks of the financial sector in general and the stock market in particular. This is certainly more important now that so many newcomers have entered the stock market, or have acquired other 'risky' investments (such as 'investment' property, i.e., real estate. With each passing year, the noise level in the stock market rises. Television commentators, financial writers, analysts, and market strategists are all overtaking each other to get investors' attention. At the same time, individual investors, immersed in chat rooms and message boards, are exchanging questionable and
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often misleading tips. Yet, despite all this available information, investors find it increasingly difficult to profit. Stock prices skyrocket with little reason, then plummet just as quickly, and people who have turned to investing for their children's education and their own retirement become frightened. Sometimes there appears to be no rhyme or reason to the market, only folly. This is a quote from the preface to a published biography about the long-term value-oriented stock investor Warren Buffett. Buffett began his career with from seven limited partners consisting of Buffett's family and friends. Over the years he has built himself a fortune. The quote illustrates some of what has been happening in the stock market during the end of the 20th century and the beginning of the 21st century. From experience we know that investors may 'temporarily' move financial prices away from their long term aggregate price 'trends'. (Positive or up trends are referred to as bull markets; negative or down trends are referred to as bear markets.) Over-reactions may occur—so that excessive optimism (euphoria) may drive prices unduly high or excessive pessimism may drive prices unduly low. New theoretical and empirical arguments have since been put forward against the notion that financial markets are 'generally' efficient. According to the efficient market hypothesis (EMH), only changes in fundamental factors, such as the outlook for margins, profits or dividends, ought to affect share prices beyond the short term, where random 'noise' in the system may prevail. (But this largely theoretic academic viewpoint—known as 'hard' EMH—also predicts that little or no trading should take place, contrary to fact, since prices are already at or near equilibrium, having priced in all public knowledge.) The 'hard' efficientmarket hypothesis is sorely tested by such events as the stock market crash in 1987, when the Dow Jones index plummeted—the largest-ever one-day fall in the United States. This event demonstrated that share prices can fall dramatically even though, to this day, it is impossible to fix a generally agreed upon definite cause: a thorough search failed to detect any 'reasonable' development that might have accounted for the crash. (But note that such events are predicted to occur strictly by chance , although very rarely.) It seems also to be the case more generally that many price movements (beyond that which are predicted to occur 'randomly') are not occasioned by new information; a study of the fifty largest one-day share price movements in the United States in the post-war period seems to confirm this. However, a 'soft' EMH has emerged which does not require that prices remain at or near equilibrium, but only that market participants not be able to systematically profit from any momentary market 'inefficiencies'. Moreover, while EMH predicts that all price movement (in the absence of change in fundamental information) is random (i.e., non-trending), many studies have shown a marked tendency for the stock market to trend over time periods of weeks or longer. Various explanations for such large and apparently non-random price movements have been promulgated. For instance, some research has shown that changes in estimated
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risk, and the use of certain strategies, such as stop-loss limits and Value at Risk limits, theoretically could cause financial markets to overreact. But the best explanation seems to be that the distribution of stock market prices is (in which case EMH, in any of its current forms, would not be strictly applicable). Other research has shown that psychological factors may result in exaggerated (statistically anomalous) stock price movements (contrary to EMH which assumes such behaviors 'cancel out'). Psychological research has demonstrated that people are predisposed to 'seeing' patterns, and often will perceive a pattern in what is, in fact, just noise. (Something like seeing familiar shapes in clouds or ink blots.) In the present context this means that a succession of good news items about a company may lead investors to overreact positively (unjustifiably driving the price up). A period of good returns also boosts the investor's self-confidence, reducing his (psychological) risk threshold. Another phenomenon—also from psychology—that works against an objective assessment is group thinking. As social animals, it is not easy to stick to an opinion that differs markedly from that of a majority of the group. An example with which one may be familiar is the reluctance to enter a restaurant that is empty; people generally prefer to have their opinion validated by those of others in the group. In one paper the authors draw an analogy with gambling. In normal times the market behaves like a game of roulette; the probabilities are known and largely independent of the investment decisions of the different players. In times of market stress, however, the game becomes more like poker (herding behavior takes over). The players now must give heavy weight to the psychology of other investors and how they are likely to react psychologically.

Irrational behavior
Sometimes the market seems to react irrationally to economic or financial news, even if that news is likely to have no real effect on the technical value of securities itself. But this may be more apparent than real, since often such news has been anticipated, and a counter reaction may occur if the news is better or worse than expected. Therefore, the stock market may be swayed in either direction by press releases, rumors, euphoria and mass panic; but generally only briefly, as more experienced investors (especially the hedge funds) quickly rally to take advantage of even the slightest, momentary hysteria. Over the short-term, stocks and other securities can be battered or buoyed by any number of fast market-changing events, making the stock market behavior difficult to predict. Emotions can drive prices up and down, people are generally not as rational as they think, and the reasons for buying and selling are generally obscure. Behaviorists argue that investors often behave 'irrationally' when making
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investment decisions thereby incorrectly pricing securities, which causes market inefficiencies, which, in turn, are opportunities to make money. However, the whole notion of EMH is that these non-rational reactions to information cancel out, leaving the prices of stocks rationally determined.

Crashes "The stock market has not come down to historical levels: the price-earnings ratio as I define it in this book is still, at this writing in the mid, far higher than the historical average. People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes."

Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller . The horizontal axis shows the real price-earnings ratio of the Composite Stock Price Index as computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The vertical axis shows the geometric average real annual return on investing in the S&P Composite Stock Price Index, reinvesting dividends, and selling twenty years later. Data from different twenty year periods is color-coded as shown in the key. See also ten-year returns. Shiller states that this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their exposure to the stock market when it is high, as it has been recently, and get into the market when it is low." A stock market crash is often defined as a sharp dip in share prices of equities listed on the stock exchanges. In parallel with various economic factors, a reason for stock market crashes is also due to panic and investing public's loss of confidence. Often, stock market crashes end speculative economic bubbles. There have been famous stock market crashes that have ended in the loss of billions of dollars and wealth destruction on a massive scale. An increasing number of people are involved in the stock market, especially since the social security and retirement plans are being increasingly privatized and linked to stocks and bonds and other elements of the market. For some time after the crash, trading in stock exchanges worldwide was halted, since the exchange computers did not perform well owing to enormous quantity of trades being received at one time. This halt in trading allowed the Federal Reserve system and central banks of other countries to take measures to control the spreading of worldwide financial crisis. In the United States the introduced several new measures of control into the stock
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market in an attempt to prevent a re-occurrence of the events of Black Monday. Computer systems were upgraded in the stock exchanges to handle larger trading volumes in a more accurate and controlled manner. The modified the margin requirements in an attempt to lower the volatility of common stocks, stock options and the futures market. The New York Stock Exchange and the Chicago Mercantile Exchange introduced the concept of a circuit breaker. The circuit breaker halts trading if the Dow declines a prescribed number of points for a prescribed amount of time.

Stock market index
The movements of the prices in a market or section of a market are captured in price indices called stock market indices. Such indices are usually market capitalization weighted, with the weights reflecting the contribution of the stock to the index. The constituents of the index are reviewed frequently to include/exclude stocks in order to reflect the changing business environment.
Short selling

In short selling, the trader borrows stock (usually from his brokerage which holds its clients' shares or its own shares on account to lend to short sellers) then sells it on the market, hoping for the price to fall. The trader eventually buys back the stock, making money if the price fell in the meantime or losing money if it rose. Exiting a short position by buying back the stock is called "covering a short position." This strategy may also be used by unscrupulous traders to artificially lower the price of a stock. Hence most markets either prevent short selling or place restrictions on when and how a short sale can occur. The practice of naked shorting is illegal in most (but not all) stock markets

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CHAPTER -3
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INTRODUCTION OF TOPIC
Religare Securities Limited (RSL) is a leading equity and securities firm in India. The company currently handles sizeable volumes traded on NSE and in the realm of online trading and investments if currently holds a reasonable share of the market the major activities and offerings of the company today are Equity broking, depository participant services, portfolio management services, institutional brokerage and Research Investment Banking and Corporate Finance. To broaden he gamut of services offered to its investors, the company has also recently unveiled a new avatar of its online investment portal armed with a host of revolutionary features. RSL is a member of the National Stock Exchange of India, Bombay Stock Exchange of India, Depository participant with National Securities Depository securities (In) Limited, and SEBI approved portfolio Manager.

Who regulates the Indian capital market? Sebi regulates the entire capital market and the stock exchanges (SE) are a very significant part of it. Besides, Sebi regulates mutual funds (MFs), foreign institutional investors, stockbrokers, merchant bankers, depositories, venture capital, portfolio managers and other related entities. A major portion of Sebi‘s time and energy goes in regulating the secondary market which is the cash market where the trading of listed stocks takes place. Sebi has created a separate division called the secondary markets division to look after the day-to-day regulatory function of the segment. Recently, this division was renamed the markets regulation department. What is the risk containment measures sebi resorts to for curbing market volatility? Besides discharging its day-to-day regulatory function. Sebi also keeps a close watch on price movements and volatility in the market. To curb this volatility, vhich was the order of the day till recently, the regulator along with the bourses takes various steps for risk containment and tightening of the surveillance mechanism.
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These steps may include tightening of various margins or relaxing them, depending on the situation. Different types of margins are the best weapon at the disposal of the regulator. It is through this measure that the regulator can control price volatility of stock. When the price of the stock is rising unabatedly or it is supported without any fundamentals, the SEs in consultation with the regulatory can hike the margins to contain volatility. Other stricter measures to contain volatility include shifting them to trade-to-trade segment where every order (buy or sell) results in compulsory delivery and no netting is allowed.

Does the union finance ministry have a role to play in monitoring price movements in stock markets? The ministry of finance too keeps a watchful eye on the stock market through its capital market division, headed by an officer of the rank of joint secretary. Though the ministry does not interfere in the day-to-day affairs of the market regulator, does step in when major market movements happen. For instance, the one recently when the 30-share Sensex of the Bombay Stock Exchange (BSE) dipped 1,111 points intraday and trading had to be halted for half-an-hour. On that day, the finance ministry got in touch with the capital market regulatory as well as the banking sector regulator the reserve bank of India to prevent any liquidity problems. What step has Sebi taken in the recent past to curb market volatility? Sebi recently tightened the margining system in the cash market. The cash market margins which are based on value at risk (VAR) will also be updated five times a day in line with the derivatives market. The new Sebi measures will come into force from July 10 for BSE and NSE, while for the other it will be implemented from August 28, 2006. Currently, in the cash market margin rate is calculated at the end of the trading day and then applied to the open positions of the subsequent trading day. However, in the derivative market, the risk parameter files for computation of the margins are updated intra-day. What are stocks? Definition: Plain and simple, a ―stock‖ is a share in the ownership of a company. A stock represents a claim on the company‘s assets and earnings. As you acquire more stocks, your ownership stake in the company becomes greater.
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Note: Some times different words like shares, equity, stocks etc are used. All these words mean the same thing. How to make money in the stock market? This article is a COMPLETE guide to the basics of making money in the stock market! If you are considering investing in the stock market, you MUST read this article! We have explained all the concepts and talked about all the ―myths‖ that people have about the stock market!

What does ownership of a company give you? Holding a company‘s stock means that you are one of the many owners (shareholders) of a company and, as such, you have a claim to everything the company owns. This means that technically you own a tiny little piece of all the furniture, every trademark, and every contract of the company. As an owner, you are entitled to your share of the company‘s earnings as well. These earnings will be given to you. These earnings are called ―dividends‖ and are given to the shareholders from time to time. A stock is represented by a ―stock certificate‖. This is a piece of paper that is proof of your ownership. However now-a-days you could also have a ―demat‖ account. This means that there will be no ―stock certificates‖. Everything will be done though the computer electronically. Selling and buying stocks can be done just by a few clicks. Being a shareholder of a public company does not mean you have a say in the day-to-day running of the business. Instead, ―one vote per share‖ to elect the board of directors of the company at annual meetings is all of you can do. For instance, being a Microsoft shareholder doesn‘t mean you can call up Bill gates and tell him how you think the company should be run. The management of the company is supposed to increase the value of the firm for shareholders. If this doesn‘t happen, the shareholders can vote to have the management removed. In reality, individual investors like you and I don‘t own enough shares to have a material influence on the company. It‘s really the big boys like large institutional investors and billionaire entrepreneurs who make the decisions.

