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A PROJECT REPORT ON PORTFOLIO MANAGEMENT SERVICES AN INVESTMENT OPTION

WITH REFERENCE TO

(SHAREKHAN LIMITED) SUBMITTED TO BARODA INSTITUTE OF MANAGEMENT STUDIES

SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF

MASTER OF BUSINESS ADMINISRTATION


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NAME:- PATEL MAMTA A. 3RD SEM MBA(FINANCE) GAJRA

PROJECT GUIDE MR. SUHEL

Chapter no.

Table of contents Executive summary

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Introduction Introduction to study Introduction to stock exchange Company profile 10 12 31 37 42 48

Product profile Product and services offered by Sharekhan Sharekhan PMS

Literature review PMS Portfolio construction Type of asset

Research methodology Objective of study Limitation of project Scope of Study

5 6 7 8

Findings Conclusion and suggestions Bibliography Annexure


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Baroda Institute of Management Studies


PROJECT COMPLETION CERTIFICATE
This is to certify that Project Report entitled: ____________________________________________________ is submitted in partial fulfillment of the requirements for the degree of Masters of Business Administration (MBA) By : _____________________________________________ __________________ __________________ Specialization :

Registration no. : Semester _____________ :

The degree awarded is approved by UGC, Ministry of HRD, DEC and AIU. It is to further certify that he/she has worked under my supervision and Guidance and that no part of this report has been submitted for the Award of any other degree, Diploma, Fellowship or other similar titles or prizes and that the work has not been published in any Journal or Magazine.
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Certified by: Nainil Bhatt


Faculty Finance

Umesh Vice Dean

Pandya MBA(Finance) (Guides Name & Qualification) Date -1st Jan.2011

ACNOWLEDGEMENT
Education is simply the soul of a society as it passes from one generation to another First of all I thank God who has bestowed with such lovely atmosphere, good health and good luck in my life. I know before him with reverence so that nothing untoward happens to anyone connected to me in anyway and any field. With regard to my Project with Share khan, Bharuch. I would like to thank each and every one who offered help, guidelines and support whenever required.

I sincerely express my thankfulness to Mr. Suhel Gajra for his valuable suggestions and help during the project. I express my deep sense of gratitude to my company mentors, Mr. Aaftab Hansoti(Territory manager) and Mr. Shailesh Bhatt (Branch Manager) without whose support and coopration this project could not have been completed successfully.

Last, but not least my heartfelt love for my parents and my friends, whose constant support and blessings kept me enthusiastic throughout this project.

EXECUTIVE SUMMARY Investing is both Arts and Science. Every Individual has their own specific financial need and expectation based on their risk taking capabilities, whereas some needs and expectation are universal. Therefore, we find that the scenario of the Stock Market is changing day by day hours by hours and minute by minute. The
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evaluation of financial planning has been increased through decades, which can be best seen in customers. Now a days investments have become very important part of income saving. In order to keep the Investor safe from market fluctuation and make them profitable, Portfolio Management Services (PMS) is fast gaining Investment Option for the High Networth Individual (HNI). There is growing competition between brokerage firms in post reform India. For investor it is always difficult to decide which brokerage firm to choose. The research design is analytical in nature. A questionnaire was prepared and distributed to Investors. The investors profile is based on the results of a questionnaire that the Investors completed. The Sample consists of 100 investors from various brokers premises. The target customers were Investors who are trading in the stock market. In order to identify the effectiveness of Sharekhan PMS services this Research is carried throughout the area of Bangalore. At the time of investing money everyone look for the Risk factor involve in the Investment option.
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The Report is prepared on the basis of Research work done through the different Research Mythology the data is collected from both the source Primary sources which consist of Questionnaire and secondary data is collected from different sources such as Company website, Magazine and other sources. In this project I have shown the details of financial planning as well as wealth management so as to understand about the customers needs and wants with respect to market and how a clients portfolio can be designed and what factors a portfolio manager must consider for designing a portfolio.

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Chapter 1 Introduction

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INTRODUCTION TO STUDY

The field of investment traditionally divided into security analysis and portfolio management. The heart of security analysis is valuation of financial assets. Value in turn is the function of risk and return. These two concepts are in the study of investment .Investment can be defined the commitment of funds to one or more assets that will be held over for some future time period. PMS is an investment portfolio in stocks, fixed income, debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. The field of investment traditionally divided into security analysis and portfolio management. The heart of security analysis is valuation of financial assets. Value in turn is the function of risk and return. These two concepts are in the study of investment .Investment can be defined the commitment of funds to one or more assets that will be held over for some future time period. In today fast growing world many opportunities are available, so in order to move with changes and grab the best opportunities in the field of investments a professional fund manager is necessary.
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Therefore, in the present scenario the Portfolio Management Services (PMS) is fast gaining importance as an investment alternative for the High Net worth Investors. Portfolio Management Services (PMS) is an investment portfolio in stocks, fixed income, Debt, cash, structured products and other individual securities, managed by a professional money manager that can potentially be tailored to meet specific investment objectives. When you invest in PMS, you own individual securities unlike a mutual fund investor, who owns units of the entire fund. You have the freedom and flexibility to tailor your portfolio to address personal preferences and financial goals. Although portfolio managers may oversee hundreds of portfolio, your account may be unique. Investment Management Solution in PMS can be provided in the following ways: i. Discretionary ii. Non Discretionary iii. Advisory.

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Discretionary: Under these services, the choice as well as the timings of the investment decisions rest solely with the Portfolio Manager.

Non Discretionary: Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the timings of the investment decisions rest solely with the Investor. However the execution of trade is done by the portfolio manager. Advisory Under these services, the portfolio manager only suggests the investment ideas. The choice as well as the execution of the investment decisions rest solely with the Investor. INTRODUCTION TO STOCK EXCHANGE The emergence of stock market can be traced back to 1830. In Bombay, business passed in the shares of banks like the commercial bank, the chartered mercantile bank, the chartered bank, the oriental
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bank and the old bank of Bombay and shares of cotton presses. In Calcutta, Englishman reported the quotations of 4%, 5%, and 6% loans of East India Company as well as the shares of the bank of Bengal in 1836. This list was a further broadened in 1839 when the Calcutta newspaper printed the quotations of banks like union bank and Agra bank. It also quoted the prices of business ventures like the Bengal bonded warehouse, the Docking Company and the storm tug company. Between 1840 and 1850, only half a dozen brokers existed for the limited business. But during the share mania of 1860-65, the number of brokers increased considerably. By 1860, the number of brokers was about 60 and during the exciting period of the American Civil war, their number increased to about 200 to 250. The end of American Civil war brought disillusionment and many Failures and the brokers decreased in number and prosperity. It was in those troublesome times between 1868 and 1875 that brokers organized an informal association and finally as recited in the Indenture constituting. Articles of Association of the Exchange On or about 9th day of July,1875, a few native brokers doing brokerage business in shares and stocks resolved upon forming in Bombay an association for protecting the character, status and
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interest of native share and stock brokers and providing a hall or building for the use of the Members of such association. As a meeting held in the broker Hall on the 5th day of February, 1887, it was resolved to execute a formal deal of association and to constitute the first managing committee and to appoint the first trustees. Accordingly, the Articles of Association of the Exchange and the Stock Exchange was formally established in Bombay on 3rd day of December, 1887. The Association is now known as The Stock Exchange. The entrance fee for new member was Re.1 and there were 318 members on the list, when the exchange was constituted. The numbers of members increased to 333 in 1896, 362 in 1916and 478 in 1920 and the entrance fee was raised to Rs.5 in 1877, Rs.1000 in 1896, Rs.2500 in 1916 and Rs. 48,000 in 1920. At present there are 23 recognized stock exchanges with about 6000 stock brokers. Organization structure of stock exchange varies. 14 stock exchanges are organized as public limited companies, 6 as companies limited by guarantee and 3 are non-profit voluntary organization. Of the total of 23, only 9 stock exchanges have been permanent recognition. Others have to seek recognition on annual basis.

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These exchange do not work of its own, rather, these are run by some persons and with the help of some persons and institution. All these are down as functionaries on stock exchange. These are: i. Stockbrokers ii. Sub-broker iii. Market makers iv. Portfolio consultants etc.

1. Stockbrokers: Stock brokers are the members of stock exchanges. These are the persons who buy, sell or deal in securities. A certificate of registration from SEBI is mandatory to act as a broker. SEBI can impose certain conditions while granting the certificate of registrations. It is obligatory for the person to abide by the rules, regulations and the buy-law. Stock brokers are commission broker, floor broker, arbitrageur etc. detail of Registered Brokers Total no. of registered brokers as on 31.03.09 9000

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Total no. of sub-broker as on 31.03.09 24,000

2. Sub-broker: A sub-broker acts as agent of stock broker. He is not a member of a stock exchange. He assists the investors in buying, selling or dealing in securities through stockbroker. The broker and sub-broker should enter into an agreement in which obligations of both should be specified. Sub-broker must be registered SEBI for a dealing in securities.For getting registered with SEBI, he must fulfill certain rules and regulation.

