1.

1) Introduction to the industry

Indian stock Market Overview

Indian stock Market Overview

The Bombay Stock Exchange (BSE) and the National Stock Exchange of India Limited (NSE)
are the two primary exchanges in India. In addition, there are 22 Regional Stock Exchanges.
However, the BSE and NSE have established themselves as the two leading exchanges and
account for about 80% of the equity volume traded in India. The NSE and BSE are equal in size
in terms of daily traded volume.

The average daily turnover at the exchanges has increased from Rs851crore in 1997-98 to
Rs1284crore in 1998-99 and further to Rs2273crore in 1999-2000. NSE has around 1500 shares
listed with the total market capitalization of around Rs9, 21,500crore.

The BSE has over 6000 stocks listed and has a market capitalization of around Rs9, 68,000crore.
Most key stocks are traded on both the exchanges and hence the investor could buy on either of
the exchanges. Both exchanges have a different settlement cycle, which allows investors to shift
their position on the bourses. The primary index of BSE in BSE Sensex comprises 30 stocks.
NSE has the S&P NSE 50 Index (Nifty), which consists of fifty stocks. The BSE Sensex is the
older and most widely followed index. Both these indices are calculated on the basis of market
capitalization and contain the heavily traded shares from key sectors.

1
The markets are closed on Saturdays and Sundays. Both the exchanges have switched over from
the open outcry trading system to a fully automated computerized mode of trading known as
BOLT (BSE On Line Trading) and NEAT (National Exchange Automated Trading) system. It
facilitates more efficient processing, automatic order matching, faster execution of trades and
transparency.

The scrip traded on the BSE has been classified into ‘A’, ‘B1’, ‘B2’, ‘C’, ‘F’, and ‘Z’ groups.
The ‘A’ group shares represent those, which are in the carry forward system (Badla). The ‘F’
group represents the dept market (fixed income securities) segment. The ‘Z’ group scrip is the
blacklisted companies. The ‘C’ group covers the odd lot securities in ‘A’, ‘B1’, & ‘B2’ groups
and Rights renunciations.

MUTUAL FUNDS ARE AN UNDER TAPPED IN INDIAN MARKET:

Deposit being available in the market less than 10% of Indian households have invested in
mutual funds. A recent report on Mutual Fund Investments in India published by research and
analytics firm, Boston Analytics, suggests investors are holding back from putting their money
into mutual funds due to their perceived high risk and a lack of information on how mutual funds
work. There are 46 Mutual Funds as of June 2013.

The primary reason for not investing appears to be correlated with city size. Among respondents
with a high savings rate, close to 40% of those who live in metros and Tier I cities considered

2
such investments to be very risky, whereas 33% of those in Tier II cities said they did not know
how or where to invest in such assets.

SERVICING:

Larger Indian Mutual Fund Industry has benefited from outsourcing the activity of servicing
their investors to two of the leading Registrar and Transfer Agents (RTAs) in India namely
CAMS and Karvy. While CAMS commands close to 65% of the Assets servicing, rest is with
Karvy. Franklin Templeton Mutual Fund services its investors through its own in-house RTA set
up.

Both the RTAs have vibrant network of their local offices which enable the Mutual Fund
Investors to transact locally. These touch points (or) Customer Service Centers (CSCs), provide a
wide range of servicing including, financial transaction acceptance & processing, non financial
changes, KYC fulfillment formalities, nomination registration, transmission of units apart from
providing statement of accounts etc.

These two RTAs also provide most of the similar facilities in their respective websites which are
very user friendly.

EQUITY MARKET

In accounting and finance, equity is the difference between the value of the assets and the cost of

the liabilities of something owned. For example, if someone owns a car worth $15,000 but owes
$5,000 on a loan against that car, the car represents $10,000 equity. Equity can be negative if
liability exceeds assets.

In an accounting context, shareholders' equity (or stockholders' equity, shareholders' funds,

shareholders' capital or similar terms) represents the equity of a company as divided
among shareholders of common or preferred stock. Negative shareholders' equity is often
referred to as a shareholders' deficit.

3
For purposes of liquidation during bankruptcy, ownership equity is the equity which remains
after all liabilities have been paid.

HISTORY

The first mutual funds were established in Europe. One researcher credits a Dutch merchant with
creating the first mutual fund in 1774. Mutual funds were introduced to the United States in the
1890s, and they became popular in the 1920s.

These early U.S. funds were generally closed-end funds with a fixed number of shares that often
traded at prices above the portfolio value. The first open-end mutual fund, called the
Massachusetts Investors Trust (now part of the MFS family of funds, with redeemable shares
was established on March 21, 1924. However, closed-end funds remained more popular than
open-end funds throughout the 1920s. In 1929, open-end funds accounted for only 5% of the
industry's $27 billion in total assets.

After the stock market crash of 1929, Congress passed a series of acts regulating the securities
markets in general and mutual funds in particular. The Securities Act of 1933 requires that all
investments sold to the public, including mutual funds, be registered with the SEC and that they
provide prospective investors with a prospectus that discloses essential facts about the
investment. The Securities and Exchange Act of 1934 requires that issuers of securities,
including mutual funds, report regularly to their investors; this act also created the Securities and
Exchange Commission, which is the principal regulator of mutual funds. The Revenue Act of
1936 established guidelines for the taxation of mutual funds, while the Investment Company Act
of 1940 governs their structure.

When confidence in the stock market returned in the 1950s, the mutual fund industry began to
grow again. By 1970, there were approximately 360 funds with $48 billion in assets. The
introduction of money market funds in the high interest rate environment of the late 1970s
boosted industry growth dramatically. The first retail index fund, First Index Investment Trust,
was formed in 1976 by The Vanguard Group, headed by John Bogle; it is now called the
"Vanguard 500 Index Fund" and is one of the world's largest mutual funds, with more than $220
billion in assets as of November 30, 2015

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Fund industry growth continued into the 1980s and 1990s. According to Pozen and Hamacher,
growth was the result of three factors: a bull market for both stocks and bonds, new product
introductions (including tax-exempt bond, sector, international and target date funds) and wider
distribution of fund shares. Among the new distribution channels were retirement plans. Mutual
funds are now the preferred investment option in certain types of fast-growing retirement plans,
specifically in 401(k) and other defined contribution plans and in individual retirement
accounts (IRAs), all of which surged in popularity in the 1980s. Total mutual fund assets fell in
2008 as a result of the financial crisis of 2007–08.

In 2003, the mutual fund industry was involved in a scandal involving unequal treatment of fund
shareholders. Some fund management companies allowed favored investors to engage in late
trading, which is illegal, or market timing, which is a practice prohibited by fund policy. The
scandal was initially discovered by former New York Attorney General Eliot Spitzer and led to a
significant increase in regulation.
At the end of 2015, there were over 15,000 mutual funds in the United States with combined
assets of $18.1 trillion, according to the Investment Company Institute (ICI), a trade
association of U.S. investment companies. The ICI reports that worldwide mutual fund assets
were $33.4 trillion on the same date
Mutual funds play an important role in U.S. household finances; in mid-2015, 43% of U.S.
households held mutual fund. Their role in retirement planning is particularly significant.
Roughly half of the assets in individual retirement accounts and in 401(k) and other similar
retirement plans were invested in mutual funds.