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For ordinary shareholders, not being able to manage the company isn‘t such a big deal. After all, the idea is that you don‘t want to have to work to make money, right? The importance of being a shareholder is that you are entitled to a portion of the company‘s profits and have a claim on assets. Profits are sometimes paid out in the form of dividends as mentioned earlier. The more shares you own, the larger the portion of the profits you get. Your claim on assets is only relevant if a company goes bankrupt. In case of liquidation, you‘ll receive what‘s left after all the creditors have been paid. Another extremely important feature of stock is ―limited liability‖, which means that, as an owner of a stock, you are ―not personally liable ― if the company is not able to pay its debts. In other legal structures such as partnerships, if the partnership firm goes bankrupt the creditors can come after the partners ―personally‖ and sell off their house, car, furniture, etc. To understand all this in more detail you could read our ―How to incorporate?‖ article. Owning stock means that, no matter what happens to the company the maximum value you can lose is the value of your stocks. Even if a company of which you are a shareholder goes bankrupt. You can never lose your personal assets. Why would the founders share the profits with thousands of people when they could keep profits to themselves? This is the obvious question that comes up next. This what the next section is all about! What are the Sensex and the Nifty? The Sensex is an ―index‖. What is an index? An index is basically an indicator. It gives you a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE. If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. Just like the Sensex represents the top stocks of the BSE, the nifty represents the top stocks of the NSE.
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Just in case you are confused, the BSE, is the Bombay Stock Exchange and the NSE is the National Stock Exchange. The BSE is situated at Bombay and the NSE is situated at Delhi. These are the major stock exchanges in the country. There are other stock exchanges like the Calcutta stock Exchange etc. but they are not as popular as the BSE and the NSE. Most of the stock trading in the country is done though the BSE & the NSE. Besides Sensex and the nifty there are many other indexes. There is an index that gives you an idea about whether the mid-cap stocks go up and down. This is called the ―BSE mid-cap index‖. There are many other types of indexes.

PRODUCT & OFFERINGS OF RSL
Equity Portfolio Management services Investment Advisory Investment Banking

EQUITY Trading in equities with religare truly empowers the investor for their investment needs. Religare ensure investors have a superlative trading experience throughA highly process driven diligent approach Powerful Research & Analytical and One of the ―best in class‖ dealing rooms

Further, Religare also has one of the largest retail networks, with its presence in more than 1300 locations across more than 400 towns & cities. This means, you can walk into any of these branches and connect to our highly skilled and dedicated relationship managers to get the best services. The Indian Equity Market is also the other name for Indian share market or Indian stock market. The forces of the market depend on monsoons, global fundings flowing into equities in the market and the performance of various
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companies. The Indian market of equities is transacted on the basis of two major stock indices, National Stock Exchange of India Ltd. (NSE) and The Bombay Stock Exchange (BSE), the trading being carried on in a dematerialized form. The physical stocks are in liquid form and cannot be sold by the investors in any market. Two types of funds are there in the Indian Equity Market, Venture Capital Funds and Private Equity Funds. The equity indexes are correlated beyond the boundaries of different countries with their exposure to common calamities like monsoon which would affect both India and Bangladesh or trade integration policies and close connection with the foreign investors. From 1995 onwards, both in terms of trade integration and India has made an advance. All these have established a close relationship between the stock market indexes of India stock market and those of other countries. The Stock derivatives add up all futures and options on all individual stocks. This stock index derivative was found to have gone up from 12 % of NSE derivatives turnover in 2002 to 35 % in 2004. the Indian Equity Market also comprise of the Debt Market, dominated by primary dealers, banks and wholesale investors. Indian Equity Market at present is a lucrative field for the investors and investing in Indian stocks are profitable for not only the long and mediumterm investors, but also the position traders, short-term swing traders and also very short term intra-day traders. In terms of market capitalization, there are over 2500 companies in the BSE chart list with the Reliance Industries Limited at the top. The SENSEX today has rose from 1000 levels to 8000 levels providing a profitable business to all those who had been investing in the Indian Equity Market. There are about 22 stock exchanges in India which regulates the market trends of different stocks. Generally the bigger companies are listed with the NSE and the BSE, but there is the OTCEI or the Over the Counter Exchange of India, which lists the medium and small sized companies. There is the SEBI or the Securities and Exchange Board of India which supervises the functioning of the stock markets in India.

PORTFOLIO MANAGEMENT SERVICE

WHAT IS PMS?

PMS gives investors access to an institutional process of money management
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   

Provides a customized solution by matching the unique circumstances and objectives of each investor. Wealth creation based on disciplined investment process is the crux of PMS Effective diversification helps reduce portfolio volatility and enhances riskadjusted returns over long term PMS gives investor direct ownership of the individual securities in the portfolio

BENEFITS OF PMS Professional Management The service provides professional management of equity portfolios designed to deliver consistent long-term performance while identifying and controlling risks. Continued Monitoring We at Karvy understand the need to constantly monitor your portfolios and bring in periodic changes to optimize the results. Research Support A research team responsible for establishing our investment strategy and providing us real time information backs our portfolio managers. Identifying Investor Objectives The foundation of every financially sound portfolio is the ability to identify one‘s investment objective. It‘s a process that requires expertise. Karvy provides every investor a Relationship manager who comes with the required expertise and experience to understand an investor‘s financial goals.

Hassle free operation Karvy ensures investors enjoy healthy portfolios without having to involve themselves personally in monitoring and maintaining them. We provide you with a customized service. All the administrative aspects of your portfolio is taken care of by us for you. Transparency A dedicated website allows you access to all information relating to your investment. You will also receive quarterly account performance statement on the overall status of the portfolio and Karvy research reports. Religare offers PMS to address varying investment preferences. As a focused service, PMS pays attention to details, and portfolios are customized to suit the unique requirements of investors. Religare PMS currently extends five portfolio management schemes, viz panther, Tortoise, Elephant, caterpillar and Leo. Each scheme is designed keeping in mind the varying tastes, objectives and risk tolerance of our investors.
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What to expect from PMS Okay, you have fallen for the sales pitch and entrusted your money to a PMS. What can you now expect from this service? More handholding from your portfolio manager than you have been accustomed to from your mutual fund. You can expect to have a personal relationship manager through whom you can interact with the fund manager at any time of your choice. You can also expect frequent (maybe monthly) interaction with the portfolio manager to discuss any concerns that you might have. Expect to be consulted on any major changes in asset allocation or in the investment strategy relating to your portfolio. All administrative matters, including operating a bank account and dealing with settlement and depository transactions, will be handled by the PMS. If you are the type who likes to watch over your money like a baby, the disclosures offered by a PMS may be just right for you. On handing over your money, you will receive a user-ID and password from the PMS, which will grant you online access to your portfolio details. You can use these to check back on your portfolio as often as you like. Keeping track of capital gains (and losses) for the taxman can be a depressing chore, when you have furiously churned your investments through the year. Opting for PMS will free you of this chore, as a detailed statement of the transactions on your portfolio for tax purposes comes as a part of the package.

INVESTMENT PHILOSOPHY We believe that our investors are better served by a disciplined investment approach, which combines an understanding of the goals and objectives of the investor with a fine tuned strategy backed by research. Stock specific selection procedure is based on fundamental research for making sound investment decisions. Focus on minimizing investment risk by following rigorous valuation disciplines. Capital preservation. Selling discipline and use of Derivatives are to control volatility. Overall to enhance absolute return for investors.

OUR SCHEMES
PANTHER The panther portfolio aims to achieve higher returns by taking aggressive positions across sectors and market capitalizations. It is suitable
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for the ―High Risk High Return‖ investor with a strategy to invest across sectors and take advantage of various market conditions.

TORTOISE The tortoise portfolio aims to achieve growth in the portfolio value over a period of time by way of careful and judicious investment in fundamentally sound companies having good prospects. The scheme is suitable for the ―Medium Risk Medium Return‖ investor with a strategy to invest in companies which have consistency in earnings, growth and financial performance.

ELEPHANT The Elephant portfolio aims to generate steady returns over a longer period by investing in Securities selected only from BSE 100 and NSE 100 index. This plan is suitable for the ―Low Risk Low Return‖ investor with a strategy to invest in blue chip companies, as these companies have steady performance and reduce liquidity risk in the market.

CATERPILLAR The caterpillar portfolio aims to achieve capital appreciation over a long period of time by investing in a diversified portfolio. This scheme is suitable for investors with a high risk appetite. The investment strategy would be to invest in scrip‘s which are poised to get a re-rating either because of change in business, potential fancy for a particular sector in the coming years/months, business diversification leading to a better operating performance, stocks in their early stages of an upturn or for those which are in sectors currently ignored by the market.

LEO Leo is aimed at retail customers and structured to provide medium to long-term capital appreciation by investing in stocks across the market capitalization range. This scheme is a mix of moderate and aggressive investment strategies. Its aim is to have a balanced portfolio comprising selected investments from both Tortoise and Panther Exposure to Derivatives is taken within permissible regulatory limits.

The Religare Edge We serve you with a diligent, transparent and process driven approach and ensure that your money gets the care it deserves.
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No experts, only expertise: PMS brought to you by Religare with its solid reputation of an ethical and scientific approach to financial management. While we offer you the services of a dedicate relationship manager who is at your service 24x7, we do not depend on individual expertise alone. For you, this means lower risk, higher dependability and unhindered continuity. Moreover, you are not limited by a particular individual‘s investment style.

No hidden profits: we ensure that a part of the broking at Religare Portfolio Management Services is through external broking houses. This means that your portfolio is not churned needlessly.

How to Start Investing in Shares
When I wanted to know about share market investing, I just typed ―how to invest in shares‖ in google and looked for a detailed answer. Most of the time I got a high tech, high funda output but none of the thing helped me as a layman when I was looking for the first brick to build my house. I just learned by inquiring and practically working on several issues. Now I am an MBA student which further helps me in enriching my knowledge. I am just publishing this article to help beginners practically how to start with stock market investing. To start investing in share trading, we have to open an account called ―Demat account‖ which is called as dematerialized account. What is a Demat Account? It is an account which can be compared to a bank account wherein here your shares are in electronic form with its respective value (either purchase price or selling price). Don‘t get bogged down by high funds like ―Demat Account‖. In simple words, instead of having shares in paper form we are having it in electronic form .That‘s it! In early days, stocks and shares are traded in paper form by people gathering in stock exchanges and showing signs of company and price through signals. Even now Chicago stock markets operate in this way. The highest bidder or the one who is quoting for highest price will be awarded the shares. Now you can trade electronically and so you need an electronic format and hence demat. What should I do to open a Demat Account and where? You can open a demat account with depositary participant (DP). You can compare this DP with a bank. They will charge you for every purchase and every sale you make. To find a list of DP you can type ―Depository Participant‖ in the search engine and find a one close to your location. Some of the notable ones are India bulls and goliath. And most of the banks like ICICI also provide you this option. 26

What should I have to open a Demat Account?
  

You should have a three months bank statement. PAN Card. An identity proof.

These depository participants will also advice on stocks and shares. However I personally advice you to have market watch before investing. In next article I will further explain how to trade.

