University of Mumbai

A Project on INVESTMENT IN SHARE MARKET AND MUTUAL FUND

Submitted to

University of Mumbai for partial Completion of the

Degree of Master in Commerce
Under the Faculty of Commerce

Mr. ABHISHEK AMBIKA TIWARI

Roll No :– 52
Year : 2021-22
Under the Guidance of
Prof. AJIT N. JADHAV

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SHANKAR NARAYAN COLLEGE OF ARTS & COMMERCE
Navghar, Mahavidyalaya Marg, Bhayandar (East) Thane – 401105 .

Certificate

This is to certify that Mr ABHISHEK AMBIKA TIWARI has worked and duly
completed his Project Work for the degree of Master in Commerce under the
Faculty of commerce and the project is entitles,“ INVESTMENT IN STOCK
MARKET AND MUTUAL FUND ” under my supervision.

I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any Degree or
Diploma of any University. It is her own work and facts reported by her personal
findings and investigations.

Prof. Ajit Jadhav Dr. V. N. Yadav

Coordinator Principal

Internal Project Guide External Guide

Date of Submission:- 16th Decmber 2021

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 DECLARARTION

I, ABHISHEK AMBIKA TIWARI student of Shankar Narayan College of

Arts and Commerce, Bhayandar (East) M.com Part-I (Semester- III ), at
University of Mumbai hereby declare that I have completed this project
on “ A Project on INVESTMENT IN STOCK MARKET AND MUTUAL
FUND ” for the academic year 2020-2021. The information submitted is
true and original to the best of my knowledge of the subject matter.

Name of the student: ABHISHEK AMBIKA TIWARI

Signature:

Place: MUMBAI

Date: 16th Decmber 2021

Certified by,
Prof. AJIT N. JADHAV

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 Acknowledgement

As a student of “SHANKAR NARAYAN COLLEGE ”, I would like to express

my sincere thanks to all those who helped me during myProject Wrk. I would like
to express my gratitude to all those who encouraged me to complete this project.

I would like to thank my College authorities for providing me the opportunity to

work with such a prestigious organization. I would like to express my gratitude
to respected Principal Dr. V. N. Yadav, for given me the opportunity to do my
project work in the Mcom programme and lighted my way of progress with his
guidance.

My sincere and deepest thanks to Prof. Ajit N. Jadhav of “Shankar Narayan

College of Arts and Commerce, Bhayander (E)” for having spared his valuable
time with me and for all the guidance given in executing the project as per
requirements. I would like to give my special thanks to my parents, their love,
support and blessing enabled me to complete this project work.

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 Evaluation Report
Basic Information

Name of the Student: ABHISHEK AMBIKA TIWARI

Name of the Programme: PROJECT WORK 1

Academic Year and Roll No: 2021-22 / 52

Name of the Topic: Investment in Stock market and Mutual fund

Name of the Project Guide: Prof. AJIT N. JADHAV

Score Card

Please rate the following attributes on a scale of 01-05.

(01=Average, 02=Good, 03=Very Good, 04=Excellent and 05=Outstanding)

Sr. Attributes Score Score

No.
1 Attendance

2 Punctuality

3 Attitude

4 Performance

5 Initiative

6 Interpersonal Skills

Diligence Level
7

8 Subject Knowledge

9 Personal Grooming

10 Communication Skills

Total Score 60 40

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 Index
Sr. No. Topic Page no.
1. Introduction 8
2. Functions of stock exchange 9
3. Factors affecting Stock Market 10
4. Pros and Cons of Financial Investment 11
5. Financial investment opportunities 12
6. Investment in Mutual funds 14
7. Investment Strategies 16
8. Advantages and Disadvantages of Mutual funds 18
9. Conclusion 21
10. References 22

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Introduction
With the ever increasing and expanding economy, Indian
economy is considered as a growth engine of the world’s
economy. And stock market of such robust economy is the face
of the growing market and companies in it. India has one of the
oldest and the fastest stock market platform i:e Bombay Stock
Exchange (BSE).

Stock market basically is an electronic platform where the share

of the companies are listed and traded. Because of this advanced
platform it is possible for companies to raise capital from public
efficiently and effectively. With the economic reforms in the
country, stock exchanges have grown exponentially in terms of
foreign institutional investment and transaction turnover. This
increase is mainly due liberalized and supportive along with
regulative role of government.

