I.BBA ( 2009-2012 BATCH)

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What is the Stock Market ?
The Stock Market refers to equities where actually stocks and derivatives are traded. In the Indian context, all trading in stocks happens in one of the major two exchanges : NSE and BSE. The Indian stock markets has evolved and it has become relatively easy to invest in shares of Indian companies with the advent of dematerialisation, reduction in market lots and the growth of online stock trading. The Stock Market is akin to a marketplace where buyers and sellers of a company's share come together and transact the share of the company. Money flows from the buyer to the seller and the shares are transferred from the seller to the buyer. However, there is a lot of intricacies involved in investing in the stock markets of any country and more so in the Indian Stock Markets due to the large number of listed companies which can easily confuse the lay investor. Stock Marketing investing is not for the faint hearted as it can lead to huge losses if the investor has not done the necessay homework to understand the nuances of stock market investments. Finally, there is a well known saying in the stock markets : "Tread with caution...always !".

What Is An IPO ?
An IPO is an Initial Pubic Offering. In effect, an IPO takes a private company public. It is also a means for an existing company listed on one of the exchanges to spin off or create a new company from its parent company.

Reasons For Floating An IPO
The most obvious reason for a private company to enter the public market is raising immediate liquid assets by way of offering shares in the company. A company may need to generate money to drive it's expansion plans and combat competitition. There have been some bad apples in the IPO offerings in the Indian Stock Market history.  Generally, companies start floating Initial Public Offerings (IPO) when the stock markets are at a high and the public appetite for shares of companies are also at a high. However, precautions need to be taken in such situations as the general public is most vulnerable in these times.  It is at these times that the stock market regulators like the Securities Exchange Board Of India (SEBI) should take care of the investors through appropriate investor awareness programs.  Corporate India needs to take note of such unwanted spikes in IPOs and protect investors from the pitfalls.  The IPO, however still remains the prefered vehicle for new investors to get into the stock markets and it can prove to be beneficial only if investors pick the right Initial Public Offerings (IPOs) to participate and make a decent return on their investments

Dematerialization of Shares
As you may be aware that the shares of MFL are under compulsory dematerialization (demat) segment of trading as per SEBI directives.   This means, MFL shares can be purchased / sold at the Stock Exchanges only in demat form.   Shareholders are therefore advised to avail the demat facility.  

Dematerialization - Meaning
Dematerialisation is the process of converting physical share certificates into electronic form i.e. crediting of equivalent number of shares to your depository account electronically.

Depository Account
For dematerialisation of shares you have to open a depository account with a Depository Participant (DP) having connectivity with National Securities Depository Ltd (NSDL) / Central Depository Services (I) Ltd (CSDL).     You are free to open an account with any of the DPs for demat.  

Advantages of share investment
1.Capital Appreciation  2. Bonus shares:  3. Dividend earnings  4. Diversify Portfolio  5. Long term benefits and return on investment:  6. Simple and easy method to purchase and trade:  7. Easily cashable  8.lucrative and simple methods of investment. 

Disadvantages in share investment
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High returns involves High Risk  Share prices fluctuate a lot, which short term oriented investors find very distressing. Some companies go broke, and due to the occasional dishonest auditor you won't be able to see it coming. Therefore you need to diversify a lot, though this is easy to do since you can buy small amounts of shares. Shares require analysis and hard work if you are going to do better than average. Achieving high returns above the inflationary rate, in these times property may not provide superior returns.


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The Bombay/Mumbai Stock Exchange Limited (formerly, The Stock Exchange, Mumbai; popularly called The Bombay/Mumbai Stock Exchange, or BSE) is the oldest stock exchange in Asia and has the greatest number of listed companies in the world, with 4700 listed as of August 2007. It is located at Dalal Street, Mumbai, India. BSE Online Trading System (BOLT) which is the online trading system of the exchange. On 31 December 2007, the equity market capitalization of the companies listed on the BSE was US$ 1.79 trillion, making it the largest stock exchange in South Asia and the 12th largest in the world. With over 4700 Indian companies list on the stock exchange and it has a significant trading volume. The BSE SENSEX (SENSitive indEX), also called the "BSE 30", is a widely used market index in India and Asia. Though many other exchanges exist, BSE and the National Stock Exchange of India account for most of the trading in shares in India. Hours of operation Beginning of the Day Session....8:00 - 9:00 Login Session....9:00 - 9:30 Trading Session....9:55 - 15:30 Position Transfer Session....15:30 - 15:50 Closing Session....15:50 - 16:05 Option Exercise Session....16:05 - 16:35 Margin Session....16:35 - 16:50 Query Session....16:50 - 17:35 End of Day Session....17:35 The hours of operation for the BSE quoted above are stated in terms of the local time in Mumbai, India (also known as Bombay). This translates into a standard time zone UTC/GMT +5:30. BSE's normal trading sessions are on all days of the week except Saturdays, Sundays and holidays declared by the Exchange in advance