Stock Exchange
A stock exchange is a mutual organization which provides "trading" facilities for stock brokers and traders, to trade stocks and other securities. Stock exchanges also provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. The securities traded on a stock exchange include: shares issued by companies, unit trusts, derivatives, pooled investment products and bonds. To be able to trade a security on a certain stock exchange, it has to be listed there. Usually there is a central location at least for recordkeeping, but trade is less and less linked to such a physical place, as modern markets are electronic networks, which gives them advantages of speed and cost of transactions. Trade on an exchange is by members only. The initial offering of stocks and bonds to investors is by definition done in the primary market and subsequent trading is done in the secondary market. A stock exchange is often the most important component of a stock market. Supply and demand in stock markets is driven by various factors which, as in all free markets, affect the price of stocks (see stock valuation). There is usually no compulsion to issue stock via the stock exchange itself, nor must stock be subsequently traded on the exchange. Such trading is said to be off exchange or over-the-counter. This is the usual way that derivatives and bonds are traded. Increasingly, stock exchanges are part of a global market for securities. The role of stock exchanges Stock exchanges have multiple roles in the economy, this may include the following: Raising capital for businesses The Stock Exchange provide companies with the facility to raise capital for expansion through selling shares to the investing public.[2]
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Mobilizing savings for investment When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized and redirected to promote business activity with benefits for several economic sectors such as agriculture, commerce and industry, resulting in stronger economic growth and higher productivity levels of firms. Facilitating company growth Companies view acquisitions as an opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion. Profit sharing Both casual and professional stock investors, through dividends and stock price increases that may result in capital gains, will share in the wealth of profitable businesses. Corporate governance By having a wide and varied scope of owners, companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. Consequently, it is alleged that public companies (companies that are owned by shareholders who are members of the general public and trade shares on public exchanges) tend to have better management records than privately-held companies (those companies where shares are not publicly traded, often owned by the company founders and/or their families and heirs, or otherwise by a small group of investors). However, some well-documented cases are known where it is alleged that there has been considerable slippage in corporate governance on the part of some public companies. Creating investment opportunities for small investors As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors.

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Government capital-raising for development projects Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds can be raised through the Stock Exchange whereby members of the public buy them, thus loaning money to the government. The issuance of such bonds can obviate the need to directly tax the citizens in order to finance development, although by securing such bonds with the full faith and credit of the government instead of with collateral, the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature. Barometer of the economy At the stock exchange, share prices rise and fall depending, largely, on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. An economic recession, depression, or financial crisis could eventually lead to a stock market crash. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy.

National Stock Exchange
National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted by leading Financial Institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure, market practices and trading volumes. NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has written for itself the mandate to create World-class Stock Exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE is set up on a demutualised model wherein the ownership, management and trading rights are in the hands of three different sets of people. This has completely eliminated any conflict of interest. NSE was set up with the objectives of: * Establishing nationwide trading facility for all types of securities
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* Ensuring equal access to investors all over the country through an appropriate telecommunication network * Providing fair, efficient & transparent securities market using electronic trading system * Enabling shorter settlement cycles and book entry settlements * Meeting International benchmarks and standards Within a very short span of time, NSE has been able to achieve its objectives for which it was set up. Indian Capital Markets are a far cry from what they were 12 years back in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service. To ensure continuity of business, NSE has built a full fledged BCP site operational for last 7 years. NSE's markets NSE provides a fully automated screen-based trading system with national reach in the following major market segments:* Equity OR Capital Markets {NSE's market share is over 65%} * Futures & Options OR Derivatives Market {NSE's market share over 99.5%} * Wholesale Debt Market (WDM) * Mutual Funds (MF) * Initial Public Offerings (IPO) What are the IT initiatives of NSE in the last one year? NSE believes that technology shall continue to provide necessary impetus for any organisation to retain its competitive edge, ensure timeliness & satisfaction in customer service. Being fully dependant on Information Technology, NSE has stressed on innovation and sustained investment in technology on a continual basis to ensure customer satisfaction, improvement in services which automatically helps in sustaining business and remain ahead of competition. As a policy, NSE looks to improve the quality of Services to its customers. Projects are not initiated based on a business model to reap profits but from a strategic perspective of better productivity, Value-adds & features, improving efficiency, reducing operational costs, compliance, operational transparency etc for the customers, investors and to the entire Indian Securities Industry. Some of the projects taken by NSE last year are as follows:1. Trading System Capacity enhancement 2. Re-engineering of Online Position Monitoring (OPMS) 3. Augmentation of Data Warehouse (DWH) What was the objective, business benefits that the company derived and beneficiaries of the implementation of Trading System Capacity enhancement? Project Objective
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NSE's Capital Market Trading system was operational on two machine split architecture using Fault Tolerant mainframes and geared to handle 3 million trades. However, the CM segment had started to experience trades nearing 3 Million trades which form a threshold. Based on the trends & expected volumes, growth in the medium term is more than thrice the current trading volume, i.e. about 10 Million transactions per day. However with the then existing 2-machine split architecture, it was required to improve the trading system transaction handling capacity. The 3-machine split architecture project was thus taken up to enhance the load handling capacity of the system by introducing a 3-way split Hardware, Application optimization and improving the processes for achieving market volume of around 6 million transactions per day. Project was completed as per schedule & is currently operational since last 1 year. Business Benefits 1. System scaled on 3 machines with distribution of users and securities with complete transparency to market participants. 2. System witnessed 3 million trades with faster response time to members at significantly lower system resource utilisation level. 3. Scalability to handle higher volumes (3 million to 6 million transactions per day). Beneficiaries Trading Members have experienced a faster response time. The trading system is able to handle higher volume of transactions which translates into higher turnover. It therefore directly translates into more opportunities and growth for the Entire Indian Securities market.

In the fast growing Indian financial market, there are 23 stock exchanges trading securities. The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most advanced exchange with 1016 companies listed and 726 trading members. The NSE is owned by the group of leading financial institutions such as Indian Bank or Life Insurance Corporation of India. However, in the totally demutualised Exchange, the ownership as well as the management does not have a right to trade on the Exchange. Only qualified traders can be involved in the securities trading. The NSE is one of the few exchanges in the world trading all types of securities on a single platform, which is divided into three segments: Wholesale Debt Market (WDM), Capital Market (CM), and Futures & Options (F&O) Market. Each segment has experienced a significant growth throughout a few years of their
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launch. While the WDM segment has accumulated the annual growth of over 36% since its opening in 1994, the CM segment has increased by even 61% during the same period. The National Stock Exchange of India has stringent requirements and criteria for the companies listed on the Exchange. Minimum capital requirements, project appraisal, and company's track record are just a few of the criteria. In addition, listed companies pay variable listing fees based on their corporate capital size. The National Stock Exchange of India Ltd. provides its clients with a single, fully electronic trading platform that is operated through a VSAT network. Unlike most world exchanges, the NSE uses the satellite communication system that connects traders from 345 Indian cities. The advanced technologies enable up to 6 million trades to be operated daily on the NSE trading platform.

National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted by leading Financial Institutions at the behest of the Government of India, and was incorporated in November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure, market practices and trading volumes. NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has written for itself the mandate to create World-class Stock Exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE is set up on a demutualised model wherein the ownership, management and trading rights are in the hands of three different sets of people. This has completely eliminated any conflict of interest.

NSE was set up with the objectives of:
   

Establishing nationwide trading facility for all types of securities Ensuring equal access to investors all over the country through an appropriate telecommunication network Providing fair, efficient & transparent securities market using electronic trading system Enabling shorter settlement cycles and book entry settlements
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Meeting International benchmarks and standards

Within a very short span of time, NSE has been able to achieve its objectives for which it was set up. Indian Capital Markets are a far cry from what they were 12 years back in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service. To ensure continuity of business, NSE has built a full fledged BCP site operational for last 7 years. NSE's markets NSE provides a fully automated screen-based trading system with national reach in the following major market segments:    

Equity OR Capital Markets {NSE's market share is over 65%} Futures & Options OR Derivatives Market {NSE's market share over 99.5%} Wholesale Debt Market (WDM) Mutual Funds (MF) Initial Public Offerings (IPO)

What are the IT initiatives of NSE in the last one year? NSE believes that technology shall continue to provide necessary impetus for any organisation to retain its competitive edge, ensure timeliness & satisfaction in customer service. Being fully dependant on Information Technology, NSE has stressed on innovation and sustained investment in technology on a continual basis to ensure customer satisfaction, improvement in services which automatically helps in sustaining business and remain ahead of competition. As a policy, NSE looks to improve the quality of Services to its customers. Projects are not initiated based on a business model to reap profits but from a strategic perspective of better productivity, Value-adds & features, improving efficiency, reducing operational costs, compliance, operational transparency etc for the customers, investors and to the entire Indian Securities Industry. Some of the projects taken by NSE last year are as follows:1. Trading System Capacity enhancement 2. Re-engineering of Online Position Monitoring (OPMS) 3. Augmentation of Data Warehouse (DWH) What was the objective, business benefits that the company derived and beneficiaries of the implementation of Trading System Capacity enhancement? Project Objective NSE's Capital Market Trading system was operational on two machine split architecture using Fault Tolerant mainframes and geared to handle 3 million trades. However, the CM segment had started to experience trades nearing 3 Million trades which form a threshold. Based on the trends & expected volumes, growth in the medium term is more than thrice the current trading volume, i.e.
33

about 10 Million transactions per day. However with the then existing 2-machine split architecture, it was required to improve the trading system transaction handling capacity. The 3-machine split architecture project was thus taken up to enhance the load handling capacity of the system by introducing a 3-way split Hardware, Application optimisation and improving the processes for achieving market volume of around 6 million transactions per day. Project was completed as per schedule & is currently operational since last 1 year. Business Benefits 1. System scaled on 3 machines with distribution of users and securities with complete transparency to market participants. 2. System witnessed 3 million trades with faster response time to members at significantly lower system resource utilisation level. 3. Scalability to handle higher volumes (3 million to 6 million transactions per day). Beneficiaries Trading Members have experienced a faster response time. The trading system is able to handle higher volume of transactions which translates into higher turnover. It therefore directly translates into more opportunities and growth for the Entire Indian Securities market.

PRIMARY AND SECONDARY MARKET
The industrial securities market in India consists of new issue market and stock exchange. The new issue market deals with the new securities which were not previously available to the investing public i.e. the securities that are offered to the investing public for the first time. The market, therefore makes available a new block of securities for public for subscriptions. In other words, new issue market deals with raising of fresh capital by companies either for cash or for consideration other then cash. The new issue market encompasses all institutions dealing in fresh claim. The forms in which these claims created are equity shares, preference shares, debentures, rights issues, deposits etc. all financial institutions which contribute, underwrite and directly subscribe to the securities are part of new issue market. The 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
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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 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. In the public securities markets can be divided into primary and secondary markets. The distinguishing difference between the two markets is that in the primary market, the money for the securities is received by the issuer of those securities from investors, typically in an initial public offering transaction, whereas in the secondary market, the securities are simply assets held by one investor selling them to another investor (money goes from one investor to the other). An initial public offering is when a company issues public stock newly to investors, called an "IPO" for short. A company can later issue more new shares, or issue shares that have been previously registered in a shelf registration. These later new issues are also sold in the primary market, but they are not considered to be an IPO but are often called a "secondary offering". Issuers usually retain investment banks to assist them in administering the IPO, obtaining (or other regulatory body) approval of the offering filing, and selling the new issue. When the investment bank buys the entire new issue from the issuer at a discount to resell it at a markup, it is called a firm commitment underwriting. However, if the investment bank considers the risk too great for an underwriting, it may only assent to a best effort agreement, where the investment bank will simply do its best to sell the new issue. In order for the primary market to thrive, there must be a secondary market, or aftermarket which provides liquidity for the investment security, where holders of securities can sell them to other investors for cash. Otherwise, few people would purchase primary issues, and, thus, companies and governments would be restricted in raising equity capital (money) for their operations. Organized exchanges constitute the main secondary markets. Many smaller issues and most debt securities trade in the decentralized, dealer-based over-the-counter markets. In Europe, the principal trade organization for securities dealers is the International Capital Market Association. In the U.S., the principal trade organization for securities dealers is the Securities Industry and Financial Markets Association, which is the result of the merger of the Securities Industry Association and the Bond Market Association. The Financial Information Services Division of the Software and Information Industry Association represents a roundtable of market data industry firms, referring to them as Consumers, Exchanges, and Vendors.

