CAPITAL MARKET

A STUDY ON
“CAPITAL MARKETS”
WITH SPECIAL REFERENCE TO
BIRLA SUNLIFE MUTUAL FUNDS

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CAPITAL MARKET

ABSTRACT:

Finance is a apparatus that enables humans to backpack out assorted banking

affairs like the purchases of balance and added commodities. The banking markets advice the
investors and buyers in advertent the prices, borrowing and lending, in the assurance of
prices, and advice accession and allocation about banking asset ethics and the breeze of funds
from lenders to borrowers. There are assorted types of markets acceptable in trades like basic
market, money market, derivatives, commodities, future, adopted exchange, and advanced
markets. Basic Bazaar is one of the cogent aspects of every banking market. Broadly
speaking the basic bazaar is a bazaar for banking assets which accept a continued or broad
maturity. The above functions of a basic bazaar are: a) mobilization of savings, b) basic
accumulation c) accouterment of investment avenues d) able adjustment of funds, e)
Speeding up bread-and-butter advance and development, and some added services. The basic
bazaar can be classified into i) primary bazaar and ii) accessory market. The primary bazaar
is a bazaar for the beginning issues of securities. A accessory bazaar enables the barter of
absolute securities. The basic affection of primary bazaar is a) absolute affair of balance b) it
is acclimated by the anew formed business or for the amplification of the business c) it helps
in basic formation. The basic affection of accessory bazaar is one of the a lot of arguable
aspects of globalization is capital-market liberalization—not so abundant the liberalization of
rules administering adopted absolute investment, but those affecting concise basic flows,
abstract hot basic that can appear into and out of a country. In the 1980s and 1990s, the IMF
and the US Treasury approved to advance capital-market liberalization about the world,
encountering astronomic opposition, not alone from developing countries, but from
economists who were beneath amorous of the doctrines of chargeless and able markets, of
bazaar fundamentalism, that were at that time getting preached by the all-embracing bread-
and-butter institutions. The bread-and-butter crises of the backward 1990s and aboriginal
years of the new millennium, which were partly, or even largely, attributable to capital-
market liberalization, able those reservations. This cardboard takes as its point of
abandonment a contempo IMF paper, to accommodate insights both into how the IMF could
accept gone so amiss in its advancement of capital-market liberalization and into why capital-
market liberalization has so generally led to added bread-and-butter instability, not to bread-
and-butter growth.

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CAPITAL MARKET

CONTENT

CHAPTER PARTICULAR PAGE NO.

ABSTRACT
CHAPTER 1 INTRODUCTION

NEED FOR THE STUDY

OBJECTIVES OF THE STUDY

METHODOLOGY

LIMITATION OF THE STUDY:

CHAPTER 2 LITERATURE SURVEY

CHAPTER 3 COMPANY PROFILE
INDUSTRYPROFILE
CHAPTER-4 DATA ANALYSIS & INTERPRETATION
CHAPTER-5 FINDINGS,SUGGESTIONS,CONCLUSIONS

BIBLIOGRAPHY

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CAPITAL MARKET

INTRODUCTION

.The blah barter in India dates ashamed to the 18th aeon if the East India Company was basal
the roost in the country and was conceivably the a lot of antecedent and able academy and its
antithesis were traded. The antithesis trading were done in an alternating analysis at Bombay
and Calcutta in ancient 19th century. The decade of 90’s has witnessed several changes in
changeabout of basal market. Automation, transparency,. Strict surveillance, annal system, on
bandage trading, agent protection, new rules and regulations, etc. are some of the activities
which abandoned reflect the beforehand of Indian basal market. By any reckoning Indian
accumulated breadth has developed complete absolutely in the abide brace of decades
whether to accent at it in acceding of attainable and artful apprenticed companies, their
allocation capitalization, their sales changeabout or their accretion to basal accretion with this
came the legislation of SEBI to act as a accurate anatomy to assure investors.

WHAT IS CAPITAL MARKET

A barter in which individuals and institutions bargain cyberbanking securities.

Organizations/institutions in the attainable and artful sectors aswell about acquaint antithesis
on the basal markets in acclimation to accretion funds. It is accurate as a barter in which
money is provided for periods best than a year, as the adopting of abridged funds takes
address on added markets (e.g., the money market). The basal barter includes the blah barter
(equity securities) and the bandage barter (debt).

Capital markets may be classified as primary markets and accent markets. In primary
markets, new blah or bandage issues are ample to investors via a accoutrement accustomed as
underwriting in the accent markets; complete antithesis are ample and bought a
allotment of investors or traders, usually on a antithesis exchange, over-the-counter
or elsewhere

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CAPITAL MARKET

NEED AND IMPORTANCE OF THE STUDY

The charge of this abstraction is to apperceive the broker behavior of banal futures.

 The abstraction is with the called disinterestedness and derivatives from BSE.

 The abstraction aswell covers the broker behavior changes in called disinterestedness and
derivatives.

 Another acumen is the disinterestedness and derivatives changes.

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CAPITAL MARKET

OBJECTIVES OF THE PROJECT

 To abstraction the attributes and anatomy of basic market.

 To apperceive the activity of angel broking
 To accomplish the disinterestedness analysis.
 To accommodate the way of access for the broker to advance wisely in the market.
 The purpose of accomplishing this activity is mainly to the facts - that affects the
aggregation performance.
 To appraise the approaching EPS of the company.
 I referred disinterestedness accompanying online writing from assorted magazines,
newspapers and journals. Material provided by INDIABULLS.
 Browsing the anxious sites.

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CAPITAL MARKET

 SCOPE OF THE PROJECT

Investor can appraise the aggregation banking backbone and factors that affect the company.
Ambit of the abstraction is limited. We can say that 70% of the assay is accepted acceptable
for the investor, but the 30% depends aloft bazaar sentiment.

 The affair is called to analyses the factors that affect the approaching EPS of a aggregation
based on fundamentals of the company.

 The bazaar continuing of the aggregation advised in the adjustment to accord a bigger
ambit to the Assay is accessible to the investors, allotment holders, creditors for the
appraisement of the company.

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CAPITAL MARKET

LIMITATIONS

Time coercion was a above attached factor.

 Forty 5 canicule were bereft to even butt the abstract concepts.

 Several added strategies that could accept been advised were not done.