3. Market Makers: Market maker is a designated specialist in the specified securities. They make both bid and offer at the same time. A market maker has to abide by bye-laws, rules regulations of the concerned stock exchange. He is exempt from the margin requirements. As per the listing requirements, a company where the paid-up capital is Rs. 3 Crore but not more than Rs. 5 core and having a commercial
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operation for less than 2 years should appoint a market maker at the time of issue of securities.

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Functions of sharemarket

In every economic System, some units which may be individual or Institution are surplus-generating while others are deficitgenerating. Securities Market in India Surplus-Generating Units are called Savers while Deficit-generating units are called spenders. Households are surplus-generating and Corporates and Government are deficit generators.By placing the surplus funds in Financial claims or Financial securities the Spending community gets funds at a cost and saving community gets various benefits like interest, dividend, capital appreciation, Bonus etc. The Surplus generating units (Savers) are investors and Deficit generating units (spenders) are issuers.These investors and issuers of financial securities constitute two important elements of the securities markets.The third critical element of markets is the intermediaries who act as conduit between the investors and issuers.Regulatory bodies, which regulate the functioning of the securities markets, constitute the last but very significant element of securities markets. Thus the four important elements of securities markets are:

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Investors Issuers Intermediaries Regulators

Securities Can be Government or Industrial Long-term or short-term Primary Market or Secondary Market Securities Market in India

Primary Market is the segment in which new issues are made whereas secondary market is the segment in which outstanding issues are traded. It is for this reason that the Primary Market is called the New issues Market and the secondary market is called Stock Market. Securities Market in India

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Role & Functions of Stock Exchange

In Union of India Vs. Allied International Products Ltd. [ (1971) 41 Comp Cas 127 SC]: (1970) 3 SCC 5941), the Supreme Court of India has enunciated the role of the Stock Exchanges in these words: A Stock Exchange fulfills a vital function in the economic development of a nation: its main function is to liquify capital by enabling a person who has invested money in, say a factory or railway, to convert it into cash by disposing off his shares in the enterprise to someone else. Investment in Joint stock companies is attractive to the public, because the value of the shares is announced day after day in the stock exchanges, and shares quoted on the exchanges are capable of almost immediate conversion into money. In modern days a company stands little chance of inducing the public to subscribe to its capital, unless its shares are quoted in an approved stock exchange. All public
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companies are anxious to obtain permission from reputed exchanges for securing quotations of their shares and the management of a company is anxious to inform the investing public that the shares of the company will be quoted on the stock exchange.

Introduction to stock market The stock exchange is really an essential pillar of the private sector corporate economy. It discharges three essential functions: First, the stock exchange provides a market place for purchase and sale of securities viz. shares, bonds, debentures etc. It, therefore, ensures the free transferability of securities which is the essential basis for the joint stock enterprise system. Secondly, the stock exchange provides the linkage between the savings in the household sector and the investment in the corporate economy. It mobilizes savings, channelises them as securities into these enterprises which are favoured by the investors on the basis of such criteria as future growth prospects, good returns and appreciation of capital.
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Thirdly, by providing a market quotation of the prices of shares and bonds- a sort of collective judgment simultaneously reached by many buyers and sellers in the market- the stock exchange serves the role of a barometer, not only of the state of health of individual companies, but also of the nations economy as a whole. A stock market or equity market is a public (a loose network of economic transactions, not a physical facility or discrete entity) for the trading of company stock (shares) and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately. The size of the world stock market was estimated at about $36.6 trillion at the start of October 2008. The total world derivatives market has been estimated at about $791 trillion face or nominal value, 11 times the size of the entire world economy. The value of the derivatives market, because it is stated in terms of notional values, cannot be directly compared to a stock or a fixed income security, which traditionally refers to an actual value. Moreover, the vast majority of derivatives 'cancel' each other out (i.e., a derivative 'bet' on an event occurring is offset by a comparable derivative 'bet' on the event not occurring). Many such relatively illiquid securities are valued as marked to model, rather than an actual market price.
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The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The largest stock market in the United States, by market cap, is the New York Stock Exchange, NYSE. In Canada, the largest stock market is the Toronto Stock Exchange. Major European examples of stock exchanges include the London Stock Exchange, Paris Bourse, and the Deutsche Brse (Frankfurt Stock Exchange). Asian examples include the Tokyo Stock Exchange, the Hong Kong Stock Exchange, the Shanghai Stock Exchange, and the Bombay Stock Exchange. In Latin America, there are such exchanges as the BM&F Bovespa and the BMV.

Trading

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The London Stock Exchange. Participants in the stock market range from small individual stock investors to large hedge fund traders, who can be based anywhere. Their orders usually end up with a professional at a stock exchange, who executes the order. Some exchanges are physical locations where transactions are carried out on a trading floor, by a method known as open outcry. This type of auction is used in stock exchanges and commodity exchanges where traders may enter "verbal" bids and offers simultaneously. The other type of stock exchange is a virtual kind, composed of a network of computers where trades are made electronically via traders. Actual trades are based on an auction market model where a potential buyer bids a specific price for a stock and a potential seller asks a specific price for the stock. (Buying or selling at market means you will accept any ask price or bid price for the stock, respectively.) When the bid and ask prices match, a sale takes place, on a firstcome-first-served basis if there are multiple bidders or askers at a given price. The purpose of a stock exchange is to facilitate the exchange of securities between buyers and sellers, thus providing a marketplace

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(virtual or real). The exchanges provide real-time trading information on the listed securities, facilitating price discovery.

The New York Stock Exchange. The New York Stock Exchange is a physical exchange, also referred to as a listed exchange only stocks listed with the exchange may be traded. Orders enter by way of exchange members and flow down to a floor broker, who goes to the floor trading post specialist for that stock to trade the order. The specialist's job is to match buy and sell orders using open outcry. If a spread exists, no trade immediately takes placein this case the specialist should use his/her own resources (money or stock) to close the difference after his/her judged time. Once a trade has been made the details are reported on the "tape" and sent back to the brokerage firm, which then notifies the investor who placed the order. Although there is a significant amount of human contact in this process,
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computers play an important role, especially for so-called "program trading". The NASDAQ is a virtual listed exchange, where all of the trading is done over a computer network. The process is similar to the New York Stock Exchange.However, buyers and sellers are electronically matched. Stockbrokers met on the trading floor or the Palais Brongniart. In 1986, the CATS trading system was introduced, and the order matching process was fully automated. From time to time, active trading (especially in large blocks of securities) have moved away from the 'active' exchanges. Securities firms, led by UBS AG, Goldman Sachs Group Inc. and Credit Suisse Group, already steer 12 percent of U.S. security trades away from the exchanges to their internal systems. That share probably will increase to 18 percent by 2010 as more investment banks bypass the NYSE and NASDAQ and pair buyers and sellers of securities themselves, according to data compiled by Boston-based Aite Group LLC, a brokerage-industry consultant.[5] Now that computers have eliminated the need for trading floors like the Big Board's, the balance of power in equity markets is shifting investors pay in trading commissions as well as the surplus of the century had taken place.

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History

Established in 1875, the Bombay Stock Exchange is Asia's first stock exchange. BSE SENSEX is the benchmark index for the Indian stock market. It is the most frequently used indictor while reporting on the state of the market. Sensex is not only scientifically designed but also based on globally accepted construction and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent stocks representing a sample of large, liquid and representative companies. The base year of SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic and international markets through print as well as electronic media. The Index was initially calculated based on the Full Market Capitalization methodology but was shifted to the free-float methodology with effect from September 1, 2003. The Free-float Market Capitalization methodology of index construction is regarded as an industry best practice globally. All major index providers like
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MSCI, FTSE, STOXX, S&P and Dow Jones use the Free-float methodology. Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of the Indian stock market. As the oldest index in the country, it provides the time series data over a fairly long period of time (From 1979 onwards). Small wonder, the SENSEX has over the years become one of the most prominent brands in the country. The growth of equity markets in India has been phenomenal in the decade gone by. Right from early nineties the stock market witnessed heightened activity in terms of various bull and bear runs. The SENSEX captured all these events in the most judicial manner. One can identify the booms and busts of the Indian stock market through SENSEX. Major Milestones Here is a timeline on the rise and rise of the Sensex through Indian stock market history.

1000, July 25, 1990 On July 25, 1990, the Sensex touched the four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results. 4000, March 30, 1992 On March 30, 1992, the Sensex crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling. 5000, October 11, 1999 On October 8, 1999, the Sensex crossed the 5,000-mark as the BJP-led coalition won the majority in the 13th Lok Sabha election. 6000, February 11, 2000 On February 11, 2000, the infotech boom helped the Sensex to cross the 6,000-mark and hit and all time high of 6,006.