Features of primary markets are:

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    

This is the market for new long term equity capital. The primary market is the market where the securities are sold for the first time. Therefore it is also called the new issue market (NIM). In a primary issue, the securities are issued by the company directly to investors. The company receives the money and issues new security certificates to the investors. Primary issues are used by companies for the purpose of setting up new business or for expanding or modernizing the existing business. The primary market performs the crucial function of facilitating capital formation in the economy. The new issue market does not include certain other sources of new long term external finance, such as loans from financial institutions. Borrowers in the new issue market may be raising capital for converting private capital into public capital; this is known as "going public." The financial assets sold can only be redeemed by the original holder.

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SERVICES

PUBLIC ISSUES

RIGHT ISSUES

PRIVATE SUBSCRIPTION

INITIAL PUBLIC OFFERING

OFFER FOR SALE

Methods of issuing securities in the primary market are:
  

Public Issue Rights issue (for existing companies); Private Subscription

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Public offer and private placement In the primary markets, securities may be offered to the public in a public offer. Alternatively, they may be offered privately to a limited number of qualified persons in a private placement. Sometimes a combination of the two is used. The distinction between the two is important to securities regulation and company law. Privately placed securities are not publicly tradable and may only be bought and sold by sophisticated qualified investors. As a result, the secondary market is not nearly as liquid as it is for public (registered) securities. Another category, sovereign bonds, is generally sold by auction to a specialized class of dealers. Listing and OTC dealing Securities are often listed in a stock exchange, an organized and officially recognized market on which securities can be bought and sold. Issuers may seek listings for their securities in order to attract investors, by ensuring that there is a liquid and regulated market in which investors will be able to buy and sell securities. Growth in informal electronic trading systems has challenged the traditional business of stock exchanges. Large volumes of securities are also bought and sold "over the counter" (OTC). OTC dealing involves buyers and sellers dealing with each other by telephone or electronically on the basis of prices that are displayed electronically. Function of New Issue market

The main function of new issue market is to facilitate transfer of resources from savers to the users. The savers are individuals, commercial banks, insurance company etc. The users are public limited companies and the government. The new issue market plays an important role of mobilizing the funds from the savers and transfer them to borrowers for production purposes, an important requisite of economic growth. It is not only a platform for raising finance to establish new enterprises but also for expansion or diversification or modernization of existing units. In this basis the new issue market can be classified as:(1) Market where firms go the the public for the first time through initial public offering (IPO) Market where firms which are already trade raise additional capital through seasoned equity offering (SEO).

(2)

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The main function of new issue market can be divided into a triple service functions :1) 2) 3) Origination. Underwriting. Distribution.

The function of origination is done by merchant bankers who may be commercial banks, all India financial institution or private firms. Initially this services was provided by specialize division of commercial banks. At present, financial institutions and private firms also perform this service. Though the service is highly important, the success of the issue depends, to a large extent, on the efficiency of the market. The origination itself does not guarantee the success of the issue Underwriting, a specialize service is required in this regard. 1) Origination :- Origination refers to the work of investigation, analysis and processing of new project proposals. Origination starts before an issue is actually floated in the market. There are two aspects in this function: (a) A careful study of the technical, economic and financial viability to ensure soundness of the project. This is a preliminary investigation undertaken by the sponsors of the issue. Advisory services which improve the quality of capital issues and ensure its success.

(b)

2)

a) b) c) d) e)

Underwriting :- Underwriting is an agreement whereby the underwriter promises to subscribe to a specified number of shares or debentures or a specified amount of stock in the event of public not subscribing to the issue. If the issue is fully subnscribed then there is no liability for the underwriter. If a part of share issues remain unsold, the underwriter will buy the shares. Thus underwriting is a guarantee for the marketability of shares. Before appointing an underwriter, the financial strength of the prospective underwriter is considered because he has to undertake the agreed non-subscribed portion of the public issue. The other aspects considered are Experience in the primary market. Past underwriting performance and default. Outstanding underwriting commitment. The network of investor clientele of the underwriter. His overall reputation.

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The company after the closure of subscription list communicates in writing to the underwriter the total number of shares or debentures remaining unsubscribed, the number of shares or debentures are required to be taken up by the underwriter. The underwriter would take up the agreed portion. If the underwriter fails to pay, the company is free to allot the shares to others or take up proceeding against the underwriter to claim damages for any loss suffered by the company for his denial. Methods of Underwriting :- An underwriting agreement may take any of the following three forms:(i) Standing behind the issue :- Under this method, the underwriter guarantees the sale of a specified number of hares within a specified period. If the public do not subscribe to the specify amount o issue, the underwriter buyer the balanced in the issue. (ii) The underwriter, in this method, makes outright purchase of shares and resell them to the investors. (iii) Consortium method:- Underwriting is jointly done by a group of underwriters in this method. The underwriters from syndicate for this purpose. This method is adopted for large issues.

BSE
The Bombay Stock Exchange is known as the oldest exchange in Asia. It traces its history to the 1850s, when stockbrokers would gather under banyan trees in front of Mumbai's Town Hall. The location of these meetings changed many times, as the number of brokers constantly increased. The group eventually moved to Dalal Street in 1874 and in 1875 became an official organization known as 'The Native Share & Stock Brokers Association'. In 1956, the BSE became the first stock exchange to be recognized by the Indian Government under the Securities Contracts Regulation Act. The Bombay Stock Exchange developed the BSE Sensex in 1986, giving the BSE a means to measure overall performance of the exchange. In 2000 the BSE used this index to open its derivatives market, trading Sensex futures contracts. The development of Sensex options along with equity derivatives followed in 2001 and 2002, expanding the BSE's trading platform. Historically an open-cry floor trading exchange, the Bombay Stock Exchange switched to an electronic trading system in 1995. It took the exchange only fifty days to make this transition.
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MUTUAL FUND
Mutual Funds has evolved over the years and it is sure to appear as something very interesting for all the investors of the world. In present world, mutual funds have become a main form of investment because of its diversified and liquid features. Not only in the developed world, but in the developing countries also different types of mutual funds are gaining popularity very fast in a tremendous way. But, there was a time when the concept of Mutual Funds were not present in the economy. There is an ambiguity about the fact that when and where the Mutual Fund Concept was introduced for the first time. According to some historians, the mutual funds were first introduced in Netherlands in 1822. But according to some other belief, the idea of Mutual Fund first came from a Dutch Merchant ling back in 1774. In 1822, that idea was further developed. In 1822, the concept of Investment Diversification was properly incorporated in the mutual funds. In fact, the Investment Diversification is the main attraction of mutual funds as the small investors are also able to allocate their little Funds in a diversified way to lower Risks. After 1822 in Netherlands, the Mutual Funds Concept came in Switzerland in 1849 and thereafter in Scotland in the 1880s. After being popular in Great Britain and France, Mutual fund concept traveled to U.S.A in the 1890s. In 1920s and 1930s, the Mutual Fund popularity reached a new high. There was record investment done in mutual funds. But, before 1920s,the mutual funds were not like the modern day mutual funds. The modern day mutual funds came into existence in 1924, in Boston. Massachusetts Investors Trust introduced the Modern Mutual Funds and the funds were available from 1928. At present this Massachusetts Investors Trust is known as MFS Investment Management Company. After the glorious year of 1928, Mutual fund ideas expanded to different levels and different regulations came for well functioning of the funds.

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn.Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the
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deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry.The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described as under. First Phase - 1964-87Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003
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This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. The year 1993 was a remarkable turning point in the Indian Mutual Fund industry. The stock investment scenario till then was restricted to UTI (Unit Trust of India) and public sector. This year marked the entry of private sector mutual funds, giving the Indian investors a wider choice of selecting mutual funds. From then on, the graph of mutual fund players has been on the rise with many foreign mutual funds also setting up funds in India. The industry has also witnessed several mergers and acquisitions proving it advantageous to the Indian investors. Are mutual funds emerging as preferred investment option? Are they safe and will your money be secured with them? Before proceeding to answer these questions, a look at the February 2006, Indian bull market scenario is worth a mention. For the first time ever, stock market indices in India are at a record high. The Bombay Stock Exchange closed above the 10,000-mark for the first time ever, an ecstatic event in the history of the Stock exchange. Market savvy Indian investors have been busy transacting across sectors such as banking automobile, sugar, consumer durable, fast moving consumer goods (FMCG) and pharmaceutical scripts. And, the Union Finance Minister, Mr.P.Chidambaram, has responded positively and advised investors to take informed decisions or invest through mutual funds. Mutual funds are not considered any more as obscure investment opportunities. The mutual funds assets have registered an annual growth rate of 9% over the past 5 years. Considering the current trend and the relative positive response of the Indian economy, a much bigger jump is on the anvil. The history of the Indian mutual fund industry can be traced to the formation of UTI in 1963. This was a joint initiative of the Government of India and RBI. It held monopoly for nearly 30 years. Since 1987, non-UTI mutual funds entered the
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scenario. These consisted of LIC, GIC and public-sector bank backed Indian mutual funds. SBI Mutual fund was the first of this kind. 1993 saw the entry of private sector players on the Indian Mutual Funds scene. Mutual fund regulations were revised in 1996 to accommodate changing market needs. With the Sensex on a scorching bull rally, many investors prefer to trade on stocks themselves. Mutual funds are more balanced since they diversify over a large number of stocks and sectors. In the rally of 2000, it was noticed that mutual funds did better than the stocks mainly due to prudent fund management based on the virtues of diversification. A Brief of How Mutual Funds Work Mutual funds can be either or both of open ended and closed ended investment companies depending on their fund management pattern. An open-end fund offers to sell its shares (units) continuously to investors either in retail or in bulk without a limit on the number as opposed to a closed-end fund. Closed end funds have limited number of shares. Mutual funds have diversified investments spread in calculated proportions amongst securities of various economic sectors. Mutual funds get their earnings in two ways. First is the most organic way, which is the dividend they get on the securities they hold. Second is by the redemption of their shares by investors will be at a discount to the current NAVs (net asset values). Working of mutual funds A mutual fund is set up by a sponsor. However, the sponsor cannot run the fund directly. He has to set up two arms: a trust and Asset Management Company. The trust is expected to assure fair business practice, while the AMC manages the money. All mutual funds except UTI functions under Sebi (Mutual Fund) regulations 1996. The mutual fund collects money directly or through brokers from investors. The money is invested in various instruments depending on the objective of the scheme. The income generated by selling securities or capital appreciation of these securities is passed on to the investors in proportion to their investment in the scheme. The investments are divided into units and the value of the units will be reflected in Net Asset Value or NAV of the unit. NAV is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the valuation date. Mutual fund companies provide daily net asset value of their schemes to their investors. NAV is important, as it will determine the price at which you buy or redeem the units of a scheme. Depending on the load structure of the scheme, you have to pay entry or exit load.

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Various Mutual Fund schemes and their implications Mutual fund schemes are classified on the basis of its structure and investment objective. By Structure Open-ended funds: Investors can buy and sell units of open-ended funds at NAVrelated price every day. Open-end funds do not have a fixed maturity and it is available for subscription every day of the year. Open-end funds also offer liquidity to investments, as one can sell units whenever there is a need for money. Close-ended funds: These funds have a stipulated maturity period, which may vary from three to 15 years. They are open for subscription only during a specified period. Investors have the option of investing in the scheme during initial public offer period or buy or sell units of the scheme on the stock exchanges. Some closeended funds repurchase the units at NAV-related prices periodically to provide an exit route to the investors. Interval Funds: These funds combine the features of both open and close-ended funds. They are open for sale and repurchase at a predetermined period. By Investment objective Growth funds: They normally invest most of their corpus in equities, as their objective is to provide capital appreciation over the medium-to-long term. Growth schemes are ideal for investors with risk appetite. Income funds: As the name suggests, the aim of these funds is to provide regular and steady income to investors. They generally invest their corpus in fixed income securities like bonds, corporate debentures, and government securities. Income funds are ideal for those looking for capital stability and regular income. Balanced funds: The objective of balanced funds is to provide growth along with regular income. They invest their corpus in both equities and fixed income securities as indicated in the offer documents. Balanced funds are ideal for those looking for income and moderate growth. Money market funds: These funds strive to provide easy liquidity, preservation of capital and modest income. MMFs generally invest the corpus in safer short-term instruments like treasury bills, certificates of deposit, commercial paper and interbank call money. Returns on these schemes hinges on the interest rates prevailing in the market. MMFs are ideal for corporate and individual investors looking to park funds for short periods.