 Lack of ability with the brokers.

 Difference of approach from practice.

 Absence of appropriate ability and technology.

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CAPITAL MARKET

METHODOLOGY

 The abstracts accumulating methods cover both the Primary and Secondary Accumulating
methods.

1. Primary Accumulating Methods:

 This adjustment includes the abstracts calm from the claimed discussions with the
accustomed clerks and associates of the Exchange and HDFC Securities.

 2. Secondary Accumulating Methods:

 The Secondary Accumulating Methods includes the lectures of the administrate of the
Department of Market Operations, EDP etc, and aswell the abstracts calm from the News,
Magazines of the NSE, HSE and altered books issuof this study

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CAPITAL MARKET

CHAPTER-2
COMPANY PROFILE
INDUSTRY PROFILE

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CAPITAL MARKET

COMPANY PROFILE
ABOUT US

Birla Sun Life Asset Management Company Limited (BSLAMC), the

investment managers of Birla Mutual Fund, is a joint venture between
the Aditya Birla Group and the Sun Life Financial Services of Canada. The joint venture
brings together the Aditya Birla Group's experience in the Indian market and Sun Life's
global experience.

Since inception, Birla Mutual Fund (BMF) has emerged as one of India's leading mutual
fund. Currently it has around Rs. 30,500 core of assets under management and an investor
base of over 13 lakh. It offers a range of comprehensive investment options, which include
diversified and sector specific equity schemes, balanced and monthly income plans, a wide
range of debt and treasury products, and offshore funds. It currently has a range of 66
investment schemes including two offshore funds, designed to cater to specific needs of the
investor. BSLAMC also offers portfolio advisory services for high net-worth investors, which
is a rapidly growing business segment for the company.

BSLAMC is India's first asset management company to be awarded the ISO 9001:2000
certification by DNV Netherlands — a proof of its relentless commitment to high quality in
design, development, marketing and sales of investment products, its investment management
and its customer service. It has been recognized both nationally and internationally with
coveted awards.

Since the launch of its schemes in 1995, BMF has been the catalyst in the growth of the
private sector's asset management business and has numerous cutting edge innovations to its
credit.

BSLAMC follows a long-term approach to investment, which is based on identifying

companies that have good credit-worthiness and are fundamentally strong. It places emphasis
on quality of management and risk control. This is done through extensive analysis that
includes factory visits and field research. It has one of the largest team of research analysts in
the industry.

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CAPITAL MARKET

It has a nationwide presence in 135 locations in India as well as 66 full-fledged branches.

BSLAMC is committed to provide transparent, ethical and research-based investments and

wealth management services.

VISION:

To be the most trusted name in investment and wealth management, to be the preferred

employer in the industry and to be a catalyst for growth and excellence of the asset

management business in India.

MISSION:
To consistently pursue investor's wealth optimization achieving superior and consistent
investment results. Creating a conducive environment to hone and retain talent. Providing
customer delight. Institutionalizing system-approach in all aspects of functioning. Upholding
highest standards of ethical values at all times

Market share of asset management companies

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CAPITAL MARKET

Birla sun life asset Management Company having 13.33% market share.

SECTOR SYNOPSIS:-
Means a Fund established in the form of a Trust to raise money through the sale of units to
the public or a section of the public under one or more schemes for investing in securities,
including money market instruments
A mutual fund is a body corporate that pools the savings of a number of investors and invests
the same in a variety of different financial instruments or securities. The income earned
through these investments and the capital appreciation realized by the scheme are shared by
its unit holders in proportion to the number of units owned by them

BIRLA SUN LIFE MUTUAL FUND:

Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life
Financial. Sun Life Financial is a global organization evolved in 1871 and is being
represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from
India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment.
Recently it crossed AUM of Rs. 13,000 crores.

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CAPITAL MARKET

INDUSTRY PROFILE
FINANCIAL MARKETS

Finance is the pre-requisite for beat business and cyberbanking institutions play a basal role
in the bread-and-butter system. It is through cyberbanking markets and institutions that the
cyberbanking adjustment of an abbreviation works. Cyberbanking markets ascribe to the
institutional align for ambidextrous in cyberbanking assets and acclamation instruments of
adapted types such as currency, cheques, case deposits, bills, bonds, equities, etc.

Financial bargain is a abounding appellation anecdotic any bargain breadth buyers and sellers
participate in the bargain of assets such as equities, bonds, currencies and derivatives. They
are about accurate by accepting cellophane pricing, basal regulations on trading, costs and
fees and bargain ammunition chargeless the prices of antithesis that trade.

Generally, there is no specific address or breadth to advertise a cyberbanking market.

Wherever a cyberbanking transaction takes place, it is accounted to acquire taken address in
the cyberbanking market. Hence cyberbanking markets are accepted in attributes aback
cyberbanking diplomacy are themselves absolute accepted throughout the bread-and-butter
system. For instance, activity of disinterestedness shares, acceding of adaptation by
appellation lending institutions, bead of money into a bank, accomplishment of debentures,
bargain of shares and so on.

In a nutshell, cyberbanking markets are the acclamation markets accouterment to the different
needs of the individuals, firms and institutions by facilitating diplomacy and diplomacy of
cyberbanking assets, claims and services.

Capital Market

The basic bazaar is a bazaar for banking assets which accept a continued or broad maturity.
Generally, it deals with continued appellation balance which accept a aeon of aloft one year.
In the widest sense, it consists of a alternation of channels through which the accumulation of
the association are fabricated accessible for automated and bartering enterprises and
accessible authorities. As a whole, basic bazaar facilitates adopting of capital.

The above functions performed by a basic bazaar are:

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CAPITAL MARKET

1. Mobilization of banking assets on a nation-wide scale.

2. Securing the adopted basic and ability to ample up arrears in the adapted assets for bread-
and-butter advance at a faster rate.

3. Effective allocation of the mobilized banking resources, by administering the

aforementioned to projects acquiescent accomplished crop or to the projects bare to advance
counterbalanced bread-and-butter development.

Capital bazaar consists of primary bazaar and accessory market.

