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Executive Summary

It is very important to understand business environment in which the company

operates. The project I was working on is an attempt to understand the intricacies
of Public Relation and to get the practical exposure to customer service through
effective Services.

Being the part of the service market it is important to customize the services
according to the requirement of the client.

At Reliance Money I worked as Operation Trainee. I was into customer services.

Customers used to come with their problems regarding financial services. I was
dealing with customer’s querries with whole operation team.

This report aims to study and analyze the Investor’s behavior towards various
investment options offered by Reliance Money Ltd. The project also interprets why
and how a customer perceives a particular scheme and the way he selects and
interprets the financial product offered by investment and services division of
Reliance Money.

Serial No. Particulars Page

1. Acknowledgement 2
2. Declaration 3
3. Executive summary 4
4. Company profile 6
5. Objective 8
6. Research Methodology 10

7. Demat A/C 15

8. Mutual fund 27

9. Customer services 43

10. Other Topics 59

11. Questionnaire 92

12. Findings & Analysis 96

13. Conclusion 103

14. Recommendations 104

15. References 106


Reliance Money is a part of Reliance capital Ltd. (RCL) and is Under Reliance
Anil Dhirubhai Ambani Group. RCL is one of the fastest growing private sector
financial services company in India.

This Group has the following divisions:-

 Reliance Money
 Reliance Life Insurance
 Reliance Mutual Fund
 Reliance Consumer Finance

In terms of net worth, it is ranked among the top three private sector financial
services companies. It has its interests relating it to asset management and mutual
funds, life and general insurance, credit cards and other activities in financial
services. RCL is registered as a depository participant with National Securities
Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL) under the
Securities and Exchange Board of India (Depositories and Participants)
Regulations, 1996. Reliance Capital Ltd (RCL) reported a gross income of Rs. 400
Crore for FY 2006-07, as against a Rs. 295 Crores income in FY 2005-06.
Depreciation stood at Rs. 23 Crore versus Rs. 28 Crores last year. Provisions for
taxation during the financial year amounted to Rs. 13 Crore versus Rs. 5.4 Crore
last year. Net profit increased to Rs. 538 Crore from Rs. 106 Crore in the last year.
Reliance Money offers a single window platform for all the financial transactions
of the consumers. It is offering an investment avenue for a wide range of asset
classes like equity, equity and commodities derivatives, mutual funds, IPOs, Life

and General Insurance, Offshore Investments, Money transfers, Money Changing

and Credit cards.

The endeavor of the company is to change the way India transacts in financial
market and avails the financial services.

Services provided at the Reliance Company:

 Demat services.
 Mutual Funds.
 Insurance (general and life).
 Investments (NFO’s, IPO’s, bonds).
 Equity and Commodity derivatives.
 Credit Cards.
 Money Transfers.

Reliance Money is the most cost effective, convenient and secure way to transact
in a wide range of financial product, as claimed by the top officials of this

The objective of this project is not only to develop an understanding about the
concepts and origin of broking of finances in India but also to give inputs on how
to better the whole process by finding bottlenecks in the present system. The
process of a thorough analysis of what the client actually needs, is done and
whether the right product is pitched in or not.

The main idea behind is to study Investor’s behavior towards investment in

various financial products. It includes to deals the various financial products like
stock broking, life insurance, general insurance, mutual funds and gets full
knowledge about all of them.

The objective is to have a better understanding of products offered by other players

in India so that suggestions can be made for the betterment of the product line and

The objective of the project is to make the comparative analysis of financial

products, regarding the risk, returns, tax advantages and other features associated.
Further the project aims at defining the customer perception towards financial
planning, factors influencing their decision of investment and the procedure of
helping the customer to choose the right type of financial product.

Also, this project helped me in understanding financial products.

Scope of study
As Reliance Money provides financial services, it gives me the practical exposure
of client service as well as I got my first hand experience of service Industry. In the
process of creating client relationship I got a chance to improve my
communication skills and it also provided me with the chance to know about the
negotiation with the client. It also helps me in understanding the organizational
culture. This project helps me in developing PR skills which are of utmost
importance for any professional.


Research is the movement from the known to unknown. Research is the scientific

investigation. Research is both art and science. Every research project conducted

scientifically has a specified framework for collection and analysis of data in

manner that aims at combining relevance to the research purpose with economy in

procedure. This framework is called research design. Any research design consists

following stages:
 Defining the problem and the research objective:
The research objective states what information is needed to solve the problem. The
objective of the research is to derive the opinion of the investors and the agents of
the different de-metallization account & mutual funds to evaluate the performance
of the different de-metallization account & mutual funds.

 Developing the research plan:

Once the problem is identified, the next step is to prepare a plan for getting the
information needed for the research. The present study will adopt the exploratory
approach wherein there is a need to gather large amount of information before
making a conclusion. If required, the descriptive and casual approaches may also
be used.

 Collection and Sources of data:

Market research requires two kinds of data, i.e., primary data and secondary

• Primary Data

• Secondary Data.

Primary Data:

In this the information is being possessed with first hand information, which is
new and fresh.

The tools used by us for the primary data are:

• Questionnaire

• Personal Interview

• Observation

Secondary data:
The information that is received with the help of Internet, Journals, Magazines,
Financial reports, Data from management books and magazines.

• Gathered information through internet and from other sources.

• Support and knowledge provided by Faculty and Company guide.

 Survey of Existing Literature

I had done the literature survey (Brochure etc.) of Reliance Money generals and
other broking houses.

 Analyze the collected information:

This involves converting raw data into useful information. It involves tabulation of
data, using statistical measures on them

For developing frequency distributions and calculating the averages and


 Report research findings:

This phase will mark the culmination of the research effort. The report with the
research findings is a formal written document. The research findings and personal
experience will be used to propose recommendations for the improvement of the

 Relevance of the Study:

In the contemporary world, many fast mushrooming financial institutions are,
offering new products and services to the investors. They entice them to invest
their funds by providing incentives and facilities in terms of flexible investment
options and withdrawal plan.

The broking houses have grown up in leaps and bounds, particularly during
the last two decades of the 20th Century.

A proper evaluation measure will remove the confusion and help investors to
decide the level of investment in various stocks, about their financial performance
over a period of time, and the risk associated with their investment, so as to avoid
loss and maximize returns.

This needs the following steps to be taken with good approach:


• It includes detailed analysis of the present investment plans available with

the Reliance Money.
• Besides this we need to study various investment plans offered by other
financial institutions, so that when we advise people to invest in our plan we
should compare it with other’s plan. This will develop a comparative
• Study of new fund offers is a must, as new customers are added a lot to the
Company database by these new fund offers.
• We were also trained for other financial products like Demat, Life Insurance
& General Insurance.


• We have to interact with the customers who visit the company office.
• We can meet the existing customers of the company by looking for their
contact in the company database.
• Some times we have to go to the leads provided by the seniors.
• For corporate clients we have to visit the company and make the corporate


• I have to record the relevant data about the customer with whom we interact.
Information like the amount he is interested to invest in, the investment plan
he is looking for.
• Number of customers and their details who had finally invested their
• This data base could be further utilized by the company to inform the
existing customer when the new investment plan is introduced.
Flow chart of Methodology

Defining Research objective &

Data collection through various means

Designing a questionnaire

Interaction with customers

Analysis of the data collected on SPSS


Demat A/C
For each Reliance account, there has to be one corresponding Demat account,

where the settlements of shares are done. Since it is a complete online offerings,

for all the purchase transactions, shares will be credited to the linked demat

account and for all the sales transactions Shares will be debited from the linked

demat account only.