Being a pioneer industry, shares of IT companies are always

remain in the limelight of stock market. Further return on this is
again fluctuative due to industry and market factors. Since so
many fluctuations exist in the stock market, it creates an urge to
study about those factors which are responsible for the ups and
downs in the market.

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 Importance of stock market

· Function and purpose

The stock market is one of the most important sources for companies to raise
money. This allows businesses to go public, or raise additional capital for
expansion. The liquidity that an exchange provides affords investors the ability
to quickly and easily sell securities. This is an attractive feature of investing in
stocks, compared to other less liquid investments such as real estate. Exchanges
also act as the clearinghouse for each transaction, meaning that they collect and
deliver the shares, and guarantee payment to the seller of a security. The smooth
functioning of all these activities facilitates economic growth in that lower cost
and enterprise risks promote the production of goods and services as well as
employment. In this way the financial system contributes to increased
prosperity.

· Relation of the stock market to the modern financial system

The financial system in most western countries has undergone a remarkable
transformation. One feature of this development is disintermediation. A portion
of the funds involved in saving and financing flows directly to the financial
markets instead of being routed via banks' traditional lending and deposit
operations. The general public's heightened interest in investing in the stock
market, either directly or through mutual funds, has been an important
component of this process. Statistics show that in recent decades shares have
made up an increasingly large proportion of households' financial assets in
many countries. The major part of this adjustment in financial portfolios has
gone directly to shares.

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  STOCK EXCHANGES IN INDIA
Stock Exchange (also known as stock market or share market) is one
of the main integral part of capital market in India. It plays a vital role
in growing industries and commerce of a country which eventually
affect the economy. It is well organized market for purchase and sale
of corporate and other securities which facilitates companies to raise
capital by pooling funds from different investors as well as act as an
investment intermediary for investors. Moreover, it ensures that
securities should be traded according to some pre defined rules and
regulations.
Bombay Stock Exchange (BSE) is the leading and fastest stock
exchange in India as well as in South Asia established in 1875.
Bombay stock exchange is the world's 11th largest stock market by
market capitalization at $1.7 trillion as of 31 January 2015 (Monthly
Reports, World Federation of Exchanges). More than 5,000 companies
are listed on BSE. The main index of Bombay stock exchange is
Sensex which comprises of 30 stocks.
National Stock Exchange was incorporated in 1992 as a tax paying
company and was recognized as a stock exchange in 1993 under the
Securities Contracts (Regulation) Act 1956. NSE is the 12th largest
stock exchange in the world with a market capitalization of more than
US$ 1.65 trillion as on 31 January 2015 (Monthly Reports, World
Federation of Exchanges).
Moreover, it was the first exchange to provide fully automated screen
based electronic trading system. Nifty is the indices to measure overall
performance of the National Stock Exchange which comprises of 50
stock index.

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 Functions of Stock Exchange
The Stock Exchange serves two critical functions:
• It provides a critical link between companies that need funds to set
up new business or to expand their current operations and interested
investors.
• Stock Exchange also acts as a guide for the investors that have excess
funds to invest in such companies. The main aim of this study is to
determine the impact of various economic variables on the
performance of stock market of selected listed IT companies on NSE.

SECTOR INDICATORS
There are number of sectors or industries which are listed on National Stock
Exchange and Bombay Stock Exchange. In addition to this, an individual
sector comprises of number of companies. There are around 73 sectors
listed on NSE and BSE separately. Some of the important sectors present
on both the exchanges are as follows: -
_ BANKING SECTOR

_ AUTOMOBILE SECTOR

_ INFORMATION TECHNOLOGY SECTOR

_ METAL SECTOR

_ REAL ESTATE SECTOR

_ FMCG SECTOR

_ MEDIA & ENTERTAINMENT SECTOR

_ PHARMACEUTICALS SECTOR

_ POWER SECTOR

_ PSU BANK SECTOR

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  IMPACT OF STOCK EXCHANGES IN INDIA:

Following are the changes due to the existence of Stock Exchange:

1. Mobilization of savings
The savings of the individuals are easily mobilized in various types of industries.
Therefore the amount of investments in the stock exchange increases.
2. Increase in rate of return on investment
The investors get more rate of return i.e. the market rate and not the normal bank
rate, which is much lower.
3. Availability of funds for growth of industries.
The amount of funds required for the growth of the industries is easily available
whereas there was always shortage of capital.
4. Diversification of industries
Due to the availability of funds the industry becomes financially strong and have
scope or diversification due to which they can become more strongly in the
market.
5. Increase in employment
Growth and diversification of industries leads to increase in the amount of work
and thus increase job opportunities for the unemployed.
6. Increase in standard of living
The increased job opportunities and the availability of goods of higher quality
have increased the standard of living of people.
7. Increase in GDP
Increase in business in overall all industries has automatically leaded to the rise
in GDP of the country and thus its prosperity.
8. Decrease in Trade Deficit.
Due to growth in industries the country is becoming self-sufficient leading to
decrease in trade deficit.

