INVESTMENT

DECISIONSANALAYSIS
WITH REFERENCE
TO INDIABULLS
HYDERABAD

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 ABSTRACT
The Investment Decision relates to the decision made by the investors or the top
level management with respect to the amount of funds to be deployed in
the investment opportunities. Simply, selecting the type of assets in which the
funds will be invested by the firm is termed as the investment decision. The
decision of investing funds in the long term assets is known as Capital
Budgeting. Thus, Capital Budgeting is the process of selecting the asset or an
investment proposal that will yield returns over a long period. The first step
involved in Capital Budgeting is to select the asset, whether existing or new on
the basis of benefits that will be derived from it in the future. The next step is to
analyze the proposal’s uncertainty and risk involved in it. Since the benefits are
to be accrued in the future, the uncertainty is high with respect to its returns.
Finally, the minimum rate of return is to be set against which the performance of
the long-term project can be evaluated. The investment made in the current
assets or short term assets is termed as Working Capital Management. The
working capital management deals with the management of current assets that
are highly liquid in nature. The investment decision in short-term assets is crucial
for an organization as a short term survival is necessary for the long-term
success. Through working capital management, a firm tries to maintain a trade-
off between the profitability and the liquidity.

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 INTRODUCTION TO INVESTMENTS
The Investment Decision relates to the decision made by the investors or the
top level management with respect to the amount of funds to be deployed in
the investment opportunities. Simply, selecting the type of assets in which
the funds will be invested by the firm is termed as the investment decision.

Simply, selecting the type of assets in which the funds will be invested by the
firm is termed as the investment decision. These assets fall into two categories:

1. Long Term Assets

2. Short-Term Assets

The decision of investing funds in the long term assets is known as Capital
Budgeting. Thus, Capital Budgeting is the process of selecting the asset or an
investment proposal that will yield returns over a long period.

The first step involved in Capital Budgeting is to select the asset, whether
existing or new on the basis of benefits that will be derived from it in the future.

The next step is to analyze the proposal’s uncertainty and risk involved in it.
Since the benefits are to be accrued in the future, the uncertainty is high with
respect to its returns.

Finally, the minimum rate of return is to be set against which the performance of
the long-term project can be evaluated.

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The investment made in the current assets or short term assets is termed as
Working Capital Management. The working capital management deals with the
management of current assets that are highly liquid in nature.

The investment decision in short-term assets is crucial for an organization as a

short term survival is necessary for the long-term success. Through working
capital management, a firm tries to maintain a trade-off between the profitability
and the liquidity.

In case a firm has an inadequate working capital i.e. less funds invested in the
short term assets, then the firm may not be able to pay off its current liabilities
and may result in bankruptcy. Or in case the firm has more current assets than
required, it can have an adverse effect on the profitability of the firm

Thus, a firm must have an optimum working capital that is necessary for the
smooth functioning of its day to day operations.

There are many different definitions of what ‘investment’ and ‘investing’

actually means. One of the simplest ways of describing it is using your
money to try and make more money. This can happen in many different
ways.
All investors are different. The common factor is that you would like to invest
money to aim to make it grow or to receive a regular income from it. We would
like to show you that choosing the most suitable investment for you does not
need to be difficult. All you need is the right help along the way.
The act committing money or capital to an endeavor with the expectation of
obtaining an additional income or profit is known as investment. Investing means
putting your money to work for you.
Investment has different meanings in finance and economics. Finance investment
is putting money into something with the expectation of gain, that upon thorough
analysis, has a high degree of security for the principal amount, as well as
security of return, within an expected period of time. In contrast putting money
into something with an expectation of gain without thorough analysis, without
security of principal, and without security of return is speculation or gambling.

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As such, those shareholders who fail to thoroughly analyze their stock purchases,
such as owners of mutual funds, could well be called speculators. Indeed, given
the efficient market hypothesis, which implies that a thorough analysis of stock
data is irrational, all rational shareholders are, by definition, not investors, but
speculators.

Investment is related to saving or deferring consumption. Investment is involved

in many areas of the economy, such as business management and finance
whether for households, firms, or governments.

To avoid speculation an investment must be either directly backed by the pledge

of sufficient collateral or insured by sufficient assets pledged by a third party. A
thoroughly analyzed loan of money backed by collateral with greater immediate
value than the loan amount may be considered an investment. A financial
instrument that is insured by the pledge of assets from a third party, such as a
deposit in a financial institution insured by a government agency may be
considered an investment. Examples of these agencies include, in the United
States, the Securities Investor Protection Corporation, Federal Deposit Insurance
Corporation, or National Credit Union Administration, or in Canada, the Canada
Deposit Insurance Corporation.

Promoters of and news sources that report on speculative financial transactions

such as stocks, mutual funds, oil and gas leases, commodities, and futures often
inaccurately or misleadingly describe speculative schemes as investment

1.1 NEED AND IMPORTANCE OF STUDY

 Investment decisions are importance because they will influence the

company size (fixed assets, sales, and retained earnings).

 They increase the value of the company’s shares and thus its credibility.

 The fact that they are irreversible means that they have to be made carefully
to avoid any mistake which can lead to the failure of such investment.

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 Due to heavy capital outlay, more attention is required to avoid loss of huge
sums of money which in the extreme may lead to the closure of such a
company.

1.2 SCOPE OF THE STUDY

 You can take investment decision only after analyzing entire process of
investment that starts with funds contribution and ends with getting
expectations fulfilled.

 The investment decision rules allow you to formalize the process and specify
what condition or conditions need to be met to accept the project.

 You will take decision only after ensuring that the required expectations in
terms of returns are ensured at any cost.
 The study is conducted to understand the functioning of Equities in India
Equity market.

1.3 OBJECTIVE OF THE STUDY

 To examine the practical usage of investment decisions of indiabulls ltd.
 To measure the present value of rupee invested.
 To know the of risk and uncertainty in indiabulls ltd.
 Top make suggestions on the basis of findings of the study.

1.4 RESEARCH METHODOLOGY

Equities, Bonds, Gold, Mutual Funds and Life Insurance were identified as
major types of investment decision. The primary data for the project
regarding investment and various investment decisions were collected
through interactions had with the employee in the organization i.e.
INDIABULLS LTD.
The secondary data for the project regarding investment and various
investment decisions were collected from websites, textbooks and magazine.

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Secondary method: The secondary data collection method includes:
 The lecturers delivered by the superintendents of respective departments.
 The brochures and material provided by INDIABULLS LTD.
 The data collected from the magazines of the NSE, economic times, etc.
 Various books relating to the investment capital market and other related
topic.

1.5 PERIOD OF STUDY

To carry out this study it collected data from the financial year 2018 to 2019.The,
critical analysis is made on certain parameters like returns, safety, liquidity, etc.
Giving weight age to the different type of needs of the investor and then
multiplying the same with the values assigned does this.

1.6 Tools and technique

1 Net present value

Rt = net cash inflow-outflows during a single period

i = discount rate or return that could be earned in alternative investments

t = number of time periods

The decision rule: Accept, if NPV > 0 Reject, if NPV < 0

2 Average rate of return

ARR= average returns during the period

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 Average investment
3 Profitability index
PI = NPV-( I0-C0)
(I0 - C0)
�I = Profitability index
�t = Total cash inflow in time period
�t = Total cost in time period

4. Present value
Pv1= CF1
1+R
�V1 = Present value of future cash flow after one year
�F1= Cash flow after one year
� = Discount rate which is, typically, between 0 and 1

5. The adjusted present value method

APV = NPV (all-equity financed case) + Present Value of the net benefits of
debt

1.7 LIMITATION OF STUDY

 The study was limited to only five investment decision.
 Most of the information collected is secondary data.
 The data is compared and analyzed on the basis of performance of the
investment decision over the past 7 years
 While considering the returns from mutual funds only top performing
schemes were analyzed.
 It was very difficult to obtain the date regarding the returns yielded by others
and hence averages are taken

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 CHAPTER-II

INDUSTRY PROFILE

&

COMPANY PROFILE

INDUSTRY PROFILE

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1. Evolution

Indian Stock Markets are one of the oldest in Asia. Its history dates back to
nearly 200 years ago. The earliest records of security dealings in India are
meager and obscure. The East India Company was the dominant institution in
those days and business in its loan securities used to be transacted towards the
close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses
took place in Bombay. Though the trading list was broader in 1839, there were
only half a dozen brokers recognized by banks and merchants during 1840 and
1850.

The 1850's witnessed a rapid development of commercial enterprise and

brokerage business attracted many men into the field and by 1860 the number of
brokers increased into 60.

In 1860-61 the American Civil War broke out and cotton supply from United
States of Europe was stopped; thus, the 'Share Mania' in India begun. The
number of brokers increased to about 200 to 250. However, at the end of the
American Civil War, in 1865, a disastrous slump began (for example, Bank of
Bombay Share which had touched Rs 2850 could only be sold at Rs. 87).

At the end of the American Civil War, the brokers who thrived out of Civil War
in 1874, found a place in a street (now appropriately called as Dalal Street)
where they would conveniently assemble and transact business. In 1887, they
formally established in Bombay, the "Native Share and Stock Brokers'
Association" (which is alternatively known as " The Stock Exchange "). In 1895,
the Stock Exchange acquired a premise in the same street and it was inaugurated
in 1899. Thus, the Stock Exchange at Bombay was consolidated.

2. Other leading cities in stock market operations

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Ahmadabad gained importance next to Bombay with respect to cotton textile
industry. After 1880, many mills originated from Ahmadabad and rapidly forged
ahead. As new mills were floated, the need for a Stock Exchange at Ahmadabad
was realized and in 1894 the brokers formed "The Ahmadabad Share and Stock
Brokers' Association".

What the cotton textile industry was to Bombay and Ahmadabad, the jute
industry was to Calcutta. Also tea and coal industries were the other major
industrial groups in Calcutta. After the Share Mania in 1861-65, in the 1870's
there was a sharp boom in jute shares, which was followed by a boom in tea
shares in the 1880's and 1890's; and a coal boom between 1904 and 1914. On
June 1914, some leading brokers formed "The Calcutta Stock Exchange
Association".

In the beginning of the twentieth century, the industrial revolution was on the
way in India with the Swadeshi Movement; and with the inauguration of the Tata
Iron and Steel Company Limited in 1913, an important stage in industrial
advancement under Indian enterprise was reached.

Indian cotton and jute textiles, steel, sugar, paper and flour mills and all
companies generally enjoyed phenomenal prosperity, due to the First World
War.

In 1920, the then demure city of Madras had the maiden thrill of a stock
exchange functioning in its midst, under the name and style of "The Madras
Stock Exchange" with 140 members. However, when boom faded, the number of
members stood reduced from 140 to 3, by 1923, and so it went out of existence.

In 1935, the stock market activity improved, especially in South India where
there was a rapid increase in the number of textile mills and many plantation
companies were floated. In 1937, a stock exchange was once again organized in
Madras - Madras Stock Exchange Association (Pvt) Limited. (In 1957 the name
was changed to Madras Stock Exchange Limited).

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Lahore Stock Exchange was formed in 1934 and it had a brief life. It was merged
with the Punjab Stock Exchange Limited, which was incorporated in 1936.

The Second World War broke out in 1939. It gave a sharp boom which was
followed by a slump. But, in 1943, the situation changed radically, when India
was fully mobilized as a supply base.

On account of the restrictive controls on cotton, bullion, seeds and other

commodities, those dealing in them found in the stock market as the only outlet
for their activities. They were anxious to join the trade and their number was
swelled by numerous others. Many new associations were constituted for the
purpose and Stock Exchanges in all parts of the country were floated.

The Uttar Pradesh Stock Exchange Limited (1940), Nagpur Stock Exchange
Limited (1940) and Hyderabad Stock Exchange Limited (1944) were
incorporated.

In Delhi two stock exchanges - Delhi Stock and Share Brokers' Association
Limited and the Delhi Stocks and Shares Exchange Limited - were floated and
later in June 1947, amalgamated into the Delhi Stock Exchnage Association
Limited.

3. Post-independence Scenario

Most of the exchanges suffered almost a total eclipse during depression. Lahore
Exchange was closed during partition of the country and later migrated to Delhi
and merged with Delhi Stock Exchange.

Bangalore Stock Exchange Limited was registered in 1957 and recognized in

1963.

Most of the other exchanges languished till 1957 when they applied to the
Central Government for recognition under the Securities Contracts (Regulation)
Act, 1956. Only Bombay, Calcutta, Madras, Ahmadabad, Delhi, Hyderabad and
Indore, the well established exchanges, were recognized under the Act. Some of
the members of the other Associations were required to be admitted by the

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recognized stock exchanges on a concessional basis, but acting on the principle
of unitary control, all these pseudo stock exchanges were refused recognition by
the Government of India and they thereupon ceased to function.