A Product for every need

RELIANCE MONEY-Transacting and investing simplified –
Get ready to change the way of transact and invest in financial product and
Whether you wise to transact in Equity, Equity and commodity

Derivatives, IPO’s offshore investment or prefer to investment in mutual fund, Life

and General insurance products or avail money

Transfer and money changing services, you can do it all through

Reliance money.

Simply open a reliance money account and enjoy the convenience of handling all
your key financial transaction

Through this one window.

Benefits of having a Reliance money account -

• It’s cost –effective

You pay comparatively lower transaction fees. As an introductory offer,

we invite you to pay flat fee

Of just Rs.500/-and transact through reliance money.

This fee is valid for two months or a specified transaction value*.

See the table on next page for details:-

Limit Cards:-



500 2 Months Rs. 1 Cr. Rs.90 Lac Rs. 10 Lac

1350 6 Months Rs. 3 Cr. Rs. 2.7Cr Rs. 30 Lac

2500 12 Months Rs. 6 Cr. Rs 5.4Cr. Rs.60 Lac

It offers single-window Access

Through Reliance money’s associates, you can transact in Equity, Equity and
commodity Derivatives, IPO’s offshore investment or prefer to investment in
mutual fund, Life and General insurance products or avail money Transfer and
money changing and credit card, you can do it all through Reliance money.

• It’s convenient –
You can access Reliance money’s services through:-

• The Internet
• Transaction kiosks
• The phone call & transact
• Our all India network of associates
On an associate trade (through the call center or our network of associate) a
charge of Rs. 12 per executed trade will be applicable.

• It’s safe
Your Account is safeguarded with a unique security key that changes
every 32 seconds. This no. works as a dynamic password to keep your
account extra safe.

• It provides you a Demat Account

You get your own demat account with Reliance capital, at an annual
fee of just Rs.50/.

• It provides you a 3-in-1 facility

You can access your Banking, Trading and De-mate account through
a single window and transfer funds across accounts seamlessly.

• It provides you value-Added services

At the website of the company, i.e. at www you
will get:-

• Reliable research, including views of external experts with an

enviable track record.

• Live news updates from Reuters and Dow jones.

• CEOs/ Expert views on the economy and financial market.

• Tools that help you plan your investment, tax, retirement, etc. in the
Personal Finance section.

• Risk analysis for analysis of your risk profile .

• Asset locations to build an appropriate invest portfolio.

• Reliance money website has been designed addressing specific

• The home page is divided into three segments:-
Beginner:-For new entrants to the world of investment and trading.

Market Basics

Middler:-For people who have been in trade.

Analyzing tools to learn more and trade better.

Experts:-For the “know it all”segment.

Advanced technical analysis tools & market information.

Benefits in a nutshell

 Easy access to all products and services through single screen.

 Besides trading online one can also invest in Mutual funds,
IPOs, Insurance.
 Do away with writing cheques.
 One can track its investment portfolio online.
 Its knowledge section demestifies the complex financial world.

Customers have two options for trading:-


 Simple order form.

 Available to all customers.
 Easy to understand and place a trade.
 Access BSE,NSE& FONSE scrips.
 Get price and market depth on same screen.


o Same shortcut key functionality to suit the habits of the user.

o Multiple exchange on single screen.
o Clients’ database is commonly used for the trades executed through
the dealers.
o Dealers have to access the margins and the stock positions of the
o Uses the local database for faster retrieval of information.
o Incremental and full download option available.
o Expression builders and alerts.
o Support more than 45 technical indicators.
o Line display of information such as top traded stock by volume, value,
gainers, losers, etc.
o Comprehensive MIS reporting structure.

Statutory Cost:-
Particular Cash Mkt Cash Mkt Derivative Commodity
Service Tax 12.24% 12.24% 12.24% 12.24% 12.24%
Transaction 0.0035% 0.0035% Future 0.0021% 0.002% 0.004%
Stamp duty Trad 0.002% Trad 0.002% 0.002 0.001 0.001

Deli 0.01% Deli 0.01%

STT Trad.0.025 Trad.0.025 0.0170% N.A N.A

Deli. 0.125% Deli. 0.125% N. A N.A N.A

Demat Market Share:-


During this step I got that even with sufficiently high Brand Equity, Reliance
Money ranks only 3rd amongst the Demat account providers. This is probably
because of the following two reasons:

 Lack of promotion.
 Unfocussed approach towards Product awareness.
 Non – transparent marketing policies of the company

Hence, the result suggests that the company should crystallize its products and
should indulge in aggressive marketing and promotion.
Awareness Of Online Share Trading:-


The awareness towards online share trading has increased by leaps and bounds,
with the increase in cyber education, This awareness is expected to increase
Awareness of Reliance Money:-


This pie chart shows that Reliance Money has a good Brand awareness
in terms of a premier Retail stock broking company. The company
should further leverage this brand image to increase its market share
over its competitors.

Awareness of Reliance Money Services:-

Analysis :-

Although there is sufficiently high brand equity among the target audience yet, the
customers are not aware of the facilities provided by the company meaning. So, the
company must concentrate more towards promotional tools and increase its focus
on product awareness rather than brand awareness.

Investment in Share Trading:-


This shows that people invest only upto 10% of their earnings in the stock market,
again reiterating the volatile and non-transparent structure of the Indian stock
market. Hence, effective and efficient steps should be undertaken to woo the
customers to invest more in the lucrative stock market.

“….A Mutual funds is a trust that pools the saving of a

number of investors who share a common financial goal.
The money collected is then invested in capital market
instruments such as shares, debentures and other securities

“…A Mutual fund is a trust that brings together money from

many people and invests it in stocks, bonds or other assets.
The combined holdings of stocks, bonds or other assets the
fund owns are known as its portfolio. Each investor in the
fund owns shares, which represent a part of these
There are many ways in which funds can be classified. From the
investors perspective funds are usually classified in terms:

Constitution Collection
Structure entry or exit
Close – ended Load funds
Open – ended No-Load funds

Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and

repurchase on a 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. People can buy or sell the units of the scheme on the stock exchanges
where the units are listed.

Mutual funds can also be broadly classified into four

distinguishable types:
• Equity funds
• Debt or Income funds
• Balanced funds
• Money Market funds

Equity Funds:-

Equity funds (often described as growth funds) aims to

provide capital growth by investing in the shares of
individual companies. Depending on the fund’s objective,
this could range from large blue-chip organizations to small
and new businesses. Any dividends received by the fund can
be reinvested by the fund manager to provide further growth
or paid to investors. Both risk and returns are high but they
could be a good investment if you have a long-term
perspective and can stay invested for at least five years.

Debt or Income Funds:-

The aim of debt or income funds is to make regular

payments to its investors, although dividends can be
reinvested to buy more units of the fund. To provide you with
a steady income, these funds generally invest in fixed income
securities such as bonds, corporate debentures, government
securities (gilts) and money market instruments.
Opportunities for capital appreciation are limited and the
downside is that as interest rates fluctuate, the net asset
value or NAV of the fund could follow suit – if interest rates
fall, the NAV is likely to increase and vice versa. There is
also a risk that a company issuing a bond may default on its
payment, if it is not financially healthy. However, if the fund
invests in government securities there is little risk of the
government defaulting on its payment.

Balanced funds - The best of both the worlds:-

As the name suggests, these funds aim for balance, so

they are made up of a mixture of equities and debt
instruments. They match the goals of investors who seek to
grow their capital and get regular income, while retaining
relatively low risk.

The debt or bond element of the fund provides a level

of income and acts as the safety net during dynamic periods
in the market, while equities provide the potential for capital

Balanced funds could be suitable for investors who are

looking for moderate capital appreciation.