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  FACTORS AFFECTING STOCK MARKET

Determining stock returns is a complex and conflicting task. There

are number of forces which influence the share returns of stock
market. . Although, there is no pre-planned system which can trace
the exact movement in the stock returns of the stock market.
However, fundamental factors, external factors and market behavior
can cause increase and decrease in the demand and supply of
individual stock.
Major factors working on this case consist of indicators of firm’s
performance, investor’s perception, market efficiency, and some
macro-economic variables such as Inflation, GDP, FDI, Interest Rate,
Oil Prices etc. Majorly, there are two thoughts related to this concept,
first is the technical analysis and second one is fundamental analysis.
Former is a technique which is actually a statistical tool used to
predict share price by the use of past share prices data whereas the
later one is the method of stock valuation by using financial
information with the help of a specific model.

Fundamental Analysis is further classified in two categories one is

company specific variables and other is macro-economic variables.
Company specific variables include Earning Per Share, Dividend Per
Share, Price/Earnings Ratio, Book Value Per Share, Return On
Equity, Net Asset Value etc. and macro-economic variables include
Gross domestic product, Inflation, Foreign Direct Investment,
Interest Rate, Oil Prices.

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Goals
The main goals of this project were to investigate possible investment
opportunities, logically weigh their respective risks and benefits, and make
educated investment decisions. A detailed understanding of the risks and
opportunities for high return presented in each investment opportunity were
obtained through extensive research and analysis. This knowledge will aid
in the future selection and execution of intelligent investments.

Pros and Cons of Financial Investment

Investing money into unpredictable, unstable, and uncontrollable facets can
be extremely risky. Like the lottery, the success of stock market trading is
partly attributed to luck. Many people have lost vast amounts of money
through poor investment decisions that they’ve made. Recently, investors
with shares in loan-giving companies and American car manufacturers,
which were previously a fairly stable investment, have suffered severe losses
due to the economic crisis. Investors must understand and accept this risk as
an intrinsic part of investing.

There are, however, attractive benefits to successful financial investments.

with intelligent decisions, investing can yield significant capital gains,
stability, and security.
By analyzing the trends of the stock market, the companies one is invested
in, and by followingan investment strategy, one can be successful in the stock
market. There has been much research into various ways of analyzing the
stock market as a means of facilitating intelligent investment decisions.
These “intelligent decisions” are paramount to the success of an investment
and will be examined in this experiment.

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Financial Investment Opportunities

Shares of Stock
The most well-known investment opportunity is shares of stock in
a company. The general public is not allowed to trade stock in the
NSE & BSE; instead, the public trades through stockbrokers.
Stockbrokers will buy or sell stock on behalf of an individual for a
commission, and often distinguish themselves by the investment
advice they give their customers.
Bonds
Bonds are a loan, granted by the investor (“the holder”), to a
corporation or individual (“the issuer”, usually the government). The
loan agreement includes a specified amount of time, after which the
bond is said to “mature.” A specified amount of interest is aggregated
semi-annually during the time before the bond matures, after which
no further interest is accrued.

Mutual Funds
Mutual Funds are an investment in a fund, managed by a fund
manager, which is invested in many different small investments. The
fund manager trades these small investments regularly, generating a
return for the fund principle. The investors are paid a portion of this
return. The value of a mutual fund is determined by its net asset value
(NAV), or the combined worth of the fund’s holdings (the fund’s
investment portfolio).