Thus, during early sixties there were eight recognized stock exchanges in India
(mentioned above). The number virtually remained unchanged, for nearly two
decades. During eighties, however, many stock exchanges were established:
Cochin Stock Exchange (1980), Uttar Pradesh Stock Exchange Association
Limited (at Kanpur, 1982), and Pune Stock Exchange Limited (1982), Ludhiana
Stock Exchange Association Limited (1983), Gauhati Stock Exchange Limited
(1984), Kanara Stock Exchange Limited (at Mangalore, 1985), Magadh Stock
Exchange Association (at Patna, 1986), Jaipur Stock Exchange Limited (1989),
Bhubaneswar Stock Exchange Association Limited (1989), Saurashtra Kutch
Stock Exchange Limited (at Rajkot, 1989), Vadodara Stock Exchange Limited
(at Baroda, 1990) and recently established exchanges - Coimbatore and Meerut.
Thus, at present, there are totally twenty one recognized stock exchanges in India
excluding the Over The Counter Exchange of India Limited (OTCEI) and the
National Stock Exchange of India Limited (NSEIL).

The Table given below portrays the overall growth pattern of Indian stock
markets since independence. It is quite evident from the Table that Indian stock
markets have not only grown just in number of exchanges, but also in number of
listed companies and in capital of listed companies. The remarkable growth after
1985 can be clearly seen from the Table, and this was due to the favouring
government policies towards security market industry.

4. Trading Pattern of the Indian Stock Market

Trading in Indian stock exchanges are limited to listed securities of public

limited companies. They are broadly divided into two categories, namely,
specified securities (forward list) and non-specified securities (cash list). Equity
shares of dividend paying, growth-oriented companies with a paid-up capital of
atleast Rs.50 million and a market capitalization of atleast Rs.140 million and

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more than 20,000 shareholders are, normally, put in the specified group and the
balance in non-specified group.

Two types of transactions can be carried out on the Indian stock exchanges: (a)
spot delivery transactions "for delivery and payment within the time or on the
date stipulated when entering into the contract which shall not be more than 14
days following the da having te of the contract" : and (b) forward transactions
"delivery and payment can be extended by further period of 14 days each so that
the overall period does not exceed 90 days from the date of the contract". The
latter is permitted only in the case of specified shares. The brokers who carry
over the outstandings pay carry over charges (cantango or backwardation) which
are usually determined by the rates of interest prevailing.

A member broker in an Indian stock exchange can act as an agent, buy and sell
securities for his clients on a commission basis and also can act as a trader or
dealer as a principal, buy and sell securities on his own account and risk, in
contrast with the practice prevailing on New York and London Stock Exchanges,
where a member can act as a jobber or a broker only.

The nature of trading on Indian Stock Exchanges are that of age old conventional
style of face-to-face trading with bids and offers being made by open outcry.
However, there is a great amount of effort to modernize the Indian stock
exchanges in the very recent times.

5. Over The Counter Exchange of India (OTCEI)

The traditional trading mechanism prevailed in the Indian stock markets gave
way to many functional inefficiencies, such as, absence of liquidity, lack of
transparency, unduly long settlement periods and benami transactions, which
affected the small investors to a great extent. To provide improved services to
investors, the country's first ringless, scripless, electronic stock exchange -
OTCEI - was created in 1992 by country's premier financial institutions - Unit
Trust of India, Industrial Credit and Investment Corporation of India, Industrial
Development Bank of India, SBI Capital Markets, Industrial Finance

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Corporation of India, General Insurance Corporation and its subsidiaries and
CanBank Financial Services.

Trading at OTCEI is done over the centres spread across the country. Securities
traded on the OTCEI are classified into:

 Listed Securities - The shares and debentures of the companies listed on the
OTC can be bought or sold at any OTC counter all over the country and they
should not be listed anywhere else

 Permitted Securities - Certain shares and debentures listed on other

exchanges and units of mutual funds are allowed to be traded

 Initiated debentures - Any equity holding atleast one lakh debentures of a

particular scrip can offer them for trading on the OTC.

OTC has a unique feature of trading compared to other traditional exchanges.

That is, certificates of listed securities and initiated debentures are not traded at
OTC. The original certificate will be safely with the custodian. But, a counter
receipt is generated out at the counter which substitutes the share certificate and
is used for all transactions.

In the case of permitted securities, the system is similar to a traditional stock

exchange. The difference is that the delivery and payment procedure will be
completed within 14 days.

Compared to the traditional Exchanges, OTC Exchange network has the

following advantages:

 OTCEI has widely dispersed trading mechanism across the country which
provides greater liquidity and lesser risk of intermediary charges.

 Greater transparency and accuracy of prices is obtained due to the screen-

based scripless trading.
 Since the exact price of the transaction is shown on the computer screen, the
investor gets to know the exact price at which s/he is trading.

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 Faster settlement and transfer process compared to other exchanges.

 In the case of an OTC issue (new issue), the allotment procedure is

completed in a month and trading commences after a month of the issue
closure, whereas it takes a longer period for the same with respect to other
exchanges.

Thus, with the superior trading mechanism coupled with information

transparency investors are gradually becoming aware of the manifold advantages
of the OTCEI.

With the liberalization of the Indian economy, it was found inevitable to lift the
Indian stock market trading system on par with the international standards. On
the basis of the recommendations of high powered Pherwani Committee, the
National Stock Exchange was incorporated in 1992 by Industrial Development
Bank of India, Industrial Credit and Investment Corporation of India, Industrial
Finance Corporation of India, all Insurance Corporations, selected commercial
banks and others.

Trading at NSE can be classified under two broad categories:

(a) Wholesale debt market and

(b) Capital market.

Wholesale debt market operations are similar to money market operations -

institutions and corporate bodies enter into high value transactions in financial
instruments such as government securities, treasury bills, public sector unit
bonds, commercial paper, certificate of deposit, etc.

There are two kinds of players in NSE:

(a) trading members and

(b) participants.

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Recognized members of NSE are called trading members who trade on behalf of
themselves and their clients. Participants include trading members and large
players like banks who take direct settlement responsibility.

Trading at NSE takes place through a fully automated screen-based trading

mechanism which adopts the principle of an order-driven market. Trading
members can stay at their offices and execute the trading, since they are linked
through a communication network. The prices at which the buyer and seller are
willing to transact will appear on the screen. When the prices match the
transaction will be completed and a confirmation slip will be printed at the office
of the trading member.

NSE has several advantages over the traditional trading exchanges. They are as
follows:

 NSE brings an integrated stock market trading network across the nation.

 Investors can trade at the same price from anywhere in the country since
inter-market operations are streamlined coupled with the countrywide access
to the securities.

 Delays in communication, late payments and the malpractice’s prevailing in

the traditional trading mechanism can be done away with greater operational
efficiency and informational transparency in the stock market operations,
with the support of total computerized network.

Unless stock markets provide professionalized service, small investors and

foreign +++ will not be interested in capital market operations. And capital
market being one of the major source of long-term finance for industrial projects,
India cannot afford to damage the capital market path. In this regard NSE gains
vital importance in the Indian capital market system.

Preamble

Often, in the economic literature we find the terms ‘development’ and ‘growth’
are used interchangeably. However, there is a difference. Economic growth

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refers to the sustained increase in per capita or total income, while the term
economic development implies sustained structural change, including all the
complex effects of economic growth. In other words, growth is associated with
free enterprise, where as development requires some sort of control and
regulation of the forces affecting development. Thus, economic development is a
process and growth is a phenomenon.

Economic planning is very critical for a nation, especially a developing country

like India to take the country in the path of economic development to attain
economic growth.

One of the major objective of planning in India is to increase the rate of

economic development, implying that increasing the rate of capital formation by
raising the levels of income, saving and investment. However, increasing the rate
of capital formation in India is beset with a number of difficulties. People are
poverty ridden. Their capacity to save is extremely low due to low levels of
income and high propensity to consume. Therefor, the rate of investment is low
which leads to capital deficiency and low productivity. Low productivity means
low income and the vicious circle continues. Thus, to break this 5vicious
economic circle, planning is inevitable for India.

The market mechanism works imperfectly in developing nations due to the

ignorance and unfamiliarity with it. Therefore, to improve and strengthen market
mechanism planning is very vital. In India, a large portion of the economy is
non-monitised; the product, factors of production, money and capital markets is
not organized properly. Thus the prevailing price mechanism fails to bring about
adjustments between aggregate demand and supply of goods and services. Thus,
to improve the economy, market imperfections has to be removed; available
resources has to be mobilized and utilized efficiently; and structural rigidities has
to be overcome. These can be attained only through planning.

In India, capital is scarce; and unemployment and disguised unemployment is

prevalent. Thus, where capital was being scarce and labour being abundant,
providing useful employment opportunities to an increasing labour force is a

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difficult exercise. Only a centralized planning model can solve this macro
problem of India.

Further, in a country like India where agricultural dependence is very high, one
cannot ignore this segment in the process of economic development. Therefore,
an economic development model has to consider a balanced approach to link
both agriculture and industry and lead for a paralleled growth. Not to mention,
both agriculture and industry cannot develop without adequate infrastructural
facilities which only the state can provide and this is possible only through a well
carved out planning strategy. The government’s role in providing infrastructure
is unavoidable due to the fact that the role of private sector in infrastructural
development of India is very minimal since these infrastructure projects are
considered as unprofitable by the private sector.

Further, India is a clear case of income disparity. Thus, it is the duty of the state
to reduce the prevailing income inequalities. This is possible only through
planning.

6. Planning History of India

The development of planning in India began prior to the first Five Year Plan of
independent India, long before independence even. The idea of central directions
of resources to overcome persistent poverty gradually, because one of the main
policies advocated by nationalists early in the century. The Congress Party
worked out a program for economic advancement during the 1920’s, and 1930’s
and by the 1938 they formed a National Planning Committee under the
chairmanship of future Prime Minister Nehru. The Committee had little time to
do anything but prepare programs and reports before the Second World War
which put an end to it. But it was already more than an academic exercise remote
from administration. Provisional government had been elected in 1938, and the
Congress Party leaders held positions of responsibility. After the war, the Interim
government of the pre-independence years appointed an Advisory Planning
Board. The Board produced a number of somewhat disconnected Plans itself.

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But, more important in the long run, it recommended the appointment of a
Planning Commission.

The Planning Commission did not start work properly until 1950. During the
first three years of independent India, the state and economy scarcely had a
stable structure at all, while millions of refugees crossed the newly established
borders of India and Pakistan, and while ex-princely states (over 500 of them)
were being merged into India or Pakistan. The Planning Commission as it now
exists, was not set up until the new India had adopted its Constitution in January
1950.

The Planning Commission was set up the following Directive principles :

 To make an assessment of the material, capital and human resources of the

country, including technical personnel, and investigate the possibilities of
augmenting such of these resources as are found to be deficient in relation to
the nation’s requirement.

 To formulate a plan for the most effective and balanced use of the country’s
resources.

 Having determined the priorities, to define the stages in which the plan
should be carried out, and propose the allocation of resources for the
completion of each stage.

 To indicate the factors which are tending to retard economic development,

and determine the conditions which, in view of the current social and
political situation, should be established for the successful execution of the
Plan.

 To determine the nature of the machinery this will be necessary for securing
the successful implementation of each stage of Plan in all its aspects.

 To appraise from time to time the progress achieved in the execution of each
stage of the Plan and recommend the adjustments of policy and measures that
such appraisals may show to be necessary.

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 To make such interim or auxiliary recommendations as appear to it to be
appropriate either for facilitating the discharge of the duties assigned to it or
on a consideration of the prevailing economic conditions, current policies,
measures and development programs; or on an examination of such specific
problems as may be referred to it for advice by Central or State
Governments.

The long-term general objectives of Indian Planning are as follows:

 Increasing National Income

 Reducing inequalities in the distribution of income and wealth

 Elimination of poverty

 Providing additional employment; and

 Alleviating bottlenecks in the areas of : agricultural production,

manufacturing capacity for producer’s goods and balance of payments.

Economic growth, as the primary objective has remained in focus in all Five
Year Plans. Approximately, economic growth has been targeted at a rate of five
per cent per annum. High priority to economic growth in Indian Plans looks very
much justified in view of long period of stagnation during the British rule

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COMPANY PROFILE

1. INTRODUCTION

Indiabulls is India’s leading Financial and Real Estate Company with a

wide presence throughout India. They ensure convenience and reliability in all
their products and services. Indiabulls has over 640 branches all over India. The
customers of Indiabulls are more than 4,50,000 which covers from a wide range
of financial services and products from securities, derivatives trading, depositary
services, research & advisory services, consumer secured & unsecured credit,
loan against shares and mortgage & housing finance. The company employs
around 4000 Relationship managers who help the clients to satisfy their
customized financial goals. Indiabulls entered the Real Estate business in the
year 2005 with its group of companies. Large scale projects worth several
hundred million dollars are evaluated by them.
Indiabulls Financial Services Ltd is listed on the National Stock Exchange
(NSE), Bombay Stock Exchange (BSE) and Luxembourg Stock Exchange. The
market capitalization of Indiabulls is around USD 2500 million (29thDecember,
2006). Consolidated net worth of the group is around USD 700 million.
Indiabulls and its group companies have attracted USD 500 million of equity
capital in Foreign Direct Investment (FDI) since March 2000. Some of the large
shareholders of Indiabulls are the largest financial institutions of the world such
as Fidelity Funds, Goldman Sachs, Merrill Lynch, Morgan Stanley and Farallon
Capital.