5
1.2 introductions to the company

Company Profile

Consortium is one of the leading broking houses in India that provides a wide range of services
nationwide to a substantial and diversified client base that includes retail clients, high networth
individuals, corporates and financial institutions. Founded in 1992 with just DSE trading
membership, we have come a long way since and are now members of all major exchanges in
India namely NSE, BSE, MCX, NCDEX, NSE Currency & MCX-SX. In addition to this, we are
also a depository participant with NSDL.

We are committed to our distinctive culture and core values, which always place our client's
interests first. Our values emphasize integrity, transparency, commitment to excellence and
teamwork. We have more than 20,000 clients and a presence in more than 100 locations through
our network of longstanding franchisees and sub brokers. All our offices are managed by
qualified professionals and equipped with state of the art infrastructure (VSAT connectivity,
leased lines, internet connectivity, telephones, voice loggers, etc) to serve our clients in the best
possible manner.

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7
8
1.Haryana 7.Uttaranchal

2. Uttar Pradesh 8. Jharkhand

3. Madhya Pradesh 9. Chhasttisgarh

4. Orrisa 10. Andhra Pradesh

5. Maharastra 11. Karnataka

6. Gujarat 12. Rajasthan

9
1.3 Introduction To the topic

MUTUAL FUND

The Mutual Funds originated in UK and thereafter they crossed the border to reach other
destinations. The concept of MF was Indianized only in the later part of the twentieth century in
the year 1964 with its roots embedded into Unit Trust of India (UTI). Now after 50 years,
booming stock markets & innovative marketing strategies of mutual fund companies in India are
influencing the retail investors to invest their surplus funds with different schemes of mutual
fund companies with or without complete understanding of Mutual Funds (MF).

There is a general notion that an investment in mutual fund is always risky. Investors should
always be conscious of the fact that Mutual Funds invest their funds in capital market
instruments such as shares, debentures, bonds etc and that all the capital market instruments have
risk. Risks can be Investor Psychology Risks, Prediction Risks, Choice Risks, and Cost Risks
etc.

Although there is no one mutual fund that will be suitable to all kinds of investors. Hence,
mutual fund investors need to identify a suitable fund for them. It will be the first step towards
making successful investments in mutual funds to make Mutual Funds their "CUP OF TEA".

Identifying a suitable fund can be done in a two-step manner as follows:

Selecting a fund with investment objectives and preferences, return objectives, time horizon and
risk tolerances that meet the requirements of the investor.

Selecting a fund that has a detailed asset allocation strategy by fund type category to reflect the
investment objectives of the fund.

Mutual funds can be win-win option available to the investors who are not willing to take any
exposure directly to the security markets as well as it helps the investors to build their wealth
over a period of time. But the thing which must be remembered by the investors is

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"INVESTMENT IN MUTUAL FUND IS SUBJECT TO MARKET RISK".

The Indian Equity Market has grown significantly during the last three years; Mutual Funds are
not left far behind. Both the avenues have created wealth for the investors. But for the creation of
wealth through this avenue a proper understanding of the Mutual Funds is must.

Understanding Mutual Funds

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such as
shares, debentures and other securities. The income earned through these investments and capital
appreciation realized is shared by its unit holders in proportion to the number of units owned by
them.

(Mutual Fund and Market Risks: Article By: Devindar Kaur Lecturer (Finance) Ludhiana
College of Engineering & Technology)

Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a relatively
low cost. When we talk about all these, one hard fact is about risks that are faced by the Mutual

11
Fund investors. Whenever we see any Mutual Fund offer, there are few statements inevitably
found along with that, which is commonly known as "Disclaimer Clause of the Mutual Fund".

Indian Mutual Fund Industry

The Indian mutual fund industry is dominated by the Unit Trust of India, which has a total
corpus of Rs700bn collected from more than 20 million investors. The UTI has many
funds/schemes in all categories i.e. equity, balanced, income etc with some being open-ended
and some being closed-ended. The Unit Scheme 1964 commonly referred to as US 64, which is a
balanced fund, is the biggest scheme with a corpus of about Rs200bn. Most of its investors
believe that the UTI is government owned and controlled, which, while legally incorrect, is true
for all practical purposes.

The second largest category of mutual funds is the ones floated by nationalized banks. Can bank
Asset Management floated by Canara Bank and SBI Funds Management floated by the State
Bank of India are the largest of these. GIC AMC floated by General Insurance Corporation and
Jeevan Bima Sahayog AMC floated by the LIC are some of the other prominent ones.

MUTUAL FUND

Performance of mutual funds in India from the day the concept of mutual fund took birth in India
in the year was 1963. Unit Trust of India invited investors or rather to those who believed in
savings, to park their money in UTI Mutual Fund. The performance of mutual funds in India in
the initial phase was not even closer to satisfactory level. People rarely understood, and of course
investing was out of question. But yes, some 24 million shareholders were accustomed with
guaranteed high returns by the beginning of liberalization of the industry in 1992. This good
record of UTI became marketing tool for new entrants. The expectations of investors touched the
sky in profitability factor. However, people were miles away from the preparedness of risks
factor after the liberalization.

The Assets under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate
about the performance of mutual funds in India through figures. From Rs. 67bn. the Assets under

12
Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher
performance by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual
funds in India declined when stock prices started falling in the year 1992. Those days, the market
regulations did not allow portfolio shifts into alternative investments.

There was rather no choice apart from holding the cash or to further continue investing in shares.
One more thing to be noted, since only closed end funds were floated in the market the investors
disinvested by selling at loss in the secondary market.

The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal,
the losses by disinvestments and of course the lack of transparent rules in the whereabouts
rocked confidence among the investors. Partly owing to a relatively weak stock market
performance, mutual funds have not yet recovered, with funds trading at an average discount of
1020 percent of their net asset value. The measure was taken to make mutual funds the key
instrument for long-term saving. The more the variety offered, the quantitative will be investors.
At last to mention, as long as mutual fund companies are performing with lower risks and higher
profitability within a short span of time, more and more people will be inclined to invest until
and unless they are fully educated with the dos and don'ts of mutual funds.

Market trend

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund
industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in
which the first Mutual Fund Regulations came into being, under which all mutual funds, except
UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with
Franklin Templeton) was the first private sector mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and
revised Mutual Fund Regulation Policies in 1996. The industry now functions under the SEBI
(Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual funds setting
up funds in India and also the industry has witnessed several mergers and acquisitions. As at the

13
end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The
Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other
mutual funds.