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7000, June 21, 2005 On June 20, 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance Energy, Reliance Capital and IPCL made huge gains. 10,000, February 7, 2006 The Sensex on February 6, 2006 touched 10,003 points during mid-session. 11,000, March 27, 2006 The Sensex on March 21, 2006 crossed 11,000 and touched a life-time peak of 11,001 points during mid-session at the Bombay Stock Exchange for the first time. However, it was on March 27, 2006 that the Sensex first closed at over 11,000 points. 12,000, April 20, 2006 The Sensex on April 20, 2006 crossed 12,000 and touched a life-time peak of 12,004 points during midsession at the Bombay Stock Exchange for the first time. 13,000, October 30, 2006 The Sensex on October 30, 2006 crossed 13,000 and still riding high at the Bombay Stock Exchange for the first time. It took 135 days to reach 13,000 from 12,000. And 124 days to reach 13,000 from 12,500. On 30th October 2006 it touched a peak of 13,039.36 & closed at 13,024.26. 14,000, December 5, 2006 The Sensex on December 5, 2006 crossed 14,000 and touched a life-time peak of 14028 at 9.58AM(IST) while opening for the day December 5, 2006. 15,000, July 6, 2007- The Sensex on July 6, 2007 crossed another milestone and reached a magic figure of 15,000. it took almost 7 month and 1 day to touch such a historic milestone. 16,000, September 19, 2007- The Sensex on September 19, 2007 crossed the 16,000 mark and reached a historic peak of 16322 while closing. The bull hits because of the rate cut of 50 bit/s in the discount rate by the Fed chief Ben Bernanke in US. 17,000, September 26, 2007- The Sensex on September 26, 2007 crossed the 17,000 mark for the first time, creating a
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record for the second fastest 1000 point gain in just 5 trading sessions. It failed however to sustain the momentum and closed below 17000. The Sensex closed above 17000 for the first time on the following day. Reliance group has been the main contributor in this bull run, contributing 256 points. This also helped Mukesh Ambanis net worth to grow to over $50 billion or Rs.2 trillion. It was also during this record bull run that the Sensex for the first time zoomed ahead of the Nikkei of Japan.

18,000, October 9, 2007- The Sensex crossed the 18k mark for the first time on October 9, 2007. The journey from 17k to 18k took just 8 trading sessions which is the third fastest 1000 point rise in the history of the sensex. The sensex closed at 18,280 at the end of day. This 788 point gain on 9 October was the second biggest single day absolute gains. 19,000, October 15, 2007- The Sensex crossed the 19k mark for the first time on October 15, 2007. It took just 4 days to reach from 18k to 19k. This is the fastest 1000 points rally ever and also the 640 point rally was the second highest single day rally in absolute terms. This made it a record 3000 point rally in 17 trading sessions overall. 20,000, October 29, 2007- The Sensex crossed the 20k mark for the first time with a massive 734.5 point gain but closed below the 20k mark. It took 11 days to reach from 19k to 20k. The journey of the last 10,000 points was covered in just 869 sessions as against 7,297 sessions taken to touch the 10,000 mark from 1,000 levels. In 2007 alone, there were six 1,000point rallies for the Sensex. 21,000, January 8, 2008 The Sensex opened with a huge positive gap of 157 points at 20,970, and rallied past the 21,000mark to a fresh all-time high of 21,078.

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The main trading room of the Tokyo Stock Exchange,where trading is currently completed through computers. The stock market is one of the most important sources for companies to raise money. This allows businesses to be publicly traded, or raise additional capital for expansion by selling shares of ownership of the company in a public market. 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. National stock exchange

National Stock Exchange

A+

A-

National Stock Exchange of India (NSE) is India's largest Stock Exchange & World's third largest Stock Exchange in terms of transactions. Located in Mumbai, NSE was promoted by leading Financial Institutions at the behest of the Government of India, and
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was incorporated in November 1992 as a tax-paying company. In April 1993, NSE was recognized as a Stock exchange under the Securities Contracts (Regulation) Act-1956. NSE commenced operations in the Wholesale Debt Market (WDM) segment in June 1994. Capital Market (Equities) segment of the NSE commenced operations in November 1994, while operations in the Derivatives segment commenced in June 2000. NSE has played a catalytic role in reforming Indian securities market in terms of microstructure, market practices and trading volumes. NSE has set up its trading system as a nation-wide, fully automated screen based trading system. It has written for itself the mandate to create World-class Stock Exchange and use it as an instrument of change for the industry as a whole through competitive pressure. NSE is set up on a demutualised model wherein the ownership, management and trading rights are in the hands of three different sets of people. This has completely eliminated any conflict of interest. NSE was set up with the objectives of: Establishing nationwide trading facility for all types of securities Ensuring equal access to investors all over the country through an appropriate telecommunication network Providing fair, efficient & transparent securities market using electronic trading system Enabling shorter settlement cycles and book entry settlements Meeting International benchmarks and standards Within a very short span of time, NSE has been able to achieve its objectives for which it was set up. Indian Capital Markets are a far cry from what they were 12 years back in terms of market practices, infrastructure, technology, risk management, clearing and settlement and investor service. To ensure continuity of business, NSE has built a full fledged BCP site operational for last 7 years. NSE's markets

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NSE provides a fully automated screen-based trading system with national reach in the following major market segments: Equity OR Capital Markets {NSE's market share is over 65%} Futures & Options OR Derivatives Market {NSE's market share over 99.5%} Wholesale Debt Market (WDM) Mutual Funds (MF) Initial Public Offerings (IPO) What are the IT initiatives of NSE in the last one year? NSE believes that technology shall continue to provide necessary impetus for any organisation to retain its competitive edge, ensure timeliness & satisfaction in customer service. Being fully dependant on Information Technology, NSE has stressed on innovation and sustained investment in technology on a continual basis to ensure customer satisfaction, improvement in services which automatically helps in sustaining business and remain ahead of competition. As a policy, NSE looks to improve the quality of Services to its customers. Projects are not initiated based on a business model to reap profits but from a strategic perspective of better productivity, Value-adds & features, improving efficiency, reducing operational costs, compliance, operational transparency etc for the customers, investors and to the entire Indian Securities Industry.

Company profile Sharekhan was established by Morakhia family in 1999-2000 and Morakhia family, continues to remain the largest shareholder. It is the
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retail broking arm of the Mumbai-based SSKI [SHRIPAL SHEWANTILAL KANTILAL ISWARNATH LIMITED] Group. SSKI which is established in 1930 is the parent company of Sharekhan ltd. With a legacy of more than 80 years in the stock markets, the SSKI group ventured into institutional broking and corporate finance over a decade ago. Presently SSKI is one of the leading players in institutional broking and corporate finance activities. Sharekhan offers its customers a wide range of equity related services including trade execution on BSE, NSE, and Derivatives.

Depository services, online trading, Investment advice, Commodities, etc. Sharekhan Ltd. is a brokerage firm which is established on 8th February 2000 and now it is having all the rights of SSKI. Story of sharekhan Sharekhan is Indias leading online retail broking house. Launched on February 8, 2000 as an online trading portal, Sharekhan has today a pan-India presence with over 1,529 outlets serving more than 1 million customers across 450 cities.

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It also has international presence through its branches in the UAE and Oman. Sharekhan offers services like portfolio management, trade execution in equities, futures & options, commodities, and distribution of mutual funds, insurance and structured products. These services are backed by quality investment advice from an experienced research team which offers investment and trading ideas based on fundamental and technical research respectively, market related news, statistical information on

equities, commodities, mutual funds, IPOs and much more. Sharekhan is a member of the Bombay Stock Exchange, the National Stock Exchange and the countrys two leading commodity exchanges, the NCDEX and MCX. Sharekhan is also registered as a depository participant with National Securities Depository and Central Depository Services. Sharekhan has set category leadership through pioneering initiatives like Trade Tiger, an Internet-based executable application that emulates a broker terminal
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besides providing information and tools relevant to day traders. Its second initiative, First Step, is targeted at empowering the first-time investors. Sharekhan has also set its global footprint through the India First initiative, a series of seminars conducted by Sharekhan to help the non-resident Indians participate and benefit from the huge investment opportunities in India.

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INTRODUCTION OF SHAREKHAN LTD

Misson of the sharekhan is

To educate and empower the individual investor to make better investment decision through

QUALITY ADVICE INNOVATIVE PRODUCTS


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SUPERIOR SERVICE

Share khan Limited is a retail financial services provider with a focus on equities, derivatives and Commodities brokerage execution on the National Stock Exchange of India Ltd. (NSE), Bombay StockExchange Ltd. (BSE), National Commodity and Derivatives Exchange India (NCDEX) and MultiCommodity Exchange of India Ltd. (MCX). Share khan provides trade execution services through Multiple channels - an Internet platform, telephone and retail outlets and is present in 225 cities through a network of 615 locations. The company was awarded the 2005 Most Preferred Stock Broking Brand by Awwaz Consumer Vote.

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Chapter 2 Product profile

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PRODUCT PROFILE 1- Equity Trading platform ( online/offline) 2- Commodities trading platform (online / offline) 3- Portfolio management services. 4- Mutual fund Advisory and Distribution. 5- Insurance Distribution 6- Forex

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REASON TO CHOOSE SHAREKHAN LIMITED

Experience SSKI has more than eight decades of trust and credibility in the Indian stock market. In the Asia money brokers poll held recently,SSKI won the Indias best broking house for 2004 award. Ever since it launched Sharekhan as its retail broking division in February 2000, it has been providing institution-level research and broking services to individual investors. Technology

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With their online trading account one can buy and sell shares in an instant from any pc with an internet connection. Customers get access to the powerful online trading tools that will help them to take complete control over their investment in shares.