Money market funds:-

Money market or liquid funds are an appealing

alternative to bank deposits because they aim to provide
stability, liquidity, capital preservation and slightly higher
interest rates than bank accounts. When you invest in a
money market fund, the fund manager invests in ‘cash’ assets
such as treasury bills, certificates of deposit and commercial
paper. Returns on these funds fluctuate much less compared
to other funds, but they are not guaranteed. They are
appropriate for corporate and individual investors who wish
to park their surplus money in a fund for a short period.

A Depository (NSDL & CDSL) is an organisation like a Central Bank where the
securities of a shareholder are held in the electronic form at the request of the
shareholder through the medium of a Depository Participant.
If an investor wants to utilise the services offered by a Depository, the investor has
to open an account with the Depository through a Depository Participant.

Depository Participant:-
Similar to the brokers who trade on your behalf in and outside the Stock
Exchange; a Depository Participant (DP) is a representative (agent) in the
depository system providing the link between the Company and investor
through the Depository. Your Depository Participant will maintain your
securities account balances and intimate to you the status of your holding
from time to time. According to SEBI guidelines, Financial Institutions like
banks, custodians, stockbrokers etc. can become participants in the
depository. A DP is one with whom you need to open an account to deal in
electronic form. While the Depository can be compared to a Bank, DP is like
a branch of your bank with whom you can have an account.
How does the Depository System operate?

The Depository System functions very much like the banking system. A bank
holds funds in accounts whereas a Depository holds securities in accounts for
its clients. A Bank transfers funds between accounts whereas a Depository
transfers securities between accounts. In both systems, the transfer of funds
or securities happens without the actual handling of funds or securities. Both
the Banks and the Depository are accountable for the safe keeping of funds
and securities respectively.

What are the benefits of having a demat account?

a. Trading in the shares of the Company is now under the compulsory

demat segment. With SEBI making demat mandatory on most of the
traded scrips, electronic transaction will be the only way everyone
will trade.

b. No stamp duty for transfer of securities in the electronic form. In case

of transfer of physical shares, stamp duty of 0.5 percent is payable on
the market value of shares being transferred.

c. All risks associated with physical certificates such as delays, loss, in

transit, theft, mutilation, bad deliveries, etc. eliminated. Your shares
can be kept in the “Frozen Mode” by your Depository Participant
under your specific instructions.

d. The concept of an “odd lot” in respect of dematerialized shares stands

abolished, i.e. in the demat mode, market lot becomes one share.

e. Dematerialised securities are most preferred by banks and other

financiers for providing credit facility against securities. Generally,
demat securities attract lower margin and lower rates of interest
compared to physical securities.

f. Even in the electronic mode of trading, the payment mechanism

(usually through a broker) between the buyer and seller continues to
be as before. Also the usual brokerage charges would have to be
incurred. However, after the settlement, pay in and pay out are on the
same day for scripless trading which means you get your securities as
well as cash immediately.

g. Shares bought or sold are transferred in your name on the very next
day of pay out. In case of physical shares, transfer of ownership takes
30 days or sometimes even more.

h. No courier / postal charges for sending share certificates / transfer


i. Facility for freezing / locking of investor accounts, which enables you

to make your account non-operational, for instance if you are abroad.

j. Facility to pledge and hypothecate your securities available.

k. As the Depository System becomes popular, brokers will be

increasingly reluctant to deal with physical shares.

l. Investors prefer to buy shares which are already in dematerialised

Benefits of Depository System
In the depository system, the ownership and transfer of securities takes place by
means of electronic book entries. At the outset, this system rids the capital market
of the dangers related to handling of paper. NSDL provides numerous direct and
indirect benefits like:

• Elimination of bad deliveries

In the depository environment, once holdings of an investor are

dematerialised, the question of bad delivery does not arise i.e. they cannot be
held "under objection". In the physical environment, buyer was required to
take the risk of transfer and face uncertainty of the quality of assets
purchased. In a depository environment good money certainly begets good
quality of assets.

• Elimination of all risks associated with physical certificates-

Dealing in physical securities have associated security risks of theft of

stocks, mutilation of certificates, loss of certificates during movements
through and from the registrars, thus exposing the investor to the cost of
obtaining duplicate certificates etc. This problem does not arise in the
depository environment.

• No stamp duty

for transfer of any kind of securities in the depository. This waiver extends
to equity shares, debt instruments and units of mutual funds.

• Immediate transfer and registration of securities –

In the depository environment, once the securities are credited to the

investors account on pay out, he becomes the legal owner of the securities.
There is no further need to send it to the company's registrar for registration.
Having purchased securities in the physical environment, the investor has to
send it to the company's registrar so that the change of ownership can be
registered. This process usually takes around three to four months and is
rarely completed within the statutory framework of two months thus
exposing the investor to opportunity cost of delay in transfer and to risk of
loss in transit. To overcome this, the normally accepted practice is to hold
the securities in street names i.e. not to register the change of ownership.
However, if the investors miss a book closure the securities are not good for
delivery and the investor would also stand to loose his corporate

• Faster settlement cycle –

The settlement cycle follow rolling settlement on T+2 basis i.e. the
settlement of trades will be on the 2nd working day from the trade day. This
will enable faster turnover of stock and more liquidity with the investor.

• Faster disbursement of non cash corporate benefits like rights, bonus

NSDL provides for direct credit of non cash corporate entitlements to an

investors account, thereby ensuring faster disbursement and avoiding risk of
loss of certificates in transit.

• Reduction in brokerage by many brokers for trading in dematerialised


Brokers provide this benefit to investors as dealing in dematerialised

securities reduces their back office cost of handling paper and also
eliminates the risk of being the introducing broker.

• Reduction in handling of huge volumes of paper

• Periodic status reports to investors on their holdings and transactions,

leading to better controls.
• Elimination of problems related to change of address of investor –

In case of change of address, investors are saved from undergoing the entire
change procedure with each company or registrar. Investors have to only
inform their DP with all relevant documents and the required changes are
effected in the database of all the companies, where the investor is a
registered holder of securities.

• Elimination of problems related to transmission of demat shares

In case of dematerialised holdings, the process of transmission is more

convenient as the transmission formalities for all securities held in a demat
account can be completed by submitting documents to the DP whereas, in
case of physical securities the surviving joint holder(s)/legal heirs/nominee
has to correspond independently with each company in which shares are

• Elimination of problems related to selling securities on behalf of a

minor - A natural guardian is not required to take court approval for selling
demat securities on behalf of a minor.

• Ease in portfolio monitoring

since statement of account gives a consolidated position of investments in all

Customer Services
• Various services offered by DPs with respect to these accounts are as

Standing Instruction facility:-

DP enters the advise for the transfer of securities to or from a

beneficial owner's account only on receipt of instructions from the client.
The clients need to give delivery instruction to transfer securities from their
account & receipt instruction to get credit into their account. However, for
ease of operation, a facility of standing instruction is provided to the clients
for receiving securities to the credit of their accounts without any further
instruction from them.

Change in Address:-

The client can change his address by submitting the changes in writing to the
DP along with proof of identity, proof of new address with original
document of new address for verification and latest transaction statement
received from the DP of the client. The changes conveyed to the DP will be
automatically communicated to the companies in which he is holding shares
in dematerialised form.

Bank Account Details :-

Details of bank account of the client, including the 9-digit code number of
the bank and branch appearing on the MICR cheques issued by the bank
have to given to the DP at the time of account opening. Companies use this
information for printing them on dividend/interest warrants to prevent its
misuse. In case the client wish to change this bank account details, he can do
so by submitting the changes in writing to the DP.