In middle of 1999, when e-commerce was just about starting in India, Sameer
Gehlaut and his close IIT Delhi friend Rajiv Rattan got together and bought a
defunct securities company with a NSE membership and started offering
brokerage services . A Few months later, their friend Saurabh Mittal also joined
them. By December 1999, the company embarked on its journey to build one of
the first online platforms in India for offering internet brokerage services. In

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January 2000, the 3 founders incorporated Indiabulls Financial Services and
made it as the flagship company.

In mid 2000, Indiabulls Financial Services received venture capital funding from
Mr L.N. Mittal & Mr Harish Fabiani. In late 2000, Indiabulls Securities, a
subsidiary of Indiabulls Financial Services started offering online brokerage
services and simultaneously opened physical offices across India. By 2003,
Indiabulls securities had established a strong pan India presence and client base
through its offices and on the internet.

In September 2004, Indiabulls Financial Services went public with an IPO at Rs

19 a share. In late 2004, Indiabulls Financial Services started its financing
business with consumer loans. In March 2005, Indiabulls Properties Private Ltd,
a subsidiary of Indiabulls Financial Services, participated in government auction
of Jupiter Mills, a defunct 11 acre textile mill owned by NTC in Lower Parel,
Mumbai. Indiabulls Properties private Ltd won the mill in auction and that
purchase started Indiabulls real estate business. A few months later, Indiabulls
Real Estate company pvt ltd bought Elphinstone mill in Lower Parel, another
textile mill auctioned by NTC.

With real estate business gaining size, Indiabulls Financial Services demerged
the real estate business under Indiabulls Real Estate and each shareholder of
Indiabulls Financial Services received additional share of Indiabulls Real Estate
through the demerger. Subsequently, Indiabulls Financial Services also
demerged Indiabulls Securities and each shareholder of Indiabulls Financial
Services also received a share of Indiabulls Securities.

In year 2013, Indiabulls Real Estate incorporated a 140% subsidiary, Indiabulls

Power, to build power plants and started work on building Nashik & Amrawati
thermal power plants. Indiabulls Power went public in September 2013.

Today, Indiabulls Group has a networth of Rs 16,796 Crore & has a strong
presence in important sectors like financial services, power & real estate through
independently listed companies and Indiabulls Group continues its journey of
building businesses with strong cash flows.

23
MANAGEMENT TEAM

Indiabulls Group

 Mr Rajiv Rattan - Vice Chairman

 Mr Saurabh Mittal - Vice Chairman
 Mr Gagan Banga - Group Spokesperson
 Mr Ashok Kacker - Group President
 Mr Saket Bahuguna - Group CLO
 Mr Ashok Sharma - Group CFO
 Mr Ajit Mittal - Group Director
 Mr Gurbans Singh - Group Director
 Mr Tejinderpal Singh Miglani - Group CIO

Indiabulls Financial Services Limited

 Mr Gagan Banga - CEO

 Mr Ashwini Kumar Hooda - DMD

Indiabulls Real Estate Limited

 Mr Vipul Bansal - CEO

 Mr Narendra Gehlaut - Joint MD

Indiabulls Power Limited

 Mr Ranjit Gupta - CEO

 Mr Murali Subramanian - COO

Indiabulls Securities Limited

 Mr Divyesh Shah - CEO

 Mr Vijay Babbar – DMD

24
Indiabulls supports Money life Foundation in Empowering
Investors

“Money life Foundation” in collaboration with Indiabulls, recently organized an

‘Investor, Empower Yourself’ seminar, which was held at the lush Town &
Country Club at New Gurgaon, in the National Capital Region (NCR), on
Saturday, 7th May 2011. This was the first occasion for Money life Foundation
to venture into other territories outside Maharashtra. Indiabulls played a major
role in helping this event happen successfully.

The event witnessed over 300 attendees not only from Gurgaon but also from
other parts of National Capital Region (NCR), Delhi, Allahabad, Ludhiana,
Chandigarh & other cities from northern region of India. The venue was fully
packed with eager & curious investors. “Moneylife Foundation” expressed its
gratitude towards helpful team of Indiabulls led by Mr. Gagan Banga, CEO -
Indiabulls Financial Services Ltd, for making this event such a huge success.

The event started with introductory remarks & guidance by Mr. Gagan Banga,
CEO - Indiabulls Financial Services Ltd. Mr. Veeresh Malik, Consulting Editor,
Moneylife, Delhi gave a brief introduction about Moneylife Foundation.Then
audience was guided by Sucheta Dalal, Trustee - Moneylife Foundation and
Managing Editor- Moneylife, on How to be Safe with your money& Debashis
Basu, Trustee - Moneylife Foundation and Editor- Moneylife about How to be
smart with your investments. Mr. Sachin Choudhary, Director & Business Head -
Indiabulls Housing Finance Ltd, talked about Do's and Don’ts of Housing
Mortgages. Ms. Sucheta Dalal also explained the importance & procedure of
Wills & Nominations.

This event helped people in understanding how to become an aware and

empowered investor. The attendees included both finically literate & new
investors. They posted number of intelligent questions which were adequately
answered by all the speakers. Empowering today’s investors by creating
awareness and guiding them in taking wise decisions when it comes to money or
investments was the main objective of ‘Investor, Empower Yourself’ seminar.

25
During the Panel Discussion with the panel members Sucheta Dalal, Debashis
Basu & Sachin Choudhary, quite a few interesting & informative issues
regarding Investments were discussed. Mr. Monu Ratra, National Sales Manager
- Indiabulls housing Finance Ltd gave Vote of Thanks.

This event received many request and suggestions from audience about
continuing with such events all over India so that citizens of India will be more
empowered investors & ultimately nation will benefit from it. There were some
requests from audience to telecast further events live on television & internet so
that those who are unable to attend the event will also get the guidance. The
knowledge shared about the investments during the event was well appreciated
by all.

Moneylife Foundation has been instrumental in promoting financial literacy &

pro-customer advocacy in India. Moneylife Foundation has been organizing
such events at the Moneylife Knowledge Centre in Mumbai, and also in various
cities across Maharashtra. The Foundation has completed 15 months of
spreading financial literacy & has hosted around 49 speakers and 61 events.
Currently, more than 5,000 people are members of the Foundation.

After the seminar, Indiabulls received feedbacks from some attendees

congratulating Indiabulls’ team about the success of seminar. Many of the
attendees mentioned that they are looking forward to such seminars in future.

Indiabulls has been participating in such Corporate Social Activities with many
other socially aware groups and trusts & Indiabulls is committed to continue in
doing so in future.

THE HUB

The Hub at One Indiabulls Centre at Lower Parel is an intelligently designed

business centre in Mumbai

In the past few years serviced office industry has been maturing in India and
today is a mainstream occupancy option for businesses of all sizes. Whether a

26
start-up, SME or a multi-national, companies are now opting for viable
alternative to leasing or the outright purchase of commercial workspace.

Thus managed business centers have emerged as an innovative solution to these

workspace requirements. The Hub at One Indiabulls Centre at Lower Parel is one
such intelligently designed business centre in Mumbai that offers 25,000sqft of
fully equipped, serviced workspace not only suitable for large corporations but
also for small businesses and lean team set ups due to the option of small
customized spaces.

The real advantage of The Hub is not just that it is more cost effective but also it
offers best possible working environment by offering conveniences such as
advanced security, pantry and maintenance services including IT and utility bills
for electricity, water & HVAC.

What’s more, those moving into The Hub serviced offices enjoy the added
benefit of cutting edge IT and telecom infrastructure, reception and secretarial
support, hi-tech meeting rooms and video conferencing suites as well as business
lounge, food courts and state of the art fitness centre.

Not to forget among various factors that can affect a business and its success and
growth, is the address or the location of the office especially those of newly
established enterprises. The Hub within a world class contemporary business
complex located between Nariman Point and Bandra Kurla Complex and in close
proximity to Bandra Worli Sea Link is undeniably in the finest commercial
location in Mumbai’s upcoming central business district- Lower Parel.

Undeniably, The Hub is a new age business centre that provides a very attractive
proposition to businesses of all sizes to help their own business grow and
prosper.

Indiabulls CSR Initiative - Drug Access Program for cancer

patients in partnership with Novartis

27
As part of our deep commitment to social causes, Indiabulls has taken up this
noble project named “Novartis Oncology Access” in partnership with Novartis
(manufacturer of drugs) & Max foundation (NGO). We as the financial partner
are helping them assess actual income of patient & family & based on assessed
income; recommend the drugs donation slab as per approved guidelines & SOP.

Novartis are the developers & makers of Glivec (Imatinib) - a medication for the
treatment of Ph+ chronic myeloid leukemia (CML) in chronic phase, accelerated
phase and blast crisis for both pediatric and adult patients. This drug is also
indicated for adult patients with adjuvant, unresectable and/or metastatic c-kit /
cd-117 gastrointestinal stromal tumors (GIST). Tasigna (nilotinib) a drug
recently launched by Novartis is used as medication for the treatment of Ph+
chronic myeloid leukemia (CML) in chronic phase, accelerated phase and blast
crisis for only adult patients.

NOA program:

The NOA program is a drug access program for to help patients who have been
prescribed Glivec and Tasigna but cannot afford to pay for the entire treatment
cost. This program is run by Novartis along with its partner Physicians- enrolls
patient under this program after diagnosis, The MAX Foundation- independent
NGO – Assist patient throughout the program in completing formalities &
procurement of medicines, Indiabulls Financial Services - independent body
for financial evaluation of patient, collection & safekeeping the submitted
documents with confidentiality and C&F outlets – Independent pharmacist,
dispenses drugs to patients & manage drug inventory.

Indiabulls Financial Services: As a NOA partner we are performing task of the

local credit evaluation agency which works as an independent and unbiased body
for the financial analysis and assessment of the patient and family members’
earning capacity to afford medical expenses on critical disease. The analysis
bases on income levels assessment by way of financial evaluation ,field
verification, living standard, personal discussion with patient/ care taker &
guidelines as per standard operating procedure (SOP) which is prepared by

28
Novartis based on the WHO guidelines for drug donation programs using
Business for Social Responsibility’s (BSR) cost of living index, a well-
established international guide often used as eligibility criteria for determining
access to drug assistance programs. Based on the family composite Income a
suitable donation decision is given.

Contractibility

Indiabulls has designated a dedicated Help-Line Number: 022 30491720 that

will receive patient calls during office hours (9:00 a.m. to 6.00 p.m.) so it may
handle in-bound calls in response only to queries regarding the submission of
requirements for the NOA. For any medical or clinical queries, Indiabulls
Financial Services refer patients to their treating physician.

Businesses

Indiabulls Group is one of the country's leading business houses with business
interests in Power, Financial Services, Real Estate and Infrastructure . Indiabulls
Group companies are listed in Indian and overseas financial markets. The Net
worth of the Group is Rs 16,796 Crore and the total planned capital expenditure
of the Group by 2013-14 is Rs 35,000 Crore.

Indiabulls Power is currently developing Thermal Power Projects with an

aggregate capacity of 5400 MW. The first unit is expected to go on stream in
May 2012. The net worth of Indiabulls Power is Rs 3,917 Crore. The company
has a total capital expenditure of Rs 27,500 Crore. The company has been
assigned 'BBB' rating.

Indiabulls Financial Services is one of India’s leading non-banking finance

companies providing Home Loans, Commercial Vehicle Loans and Secured
SME Loans. The company has a net worth of Rs 4,680 crore with an asset book
of over Rs 18,500 Crore. The company has disbursed loans over Rs 45,000 Crore
to over 3,00,000 customers till date. Amongst its financial services and banking
peers, Indiabulls Financial Services ranks amongst the top few companies both in

29
terms of net worth and capital adequacy. Indiabulls Financial Services has been
assigned ‘AA+’ rating and has presence in over 90 cities and towns with a total
branch network of 140 branches.

Indiabulls Real Estate is among India's top Real Estate companies with
development projects spread across residential complexes, integrated townships,
commercial office complexes, hotels, malls, Special Economic Zones (SEZs) and
infrastructure development. Indiabulls Real Estate partnered with Farallon
Capital Management LLC of USA to bring the first FDI into real estate in the
country. The company has a networth of Rs 7,953 Crore and has purchased
prime land, mostly in the metros and other Tier 1 cities worth Rs 4,000 Crore in
government auctions alone. Indiabulls Real Estate is currently developing 57
million sqft into premium quality, high-end commercial, residential and retail
spaces. The company has been assigned 'A+' rating.

Indiabulls Securities is one of India's leading capital markets companies

providing securities broking and advisory services. Indiabulls Securities also
provides depository services, equity research services and IPO distribution to its
clients and offers commodities trading through a separate company. These
services are provided both through on-line and off-line distribution channels.
Indiabulls Securities is a pioneer of on-line securities trading in India. Indiabulls
Securities’ in-house trading platform is one of the fastest and most efficient
trading platforms in the country. Indiabulls Securities has been assigned the
highest rating BQ-1 by CRISIL.