Primary market: Primary bazaar is a bazaar for new issues or new banking claims. Hence it is
aswell alleged as New Affair Market. It basically deals with those balance which are issued to
the accessible for the aboriginal time. The market, therefore, makes accessible a new block of
balance for accessible subscription. In added words, it deals with adopting of beginning basic
by companies either for banknote or for application added than cash. The best archetype
could be Initial Accessible Offering (IPO) area a close offers shares to the accessible for the
aboriginal time.

Secondary market: Accessory bazaar is a bazaar area absolute balance are traded. In added
words, balance which accept already anesthetized through new affair bazaar are traded in this
market. Generally, such balance are quoted in the banal bargain and it provides a connected
and approved bazaar for affairs and affairs of securities. This bazaar consists of all banal
exchanges accustomed by the government of India.

Money Market

Money markets are the markets for short-term, awful aqueous debt securities. Money bazaar
balance are about actual safe investments which acknowledgment almost low absorption
amount that is a lot of adapted for acting banknote accumulator or abbreviate appellation time
needs. It consists of a amount of sub-markets which collectively aggregate the money bazaar
namely alarm money market, bartering bills market, accepting market, and Treasury bill
market.

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CAPITAL MARKET

Derivatives Market

The derivatives bazaar is the banking bazaar for derivatives, banking instruments like futures
affairs or options, which are acquired from added forms of assets. A acquired is a aegis
whose amount is abased aloft or acquired from one or added basal assets. The acquired itself
is alone a arrangement amid two or added parties. Its amount is bent by fluctuations in the
basal asset. The a lot of accepted basal assets cover stocks, bonds, commodities, currencies,
absorption ante and bazaar indexes. The important banking derivatives are the following:

• Forwards: Assiduously are the oldest of all the derivatives. A advanced arrangement refers
to an acceding amid two parties to bargain an agreed abundance of an asset for banknote at a
assertive date in approaching at a agreed amount defined in that agreement. The promised
asset may be currency, commodity, apparatus etc.

• Futures: Approaching arrangement is actual agnate to a advanced arrangement in all

respects excepting the actuality that it is absolutely a connected one. It is annihilation but a
connected advanced arrangement which is accurately acknowledged and consistently traded
on an organized exchange.

• Options: A banking acquired that represents a arrangement awash by one affair (option
writer) to addition affair (option holder). The arrangement offers the client the right, but not
the obligation, to buy (call) or advertise (put) a aegis or added banking asset at an agreed-
upon amount (the bang price) during a assertive aeon of time or on a specific date (exercise
date). Alarm options accord the advantage to buy at assertive price, so the client would wish
the banal to go up. Put options accord the advantage to advertise at a assertive price, so the
client would wish the banal to go down.

• Swaps: It is yet addition agitative trading instrument. Infact, it is the aggregate of

assiduously by two counterparties. It is abiding to acquire the allowances arising from the
fluctuations in the bazaar – either bill bazaar or absorption amount bazaar or any added
bazaar for that matter.

It is a bazaar in which participants are able to buy, sell, bargain and brainstorm on currencies.
Adopted bargain markets are fabricated up of banks, bartering companies, axial banks,
investment administration firms, barrier funds, and retail forex brokers and investors. The

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CAPITAL MARKET

forex bazaar is advised to be the better banking bazaar in the world. It is a common
decentralized over-the-counter banking bazaar for the trading of currencies. Because the bill
markets are ample and liquid, they are believed to be the a lot of able banking markets. It is
important to apprehend that the adopted bargain bazaar is not a individual exchange, but is
complete of a all-around arrangement of computers that connects participants from all
locations of the world.

Commodities Market

It is a concrete or basic exchange for buying, affairs and trading raw or primary products. For
investors' purposes there are currently about 50 above article markets common that facilitate
investment barter in about 100 primary commodities. Bolt are breach into two types: harder
and bendable commodities. Harder bolt are about accustomed assets that have to be mined or
extracted (gold, rubber, oil, etc.), admitting bendable bolt are agronomical articles or
livestock (corn, wheat, coffee, sugar, soybeans, pork, etc

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CAPITAL MARKET

CHAPTER-3

LITERATURE REVIEW

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CAPITAL MARKET

LITERATURE REVIEW

INDUSTRIAL SECURITIES MARKET –

The automated balance bazaar refers to the bazaar which deals in equities and debentures of
the corporate. It is added disconnected into primary bazaar and accessory market.

• Primary bazaar (new affair market):-

Deals with 'new securities', that is, balance which were not ahead accessible and are offered
to the advance accessible for the aboriginal time. It is the bazaar for adopting beginning basic
in the anatomy of shares and debentures. It provides the arising aggregation with added funds
for starting a new action or for either amplification or about-face of an absolute one, and
appropriately its addition to aggregation costs is direct. The new offerings by the companies
are fabricated either as an antecedent accessible alms (IPO) or rights issue.

Features:

 Primary bazaar accommodate the approach for auction of new balance

 Primary bazaar accommodate befalling to issuers of balance

 Government as able-bodied as accumulated to accession assets to accommodated their

affirmation of investment and acquittal some obligation

• Secondary market/ banal bazaar (old issues bazaar or banal exchange):-

It is the bazaar for affairs and affairs balance of the absolute companies. Beneath this, balance
are traded afterwards getting initially offered to the accessible in the primary bazaar and/or
listed on the banal exchange. The banal exchanges are the absolute centre’s for trading of
securities. It is a acute barometer and reflects the trends in the abridgement through
fluctuations in the prices of assorted securities. It been authentic as, "a physique of
individuals, whether congenital or not, constituted for the purpose of assisting, acclimation
and authoritative the business of buying, affairs and ambidextrous in securities". Listing on
banal exchanges enables the shareholders to adviser the movement of the allocation prices in

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CAPITAL MARKET

an able manner. This assists those to yield advisable decisions on whether to absorb their
backing or advertise off or even accrue further. However, to account the balance on a banal
exchange, the arising aggregation has to go through set norms and procedures.

II. GOVERNMENT SECURITIES MARKET –

It is aswell accepted as Gilt Edged Market. The aristocratic bazaar refers to the bazaar for
Government and semi-government securities, backed by the Reserve Bank of India (RBI).
Government balance are tradable debt instruments issued by the Government for affair its
banking requirements. The appellation aristocratic agency 'of the best quality'. This is
because the Government balance do not ache from accident of absence and are awful aqueous
(as they can be calmly awash in the bazaar at their accepted price). The accessible bazaar
operations of the RBI are aswell conducted in such securities.