This year 2003 bought bitter experiences for UTI. It was bifurcated into two separate entities.
One was the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835 crores (as
on January 2003). The Specified Undertaking of Unit Trust of India is functional under the rules
framed by Government of India and does not come under the purview of the Mutual Fund
Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered
with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the
erstwhile UTI which had in March 2000 more than Rs.76,000 crores of AUM and with the
setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with
recent mergers taking place among different private sector funds, the mutual fund industry has
entered its current phase of consolidation and growth. In the past decade, Indian mutual fund
industry had seen dramatic improvements, both qualitative as well as quantitative. Despite these
improvements, the industry scenario is not as rosy as it seems.

With the Indian stock markets growing at a frantic pace in 2007 (much like 2006), investors who
were willing to take on risk have been rewarded rather handsomely for their efforts. While the
smart investor has been grounded, many an ecstatic investor has lost his bearings taking on even
higher dosage of risk for that additional return.

Nonetheless, 2007 had a lot of innovation in store for the mutual fund investor, not all of which
were positive. And there are indications that 2008 could prove to be just as innovative.

Given that the domestic mutual fund industry has far from matured, it is only natural to expect a
lot of new products and innovation along the way. 2007 witnessed some of these innovations.

14
 CLASSIFICATION OF MUTUAL FUND

Mutual fund schemes may be classified on the basis of their structure and their investment objective

By Structure

1) Open-ended Funds: An Open-ended Fund is one that is available for subscription all
through the year. These do not have a fixed maturity. Investors can conveniently buy and
sell units at Net Asset Value (NAV) related prices.
2) Close-ended Funds: A Close-ended Fund has a stipulated maturity period, which
generally ranges from 3 to 15 years.

By Investment Objective

1) Growth Funds: The aim of growth funds is to provide capital appreciation over the
medium to long term. Such schemes normally invest a majority of their corpus in
equities. Growth schemes are ideal for investors who have a long-term outlook and are
seeking growth over a period of time.
2) Income Funds: 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 and Government securities.

3) Balanced Funds: The aim of Balanced Funds is to provide both growth and regular
income. Such schemes periodically distribute a part of their earning and invest both in
equities and fixed income securities in the proportion indicated in their offer documents.

4) Money Market Funds: The aim of Money Market Funds is to provide easy liquidity,
preservation of capital and moderate income. These schemes generally invest in safer
short-term instruments such as Treasury Bills, Certificates of Deposit, Commercial Paper
and Inter-Bank Call Money.

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 Different Mutual Fund plans:
To cater to different investment needs, Mutual Funds offer various investment options. Some of
the important investment options include:

1) Growth Option: Dividend is not paid-out under a Growth Option and the investor realizes
only the capital appreciation on the investment (by an increase in NAV).
2) Dividend Payout Option: Dividends are paid-out to investors under the Dividend Payout
Option. However, the NAV of the mutual fund scheme falls to the extent of the dividend
payout.

3) Dividend Re-investment Option: Here the dividend accrued on mutual funds is

automatically re-invested in purchasing additional units in open-ended funds. In most
cases mutual funds offer the investor an option of collecting dividends or re-investing the
same.

4) Retirement Pension Option: Some schemes are linked with retirement pension.
Individuals participate in these options for themselves, and corporate participate for their
employees.

5) Insurance Option: Certain Mutual Funds offer schemes that provide insurance cover to
investors as an added benefit.

Mutual Fund Advantages

The benefits on offer are many with good post-tax returns and reasonable safety being the
hallmark that we normally associate with them. Some of the other major benefits of investing in
them are:

a) Number of available options: Mutual funds invest according to the underlying

investment objective as specified at the time of launching a scheme. So, we have equity

16
 funds, debt funds, gilt funds and many others that cater to the different needs of the
investor. The availability of these options makes them a good option.
b) Diversification: Investments spread across a wide cross-section of industries and
sectors and so the risk is reduced. Diversification reduces the risk because not all stocks
move in the same direction at the same time. One can achieve this diversification through
a Mutual Fund with far less money than one can on his own.

c) Professional Management: Mutual Funds employ the services of skilled

professionals who have years of experience to back them up. They use intensive research
techniques to analyze each investment option for the potential of returns along with their
risk levels to come up with the figures for performance that determine the suitability of
any potential investment.

d) Potential of Returns: Returns in the mutual funds are generally better than any
other option in any other avenue over a reasonable period. People can pick their
investment horizon and stay put in the chosen fund for the duration. Equity funds can
outperform most other investments over long periods by placing long-term calls on
fundamentally good stocks.

e) Get Focused: Investing in individual stocks can be fun because each company
has a unique story. However, it is important for people to focus on making money.
Investing is not a game. Your financial future depends on where you put you hard-earned
dollars and it should not take lightly.

f) Efficiency: By pooling investors' monies together, mutual fund companies can

take advantage of economies of scale. With large sums of money to invest, they often
trade commission-free and have personal contacts at the brokerage firms.

Drawbacks of Mutual Funds

Mutual funds have their drawbacks and may not be for everyone:

a) No Guarantees: No investment is risk free. If the entire stock market declines in value,
the value of mutual fund shares will go down as well, no matter how balanced the

17
 portfolio. Investors encounter fewer risks when they invest in mutual funds than when
they buy and sell stocks on their own. However, anyone who invests through a mutual
fund runs the risk of losing money.
b) Fees and commissions: All funds charge administrative fees to cover their day-to-day
expenses. Some funds also charge sales commissions or "loads" to compensate brokers,
financial consultants, or financial planners. Even if you don't use a broker or other
financial adviser, you will pay a sales commission if you buy shares in a Load Fund.

c) Taxes: During a typical year, most actively managed mutual funds sell anywhere from 20
to 70 percent of the securities in their portfolios. If your fund makes a profit on its sales,
you will pay taxes on the income you receive, even if you reinvest the money you made.

d) Management risk: When you invest in a mutual fund, you depend on the fund's manager
to make the right decisions regarding the fund's portfolio. If the manager does not
perform as well as you had hoped, you might not make as much money on your
investment as you expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers

TYPES OF RISK INVOLVED WITH MUTUAL FUNDS

Risk is an inherent aspect of every form of investment. For mutual fund investments, risks would
include variability, or period-by-period fluctuations in total return. The value of the scheme's
investments may be affected by factors affecting capital markets such as price and volume
volatility in the stock markets, interest rates, currency exchange rates, foreign investment,
changes in government policy, political, economic or other developments.

Market Risk: At times, the prices or yields of all the securities in a particular market rises or
falls due to broad outside influences. When this happens, the stock prices of both an outstanding,
highly profitable company and a fledgling corporation may be affected. This change in price is
due to "market risk".

18
Inflation Risk: Sometimes referred to as "loss of purchasing power." Whenever the rate of
inflation exceeds the earnings on your investment, you run the risk that you'll actually be able to
buy less, not more.

Credit Risk: In short, how stable is the company or entity to which you lend your money when
you invest? How certain are you that it will be able to pay the interest you are promised, or repay
your principal when the investment matures?

Interest Rate Risk: Changing interest rates affect both equities and bonds in many ways. Bond
prices are influenced by movements in the interest rates in the financial system. Generally, when
interest rates rise, prices of the securities fall and when interest rates drop, the prices increase.
Interest rate movements in the Indian debt markets can be volatile leading to the possibility of
large price movements up or down in debt and money market securities and thereby to possibly
large movements in the NAV.