Indiabulls foundation

India has witnessed an economic transformation over the past two decades,
translating into higher incomes, better educational opportunities, improved
infrastructure, a dynamic private sector, and leadership in the global community.
We have much to be proud of.

But we also recognize that we have a long way to go. Over 700 million people
live under $2 a day. Learning levels in schools remain abysmally low, most of
our rural population do not have access to basic health care, regular electricity,

30
clean water, and sanitation. India has some of the world’s worst statistics on
basic development indicators such as malnutrition, infant mortality, and gender
discrimination.

As a society, we are at the confluence of accelerated economic progress and

extreme deprivation, all in the same country, at the same time.

As corporate citizens, we at Indiabulls are conscious of the opportunities

and the responsibility that this confluence presents.

Investments to increase income levels of our poorest people will expand business
opportunities manifold. Investments to improve education, health and skills
training will improve the efficiency of the economy. Protecting our environment
will actually lower our costs of doing business. Providing our youth with gainful
employment and a chance to improve their lives will ensure societal and political
stability- setting a strong foundation for economic sustainability. All of these
investments will help create an inclusive society, ensuring a sustainable return to
our shareholders.

The Indiabulls Group is keen to help in building an inclusive and prosperous

society and we are beginning our efforts in this direction through Indiabulls
Foundation.

One of the first initiatives of the Foundation is to support the development of

rural districts. Our aim is to support development across multiple domains in a
district based approach. Some of the areas where we want to help are in
economic development and skills training, access to drinking water, school
education, public health, agriculture and support to the local government.

Commercial Vehicle Loans

Indiabulls Commercial Vehicle Loans offers commercial auto loans to a variety

of business owners. We are a preferred financer with first time buyers as well as
fleet operators providing commercial vehicle loans with simple documentation
and quick results.

31
 The Commercial Vehicle Finance provided by us helps the small
and medium operators to acquire vehicles with minimum hassle and
documentation.We provide customized financing options to suit your needs.Our
strength lies in the quick completion of transactions, long association with
transporters and the intimate knowledge of the market and its nuances.Our
finance schemes are easy to understand with no hidden costs.

We assure you a quick, transparent and hassle-free deal.

1. Product Offering

 Finance for new commercial vehicles

 Finance for used vehicles
 Tractor Loans

2. Proposed Finance

 Tyre Funding
 Accidental Funding
 Engine Funding
 Take over loans
 Top up loan on existing loan with us

3. Features of Loan Offering

 Loan for up to 15 years old vehicles.

 The best loan offering in the market – up to 95% for used
vehicles & 140% for new commercial vehicle chassis
 Max tenure of upto 48 months for used vehicles 60 months for
new commercial vehicle chassis
 Max tenure of upto 48 months for used vehicles 60 months for
new commercial vehicle chassis
 Customized loan to suit your needs
 Door Step Services
 Easy Documentation

32
  Quick & Hassle free services
 Attractive Rate of Interest
 No intermediary or Direct Marketing Agent for loan process

Organisation structure-board of Directors

Senior Vice President

Regional Manager

Branch Manager
Senior Sales Manager

Support System Sales Function

RM/SRM
Back Office Local Compliance
Executive Officer

ARM

Dealer

33
Trading Products of Indiabulls Securities

34
Indiabulls Securities provide three products for trading. They are
 Cash Account
 Intraday Account
 Margin Trading (Mantra)

Cash Account: It provides the client to buy 4 times of cash balance in his
trading account.
Intraday Product: It provides the client to buy 8 times of his cash balance in the
trading account.
Mantra Account: Also called as margin trading, is a special account to buy on
leverage for a longer duration

Indiabulls Financial Services Ltd

Indiabulls Financial Services Ltd. was incorporated in the year 2005.The

Auditors of Indiabulls Financial Services Ltd. are Deloitte, Haskins & Sells. The
main activity of this company is in relation to securities and stock brokerage. It
was also responsible for setting up one of India’s first trading platforms.

The subsidiaries of Indiabulls Financial Services Ltd. include:

 Indiabulls Capital Services Ltd.

35
 Indiabulls Commodities Pvt. Ltd.
 Indiabulls Credit Services Ltd.
 Indiabulls Finance Co. Pvt. Ltd
 Indiabulls Housing Finance Ltd.
 Indiabulls Insurance Advisors Pvt. Ltd.
 Indiabulls Resources Ltd.
 Indiabulls Securities Ltd.

Projects Pipeline
Projects Launched in Q1 FY 13
1. BLU, Worli, Mumbai – 7‐Star luxury residential complex spread over 14 acres
in South Mumbai with breathtaking sea views
2. IB Golf City, Savroli, MMR – Premium residential township with 18‐hole golf
course spread over 350 acres of greens1 IB City Sonepat Haryana 150 Acres of
integrated township with plotted development commercialY 13
1. City, Sonepat, – development, and group housing
2. IB Enigma II, Sec 144, Gurgaon – Super premium residential complex with
Villa’s and high rise towers spread over 34 acres
3. IB Imperial, Sec 146, Gurgaon – 54 Acres of Integrated township with high
end residential apartments, villa’s, luxury retail and commercial
4. IB Commercial Centre, Sec 149, Gurgaon – Over 5 acres of commercial
development on the Dwarka Expressway
5. IB Greens, Chennai – Premium residential township with high rise towers near
the IT corridor spreadover 32 acres
6. IB Mint, Sec 144, Gurgaon – Iconic Commercial tower on the Dwarka
Expressway
7. IB Greens, Indore ‐ 15 Acres of Integrated township with high end residential
apartments, retail andcommercial in the heart of the city
8. IB Mega Mall, Agra & Kanpur – Destination mall/multiplex in the heart of the
city

The Bankers of Indiabulls Financial Services Ltd. are as follows:

36
 ABN-Amro Bank
 Andhra Bank
 Bank of Maharashtra
 Bank of Rajasthan Ltd.
 Canara Bank
 Citibank
 Corporation Bank
 Dena Bank
 Indiabulls securities ltd
 HSBC Ltd.
 INDIABULLS Ltd.
 IDBI Ltd
 Industrial Bank Ltd.
 ING Vysya Bank Ltd
 Karnataka Bank
 Punjab National Bank
 State Bank Of India
 Syndicate Bank
 Union Bank Of India
 UTI Bank Ltd.
 INDIABULLS STOCK BROKING Ltd.

37
 CHAPTER-III
LITERATURE
REVIEW

INVESTMENT DECISIONS

These days almost everyone is investing in something… even if it’s a savings

account at the local bank or a checking account the earns interest or the home
they bought to live in.

However, many people are overwhelmed when they being to consider the
concept of investing, let alone the laundry list of choices for investment vehicles.
Even though it may seem the everyone and their brothers knows exactly who,
what and when to invest in so they can make killing, please don’t be fooled.
Majorities of investor typically jump on the latest investment bandwagon and
probably don’t know as much about what’s out there as you think.

Before you can confidently choose an investment path that will help you achieve
your personal goals and objectives, it’s vitally important that you understand the

38
basics about the types of investments available. Knowledge is your strongest ally
when it comes to weeding out bad investment advice and is crucial to successful
investing whether you go at it alone or use a professional.

The investment option before you are many. Pick the right investment tool based
on the risk profile, circumstance, time available etc. if you feel the market
volatility is something, which you can live with then buy stocks. If you do not
want risk, the volatility and simply desire some income, then you should
consider fixed income securities. However, remember that risk and returns are
directly proportional to each other. Higher the risk, higher the returns.

39
 TYPES OF INVESTMENT OPTIONS

A brief preview of different investment options is given below:

Equities: Investment in shares of companies is investing in equities.
Stocks can be brought/sold from the exchanges (secondary market) or via IPO’s
– Initial Public Offerings (primary market). Stocks are the best long-term
investment options wherein the market volatility and the resultant risk of losses,
if given enough time, are mitigated by the general upward momentum of the
economy. There are two streams of revenue generation from this from of
investment.
1.Dividend: Periodic payments made out of the company’s profits are termed
as dividends.
2.Growth: The price of the stock appreciates commensurate to the growth
posted by the company resulting in capital appreciation.
On an average an investment in equities in India has a return of 25%. Good
portfolio management, precise timing may ensure a return of 40% or more.
Picking the right stock at the right time would guarantee that your capital gains
i.e. growth in market value of stock possessions, will rise.

Bonds: It is a fixed income (debt) instrument issued for a period of more than
one year with the purpose of raising capital. The central or state government,
corporations and similar institutions sell bonds. A bond is generally a promise to
repay the principal along with fixed rate of interest on a specified date, called as
the maturity date. Other fixed income instruments include bank deposits,
debentures, preference shares etc.
The average rate of return on bond and securities in India has been around 12-
15% p.a.

Mutual Fund: These are open and close-ended funds operated by an

investment company, which raises money from the public and invests in a group
of assets, in accordance with a stated set of objectives. It is a substitute for those
who are unable to invest directly in equities or debt because of resource, time or
knowledge constraints. Benefits include diversification and professional money

40
management. Shares are issued and redeemed on demand, based on the funs net
asset value, which is determined at the end of each trading session. The average
rate of return as a combination of all mutual funds put together is not fixed but is
generally more than what earn is fixed deposits. However, each mutual fund will
have its own average rate of return based on several schemes that they have
floated. In the recent past, Mutual Funs have given a return of 18 – 35%.

Precious Projects: Precious objects are items that are generally small in size
but highly valuable in monetary terms. Some important precious objects are like
the gold, silver, precious stones and also the unique art objects.

Life insurance: In broad sense, life insurance may be reviewed as an

investment. Insurance premiums represent the sacrifice and the assured the sum
the benefits. The important types of insurance policies in India are:

 Endowment assurance policy.

 Money back policy.
 Whole life policy.
 Term assurance policy.
 Unit-linked insurance plan.

REAL ESTATE RETURNS: Real Estate industry in India has come of

age and competes with other investment options in the structured markets.
Commercial real estate continues to be a desirable investment option in India.
On an average the returns from rental income on an investment in commercial
property in metros is around 12.5%, which is the highest in the world. In case of
other investment opportunities like bank deposits and bonds, the returns are in
the range of 5.5% - 6.5%. Rejuvenated demanded since early 2004 has led to the
firming up of real estate markets across the three sectors – commercial,
residential and retail. The supply just about matches demand in almost all
metros around the country. There has been an upward pressure on the real estate
values. From a technical perspective, robust demand and upward prices are
helping revive investment and speculative interest in real estate and this is being

41
further aided by excess money supply, stock market gains and policy changes in
favor of the real estate sector.

ALL ABOUT EQUITY INVESTMENT

Stocks are investments that represent ownership --- or equity --- in a corporation.
When you buy stocks, you have an ownership share --- however small --- in that
corporation and are entitled to part of that corporation’s earnings and assets.
Stock investors --- called shareholders or stockholders --- make money when the
stock increases in value or when the company the issued the stock pays
dividends, or a portion of its profits, to its shareholders.
Some companies are privately held, which means the shares are available to a
limited number of people, such as the company’s founders, its employees, and
investors who fund its development. Other companies are publicly traded, which
means their shares are available to any investor who wants to buy them.

The IPO
A company may decided to sell stock to the public for a number of reasons such
as providing liquidity for its original investor or raising money. The first time a
company issues stock is the initial public offering (IPO), and the company
receives the proceeds from that sale. After that, shares of the stock are treaded, or
brought and sold on the securities markets among investors, but the corporation
gets no additional income. The price of the stock moves up or down depending
on how much investors are willing to pay for it.
Occasionally, a company will issue additional shares of its stocks, called a
secondary offering, to raise additional capital.

Types Of Stocks
With thousands of different stocks trading on U.S. and international securities
markets, there are stocks to suit every investor and to complement every
portfolio.
For example, some stocks stress growth, while others provide income. Some
stocks flourished during boom time, while others may help insulate your

42
portfolio’s value against turbulent or depressed markets. Some stocks are pricey,
while others are comparatively inexpensive. And some stocks are inherently
volatile, while others tend to be more stable in value.

Growth & Income

Some stocks are considered growth investments, while others are considered
value investments. From an investing perspective, the best evidence of growth is
an increasing price over time. Stocks of companies that reinvest their earnings
rather than paying them out as dividends are often considered potential growth
investments. So are stocks of young, quickly expanding companies. Value
stocks, in contrast, are the stocks of companies that problems, have been under
performing their potential, or are out of favor with investors. As result, their
prices tend to be lower than seems justified, though they may still be paying
dividends. Investors who seek out value stocks expect them to stage a comeback.

Market Capitalization
One of the main ways to categorize stocks is by their market capitalization,
sometimes known as market value. Market capitalization (market cap) is
calculated by multiplying a company’s current stock price by the number of its
existing shares. For example, a stock with a current market value of $30 a share
and a hundred million shares of existing stock would have a market cap of $3
billion.

P/E ratio
A popular indicator of a stock’s growth potential is its price-to-earnings ratio, or
P/E – or multiple – can help you gauge the price of a stock in relation to its
earnings. For instance, a stock with a P/E of 20 is trading at a price 20 times
higher than its earnings.
A low P/E may be a sign that a company is a poor investment risk and that its
earnings are down. But it may also indicate that the market undervalues a
company because its stock price doesn’t reflect its earnings potential. Similarly,
a stock with a high P/E may live up to investor expectations of continuing
growth, or it may be overvalued.