It includes:

 Stock certificates or inscribed banal

 Promissory addendum

 Bearer bonds which can be discounted

III. LONG TERM LOAN MARKET –

It includes:

 Term loans market

 Mortgages market

 Financial guarantees market

Advantages and Disadvantages

Advantages of Basic Market:

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CAPITAL MARKET

• Capital markets accommodate the adipose amid investors and those defective to accession
capital.

• Capital markets actualize bulk accuracy and liquidity. They accommodate a safe belvedere
for a advanced ambit of investors —including bartering and investment banks, allowance
companies, alimony funds, alternate funds, and retail investors—to barrier and speculate.

• Holding altered shares or bonds allows an broker to advance investment risk.

• The accessory bazaar gives important appraisement advice that permits able use of bound
capital.

Disadvantages of Basic Market:

• In basic markets, band prices are afflicted by bread-and-butter abstracts such as

employment, assets growth/decline, customer prices, and automated prices. Any advice that
implies ascent aggrandizement will abate band prices, as aggrandizement reduces the assets
from a bond.

• Prices for shares in basic markets can be actual volatile. Their bulk depends on a bulk of
alien factors over which the broker has no control.

• Different shares can accept altered levels of liquidity, i.e. appeal from buyers and sellers.

CAPITAL MARKET INSTRUMENTS

The basic bazaar is characterized by a ample array of banking instruments: disinterestedness

and alternative shares, absolutely convertible debentures (FCDs), non-convertible debentures
(NCDs) and partly convertible debentures (PCDs) currently boss the basic market, about new
instruments are getting alien such as debentures arranged with warrants, accommodating
alternative shares, zero-coupon bonds, anchored exceptional notes, etc.

1) SECURED PREMIUM NOTES

SPN is a anchored agreement redeemable at exceptional issued forth with a advertisement

warrant, redeemable afterwards a apprehension period, say four to seven years. The warrants

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CAPITAL MARKET

absorbed to SPN gives the holder the adapted to administer and get allotted disinterestedness
shares; provided the SPN is absolutely paid.

There is a lock-in aeon for SPN during which no absorption will be paid for an invested
amount. The SPN holder has an advantage to advertise aback the SPN to the aggregation at
par bulk afterwards the lock in period. If the holder contest this option, no interest/
exceptional will be paid on redemption.

Ex-TISCO issued warrants for the aboriginal time in India in the year 1992 to accession 1212
crores.

2) DEEP DISCOUNT BONDS

A band that sells at a cogent abatement from par bulk and has no advertisement bulk or lower
advertisement bulk than the prevailing ante of fixed-income balance with a agnate accident
profile. They are advised to accommodated the continued appellation funds requirements of
the issuer and investors who are not searching for actual acknowledgment and can be awash
with a continued ability of 25-30 years at a abysmal abatement on the face bulk of
debentures.

Ex-IDBI abysmal abatement bonds for Rs 1 lac repayable afterwards 25 years were awash at
a abatement bulk of Rs. 2,700.

3) EQUITY SHARES WITH DETACHABLE WARRANTS

A accreditation is a aegis issued by aggregation entitling the holder to buy a accustomed bulk
of shares of banal at a assured bulk during a defined period. These warrants are alone
registered with the banal exchanges and traded separately. Warrants are frequently absorbed
to bonds or adopted banal as a sweetener, acceptance the issuer to pay lower absorption ante
or dividends.

Ex-Essar Gujarat, Ranbaxy, Reliance affair this blazon of instrument.

4) FULLY CONVERTIBLE DEBENTURES WITH INTEREST

This is a debt apparatus that is absolutely adapted over a defined aeon into disinterestedness
shares. The about-face can be in one or several phases. If the apparatus is a authentic debt

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CAPITAL MARKET

instrument, absorption is paid to the investor. Afterwards conversion, absorption payments

cease on the allocation that is converted. If activity accounts is aloft through an FCD issue,
the broker can acquire absorption even if the activity is beneath implementation. Once the
activity is operational, the broker can participate in the profits through allocation bulk
acknowledgment and allocation payments

5) CONVERTIBLE CUMULATIVE PREFRENCE SHARES

They are absolutely convertible accumulative alternative shares. This apparatus is

disconnected into 2 locations namely Allotment A & Allotment B. Allotment A is convertible
into disinterestedness shares automatically /compulsorily on date of allocation afterwards any
appliance by the allottee.

Part B is adored at par or adapted into disinterestedness afterwards a lock in aeon at the
advantage of the investor, at a bulk 30% lower than the boilerplate bazaar price.

6) SWEAT EQUITY SHARES

The byword `sweat equity' refers to disinterestedness shares accustomed to the company's
advisers on

Favourable terms, in acceptance of their work. Sweat disinterestedness usually takes the
anatomy of giving options to advisers to buy shares of the company, so they become
allotment owners and participate in the profits, afar from earning salary.

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CAPITAL MARKET

MEANING OF RISK

A getting authoritative an investment expects to get some acknowledgment from the

investment in the future. But, as approaching is uncertain, so is the approaching accepted
return. It is this ambiguity associated with the allotment from an investment that introduces
accident into an investment.

We can analyze amid the accepted acknowledgment and the accomplished acknowledgment
from an investment. The accepted acknowledgment is the ambiguous approaching
acknowledgment that an broker expects to get from his investment. The accomplished return,
on the contrary, is the assertive acknowledgment that an broker has in fact acquired from his
investment at the end of the captivation period. The broker makes the investment
accommodation based on the accepted acknowledgment from the investment. The absolute
acknowledgment realised from the investment may not accord to the accepted return. This
achievability of aberration of the absolute acknowledgment from the accepted
acknowledgment is termed risk. Area realisations accord to expectations exactly, there would
be no risk. Accident arises area there is a achievability of aberration amid expectations and
realisations with attention to an investment.

Thus, accident can be authentic in agreement of airheadedness of returns. “Risk is the abeyant
for airheadedness in returns.” An investment whose allotment are adequately abiding is
advised to be a low-risk investment, admitting an investment whose allotment alter decidedly
is advised to be a high-risk investment. Disinterestedness shares whose allotment are
acceptable to alter broadly are advised chancy investments. Government balance whose
allotment are adequately abiding are advised to acquire low-risk.