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Other schemes Tax saving schemes: Tax saving schemes or equity-linked savings schemes offer tax rebates to investors under section 88 of the Income Tax Act. They generally have a lock-in period of three years. They are ideal for investors looking to exploit tax rebates as well as growth in investments. Special schemes: These schemes invest only in the industries specified in the offer document. Examples are Infotech funds, FMCG funds, pharma funds, etc. These schemes are meant for aggressive and well-informed investors. Index funds: Index Funds invest their corpus on the specified index such as BSE Sensex, NSE index, etc. as mentioned in the offer document. They try to mimic the composition of the index in their portfolio. Not only the shares, even their weightage is replicated. Index funds are a passive investment strategy and the fund manager has a limited role to play here. The NAVs of these funds move along with the index they are trying to mimic save for a few points here and there. This difference is called tracking error. Sector specific schemes: These funds invest only specified sectors like an industry or a group of industries or various segments like ?A? Group shares or initial public offerings. Why invest through a Mutual Fund Affordability: Mutual funds allow you to start with small investments. For example, if you want to buy a portfolio of blue chips of modest size, you should at least have a few lakhs of rupees. A mutual fund gives you the same portfolio for meager investment of Rs 1,000-5,000. A mutual fund can do that because it collects money from many people and it has a large corpus. Professional management: The major advantage of investing in a mutual fund is that you get a professional money manager for a small fee. You can leave the investment decisions to him and only have to monitor the performance of the fund at regular intervals. Diversification: Considered the essential tool in risk management, mutual funds makes it possible for even small investors to diversify their portfolio. A mutual fund can effectively diversify its portfolio because of the large corpus. However, a small investor cannot have a well-diversified portfolio because it calls for large investment. For example, a modest portfolio of 10 blue-chip stocks calls for a few a few thousands. Convenience: Mutual funds offer tailor-made solutions like systematic investment plans and systematic withdrawal plans to investors, which is very convenient to investors. Investors also do not have to worry about the investment decisions or they do not have to deal with their brokerage or depository, etc. for buying or
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selling of securities. Mutual funds also offer specialized schemes like retirement plan, children's plan, industry specific schemes, etc. to suit personal preference of investors. These schemes also help small investors with asset allocation of their corpus. It also saves a lot of paper work. Cost effectiveness: A small investor will find that a mutual fund route is a cost effective method. AMC fee is normally 2.5% and they also save a lot of transaction costs as they get concession from brokerages. Also, they get the service of a financial professional for a very small fee. If they were to seek a financial advisor's help directly, they may end up pay more. Also, the size of the corpus should be large to get the service of investment experts, who offer portfolio management. Liquidity: You can liquidate your investments anytime you want. Most mutual funds dispatch checks for redemption proceeds within two or three working days. You also do not have to pay any penal interest in most cases. However, some schemes charge an exit load. Tax breaks: You do not have to pay any taxes on dividends issued by mutual funds. You also have the advantage of capital gains taxation. Tax-saving schemes and pension schemes give you the added advantage of benefits under Section 88. Investments up to Rs 10,000 in them qualify for tax rebate. Transparency: Mutual funds offer daily NAVs of schemes, which help you to monitor your investments on a regular basis. They also send quarterly newsletters, which give details of the portfolio, performance of schemes against various benchmarks, etc. They are also well regulated and Sebi monitors their actions closely. Selecting a Mutual Fund Selection parameters Your objective: The first point to note before investing in a fund is to find out whether your objective matches with the scheme. It is necessary, as any conflict would directly affect your prospective returns. For example, a scheme that invests heavily in mid-cap stocks is not suited for a conservative equity investor. He should be better off in a scheme, which invests mainly in blue chips. Similarly, you should pick schemes that meet your specific needs. Examples: pension plans, children's plans, sector-specific schemes, etc. Your risk capacity and capability: this dictates the choice of schemes. Those with no risk tolerance should go for debt schemes, as they are relatively safer. Aggressive investors can go for equity investments. Investors that are even more aggressive can try schemes that invest in specific industry or sectors.

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Fund Manager's and scheme track record: Since you are giving your hard earned money to someone to manage it, it is imperative that he manages it well. It is also essential that the fund house you choose has excellent track record. It also should be professional and maintain high transparency in operations. Look at the performance of the scheme against relevant market benchmarks and its competitors. Look at the performance of a longer period, as it will give you how the scheme fared in different market conditions. Cost factor: Though the AMC fee is regulated, you should look at the expense ratio of the fund before investing. This is because the money is deducted from your investments. A higher entry load or exit load also will eat into your returns. A higher expense ratio can be justified only by superlative returns. It is very crucial in a debt fund, as it will devour a few percentages from your modest returns. Purchasing mutual funds Purchasing during IPO: Like companies, even mutual funds offer initial public offering. It is when they launch the scheme for the first time. You can buy units at par on this occasion. However, it is not always advantageous to buy a mutual fund during IPO. You can always wait and see the performance before investing in it. Purchasing existing mutual fund units: You can buy units of an open-end scheme anytime at NAV-related price. Most mutual funds charge an entry load of up to 2%. That means you have to pay an additional 2% of the NAV to get into the scheme. You can buy the plan directly from the mutual fund or brokerage. You can even buy them via the Internet. Selling mutual funds You can sell or redeem units very easily. As per Sebi guidelines, a mutual fund unit holder has the right to receive redemption or repurchase proceeds within 10 days of the redemption or repurchase. Most funds do not charge an exit load these days. When should you sell a mutual fund unit is a crucial question. Ideally, you should sell it when you have met your target profit. The other reason is that you need the money or your profile has changed due to some changes in your life. Other than this, you should sell the units if you find that the fund has been taken over by another fund, which you do not approve of. Any major changes in the objective of the fund or a sharp rise in expenses could also be valid reasons to redeem units. Following a favorite fund manager is also a usual practice. However, it need not be always rewarding. Income from mutual funds: the options Mutual funds distribute their income as dividend. An investor has the option of receiving the dividend or opting for the dividend reinvestment. If an investor needs
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the income, he can opt for dividend payout option. However, if you do not need the money, he can opt for dividend reinvestment. Another choice before him is the growth or cumulative option. Here the income generated from sale of securities or capital appreciation is automatically reinvested. Speedy investment, redemption and income receipts Thanks to the Electronic Clearing Services (ECS), mutual fund investor now has the option of automatic credit of dividends and redemptions into bank account. This will save a lot of paperwork, for both you and the fund. You can also instruct your bank to automatically withdraw a certain sum towards systematic investment plan. Alternatively, you can also directly receive systematic withdrawal proceeds in your bank account. Tracking mutual funds? performance Objective parameters The NAV of the scheme will reflect the performance of the scheme. The fund will also give you returns for various periods such as one month, three months, six months, one year, three years, since inception, etc. This will give you an idea about the performance of the fund. Funds also provide comparison with relevant benchmarks. This should tell you whether the fund manager has performed better than the benchmark. However, financial experts believe that these returns do not give the complete picture. They believe that the return should be risk-adjusted. Various publications and Internet sites provide such returns. The computation is complicated and they use various formulas for this purpose. Are Mutual Funds Risk Free and What are the Advantages? One must not forget the fundamentals of investment that no investment is insulated from risk. Then it becomes interesting to answer why mutual funds are so popular. To begin with, we can say mutual funds are relatively risk free in the way they invest and manage the funds. The investment from the pool is well diversified across securities and shares from various sectors. The fundamental understanding behind this is not all corporations and sectors fail to perform at a time. And in the event of a security of a corporation or a whole sector doing badly then the possible losses from that would be balanced. This logic has seen the mutual funds to be perceived as risk free investments in the market. Yes, this is not entirely untrue if one takes a look at performances of various mutual funds. This relative freedom from risk is in addition to a couple of advantages mutual funds carry with them. So, if you are a retail investor and planning an investment in securities, you will certainly want to consider the advantages of investing in mutual funds.  Lowest per unit investment in almost all the cases

Your investment will be diversified
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Your investment will be managed by professional money managers

Net asset value The net asset value, or NAV, is the current market value of a fund's holdings, less the fund's liabilities, usually expressed as a per-share amount. For most funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day. The public offering price, or POP, is the NAV plus a sales charge. Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only after the NAV is determined. Closed-end funds (the shares of which are traded by investors) may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by the different classes. Some mutual funds own securities which are not regularly traded on any formal exchange. These may be shares in very small or bankrupt companies; they may be derivatives; or they may be private investments in unregistered financial instruments (such as stock in a non-public company). In the absence of a public market for these securities, it is the responsibility of the fund manager to form an estimate of their value when computing the NAV. How much of a fund's assets may be invested in such securities is stated in the fund's prospectus. Management fees The management fee for the fund is usually synonymous with the contractual investment advisory fee charged for the management of a fund's investments. However, as many fund companies include administrative fees in the advisory fee component, when attempting to compare the total management expenses of different funds, it is helpful to define management fee as equal to the contractual advisory fee plus the contractual administrator fee. This "levels the playing field" when comparing management fee components across multiple funds. Contractual advisory fees may be structured as "flat-rate" fees, i.e., a single fee charged to the fund, regardless of the asset size of the fund. However, many funds have contractual fees which include breakpoints so that as the value of a fund's assets increases, the advisory fee paid decreases. Another way in which the advisory fees remain competitive is by structuring the fee so that it is based on the value of all of the assets of a group or a complex of funds rather than those of a single fund. Non-management expenses Apart from the management fee, there are certain non-management expenses which most funds must pay. Some of the more significant (in terms of amount) non-management expenses are: transfer agent expenses (this is usually the person you get on the other end of the phone line when you want to purchase/sell shares of a fund), custodian expense (the fund's assets are kept in custody by a bank which charges a custody fee), legal/audit expense, fund accounting expense, registration expense (the SEC charges a registration fee when funds file registration statements with it), board of directors/trustees expense (the members
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of the board who oversee the fund are usually paid a fee for their time spent at meetings), and printing and postage expense(incurred when printing and delivering shareholder reports). Brokerage commissions An additional expense which does not pass through the statement of operations and cannot be controlled by the investor is brokerage commissions. Brokerage commissions are incorporated into the price of the fund and are reported usually 3 months after the fund's annual report in the statement of additional information. Brokerage commissions are directly related to portfolio turnover (portfolio turnover refers to the number of times the fund's assets are bought and sold over the course of a year). Usually, higher rate of portfolio turnover returns in higher brokerage commissions. The advisors of mutual fund companies are required to achieve "best execution" through brokerage arrangements so that the commissions charged to the fund will not be excessive. Types of mutual funds Open-end fund The term mutual fund is the common name for what is classified as an open-end investment company by the SEC. Being open-ended means that, at the end of every day, the fund issues new shares to investors and buys back shares from investors wishing to leave the fund. Mutual funds must be structured as corporations or trusts, such as business trusts, and any corporation or trust will be classified by the SEC as an investment company if it issues securities and primarily invests in non-government securities. An investment company will be classified by the SEC as an open-end investment company if they do not issue undivided interests in specified securities (the defining characteristic of unit investment trusts or UITs) and if they issue redeemable securities. Registered investment companies that are not UITs or openend investment companies are closed-end funds. Neither UITs nor closed-end funds are mutual funds (as that term is used in the US). Exchange-traded funds A relatively recent innovation, the exchange-traded fund or ETF, is often structured as an open-end investment company. ETFs combine characteristics of both mutual funds and closed-end funds. ETFs are traded throughout the day on a stock exchange, just like closed-end funds, but at prices generally approximating the ETF's net asset value. Most ETFs are index funds and track stock market indexes. Shares are issued or redeemed by institutional investors in large blocks (typically of 50,000). Most investors purchase and sell shares through brokers in market transactions. Because the institutional investors normally purchase and redeem in kind transactions, ETFs are more efficient than traditional mutual funds (which are continuously issuing and redeeming securities and, to effect such transactions, continually buying and selling securities and maintaining liquidity positions) and therefore tend to have lower expenses. Exchange-traded funds are also valuable for foreign investors who are often able to buy and sell securities traded on a stock market, but who, for regulatory reasons, are limited in their ability to participate in traditional mutual funds.
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Equity funds Equity funds, which consist mainly of stock investments, are the most common type of mutual fund. Equity funds hold of all amounts invested in mutual funds in the United States. Often equity funds focus investments on particular strategies and certain types of issuers.