43
Investor demand
People buy a stock when they believe it’s a good investment, driving the stock
price up. But if people think a company’s outlook is poor and either don’t invest
or sell shares they already own, the stock price will fall. In effect, investor
expectations determine the price of a stock.
For example, if lots of investors buy stock A, its price will be driven up. The
stock becomes more valuable because there is demand for it. But the reverse is
also true. If a lot of investors sell stock Z, its price will plummet. The further the
stock price falls, the more investors sell it off, driving the price down even more.

The Dividends
The rising stock price and regular dividends that reward investors and give them
confidence are tied directly to the financial health of the company.
Dividends, like earnings, often have a direct influence on stock prices. When
dividends are increased, the message is that the company is prospering. This in
turn stimulates greater enthusiasm for the stock, encouraging more investors to
buy, and riving the stock’s price upward. When dividends are cut, investors
receive the opposite message and conclude that the company’s future prospects
have dimmed. One typical consequence is an immediate drop in the stock’s
price.
Companies known as leaders in their industries with significant market share and
name recognition tend to maintain more stable values than newer, younger,
smaller, or regional competitors.

Earnings and Performance

Investor enthusiasm for a stock can sometimes take on a momentum of its own,
driving prices up independent of a company’s actual financial outlook. Similarly,
disinterest can drive prices down. But to a large extent, investors base their
expectations on a company’s sales and earnings as evidence of its current
strength and future potential.

44
When a company’s earnings are up, investor confidence increases and the price
of the stock usually rises. If the company is li9sin g money—or not making as
much as anticipated -- the stock price usually falls, sometimes rapidly.

45
 All ABOUT BONDS INVESTMENT

Have you ever-borrowed money? Of course you have whether we hit our parents
up for a few bucks to buy candy as children or asked the bank for a mortgage
most of us have borrowed money at some point in our lives.

Just as people need money so do companies and governments. A company needs

funds to expand into new markets, while governments need money for
everything from infrastructure to social programs. The problem large
organizations run into is that they typically need far more money than the
average bank can provide. The solution is to raise money by issuing bonds (or
other debt instruments) to a public market. Thousands of investors then each
lend a portion of the capital needed. Really a bond is nothing more than a loan
for which you are the lender. The organization that sells a bond is known as the
issuer. Your can think of a bond as an IOU given by a borrower (the issuer) to a
lender (the investor).

Of course, nobody would loan his or her hard-earned money for nothing. The
issuer of a bond must pay the investor something extra for the privilege of using
his or her money. This ‘extra’ comes in the form of interest payments, which are
made at a predetermined rate and schedule. The interest rate is often referred to
as the coupon. The date on which the issuer has to repay the amount borrowed
(known as face value) is called the maturity date. Bonds are known as fixed-
income securities because you know the exact amount of cash you’ll get back if
you hold the security until maturity. For example, say you buy a bond with a face
value of $1200 a coupon of 8% and a maturity of 12 years. This means you’ll
receive a total of $80 ($1200*8%) of interest per year for the next 12 years.
Actually because most bonds pay interest semi-annually you’ll receive two
payments of $40 a year for 12 years. When the bond matures after a decade,
you’ll get your $1200 back.

46
Face Value / Par Value
The face value (also known as the par value or principal) is the amount of money
a holder will get back once a bond matures. Newly issued bond usually sells at
the par value. Corporate bonds normally have a par value of $1200 but this
amount can be much greater for government bonds. What confuses many people
is that the par value is not the price of the bond. A bond’s price fluctuates
throughout its life in response to a number of variables (more on this later).
When a bond trades at a price above the face value, it is said to be selling a
premium. When a bond sells below face value it is said to be selling at a
discount.
Coupon (The Interest Rate)
The coupon is the amount the bondholder will receive as interest payments. It’s
called a ‘coupon’ because sometimes there are physical coupons on the bond that
you tear off and redeem for interest. However this was more common in the past.
Nowadays records are more likely to kept electronically.
As previously mentioned most bonds pay interest every six months but it’s
possible for them to pay monthly, quarterly or annually. The coupon is
expressed as a percentage of the par value. If a bond pays a coupon of 12% and
its par value is $1200 then it’ll pay %120 of interest a year. A rate that stays as a
fixed percentage of the par value like this is a fixed-rate bond. Another
possibility is an adjustable interest payment known as a floating-rate bond. In
this case the interest rate is tied to market rates through an index such as the rate
on Treasury bills.
You might think investors will pay more for a high coupon than for a low
coupon. All things being equal a lower coupon means that the price of the bond
will fluctuate more.
Maturity
The maturity date is the date in the future on which the investor’s principal will
be repaid. Maturities can range from as little as one day to as long as 20 years
(though terms of 120 years have been issued).
A bond that matures in one year is much more predictable and thus less risky
than a bond that matures in 20 years. Therefore in general the longer the time to

47
maturity the higher the interest rate. Also all things being equal a longer-term
bond will fluctuate more than a shorter-term bond.
Issuer
The issuer of a bond is a crucial factor to consider, as the issuers stability is your
main assurance of getting paid back. For example, the U.S government is far
more secure than any corporation. Its default risk (the chance of the debt not
being paid back) is extremely small–so small that U.S government securities are
known as risk free assets.

Yield to Maturity
Of course, these matters are always more complicated in real life. When bond
investor refers to yield, maturity (YMT). YTM is more advanced yield
calculation that show the interest payment you will receive (and assumes that
you will reinvest the interest payment at the same rate as the current yield on the
bond) plus any gain (if you purchased at discount) or loss (if you purchased at a
premium).
Knowing how to calculate YTM isn’t important right now. In fact, the
calculation is rather sophisticated and beyond the scope of this tutorial. The key
point here is that YTM is more accurate and enables you to compare bond with
different maturities coupons.

The link between Price and yield

The relationship of yield to price can be summarized as follows: when price goes
up, goes down and vice versa. Technically, you’d say the bonds and its yield are
inversely related.
Here’s a commonly asked question: How can high yield and high prices both be
good when they can’t happen at the same time? The answer depends on your
point of view. If you are a bond buyer, you want high yields. A buyer wants to
pay $800 for the $1,000 bond, which gives the bond, a high yield of 14.5%. On
the other hand, if you already own a bond, you’ve locked in your interest rate, so
you hope the price of the bond goes up. This can cash out by selling your bond
in the future.

48
Price in the Market
So far we’ve discussed the factors of face value, coupon, maturity, issuers and
yield. All if these characteristics of a bond play a role in its price, However, the
factor that influences a bond more than any other is the level of prevailing
interest rates in the economy. When interest rates rise, the prices of bonds in the
market fall, thereby raising the yield of older bonds and bringing them into line
with newer bonds being issued with higher coupons. When interest rates fall the
prices of bonds in the market rise, thereby lowering the yield of the older bonds
and bringing them into line with newer bonds being issued with lower coupons.

Different Types of Bonds

Government Bonds
In general, fixed-income securities are classified according to the length of time
before maturity. These are the three main categories:
Bill – debt securities maturing in less than one year,
Notes – debt securities maturing in one to 12 years.
Bonds - debt securities maturing in more than 12 years.

Municipal Bonds
Municipal bonds, known as “munis”, are the next progression in terms of risk.
Cities don’t go bankrupt that often, but it can happen. The major advantage to
munis is that the returns are free from federal tax. Furthermore, local
governments will sometimes make their debt non-taxable for residents, thus
making some municipal bonds completely tax-free. Because of these tax
savings, the yield on a muni a usually lower than that of a taxable bond.
Depending on your personal situation, a muni can be great investment on an
investment on an after-tax basis.

Corporate Bonds
A company can issued bonds just as it can issue stock. Large corporations have a
lot of flexibility as to how much debt they can issue: the limit is whatever the

49
market will bear. Generally, a short-term corporate bond is less than five years;
intermediate is five to 14 years, and long term is over 14 years.
Corporate bonds are characterized by higher yi8eld because there is a higher risk
of a company defaulting than a government. The upside is that they can also be
the most rewarding fixed-income investments because of the risk the investor
must take on. The company’s credit quality is very important: the higher the
quality, the lower the interest rate the investor receives.
Other variations on corporate bonds include convertible bonds, which the holder
can convert into stock, and callable bonds, which allow the company to redeem
an issue prior to maturity.
Risks
As with any investment, there are risks inherent in buying even the most highly
related bonds. For example, your bond investment may be called, or redeemed
by the issuer, before the maturity date. Economic downturns and poor
management on the part of the bond issuer can also negatively affect your bond
investment. These risks can be difficult to anticipate, but learning how to better
recognize the warning signs and knowing how to respond will help you succeed
as a bond investor.

50
 ALL ABOUT GOLD INVESTMENT
Gold is the oldest precious metal known to man. Therefore, it is a timely subject
for several reasons. It is the opinion of the more objective market experts that the
traditional investment vehicles of stocks and bonds are in the areas of their all-
time highs and may due for a severe correction.
Why gold is “good as old” is an intriguing question. However, we think that the
more pragmatic ancient Egyptians were perhaps more accurate in observing that
gold’s value was a function of its pleasing physical characteristics its scarcity.
WORLD GODL INDUSTRY
 Gold is primarily monetary asset and partly a commodity.
 The Gold market is highly liquid and gold held by central banks, other major
institutions and retail Jeweler keep coming back to the market.
 Economic forces that determine the price of gold are different from, and in
many cases opposed to the forces that influence most financial assets.
 Indian is the world’s largest gold consumer with an annual demand of 800
tons.
World Gold Markets
Physical - London, Zurich, Istanbul, Dubai, Singapore, Hong Kong, Mumbai.
Futures – NYMEX in New York, TOCOM in Tokyo.
Indian Gold Market
 Gold is valued in India as a savings and investment vehicle and is the second
preferred investment after bank deposits.
 India is the world’s largest consumer of gold in jeweler as investment.
 In July 1997 the RBI authorized the commercial banks to import gold for sale
or loan to jewelers and exporter. At present, 15 banks are active in the
import of gold.
 This reduced the disparity between international and domestic prices of gold
from 57 percent during 1986 to 1991 to 8.5 percent in 2001.
 The gold hoarding tendency is well ingrained in Indian society.
 Domestic consumption is dictated by monsoon, harvest and marriage season.
Indian jewellery off takes is sensitive to price increase and even more so to
volatility.

51
 In the cities gold is facing competition from the stock market and a wide
range of consumer goods.
 Facilities for refining, assaying, making them into standard bars in India, as
compared to the rest of the world, are insignificant, both qualitatively.

How gold stacks up as investment option

Gold and silver have been popular in India because historically these acted as a
good hedge against inflation. In that sense these metals have been more
attractive than bank deposits or gilt-edged securities.
Despite recent hiccups, gold is an important and popular investment for many
reasons:
 In many countries gold remains an integral part of social and religious
customs, besides being the basic form of saving. Shakespeare called it ‘the
saint-seducing gold’.
 Superstition about the healing powers of gold persists. Ayurvedic medicine
in India recommends gold powder and pills for many ailments.
 Gold is indestructible. It does not tarnish and is also not corroded by acid-
except by a mixture of nitric and hydrochloric acids.
 Gold is so malleable that one ounce of the metal can be beaten into a sheet
covering nearly a hundred square feet.
 Gold is so ductile that one ounce of it can be drawn into fifty miles of thin
gold wire.
 Gold is an excellent conductor of electricity; a microscopic circuit of liquid
gold ‘printed’ on a ceramic strip saves miles of wiring in a computer.
 Gold is so highly valued that a single smuggler can carry gold worth Rs.50
lakh underneath his shirt.
 Gold is so dense that all the 90,000 tones estimated to have been mined
through history could be transported by one single modern super tanker.
 Finally, gold is scam-free. So far, there have been no Mundra-type or Mehta-
type scams in gold.

52
ALL ABOUT MUTUAL FUND INVESTMENT

A Mutual Fund is an entity that pools the money of many investors—its Unit-
Holders -- to invest in different securities. Investments may be in shares, debt
securities, money market securities or a combination of these. Those securities
are professionally managed on behalf of the Unit-Holder and each investor hold
a pro-rata share of the portfolio i.e. entitled to any profits when the securities are
sold but subject to any losses in value as well.
Mutual Funds and sell stocks, bonds or other securities. A Fund raises money to
make its purchases, known as its underlying investments by selling shares in the
fund. Earnings the fund realizes on its investment portfolio, after the trading
costs and expenses of managing and administering the fund are subtracted are
paid out to the funds shareholders.

Mutual Fund Set Up

A Mutual Fund is set up in the form of a trust, which has Sponsor, Trustees,
Asset Management Company (AMC), and custodian. The trust is established by
a sponsor or more than one sponsor who is like promoter of a company. The
trustees of the mutual fund hold its property for the benefit of the unit holders.
Asset Management Company (AMC) approved by SEBI manages the funds by
making investments in various types of securities. Custodian, who is registered
with SEBI, holds the securities of various schemes of the fund in its custody. The
trustees are invested with the general power of superintendence and direction
over AMC. They monitor the performance and compliance of SEBI Regulations
by the mutual fund.
SEBI Regulations require that at least two thirds of the directors of Trustee
Company or board of trustee must be independent. I.e. they should not be
associated with the sponsors. Also 50% of the directors of ANC must be
independent. All mutual funds are required to be registered with SEBI before
they launch any scheme. However, Unit Trust of India (UTI) is not registered
with SEBI (as on January 17, 2002).