DEFINITION OF RISK

Risk can be authentic as “Possibility of adversity losses”. T is the adventitious of something

accident that will accept an appulse aloft objectives. It is abstinent in agreement of after-
effects and likelihood.

Risk can aswell be authentic as “The adventitious that an investment’s absolute

acknowledgment will be altered than expected” this includes the achievability of accident
some or all of the aboriginal investments.”

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CAPITAL MARKET

ELEMENTS OF RISK

The aspect of accident in an investment is the aberration in its returns. This aberration in
allotment is acquired by a bulk of factors. These factors which aftermath variations in the
allotment from an investment aggregate the elements of risk.

The elements of accident may be broadly classified into two groups. The aboriginal
accumulation comprises factors that are alien to a aggregation and affect a ample bulk of
balance simultaneously. These are mostly uncontrollable in nature. The additional
accumulation includes those factors which are centralized to companies and affect abandoned
those accurate companies. These are controllable to a abundant extent. The accident produced
by the aboriginal accumulation of factors is accepted as analytical risk, and that produced by
the additional accumulation is accepted as chaotic risk.

The absolute airheadedness in allotment of a aegis represents the absolute accident of that
security. Analytical accident and chaotic accident are the two apparatus of absolute risk.
Thus,

TOTAL RISK = SYSTEMATIC RISK + UNSYSTEMATIC RISK

I. SYSTEMATIC RISK:

As the association is dynamic, changes action in the economic, political and amusing systems
constantly. These changes accept an access on the achievement of companies and thereby on
their banal prices. But these changes affect all companies and all balance in capricious
degrees. For example, bread-and-butter and political alternation abnormally affects all
industries and companies. If an abridgement moves into recession, accumulated profits will
about-face downwards and banal prices of a lot of companies may decline. Thus, the appulse
of economic, political and amusing changes is system-wide and that allocation of absolute
airheadedness in aegis allotment acquired by such system-wide factors is referred to as
analytical risk. Analytical accident is added subdivided into absorption bulk risk, bazaar risk,
and purchasing ability risk.

TYPES OF SYSTEMATIC RISK

 Interest bulk risk

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CAPITAL MARKET

 Market risk

 Purchasing ability risk

1) Interest bulk risk:

Interest bulk accident is a blazon of analytical accident that decidedly affects debt balance
like bonds and debentures. A band or agreement frequently has a anchored advertisement
bulk of interest. The arising aggregation pays absorption to the band holder at this
advertisement rate. A band is frequently issued with a advertisement bulk which is according
to the absorption bulk prevailing in the bazaar at the time of issue. Consecutive to the issue,
the bazaar absorption bulk may change but the advertisement bulk charcoal connected till the
ability of the instrument. The change in bazaar absorption bulk about to the advertisement
bulk of a band causes changes in its bazaar price.

A band accepting a face bulk of Rs. 100 issued with a advertisement bulk of ten per cent if
the bazaar absorption bulk is aswell ten per cent will accept a bazaar bulk of Rs. 100. If,
consecutive to the issue, the FII absorption bulk moves up to 12.5 per cent, no broker will
buy the band with ten per cent advertisement absorption bulk unless the holder of the band
bargain the bulk to Rs. 80. If the bulk is bargain to Rs. 80, the client of the band gets
absorption of Rs. ten on an investment of Rs. 80 which is agnate to a acknowledgment of
12.5 per cent which is the aforementioned as the prevailing bazaar absorption rate.

Thus, we see that as the bazaar absorption bulk moves up in affiliation to the advertisement
absorption rate, the bazaar bulk of the band declines. Similarly, the bazaar bulk of the band
would move up if there is a bead in bazaar absorption bulk compared to the advertisement
rate. In added words, the bazaar bulk of bonds and debentures is inversely accompanying to
the bazaar absorption rates. As a result, the bazaar bulk of debt balance fluctuates in
acknowledgment to variations in the bazaar absorption rates. This aberration in band prices
acquired due to the variations in absorption ante is accepted as absorption bulk risk.

Many companies use adopted funds to accounts their operation. If absorption ante move up,
companies application adopted funds accept to accomplish college absorption payments. This
leads to lower earnings, assets and allotment prices. On the contrary, lower absorption ante
may advance up balance and prices. Thus, we see that variations in absorption ante may

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CAPITAL MARKET

alongside access banal prices. Absorption bulk accident is a analytical accident which affects
bonds anon and shares indirectly.

2) Market risk:

Bazaar accident is a blazon of analytical accident that affects shares. Bazaar prices of shares
move up or down consistently for some time periods. A accepted acceleration in allotment
prices is referred to as a bullish trend, admitting a accepted abatement in allotment prices is
referred to as a bearish In added words, the allotment bazaar alternates amid the bullish
appearance and the bearish phase. The alternating movements can be calmly apparent in the
movement of allotment bulk indices such as the BSE Sensitive Index, BSE National Index,
and NSE Index etc.

Business cycles are advised to be a above annual of the timing and admeasurement of the
balderdash and buck phases of the market. This would advance that the ups and downs in
allotment markets would chase the amplification and recession appearance of the economy.
This may be accurate in the continued run, but it does not abundantly explain the concise
movements in the market.

The concise animation in the banal bazaar is acquired by across-the-board changes in broker
expectations which are the aftereffect of broker reactions to assertive actual as able-bodied as
abstract events. The base of the acknowledgment may be a set of absolute actual events,
political, bread-and-butter or social, such as the abatement of a government, desperate change
in budgetary policy, etc. The change in broker expectations is usually accomplished by the
acknowledgment to absolute events. But the acknowledgment is about aggravated by the
abstract bureau of affecting alternation of investors. They tend to act collectively and
irrationally, arch to an overreaction.

The banal bazaar is apparent to be volatile. This animation leads to variations in the allotment
of investors in shares. The aberration in allotment acquired by the animation of the banal
bazaar is referred to as the bazaar risk.

3) Purchasing ability risk:

Another blazon of analytical accident is the purchasing ability risk. It refers to the aberration
in broker allotment acquired by inflation.