A client can make a nomination of his account in favour of any person by
filing the nomination form with his DP. Such nomination is considered to be
conclusive evidence of the account holder'(s) disposition in respect of all the
securities in the account for which the nomination is made.

Transposition cum Demat:-

This is a facility whereby securities held jointly can be dematerialised in an

account of same joint holders but having different sequence of names. e.g.
securities held in joint names of X and Y can also be dematerialised in an
account opened in the names of Y and X by submitting an additional form
called Transposition Form alongwith Dematerialisation Request Form
(DRF) to the DP.

Consolidation of Accounts:-

Some clients could have opened multiple accounts to dematerialise their

shares held in multiple combinations & sequence of names. However, they
may not need so many accounts after they have dematerialised their
securities and may want to bring all their shareholdings into one or fewer
accounts. Using off-market account transfer instruction such consolidation
can be done.

Closure of Account:-

A client can close a depository account by giving an application in the

prescribed form. In case there is any balance in the account sought to be
closed, the following steps are necessary.
(a) Re-materialisation of all securities standing to the credit of the account at
the time of making the application for closure; or

(b) Transferring the balance to the credit of another account opened by the
same account holder(s) either with the same participant or with a different

Freezing of Accounts:-

Account freezing means suspending any further transaction from the

depository account till the account is de-frozen. A depository account
maintained with a DP can be frozen if the DP receives a written instruction
in prescribed form from the client. A frozen account can be de-frozen or re-
activated if the client submits written instruction in prescribed form to the
Customer Services

Dematerialisation is the process by which a client can get physical certificates

converted into electronic balances.


An investor intending to dematerialise its securities needs to have an account with

a DP. The client has to deface and surrender the certificates registered in its name
to the DP. After intimating NSDL electronically, the DP sends the securities to the
concerned Issuer/ R&T agent. NSDL in turn informs the Issuer/ R&T agent
electronically, using NSDL Depository system, about the request for
dematerialisation. If the Issuer/ R&T agent finds the certificates in order, it
registers NSDL as the holder of the securities (the investor will be the beneficial
owner) and communicates to NSDL the confirmation of request electronically. On
receiving such confirmation, NSDL credits the securities in the depository account
of the Investor with the DP.


Rematerialisation is the process by which a client can get his electronic holdings
converted into physical certificates. The client has to submit the rematerialisation
request to the DP with whom he has an account. The DP enters the request in its
system which blocks the client's holdings to that extent automatically. The DP
releases the request to NSDL and sends the request form to the Issuer/ R&T agent.
The Issuer/ R&T agent then prints the certificates, despatches the same to the client
and simultaneously electronically confirms the acceptance of the request to NSDL.
Thereafter, the client's blocked balances are debited.


• A client can rematerialise his dematerialised holdings at any point of time.

• The rematerialisation process is completed within 30 days.
• The securities sent for rematerialisation cannot be traded.

Market Transfers:-
Trading in dematerialised securities is quite similar to trading in physical
securities. The major difference is that at the time of settlement, instead of
delivery/receipt of securities in the physical form, the same is affected through
account transfers.

Delivery of securities to or from a clearing member are called "Market Trades" in
the depository system. A simple way of determining whether a trade is a market
trade is that, either source or target in a transfer instrument is a CM account; such a
transfer is a "Market Trade"

Procedure in Case of Market Transfer for Retail Investors:

In the diagram, the selling client and clearing member1 have their respective
accounts with DP1 and the buying client and clearing member2 have their
respective accounts with DP2. DP1, DP2 and the Clearing Corporation/ Clearing
House have on line electronic connectivity with NSDL. The following paragraphs,
explain the flow of securities to effect settlement of a market trade:
Procedure for Inter Settlement Transfers:
In a clearing account, the securities are always kept in a bucket of specific market
type and settlement number. Hence, the clearing member may have to move
securities from one bucket with a different market type-settlement number
combination to another bucket from where pay-in is to be effected. To effect this
movement a clearing member can give an instruction to move securities from one
settlement to another settlement. For e.g., 100 shares of INE002A01018 (Reliance
Limited) can be transferred from Market Type Physical Settlement Number
1999048 to market type Rolling Settlement Number 1999251.

Off - Market Transfers:-

Trading in dematerialised securities is quite similar to trading in physical
securities. The major difference is that at the time of settlement, instead of
delivery/receipt of securities in the physical form, the same is affected through
account transfers.

Procedure in case of an Off-Market Transfer Involving Two Clients:

The selling client will have to give a delivery instruction to his DP to transfer
securities from his depository account to the buying client's depository account. To
receive securities from the selling client's depository account, the buying client
must give a receipt instruction if he has not already given a standing receipt
instruction to his DP.

The details in the "delivery" and "receipt" instructions must match else the transfer
will not take place. The transfer will take place on the "execution date" indicated in
the instructions. If the buying client has given a standing receipt instruction, this
may be ignored.

The payment aspect is handled outside the NSDL environment between the selling
and buying clients

Inter-Depository Transfers:-

Transfer of securities from an account in one depository to an account in another

depository is termed as an inter-depository transfer. This facility is quite similar to
the account transfers within NSDL.

• It can be done only for securities that are available for dematerialisation on
both the depositories.
• The account in NSDL can be either a clearing account or a beneficiary
• For debiting the clearing account or the beneficial account with NSDL, the
form for "Inter-depository delivery instruction" is required to be submitted
by the clearing member/beneficial owner to its DP.
• For crediting the clearing account or the beneficial account, the standing
instruction given for automatically crediting the account is applicable. In
case the standing instructions are not given, then the form for "Inter-
Depository Receipt Instruction" is required to be submitted by the clearing
member/beneficial owner to its DP.
• As both the depositories are connected to each another, the batches to effect
inter - depository transfers are presently exchanged on each working day.
• Online transfer of inter depository instructions has commenced w.e.f
December 14, 2002. In the online inter depository transfer (OLIDT) module,
Inter Depository Transfer instructions for the day will be exchanged online
between the two depositories. Thus, the instructions executed by DPs may
get settled at shorter intervals.
• The deadline time for DPs to verify & release Inter Depository Transfer
delivery/ receipt instructions is 6 p.m. on weekdays and 2.30 p.m. on
• The Issuer/Registrar & Transfer Agent is informed about the transfer by both
the depositories and it amends its records accordingly.
• Government securities cannot be transferred from one depository to another
using this facility.

Pledge / Hypothecation:-

Securities held in a depository account can be pledged/hypothecated to avail of

loan/credit facility. Pledge of securities in NSDL depository requires that both the
borrower (pledgor) and the lender (pledgee) should have account in NSDL

The pledge/hypothecation transactions go through the following procedures:

• Pledge/hypothecation creation
• Pledge/hypothecation closure
• Pledge/hypothecation invocation


Equity is a share in the ownership of a company. It represents a claim on the

company's assets and earnings. As you acquire more stock, your ownership stake
in the company increases. The terms share, equity and stock mean the same thing
and can be used interchangeably. Holding a company's stock means that you are
one of the many owners (shareholders) of a company, and, as such, you have a
claim (to the extent of your holding) to everything the company owns. Yes, this
means that technically, you own a portion of every piece of furniture; every
trademark; every contract, etc. of the company. As an owner, you are entitled to
your share of the company's earnings as well as any voting rights attached to the


1. Know the business

Warren Buffett, one of the world’s most successful investors, follows the
philosophy of buying stocks of only those businesses that he understands. Select
companies in businesses that you already have an idea of and find interesting. One
of the businesses that could be of interest to you would be the one, which you are
affiliated to because of your employment. For instance, if you are working in a
pharma company, you may understand this business well.