Top 30 companies in sensex as on 20th December 2008
ACC BHEL Bajaj Auto Bharti Tele Cipla  Dr Reddys Labs Grasim Ind Guj Ambuja Cem HDFC HDFC Bank  HLL Hero Honda Hindalco   ICICI Bank ITC Infosys Larsen & Tubro Maruti Udyog  NTPC  ONGC  Ranbaxy Labs Reliance Ind Reliance Energy  SBI  Satyam Computers TCS  Tata Motors Tata Power  Tata Steel  Wipro 


The National Stock Exchange of India Limited (NSE), is a Mumbaibased stock exchange and is well known for its technological advancements. NSE began it's operations with the Wholesale Debt Market segment in June 1994 and the equity segment commenced operations in November 1994. It is the largest stock exchange in India in terms of daily turnover and number of trades, for both equities and derivative trading.. NSE has a market capitalization of around Rs 47,01,923 crore (7 August 2009) and is expected to become the biggest stock exchange in India in terms of market capitalization by 2009 end. Though a number of other exchanges exist, NSE and the Bombay Stock Exchange are the two most significant stock exchanges in India, and between them are responsible for the vast majority of share transactions. The major benchmark of NSE is the S&P CNX Nifty which is a group of 50 stocks which are actively traded in the stock exchange. 

NIFTY Top 50 Stocks

NIFTY consists of 50 top stocks from different sectors of NSE. Below is the list by 20th December 2008.  1. ABB Ltd : ELECTRICAL EQUIPMENT 2. ACC Ltd : CEMENT AND CEMENT PRODUCTS 3. Ambuja Cements Ltd : CEMENT AND CEMENT PRODUCTS 4. BHEL : ELECTRICAL EQUIPMENT 5. Bharat Petroleum Corporation Ltd(BPCL) : REFINERIES 6. Bharti Airtel Ltd : TELECOMMUNICATION - SERVICES 7. Cairn India Ltd : OIL EXPLORATION/PRODUCTION 8. Cipla Ltd : PHARMACEUTICALS 9. DLF Ltd : CONSTRUCTION 10. GAIL (India) Ltd : GAS 11. Grasim Industries Ltd : CEMENT AND CEMENT PRODUCTS 12. HCL Technologies Ltd : COMPUTERS - SOFTWARE 13. HDFC Bank Ltd : BANKS 14. Hero Honda Motors Ltd : AUTOMOBILES - 2 AND 3 WHEELERS 15. Hindalco Industries Ltd : ALUMINIUM 16. Hindustan Unilever Ltd : DIVERSIFIED 17. Housing Development Finance Corporation Ltd(HDFC) : FINANCE - HOUSING 18. ITC Ltd : CIGARETTES 19. ICICI Bank Ltd : BANKS


NIFTY Top 50 Stocks
21. Infosys Technologies Ltd : COMPUTERS - SOFTWARE 22. Larsen & Toubro Ltd : ENGINEERING 23. Mahindra & Mahindra Ltd : AUTOMOBILES - 4 WHEELERS 24. Maruti Suzuki India Ltd : AUTOMOBILES - 4 WHEELERS 25. NTPC Ltd : POWER 26. National Aluminium Co. Ltd : ALUMINIUM 27. Oil & Natural Gas Corporation Ltd(ONGC) : OIL EXPLORATION/PRODUCTION 28. Power Grid Corporation of India Ltd : POWER 29. Punjab National Bank : BANKS 30. Ranbaxy Laboratories Ltd : PHARMACEUTICALS 31. Reliance Communications Ltd : TELECOMMUNICATION - SERVICES 32. Reliance Industries Ltd : REFINERIES 33. Reliance Infrastructure Ltd : POWER 34. Reliance Petroleum Ltd : REFINERIES 35. Reliance Power Ltd : POWER 36. Satyam Computer Services Ltd : COMPUTERS - SOFTWARE 37. Siemens Ltd : ELECTRICAL EQUIPMENT 38. State Bank of India : BANKS 39. Steel Authority of India Ltd(SAIL): STEEL AND STEEL PRODUCT 40. Sterlite Industries (India) Ltd : METALS 41. Sun Pharmaceutical Industries Ltd : PHARMACEUTICALS 42. Suzlon Energy Ltd : ELECTRICAL EQUIPMENT 43. Tata Communications Ltd : TELECOMMUNICATION - SERVICES 44. Tata Consultancy Services Ltd(TCS) : COMPUTERS - SOFTWARE 45. Tata Motors Ltd : AUTOMOBILES - 4 WHEELERS 46. Tata Power Co. Ltd : POWER 47. Tata Steel Ltd : STEEL AND STEEL PRODUCTS 48. Unitech Ltd : CONSTRUCTION 49. Wipro Ltd : COMPUTERS - SOFTWARE 50. Zee Entertainment Enterprises Ltd : MEDIA & ENTERTAINMENT

How To Select Your Stock Broker ?
It goes without saying that your stock broker is one who has to be trustworth and have the ability to strike a bond with the investor. Relationship Building remains the key focus in the Indian Stock Markets as the investor is not savvy enough to understand the nuances of how share markets in India function which may lead to the investor being taken for a ride by the stock broker.