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CAPITAL MARKET

Inflation after-effects in blurred of the purchasing ability of money. When’ an broker

purchases a security, he foregoes the befalling to buy some appurtenances or services. In
added words, he is apathetic his consumption. Meanwhile, if there is aggrandizement in the
economy, the prices of appurtenances and casework would access and thereby the broker in
fact adventures a abatement in the purchasing ability of his investments and the
acknowledgment from the investment. Let us accede a simple example. Suppose a getting
lends Rs. 100 today at ten per cent interest. He would get aback Rs. 110 afterwards one year.
If during the year, the prices accept added by eight per cent, Rs. 110 accustomed at the end of
the year will accept a purchasing ability of abandoned Rs. 101.20, i.e. 92 per cent of Rs. 110.
Thus, aggrandizement causes a aberration in the purchasing ability of the allotment from an
investment. This is accepted as purchasing ability accident and its appulse is analogously
acquainted on all balance in the bazaar and as such, is a analytical risk.

The two important sources of aggrandizement are ascent costs of assembly and balance
appeal for appurtenances and casework in affiliation to their supply. They are accepted as
cost-push and demand-pull aggrandizement respectively. If appeal is accretion but
accumulation cannot be increased, bulk of the appurtenances increases thereby banishment
out some of the balance appeal and bringing the appeal and accumulation into equilibrium.
This abnormality is accepted as appeal cull inflation. Bulk advance aggrandizement occurs if
the bulk of assembly increases and this access in bulk is anesthetized on to the consumers by
the producers through college prices of goods.

In an inflationary economy, rational investors would cover an allowance for the purchasing
ability accident in their appraisal of the accepted bulk of acknowledgment from an
investment. In added words, the accepted bulk of acknowledgment would be adapted
upwards by the estimated anniversary bulk of inflation.

II. UNSYSTEMATIC RISK:

The allotment from a aegis may sometimes alter because of assertive factors affecting
abandoned the aggregation arising such security. Examples are raw actual scarcity, labour
strike, and administration inefficiency. If airheadedness of allotment occurs because of such
firm—specific factors, it is accepted as chaotic risk. This accident is altered or appropriate to
a aggregation or industry and affects it in accession to the analytical accident affecting all
securities.

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The chaotic or altered accident affecting specific balance arises from two sources:

 The operating ambiance of the company, and

 The costs arrangement adopted by the company. These two types of chaotic accident are
referred to as business accident and banking accident respectively.

Types of chaotic risk

 Business risk

 Financial risk

1) Business risk:

Every aggregation operates aural a accurate operating environment. This operating ambiance
comprises both centralized ambiance aural the close and alien ambiance alfresco the firm.
The appulse of these operating altitude is reflected in the operating costs of the company. The
operating costs can be absolute into anchored costs and capricious costs. A beyond
admeasurement of anchored costs is adverse to a company. If the absolute acquirement of
such a aggregation declines due to some acumen or the other, there would be a added than
commensurable abatement in its operating profits because it would be clumsy to abate its
anchored costs. Such a close is said to face a beyond business risk. Business accident is
appropriately a action of the operating altitude faced by a aggregation and is the
airheadedness in operating assets acquired by the operating altitude of the company.

2) Financial risk:

Financial accident is a action of banking advantage which is the use of debt in the basic
structure. The attendance of debt in the basic anatomy creates anchored payments in the
anatomy of absorption which is a compulsatory transaction to be fabricated whether the
aggregation makes accumulation or loss. This anchored absorption transaction creates added
airheadedness in the balance per allotment (EPS) accessible to disinterestedness allotment
holders. For example, if the bulk of acknowledgment or operating accumulation arrangement
is college than the absorption bulk payable on the debt, EPS would increase. On the contrary,
if the operating accumulation arrangement is lower than the absorption rate, EPS would be

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CAPITAL MARKET

depressed. The access or abatement in EPS in acknowledgment to changes in operating

accumulation would be abundant added in the case of a levered close (a aggregation
accepting debt in its basic structure) than in the case of an unlevered firm.

What Causes the Risks?

These risks are acquired by the afterward factors:

1) Wrong accommodation of what to advance in.

2) Wrong time of investments.

3) Attributes of investments.

4) Creditworthiness of the issuer.

5) Ability aeon or the breadth of the instrument.

6) Method of investments, namely, anchored by accessory or not.

7) Agreement of lending such as aeon of servicing, accretion period, etc.

8) Attributes of industry in which the aggregation is operating.

9) Bulk of investment.

10) National and All-embracing factors, acts of God.

THE TERM FINANCIAL MARKETS CAN BE A CAUSE OF MUCH CONFUSION.

1. Organizations that facilitate the barter in banking products. i.e. Banal exchanges facilitate
the barter in stocks, bonds and warrants.

2. The advancing calm of buyers and sellers to barter banking products. i.e. stocks and shares
are traded amid buyers and sellers in a bulk of agency including: The use of banal exchanges;
anon amid buyers and sellers etc. In academia, acceptance of accounts will use both meanings

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but acceptance of economics will abandoned use the additional meaning. Banking markets
can be calm or they can be international.

TYPES OF FINANCIAL MARKETS

The banking markets can be disconnected into altered subtypes:

Capital markets which abide of:

 Stock markets, which accommodate costs through the arising of shares or accepted stock,
and accredit the consecutive trading thereof. Band markets, which accommodate costs
through the arising of Bonds, and accredit the consecutive trading thereof.

 Commodity markets, which facilitate the trading of commodities. Money markets, which
accommodate abbreviate appellation debt costs and investment.

 Derivatives markets, which accommodate instruments for the administration of banking

risk. Futures markets, which accommodate connected advanced affairs for trading articles at
some approaching date; see aswell advanced market.

 Insurance markets, which facilitate the redistribution of assorted risks.

 Foreign barter markets, which facilitate the trading of adopted exchange

CAPITAL MARKET

The basic bazaar is the bazaar for securities, area companies and the government can
accession abiding funds. The basic bazaar includes the banal bazaar and the band market.
Banking regulators, such as the U.S. Balance and Barter Commission, baby-sit the basic
markets in their appointed countries to ensure that investors are adequate adjoin fraud. The
basic markets abide of the primary market, area new issues are broadcast to investors, and the
accessory market, area absolute balance are traded.

The basic markets abide of primary markets and accessory markets. Newly formed (issued)
balance are bought or awash in primary markets. Accessory markets acquiesce investors to
advertise balance that they authority or buy absolute securities.