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3. Stock Market Trading Strategies
3.1 Day Trading
Day trading is the strategy of buying and trading a stock within the same day.
Day trading is a very fast‐paced investment strategy, relying on quick, often
emotional, decisions from the investor. Day trading relies on the daily fluctuation
of stock values. Investors hope to ideally buy stock at its lowest value that day,sell
it later that day at its peak value, and earn the difference. Day traders do not care
as much about what company they are buying stock in, only on that stock’s
potential for growth that day. There are many subtle strategies to day trading,
along with a keen sense for stocks that are about to gain value, that make an
investor successful. With the popularity of the Internet, many investors can make
day trading transactions from their homes. These investors use websites that offer
trading services for a small fee. This has led to a rise in personal investors
employing a day trading strategy. Day trading was further investigated in the
investment simulation.
3.2 Swing Trading
Swing Trading is the strategy of trading at the peaks of price oscillation over
a period of a few days or weeks. This strategy is more involved than Day Trading,
requiring an investor with a watchfuleye and a thorough understanding of the
company they are investing in. The investor must determine when the best time
to sell and buy a stock is, based on recent fluctuation activity, news, and the
investor’s intuition. Swing trading involves research into different markets, and
into what makes investors excited about a company. An investor can utilize the
events’ impacts to make a profit.
Due to the amount of research involved, swing trading is usually a less risky
strategy than day trading. Day trading focuses on current growth and
fluctuation, whereas swing trading profits off underlying trends in a stocks’
price. Swing trading can involve investments lasting a few days, weeks or even

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months. The flexibility presented with a swing trading simulation made it ideal
for this short investment
simulation.

How to Invest Sensibly, Suitably, and Simply

Many veteran investors diversify their portfolios using the asset

classes listed above, with the mix reflecting their tolerance for risk.
A good piece of advice to investors is to start with simple
investments, then incrementally expand their portfolios. Specifically,
mutual funds or ETFs are a good first step, before moving on to
individual stocks, real estate, and other alternative investments.

However, most people are too busy to worry about monitoring their
portfolios on a daily basis. Therefore, sticking with index funds that
mirror the market is a viable solution.

Investment education is essential—as is avoiding investments you

don't fully understand. Rely on sound recommendations from
experienced investors, while dismissing "hot tips" from
untrustworthy sources. When consulting professionals, look to
independent financial advisors who get paid only for their time,
instead of those who collect commissions. And above all, diversify
your holdings across a wide swath of assets.

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 INVESTMENT
IN
MUTUAL FUNDS

According to Securities and Exchange Board of India Regulations, 1996 a

mutual fund means “a fund established in the form of trust to raise money
through the sale of units to the public or a section of the public under one or
more schemes for investing in securities, including money market
instruments”.

A Mutual Fund is a collective investment vehicle formed with the specific

objective of raising money from a large number of individuals and investing
it according to a pre-specified objective, with the benefits accrued to be
shared among the investors on a pro-rata basis in proportion to their
investment.

According to Securities and Exchange Board of India Regulations, 1996 a

mutual fund means “a fund established in the form of trust to raise money
through the sale of units to the public or a section of the public under one or
more schemes for investing in securities, including money market
instruments”.

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 Concept of Mutual Fund

Concept of Mutual Fund

A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal. This pool of money
is invested in accordance with a stated objective. The joint
ownership of the fund is thus “ MUTUAL”, i.e. the funs belongs to
all investors. The money thus collected is then invested in capital
market instruments such as share, debentures and other securities .
The income earned through these investments and the capital
appreciations realized are shared by its unit holders in proportion
the number of units owned by them. Thus the 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.

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 The Operational flow of Mutual fund

Investors pool their

Returns are passed money with a
back to the registered mutualfund
investors

Generates returns Mutual fund

on the pool manager invest this
Investment amount with
securities

The following diagram shows the operational flow of Mutual

fund
INVESTMENT STRATEGIES
1. Systematic Investment Plan: Under this a fixed sum is
invested each month on a fixed date of a month. Payment is made
through post dated cheques or direct debit facilities. The investors
gets fewer units when the NAV is high and more units when the NAV
is low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: Under this is an investor invest in

debit oriented fund and give instructions to transfer a fixed sum, at a
fixed interval, to an equity scheme of the same mutual fund.

3. Systematic Withdrawal Plan: If someone wishes to withdraw

form an mutual fund then he can withdraw a fixed amount each
month.

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20
  Advantages of Mutual Funds
Mutual Funds are professionally managed companies or schemes
that pool money from investors and invest it in stock markets,
shares, derivative markets and other securities. By investing in
Mutual funds, investors can avail of the following advantages:-

1. Professional Management:The biggest advantage of

investing in mutual funds is that they are managed by qualified and
professional expertise that are backed by a dedicated investment
research team which analyses the performance and prospects of
companies and selects suitable investments.