2. Assess the past performance

All companies present details of their financial performance in their Annual
Reports[ . In case of a company having its Initial Public Offering – IPO (when a
company offers its shares to the public for the first time, it is called Initial Public
Offering), it is required to publish its past performance in its IPO offer document].
There are also a vast number of research reports published by research and
brokerage houses, and company analysis done by the media, which is worth
reading, to assess a company’s past performance and future potential. ‘Ratio
Analysis’ is widely used to assess a company’s past performance.

3. Know the promoters

The promoters and management team of a company are the key people who drive
its business. Their integrity dictates whether the business benefits or they benefit
personally. Also, their experience and business competence is crucial for business
growth. Evaluate the company’s promoters and management on the basis of four
Cs: Competence, Credibility, Corporate governance and Concern for shareholders.

4. Assess the future prospects of the company

Although a company may have performed well in the past, it is not necessary that
it will continue performing well in the future. All companies go through business
cycles of ups and downs. It is important that you form a view on the future trends
of the business the company is a player in. This can be done by reading views of
experts in that business/industry and forming your own view by reading and
understanding economic trends and the impact of these trends on the company’s

5. Assess the stock price

As mentioned earlier, the share price of all companies continuously fluctuate on
the stock markets with investors buying and selling the shares. The price at which
an investor is willing to buy or sell a share of a company is the perceived value of
the share of the company taking into consideration the company’s present business
and future business growth. In addition to this, investor sentiment plays a large role
in pricing of stocks. It is important that before you buy a company’s share, you
assess whether the price of the share at which it is available for purchase, is
adequately valued i.e. it is not over-priced. Similarly, when you sell, you need to
make sure that you are not selling too cheap. To help you assess this, you could use
a popular stock market ratio called the Price/Earning ratio (P/E ratio). The P/E
ratio is based on the following formula:

P/E ratio = Market price of the share

Earning per share (EPS)*

*EPS = Profit After Tax (PAT)

Total number of shares issued by the company

You can obtain information on the EPS, PAT and total number of shares issued by
the company from its annual report.

Let’s understand how the P/E ratio is used with an example:

Company XYZ Ltd. has issued a total of 10 lakh equity shares and has earned a net
profit of Rs 10 lakh. The EPS of the company is Re 1. The current market price of
the company is Rs 15 per share. The P/E ratio of Company XYZ Ltd will be 15 (Rs
15 / Re 1).

The P/E ratio helps judge by how many times the company’s share is traded based
on its earnings. In this case, the company’s stock is available at a multiple of 15
times its earnings. The higher the P/E ratio, the higher is the stock’s valuation.
Usually market prices of well-established companies with a good past track record
and reputed promoters command a high P/E ratio.

To use the P/E ratio correctly, keep the following aspects in perspective:
• Compare the P/E ratio of a company with that of other companies in the
same business.
• Compare it with P/E ratios of the benchmark indices such as the P/E ratio of
the BSE Sensex, the NSE Nifty, etc.
• Compare the P/E ratio with the growth potential of the company and the
industry it is a part of. There could be a situation that even if the P/E ratio of
a company is high, it would be worthwhile to buy the stock if the growth
potential is significant.

To conclude, just because a company’s P/E ratio is high, it does not mean that it is
over-priced. Consider this ratio along with other factors such as past performance,
business potential, promoters, the company’s order book position, etc.

What is an IPO?

When private companies i.e. companies that are wholly owned by their promoters,
invite the public to subscribe to their shares, this issue of shares is called an Initial
Public Offering (IPO). The shares issued could be in the form of fresh equity and/or
the promoters sell a portion of their equity to the public. These shares are then listed
on a stock exchange where they can be bought and sold by investors. IPOs are a
very popular way of investing in the stock market as they allow investors a simple
entry route to buying stocks.


To be able to successfully fulfil your financial aspirations and live a financially

secure life, constructing a “Financial Plan” is helpful. This plan analyses your
short-term and long-term financial goals and sustenance needs in order to help you
decide how much you should save to meet these requirements. It also times cash
flows based on when financial aspirations come up for fulfilment. Not only this, the
plan addresses managing of personal risks using insurance, and reducing your tax
burden through proper tax planning. Lastly, in order to help you judge the level of
risk you are able to cope with where investing is concerned, the plan helps you
profile your risk personality and risk-taking capacity.

All this may sound extremely complicated on the surface, but financial planning
simply boils down to effectively managing your financial resources to meet your
desired needs and ambitions in life. A good financial plan serves as a ‘road-map’
for efficient money management. It gives a meaning to the entire gamut of financial
actions that you undertake, including earning, spending, saving, investing, paying
taxes, etc. So, begin with a financial plan and see how well begun is half done.
Need for a Systematic, planned approach to money management

Whilst beginning our financial journey, we need to inculcate a meticulous saving

habit. “But I do save for the future and also invest my money in various investment
avenues, such as NSC, PPF, mutual funds, insurance and equity, along with some
tax-saving products,” is what most of us say. And it’s true. However, it’s also a fact
that very few of us adopt a systematic and planned approach to managing our

This leads to an ad-hoc, casual and haphazard attitude to handling

of finances. Such an approach could result in erosion in the
amount of capital that is invested and, instead of a wealth build-
up, it can lead to a deterioration in financial health. Worse still, an
unplanned method of investing could culminate in having to cut
back on aspirations leaving some or most dreams unrealised.
Derivatives - Financial Derivatives

Derivatives, as the name suggests, are financial instruments that derive their value
from an underlying security or asset. The underlying could be equity shares or an
index, a commodity, a currency or the exchange rate, bonds, etc. Sounds
complicated? In a way, it is. But once you are clear about how a derivative product
derives its value from an underlying asset and yet has a price and an identity of its
own, it will become just another financial product to you. Then again, derivative
products have more variants than any other financial products since they have been
created to meet a variety of niche needs .
Derivatives - Types of Derivatives

A forward contract or ‘forward’ is an agreement between two parties, wherein one

will sell an asset to the other on a certain future date at an agreed price. The
quantity and quality specifications of the asset and place of delivery are mutually
decided while entering into the agreement In India, forward contracts are regularly
used in the foreign exchange markets to hedge currency risk and in the
commodities market to hedge price risk..

In India, forward contracts are regularly used in the foreign exchange markets to
hedge currency risk and in the commodities market to hedge price risk.

Futures contracts or ‘futures’ are an improvement over forward
contracts as they are standardized and tradable. A futures
contract is a legal agreement between a buyer and a seller and
both parties are bound to uphold the agreement. As per the
contract, the seller agrees to sell a specific asset to the buyer at
an agreed price on a particular date in the future. The contract
specifies quantity, quality, delivery time, place and date of

The commodity futures market like the Multi Commodity Exchange (MCX),
National Commodity and Derivatives Exchange (NCDEX), National Multi-
Commodity Exchange (NMCE) and the index and stock futures segment of the
Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) are some
examples of futures markets.


An option is a contract where the writer of the option grants the buyer of the option
the right to purchase from (call option) or sell to (put option) him a specific asset at
a specific price within a specified period. In return the buyer of the option (also
called the option holder) pays a price called an option premium to the writer for this
right. In common market parlance, the writer of the option is also called the ‘seller’
of the option.

The option seller has the obligation to honour the contract, whether he is required
to sell or buy the asset, if the buyer chooses to exercise his option to buy or sell.
The potential downside or risk for the option seller is unlimited, while his upside or
profit is limited to the premium that he receives. On the other hand, the maximum
loss that the buyer could face is the option premium that he pays, but his potential
profit is unlimited.