Accessibility Sharekhan provides ADVISE, EDUCATION, TOOLS AND EXECUTION services for investors. These services are accessible thou gh many centers across the country (over 650 location in 150 cities), over the internet (through the website www.sharekhan.com) as well as over the voice tool

Knowledge In a business where the right information at the right time can translate into direct profits, investor get access to a wide range of information on the content rich portal www.sharekhan.com investor

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will also get a useful set of knowledge based tools that will empower them to take informed decisions.

Convenience One can call Sharekhans Dial-N-Trade number to get investment advice and execute his/her transaction. They have a dedicated callcenter to provide this service via a Toll free number 1800 22 7500 & 39707500 from India

Customer service Its customer service team assist their customer for any help that they need relating to transaction, billing, demat and other queries. Their customer service an be contacted via a toll free number , email or live chat on www.sharekhan.com Investment Advice

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Sharekhan has dedicated research teams of more than 30 people of fundamental and technical research. Their analyst constantly track the pulse of the market and provide timely investment advise to customer in the form of daily research emails, online chat , printed reports etc. Benefits Instant Cash Transfer. Multipal Bank Option. Secure Order By Voice Trade Dial-N-Trade. Automated Portfolio to keep Track of the value of your actual purchases 24x7 Voice Tool access to your Trading account. Personalized Price and Account Alerts delivered instantly to your mobile phone and E-mail address. Live chat Facility with relationship manager on Yahoo Messenger. Special personal Inbox for order and trade confirmation. Online Customer service via web chat. Enjoy Automated Portfolio.

Buy or Sell even single share.Anytime ordering.

Sharekhan offers the following product:-

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ShareKhan Classic account Allow investor to buy and sell stocks online along with the following features like multiple watch lists, Integrated Banking, demat and digital contracts, Real-time portfolio tracking with price alerts and Instant credit & transfer. Online trading account for investing in Equities and Derivatives Free trading through Phone (Dial-n-Trade) Two dedicated numbers for placing your orders with your cellphone or landline. Automtic funds tranfer with phone banking . Simple and Secure Interactive Voice Response based system for authentication get the trusted, professional advice of our telebrokers After hours order placement facility between 8.00 am and 9.30 am Integration of: Online trading + Bank + Demat account Instant cash transfer facility against purchase & sale of shares IPO investments Instant order and trade confirmations by e-mail
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Single screen interface for cash and derivatives

ShareKhan SpeedTrade account This accounts for active traders who trade frequently during the day's trading session. Following are few popular features of SpeedTrade account.

Single screen interface for cash and derivatives Real-time streaming quotes with Instant order Execution & Confirmation Hot keys similar to a traditional broker terminal Alerts and reminders Back-up facility to place trades on Direct Phone lines Brokerage: Some stock trading companies charge direct percentage while others charge a fixed amount per Rs 100. Sharekhan charges 0.5% for inter day shares and 0.1% for intra day or you could say Sharekhan charges 50 paise per Rs 100.

CLASSIC ACCOUNT: 1. A/C OPENING CHARGES:Rs750/2. MARGIN CHEQUE OF Rs 10000/-(where you can use this
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margin for investment purpose) 3. Brokerage charges are For delivery its 0.5% Intraday its 0.1% only on buy side sell side nil ** Note: If the customer generated Rs 750/- brokerage in 6 months after a/c opening the 750 will be refunded to the client. 2. PREPAID CLASSIC ACCOUNT: 1. A/C OPENING CHARGES: NIL 2. PREPAID BROKERAGE CHEQUE OF Rs 2000/3.BROKERAGE WILL BE 0.4% ON DELIVERY & 0.07% ON INTRADAY TRADING ONLY ON BUY SIDE SELL SIDE NIL.

3. PREPAID SPEEDTRADE ACCOUNT: 1. A/C OPENING CHARGES : NIL 2.PREPAID BROKERAGE CHEQUE Rs 6000/3.BROKERAGE WILL BE 0.25% ON DELIVERY & 0.05% ON INTRADAY TRADING ONLY ON BUY SIDE,SELL SIDE NIL SPEED TRADE: Speed trade is a next generation online trading products that brings the power of your brokers terminal to your PC. It is ideal for active traders who transact frequently during movements. SPEEDTRADE is an internet-based application available on a CD, which provides everything a trader needs on
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one screen, thereby, reducing the time required to execute a trade. KEY FEATURES OF SPEED TRADE: 1. Single Screen Trading Terminal 2. Real time Streaming Quotes 3. Live Tic-by-Tic Intra day Charting 4. Instant Order / Trade Confirmations in the same window 5. Hot keys similar to Brokers Terminal 6. Customized Alerts based on multiple Parameters 7. Back-up Facility to Place Trading on Direct Phone Lines

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DIAL-N-TRADE:It is also an exclusive service available to all Sharekhan customers for trading in shares via the telephone. On dialing the toll free number 1800-227500 the customer will be directed to a tele-broker who will buy or sell shares for him. Mobile-N-Trade facility: Now Sharekhan is providing the facility that their customers can do trading with the help of their mobile handset. For tat purpose they have to pay some extra charge to activate that facility. Customers: In now days each and every person is the customer of Sharekhan. All the Business Man, Shopkeepers, Young Generation i.e. students , Adults,Housewife and the person who have money and likes to take risk are the potential customer of the Sharekhan. The person who likes to invest their money in share market is also the customer of Sharekhan.

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But mostly the customers are divided into two types depending upon the transactions they do or money they invest in the share market. They are Investoror Traders.The investors are those who Invest their money in the market once when they have money in excess after fulfilling their needs and wants and the traders are those who daily do the share transactions as their business and called as Intraday transaction and the previous is called as Delivery transaction. Competitors: Sharekhan is one of the major player in on line Trading. In Mumbai the main competitors of Sharekhan are ICICI Direct, India bulls, Kotak Securities, HDFC Securities, Anand Rathi, and Motilal Oswal. 1. Religare Enterprises 2. India Info line 3. ICICI DIRECT 4. INDIA BULLS 5. RELIANCE MONEY 6. Kotak Securities 7. MOTILAL OSWAL These are some of the competitors of sharekhan Sharekhan has set category leadership through pioneering initiatives like Trade Tiger, an Internet-based
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executable application that emulates a broker terminal besides providing information and tools relevant to day traders. Its second initiative, First Step, is targeted at empowering the first-time investors. Sharekhan has also set its global footprint through the India First initiative, a series of seminars conducted by Sharekhan to help the non-resident Indians participate and benefit from the huge investment opportunities in India.

Sharekhan offers product


A trading-based Portfolio Management Scheme Presenting Share khans ProTech - PMS for Technicals. Using scientific rules and time-tested strategies, it delivers consistent returns no matter where the market is headed. Reason enough to be happy and stay that way. ProTech PMS products A) Thrifty Nifty: Nifty futures are bought/ sold through a automated trading system that generates calls to go long/short at any given time. Being short allows you to earn returns even in falling markets.

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B) Beta Portfolio: 80% is traded in stocks in long term technical up trends, the balance in Options. Portfolio rebalancing is done based on segment profitability. --------------------------------------------Investment Details > Minimum investment Rs 5 Lakhs > 0% AMC fees > Lock in for 3 months > Fortnightly Networth reporting > Monthly reporting of Portfolio Holdings/Transactions > 20% profit sharing fees on booked profits quarterly basis./ 15% if 1cr investment or 1 year Lockin. > Brokerage 0.05% for derivatives and 0.30% for delivery

ProTech Investing Protech uses the knowledge of technical analysis and the power of the derivatives market to identify trading opportunities in the market. Superior performance can be achieved through sheer market timing, by picking Stocks/Nifty before the infection points in their trading cycles.The product characteristics are as follows

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Having positions in cash and options Using swing/momentum based index trading systems with stop and reverse trend following

PRODUCTS OFFERED Momentum trading techniques are used to spot short term momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of risk management or profit protection is used to lower the portfolio volitality and maximize returns.Trading opportunities are explored both on the long and the short side as the market demands

ProPrime Investing

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Ideal for investors looking at steady and superior returns with low to medium risk appetite. This portfolio consists of a blend of quality bluechip and growth stocks ensuring a balanced portfolio with relatively medium risk profile. Investment are selected are to give consistent, steady and sustainable returns. The main features are:

Bottom up stock selection In-depth, independent fundamental research High quality companies with relatively large capitalization Disciplined valuation approach applying multiple valuation measures Medium to long term vision, resulting in low portfolio turnover.

4 Reasons why Sharekhan PMS is more than Management: For any market condition: Choose from our range of PMS products that are designed to perform in any market based on your investment objectives. Exclusive Service: Proactive management of your funds by fund manager; backed by a Central Research team of Analysts and serviced by your dedicated Relationship Manager Performance-Focused: Profit-sharing option with PMS ProTech and not based on churn Convenient Reporting: Regular up-to-date views of portfolio

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Difficult for clients! 1) Tracking the Market is a full time job 2) Judging the impact of the News for sectors & scrip may not be always possible 3) Maintaining the news flow & apply at proper time is difficult 4) Availability of basic Research may not always be possible 5) Basic fund management rules may not be in place like Investment Philosophy, Sector Allocation, Scrip Allocation, etc.