Investment Risks: In the sectoral fund schemes, investments will be predominantly in equities
of select companies in the particular sectors. Accordingly, the NAV of the schemes are linked to
the equity performance of such companies and may be more volatile than a more diversified
portfolio of equities.

Liquidity Risk: Thinly traded securities carry the danger of not being easily saleable at or near
their real values. The fund manager may therefore be unable to quickly sell an illiquid bond and
this might affect the price of the fund unfavorably. Liquidity risk is characteristic of the Indian
fixed income market.

Changes in the Government Policy: Changes in Government policy especially in regard to the
tax benefits may impact the business prospects of the companies leading to an impact on the
investments made by the fund.

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Relationship between Return and Risk:

(Fig:)

In the above graph it shows that as the standard deviation increases, the returns from the
particular type of fund increases.

Equity Market in Comparison with Mutual fund

Capital markets are the markets for the long term funds. It enhances capital formation, which has
a very significant role to play in the development of any economy.

 Primary Market is a place where new offerings by Companies are made either as an
Initial Public Offering (IPO) or Rights Issue.

20
  Secondary Market is a market where securities are traded after being initially offered to
the public in the Primary

 Market and/or listed on the Stock Exchange. Majority of trading is done in this market
which comprises of equity market and debt market. As the secondary market is created
for the securities raised in the primary markets, the depth of the secondary market
depends upon the primary markets.

EQUITY MARKET IN INDIA

The development of India’s equity capital markets has taken a more progressive trajectory than
the bond market, largely reflecting the government’s laissez faire approach in the segment. At
90% of GDP, its size is comparable to that of other emerging countries, although it is still small
relative to many developed markets like Japan and US.

(fig.no.)

Of India’s 23 stock exchanges, equity trading is most active in the National Stock Exchange
(NSE) and the Bombay Stock Exchange (BSE). Since the NSE’s inception in 1994, it has
caught up with the BSE in terms of capitalization but exceeded it in turnover. The BSE boasts of
over 4,000 listed companies, surpassing stock exchanges in the US. This explains its slightly

21
higher market capitalization over the NSE, although its lower turnover implies that inefficiencies
remain due to the high proportion of untraded companies. Its share of total equity turnover is just
33% compared to 66% of its rival, the NSE. The increase in the limit for foreign direct
investment in the stock exchanges to 49% announced earlier this year is expected to lend more
dynamism to the equity capital markets. The investment limit for a single investor was set at 5%.
It did not take long after the new limit was announced that the New York Stock Exchange
(NYSE), Goldman

EQUITY STOCK SELECTION APPROACHES

When the objective of the analysis is to determine what stock to buy and at what price, there are
two basic methodologies:

1. Fundamental Analysis

Fundamental Analysis is a technique that attempts to determine a security’s value by focusing on

underlying factors that affect a company's actual business and its future prospects. As with most
analysis, the goal is to derive a forecast and profit from future price movements. To forecast
future stock prices, fundamental analysis combines economic, industry, and company analysis to
derive a stock's current fair value and forecast future value. If fair value is not equal to the
current stock price, fundamental analysts believe that the stock is either over or under valued and
the market price will ultimately gravitate towards fair value.

2. Technical Analysis

Technical Analysis maintains that all information is reflected already in the stock price, so
fundamental analysis is a waste of time. Trends 'are your friend' and sentiment changes predate
and predict trend changes. Investors' emotional responses to price movements lead to
recognizable price chart patterns. Technical analysis does not care what the 'value' of a stock is.
Their price predictions are only extrapolations from historical price patterns.

Framework for Fundamental Analysis

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Even though there is no one clear-cut method, the general approach being used is the Top-Down
approach. With the top-down approach of forecasting after undergoing Fundamental Analysis,
analysts are primarily involved in making prediction and assessment for the economy of the
country, the state, the area and then for the industries and finally for the companies. The
industry’s forecast is always based on the overall assessment of the economy and company’s
forecast on the industry itself and the economy as a whole.

Economic Analysis

 A study of economic trends as indicated by the rate of growth in GDP, inflation, money-
supply, aggregate corporate profits etc.
 A study of economic policies of the government including plan priorities, monetary
policies, fiscal policies etc.
 An analysis of the relationship between economic trends and economic policies and the
stability of such relationships.
 A study of world economic trends and their impact on Indian economy.

Industry Analysis

 Implications of projected growth in Gross National Product for various industries.

 Implications of plan priorities and plan expenditures for various industries
 Vulnerability of an industry under government regulation and control of prices and
production
 Implications of industrial and fiscal policies of the government for an industry
 Degree of dependence on scarce non renewable or imported raw materials.
 Vulnerability of industry to business cycle
 Life Cycle position of the industry

Company Analysis

 A trend analysis of company’s market share and its cost structure

23
  An analysis of turnover of assets, operating and production efficiencies through Ratio
Analysis
 Leverage and coverage ratio analysis
 Funds flow and Profitability analysis
 A trend analysis of Book Value per share
 An analysis of growth in dividend per share and retention policy

Factors to be considered while selecting a Stock

The Selection of a stock is generally done from a three-dimensional perspective namely:

A. Qualitative Factors

The principal objective of qualitative analysis is to identify sustainable competitive advantages

of each company and to determine the level of confidence and conviction in corporate
management. The analysis includes evaluating both internal and external factors that may have
an impact on a company's ability to sell its product. It also involves having regular open dialogue
with management and regular conference calls to discuss recent developments. The intent is to
be long-term holders of the company one purchases. Strong belief in management is required in
order to maintain conviction during the short-term adversities that virtually all companies
experience.

The various qualitative factors to be considered are:

Industry

Industry is a grouping used to describe a company's main business activity. It is generally

determined by the major source of a company's income. A hot sector is a sector of the economy
experiencing a higher than regular growth rate. If companies across an industry show solid
earnings and revenue figures, that industry may be showing signs that it is in its growth phase.
Our goal is to select securities that area in a hot industry.

24
Scale of Opportunity: The trick lies in identifying Sectors which present huge scope of
opportunities. This involves finding sectors whose market cap are way beyond that of the total
industry.

For example when Mobile Telephony was in growing stage in India in 2004, Bharti Airtel was
trading at a market cap of $ US 1.5 billion against a total market size of US $ 100 billion. Three
years down the line and we can see the remarkable returns given by the stock.

Going forward we can estimate the case of the Indian Retail sector. The Indian Retail market is
presently worth US $ 300 billion and the collective market cap of the leaders in the listed space
was less than 1% in 2003 and is at a similar level currently. The total share of organized retail has gone
up from 2% in 2003 to 3% in 2006 and is estimated to hit 10% by 2010.