2. Diversifiacation: Since one of the primary rules of

investment is to diversify portfolios, a mutual fund can be a simple
and successful way to accomplish this goal. They invest in a
number of companies across a broad cross-section of industries and
sectors. This diversification reduces the risk because seldom do all
stocks make losses at the same time and in the same proportion.
3.Convenient Administration:Investing in a Mutual Fund
reduces paperwork and helps to avoid many problems such as bad
deliveries, delayed payments and follow up with brokers and
companies. Mutual Funds save time and makes investing easy and
convenient.

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4. Return Potential: Over medium to long-term, Mutual
Funds have the potential to provide a higher return as they invest
in a diversified basket of selected securities.

5.Low Costs: Mutual funds are one of the best investment

options considering the costs involved. They are a relatively less
expensive if compared to directly investing in the capital markets
because the benefits of scale in brokerage, custodial and other fees
translate into lower costs for investors.

6.Variety of Schemes: You can find a mutual fund scheme

that matches almost exactly what you are looking for from an
investment. This could be related to both your risk tolerance and
your investment horizon.

7. Transparency: You get regular information on the value of

your investment through account statement and in addition to
disclosure on the investments made by your scheme through
portfolios disclosures, which indicates the proportion invested in
each class of assets. The Scheme related documents also specifies
the investment strategy and asset allocation for each scheme.

8. Well Regulated: All mutual funds are registered with SEBI

and they function within the regulatory provisions framed to
protect the interests of investors. The operations of mutual funds
are regularly monitored by SEBI.

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Disadvantages of Mutual Funds
However, there are also disadvantages to being an investor in mutual
funds. Here's a more detailed look at some of those concerns.

1.High Expense Ratios and Sales Charges: If you're not

paying attention to mutual fund expense ratios and sales charges, they
can get out of hand. Be very cautious when investing in funds with
expense ratios higher than 1.50%, as they are considered to be on the
higher cost end. Be wary of advertising fees and sales charges in
general. There are several good fund companies out there that have no
sales charges. Fees reduce overall investment returns.

2.Management Abuses: Churning, turnover, and window

dressing may happen if your manager is abusing their authority. This
includes unnecessary trading, excessive replacement, and selling the
losers prior to quarter-end to fix the books.

3.Tax Inefficiency: Like it or not, investors do not have a choice

when it comes to capital gains payouts in mutual funds. Due to the
turnover, redemptions,gains,and losses in security holdings throughout
the year, investors typically receive distributions from the fund that are
an uncontrollable tax event.

4.Poor Trade Execution:If you place your mutual fund trade

anytime before the cut-off time for same-day NAV, you'll receive the
same closing price NAV for your buy or sell on the mutual fund. For
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investors looking for faster execution times, maybe because of short
investment horizons, day trading, or timing the market, mutual funds
provide a weak execution strategy.

Conclusion: Investment means we have money, then weneed to

make analysis to invest the money, and expected get return in future.
If the investmentare run early, then we will make a lot of profit if the
investment run well, if not we will lose all ofthe investment need to
start from earlier. So Every investment is inherently connected with
risk. Its existence and diversity among various types of investments
is one of the driving forces behind the development of the capital
market. The risk has also caused emergence and development of
alternative investments. Flourishment of this segment of the market
has also been influenced by periodical financial crises, which have
been the driving force behind the search for investments that would
allow investment portfolio diversification and would provide
opportunities for profiting, even during price declines on the market.
Alternative investments constitute an effective tool for risk
diversification, however,they are not suitable for all investors. Stock
is equity, bonds are debt. Bondholders are guaranteed a return on
their investment and have a higher claim than shareholders. This is
generally why stocks are considered riskier investments and require
a higher rate of return. You can lose all of your investment with
stocks. To lower your risk many investor seek investing in Mutual
Funds which brings together a group of people and invest their money
in stocks, bonds, and other securirties at lower cost. The advantages
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of Mutuals are professional management, diversification of portfolio
simplicity and liquidity.

References:
www.moneycontrol.com

www.investopedia.com

www.Grow.com

www.sebi.gov.in

NSE - National Stock Exchange of India Ltd: Live Share/Stock Market News & Updates,
Quotes- Nseindia.com

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