Product Range: ProTech PMS has a range of 4 product schemes to choose from based on your risk-return appetites. You can choose between an automated model and a portfolio managed by our fund managers Stock Market Expertise, Exclusively for you, Ideal Investment Platform for HNIs?? Portfolio Management Services (Growing your Wealth with Sharekhan PMS) PMS Minimum Investment Rs 5 Lakh and a Lock in period for 6 months Sharekhan PMS which are based on
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Fundamental Analysis ProPrime Technical Analysis ProTech & ProTech Diversified

PMS schemes that suit your needs.


PROTECH Diversified: Moderate Risk High Return product PROTECH - Nifty Trifty: Technical Analysis Trading PROPRIME: Investing on Fundamentals

Product Offerings

Pro prime The Balanced Scheme: Ideal for investors looking at steady and superior returns with low to medium risk appetite. This portfolio consists of a blend of quality bluechip and growth stocks ensuring a balanced portfolio with relat vely
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medium risk profile. The portfolio will mostly have large capitalization stocks based on sectors & themes who have medium to long term growth potential.

Product Approach Investment are based on 3 tenets: i] Consistent, steady and sustainable returns ii] Margin of Safety iii Low Volatility ] Product Characteristics Bottom up stock selection In-depth, independent fundamental research

High quality companies with relatively large capitalization. Disciplined valuation approach applying multiple valuation measures Medium to long term vision, resulting in low portfolio turnover

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Product Details

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Ch ar Re ge po s: rti 2. ng 5% : pe On r lin an e nu ac Mi m ce ni AM ss m C Lo to u ch ck po m ar in rtf Inv ge pe oli est Pr d rio o m ofi ev d: hol en t er 6 din t: wit y Mo gs, Rs hd qu nt qu 5 ra art hs at lak wa er, erl hs l in 0. y m 5% re ulti br pe ple ok ort s er ing of ag of 25 e po 00 20 rtf 0 % oli aft pr o er ofi hol loc t din k sh gs/ in ari tra pe ng ns rio aft act d. er ion 15 s

protech.

Nifty Thrifty: Nifty futures are bought and sold on the basis of an automated trading system that generates calls to go long/short. The exposure never exceeds value of portfolio i.e. there is no leveraging; but being short in Nifty allows you to earn even in falling markets and there by generateslinear Product Approach
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Superior performance can be achieved through sheer market timing, by picking Stocks/Nifty before the infection points in their trading cycles Linear returns are possible from having sell market positions in downtrends and by using the options market to change the portfolio beta Money management rules will be in place. Product Characteristics Using swing based index -trading systems, stop and reverse, trend following and momentum trading techniques. Nifty based products for low impact cost and low product volatity. Both long anf short strategies to earn returns even in falling markets. The use of options to enchance the risk reward profile of the product and therefore offer a higher Beta.

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Product Details

> Minimum Investment: Rs 5 lakhs > Lock in: 6 months > AMC fees:0% --------------------------------------------------> Reporting: Monthly reporting of transactions, brokerage 0.05% for derivatives, 20% profit sharing on booked profits on quaterly basis. > Profit withdrawal in multiples of 25000 after lock in period.

Beta Portfolio: Positional trading opportunities are identified in the futures segment based on technical analysis. Inflection points in the momentum cycles are identified to go long/short on stock/index
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futures with 1-2 month time horizon. The idea is to generate the best possible returns in the medium term irrespective of the direction of the market without really leveraging beyond the portfolio value. Risk protection is done based on stop losses on daily closing prices.

STAR Nifty: Swing trading techniques and Dow theory is used to identify short term reversal levels for Nifty futures and ride with the trend both on the long & short side. Thus returns can be earned in bull&bear markets. Stop & reverse ones position from long to short or short to long at reversal level simultaneously. The exposure never value of portfolio i.e there is no leveraing.

Trailing Stops:
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Momentum trading techniques are used to spot short term momentum of 5-10 days in stocks and stocks/index futures. Trailing stop loss method of risk management or profit protection is used to lower the portfolio volitality and maximize returns.Trading opportunities are explored both on the long and the short side as the market demands to get the best of both upwards & downward trends.

Product Approach > Superior performance can be achieved through sheer market timing, by picking Stocks/Nifty before the infection points in their trading cycles > Linear returns are possible from having sell market positions in downtrends and by using the options market to change the portfolio beta > Money management rules will be in place. Product Characteristics > Using swing based index -trading systems, stop and reverse, trend following and momentum trading techniques. > Nifty based products for low impact cost and low product volatity. > Both long anf short strategies to earn returns even in falling markets. > The use of options to enchance the risk reward profile of the
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product and therefore offer a higher Beta.

Product Details

> Minimum Investment: Rs 5 lakhs > Lock in: 6 months > AMC fees:0% --------------------------------------------------67

> Reporting: Monthly reporting of transactions, brokerage 0.05% for derivatives, 20% profit sharing on booked profits on quaterly basis. > Profit withdrawal in multiples of 25000 after lock in period.

ShareMobile Sharekhan, one of India's leading brokerage houses, is the retail arm of SSK With over 510 share shops in 170 cities, and India's premier online trading portal, our customers enjoy multi-channel access to the stock markets.

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Sharekhan launchs ShareMobile, an exclusive live streaming quotes and trading facility for its online trading customers Next time when you are on move, you need not worry about your favourite stocks price movement. You can carry stock market terminal with you anywhere anytime. Special offer- 3 month free trial usage for all Sharekhan trading customers. Contact Silicon for details. Prerequisites for ShareMobile are Java enabled Mobile Handset. GRPS connection - For getting a GPRS connection, get in touch with your Service provider. ShareMobile will not work if Your Mobile Handset does not support JAVA Applications. If user has WAP connection of BPL (Also known as BPL WAP connection or MMS Pack) For all Reliance Mobile Users

SHAREKHANS SERVICES

Sharekhan is one of India's leading financial services companies. We provide a complete life-cycle of investment solution in Equities, Derivatives, Commodities, IPO, Mutual Funds, Depository Services,
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Portfolio Management Services and Insurance. We also offer personalized wealth management services for High Networth individuals.With a physical presence in over 300 cities of India through more than 800 "Share Shops", and an online presence through Sharekhan.com, India's premier online destination, we reach out to more than 800,000 trading customers.

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Chapter 3 Literature review

PORTFOLIO MANGEMNT SERVICES (PMS)


Portfolio (finance) means a collection of investments held by an institution or a private individual. Holding a portfolio is often part of
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an investment and risk-limiting strategy called diversification. By owning several assets, certain types of risk (in particular specific risk) can be reduced. There are also portfolios which are aimed at taking high risks these are called concentrated portfolios. Investment management is the professional management of various securities (shares, bonds etc) and other assets (e.g. real estate), to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds). The term asset management is often used to refer to the investment management of collective investments, whilst the more generic fund management may refer to all forms of institutional investment as well as investment management for private investors. Investment managers who specialize in advisory or discretionary management on behalf of (normally wealthy) private investors may often refer to their services as wealth management or portfolio management often within the context of so-called "private banking". The provision of 'investment management services' includes elements of financial analysis, asset selection, stock selection, plan implementation and ongoing monitoring of investments. Outside of the financial industry, the term "investment management" is often applied to investments other than financial instruments. Investments are often meant to include projects, brands, patents and many things other than stocks and bonds. Even in this case, the term implies that rigorous financial and economic analysis methods are used.

The SEBI (portfolio managers) Rules, 1993 defines the term Portfolio as total holding of securities belonging to any
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person. As a matter of fact, portfolio is combination of assets the outcomes of which cannot be defined with certainty new assets could be physical assets, real estates, land, building, gold etc. or financial assets like stocks, equity, debenture, deposits etc. Portfolio management refers to managing efficiently the investment in the securities held by professional for others. Merchant banker and the portfolio management with a view to ensure maximum return by such investment with minimum risk of loss of return on the money invested in securities held by them for their clients. The aim Portfolio management is to achieve the maximum return from a portfolio, which has been delegated to be managed by manger or financial institution. There are lots of organization in the market on the lookout for the people like you who need their portfolios managed for them .They have trained and skilled talent will work on your money to make it do more for you. Therefore, if any investors still insist on managing their own portfolio, then ensure you build discipline into their investment. Work out their strategy and stand by it. PMS