A warrant is a call option, which gives you the right (but you are not obliged) to
buy a predetermined number of equity shares within a stipulated time frame at an
agreed price. Normally, a nominal margin of about 10 per cent of the agreed price,
is payable when warrants are subscribed by the investor.

The important difference between a normal call option and a warrant is that
warrants are for a longer duration (1 to 5 years) as against the duration of a call
option which is usually only a few months (normally up to 3 months in the case of
stock options on the NSE and BSE).

Warrants are normally issued by companies for the benefit of a certain class of
shareholders (i.e. promoters or institutional investors) or to raise capital over a
period of time or reduce interest cost (by attaching warrants to debt instruments).

A swap is an agreement between two parties to exchange their cash flow streams,
without liquidating the asset that generates those flows. The best example of a swap
is applicable to the case of a floating rate housing loan. If you expect interest rates
to go up in the near future, you could swap your floating rate loan for a fixed rate,
without having to prepay your loan and take a fresh one. Even corporations with
floating rate debt could swap their liabilities to a fixed rate obligation, without
having to retire and reissue debt.

Forex, or Foreign Exchange, is the simultaneous exchange of one country's

currency for that of another.. The foreign exchange market is the generic term for
the worldwide institutions that exist to exchange or trade the currencies of different
countries. The players in the foreign exchange markets are speculators,
corporations, commercial banks, currency brokers, and central banks The FOREX
market is an over-the-counter market with no centralized exchange. Traders have a
choice between firms that offer trade-clearing services.

Forex, or Foreign Exchange, is the simultaneous exchange of one country's

currency for that of another. Traders in the FOREX market wish to purchase or sell
one currency for another with the hope of making a profit when the value of the
currencies changes in favor of the investor, whether from market news or events
that take place in the world.

The foreign exchange (FX or FOREX) market is the market where exchange rates
are determined. Exchange rates are the mechanisms by which world currencies are
tied together in the global marketplace, providing the price of one currency in terms
of another.


The items produced by different producer are considered equivalent if

they conform to a predetermined standard. It is this underlying standard
or ‘specifications’ that defines the commodity and not any quality
inherent in the particular product.

Commodities can be agricultural or non-agricultural in nature. In the case

of agricultural commodities, the specifications are often more elaborate
and include stipulations on origin of the commodity, maximum
permissible foreign particles, moisture content, etc.
In the Indian context, commodities can be broadly classified under the
following categories:

• Precious Metals: Such as Gold and Silver

• Base Metals: Such as Steel, Nickel, Tin, Iron, Copper, Zinc
• Energy Products: Such as Crude Oil, Furnace Oil, Natural Gas
• Plastics & Petrochemicals: Such as Polypropylene (PP), High
Density Polyethylene (HDPE)
• Agricultural Commodities: These are varied and are classified in
sub-groups such as:

1. Cereals - like Wheat, Maize, Rice

2. Pulses - like Chana (Gram), Urad (Black Matpe), Lemon Tur,
Masoor, Field Peas, etc.
3. Oil Complex - like Soyabeans, Soy Oil and Soy Meal, Mustard
Seed and Oil, Crude Palm Oil, etc
4. Spices - like Turmeric, Chilli, Black Pepper, Cumin, Cardamom
5. Plantation Crops - like Coffee, Cashew, Rubber
Fibres - like Cotton, Jute, Mulberry Cocoons, etc.

Life Insurance
Life insurance helps Provide financial assurance & security for your
dependents & loved ones. It is an important part of the financial planning
bouquet for all individuals & families. Life insurance products offer
comprehensive financial solutions which besides offering financial
security also provide opportunity for saving, investment & tax planning.
Life insuarance is an agreement between the I nsured and an insurer.
Under the term of life insuarance contract,the insurer promises to pay a
certain sum to a beneficiary when he die, in exchange for your
premium payments.
General Insurance
Reliance General Insurance, a Subsidiary of Reliance Captial, is one of
the first non-life companies to get the license from the IRDA. RGICL
offers an exhaustive range of insurance products that covers most risks
including Property, Marine, Casualty and Liability

Net Asset Value (NAV)