Bond funds Bond funds account for 18% of mutual fund assets. Types of bond funds include term funds, which have a fixed set of time (short-, medium-, or long-term) before they mature. Municipal bond funds generally have lower returns, but have tax advantages and lower risk. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential for high yield, these bonds also come with greater risk. Money market funds Money market funds hold 26% of mutual fund assets in the United States. Money market funds entail the least risk, as well as lower rates of return. Unlike certificates of deposit (CDs), money market shares are liquid and redeemable at any time. Funds of funds Funds of funds (FoF) are mutual funds which invest in other underlying mutual funds (i.e., they are funds comprised of other funds). The funds at the underlying level are typically funds which an investor can invest in individually. A fund of funds will typically charge a management fee which is smaller than that of a normal fund because it is considered a fee charged for asset allocation services. The fees charged at the underlying fund level do not pass through the statement of operations, but are usually disclosed in the fund's annual report, prospectus, or statement of additional information. The fund should be evaluated on the combination of the fund-level expenses and underlying fund expenses, as these both reduce the return to the investor. Most FoFs invest in affiliated funds (i.e., mutual funds managed by the same advisor), although some invest in funds managed by other (unaffiliated) advisors. The cost associated with investing in an unaffiliated underlying fund is most often higher than investing in an affiliated underlying because of the investment management research involved in investing in fund advised by a different advisor. Recently, FoFs have been classified into those that are actively managed (in which the investment advisor reallocates frequently among the underlying funds in order to adjust to changing market conditions) and those that are passively managed (the investment advisor allocates assets on the basis of on an allocation model which is rebalanced on a regular basis). The design of FoFs is structured in such a way as to provide a ready mix of mutual funds for investors who are unable to or unwilling to determine their own asset allocation model.

Mutual funds vs. other investments
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Mutual funds offer several advantages over investing in individual stocks. For example, the transaction costs are divided among all the mutual fund shareholders, which allows for cost-effective diversification. Investors may also benefit by having a third party (professional fund managers) apply expertise and dedicate time to manage and research investment options, although there is dispute over whether professional fund managers can, on average, outperform simple index funds that mimic public indexes. Yet, the Wall Street Journal reported that separately managed accounts performed better than mutual funds in 22 of 25 categories from 2006 to 2008. This included beating mutual funds performance in 2008, a tough year in which the global stock market lost in value In the story, Morningstar, Inc said outperformed mutual funds in 25 of 36 stock and bond market categories. Whether actively managed or passively indexed, mutual funds are not immune to risks. They share the same risks associated with the investments made. If the fund invests primarily in stocks, it is usually subject to the same ups and downs and risks as the stock market. Share classes Many mutual funds offer more than one class of shares. For example, you may have seen a fund that offers "Class A" and "Class B" shares. Each class will invest in the same pool (or investment portfolio) of securities and will have the same investment objectives and policies. But each class will have different shareholder services and/or distribution arrangements with different fees and expenses. A multi-class structure offers investors the ability to select a fee and expense structure that is most appropriate for their investment goals (including the length of time that they expect to remain invested in the fund). Load and expenses Mutual fund fees and expenses A front-end load or sales charge is a commission paid to a broker by a mutual fund when shares are purchased, taken as a percentage of funds invested. The value of the investment is reduced by the amount of the load. Some funds have a deferred sales charge or back-end load. In this type of fund an investor pays no sales charge when purchasing shares, but will pay a commission out of the proceeds when shares are redeemed depending on how long they are held. Another derivative structure is a level-load fund, in which no sales charge is paid when buying the fund, but a back-end load may be charged if the shares purchased are sold within a year. Load funds are sold through financial intermediaries such as brokers, financial planners, and other types of registered representatives who charge a commission for their services. Shares of front-end load funds are frequently breakpoints (i.e., a reduction in the commission paid) based on a number of variables.

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Capital market
A capital market is a market for securities (debt or equity), where business enterprises (companies) and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets (e.g., the money market). The capital market includes the stock market (equity securities) and the bond market (debt). Financial regulators, such as the Financial Services Authority or the Securities and Exchange Commission, oversee the capital markets in their designated jurisdictions to ensure that investors are protected against fraud, among other duties. Capital markets may be classified as primary markets and secondary markets. In primary markets, new stock or bond issues are sold to investors via a mechanism known as underwriting. In the secondary markets, existing securities are sold and bought among investors or traders, usually on a securities exchange, over-thecounter, or elsewhere. A security is a fungible, negotiable instrument representing financial value. Securities are broadly categorized into debt securities (such as banknotes, bonds and debentures); equity securities, e.g., common stocks; and derivative contracts, such as forwards, futures, options and swaps. The company or other entity issuing the security is called the issuer. A country's regulatory structure determines what qualifies as a security. For example, private investment pools may have some features of securities, but they may not be registered or regulated as such if they meet various restrictions. Securities may be represented by a certificate or, more typically, "noncertificated", that is in electronic or "book entry" only form. Certificates may be bearer, meaning they entitle the holder to rights under the security merely by holding the security, or registered, meaning they entitle the holder to rights only if he or she appears on a security register maintained by the issuer or an intermediary. They include shares of corporate stock or mutual funds, bonds issued by corporations or governmental agencies, stock options or other options, limited partnership units, and various other formal investment instruments that are negotiable and fungible. Commercial enterprises have traditionally used securities as a means of raising new capital. Securities may be an attractive option relative to bank loans depending on their pricing and market demand for particular characteristics. Another disadvantage of bank loans as a source of financing is that the bank may seek a measure of protection against default by the borrower via extensive financial covenants. Through securities, capital is provided by investors who purchase the securities upon their initial issuance. In a similar way, the governments may raise capital through the issuance of securities (see government debt).

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Investment
The traditional economic function of the purchase of securities is investment, with the view to receiving income and/or achieving capital gain. Debt securities generally offer a higher rate of interest than bank deposits, and equities may offer the prospect of capital growth. Equity investment may also offer control of the business of the issuer. Debt holdings may also offer some measure of control to the investor if the company is a fledgling start-up or an old giant undergoing 'restructuring'. In these cases, if interest payments are missed, the creditors may take control of the company and liquidate it to recover some of their investment.

Debt and equity
Securities are traditionally divided into debt securities and equities (see also derivatives).

Debt Debt securities may be called debentures, bonds, deposits, notes or commercial paper depending on their maturity and certain other characteristics. The holder of a debt security is typically entitled to the payment of principal and interest, together with other contractual rights under the terms of the issue, such as the right to receive certain information. Debt securities are generally issued for a fixed term and redeemable by the issuer at the end of that term. Debt securities may be protected by collateral or may be unsecured, and, if they are unsecured, may be contractually "senior" to other unsecured debt meaning their holders would have a priority in a bankruptcy of the issuer. Debt that is not senior is "subordinated".
Corporate bonds represent the debt of commercial or industrial entities. Debentures have a long maturity, typically at least ten years, whereas notes have a shorter maturity. Commercial paper is a simple form of debt security that essentially represents a postdated check with a maturity of not more than 270 days. Money market instruments are short term debt instruments that may have characteristics of deposit accounts, such as certificates of deposit, and certain bills of exchange. They are highly liquid and are sometimes referred to as "near cash". Commercial paper is also 55

often highly liquid. Euro debt securities are securities issued internationally outside their domestic market in a denomination different from that of the issuer's domicile. They include eurobonds and euronotes. Eurobonds are characteristically underwritten, and not secured, and interest is paid gross. Government bonds are medium or long term debt securities issued by sovereign governments or their agencies. Typically they carry a lower rate of interest than corporate bonds, and serve as a source of finance for governments. Indian federal government bonds are called treasuries. Because of their liquidity and perceived low risk, treasuries are used to manage the money supply in the open market operations of central banks. Sub-sovereign government bonds, known in the India as municipal bonds, represent the debt of state, provincial, territorial, municipal or other governmental units other than sovereign governments. Supranational bonds represent the debt of international organizations such as the World Bank, the International Monetary Fund, regional multilateral development banks and others.

Equity An equity security is a share of equity interest in an entity such as the capital stock of a company, trust or partnership. The most common form of equity interest is common stock, although preferred equity is also a form of capital stock. The holder of an equity is a shareholder, owning a share, or fractional part of the issuer. Unlike debt securities, which typically require regular payments (interest) to the holder, equity securities are not entitled to any payment. In bankruptcy, they share only in the residual interest of the issuer after all obligations have been paid out to creditors. However, equity generally entitles the holder to a pro rata portion of control of the company, meaning that a holder of a majority of the equity is usually entitled to control the issuer. Equity also enjoys the right to profits and capital gain, whereas holders of debt securities receive only interest and repayment of principal regardless of how well the issuer performs financially. Furthermore, debt securities do not have voting rights outside of bankruptcy. In other words, equity holders are entitled to the "upside" of the business and to control the busines. Preference shares form an intermediate class of security between equities and debt. If the issuer is liquidated, they carry the right to receive interest and/or a return of capital in priority to ordinary shareholders. However, from a legal perspective, they are capital stock and therefore may entitle holders to some degree of control depending on whether they contain voting rights. Convertibles are bonds or preferred stock which can be converted, at the election of the holder of the convertibles, into the common stock of the issuing company. The convertibility, however, may be forced if the convertible is a callable bond, and the issuer calls the bond. The bondholder has about 1 month to convert it, or the company will call the bond by giving the holder the call price, which may be less than the value of the converted stock. This is referred to as a forced conversion.
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Equity warrants are options issued by the company that allow the holder of the warrant to purchase a specific number of shares at a specified price within a specified time. They are often issued together with bonds or existing equities, and are, sometimes, detachable from them and separately tradable. When the holder of the warrant exercises it, he pays the money directly to the company, and the company issues new shares to the holder. Warrants, like other convertible securities, increases the number of shares outstanding, and are always accounted for in financial reports as fully diluted earnings per share, which assumes that all warrants and convertibles will be exercised.

Shareholder
A shareholder (or stockholder) is an individual or company (including a corporation) that legally owns one or more shares of stock in a joint stock company. Both private and public traded companies have shareholders. Companies listed at the stock market are expected to strive to enhance shareholder value. Shareholders are granted special privileges depending on the class of stock, including the right to vote (usually one vote per share owned) on matters such as elections to the board of directors, the right to share in distributions of the company's income, the right to purchase new shares issued by the company, and the right to a company's assets during a liquidation of the company. However, shareholder's rights to a company's assets are subordinate to the rights of the company's creditors. Shareholders are considered by some to be a partial subset of stakeholders, which may include anyone who has a direct or indirect equity interest in the business entity or someone with even a non-pecuniary interest in a non-profit organization. Thus it might be common to call volunteer contributors to an association stakeholders, even though they are not shareholders. Although directors and officers of a company are bound by fiduciary duties to act in the best interest of the shareholders, the shareholders themselves normally do not have such duties towards each other. However, in a few unusual cases, some courts have been willing to imply such a duty between shareholders. In majority shareholders of closely held corporations have a duty to not destroy the value of the shares held by minority shareholders.The largest shareholders (in terms of percentages of companies owned) are often mutual funds, and, especially, passively managed exchangetraded funds.

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Application
The owners of a company may want additional capital to invest in new projects within the company. They may also simply wish to reduce their holding, freeing up capital for their own private use. By selling shares they can sell part or all of the company to many part-owners. The purchase of one share entitles the owner of that share to literally share in the ownership of the company, a fraction of the decision-making power, and potentially a fraction of the profits, which the company may issue as dividends. In the common case of a publicly traded corporation, where there may be thousands of shareholders, it is impractical to have all of them making the daily decisions required to run a company. Thus, the shareholders will use their shares as votes in the election of members of the board of directors of the company. In a typical case, each share constitutes one vote. Corporations may, however, issue different classes of shares, which may have different voting rights. Owning the majority of the shares allows other shareholders to be out-voted - effective control rests with the majority shareholder (or shareholders acting in concert). In this way the original owners of the company often still have control of the company.