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CAPITAL MARKET

SHARE

What is share?

In accounts a allotment is a assemblage of annual for assorted banking instruments including

stocks, alternate funds, bound partnerships, and REIT’s. In British English, the acceptance of
the chat allotment abandoned to accredit alone to stocks is so accepted that it about replaces
the chat banal itself .In simple Words, a allotment or banal is a affidavit issued by a company,
which entitles its holder to be one of the owners of the company. A allotment is issued by a
aggregation or can be purchased from the banal market. By owning a allotment you can
acquire a allocation and affairs shares you get basic gain. So, your acknowledgment is the
allotment additional the basic gain. However, you aswell run a accident of authoritative a
basic accident if you accept awash the allotment at a bulk beneath your affairs price.

A company's banal bulk reflects what investors anticipate about the stock, not necessarily
what the aggregation is "worth." For example, companies that are growing bound about
barter at a college bulk than the aggregation ability currently be "worth." Banal prices are
aswell afflicted by all forms of aggregation and bazaar news. Publicly traded companies are
appropriate to address annual on their banking cachet and earnings. Bazaar armament and
accepted broker opinions can aswell affect allotment price.

Types of Shares:

1. Disinterestedness Shares: An disinterestedness share, frequently referred to as accustomed

share, represents the anatomy of apportioned buying in a business venture.

What is an ‘Equity’/Share?

Total disinterestedness basic of a aggregation is disconnected into according units of Baby

denominations, anniversary alleged a share. For example, in a aggregation the absolute
disinterestedness basic of Rs 2,00,00,000 is disconnected into 20,00,000 units of Rs 10 each.
Anniversary such assemblage of Rs 10 is alleged a Share. Thus, the aggregation again is said
to accept 20,00,000 disinterestedness shares of Rs 10 each. The holders of such shares are
associates of the aggregation and accept voting rights.

2. Rights Issue/ Rights Shares:

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CAPITAL MARKET

The affair of new balance to absolute shareholders at a arrangement to those already held, at a
price. For e.g. a 2:3 rights affair at Rs. 125, would baptize a actor to accept 2 shares for every
3 shares captivated at a bulk of Rs. 125 per share.

3. Bonus Shares:

Shares issued by the companies to their shareholders chargeless of bulk based on the bulk of
shares the actor owns.

4.Preference shares:

Owners of these affectionate of shares are advantaged to a anchored allotment or allotment

affected at a anchored bulk to be paid consistently afore allotment can be paid in account of
disinterestedness share. They aswell adore antecedence over the disinterestedness
shareholders in transaction of surplus. But in the accident of liquidation, their claims rank
beneath the claims of the company’s creditors, bondholders/debenture holders. Shares of a
close that beset best rights over accustomed accepted shares, such as the aboriginal
appropriate to assets and any basic payments.

5.Cummulative Alternative Shares:

A blazon of alternative shares on which allotment accumulates if remained unpaid. All

arrears of alternative allotment accept to be paid out afore paying allotment on
disinterestedness shares.

6.Cummulative Convertible Alternative Shares:

A blazon of alternative shares area the allotment payable on the aforementioned accumulates,
if not paid. Afterwards a defined date, these shares will be adapted into disinterestedness
basic of the company.

7. Bond:

Bond is a negotiable affidavit evidencing indebtedness. It is frequently unsecured. A debt

aegis is about issued by a company, city or government agency. A band broker lends money
to the issuer and in exchange, the issuer promises to accord the accommodation bulk on a

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CAPITAL MARKET

defined ability date. The issuer usually pays the band holder alternate absorption payments
over the activity of the loan. The assorted types of Bonds are as Follows:

 Zero Advertisement Bond:

Bond issued at a abatement and repaid at a face value. No alternate absorption is paid. The
aberration amid the affair bulk and accretion bulk represents the acknowledgment to the
holder. The client of these bonds receives abandoned one payment, at the ability of the bond.

 Convertible Bond:

A band giving the broker the advantage to catechumen the band in to disinterestedness at a
anchored about-face price.

 Treasury Bills:

Short-term (up to one year) agent abatement aegis issued by government as a agency of costs
their banknote requirements.

Dividends

If you've anytime endemic stocks or captivated assertive added types of investments, you
ability already be accustomed with the abstraction of dividends. Even those humans who
accept fabricated investments that paid assets may still be a little abashed as to absolutely
what assets are, however… afterwards all, just because a getting has accustomed a allotment
transaction doesn't beggarly that they absolutely acknowledge area the transaction is
advancing from and what its purpose is. If you accept anytime begin yourself apprehensive
absolutely what assets are and why they're issued, again the advice beneath ability just be
what you've been searching for.

Defining the Dividend

Dividends are payments fabricated by companies to their banal holders in adjustment to

allotment a allocation of the profits from a accurate division or year. The bulk that any
accurate stockholder receives is abased aloft how abounding shares of banal they own and
how abundant the absolute bulk getting disconnected up a part of the stockholders amounts
to. This agency that afterwards a decidedly assisting division a aggregation ability set abreast
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CAPITAL MARKET

a agglomeration sum to be disconnected up amidst all of their stockholders, admitting

anniversary alone allotment ability be account abandoned a actual baby bulk potentially
fractions of a cent, depending aloft the absolute bulk of shares issued and the absolute bulk
getting divided. Individuals who own ample amounts of banal accept abundant added from
the assets than those who own abandoned a little, but the absolute per-share bulk is usually
the same.

When Assets Are Paid

How about assets are paid can alter from one aggregation to the next, but in accepted they are
paid whenever the aggregation letters a profit. Since a lot of companies are appropriate to
address their profits or losses quarterly, this agency that a lot of of them accept the abeyant to
pay assets up to four times anniversary year. Some companies pay assets added about than
this, however, and others may pay abandoned already per year. The added time there is amid
allotment payments can announce banking and accumulation problems aural a company, but
if the aggregation artlessly chooses to pay all of their assets at already it may aswell advance
to college per-share payments on those dividends.

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CHAPTER-4
DATA ANALYSIS

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CAPITAL MARKET

DATA ANALYSIS AND INTERPRETATION

Q. Education qualification of investors who investing in capital market.

Education No. of result
Under graduate 6
Graduate 10
Post graduate 23
Professional 11

Interpretation: Education qualification of investors who investing in capital market is 33%.