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Need of PMS

While selecting Portfolio management service (PMS) over mutual funds services it is found that portfolio managers offer some very services which are better than the standardized product services offered by mutual funds managers. Such as: Asset Allocation: Asset allocation plan offered by Portfolio management service PMS helps in allocating savings of a client in terms of stocks, bonds or equity funds. The plan is tailor made and is designed after the detailed analysis of client's investment goals, saving pattern, and risk taking capacity. Timing: portfolio managers preserve client's money on time. Portfolio management service PMS help in allocating right amount of money in right type of saving plan at right time. This means, portfolio manager provides their expert advice on when his client should invest his money in equities or bonds and when he should take his money out of a particular saving plan. Portfolio manager analyzes the market and provides his expert advice to the client regarding the amount of cash he should take out at the time of big risk in stock market. Flexibility: portfolio managers plan saving of his client according
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to their need and preferences. But sometimes, portfolio managers can invest client's money according to his preference because they know the market very well than his client. It is his client's duty to provide him a level of flexibility so that he can manage the investment with full efficiency and effectiveness. In comparison to mutual funds, portfolio managers do not need to follow any rigid rules of investing a particular amount of money in a particular mode of investment. Mutual fund managers need to work according to the regulations set up by financial authorities of their country. Like in India, they have to follow rules set up by SEBI. MYTH S ABOUT PMS There are two most common myths found about Portfolio Management Services (PMS) Which we found among most of the Investors. They are as follows. Myth No. 1: PMS and Mutual Fund are Similar as the investment option As in the Finance Basket both the PMS and Mutual Fund are used for minimizing risk and maximize the profit of the Investors. The objectives are similar as in both the product but they are different from each other in certain aspects. They are as follows. Management Side
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In PMS, its ongoing personalized access to professional money management services.Whereas, in Mutual fund gives personalize access to money. Customization In PMS, Portfolio can be tailored to address each investor's specific needs. Whereas in Mutual Fund Portfolio structured to meet the fund's stated investment objectives. Ownership In PMS, Investors directly own the individual securities in their portfolio, allowing for tax Management flexibility whereas in Mutual Fund Shareholders own shares of the fund and cannot influence buy and sell decisions or control their exposure to incurring tax liabilities. Liquidity In PMS, managers may hold cash; they are not required to hold cash to meet redemptions, whereas, Mutual funds generally hold some cash to meet redemptions . Minimums PMS generally gives higher minimum investments than mutual funds. Generally, minimum ranges from: Rs. 1 Crore + for Equity
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Options Rs. 5 Crore + for Fixed Income Options Rs. 20 Lacs + for Structured Products, whereas in Mutual Fund Provide ongoing, personalized access to professional money management services. Flexibility PMS is generally more flexible than mutual funds. The Portfolio Manager may move to 100% cash if it required. The Portfolio Manager may take his own time in building up the portfolio. The Portfolio Manager can also manage a portfolio with disproportionate allocation to select compelling opportunities whereas, in Mutual Fund comparatively less flexible. Myth No. 2: PMS is more Risk free than other Financial Instrument In Financial Market Risk factor is common in all the financial products, but yes it is true that Risk Factor vary from each other due to its nature. All investments involve a certain amount of risk, including the possible erosion of the principal amount invested, which varies depending on the security selected. For example, investments in small and mid-sized companies tend to involve more risk than investments in larger companies.

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These services are backed by quality investment advice from an experienced research team which offers investment and trading ideas based on fundamental and technical research respectively, market related news, statistical information on equities, commodities, mutual funds, IPOs and much more. Sharekhan is a member of the Bombay Stock Exchange, the National Stock Exchange and the countrys two leading commodity exchanges, the NCDEX and MCX. Sharekhan is also registered as a depository participant with National Securities Depository and Central Depository Services.

PORTFOLIO CONSTRUCTION The Portfolio Construction of Rational investors wish to maximize the returns on their funds for a given level of risk. All investments possess varying degrees of risk. Returns come in the form of income, such as interest or dividends, or through growth in capital values (i.e. capital gains). The portfolio construction process can be broadly characterized as comprising the following steps: 1. Setting objectives.
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The first step in building a portfolio is to determine the main objectives of the fund given the constraints (i.e. tax and liquidity requirements) that may apply. Each investor has different objectives, time horizons and attitude towards risk. Pension funds have long-term obligations and, as a result, invest for the long term. Their objective may be to maximize total returns in excess of the inflation rate. A charity might wish to generate the highest level of income whilst maintaining the value of its capital received from bequests. An individual may have certain liabilities and wish to match them at a future date. Assessing a clients risk tolerance can be difficult. The concepts of efficient portfolios and diversification must also be considered when setting up the investment objectives. 2. Defining Policy. Once the objectives have been set, a suitable investment policy must be established. The standard procedure is for the money manager to ask clients to select their preferred mix of assets, for example equities and bonds, to provide an idea of the normal mix desired. Clients are then asked to specify limits or maximum and minimum amounts they will allow to be invested in the different assets available. The main asset classes are cash, equities, gilts/bonds and other debt instruments, derivatives, property and overseas assets. Alternative investments, such as private equity, are also growing in popularity, and will be discussed in a later chapter. Attaining the optimal asset mix over time is one of the key factors of successful investing. 3. Applying portfolio strategy. At either end of the portfolio management spectrum of strategies are active and passive strategies. An active strategy involves predicting trends and changing expectations about the likely future performance of the various asset classes and actively dealing in and out of investments to seek a better performance. For example, if the manager expects interest rates to rise, bond prices are likely to fall and so bonds should be sold, unless this expectation is already
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factored into bond prices. At this stage, the active fund manager should also determine the style of the portfolio. For example, will the fund invest primarily in companies with large market capitalizations, in shares of companies expected to generate high growth rates, or in companies whose valuations are low? A passive strategy usually involves buying securities to match a preselected market index. Alternatively, a portfolio can be set up to match the investors choice of tailor-made index. Passive strategies rely on diversification to reduce risk. Outperformance versus the chosen index is not expected. This strategy requires minimum input from the portfolio manager. In practice, many active funds are managed somewhere between the active and passive extremes, the core holdings of the fund being passively managed and the balance being actively managed. 4. Asset selections . Once the strategy is decided, the fund manager must select individual assets in which to invest. Usually a systematic procedure known as an investment process is established, which sets guidelines or criteria for asset selection. Active strategies require that the fund managers apply analytical skills and judgment for asset selection in order to identify undervalued assets and to try to generate superior performance. 5. Performance assessments. In order to assess the success of the fund manager, the performance of the fund is periodically measured against a preagreed benchmark perhaps a suitable stock exchange index or against a group of similar portfolios (peer group comparison). The portfolio construction process is continuously iterative, reflecting changes internally and externally. For example, expected movements in exchange rates may make overseas investment more
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attractive, leading to changes in asset allocation. Or, if many largescale investors simultaneously decide to switch from passive to more active strategies, pressure will be put on the fund managers to offer more active funds

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Objective of PMS
There are the following objectives which are full filled by Portfolio Management Services.

1. Safety Of Fund: The investment should be preserved, not be lost, and should remain in the returnable position in cash or kind.

2. Marketability: The investment made in securities should be marketable that means, the securities must be listed and traded in stock exchange so as to avoid difficulty in their encashment.

3.Liquidity: The portfolio must consist of such securities, which could be encashed without any difficulty or involvement of time to meet urgent need for funds. Marketability ensures liquidity to the portfolio.

4.Reasonable return: The investment should earn a reasonable return to upkeep the declining value of money and be compatible with opportunity cost of the money in terms of current income in the form of interest or dividend.

5. Appreciation in Capital: The money invested in portfolio should grow and result into capital gains.

6. Tax planning: 82

Efficient portfolio management is concerned with composite tax planning covering income tax, capital gain tax, wealth tax and gift tax.

7. Minimize risk: Risk avoidance and minimization of risk are important objective of portfolio management. Portfolio managers achieve these objectives by effective investment planning and periodical review of market, situation and economic environment affecting the financial market.

Types of assets
The structure of a portfolio will depend ultimately on the investors objectives and on the asset selection decision reached. The portfolio structure takes into account a range of factors, including the investors time horizon, attitude to risk, liquidity requirements, tax position and availability of investments. The main asset classes are cash, bonds and other fixed income securities, equities, derivatives, property and overseas assets.