Shareholder rights
Although ownership of 50% of shares does result in 50% ownership of a company, it does not give the shareholder the right to use a company's building, equipment, materials, or other property. This is because the company is considered a legal person, thus it owns all its assets itself. This is important in areas such as insurance, which must be in the name of the company and not the main shareholder. In most countries, including the United States, boards of directors and company managers have a fiduciary responsibility to run the company in the interests of its stockholders. Nonetheless, as Martin Whitman writes: Even though the board of directors runs the company, the shareholder has some impact on the company's policy, as the shareholders elect the board of directors. Each shareholder typically has a percentage of votes equal to the percentage of shares he or she owns. So as long as the shareholders agree that the management (agent) are performing poorly they can elect a new board of directors which can then hire a new management team. In practice, however, genuinely contested board elections are rare. Board candidates are usually nominated by insiders or by the board of the directors themselves, and a considerable amount of stock is held and voted by insiders.
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Means of financing
Financing a company through the sale of stock in a company is known as equity financing. Alternatively, debt financing (for example issuing bonds) can be done to avoid giving up shares of ownership of the company. Unofficial financing known as trade financing usually provides the major part of a company's working capital (day-to-day operational needs).

Trading
A stock exchange is an organization that provides a marketplace for either physical or virtual trading shares, bonds and warrants and other financial products where investors (represented by stock brokers) may buy and sell shares of a wide range of companies. A company will usually list its shares by meeting and maintaining the listing requirements of a particular stock exchange. In the India, through the inter-market quotation system, stocks listed on one exchange can also be bought or sold on several other exchanges, including relatively new so-called (Electronic Communication Networks like Archipelago or Instinet). Many large companies choose to list on a. exchange as well as an exchange in their home country in order to broaden their investor base. These companies have then to ship a certain number of shares to a bank in the (a certain percentage of their principal) and put it in the safe of the bank. Then the bank where they deposited the shares can issue a certain number of so-called Indian Depositary Shares, short (singular). If someone buys now a certain number of the bank where the shares are deposited issues an for the buyer.Although it makes sense for some companies to raise capital by offering stock on more than one exchange, a keen investor with access to information about such discrepancies could invest in expectation of their eventual convergence, known as an arbitrage trade. In today's era of electronic trading, these discrepancies, if they exist, are both shorter-lived and more quickly acted upon. As such, arbitrage opportunities disappear quickly due to the efficient nature of the market.

Buying
There are various methods of buying and financing stocks. The most common means is through a stock broker. Whether they are a full service or discount broker, they arrange the transfer of stock from a seller to a buyer. Most trades are actually done through brokers listed with a stock exchange, such as the Stock Exchange. There are many different stock brokers from which to choose, such as full service brokers or discount brokers. The full service brokers usually charge more per trade, but give investment advice or more personal service; the discount brokers offer little or no investment advice but charge less for trades. Another type of broker would be a bank or credit union that may have a deal set up with either a
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full service or discount broker. There are other ways of buying stock besides through a broker. One way is directly from the company itself. If at least one share is owned, most companies will allow the purchase of shares directly from the company through their investor relations departments. However, the initial share of stock in the company will have to be obtained through a regular stock broker. Another way to buy stock in companies is through Direct Public Offerings which are usually sold by the company itself. A direct public offering is an initial public offering in which the stock is purchased directly from the company, usually without the aid of brokers. When it comes to financing a purchase of stocks there are two ways: purchasing stock with money that is currently in the buyer's ownership, or by buying stock on margin. Buying stock on margin means buying stock with money borrowed against the stocks in the same account. These stocks, or collateral, guarantee that the buyer can repay the loan; otherwise, the stockbroker has the right to sell the stock (collateral) to repay the borrowed money. He can sell if the share price drops below the margin requirement, at least 50% of the value of the stocks in the account.

Selling
Selling stock is procedurally similar to buying stock. Generally, the investor wants to buy low and sell high, if not in that order (short selling); although a number of reasons may induce an investor to sell at a loss, e.g., to avoid further loss. As with buying a stock, there is a transaction fee for the broker's efforts in arranging the transfer of stock from a seller to a buyer. This fee can be high or low depending on which type of brokerage, full service or discount, handles the transaction. After the transaction has been made, the seller is then entitled to all of the money. An important part of selling is keeping track of the earnings. Importantly, on selling the stock, in jurisdictions that have them, capital gains taxes will have to be paid on the additional proceeds, if any, that are in excess of the cost basis.

Stock price fluctuations
Robert Shiller's plot of the Composite Real Price Index, Earnings, Dividends, and Interest Rates, from Irrational Exuberance, In the preface to this edition, Shiller warns that "the stock market has not come down to historical levels: the priceearnings ratio as I define it in this book is still, at this writing in the far higher than the historical average. People still place too much confidence in the markets and have too strong a belief that paying attention to the gyrations in their investments will someday make them rich, and so they do not make conservative preparations for possible bad outcomes." Price-Earnings ratios as a predictor of twenty-year returns based upon the plot by Robert Shiller The horizontal axis shows the Index as computed in Irrational Exuberance (inflation adjusted price divided by the prior ten-year mean of inflation-adjusted earnings). The vertical
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axis shows the geometric average real annual return on investing in the Composite Stock Price Index, reinvesting dividends, and selling twenty years later. Data from different twenty year periods is color-coded as shown in the key. See also ten-year returns. Shiller states that this plot "confirms that long-term investors—investors who commit their money to an investment for ten full years—did do well when prices were low relative to earnings at the beginning of the ten years. Long-term investors would be well advised, individually, to lower their exposure to the stock market when it is high, as it has been recently, and get into the market when it is low. The price of a stock fluctuates fundamentally due to the theory of supply and demand. Like all commodities in the market, the price of a stock is directly proportional to the demand. However, there are many factors on the basis of which the demand for a particular stock may increase or decrease. These factors are studied using methods of fundamental analysis and technical analysis to predict the changes in the stock price. A recent study shows that customer satisfaction, as measured by the Indian Customer Satisfaction Index, is significantly correlated to the stock market value. Stock price is also changed based on the forecast for the company and whether their profits are expected to increase or decrease.

Pricing
The underpricing of initial public offerings (IPO) has been well documented in different markets. While Issuers always try to maximize their issue proceeds, the underpricing of IPOs has constituted a serious anomaly in the literature of financial economics. Many financial economists have developed different models to explain the underpricing of IPOs. Some of the models explained it as a consequences of deliberate underpricing by issuers or their agents. In general, smaller issues are observed to be underpriced more than large issues. Historically, IPOs both globally and in the United States have been underpriced. The effect of "initial underpricing" an IPO is to generate additional interest in the stock when it first becomes publicly traded. Through flipping, this can lead to significant gains for investors who have been allocated shares of the IPO at the offering price. However, underpricing an IPO results in "money left on the table"—lost capital that could have been raised for the company had the stock been offered at a higher price. One great example of all these factors at play was seen with the IPO which helped fuel the IPO mania of the late internet era. Underwritten by Bear Stearns on November 13, 1998 the stock had been priced at per share, and famously jumped after large sell offs from institutions flipping the stock . Although the company did raise about from the offering it is estimated that with the level of demand for the offering and the volume of trading that took place the company might have left upwards of on the table. The danger of overpricing is also an important consideration. If a stock is offered to the public at a higher price than the market will pay, the underwriters may have trouble meeting their commitments to sell shares. Even if they sell all of the issued
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shares, if the stock falls in value on the first day of trading, it may lose its marketability and hence even more of its value. Investment banks, therefore, take many factors into consideration when pricing an IPO, and attempt to reach an offering price that is low enough to stimulate interest in the stock, but high enough to raise an adequate amount of capital for the company. The process of determining an optimal price usually involves the underwriters ("syndicate") arranging share purchase commitments from leading institutional investors.

Issue price
A company that is planning an IPO appoints lead managers to help it decide on an appropriate price at which the shares should be issued. There are two ways in which the price of an IPO can be determined: either the company, with the help of its lead managers, fixes a price or the price is arrived at through the process of book building.

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CHAPTER- 4

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CHAPTER – 4

OBJECTIVES OF THE STUDY
1. To analysis the market strategy of Religare Broking Houses. 2. To know about mostly which age group of client invest in share market.

3. To analysis the type of services provides by Religare Broking Houses. 4. To analysis how many client invest in share market through Religare Broking Houses.

5. To establish and maintain cordial relations between employees and management. 6. Analyzing the role of dealer in stock broking house

7. Analyzing the role of broker in stock broking house.

8. Analyzing the investor objective of investment.

9. To analyze the brokerage of religare security ltd in compare to other broking house.

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CHAPTER- 5

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CHAPTER – 5

Research methodology

5.1 Field of the study

Research reference to a search for knowledge, it can also be defined research as a scientific systematic search for pertinent information on a specific topic. In fact research is an art of scientific investigation. Redman and Mory defined research as a systematized effort to gain new knowledge some people consider research as a movement. A movement from the known to unknown. Research is an academic activity and as such the term should be used in technical sense. According to Clifford woody research comprises defining and redefining problems, formulating hypothesis or suggested solutions, collecting, organizing and evaluating data, making deductions and reaching conclusion, and at last carefully tasting he conclusions to determine whether they fit the formulating hypothesis.

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(5.2) SCOPE
1. To learn how Religare broking house is providing the services.. 2. To learn which type of Services provided by Religare broking house. 3. To learn the services are providing from which person a Dealer or any person who is working in the company. 4. Identifying that which type of investor are investing in the stock market well educate or illiterate person also. 5. To learn from the effects of different type of selling strategies of the Stock market. 6. Identifying that which age of person are investing in the stock market. 7. Identifying that the investor are investing in which type of Services more and more.

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(5.3) SAMPLE SIZE

This refers to the number of items to be selected from the universal. The size of the sample should be neither too large nor too small. It should be optimum. In this research work size of the sample is 100

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(5.4) LIMITATION OF THE STUDY

 Investor’s return is subjected to market risk.

 Time consuming process.

 Some customer not aware about invest plan.

 Lack of interest shown by people.

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(5.5) PREPARATION OF QUESTIONNAIRE
Q.1 How much necessity of investment among customer? Much needed Some needed not so

Q.2 How Much Better Religare broking house with other Competitors? Much better Some what Same worse

Q.3 What is the promotional strategy of Religare Broking House? Better service Experience staff Brand name Offers

Q.4 After the investment in shares the Religare broking house is Providing services Good or not? Good Poor Excellent Very Good

Q.5 According to RSL, what is the investment objective? High return Future safety

Q.6 How many investor are Satisfied with Services? Average Satisfied . Highly satisfied Dissatisfied

Highly dissatisfied

Q.7 How Religare helped their customer to solve their problem? Good Excellent Poor Fair .

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(5.6) Statistical scale of measure in Research?
Scaling describes the procedures of assigning numbers to various degrees of opinion, Attitude and other concepts. This can be done in two ways – 1. Making a judgment about some characteristic of an individual & then placing him directly on a scale that defined in terms of that characteristic. 2. Constructing questionnaires in such a way that the score of individual responses assigns him a place on a scale. Types of Numerical Scales:There are many types of scales used in research as followed. 1. Nominal Scales. 2. Ordinal Scales. 3. Interval Scales. 4. Ratio Scales.

Kinds of Opinion Scales:Many forms of opinion scales are used but the main them are the following – 1. Thurstone Scale. 2. Likert Scale. . Likert Scale: - In 1932, likert constructed a scale which differed from the one by Thurston. This scale aimed at discovering the attitude of various human groups Concerning imperialism, internationalism and Negroes. 1. To construct much statement related to the object or problem the attitudes toward Which are to be studied?
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2. To show these statement to the subject & to get them classified into the Following groups – strongly approve, undecided, disapprove, Strongly disapprove, approve. 3. To award points to the above classification in the following manner.