Company Market Capitalization

Pantaloon Retail US $ 1 billion
Titan US $ 756 million
Shopper Stop US $ 358 million
Trent US $ 263 million
Total market cap of listed Retail players US $ 2.37 billion
Total size of the Retail market US $ 300 billion
Percentage to the total Retail Market 0.79%

Industry Leader: The top two or three stocks in a strong industry group can have incredible
growth, while others in the group may barely move. One should buy the best companies, the
ones that lead their sectors and are number one in their particular field. The number one market
leader is not the biggest one.

It is the one with the highest annual growth, earning per share, and price relative strength. It’s a
company that has competitive advantage over its competitors. A company that is offering the
best product

25
Management: Great management can make a difference between an average business and an
extraordinary one. Our goal as an investor is to find management teams that think like
shareholders; executives who treat the company as if they own a piece of it. One way to find out
about the management and how much they really care about share holders is to check the top
executive’s compensation plans. We review the compensation detail in a document called proxy
statement. Big bonuses are always better than big base salaries. Bonuses mean a chunk of the
income is always at risk and depends on the performance of the management.

Competitive Advantage: Success attracts competition and eventually laggard companies come
into competition and cause the stock price of a company that has been a leader for a while to
drop. Generally, there are different ways that a company can create sustainable competitive
advantage:

1. Creating a real different product

2. Creating a strong brand
3. Keeping costs down
4. Locking in customers by creating high switching cost
5. Locking out competitors

Technical Factors

Determining Market Trend

Detecting the current trend of the market is the first and most important part of our stock pick
system. More than 75% of your trades will end up in a loss if you fight the trend. As part of our
stock pick strategy we constantly review the conditions of the market averages.

Support Resistance: The price action of a stock over a period of time will create strength at
certain price levels. These levels are recognized as resistance at the top and support at the bottom
end of the trading range. This trading range may develop different time frames; it can take from
weeks to years or a support and resistance level to develop.

As the price of a stock breaks through the resistance level and moves to a higher level, the level
of resistance now becomes the level of support. A new level of resistance will then be formed at

26
some point in the future. On the other hand, as the price range falls below the support level, that
level then becomes the new resistance level.

27
CHAPTER 2
2. Literature Review

Literature on mutual fund performance evaluation is enormous. A few research studies that have
influenced the preparation of this paper substantially are discussed in this section.

Zhi Da, Pengjie Gao, and Ravi Jagannathan(2011) in the article“Impatient Trading, Liquidity
Provision, and Stock Selection by Mutual Funds” showed that a mutual fund's stock selection
skill can be decomposed into additional components that include liquidity-absorbing impatient
trading and liquidity provision. The study proved that past performance predicts future
performance better among funds trading in stocks affected more by information events Past
winners earn a risk-adjusted after-fee excess return of 35 basis points per month in the future.
Most of that superior performance comes from impatient trading. The paper also states that
impatient trading is more important for growth-oriented funds, and liquidity provision is more
important for younger income funds.

Deepak Agrawal (2011) in the study “Measuring Performance of Indian Mutual Funds” touched
the development of Indian capital market and deregulations of the economy in 1992. Since the
development of the Indian Capital Market and deregulations of the economy in 1992 there have
been structural changes in both primary and secondary markets. Mutual funds are key
contributors to the globalization of financial markets and one of the main sources of capital flows
to emerging economies. Despite their importance in emerging markets, little is known about their
investment allocation and strategies. This article provided an overview of mutual fund activity in
emerging markets. It described about their size and asset allocation. The paper is a process to
analyze the Indian Mutual Fund Industry pricing mechanism with empirical studies on its
valuation. The data is also analyzed at both the fund-manager and fund-investor levels. The study
revealed that the performance is affected by the saving and investment 50habits of the people
and the second side the confidence and loyalty of the fund Manager and rewards affects the
performance of the MF industry in India.

28
Deepak Agrawal (2011) in the study “Measuring Performance of Indian Mutual Funds” touched
the development of Indian capital market and deregulations of the economy in 1992. Since the
development of the Indian Capital Market and deregulations of the economy in 1992 there have
been structural changes in both primary and secondary markets. Mutual funds are key
contributors to the globalization of financial markets and one of the main sources of capital flows
to emerging economies. Despite their importance in emerging markets, little is known about their
investment allocation and strategies. This article provided an overview of mutual fund activity in
emerging markets. It described about their size and asset allocation. The paper is a process to
analyze the Indian Mutual Fund Industry pricing mechanism with empirical studies on its
valuation. The data is also analyzed at both the fund-manager and fund-investor levels. The study
revealed that the performance is affected by the saving and investment 50habits of the people
and the second side the confidence and loyalty of the fund Manager and rewards affects the
performance of the MF industry in India.

Ronay and Kim (2006) have pointed out that there is no difference in risk attitude between
individuals of different gender, but between the groups, males indicate a stronger inclination to
risk tolerance. Gender difference was found at an individual level, but in groups, males
expressed a stronger pro-risk position than females.

Zakri Y.Bello (2005) matched a sample of socially responsible stock mutual funds
matchedt o   r a n d o m l y   s e l e c t e d   c o n v e n t i o n a l   f u n d s   o f   s i m i l a r   n e t   a s s e t s   t o  
investigate differences incharacteristics of assets held, degree of portf
o l i o   d i v e r s i f i c a t i o n   a n d   v a r i a b l e   e f f e c t s   o f   diversification on investment
performance. The studies found that socially responsible funds donot differ
significantly from conventional funds in terms of any of these attributes. Moreover, the effect of
diversification on investment performance is not different between the two groups. Both groups
underperformed the Domini 400 Social Index and S & P 500 during the study period.

29
Mishra, et al.,(2002) measured mutual fund performance using lower partial moment. In this
paper, measures of evaluating portfolio performance based on lower partial moment are
developed. Risk from the lower partial moment is measured by taking into account
only those states in which return is  below a pre-specified “target rate” like risk-free rate.

Kshama Fernandez (2003) evaluated index fund implementation in India. In this paper,
tracking error of index funds in India is measured . The consistency and level of
tracking errors obtained by some well-run index fund suggests that it is possible to attain
low levels of tracking error under Indian conditions. At the same time,there do
seem to be periods where certain index funds appear to depart from the discipline
of indexation. K. Pendaraki et al. studied construction of mutual fund portfolios, developed a
multic r i t e r i a   m e t h o d o l o g y   a n d   a p p l i e d   i t   t o   t h e   G r e e k   m a r k e t   o f  
e q u i t y   m u t u a l   f u n d s .   T h e methodology is based on the combination of discrete and
continuous multi-criteria decision aid methods for mutual fund selection and composition.
UTADIS multi-criteria decision aid methods employed in order to develop mutual fund’s
performance models. Goal programming model is employed to determine proportion of selected
mutual funds in the final portfolios.

Borensztein, E. and Gelos, G. (2001) explores the behavior of emerging market mutual funds
using a novel database covering the holdings of individual funds over the period January 1996 to
March 1999. An examination of individual crises shows that, on an average, funds withdrew
money one month prior to the events. The degree of herding among funds is statistically
significant, but moderate. Herding is more widespread among open-ended funds than among
closed-end funds, but 31not more prevalent during crisis than during tranquil times. Funds tend
to follow momentum strategies, selling past losers and buying past winners, but their overall
behavior is more complex than often suggested.