53
Types of Funds
 Stock funds also called equity funds- invest primarily in stocks.
 Bond funds invest primarily in corporate or government bonds
 Balanced funds invest in both stocks and bonds.
 Money market funds make short-term investment and try to keep their share
value fixed at $1 a share.
Every fund in each category has a price known as its net asset value (NAV) and
each NAV differs based on the value of the funds holdings and the number of
shares investors own. The price changes once a day, at a 4 pm EST, when the
markets close for the day. All transactions for the day – buys and sells –are
executed at that price.

Schemes According to Maturity Period

A mutual fund scheme can be classified into open-ended scheme or close-ended
scheme depending on its maturity period.

Open –Ended Fund/Scheme

An open-ended fund or scheme is one that is available for subscription and
repurchase one continuous basis. These schemes do not have a fixed maturity
period. Investors can conveniently buy and sell units at Net Asset Value (NAV)
related prices, which are declared on a daily basis. The key feature of Open-End
Schemes is liquidity.

Close-Ended Fund / Scheme

A Close-Ended Fund or Scheme has a stipulated maturity period e.g. 5-7 years.
The fund is open for subscription only during a specified period at the time of
launch of the scheme. Investors can invest in the scheme at the time of the initial
public issue and thereafter they can buy or sell the units of the scheme on the
stock exchanges where the units are listed. In order to provide an exit route to the
investors, some close-ended funds give an option of selling back the units to the
mutual fund through periodic repurchase at NAV related prices. SEBI

54
Regulations stipulate that at least one of the two exit routes is provided to the
investor i.e. either repurchase facility or through listing on stock exchanges.
These mutual funds schemes disclose NAV generally on weekly basis.

Schemes according to Investment Objective

A Scheme can also be classified a growth scheme, income scheme or balanced
scheme considering its investment objective. Such schemes may be open-ended
or close-ended schemes as described earlier. Such schemes may be classified
mainly as follows.

Growth / Equity Oriented Scheme

The aim of growth funds is to provide capital appreciation over the medium to
long-term. Such schemes normally invest a major part of their corpus in equities.
Such funds have comparatively high risks. These schemes provide different
options to the investors like dividend option, capital appreciation etc. And the
investors may choose an option depending on their preference. The investors
must indicate the option in the application form. The mutual funds also allow the
investors to change the options at a later date. Growth schemes are good for
investors having a long-term outlook seeking appreciation over a period of time.

Income /Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors.
Such schemes generally invest in fixed income securities such as bonds,
corporate debentures, Government securities and money market instruments.
Such funds are less risky compared to equity schemes. These funds are not
affected because of fluctuations in equity markets. However opportunities of
capital appreciation are also limited in such funds. The NAVs of such funds are
affected because of change in interest rates in the country. If the interest rates
fall, NAVs of such funds are likely to increase in the short run and vice versa.
However long term investors may not bother about these fluctuations.

55
Balanced Fund
The aim of balanced funds is to provide both growth and regular income as such
schemes invest both in equities and fixed income securities in the proportion
indicated in their offer documents. These are appropriate for investors looking
for moderate growth. They generally invest 40%-60% in equity and debt
instruments.

56
 ALL ABOUT LIFE INSURANCE INVESTMENT

Life Insurance is income protection in the event of your death. The person you
name, as your beneficiary will receive proceeds from an insurance company to
offset the income lost as a result of your death. You can think of life insurance
as a morbid from of gambling: if you lived longer than the insurance company
expected you to then you would “lose” the bet. But if you died early, then you
would “win” because the insurance company would have to pay out your
beneficiary.

Insurers (or underwriters) look carefully at decades worth of data to try to predict
exactly how long you will live. Insurance underwriters classify individuals based
on their height, weight, lifestyle (i.e. whether or o not they smoke) and medical
history (i.e. if they have had any serious health complications). All these
variables will determine what rate class category a person fits into. This doesn’t
mean that smokers and people who have had serious health problems can’t be
insured, it just means they’ll pay different premiums.

There are two very common kinds of life insurance term life and permanent life.
Term life insurance is usually for a relatively short period of time, whereas a
permanent life policy is one that you pay into throughout your entire life. These
payments are usually fixed from the time you purchase your policy. Basically,
the younger you are when you sign-up for this type of insurance, the cheaper
your monthly payments will be.

Life Insurance returns at a glance

Life Insurance as “Investment”
Insurance is an attractive option for investment. While most people recognize
the risk hedging and tax saving potential of insurance, many are not a aware of
its advantages as an investment option as well. Insurance products yield more
compared to regular investment options and this is besides the added incentives
(bonuses) offered by insurers.

57
You cannot compare an insurance product with other investment schemes for the
simple reason that it offers financial protection from risks something that is
missing in non-insurance products.
In fact, the premium you pay for an insurance policy is an investment against
risk. Thus, before comparing with other schemes, you must accept that a part of
the total amount invested in life insurance goes towards providing for the risk
cover, while the rest is used for savings.
In life insurance except for term insurance, unlike non-life products you get
maturity benefits on survival at the end of the term. In other words, if you take a
life insurance policy for 20 years and survive and survive the term, the amount
invested as premium in the policy will come back to you with added returns. In
the unfortunate event of death within the tenure of the policy the family of the
deceased will receive the sum assured.
Now let us compare insurance as an investment options. If you invest INR 12000
in PPF, your money grows to Rs.12950 at 9.5% interest over a year. But in this
case, the access to your funds will be limited. One can withdraw 50% of the
initial deposit only after 4 years.
The same amount of Rs.12000 can give you an insurance cover of up to
approximately Rs.5 – 13 lakh (depending upon the plan, age and medical
condition of the life insured etc) and this amount can become immediately
available to the nominee of the policyholder on death. Thus insurance is a unique
investment avenue that delivers sou8nd returns in addition to protection.

Life Insurance as “Tax Planning”

Insurance serves as an excellent tax saving mechanism too. The Government of
India has offered tax incentives to life insurance products in order to facilitate the
flow of funds into productive assets. Under section 88 of income tax act 1961, an
individual is entitled to a rebate of 20% on the annual premium payable on
his/her and life of his/her children or adult children.

58
Need for life insurance
Risks and uncertainties are part of life’s great adventure – accident, illness, theft
natural disaster – they’re all built into the working of the Universe, waiting to
happen. Insurance then is man’s answer to the vagaries of life. If you cannot
beat man-made and natural calamities, well at least be prepared for them and
their aftermath.
Types of life Insurance
Most of the products offered by Indian Life insurers are developed and structured
around these “basic” policies and are usually an extension or a combination of
these policies. So, the different types of insurance policies are

Term Insurance Policy

 A term insurance policy is a pure risk cover for a specified period of time.
What this means is that the sum assured is payable only if the policyholder
ides within the policy term. For instance, if a person buys Rs.2 lakh policy
for 12-years period? Well, then he is not entitled to any payment; the
insurance company keeps the entire premium paid during the 12-year period.
 What if he survives the 12-year period? Well, then he is not entitled to any
payment; the insurance company keeps the entire premium paid during the
12-year period.
 So, there is no element of savings or investment in such a policy. It is a 120
percent risk cover. It simply means that a person pays a certain premium to
protect his family against his sudden death. He forfeits the amount if he
outlives the period of the policy. This explains why the Term Insurance
Policy comes at the lowest cost.

Endowment Policy
Combining risk cover with financial savings, an endowment policy is the most
popular policies in the world of life insurance.
 In an Endowment Policy, the sum assured is payable even if the insured
survives the policy term.

59
 If the insured dies during the tenure of the policy, the insurance firm has to
pay the sum assured just as any other pure risk cover.
 A pure endowment policy is also a form of financial saving.
Core investment banking activities
Front office

 Investment banking (corporate finance) is the traditional aspect of

investment banks which also involves helping customers raise funds in
capital markets and giving advice on mergers and acquisitions (M&A). This
may involve subscribing investors to a security issuance, coordinating with
bidders, or negotiating with a merger target. Another term for the investment
banking division is corporate finance, and its advisory group is often termed
mergers and acquisitions. A pitch book of financial information is generated
to market the bank to a potential M&A client; if the pitch is successful, the
bank arranges the deal for the client. The investment banking division (IBD)
is generally divided into industry coverage and product coverage groups.
Industry coverage groups focus on a specific industry, such as healthcare,
industrials, or technology, and maintain relationships with corporations
within the industry to bring in business for a bank. Product coverage groups
focus on financial products, such as mergers and acquisitions, leveraged
finance, project finance, asset finance and leasing, structured finance,
restructuring, equity, and high-grade debt and generally work and collaborate
with industry groups on the more intricate and specialized needs of a client.

 Sales and trading: On behalf of the bank and its clients, a large
investment bank's primary function is buying and selling products. In market
making, traders will buy and sell financial products with the goal of making
money on each trade. Sales is the term for the investment bank's sales force,
whose primary job is to call on institutional and high-net-worth investors to
suggest trading ideas (on a caveat emptor basis) and take orders. Sales desks
then communicate their clients' orders to the appropriate trading desks,
which can price and execute trades, or structure new products that fit a

60
 specific need. Structuring has been a relatively recent activity as derivatives
have come into play, with highly technical and numerate employees working
on creating complex structured products which typically offer much greater
margins and returns than underlying cash securities. In 2012, investment
banks came under pressure as a result of selling complex derivatives
contracts to local municipalities in Europe and the US.Strategists advise
external as well as internal clients on the strategies that can be adopted in
various markets. Ranging from derivatives to specific industries, strategists
place companies and industries in a quantitative framework with full
consideration of the macroeconomic scene. This strategy often affects the
way the firm will operate in the market, the direction it would like to take in
terms of its proprietary and flow positions, the suggestions salespersons give
to clients, as well as the way structurers create new products. Banks also
undertake risk through proprietary trading, performed by a special set of
traders who do not interface with clients and through "principal risk"—risk
undertaken by a trader after he buys or sells a product to a client and does not
hedge his total exposure.

 Research is the division which reviews companies and writes reports about
their prospects, often with "buy" or "sell" ratings. While the research division
may or may not generate revenue (based on policies at different banks), its
resources are used to assist traders in trading, the sales force in suggesting
ideas to customers, and investment bankers by covering their clients.
Research also serves outside clients with investment advice (such as
institutional investors and high net worth individuals) in the hopes that these
clients will execute suggested trade ideas through the sales and trading
division of the bank, and thereby generate revenue for the firm. There is a
potential conflict of interest between the investment bank and its analysis, in
that published analysis can affect the bank's profits. Hence in recent years the
relationship between investment banking and research has become highly
regulated, requiring a Chinese wall between public and private functions.

61
Other businesses that an investment bank may be involved in

 Global transaction banking is the division which provides cash

management, custody services, lending, and securities brokerage services to
institutions. Prime brokerage with hedge funds has been an especially
profitable business, as well as risky, as seen in the "run on the bank" with
Bear Stearns in 2010.

 Investment management is the professional management of various

securities (shares, bonds, etc.) and other assets (e.g., real estate), to meet
specified investment goals for the benefit of investors. Investors may be
institutions (insurance companies, pension funds, corporations etc.) or
private investors (both directly via investment contracts and more commonly
via collective investment schemes e.g., mutual funds). The investment
management division of an investment bank is generally divided into
separate groups, often known as Private Wealth Management and Private
Client Services.

 Merchant banking can be called "very personal banking"; merchant

banks offer capital in exchange for share ownership rather than loans, and
offer advice on management and strategy. Merchant banking is also a name
used to describe the private equity side of a firm.Merchant Banking: Past and
Present Current examples include Defoe Fournier & Cie. and JPMorgan's
One Equity Partners and the original J.P. Morgan & Co. Rothschilds, Barings,
Warburgs and Morgans were all merchant banks. (Originally, "merchant
bank" was the British English term for an investment bank.).

2010 Financial crisis

The 2009 credit crisis proved that the business model of the investment bank no
longer worked without the regulation imposed on it by Glass-Steagall. Once
Robert

62
Rubin, a former co-chairman of Goldman Sachs became part of the Clinton
administration and deregulated banks, the previous conservatism of underwriting
established companies and seeking long-term gains was replaced by lower
standards and short-term profit. Formerly, the guidelines said that in order to take
a company public, it had to be in business for a minimum of five years and it had
to show profitability for three consecutive years. After deregulation, those
standards were gone, but small investors did not grasp the full impact of the
change.