(5.7) SAMPLING METHOD

There are different methods of sample design based on two factors viz. the representation basis and the element selection technique. On the representation basis, the sample may be probability sampling on it may non probability sampling. Probability sampling is based on the concept of random selection, whereas non probability sampling is “non-random” sampling. On element selection basis, the sample may be either unrestricted or restricted. When each sample element is individually from the population at large, and then the sample so drown known as “unrestricted sample”, whereas all other forms of sampling are covered under the term “restricted sampling”. Thus sample designs are basically of two types’ viz. non-probability sampling and probability sampling.

1. NONPROBABILITY SAMPLING: Non-probability sampling is also known by different names such as deliberate sampling purposive sampling and judgments sampling. In this sampling, items for the sample are selected deliberately by researcher; his choice concerning the items remains supreme. In other words, under non probability sampling the organizer of the inquiry purposively choose the particular units of the universe for constituting a sample on the basis that the small mass that they so select out of a huge one will be typical or representative of the whole. 2. PROBABILITY SAMPLING:

Probability sampling is also known as “Random Sampling”. Under this sampling design, every item of the universe has an equal chance of conclusion in the sample. The result obtain from
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probability or random sampling can assured in term of probability, that is we can measure the errors of estimation on the significance of result obtain from random sample.

CHAPTER - 6

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SECONDARY DATA

The secondary data, on the other hand, are those which have already been passed through the statistical process. When the researcher utilizes secondary data then he has to look in to various sources from where he can obtained them. Secondary data may either be published data are available in.

Various publications of foreign government one of international bodies and their subsidiary organization, Technical's journals, Books, magazines and newspaper reports and publication of various associations connected with business and industry, banks stock exchange etc. Reports prepared by research scholars, universities, economist etc in different fields. Public records and statistics, historical documents, and other sources of published information.

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CHAPTER - 7

75

ANALYSIS OF INTERPRETATION
Q.1 How much necessity of investment among customer?

60 50 40 30

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39

East 20 10 0 Much Needed Some what Not so 4

INTERPRETATION
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Out of 100 respondents 57 % of the customers are investors, and 39 % customers are using it to some extent. Only 4% customers are thinking that investment is not necessary for them.

Q.2 Pie chart showing Rating of Religare broking house with other competitors.

Same 10%

Worse 10% Much better 45% Much better some what Same Worse

some what 35%

INTERPRETATION Out of 100 respondents 45 % of the customers feel that Religare is much better than other products in this category. 35% customer feels that A
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Religare is somewhat better than competitor products. Around 10% of the customer feels that it has the same service as that of competitors. And 10% of customer feels that it is worse than its competitors.

Q.3 What is the promotional strategy of Religare Broking House?

Brand Experienc Name e staff 20% 30% Offers 13% Better Service 37%

INTERPRETATION
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Out of 100 respondents only 13% of the customers preferred Religare because of offers. The highest 37 % of the customers preferred Religare because of the Better service by Religare. The second most 30% of the customers have preferred because of the Experience staff. It also shows the brand name also has some implication before choosing Religare services. 20% of the customer has chosen Religare because of the brand name ‗Religare.

Q.4 After investment customers rating of services?

poor Excellent 15% 25% Good 35%

very good 25%

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INTERPRETATION Out of 100 respondents, 25% of the customer has rated the after investment as excellent. Some 25% rated it as very good and 35% as good. But the concern is that 15 % of the customer also feel that the after investment is poor.

Q.5 According to RSL, what is the investment objective?

80% 70% 60% 50% 40% 30% 20% 10% 0% High Return Future safety

Series1

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INTERPRETATION Out of 100 investors 69% of investors are saying RSL is FUTURE SAFETY and 31% investors are saying that RSL is HIGH RETURN.

Q.6 Overall satisfaction level of Religare customers?

Highly Satisfied 19%

Highly dissatisfied 7%

Dissatisfied 11%

Highly dissatisfied Dissatisfied Average Satisfied Highly Satisfied

Average 19% Satisfied 44%

INTERPRETATION
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Out of 100 respondents, 19% of the customer is highly satisfied,. 44% of the customer is satisfied. Around 7% of the customer is highly dissatisfied and 11% of customer is dissatisfied and average is 19% customer with the overall service provided by Religare.

Q.7 How Religare helped their customer to solve their problem?

Excellent 13%

Poor 7% fair 27% Poor fair Good Excellent

Good 53%

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INTERPRETATION The interpretation is that 13 % of the customer feels that the investment in Religare helped them to solve their related problem which exists in earlier. Most of around 53 % felt that, it was good. 27% of the customer felt it was fair. Only 7% of the customer felt it as poor solving their problem.

Hypothesis testing CHI SQUARE TEST

S.NO. 1 2 3 4 5 Total

Oi 44 19 11 7 19

Ei 20 20 20 20 20

(Oi –Ei)2 576 1 81 169 1

(Oi -Ei)2/Ei 28.8 0.05 4.05 8.45 0.05 X2=41.4

Ei=100/5=20 X2=41.4 D.F= n-1 D.f =5-1=4 T.V= 9.488 T.V IS LESS THAN C.V OF DEGREE OF FREEDOM =3, LEVEL OF SIGNIFICANCE 5% SO NULL HYPOTHESIS I S REJECTED.

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CHAPTER - 8

84

FINDINGS

1. According to Religare broking houses, mostly client’s objective is future safety and security. 2. Kotak, Karvy, Religare, Apollo Sindhoori, India Infoline and Arihant stock broking house in Bilaspur city. 3. Generally 30-40 age group of client invest in share market. 4. Customers are satisfied. 5. Mostly Religare broking houses, follow better service promotional strategy at Bilaspur market. 6. Religare Broking House provides both type of services online and offline. 7. I have realized that services are provided properly and regularly.

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CHAPTER - 9

86

SUGGESTION / RECOMMENDATION

1. Broking house must consider investor invest and gain rather then staff centralization. 2. Broker should provide all those service which is beneficial for the investors. 3. Broking house should provide new schemes and offering to their client in order to provide satisfaction. 4. Give clear and unambiguous intructions to your broker and subbroker. 5. Keep a record of all instruction to the broker and sub-broker. 6. Trade within your predetermine limits and financial capacity. 7. Submit your detail and sign the broker client agreement with your broker. This is mandatory. 8. The investors are carefully throughout and plan decision.

.

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CHAPTER-10

88

CONCLUSION

In this project an attempt to study the share market and to go for the comparative analysis of Religare broking house. Here the comparative analysis is done on the basis of primary and secondary data and thus increasing the authencity is the result obtained. According to the analysis done under this project, both primary and secondary data analysis reflects that Religare security limited the most promising broking house which provides maximum studied to their customers by excellent service. And people who invest in general share market through Religare security ltd are fully satisfied with the investment and also getting good returns. This shows that portfolio managers in this company are well skill, and highly aware about market conditions.

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CHAPTER-11

BIBLIOGRAPHY
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NEWS PAPERS : 1. THE ECONOMIC TIMES.

CONTENTS
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CONTENTS Chapter – 1 company introduction Chapter - 2 brief history of religare security ltd. Chapter - 3 introduction of trading mechanism of stock market Chapter - 4 Objective Chapter - 5 (5.1) methodology of study (5.2) scope of the study (5.3) sample size (5.4) limitation (5.5) preparation of questionnaire (5.6) statistical scale of measure in research (5.7) sampling method Chapter - 6 secondary data Chapter - 7 analysis of interpretation Chapter - 8 Finding Chapter – 9 suggestion Chapter –10 conclusion Chapter – 11 bibliograpy

PAGE NO. 1-3 4 - 17 18 - 58 59. -60 61 - 62 63 64 65 66 67 – 72 73 74 – 75 76 - 77 78 - 79 80 - 82 83 - 84 85 - 86

CONTENTS

PAGE NO. 92

Chapter – 1 company introduction Chapter - 2 brief history of religare security ltd. Chapter - 3 introduction of services provided by religare broking house Chapter - 4 Objective Chapter - 5 (5.1) methodology of study (5.2) scope of the study (5.3) SAMPLE SIZE (5.4) limitation (5.5) preparation of questionnaire (5.6) statistical scale of measure in research (5.7) sampling method Chapter - 6 secondary data Chapter - 7 analysis of interpretation Chapter - 8 Finding Chapter – 9 suggestion Chapter –10 conclusion Chapter – 11 bibliograpy

2-4 6 - 15 17- 62 64 66 67 68 69 70 71 72 74 76 - 83 85 87 89 91

FORMULATING THE RESEARCH PROBLEM:
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The first step of process is formulating the problem. In order to identify the research problem three categories of systematic situations namely over difficulties, and unnoticed opportunities should be studied. Over difficulties are these which are quit apparent. Latent difficulties are these which are not so apparent. Unnoticed opportunities indicate the potential for growth in a certain area; such opportunities are not clearly seen some effort is required to explore them. A researcher may recognize two or more problems at a time.

RESEARCH DESIGN: The formidable problem that follows the task of defining the research problem is the preparation of the design of the research project, popularly known as the ―research design‖. Decisions regarding what, where, when, how much, by what means concerning an inquiry or a research study constitute a research design. A research design is the arrangement of conditions for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economic procedure‖

SOURCES OF DATA

The task of data collection begins after a research problem has been defined are research design chalked out. While deciding about he method of data collection to be used for the study the researcher should keep in mind two types of data that is primary and secondary.

Primary data:

The primary data are those which are collected a fresh and for the first time, thus happened to be original in character. There are several methods of collecting primary data, particularly in a surveys and descriptive researches important ones are: 1. Observational method.
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2. Interview method.

Secondary data:

SAMPLE DESIGNS:

A sample design is a definite plan for obtaining a sample from a given population. It refers to the technique or the procedure the researcher would adopt in selecting items for the samples. Sample design may as well lay down the number of item to be included in the sample that is a size of the sample. Sample design is determined before data and collected.

TYPES OF SAMPLE DESIGNING:

There are different types of sample design based on two factors viz. the representation basis and the element selection technique. On the representation basis, the sample may be probability sampling on it may non probability sampling. Probability sampling is based on the concept of random selection, whereas non probability sampling is ―non-random‖ sampling. On element selection basis, the sample may be either unrestricted or restricted. When each sample element is individually from the population at large, and then the sample so drown known as ―unrestricted sample‖, whereas all other forms of sampling are covered under the term ―restricted sampling‖. Thus sample designs are basically of two types‘ viz. non-probability sampling and probability sampling.

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9. NONPROBABILITY SAMPLING: Non-probability sampling is also known by different names such as deliberate sampling purposive sampling and judgments sampling. In this sampling, items for the sample are selected deliberately by researcher; his choice concerning the items remains supreme. In other words, under non probability sampling the organizer of the inquiry purposively choose the particular units of the universe for constituting a sample on the basis that the small mass that they so select out of a huge one will be typical or representative of the whole. 10. PROBABILITY SAMPLING: Probability sampling is also known as ―Random Sampling‖. Under this sampling design, every item of the universe has an equal chance of conclusion in the sample. The result obtain from probability or random sampling can assured in term of probability, that is we can measure the errors of estimation on the significance of result obtain from random sample.

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CONTENTS Chapter – 1 Meaning and Definition of product Chapter - 2 Characteristic of Product Chapter - 3 Importance of Product Chapter - 4 Classification of Product Chapter - 5 Meaning and Elements of Product planning Chapter - 6 Importance of Product planning Chapter - 7 Meaning of Product Development Chapter - 8 Advantages of Product Development Chapter – 9 Causes of Failure of new product Chapter –10 Importance of New Product Development Chapter – 11 New product Development process Chapter - 12 Product Life Cycle Chapter - 13 Product Development Strategy Chapter - 14 Meaning of Test Marketing

PAGE NO. 1 2 3 4. 8 9 – 11 12 – 15 16 17 -18 18 19 - 22 23 – 30 30 – 33 34 – 40 99

Chapter - 15 Conclusion

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