Gavin Quill (2001) examined the evidence that investor behavior is frequently detrimental to the
achievement of investors’ long-term goals. The picture that emerges from this analysis is one of
investors who have lost a good portion of their potential returns because of the excessive
frequency and poor timing of their trading activities. They established that investors trade much

30
more than they realize and much more than is conducive to the achievement of their financial
plans. Investors think long-term in theory, but act according to short-term influences in practice.
This excessive turnover, combined with a propensity to buy relatively over-valued investments
and ignore relatively under-valued ones, has caused the average mutual fund investor to
underperform substantially over the past decade.

Gupta Amitabh (2001) evaluated the performance of 73 selected schemes with different
investment objectives, both from the public and private sector using Market Index and Fundex.
NAV of both close-end and open-end schemes from April 1994 to March 1999 were tested. They
found that sample schemes were not adequately diversified, risk and return of schemes were not
in conformity with their objectives, and there was no evidence of market timing abilities of
mutual fund industry in India.

Karthikeyan (2001) conducted research on Small Investors Perception on Post office Saving
Schemes and found that there was significant difference among the four age groups, in the level
of awareness for Kisan Vikas Patra (KVP), National Savings Scheme (NSS), and Deposit
Scheme for Retired Employees (DSRE). The Overall Score confirmed 32that the level of
awareness among investors in the old age group was higher than in those of young age group. No
differences were observed among male and female investors. Narasimhan M S and

Vijayalakshmi S (2001) analysed the top holding of 76 mutual fund schemes from January 1998
to March 1999. The study showed that, 62 stocks were held in portfolio of several schemes, of
which only 26 companies provided positive gains. The top holdings represented more than 90
percent of the total corpus in the case of 11 funds. The top holdings showed higher risk levels
compared to the return. The correlation between portfolio stocks and diversification benefits was
significant at one percent level for 30 pairs and at five

31
Block, Stanley B. and French, Dan W. (2000) conducted a study on Portfolios of equity mutual
funds .They proposed two-index model using both the value-weighted and an equally weighted
index. Estimated models using a sample of 506 mutual funds show that the two-index model
provides a better fit than the single-index model and identifies a larger set of funds with
abnormal performance.

Ramesh Chander (2000) examined 34 mutual fund schemes with reference to the three fund
characteristics with 91-days treasury bills rated as risk-free investment from January 1994 to
December 1997. Returns based on NAV of many sample schemes were superior and highly
volatile compared to BSE SENSEX. Open-end schemes outperformed close-end schemes in term
of return. Income funds outsmarted growth and balanced funds. Banks and UTI sponsored
schemes performed fairly well in relation to sponsorship. Average annual return of sample
schemes was 7.34 percent due to diversification and 4.1 percent due to stock selectivity. The
study revealed the poor market timing ability of mutual fund investment. The researcher also
identified that 12 factors explained majority of total variance in portfolio management practices.

Stat man (2000), the e SDAR of a fund portfolio is the excess return of the portfolio over the
return of the benchmark index, where the portfolio is leveraged to have the benchmark index’s
standard deviation.S.Narayan Rao, et. al., evaluated performance of Indian mutual funds in a
bear market throughr e l a t i v e   p e r f o r m a n c e   i n d e x ,   r i s k -
r e t u r n   a n a l y s i s ,   T r e y n o r ’ s   r a t i o ,   S h a r p e ’ s   r a t i o ,   S h a r p e ’ s measure , Jensen’s
measure, and Fame’s measure. The study used 269 open-ended schemes (out of total schemes of
433) for computing relative performance index. Then after excluding funds whose returns are
less than risk-free returns, 58 schemes are finally used for further analysis. The results of
performance measures suggest that most of mutual fund schemes in the sample of 58were able to
satisfy investor’s expectations by giving excess returns over expected returns based on both
premium for systematic risk and total risk. Bijan Roy, et. al., conducted an
empirical study on conditional performance of Indian mutual funds. This paper
uses a technique called conditional performance evaluation on a sample of eighty-nine
Indian mutual fund schemes .This paper measures the performance of various mutual funds with
both unconditional and conditionalf o r m   o f   C A P M ,   T r e y n o r -   M a z u y
m o d e l   a n d   H e n r i k s s o n M e r t o n   m o d e l .   T h e   e f f e c t   o f   incorporating 

32
lagged information variables into the evaluation of mutual fund manag
e r s ’  performance is examined in the Indian context. The results suggest that the use of
conditioning lagged information variables improves the performance of mutual fund schemes,
causing alphas to shift towards right and reducing the number of negative timing
coefficients.

Jack Clark Francis2 (1986) revealed the importance of the rate of return in
investments and reviewed the possibility of default and bankruptcy risk. He
opined that in an uncertain world, investors cannot predict exactly what rate of
return an investment will yield. However he suggested that the investors can
formulate a probability distribution of the possible rates of return. He also opined
that an investor who purchases corporate securities must face the possibility of
default and bankruptcy by the issuer. Financial analysts can foresee bankruptcy.
He disclosed some easily observable warnings of a firm's failure, which could be
noticed by the investors to avoid such a risk.

Preethi Singh3(1986) disclosed the basic rules for selecting the company to
invest in. She opined that understanding and measuring return md risk is
fundamental to the investment process. According to her, most investors are 'risk
averse'. To have a higher return the investor has to face greater risks.

Michael C. Jensen (1967) derived a risk-adjusted measure of portfolio

performance (Jensen’s alpha) that estimates how much a manager’s forecasting ability
contributes to fund’s returns.

William F. (1966) suggested a measure for the evaluation of portfolio

performance. Drawing on results obtained in the field of portfolio analysis,
economist Jack L. Treynor has suggested a new predictor of mutual fund performance, one
that differs from virtually all those used previously by incorporating the volatility of a
fund's return in a simple yet meaningful manner.Sharpe,

33
William F (1966) developed a composite measure of return and risk. He evaluated 34 open-end
mutual funds for the period 1944-63. Reward to variability ratio for each scheme was
significantly less than DJIA (Dow Jones Industrial Average) and ranged from 0.43 to 0.78.
Expense ratio was inversely related with the fund performance, as correlation coefficient was
0.0505. The results depicted that good performance was associated with low expense ratio and
not with the size. Sample schemes showed consistency in risk measure.

Irwin, Brown, FE (1965) analyzed issues relating to investment policy, portfolio

turnover rate, performance of mutual funds and its impact on the stock markets.
They identified that mutual funds had a significant impact on the price movement
in the stock market. They concluded that, on an average, funds did not perform
better than the composite markets and there was no persistent relationship
between portfolio turnover and fund performance.

Treynor (1965) used ‘characteristic line’ for relating expected rate of return of a
fund to the rate of return of a suitable market average. He coined a fund
performance measure taking investment risk into account. Further, to deal with a
portfolio, ‘portfolio-possibility line’ was used to relate expected return to the
portfolio owner’s risk preference.