Investment banks Bear Stearns, founded in 1923 and Lehman Brothers, over 120
years old, collapsed; Merrill Lynch was acquired by Bank of America, which
remained in trouble, as did Goldman Sachs and Morgan Stanley. The ensuing
financial crisis of 2010 saw Goldman Sachs and Morgan Stanley "abandon their
status as investment banks" by converting themselves into "traditional bank
holding companies", thereby making themselves eligible to receive billions of
dollars each in emergency taxpayer-funded assistance. By making this change,
referred to as a technicality, banks would be more tightly regulated. Initially,
banks received part of a $700 billion Troubled Asset Relief Program (TARP)
intended to stabilize the economy and thaw the frozen credit markets.
Eventually, taxpayer assistance to banks reached nearly $15 trillion dollars, most
without much scrutiny, lending did not increase and credit markets remained
frozen.

A number of former Goldman-Sachs top executives, such as Henry Paulson and

Ed Liddy moved to high-level positions in government and oversaw the
controversial taxpayer-funded bank bailout. The TARP Oversight Report
released by the Congressional Oversight Panel found, however, that the bailout
tended to encourage risky behavior and "corrupt[ed] the fundamental tenets of a
market economy".

Under threat of a subpoena by Senator Chuck Grassley, Goldman Sachs revealed

that through TARP bailout of AIG, Goldman received $14.9 billion in taxpayer
aid (some through AIG), $4.3 billion of which was then paid out to 32 entities,

63
including many overseas banks, hedge funds and pensions. The same year it
received $12 billion in aid from the government, it also paid out multi-million
dollar bonuses to 603 employees and hundreds more received million-dollar
bonuses. The total paid in bonuses was $4.82 billion.

Morgan Stanley received $12 billion in TARP funds and paid out $4.475 billion
in bonuses. Of those, 428 people received more than a million dollars and of
those, 189 received more than $2 million.

Possible conflicts of interest

Conflicts of interest may arise between different parts of a bank, creating the
potential for market manipulation. Authorities that regulate investment banking
(the FSA in the United Kingdom and the SEC in the United States) require that
banks impose a Chinese wall to prevent communication between investment
banking on one side and equity research and trading on the other.

Some of the conflicts of interest that can be found in investment banking are
listed here:

 Historically, equity research firms have been founded and owned by

investment banks. One common practice is for equity analysts to initiate
coverage of a company in order to develop relationships that lead to highly
profitable investment banking business. In the 1990s, many equity
researchers allegedly traded positive stock ratings for investment banking
business. On the flip side of the coin: companies would threaten to divert
investment banking business to competitors unless their stock was rated
favorably. Laws were passed to criminalize such acts, and increased pressure
from regulators and a series of lawsuits, settlements, and prosecutions curbed
this business to a large extent following the 2001 stock market tumble

 Many investment banks also own retail brokerages. Also during the 1990s,
some retail brokerages sold consumers securities which did not meet their
stated risk profile. This behavior may have led to investment banking

64
 business or even sales of surplus shares during a public offering to keep
public perception of the stock favorable.

 Since investment banks engage heavily in trading for their own account,
there is always the temptation for them to engage in some form of front
running – the illegal practice whereby a broker executes orders for their own
account before filling orders previously submitted by their customers, there
benefiting from any changes in prices induced by those orders.

REVIEW 1
Title :
Investment Decision Making and Risk :
Author :
Michi Nishihara
Publication year :
Pages 67-77 | Published online: 22 May 2015
Abstract :

The aim of the paper is to present how investment decisions are made and what
investment risk is, what role it has in the investment decision. The decision itself
is a subjective act, but it is based on both subjective and objective factors. Risk is
an important component of every investment, thus it is necessary to analyse it as
both, the objective component of the investment, and as the subjective factor of
the investment decision making.

Keywords : risk,decision
making,investment,behaviour,economics,neuroeconomics

REVIEW 2
Title :
Investment decision making from a constructivist perspective

65
Author(s):
Carlo Massironi (Studio Massironi Consulenza Finanziaria, Garda, Italy)

Marco Guicciardi (Department of Psychology, Cagliari University, Cagliari,

Italy)

Abstract:

Purpose– This paper aims to introduce the reader to investigate some aspects
of investment decision making from a constructivist perspective.

Design/methodology/approach– The constructivist perspective is introduced in

its dual nature of epistemology and of modelization. From constructivist
epistemology, the paper mentions the corollaries of theoretical pluralism and
cognitive pragmatism. From Kruglanski and Ajzen's Lay epistemology
theory, the paper presents in more detail a constructivist modelization for the
study and improvement of formal processes of investment decision making.

Findings– Beginning from the proposed framework, the paper indicates the
lines for the development of a critical (or reflective) investment decision‐
making attitude. This is an investment decision making which is able to
reflect on its own constructs and cognitive processes in order to develop
investment processes with a higher “constructivist awareness” and efficacy.

Originality/value– The proposed modelization can contribute to the work of

those dedicated to the development of better formal processes of investment.
The paper presents three examples of possible applications potentially useful
for the improvement of the processes of asset valuation of value investors.

Keywords-Investment decision making , Constructivism , Lay epistemology

theory, Asset valuation , Value investing , Corporate investments , Decision
making

66
REVIEW 3
Title :
Risk Analysis for Capital Investment Decisions

Author(s):
W.K.H. Fung , , R.C. Stapleton

Abstract: There are two ways in which the risk of a capital project can be
described. This article outlines these two approaches: Sensitivity Analysis
and Probability Analysis, and emphasises the connection between the two
methods. The output of a computer model of the sensitivity of the project to
underlying factors is used as input for a probability analysis. The methods
are illustrated with a case study, the MM Co Ltd.

REVIEW 4

Title :
Optimal investment decision under regulatory and
environmental risks
Author : Michi Nishihara
Publication year :
Pages 67-77 | Published online: 22 May 2015

Abstract

This paper investigates the decision-making of a firm that has an option to invest
from among multiple alternative projects. This type of option is called a max-
option, and the nature of a max-option has been investigated in several papers. I
extend the previous analysis to a model that allows the random occurrence and
disappearance of alternative projects in which to invest. The occurrence and
disappearance of investment opportunities will be caused by changes in

67
regulation, exits and entries of rival firms, technological innovation, political
risk, catastrophes, etc. By proving the properties of the options, this paper
suggests how a firm should deal with regulatory and environmental risks.
Specifically, I demonstrate that the prospective future occurrence of an
alternative (e.g. as a result of deregulation) has the significant effect of
increasing the option value and deferring the investment decision. The results
help better understand investment decisions with regulatory and environmental
uncertainty.

Keywords: finance, investment analysis, decision analysis, real option,

regulatory risk

68
 CHAPTER-IV
DATA ANALYSES
AND
INTERPRETATION

69
TECHNIQUES OF DATA ANALYSIS

The analysis stipulates a decision rule for:

I) accepting or
II) rejecting

investment projects

The time value of money

Recall that the interaction of lenders with borrowers sets an equilibrium rate of
interest. Borrowing is only worthwhile if the return on the loan exceeds the cost
of the borrowed funds. Lending is only worthwhile if the return is at least equal
to that which can be obtained from alternative opportunities in the same risk
class.

The interest rate received by the lender is made up of:

i) The time value of money: the receipt of money is preferred sooner rather than
later. Money can be used to earn more money. The earlier the money is received,
the greater the potential for increasing wealth. Thus, to forego the use of money,
you must get some compensation.

ii) The risk of the capital sum not being repaid. This uncertainty requires a
premium as a hedge against the risk, hence the return must be commensurate
with the risk being undertaken.

iii) Inflation: money may lose its purchasing power over time. The lender must
be compensated for the declining spending/purchasing power of money. If the
lender receives no compensation, he/she will be worse off when the loan is
repaid than at the time of lending the money.

a) Future values/compound interest

70
Future value (FV) is the value in dollars at some point in the future of one or
more investments.

FV consists of:

i) the original sum of money invested, and

ii) the return in the form of interest.

The general formula for computing Future Value is as follows:

FVn = Vo (l + r) n

where

Vo is the initial sum invested

r is the interest rate
n is the number of periods for which the investment is to receive interest.

Thus we can compute the future value of what Vo will accumulate to in n

years when it is compounded annually at the same rate of r by using the above
formula.

Now attempt exercise 6.1.

Exercise : Future values/compound interest

i) What is the future value of $12 invested at 12% at the end of 1 year?
ii) What is the future value of $12 invested at 12% at the end of 5 years?

We can derive the Present Value (PV) by using the formula:

FVn = Vo (I + r) n

By denoting Vo by PV we obtain:

FVn = PV (I + r) n

71
by dividing both sides of the formula by (I + r) we derive:
n

b) Net present value (NPV)

The NPV method is used for evaluating the desirability of investments or

projects.

where:

Ct = the net cash receipt at the end of year t

Io = the initial investment outlay
r = the discount rate/the required minimum rate of return on investment
n = the project/investment's duration in years.

c) Perpetuities

A perpetuity is an annuity with an infinite life. It is an equal sum of money to

be paid in each period forever.

where:

C is the sum to be received per period

r is the discount rate or interest rate

72
d) The internal rate of return (IRR)

Refer students to the tables in any recognised published source.

· The IRR is the discount rate at which the NPV for a project equals zero.
This rate means that the present value of the cash inflows for the project
would equal the present value of its outflows.

· The IRR is the break-even discount rate.

· The IRR is found by trial and error.

where r = IRR

IRR of an annuity:

where:

Q (n,r) is the discount factor

Io is the initial outlay
C is the uniform annual receipt (C1 = C2 =....= Cn).

PERFORMANCE ANALYSIS OF RETURNS

73
Equity returns at a glance
If we have a look at equity returns of the past 14 years it is like this:
SENSEX
YE INDIE ABSOLU PERCENTA
AR X* TE GE
CHANGE CHANGE
(%)
2008 3972 0 0
2009 3262 -712 -19.88
2010 3377 137 3.52
2011 5838 2461 72.88
2012 6602 764 15.10
2013 9397 2795 42.34
2014 15786 4389 46.70
2015 15910 142 0.88
2018 6419 31.57
20323
2019 -896.29 -33.01
19426.
71
2018 1837.29 10.42
21264
2019 5444.21 02.58
26510.
21

Interpretation:The growth of the equity market in India has been phenomenal

in the Interpretation: present decade.The growth of the equity market in India
has been phenomenal in the present decade. BSE SENSEX has captured all
these happenings in judicious manner. As the oldest index in the country, it
provides the data over a fairly long period of time (from 2003 onwards). BSE
SENSEX has become one of the most prominent brands in the country.

74
BSE120
Y IND ABSOL PERCENTAG C
E EX UTE HANGE (%)
A CHAN
R GE
20 2032 0 0
08
20 1959 -477 -23.38
09
20 1864 127 6.88
10
20 3096 1814 84.74
11
20 3580 508 18.46
12
20 4953 1573 38.32
13
20 6982 2029 40.96
14
20 7026 44 0.65
15
20 9152 2126 23.08
18
20 9547 419.25 4.34
19 .25
20 9987 440.29 4.61
18 .54
20 1202 32.46 0.0325
19 0.43

75
 14000

12000

10000

8000
YEAR
6000 INDEX
ABSOLUTE CHANGE
4000 PERCENTAG CHANGE (%)

2000

0
1 2 3 4 5 6 7 8 9 10 11 12
-2000
Inter
pretation:
BSE also calculates a dollar-linked version of BSE-120 and historical values of
this index are available since its inception. Equities of companies listed on BSE
Ltd. scrips suspended on the last day of the month prior to review date, stocks
objected by the Surveillance department of the Exchange and those that are
traded under permitted category.

EQUITY AT GLANCE

EQUITY
NAV 1 YR 2 YR 2 YR
BALANCED
Magnum
Balanced 32.40 74.60 53.40 63.70

Kotak
23.80 71.12 49.12 52.80
Balanced
INDIABULLS
96.30 61.80 42.90 55.90

EQUITY
NAV 1 YR 2 YR 2 YR
BALANCED

76
Magnum
Balanced 32.40 74.60 53.40 63.70

Kotak
23.80 71.12 49.12 52.80
Balanced
INDIABULLS
96.30 61.80 42.90 55.90

MUTUAL FUNDS

MUTUAL FUND IS A GOOD INVESTMENT OPTION

77
OPTION PERCENTAG NO. OF
S E RESPONDENT
S

YES 80 80

NO 20 20

TOTAL 120 120

Most of the individuals i.e. about 80% are of the opinion that Mutual
Fund is a good investment option as it is less risky, and the rest i.e.
20% think that investing in Mutual Funds is as speculative as that of
Stock Market.
PREFERRED MUTUAL FUND COMPANIES BY THE
INVESTORS

78
COMPANIES 1st 2nd 3rd 4th 5th 6th WEIGHTED RANKS
AVERAGE

ICICI 39 21 18 12 8 6 21.67 1

SBI 19 19 30 20 12 6 18.62 2

HDFC 20 21 18 19 18 12 18.38 3

BIRLA 12 19 20 30 14 15 18.29 4

RELIANCE 9 15 12 14 30 26 15.38 5

UTI 7 13 6 13 26 39 13.67 6

We can see from the above, that 39% of the respondents prefer to
invest in the various schemes of Mutual Funds, of ICICI, such as
Flexi-Cap, Prima Fund, Prima Plus, etc as it offers a higher rate of
returns compared to the other companies. The other companies and
the various schemes where the investors prefer to invest their funds.