Tips To Pick Your Stock Broker
The investor should verify the credentials of a stock broker before entering into a relationship. A stock broker should hold a valid license to transact in securities in the Indian stock markets. It is important to understand the services that he is qualified to perform. In recent times, an integrated service provider is preferred who can provide a gamut of stock broking and advisory services including online and offline trading across exchanges. A referral can be useful and may give a direction to pick your stock broker. A stock broker should have a good customer retention strategy and client servicing capabilities. A stock broker has to understand your risk profile before trading stocks on your advice. Your stock broker should have the time and the ability to explain stock market jargon for your understanding and implementation. Finally, it is fair to wait and think twice before taking your decision in selecting your stock broker as a stock broker in the context of the Indian stock markets has an important role to play as it also involves educating clients and investors to make the right choices in picking their stocks and making buy and sell decisions.

List of Online Stock Market / Share Trading Websites (India) AS ON 2008
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5Paisa - AnandRathi Angel Trade - Geojit Financial services Ltd - Online Trading, Internet Trading HDFC Securities Investor- ICICIDirect- IDBI Paisabuilder - Online stock / share trading portal India ...www.idbipaisabuilder.inIndia Infoline- Invest Indiabulls- Kotak Securities Motilal Oswal Securities- Networth Stock Broking Ltd. Reliance Money Religare Securities- Sharekhan- UTI Securities Ltd (UTISEL) -

1.One of the simple concepts always preferred is buying shares at lower prices and selling them at higher prices 2. Get Advice but make your own decision 3. Gain Adequate Knowledge and make effective planning 4. See the Balance sheet and financial results of the company for every quarter. from news letters and news papers.  1st Quarter -April to June. Results are declared in July  2nd Quarter- July to September. Results declared in October.   3rd Quarter-October to December. Results declared in January.  4th Quarter- January to April. Results declared in April  The 4th Quarter is considered as end of the financial year. 5. Practice Disciplined Trade 6. Invest for long period: 7. Purchase Emerging Stocks


Insurance - Meaning
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Insurance provides financial protection against a loss arising out of happening of an uncertain event. A person can avail this protection by paying premium to an insurance company.  A pool is created through contributions made by persons seeking to protect themselves from common risk. Premium is collected by  insurance companies which also act as trustee to the pool. Any loss to the insured in case of happening of an uncertain event is paid out of this pool. The insurance premiums offered vary from company to company and also from the policy to policy. Indian insurance companies play a key role in India's financial sector. With India's population becoming more affluent and globalize, insurance is growing rapidly. This increasing market is creating considerable competition among Indian insurance companies in an industry that 20 years ago was relatively small. Counting the existing public sector insurance companies, there are currently 13 Indian insurance companies  in the Life insurance and 13 Indian insurance companies operating in general insurance. Life Insurance Corporation is the oldest player in the market. It is the market leader. However, some other companies also offer good innovative products. General Insurance Corporation has been approved as the Indian reinsurer for underwriting only reinsurance business All insurance companies are regulated by the Insurance Regulatory and Development Authority (IRDA).



The various fields covered by insurance companies in India include: Life Insurance: For students, children, family, individual etc. Health insurance: For self, for family, accidental insurance premium, medical claim policies etc. Non-life insurance: Home or House Insurance and other property insurance, Auto Insurance (for cars, motorcycle and other two-wheelers, commercial vehicles), Infrastructure Projects Insurance, Travel Insurance, real estate insurance, mobile insurance etc.

"Bancassurance" refers to a tie up arrangement of banks with insurance companies for selling the insurance products in life and non life segments as corporate agents for fee based income. This income is risk-free, as the bank plays a role of a intermediary for souring business to insurance company. Bancassurance is a package of banking and insurance service at one roof. The introduction of Bancassurance has broadened the scope of retail banking



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A bond is just an organization's IOU; i.e., a promise to repay a sum of money at a certain interest rate and over a certain period of time. In other words, a bond is a debt instrument. Other common terms for these debt instruments are notes and debentures. Most bonds pay a fixed rate of interest for a fixed period of time. During this period, the investors receive a regular payment of interest, semi-annually or annually, which is calculated as a certain percentage of the face value and know as a 'coupon payment.' . Based on the maturity period, bonds are referred to as bills or short-term bonds and long-term bonds. The debt market in India is amongst the largest in Asia. It includes government securities, public sector undertakings, other government bodies, financial institutions, banks and companies