Cash and cash instruments


Cash can be invested over any desired period, to generate interest income, in a range of highly liquid or easily redeemable instruments, from simple bank deposits, negotiable certificates of deposits, commercial paper (short term corporate debt) and Treasury bills (short term government debt) to money market funds, which actively manage cash resources across a range of domestic and foreign markets. Cash is normally held over the short term pending use elsewhere (perhaps for paying claims by a non-life insurance company or for paying pensions), but may be held over the longer term as well. Returns on cash are driven by the general demand for
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funds in an economy, interest rates, and the expected rate of inflation. A portfolio will normally maintain at least a small proportion of its funds in cash in order to take advantage of buying opportunities. Bonds Bonds are debt instruments on which the issuer (the borrower) agrees to make interest payments at periodic intervals over the life of the bond this can be for two to thirty years or, sometimes, in perpetuity. Interest payments can be fixed or variable, the latter being linked to prevailing levels of interest rates. Bond markets are international and have grown rapidly over recent years. The bond markets are highly liquid, with many issuers of similar standing, including governments (sovereigns) and state-guaranteed organizations. Corporate bonds are bonds that are issued by companies. To assist investors and to help in the efficient pricing of bond issues, many bond issues are given ratings by specialist agencies such as Standard & Poors and Moodys. The highest investment grade is AAA, going all the way down to D, which is graded as in default. Depending on expected movements in future interest rates, the capital values of bonds fluctuate daily, providing investors with the potential for capital gains or losses. Future interest rates are driven by the likely demand/ supply of money in an economy, future inflation rates, political events and interest rates elsewhere in world markets. Investors with short-term horizons and liquidity requirements may choose to invest in bonds because of their relatively higher return than cash and their prospects for possible capital appreciation. Long-term investors, such as pension funds, may acquire bonds for the higher income and may hold them until redemption for perhaps seven or fifteen years. Because of the greater risk, long bonds (over ten years to maturity) tend to be more volatile in price than medium- and shortterm bonds, and have a higher yield. Equities
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Equity consists of shares in a company representing the capital originally provided by shareholders. An ordinary shareholder owns a proportional share of the company and an ordinary share carries the residual risk and rewards after all liabilities and costs have been paid. Ordinary shares carry the right to receive income in the form of dividends (once declared out of distributable profits) and any residual claim on the companys assets once its liabilities have been paid in full. Preference shares are another type of share capital. They differ from ordinary shares in that the dividend on a preference share is usually fixed at some amount and does not change. Also, preference shares usually do not carry voting rights and, in the event of firm failure, preference shareholders are paid before ordinary shareholders. Returns from investing in equities are generated in the form of dividend income and capital gain arising from the ultimate sale of the shares. The level of dividends may vary from year to year, reflecting the changing profitability of a company. Similarly, the market price of a share will change from day to day to reflect all relevant available information. Although not guaranteed, equity prices generally rise over time, reflecting general economic growth, and have been found over the long term to generate growing levels of income in excess of the rate of inflation. Granted, there may be periods of time, even years, when equity prices trend downwards usually during recessionary times. The overall longterm prospect, however, for capital appreciation makes equities an attractive investment proposition for major institutional investors Derivatives Derivative instruments are financial assets that are derived from existing primary assets as opposed to being issued by a company or government entity. The two most popular derivatives are futures and options. The extent to which a fund may incorporate derivatives products in the fund will be specified in the fund rules and, depending on the type of fund established for the client and depending on the client, may not be allowable at all. A futures contract is an agreement in the form of a standardized
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contract between two counterparties to exchange an asset at a fixed price and date in the future. The underlying asset of the futures contract can be a commodity or a financial security. Each contract specifies the type and amount of the asset to be exchanged, and where it is to be delivered (usually one of a few approved locations for that particular asset). Futures contracts can be set up for the delivery of cocoa, steel, oil or coffee. Likewise, financial futures contracts can specify the delivery of foreign currency or a range of government bonds. The buyer of a futures contract takes a long position, and will make a profit if the value of the contract rises after the purchase. The seller of the futures contract takes a short position and will, in turn, make a profit if the price of the futures contract falls. When the futures contract expires, the seller of the contract is required to deliver the underlying asset to the buyer of the contract. Regarding financial futures contracts, however, in the vast majority of cases no physical delivery of the underlying asset takes place as many contracts are cash settled or closed out with the offsetting position before the expiry date. An option contract is an agreement that gives the owner the right, but not obligation, to buy or sell (depending on the type of option) a certain asset for a specified period of time. A call option gives the holder the right to buy the asset. A put option gives the holder the right to sell the asset. European options can be exercised only on the options expiry date. US options can be exercised at any time before the contracts maturity date. Option contracts on stocks or stock indices are particularly popular. Buying an option involves paying a premium; selling an option involves receiving the premium. Options have the potential for large gains or losses, and are considered to be high-risk instruments. Sometimes, however, option contracts are used to reduce risk. For example, fund managers can use a call option to reduce risk when they own an asset. Only very specific funds are allowed to hold options.

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Advantages of Stocks Trading 1. Better returns


Actively trading stocks can produce better overall returns than simply buying and holding.

2. Huge Choice
There are thousands of stocks listed on markets around the world. There is always a stock whose price is moving - its just a matter of finding them.

3. Familiarity
The most traded stocks are in the largest companies that most of us have heard of and understand - Microsoft, IBM, and Cisco etc.
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Disadvantages of Stocks Trading 1. Leverage


With a margined account the maximum amount of leverage available for stock trading is usually 4:1. Meaning a $25,000 could trade up to $100,000 of stock. This is pretty low compared to Forex trading or futures trading. 2. Pattern Day Trader Rules It requires at least $25,000 to be held in a trading account if the trader completes more than 4 trades in a 5 day period. No such rule applies to Forex trading or futures trading. 3. Uptick Rule on Short Selling A trader must wait until a stock price ticks up before they can short sell it. Again there are no such rules in Forex trading or futures
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trading where going short are as easy as going long. 4. Need to Borrow Stock to Short Stocks are physical commodities and if a trader wishes to go short then the broker must have arrangements in place to borrow that stock from a shareholder until the trader closes their position. This limits the opportunities available for short selling. Contrast this to futures trading where selling is as easy as buying. 5. Costs Although online trading costs for stock trading are low they still add considerably to the costs of day trading. Online futures trading are about 1/4 of the cost for the equivalent value. In the UK 0.5% stamp duty is also levied on all share purchases making trading virtually impossible, hence the popularity of spread betting.

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Chapter 4 Research methodology

OBJECTIVE OF THE PROJECT Each research study has its own specific purpose.It is like to discover to question through the application of scientific procedure. But the main aim of our research to find out the truth that is hidden and which has not been discover as yet. Our research study has two objectives. OBJECTIVES To know the concept Portfolio management. To know about the schemes offered by the different insurance companies, new IPOs , Mutual funds. To know depth about Insurance, Mutual funds, Stock, Bonds etc. To know about awareness towards stock brockers and
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share market. To study about competitive position of Sharekhan Ltd. In Comparative market.

To study about the effectiveness & efficiency of Sharekhan ltd. In relation to its competitors.

To study about whether people are satisfied with Sharekhan Services & Management System or not. To study about the difficulties faced by persons while Trading in Sharekhan. To study about the need of improvement in existing Trading System.

RESEARCH DESIGN OF THE STUDY


This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones.

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The study consists of analysis about Investors Perception about the Portfolio Management Services offered by Sharekhan Limited. For the purpose of the study 100 customers were picked up at random and their views solicited on different parameters. The methodology adopted includes Questionnaire Random sample survey of customers Discussions with the concerned

SOURCES OF DATA 1) Primary data: Ques tio n n air e 2) Secondary data: Published materials of Sharekhan Limited. Such as periodicals, journals, news papers, and website.

Data collection tools

Sampling:
Since Share khan Limited has many segments I selected Portfolio Management Services (PMS) segment as per my profile to do market research. 100% coverage was difficult within the limited period of
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time. Hence sampling survey method was adopted for the purpose of the study.

Population:
(Universe) customers & non consumers of Share khan limited Sampling size: A sample of hundred was chosen for the purpose of the study. Sample consisted of Investor as based on their Income and Profession as well as Educational Background. Sampling Methods: Probability sampling requires complete knowledge about all sampling units in the universe. Due to time constraint non-probability sampling was chosen for the study. Sampling procedure: From large number of customers & non consumers sample lot were randomly picked up by me.

Field Study:
Directly approached respondents by the following strategies
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Tele-calling Personal Visits Clients References Promotional Activities Database provided by the Share khan Limited. Research Area Duration of study The study was carried out for the period of 4 weeks from 29th nov. 2010 to 1 jan.2011

LIMITATION OF THE PROJECT As only bharuch was dealt in the survey so it does not represent the view of the total Indian market.
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The sample size was restricted with hundred respondents.

There was lack of time on the part of respondent. There may be biasness in information by market participants. COMPLETE DATA WAS NOT AVAILABLE DUE TO COMPANY PRIVACY AND SECRECY.

Chapter 5 Data Analysis and Interpretation


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1.Do u know about the Investment Option available?


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Interpretation As the above table shows the knowledge of investors out of 100 respondents carried throughout the bharuch area is only 85%. The remaining 15% take his/her residential property as an investment. According to law purpose this is not an investment because of it is not create any profit for the owner. The main thing in 2009-10 PMS has given best result 127% return to their customer because at that time market was jump from 7000 to 19000 so this huge return was given to customer. But in 2010 return rate is only 27% so it all is depend on market.

2. What is the basic purpose of your investment?

Interpretation As the above analysis , it is found 75% people are interested in liquidity , returns and tax benefit. And remaining 25% are interested in capital appreciation. Risk covering, and others. In the entire respondent it is common that this time every one is looking for
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minimizing the risk and maximizing their profit with the short time of period. As explaining them about Portfolio Management Services of Sharekhan, they were quite interested in Protech Services.

3. What is the mist important factor you consider at that time of investment?

Interpretation As the above analysis gives the clear idea that most of the investor considered the market factor as around 12% for risk and 23% return, but most important common things in all are that they are even ready for taking both Risk and Return in around 65% investor.

4. From which option you will get best return?

Interpretation Most of respondent say they will they get more return in share market. Since share market is said to be the best place to invest to get more returns. The risk in the investment is also high.
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Similarly, The investor are more Interested in Investing their money in mutual fund schemes as that is also very important financial product due to its nature of minimizing risk and maximizing the profit. As the commodities market is doing well from last few months so investor also prefer to invest their money in commodities market basically in GOLD nowdays. Moreover, even who dont want to take Risk they are looking for investing in fixed Deposits for long period of time.