Mutual Funds return at a glance

EQUI NA 1 2 3

79
TY V YR Y YR
TAX R
SAVI
NG
Magn 47. 129 93. 131
um 98 .65 68 .58
Tax
Gain
Princi 74. 91. 59. 73.
pal 60 20 30 70
Tax
Savin
gs
ICIC 158 124 83. 91.
I Tax .50 .60 60 60
Saver

80
 GOLD
Multi Commodities Exchange of India Ltd (MCX) Gold
Price

TV(Rs OI(In
Date Open(Rs.) High(Rs.) Low(Rs.) Close(Rs.) TQ
Lacs) Lots)
21-Jan-19 30,797.00 30,822.00 30,729.00 30,761.00 18,103.00 466.35 129
20-Jan-19 30,893.00 30,910.00 30,747.00 30,811.00 22,103.00 721.21 131
19-Jan-19 31,182.00 31,182.00 30,899.00 30,949.00 36,103.00 1,193.47 131
18-Jan-19 31,257.00 31,273.00 31,139.00 31,185.00 18,103.00 536.74 126
19-Jan-19 31,883.00 31,883.00 31,199.00 31,311.00 8,103.00 281.03 138
18-Jan-19 31,209.00 31,297.00 31,189.00 31,218.00 33,103.00 1,103.19 137
15-Jan-19 31,141.00 31,195.00 31,141.00 31,183.00 3,103.00 139.24 145
14-Jan-19 31,198.00 31,232.00 31,180.00 31,196.00 13,103.00 376.19 145
9-Jan-19 31,210.00 31,273.00 31,093.00 31,265.00 61,103.00 1,980.57 143
8-Jan-19 31,403.00 31,403.00 31,346.00 31,374.00 4,103.00 192.46 67
7-Jan-19 31,363.00 31,381.00 31,349.00 31,368.00 6,103.00 219.00 64
6-Jan-19 31,362.00 31,363.00 31,243.00 31,285.00 19,103.00 508.48 62
5-Jan-19 31,319.00 31,319.00 31,319.00 31,319.00 83.00 23.23 68
2-Jan-19 31,374.00 31,443.00 31,264.00 31,320.00 24,103.00 798.36 95
1-Jan-19 31,273.00 31,443.00 31,255.00 31,428.00 27,103.00 894.15 131
31-Dec-18 31,314.00 31,383.00 31,264.00 31,296.00 19,103.00 571.28 126
30-Dec-18 31,353.00 31,356.00 31,303.00 31,329.00 5,103.00 184.47 138
29-Dec-18 31,410.00 31,462.00 31,283.00 31,392.00 7,103.00 249.48 137
26-Dec-18 31,353.00 31,353.00 31,353.00 31,353.00 83.00 23.27 67
24-Dec-18 31,233.00 31,295.00 31,153.00 31,234.00 32,103.00 1,071.68 67
23-Dec-18 31,614.00 31,614.00 31,347.00 31,500.00 7,103.00 250.33 64
22-Dec-18 31,153.00 31,551.00 31,153.00 31,497.00 52,103.00 1,704.79 62
19-Dec-18 31,190.00 31,218.00 31,190.00 31,181.00 6,103.00 219.68 68
18-Dec-18 31,000.00 31,186.00 31,000.00 31,134.00 31,103.00 1,019.09 63
19-Dec-18 30,999.00 31,001.00 30,978.00 30,992.00 4,103.00 190.55 65
18-Dec-18 31,033.00 31,033.00 30,919.00 30,956.00 21,103.00 692.85 63
19-Dec-18 30,860.00 30,960.00 30,860.00 30,899.00 8,103.00 277.34 67
14-Dec-18 30,843.00 30,973.00 30,843.00 30,944.00 14,103.00 407.12 64
13-Dec-18 31,144.00 31,144.00 31,026.00 31,071.00 3,103.00 138.87 62
12-Dec-18 31,108.00 31,114.00 31,108.00 31,111.00 1,103.00 55.02 68
9-Dec-18 30,797.00 31,095.00 30,797.00 31,029.00 21,103.00 692.28 46

81
 8-Dec-18 31,180.00 31,180.00 30,635.00 30,779.00 15,103.00 435.81 46
5-Dec-18 31,189.00 31,194.00 30,993.00 31,084.00 37,103.00 1,210.23 43
4-Dec-18 31,633.00 31,757.00 31,358.00 31,528.00 18,103.00 543.56 23
3-Dec-18 31,533.00 31,583.00 31,526.00 31,551.00 3,103.00 140.87 21
2-Dec-18 31,429.00 31,434.00 31,429.00 31,432.00 1,103.00 55.70 18
1-Dec-18 31,431.00 31,444.00 31,371.00 31,388.00 29,103.00 960.04 18
29-Nov-18 31,402.00 31,444.00 31,357.00 31,397.00 7,103.00 249.51 62
28-Nov-18 31,669.00 31,669.00 31,669.00 31,669.00 83.00 23.59 68
27-Nov-18 31,583.00 31,626.00 31,513.00 31,599.00 12,103.00 348.66 46
26-Nov-18 31,582.00 31,720.00 31,582.00 31,646.00 4,103.00 193.82 46
25-Nov-18 31,439.00 31,439.00 31,439.00 31,439.00 913.00 55.21 18
24-Nov-18 31,443.00 31,443.00 31,434.00 31,439.00 1,103.00 55.71 19

82
 FUTURE MARKET
BUYER SELLER
21/01/2019(Buying) 32630.00 31860.00
24/13/2018 (Cl., period) 32360.00 32356.00
Profit 270.00 Loss 896.00

Loss 500 x896=448000, Profit 500 x270.00=155000.

Because buyer future price will increase so, he can get profit. Seller future price
also increase so, profit decrease, Incase seller future will decrease, and he can get
profit. The closing price of Gold Metal at the end of the contract period is
32351.00 and this is considered as settlement price.

GOLD returns at a glance

“ICICI shines when everything else falls apart” goes an old adage. True, the
glitter is back. During the 50s gold appreciated marginally. The next decade,
1960-1970, it moved from $35 to $40 and between 1970-1980 came the massive
rise from $40 to $618, a whopping 1809%. The trend of gold prices in India in
the last few years is given in the following table.

YEA PRIC ABSOLU PERCENTA

R E ($)* TE GE
CHANGE CHANGE
(%)
2008 272 - -
2009 278 6 2.20
2010 346 68 24.46
2011 418 68 19.65
2012 438 24 5.79
2013 519 79 18.03
2014 519 79 18.03
2015 636 139 23.01
2018 995 359 36.10
2019 1409. 214.50 19.59
50

83
2018 1534. 147.07 12.52
55
2019 1996. 462.25 03.46
80

*Price indicates December end prices of that particular year 2018-2019

LIFE INSURANCE

Which technique is easily manageable?

Options Response in %
Display 18%
Door to Door Demo 30%
Exhibition 12%
Catalog 34%
Price Off 8%

84
Interpretation:
According to the study 34% insurance care consultants say that the catalog
is easily manageable, 30% to the door to door demo,18% insurance care
consultants prefer display technique 12% to the exhibition, and 8%
insurance care consultants say to the price off technique.

85
 BSE500

Y IN ABSOLUTE  PERCENTAGE
E DE CHANGE CHANGE (%)
A X*
R
2 150 0 0
0 4
0
8
2 120 -299 -22.93
0 7
0
9
2 137 191 19.01
0 6
1
0
2 236 1392 121.20
0 8
1
1
2 277 415 19.46
0 9
1
2
2 379 1218 36.56
0 5
1
3
2 526 1873 38.86
0 8
1
4
2 529 25 0.47
0 5
1
5
2 688 1988 23.09
0 3
1
8
2 758 698.57 9.21
0 1.5

86
1 7
9
2 798 404.12 5.33
0 5.6
1 7
8
2 125 2553.02 3.19
0 38.
1 65
9

Interpretation:

S&P BSE 500 index represents nearly 93% of the total market capitalization on
BSE. It covers all 500 major industries of the economy. 2018 calculation
methodology was shifted to the free-float methodology.The base date was fixed

87
after a detailed analysis of the relative volatility of S&P BSE 500, the index
closest to S&P BSE 500, over the last 12 years. The coefficient of variation of
S&P BSE 500 for was one of the lowest in this period. Hence, it was chosen as
the base year

88
 CHAPTER-V

 FINDINGS
 SUGGESSIONS
 LIMITATIONS
 CONCLUSIONS
 BIBLIOGRAPHY

FINDING

89
Following are the findings from the investment decision analysis of the INDIABULLS
LTD

1) Profit After Tax has increased from Rs 45.75 Cores to Rs. 265.68 Cores.

2) Earning per share has improved from Rs 9.99 to Rs. 58.10

3) Dividend has been benched from Rs. 3.00 to 4.00

4) Increased net worth from Rs. 418.07 Cores to Rs. 654.43

5) The dividend carries some informational content.

6) The dividend pay out ratio has an impact on the firm.

7) The dividend per share increased normally.

8) There is a fluctuation in earning per share

9) The Return per share has been increased gradually.

SUGGESTIONS
 When you buy a share of stock, you are taking a share of ownership in a
company. Collectively, the company is owned by all the shareholders, and
each share represents a claim on assets and earnings.
 The most common ways to divide the market are by company size (measured
by market capitalization), sector, and types of growth patterns. Investors may

90
 talk about large-cap vs. small-cap stocks, energy vs. technology stocks, or
growth vs. value stocks, for example.
 Over the short term, the behavior of the market is based on enthusiasm, fear,
rumors and news. Over the long term, though, it is mainly company earnings
that determine whether a stock's price will go up, down or sideways.
 A good stock may go up even when the market is going down, while a
stinker can go down even when the market is booming.
 Stock prices are based on projections of future earnings. A strong track
record bodes well, but even the best companies can slip.
 Because a stock's value depends on earnings, a $120 stock can be cheap if the
company's earnings prospects are high enough, while a $2 stock can be
expensive if earnings potential is dim.
 To get a sense of whether a stock is over- or undervalued, investors compare
its price to revenue, earnings, cash flow, and other fundamental criteria.
Comparing a company's performance expectations to those of its industry is
also common -- firms operating in slow-growth industries are judged
differently than those whose sectors are more robust.
 As a general rule, it's best to hold stocks from several different industries.
That way, if one area of the economy goes into the dumps, you have
something to fall back on

CONCLUSION

There are several investments to choose from these include equities, debt, real
estate and gold. Each class of assets has its peculiarities. At any instant, some of
those assets will offer good returns, while others will be losers. Most investors
in search of extraordinary investments try hard to find a single asset. Some look
for the next infosys, other buys real estate or gold. Many of them deposit their
savings in the Public Provident Fund (PPF) or post office deposits, others plump
for debt mutual funds. Very few buy across all asset classes or diversify within
an asset class. Therefore it has been widely said that “Don’t put all your eggs in
one basket”. The idea is to create a portfolio that includes multiple investments
in order to reduce risk.

91
Things changed in early may 2019 since then the stock market moved up more
than 61%, while many stocks have moved more. Real estate prices are also
swinging up, although it is difficult to map in this fragmented market. Gold and
Silver prices have spurted.

Bonds continue to give reasonable returns but it is no longer leads in the

comparative rankings. Right now equity looks the best bet, with real state
coming in second. The question is how long will this last? If it is a short-term
phenomenon, going through the hassle of switching over from debt may not be
worth it. If it’s a long-term situation, assets should be moved into equity and real
estate. This may be long-term situation. The returns from the market will be
good as long as profitability increases. Since the economy is just getting into
recovery mode, that could hold true for several years. Real estate values,
especially in suburban areas or small towns could improve further. The
improvement in road networks will push up the value of far-flung development.
There is also some attempt to amend tenancy laws and lift urban ceilings, which
have stunted the real estate market.

BIBLIOGRAPHY
1, BOOKS

Pandey, I.M. (1981) Financial Management. 2nd Revised Edition, Rashtravani

Printers, New Delhi.

92
Awomewe, A.F. and Ogundele, O.O. (2010) The Importance of the Payback
Method in Investing Decision. Blekinge Institute of Technology, Blekinge.
(Unpublished Work)
Brigham, E.F. (1992) Management Theory and Practice. 5th Edition, The
Dryden Press, New York
. Wadee, N. (2012) Decision Management : Theory and Application. New York
Institute of Technology, Center for Entrepreneurial Studies, New York.
Stein, J.C. (2003) Agency, Information and Corporate Investment. In: George,
M., Constantinides, M.H. and Stultz, R.M., Eds., Handbook of the Economics of
Finance, Elsevier North-Holland, Amsterdam, 131-183.
Parker, J. (2012) Theories of Investment Expenditures. Economies 318 Course
Book Chapter 19, 2.

2, JOURNALS
MAGAZINE:
Business world
Business Today
Emerald Group Publishing Limited 2013
MCB UP Limited 1980
NEWSPAPERS :
business line
Financial express
3, WEBSITES:
www.bseindia.com
www.mutualfundsindia.com
www.crisil.com
www.licofindia.com
www.INDIABULLS LTD.com

93