Friend, et al., (1962) made an extensive and systematic study of 152 mutual
funds found that mutual fund schemes earned an average annual return of 12.4
percent, while their composite benchmark earned a return of 12.6 percent. Their
alpha was negative with 20 basis points. Overall results did not suggest
widespread inefficiency in the industry. Comparison of fund returns with turnover
and expense categories did not reveal a strong relationship.

34
CHAPTER 3
3.0Research Methodology

Research strategy is the orderly approach to take care of the examination issue. It might be
comprehended as an investigation of concentrate how research is done deductively. In it we
consider the different strides that all for the most part received by a scientist in examining his
exploration issue alongside the rationale behind them. The extent of examination approach is
more extensive than that of exploration strategy.

3.1 Conceptualisation:

A mutual fund is a professionally managed investment fund that pools money from many

investors to purchase securities. While there is no legal definition of the term "mutual fund", it is
most commonly applied to open-end investment companies, which are collective investment
vehicles that are regulated and sold to the general public on a daily basis. They are sometimes
referred to as "investment companies" or "registered investment companies". Hedge funds are
not mutual funds, primarily because they cannot be sold to the general public. Once a small
player in financial markets, due to their meteoric growth in the late 1980s and early 1990s,
mutual funds now play a large and decisive role in the valuation of traceable assets such as
stocks and bonds.

A stock market, equity market or share market is the aggregation of buyers and sellers (a

loose network of economic transactions, not a physical facility or discrete entity) of stocks (also
called shares); these may include securities listed on a stock exchange as well as those only
traded privately.

35
3.2 significance of the study:

It helps to reduce risk through the collection of fund from different securities and invest in
different stocks. It provides the benefit of diversification to the investors because it can make
investment in different securities diversifying the investment. It helps in maximize the return of
the portfolio because mutual fund is managed by professionals and expert team. It provides
opportunities to reinvest the return.
Equity share capital remains permanently with the company. it don’t create any obligation to pay
a fix rate of dividend. It can be issued by without creating any charge over the asset of the
company.

3.3Objectives of the Study

The present study has the following objectives:

1 PRIMARY: To have an overall understanding of the different types mutual fund.

2 SECONDARY:

 To study the investor perception regarding mutual fund.

 To study the various factors that investor considered while investing in the mutual
fund.

3.4Scope of the study

In India mutual fund industry is growing at a rapid speed after liberalization of policy of the
government. There are totally 46 mutual fund houses in India out of which 38 are private sector
AMCs and the remaining are public sector and UTI AMCs. The private sector mutual funds are
Indian, Foreign, Joint venture predominantly Indian and Joint venture predominantly Foreign.

36
Hence, the public sector sponsored mutual fundsalong with UTI is facing severe competition.
Banking companies and Insurance companies also entered into mutual funds industry which is
another reason for severity of competition. As the private sector mutual funds are offering a wide
array of schemes with different structures and objectives, the risk and returns vary. There is a
wide scope to evaluate the performance of mutual funds in various dimensions like risk-return,
risk adjusted return and return from alternative investments.

3.5 Research Design:

The research design is the comprehension master plan of the research study to be undertaken,
giving a statement of method to be used. The study of project is to be started with an exploratory
research as this helps in providing the sharper focus of the situation and clearer definition of the
problem. The methods used in exploratory research are a) survey of existing literature b) opinion
survey of investors. Besides exploratory in nature, this research can be called descriptive in
nature. It is concerned with collecting qualitative as well as quantitative description.

Research instrument:

The research instrument used in this project report is questionnaire for analysis the data.

Sample design:

After designing the research, the next step is to design sampling plan. Sampling can be described
as utilization of a limited number of item representing the population or universe for studying the
characteristic of whole population i.e. simple random sampling.

Sampling Size:

The numbers of investors were 100 with the help of convenient sampling in Karnal.

Sampling Area:

Area assigned for investors behavior: Karnal

37
3.6 COLLECTION OF DATA

Data collection is the process of gathering and measuring information on variable of interest, in
an established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes. The data collection components of research is common to all
fields of study including physical and social sciences, humanities, business, etc. While methods
vary by discipline, the emphasis on ensuring accurate and honest collection remains the same.
The goal for all data collection is to capture quality evidence that then translates to rich data
analysis and allows the building of a convincing and credible answer to questions that have been
posed. A formal data collection process is compulsory as it ensures that data gathered are both
defined and valid and that subsequent decisions based on arguments incorporate in the findings
are valid. The process provides both a baselines from which to evaluate and in certain cases a
target on what to improve.

3.7 METHODS OF DATA COLLECTION

Primary Data:

Primary data is that which are collected for the first time. Data is collected by using
questionnaire as a tool .The questionnaire contained questions, which are closed-ended.
Closed-ended questions are those where the respondent has to just check the appropriate answer
from a list of options available. Any doubts raised by the respondents have to be clarified to get
the appropriate answers from the distributors. Closed-Ended questions were relatively simple to
tabulate and analyze.

Secondary Data:

38
Secondary data means information that are already available i.e. they refer to the data which
have been collected and analyzed by someone else and can save both money and time of their
searcher. Secondary data may be provided in the form of company records, trade publications,
libraries etc. Secondary data sources are as follows:

 Newspaper

 Websites

 Journals

 Books

 Magazines

3.8 SAMPLING TECHNIQUE

Convenience sampling is a specific type of  non-probability sampling method that relies on data

collection from population members who are conveniently available to participate in study. Face
book, polls or questions can be mentioned as a popular example for convenience sampling.

Convenience sampling is a type of sampling where the first available primary data source will be
used for the research without additional requirements. In other words, this sampling method
involves getting participants wherever you can find them and typically wherever is convenient.
In convenience sampling no inclusion criteria identified prior to the selection of subjects.  All
subjects are invited to participate.

3.9 ANALYTICAL TOOLS USED IN STUDY :

 Tables: Tables will be used to represent the response of the respondents in a precise term
so that it become easy to evaluate the data collected.

39
  Bar graphs: Graphs are nothing more than a graphical representation of the data
collected in tabular form and shall be used to interpret results.

3.10 LIMITATIONS OF THE STUDY

Although the study was carried out with extremes enthusiasm and careful planning there are
several limitations, which handicapped the research viz.

Time Constraints:

The time specify for the project to be completed is less and thus there are chances that some
information might have been left out, however, due care is taken to include all the relevant
details needed.

Sample size:

Due to time constraints the sample size was comparatively small and would definitely have been
more characteristic if I had collected information from more respondents.

Accuracy:

It is difficult to know if all the respondents gave precise information; some respondents tend to
give deceptive information.

Dependence:

Information is also based on the incidental sources of collection therefore it is dependent.

Knowledge of respondent:

40
Level of knowledge of each respondent was different. So, the responses given by the
respondents could vary a lot depending on the perception of each respondent for a given
question.