The market value of one unit of a mutual fund.
New Fund Offering
Initial offering of units to prospective investors by a new mutual fund
Net Worth
Total assets minus total liabilities of an individual or company.
Permanent Account Number
An alphanumeric number assigned by the income tax department to
Buying securities in one market and simultaneously selling in another
market to profit from the price differential.
Balance Sheet
A statement of a company's assets and liabilities on the last day of the
Bonus Shares
New shares issued to existing shareholders of a company, for free, out of
the company''s accumulated reserves.
A person who is authorized to buy and sell shares on the stock exchange
Commercial Papers
A short-term debt security issued by a company or bank to finance its
short-term funding needs.
Asset Allocation
Investing one's wealth across different investment options such as equity,
debt, mutual funds, gold, real estate, etc.
Asset Management Company
A company that manages the investment/corpus of a mutual fund.
Balanced Fund
A mutual fund scheme that invests in both equity and debt, generally in
the ratio of up to 60 per cent in equity and the balance in debt.
Money Market Fund
This is a mutual fund scheme which provides liquidity, preservation of
capital and moderate income. It invests in short-term securities such as
Treasury bills, Commercial Paper, Inter-bank call money market, etc.
(same as liquid fund).
Income Fund
A mutual fund scheme that primarily seeks income rather than growth of
Liquid Fund
This is a mutual fund scheme which provides liquidity, preservation of
capital and moderate income. It invests in short-term securities such as
Treasury bills, Commercial Paper, Inter-bank call money market, etc.
(same as money market fund).
Index Fund
A mutual fund scheme that tracks a stock market index by investing in
the stocks constituting that index in the same proportion as the weightage
given to them in the index.
A diversified equity mutual fund scheme (ELSS stands for Equity
Linked Saving Scheme) which offers a tax deduction on the investment
Gilt Fund
A mutual fund scheme that invests primarily in government securities.
Entry Load
A charge on investors at the time of buying the units of a mutual fund
Exit Load
A charge levied on an investor on exiting from a mutual fund scheme
(redeeming the scheme''s units).
Arbitrage funds
Arbitrage funds are mutual fund schemes, which make profits through
the differences in prices of stocks in the equity (cash) markets and the
derivatives market or between two cash markets.
For Eg:- NSE and BSE.
Asset allocation funds
Asset allocation funds are mutual fund schemes that offer the advantage
of investment in both debt and equity securities with the flexibility to
move in and out of equities and debt or fully invest in stocks or bonds.
Contra Funds
''Contra’ funds are equity-diversified mutual fund schemes, which offer
the opportunity to invest in ‘under-valued’, but fundamentally strong
stocks, which have the potential to deliver significant gains.
Exchange Traded Fund
A mutual fund which invests in stocks forming an index such as the BSE
Sensex or the NSE Nifty. The scheme is listed and traded on the stock
Floating rate fund
A debt mutual fund scheme which invests in debt securities offering
floating interest rates i.e. interest rates are benchmarked to a debt market
index and change along with change in the benchmark.
Fund of Funds
A Fund of Funds is a mutual fund scheme that does not directly invest in
stocks, bonds and fixed income securities or other securities but invests
in units of other mutual fund schemes.
Dividend reinvestment option
This is offered by mutual funds to their investors. Dividends declared
are reinvested in the scheme on behalf of the investor who is allotted
fresh units to the extent of the dividend amount at the prevailing NAV.
Dividend yield funds
Dividend yield funds provide investors the combination of capital
growth and income by investing primarily in a well-diversified portfolio
of dividend paying companies that have a relatively high dividend yield
(Dividend yield = dividend paid by the company / market price of the
company’s share).
Diversified equity fund
A mutual fund scheme that invests in equity shares of
companies across different sectors.
Equity diversified fund
A mutual fund scheme that invests in equity shares of companies across
different sectors.
Opportunity / Thematic Fund
Opportunity funds are diversified equity, sector or market-cap based
mutual fund schemes which focus on making the most of opportunities
available in the domestic or international markets by investing in stocks
of companies which are expected to benefit from these opportunities.
Monthly Income Plan
A mutual fund scheme which aims at providing regular income (not
necessarily monthly - it can be quarterly or half-yearly, too) to the unit-
holder, by way of dividend. The scheme invests predominantly in debt
securities with a small component of the corpus invested in equity to
ensure higher return.
Market capitalization based funds
These are mutual fund schemes, which invest in stocks based on the
market capitalization of the stocks (market capitalisation = the market
price of the stock x the total number of shares issued by the company).
Market value
The price at which an asset/security is bought/sold.
Relating prices of securities in a portfolio or account to their current
market prices to calculate profits and losses.
Practice of investing across a number of asset classes and securities to
reduce risk.
Distribution of profits to shareholders.
Interim dividend
A dividend that is declared and distributed before a company''s annual
earnings have been calculated. It is often distributed at the end of half
the year or a quarter.
Debt-equity ratio
A financial ratio which is computed by dividing the debt (borrowing) of
the company by the net worth (equity capital + reserves). It indicates
how much has been borrowed vis-à-vis ownership funds.
Dividend payout ratio
A financial ratio that divides dividends paid by company earnings and is
multiplied by 100 in order to be expressed as a percentage
. Earning per share (EPS)
This is a financial ratio where the company’s net profit is divided by the
total number of shares issued by the company in order to compute how
much the company has earned on each share issued.
Expiration/Expiry Date
The date on which a derivative contract expires.
Fixed Maturity Plans (FMPs)
Fixed Maturity Plans are close-ended mutual fund schemes, which
invest in debt securities that match the tenure of the fund.
A risk-management security whose value is derived from the underlying
Bear market
Period when the market is moving southward and there is high selling
Bull market
Period when the stock market is moving northward and there is high
buying pressure.
An agreement between two parties to buy/sell an asset on a certain
future date at an agreed price.
A standardised, tradable contract between a buyer and seller which
specifies the quantity, price and date on which an underlying asset will
be exchanged.
Options are derivatives contracts that give the holder the right to buy
(call) or sell (put) a specified amount of the underlying security at a
specified time. However, the option holder is not obliged to buy/sell i.e.
he may not exercise his option.
Historical data
Past information about a company, which is used to forecast the
company''s future prospects.
Insider trading
An illegal practice wherein a person who has access to confidential and
strategic top-level information about a company, profits from it by
trading in the shares of the company.
Purchase or redemption fee charged by a mutual fund on entry or exit
from a scheme
Margin buying
Purchase of shares that is part-financed by the buyer''s broker.
Margin call
A call by the broker to his client to fulfil the minimum margin
requirement (as specified in the client-broker agreement) by depositing
cash or shares.
Market capitalization
The total number of shares issued by a company multiplied by the
market price of the company''s share.
Out Of The Money
An option contract, wherein the strike price in the contract is higher than
the market price of the underlying asset.
The price to be paid in order to purchase an option.
Put Option
This option gives the holder the right to sell an underlying asset by a
certain date for a certain price. However, the option holder is not obliged
to sell i.e. he may not exercise his option.
A speedy rise in the price of a share or the stock market
Ratio analysis
Financial analysis of a company''s accounts by interpreting relationships
between financial variables.
Record date
The date on which an individual must own shares/units in order to be
eligible for receiving a declared dividend or bonus.
A mutual fund buying back its units from its investors.
Registrar & Transfer Agent
An agency which handles all paperwork involving investor servicing.
Repurchase price
The price at which an investor can sell his mutual fund units back to the
Retail investor
An individual who purchases securities in modest quantities.
Rights issue
An issue of new equity to existing shareholders at an offer price, which
is below the market price of the share
Rupee cost averaging
An investment strategy where an investor purchases securities worth a
fixed amount regularly, in effect buying fewer securities when the
market price is high and more when it is low.
Sector fund
A mutual fund scheme that invests in a specific industry such as pharma,
banking, etc
Securities Transaction Tax (STT)
Tax levied on your equity mutual fund investment, equity shares and
A popular stock market index (short-form for Sensitive Index) created
and maintained by the Bombay Stock Exchange.

Strike price
The price at which an underlying asset could be bought in the future as
per a derivative contract.

An agreement between two counter parties to exchange their cash flow
streams, without liquidating the asset that generates those flows.

Systematic Investment Plan (SIP)

An investment strategy offered by mutual funds where an investor
purchases units worth a fixed amount regularly, in effect buying fewer
units when the NAV is high and more when the NAV is low.
Systematic Transfer Plan (STP)
An investment strategy where an investor invests a lump sum amount in
a mutual fund scheme and transfers a fixed amount from this scheme to
another scheme periodically. Alternatively, only the appreciation/income
earned is transferred
Systematic Withdrawal Plan (SWP)
A redemption strategy offered by mutual funds where an investor
redeems units worth a fixed amount regularly, in effect redeeming fewer
units when the NAV is high and more when the NAV is low.
Technical analysis
Studying stock price trends using stock price charts (same as charting)
The return that is earned on an investment
Issue of equity shares offered in the IPO to successful bidders.
An offer made by a prospective investor to subscribe to shares of a
company’s IPO at a specific price.
A price discovery mechanism wherein the company only defines a price
band and invites investors to submit
Cut Off Price
In a book built issue, the issuer is required to indicate a price band in the
red herring prospectus. The actual discovered issue price can be any
price in that band. This issue price is called “Cut off price”. SEBI
guidelines permit only retail individual investors to apply at the cut off

We are conducting a survey on Investor’s behavior towards investment in

stock market, please help us:-

1. If given choose from following Brokege firms,Which one you will prefer?
Reliance Money
Others(pl. mention name)

2. What features you look while opening Demat A/C .

Brand name of company
Brokerage charges
Online fund transfer facility
Customer care facility
R.M. services
Annual maintenance charges
Training facility for customers

3. Where you like to invest?



Mutual Funds



4. Does “Debit cum ATM card” facility is available in bank.

 Yes
 No

5. How do you rate the following.

a. Withdrawal facility Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

b. Insurance policies Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

c. Loan schemes Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

d. Online services Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

e. Interest Rates Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

f. Credibility Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

g. Customer satisfaction Highly satisfied ___ ___ ___ ___ ___ Highly dissatisfied

6. Do you find branches of the bank in rural areas.

 Yes
 No
7. Are you satisfied with the services of the bank.
 Yes
 No
8. Have you taken any insurance policy of the bank.
 Yes
 No

10. Demographics:-

Name :

 26-35
 36-45
 46-60
 Above 60


 Male
 Female


 Govt. employee
 Private sector employee
 Self employed


 Below 10
 11-20
 20-30
 30-40
 40-50
 Above 50


On the basis of the survey done at RELIANCE MONEY, sector 14, Gurgaon,
following are the findings along with the analysis.
Analysis of Questionnaire

1) Following graph describes the relationship between the age

and the kind of investments people make:

(Source: data collected during the study)

1= Insurance 2= Equity 3= Mutual Funds

4= P.O. Savings 5= Bank FD 6= Company Bonds

Age group 18 – 24 years: Largely investment is made into equity as this age group
has large disposable income and is therefore ready to take the risk. It is also
observed that still bank fixed deposits are made by this age group, because they
have salary account so FD’s are created. Company bonds are also a preferred

Age group 25 – 30 years: This age group lay stress on both the returns and tax
planning. For tax purpose it is observed that “unit linked investment plans are
preferred as they also provide the insurance cover. Their investment into equity
related funds is less in comparison to previous age group.