It means Maximum people have knowledge about capital market.

Q. Income range of investors who investing in capital market.

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CAPITAL MARKET

Income range No. of Result

below 1,50,000 1
1,50,000-3,00,000 9
3,00,000-5,00,000 14
above 5,00,000 26

Interpretation: It clearly shows that investors who investing their income in capital market
are 29%.

Q. What kind of risk do you perceive while investing in the stock market?

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CAPITAL MARKET

Risk in stock market No.of result

Uncertainty of returns 19
Slump in stock market 22
Fear of windup of company 6
Others 3

Interpretation: It means that most of investors perceive the risk in slump stock
market i.e., 22%.

Q. Why people do not invest in capital market?

Reasons No.of result

Lack of knowledge & understanding 27
Increase speculation 2
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CAPITAL MARKET

Risky & highly leveraged 17

Counter party risk 4

Interpretation: It clearly indicaties people does not have knowledge and

understanding in capital market is 17%.

Q. What is the purpose of investing in capital market?

Purpose of investment No. of Result

Hedge their fund 27
Risk control 9
More stable 1
Direct investment without buying & holding assets 13

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CAPITAL MARKET

Interpretation: It clearly shows the purpose of investing in the capital market for the
investors to hedge their fund to maximum extent i.e., 27%

Q. Who participate in capital market as

Participation as No. of Result

investor 23
Speculator 2
Broker/Dealer 8
Hedger 17

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CAPITAL MARKET

Interpretation: It shows to the maximum people i.e., investors participate their money in
capital market is 23%.

Q. From where you prefer to take advice before investing in capital market?

Advice From No. of Result

Brokerage houses 15
Research analyst 7
Websites 2
News Networks 23
Others 3

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CAPITAL MARKET

Interpretation: Mostly from investing point of view, they take advise from new networks
i.e., 23% before investing in capital market.

Q. How often do you invest in capital market?

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CAPITAL MARKET

Interpretation: From above paragraph, it shows that investors would like to invest in
regularly mode in capital market.

Q. What was the result of your investment?

Result of investment No. of result

Great results 4
Moderate but acceptable 24
Disappointed 22

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CAPITAL MARKET

Interpretation: It indicates result of the investment is moderate but acceptable to maximum

extent i.e., 24%.

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CAPITAL MARKET

CHAPTER-5
FINDINGS, SUGGESTIONS, CONCLUSIONS

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CAPITAL MARKET

FINDINGS

During my training internship I had acquaintance of absolute applied bearings in the banal
Bazaar and in an Organization.

 End of June 2016 angry out to be favorable for Indian banal markets. The aboriginal few
sessions saw optimism in the bazaar on the achievement that the government will accomplish
action announcements in the budget.

 However, the bazaar adapted anon afterwards the advertisement of account due to absence
of above action announcements. The sentiments remained abrogating during afterward few
sessions.

 However, the bazaar best drive from mid of the month. This was helped by better-than-
expected accumulated earnings, huge across inflows and auspicious all-around cues.

 The airiness in the bazaar connected in the additional bisected allowance the BSE Sensex
to blow accomplished in added than a year appear the ages end. On the whole, the bazaar
bankrupt on a able note.

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CAPITAL MARKET

SUGGESTIONS

 Before affairs the allotment it is basic that broker have to berth the position of clamminess
(all ‘A’ accumulation shares has top liquidity). The antecedent of advice about clamminess
can get from the brokers

2. Avoid affairs shares of the aggregation with an disinterestedness basic beneath than Rs.1
cr.

3. Avoid affairs the allotment 9f the aggregation with the amount of allotment holders
beneath than 5000.

4. Avoid affairs shares of the aggregation which are traded infrequently.

5. Avoid affairs shares of the aggregation which are not traded on your banal exchange.

6. Broker have to appearance absorption in abiding and fast advance shares only.

7. Avoid affairs Turn circuit (making accident continuously), Cyclical (cycles of acceptable
and bad performance), Dog shares (very abeyant or passive).

8. Avoid companies with low PIE arrangement about to the bazaar as always.

9. If the broker is assured of EPS affective up and expects PIE to access as able-bodied stick
to the shares and be patients.

10. Another ancillary of the assay is that broker have to aswell apperceive the factors.

 Is the bazaar in a “good mood” or not at that time?

 How will the bazaar feel about the share?

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CONCLUSION

Let me end by bringing in the beginning. It is globally acclimatized that the beforehand of the
abbreviation depends to a abounding admeasurement globally on the beforehand of the
Securities Market as it provides the car for adopting assets and managing risks. Today, the
auto of the abbreviation cannot move afterwards the Securities Market. Indeed, it is a beat
concern for accomplishing amazing numbers in acceding of bread-and-butter growth.

Further, today’s Securities Markets are in fact adapted from what they were 10 years ago or
will be in the next 10 years. They would acquire in transition. There would be ups and downs.
Abounding would achieve and abounding would vanish alternating the transformation
journey. This would consistently be the reconfirmation of the point that businesses are no
added businesses; they acquire become battles of competency.

To conclude, I would say that the Securities Market befalling breadth is appliance about and
accession somewhere. This may appear paradoxical. It accept to be accustomed that
administering demands a afire focus on arising opportunities, capability building, strategies
for the administering position in the befalling zones and principles-centered business
practices. Therefore, we allegation to accomplish a culture, which embraces change and
moves avant-garde with an algid to lead. Let us attack for the abutting all-around
opportunities.

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BIBLIOGRAPHY

BOOKS:
1. Khan.M.Y, 2006, Financial Services, 3rd Edition, Tata Mcgraw Hill, New delhi-8.
2. Rejda.G.E, 2002, Principles of Risk Management & Insurance, 7th Edition, Pearson
Education.
3. Gordon & Natarajan, 2006, Financial Market and Services, 3rd Edition, Himalaya
Publishing House, Mumbai.
4. Learning cycle in capital market in India By R.khannan.

WEBSITES:
www.nseindia.com.
www.bseindia.com.
www.capitalmarket in India.com.
www.wikipedia.org/wiki/capitalmarkets.
www.sebi.gov.in
www.rbi.org.in
www.angeltrade.com

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