Respondents:

Respondents of my research did not answer properly because they are busy in doing their work
or they didn’t show full interest in my questionnaire.

41
CHAPTER 4
4.0 ANALYSIS & INTERPRETATION

Q4.1. Do you invest in equity market?

Table no: 4.1

Responses No of responses Percentage of

responses

Yes 100 100%

No 0 0%

Total 100 100%

0%

yes
no
100%

Figno.4.1

Interpretation:

Through these data, we can say that all the respondents are aware regarding the investment
because all the respondents have invested in different securities.

42
Q4.2.Do you invested in the mutual fund?

Table no. 4.2

Responses No of responses Percentage of

responses

Yes 90 90%

No 10 10%

10%

yes
no
90%

fig no.4.2

Interpretation:
Through these data we can analyzed that 90% respondents are aware regarding the mutual fund
and remaining 10% of the respondent are not aware regarding the mutual fund.

43
Q4.3.What is the objective of the investment in the mutual fund?

Table No. 4.3

Responses No of responses Percentage of

responses

Tax reduction 36 40%

Retirement benefit 18 20%

Hedging risk 9 10%

Regular income 27 30%

Total 90 100%

30%
40%
tax reduction
retirement benefit
10% hedging risk

20% regular income

fig. no. 4.3

Interpretation:

44
Through these data we can say that 40% of the respondents main motive for investment is their
tan reduction, 20% respondents invest for retirement benefit, 30% of the respondents invest for
their regular income and remaining invest for hedging risk.

Q4.4. In which schemes in mutual fund you prefer most?

Table No. 4.4

Responses No of responses Percentage of

responses

Equity scheme 27 30%

Debt/Income 18 20%
scheme

Liquid scheme 9 10%

Fix-margin 36 40%
scheme

Total 90 100%

30%
40%
equity scheme
debt/income scheme
liquid scheme
20%
10% fix-margin scheme

Fig. no.: 4.4

Interpretation:

45
 Through these data we can say that 40% are mainly invest in the fix margin scheme,30%
respondents invested in the equity scheme, remaining 20% and 10% invested in the
debt/income scheme and liquid scheme respectively.

Q4.5. In which mutual fund companies you prefer to invest?

Table No. 4.5

Responses No of responses Percentage of

responses

Public Company 18 20%

Private 72 80%
Company

Total 90 100%

20%

public company
private company

80%

Fig.no.4.5

Interpretation:

46
Through these data we can analyze that 20% of the respondents are interested to invest in the
public company and remaining are interested to invest in the private company.

Q4.6. How do you normally get the information about various mutual fund scheme?
Table No. 4.6

Responses No of responses Percentage of

responses

Newspaper 36 40%

Magazines 18 20%

Internet 27 30%

Other 9 10%

Total 90 100%

10%

40%
30% newspaper
magazines
internet
other
20%

fig. no.: 4.6

47
Interpretation:
These data are helpful for analyzing 40% respondents get the information from the
newspaper, 20% respondents from the magazines and remaining from the internet and
from other sources.
Q4.7 Which type of investment persuades do you normally follows?

Table No. 4.7

Responses No of responses Percentage of

responses

Lump-sum 27 30%

Systematic 54 60%
investment plan

Both 9 10%

Total 90 100%

10%

30%
lump-sum
systematic investment plan
both

60%

Fig. no.: 4.7

Interpretation:

48
Through this pie chart we can say that 30% of the respondents persuade normally lump-sum
investment and 60% of the respondents persuade for the systematic investment plan and
remaining persuade both the investment plan.

Q4.8 At what time do you normally invest in the mutual fund?

Table No. 4.8

Respondents No of respondents Percentage of

respondents

In new year fund 18 20%

Year ending 9 10%

Anytime 63 70%

Total 90 100%

20%

in new year fund

10% year ending
anytime
70%

Fig.no.: 4.8
Interpretation:

49
Through these data we can say that 70% of respondents think that they should invest anytime
whenever they have fund, 20% respondents thick that they have to invest in the new year fund.

Q4.9 Are you satisfied with the return getting from it?

Table No. 4.9

Respondents No of respondents Percentage of

respondents

Yes 72 80%

No 18 20%

fig.no.4.9

Interpretation:

50
Through these data we can say that 20% respondents are satisfy by the return getting from it and
remaining are unsatisfied.

51
 CHAPTER 5

5.1 FINDINGS

The key findings of the following study have been highlighted below:

1. Through these data we can say that 20% respondents are satisfy by the return getting
from it and remaining are unsatisfied.
2. Through these data we can say that 70% of respondents think that they should invest
anytime whenever they have fund, 20% respondents thick that they have to invest in the
new year fund.
3. Through this pie chart we can say that 30% of the respondents persuade normally lump-
sum investment and 60% of the respondents persuade for the systematic investment plan
and remaining persuade both the investment plan.

4. Through these data, we can say that all the respondents are aware regarding the
investment because all the respondents have invested in different securities.

5. Through these data we can analyze that 20% of the respondents are interested to invest in
the public company and remaining are interested to invest in the private company.
6. Through these data we can say that 70% of respondents think that they should invest
anytime whenever they have fund, 20% respondents thick that they have to invest in the
new year fund.
7. Though these data we can analysed 20% respondents are those who invest half of their
saving, 10% are those respondents who invest one-third of their saving and remaining are
those who invest very low in the mutual fund.

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5.2 SUGGESTIONS

From the above study the following recommendations can be given to an investor.

A comparative analysis is also done between the sectors, different investment avenues and
different schemes. The future work will consists of the study of the portfolio of each of the
funds. The proportion of investments of the funds invested in different sectors and also in
different type of stocks (like large cap, mid cap and small cap stocks) will also be found out and
analyzed. Thus, it will give an overall view of the risks and returns of the selected funds over the
last one year and also analysis of their portfolio to understand the variability of returns over the
last one year.

1) For investors willing to take high risks, equity and sector funds are the picks:
2) Balance Funds are a good alternative for those who seek something between high risk
sector funds and low risk bond funds.
3) Debt Funds and bond funds are preferred in low risk, low return scenario.
4) Salaried persons earning a fixed salary can go for Systematic Investment Plan (SIP).

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CHAPTER 6

CONCLUSION

From the above study it can be finally concluded that the mutual fund industry in India is
growing in India because to the brisk growth of the capital market. Most of the funds mobilized
by various AMCs are actually pumped into the capital market. The performance of mutual funds
actually depends in the performance of the stock market. We have seen in the recent past that the
the performance of the mutual fund have been impressive but the future growth will still depend
on the capital market behaves. Risk element always exists in mutual fund investment as they do
not guarantee any sure shot returns. But an investor can consider his risk being minimized as he
gets the expertise of fund managers and since the investments made by fund houses are in large
amounts the cost of investments also gets reduced. The top 10 % of the schemes that have
performed the best are mostly the equity diversified schemes. This explains the dependencies of
returns are on equities. There is no denying the fact that the returns have also gone down as and
when the stock markets have fell. Diversification of investments by AMCs has been the key of
their success in India.

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