Age group 31 - 45 years: Investment pattern of this group is same as that of 25-30
year group.

Age group 46 – 55 years: In this age group inclination towards insurance and
mutual fund has increased. The reason observed is - in this age group, people start
planning for their retirement.

Age group above 55 years: Since insurance is difficult to get at this particular age
because of health options, so it was observed that people generally invest into
higher return funds like mutual funds and also direct investment into equity is

2) The graph describes the relationship between the occupation of the people and
the factors considered for preferring any asset management company:=
O ccup atio ns V S Prefernces


Preference %








Salarie d Se lf Employe d Proffe sional
Pre fe re nce T ype

1 2 3 4

Source: data collected during the study)

1= Brand type 2= Return record

3= Fund manager 4= Scheme type


Salaried:Under this category different income groups were consulted and it was
observed that return factor is most crucial for this segment. So they are also
interested to know about the scheme type (growth, dividend). Brand type is
considered by the people who are into the corporate sector; rest government
employees are least aware of it.

Self employed:This category includes businessmen; contractors etc. It was

observed that they are least concerned about factors like brand type or fund
manager. They ask for good returns and scheme type is also considered. It was
clear from the survey that this segment needs the awareness about mutual funds as
they still prefer to invest into their own business, but if they are convinced, then
they can be converted into big potential customers.

Professional: This category involves architects, engineers, doctors, lawyers. They

are aware of the various financial instruments so they are concerned about brand
type and the returns. They track the NAVs time to time. It is also hard to convince
this category.

They are also interested in maintaining their portfolios. So the institution which
provides them with the facility of portfolio is given preference.

3) Following graph shows the relationship between annual income and the type of
investment made:
In c o m e V S ty p e s o f In v e s tm e n t

Percentage of




15 31






1 2 3 4
T y p e s o f In v e s tm e n t

B e lo w 2 L a k hs2 - 4 L a c s 4 - 6 L a c s A b o ve 6 L a c s

(Source: data collected during the study)

1= Bank FD/ P.O. Scheme 2= Insurance

3= Equity 4= Mutual Funds


Income group below 2 lakhs: This category invest major amount into bank’s FD
or post office schemes. They do not go for equity related investments because of
fund shortage. Although insurance is given some weight age but it is generally life
insurance without investment options. Now it is observed that this segment has
also started investing into mutual funds although it is a small investment.

Income group between 2 – 4 lakhs: This category’s major area of investment is in

mutual funds and insurance. Since they have enough disposable income so
considerable amount is invested into equity related funds. An investment in bank
FDs is made automatically since the salary comes in the account otherwise no
specific direct investment is made into such options. By increasing the awareness
about MF they can be potential customers.

Income group between 4 – 6 lakhs: They have enough disposable income so

major investment is made into both equity and mutual funds. Insurance is also
given due weight age but with the equity related options for better returns. They
are updated with the features so thorough knowledge is needed before advising
them any fund.

Income group above 6 lakhs: They too have enough disposable income so major
investment is made into both equity and mutual funds. This category also demands
for portfolio facility. They are important customers so specific relationship
executives are assigned to them. They are continuously updated about new fund

Shares and mutual funds play a significant role in economical growth of the
country. Hence the support system in terms of providing finance and managing of
risks, financial institutions must have optimum focused product and series for

Limitations of Study
 Risk of misinformation: I had to continuously judge myself as in case if

there would have been any miscommunication regarding the services it would

create a problem for the company under which I was doing my Internship. Such

situations can lead to totally a different view to the target customer and the

public. This may have an adverse effect on the image and the goodwill of the


 Rely On Secondary Sources: As I had to get most of the data from sites &
magazines, I had to rely on these secondary sources which could have
proven adverse for me as well as my company.

For Investors:-

Start Early:The sooner you invest, the more time your money will have to grow.
If you delay, you will almost certainly have to invest much more to achieve a
similar result.

Keep some cash aside: It is always a good idea to have some money in a deposit
account in case of emergencies, which should be enough to cover three months’
living expenses.

Ask yourself how much risk you can take: There is absolutely no point having a
stock market investment if you are going to lose sleep every time share prices go
through a rough patch. It’s vital that you are realistic about your appetite for risk –
an Investment Adviser may be helpful to you to decide how much risk you can

B e a r i n m i n d t h a t i n f l a t i o n w i l l e a t y o u r s a v i n g s : Returns on
risk-free cash investments may sound respectable, but when you subtract the
current rate of inflation you may not be so impressed. For significant long-term
growth you need to make your money work a little harder.


Think carefully how long you will be investing: Only look at the stock market if
you are prepared to put your money away for five to ten years, or perhaps even
longer. If you are likely to need your money any sooner, keep it in a lower-risk
investment so that there is less chance of a fall in value just before you make a

Never put your all eggs in one basket : It’s rarely a good idea to have all your
eggs in one basket. Depending on one’s goals and one’s attitude towards risk, an
investor should spread his money across different types of investment – equities,
bonds and cash. An investor should also try to diversify within each of these
categories. With equities, for example a mutual fund will invest your money in a
variety of companies but you may want to ensure you have a range of industry
sectors too.

Invest Regularly: Investing regularly can be a great way to build up a significant

lump sum. The investor can also benefit from what is known as the concept of
‘Rupee cost averaging’. This means that, if an investor is investing in a mutual
fund, over the years he will pay the average price for units. If the market goes up,
the unit one already own will increase in value. If the market goes down, the next
installment to be paid by the investor will fetch him more units.

R E V I E W Y O U R I N V E S T M E N T P E R I O D I C A L L Y : A portfolio
that is right for you at one point in your life may not be quite so suitable a few
years later. Your investments need to adapt to changes in your circumstances, such
as getting married, having children or starting a business. It’s also a good idea to
check that each of the funds in your portfolio is living up to your expectations.
Talking to an investment advisor could help one decide whether you need to switch
money between funds.
For Company:-
We suggest following measures, which Reliance Money could take so as to take on
heavy competition from Indiabulls and 5 :

• High Promotion:To identify regions where promotions are required.

RMoney lacks visibility in Southern region where as it is a well known
name in western region. Even then, its promotional campaign focuses on
western region where as southern region is still waiting for promotional
• Reduce cost: Try to reduce cost, so that benefits can be passed on to
customers. Senior managers at Reliance Money keep on telling that it is
difficult to reduce cost, because of services we provide. But the fact is, India
being a price sensitive market; people at times go for monetary benefits
rather than for long-term non- monetary benefits.
• Customized services: If charges can’t be reduced because of costs involved,
make the services customized, so that services are provided to only those
customers who are willing to pay the price for services they are getting and
let the other customers enjoy costs benefits without getting services.
• Concept of margin funding should be introduced, as more and more people
are asking for it.
• Customer Interaction: Reliance Money should contact with their clients
regularly for knowing the problems faced by them. This will help in
providing best services to customers. This will result in additional customer
base by getting further references from satisfied clients.


 Economic times, Financial Express, Business Standards.

 Mutual Fund’s review (Reliance Money investment guide meant for internal

 Investment Philosophy and practice (a practical guide for household

investors published by Delhi Stock Exchange.)

 Marketing Management by Philip Kotler.

 Principles Of Corporate Finance .