5. Investing in PMS is far safer than Investing in Mutual Fund . Do you agree?

Interpretation In the above graphs its clear that 24% of respondent out of hundred feel that investing their money in Mutual Fund Schemes are far safer than Investing in PMS. This is because of the lack of proper information about the Portfolio Management Services as the basis is same for the mutual fund and PMS but the investment pattern is totally different from each other and which depends upon different risk factor available in both the Financial Products.

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6. How much you carry the expectation in Rise of your Income from Investment?

Interpretation The optimism is shown in the attitude of the respondents. The confidence was appreciable with which they are looking forward to a rise in their investment. Major part of the sample feels that the rise would be of around 15%. Only 8% of the respondents were confident enough to expect a rise of upto 35%. As all the respondents were considering the Risk factor also before filling the questionnaire and they were asking about the performance report of all the PMS services offered by Sharekhan Limited.

7. If you invested in Share Market, What has been your experience?

Interpretation In the customer survey 28% of the respondents have invested in share market for received satisfactory result, 8% of the respondents
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have invested in share market for burned finger. 17% feel unsatisfactory result in investing share market. Some of the investors face problems due to less knowledge about the market. Some of the respondents dont have complete overview of the happening and invest their money in wrong share which result in Loss. This is the reason most of the respondent prefer Portfolio Management Services to trade now a days, which gives the Investors the clear idea when is the right to buy and right time to sell the share which is recommended by their Fund Manager.

8. How do you trade in Share Market?

Interpretation As we know that Share Market is totally based on psychological parameters of the Investors, which changed as per the market condition, but at the same time the around 45% investor trade on the basis of speculation and 31% depend upon Investment option Bonds, Mutual Funds etc. Moreover, the now days Hedging is most common derivatives tools which is used by the Investors to get more return from the Market, this is mostly used in the Commodities Market.

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9. How do you manage your Portfolio?

Interpretation About 57% of the respondents say they themselves manage their portfolio and 43% of the respondents say they depends on the security company for portfolio management. 43% of the respondents prefer PMS of the company because they dont have to keep a close eye on their investment; they get all the information time to time from their Fund manager. Moreover, talking about the Sharekhan PMS services they are far satisfied with the protech and proprime performance during last year. They are satisfied with the quick and active services of Sharekhan customer services where, they get the updated knowledge about the scrip detail everyday from their Fund Manager.

10. If you trade with Sharekhan Limited then why?

Interpretation

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As the above research shows the reasons and parameters on which investors lie on Sharekhan and they do the trade. Among hundred respondents 35% respondents do the trade with the company due to in research Report, 28% based on Brockerage rate whereas 22% are happy with its Services. Last but not least, 15% respondents are depends upon the tips of Sharekhan which gives them idea where to invest and when to invest.

11. Are you using Portfolio Management Services (PMS) of Sharekhan?

Interpretation As talking about the Investment option, in most of clients it was common that they know about the option but as the PMS of Sharekhan have different Product offering, Product Characteristics and the Investments amount is also different this makes the clients to think differently. It is found that 56% of Sharekhan clients where using PMS services as for their Investment Option.
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12. Which Portfolio Type you preferred?

Interpretation The above analysis shows, in which portfolio the investors like to deal more in PMS. As 45% investors likes to go for Equity Portfolio and 28% with Balanced Portfolio, whereas around 27% investors like to go for debt portfolio.

13. How was your experience about Portfolio Management Services (PMS) of Sharekhan Limited?

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Interpretation In the above analysis I is clear that the investor have the good and the bad experience both with the Sharekhan PMS services. In the current scenario 52% of the Investors earned, whereas around 18% have to suffer losses in the market. Similarly 30% of the respondents are there in breakeven point (BEP), where no loss and no profit.

14. Does Sharekhan Limited keep it PMS process Transparent?

Interpretation The above analysis is talking about the Sharekhan Transparency of their PMS services. In hundred respondents 63% said that they get all the information about their scrip buying and selling information day by day. Where as 37% of respondent are not satisfied with the PMS information and Transparency because they dont get any type of extra services in PMS as they were saying.

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15. Do you recommend Sharekhan PMS to others?

Interpretation The above analysis shows the investor perception toward the Sharekhan PMS as on the basis of their good and bad experience with Sharekhan Limited. Among hundred respondents 86% respondents were agree to recommend the PMS of Sharekhanto their peers, relatives etc.

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Chapter 6 FINDINGS

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FINDINGS About 85% Respondents knows about the Investment Option, because remaining 15% take his/her residential property as Investment, but in actual it not an investment philosophy carries that all the Investments does not creat any profit for the owner.

More than 75% Investors are investing their money for Liquidity, Return and Tax benefits.

At the time if Investment the Investors basically considered the both Risk and Return in more percentage around 65%.

As among all Investment Option for Investor the most important area to get more return is share around 22% after that Mutual Fund and other comes into existence. More than 76% of Investors feels that PMS is less risky than investing money in Mutual Funds. As expected return from the market more than 48% respondents expect the rise Income more than 15%, 32% respondents are expecting between 15-20% return. As the experience from the market more than 34% Investor had lose their money during the year, whereas 23% respondents have got satisfied return.
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About 45% respondents do the trade in the market with Derivatives Tools Speculation compare to 24% though hedging. And the rest 31% Trade their money in Investment. Around 57% residents manage their Portfolio through the different company where as 43% Investors manage their Portfolio themselves. The most important reasons for doing trade with Sharekhan Limited is Sharekhan Research Department than its Brokerage rate Structure. Out of hundred respondents 56% respondents are using Sharekhan PMS services. Investors preferred more than 45% equity Portfolio, 28% Balanced Portfolio and about 27% Debt Portfolio with Sharekhan PMS. About 52% Respondents earned through Sharekhan PMS product, whereas 18% investors faced loses also.

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Chapter 7 Conclusion and Suggestions

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Suggestions The company should also organize seminars and similar activities to enhance the knowledge of prospective and existing customers, so that they feel more comfortable while investing in the stock market. Investors accounts must be more Transparent as compare to other companies.

Sharekhan Limited must try to Promote more its Portfolio Management Services through Advertisement.

Sharekhan needs to improve more its Customer Services.

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There is need to change in lock in period in all three PMS i.e. Protech, Proprime, Pro Arbitrage.

Sharekhan limited must improve the level of its employee satisfaction.

Sharekhan limited have to reinforce their employees and executives.

Conclusion On the basis of the study it is found that Sharekhan Ltd is better services provider than the other stockbrokers because of their timely research and personalized advice o what stocks to buy and sell. Sharekhan Ltd. provides the facility of Trade Tiger as well as relationship manager facility for encouragement and protects the interest of the investors. It also provides the information through the internet and mobile alerts that what IPOs are coming in the market and it also provides Its research on the future prospect of the IPO. We can conclude the following with above analysis. Sharekhan Ltd. Has better Portfolio Management Services than other companies. It keeps its process more transparent.
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It charges are less than other Portfolio Management Services. It provides daily updates about the stock information. Investors are looking for those investment options where they get maximum return with less return. Market is becoming complex & it means than the individual investors will not have the time to play stock game on his own. People are not so much were aware about the Investment Option available in the Market.

Chapter 8 Bibliography

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BIBLIOGRAPHY WEB SITES USED I. www.sharekhan.com II. www.sebi.gov.in


III.

www.moneycontrol.com
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IV.www.karvy.com V. www.valueresearchonline.com VI.www.yahoofinance.com VII.www.theeconomist.com VIII.www.nseindia.com IX.www.bseindia.com X. www.thehindubusinessline.com

BOOK REFERRED value guide by Sharekhan. Investors eyes by Sharekhan. Business world.

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Chapter 9 Annexure

ANNEXURE QUESTIONNAIRE

NAME .
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AGE OCCUPATION PHONE NO. .

1.Do you know about the investments option available? A) yes B) no

2. What is the basis purpose of your investments? A) Liquidity B) Return C) Tax Benefit D) Risk covering E) Capital Appreciation F) Others

3. What is the most important factor you consider at the time of investment? A) Risk B) Return C) Both

4) From which option you will get the best return? A) Mutual Fund D) Bonds B) shares c) Commodities Market F) property G) others

E) Fixed Deposits
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5) Investing in PMS is far safer than Investing in Mutual Fund Do you agree? A) yes B) no

6) How much you carry the expectation in Rise of your income from Investment? A) Upto 15% 35% 7) If you invested in share market, what has been your experience? A) Satisfactory Return C) Unsatisfactory Result B) Burned Finger D) No B) 15-25% C) 25-35% D) More than

8) Hoe do you trade in share market? A) hedging B) Speculation c) Investment

9) How do you manage your Portfolio? A) self Portfolio 10) If you trade with Sharekhan limited then why? A) Research B) Brokerage
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B) Depends of the company for

C) Services

D) Investment tips

11) Are you using Portfolio Management Services (PMS)of Sharekhan? A) yes B) no

12) Which Portfolio type you preferred? A) Equity B) Debt C)Balanced

13) How was your experience about Portfolio Management Services of Sharekhan limited? A) Earned B) faced loss C) No profit No loss

14) Does Sharekhan Limited keep it process Transparent? A) Yes B) No

15) Do you recommend Sharekhan PMS to others? A) Yes B) No

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