Benefits of debt instrument investments:
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Portfolio diversification Fixed and Regular Income Risk Free investments Greater safety

Disadvantages of bonds

Companies and municipalities can and do go bankrupt, and if they do, your bonds will lose value and possibly even become worthless.    Long-term bonds will have your money tied up in low yielding bonds should interest rates go up.    Unlike stocks, bonds don't offer the possibility of high long-term returns

When should you buy bonds?
Bonds are a good option for those who need a steady and relatively dependable source of income, including the elderly and disabled. After retirement, bonds will provide a regular interest check to live on.  As you progress from middle age and get within a few years of retirement, you should start gradually switching your assets from equity holdings (stocks) into bonds. As you get closer to retirement you want to reduce your investment risk. 

Impact of debt markets in Indian economy
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Opportunity for investors to diversify their investment portfolio. Higher liquidity and control over credit. Better corporate governance. Improved transparency because of stringent disclosure norms and auditing requirements. Less risk compared to the equity markets, encouraging low-risk investments. This leads to inflow of funds in the economy. Increased funds for implementation of government development plans. The government can raise funds at lower costs by issuing government securities. Implementation of a monetary policy.

A few sections of the Income Tax Act, 1961 are mentioned below which are essential for the investment purpose. 

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Deductions under section 80C for debt instruments: Contribution to Employee Provident Fund (EPF):

Provident Fund is deducted from the salary. Both employer and employee contribute towards Provident fund. Employer's contribution is fully exempt from tax. Employee contribution is counted towards 80C. Voluntary contributions can be made by employee Current Rate of Interest is 8.5% annually and tax free. Pubic Provident Fund (PPF):

Current Interest Rate = 8% tax free Maturity period = 15 years Minimum Amount = Rs.500 Maximum limit = Rs.70,000 per annum

National Saving Certificate (NSC):

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Current Interest Rate = 8% compounded half yearly Maturity period =6 years Minimum amount = Rs.100 Maximum amount = No limits Interest accrued every year is liable to tax. If NSC is re-invested, it is eligible for deduction under 80C. There is also eligibility of deduction for the interest under section 80L under Income Tax Act, 1961.

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Unit Linked Insurance Plans (ULIPs) : ULIPs are covered under Life Insurance. There are three types of Funds under this scheme - Equity Fund, Balanced Fund & Debt Fund. Tenure = 10 years Eligible for tax deduction under section 80C. Equity Linked Saving Scheme (ELSS): Lock in period =3years Deduction up to Rs. 1 lakh allowed. Dividend and Bonus are not eligible for deduction. Tax exemption can be availed under section 88 also. Some of the tax saver plans under Mutual funds are Birla Tax Relief 96 Stan Chart Tax Saver Fund Kotak Tax Saver UTI Equity Tax Saver Tata Tax Saving Fund HDFC Tax Saver ABN Amro Tax Average SBI Tax Saving Plan Prudential ICICI Tax Saving plan.

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Infrastructure Bonds: These are issued by institutions/ banks such as ICICI, IDBI etc in the name of ICICI safety bonds and IDBI Flexi bonds. Tax liability relief up to Rs.16000 per annum is available under section 88. Senior Citizen Saving Scheme:  This scheme is considered to be lucrative and eligible for deduction under section 80C. Current Rate of Interest = 8% for Government Employee & 9.5% half yearly for Public sector employee. Maturity period -3years Minimum Investment =Rs.10,000. Maximum Investment= Total Retirement Benefit  Interest Income chargeable to tax.

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NABARD Rural Bonds: There are two types of Bonds issued by NABARDNABARD Rural Bonds Bhavishya Nirman Bonds NABARD Rural Bonds are eligible for deductions under section 80C.At present, subscriptions is not open. RBI Relief Bond: These bonds are issued by RBI. Interest compounded half yearly Maturity Period= 5years Interest received is tax free.

5 year Bank Fixed Deposits: Rate of Interest =8.25% for general investment and 8.75% for senior citizens Maximum limit= Rs 1,00,000 per annum Interest income is taxable. Post office schemes: Post office offers numerous tax saving options in India and popular among Indian citizens. This is similar to bank deposit. Post office schemes includes Post Office Term Deposit Scheme Post Office Monthly Income Scheme Kisan Vikas Patra Time Deposit Scheme Deposits for Retired Government Employees Post Office recurring Deposits

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Deposit Schemes for Retiring Employees of Pubic Sector companies. Tenure: For 1 year -6.25% interest per annum For 2 years -6.50% interest per annum For 3 years -7.25% interest per annum For 5 years- 7.50% interest per annum. Maximum Rate of Interest =8% per annum and 10% bonus on principal amount at the time of maturity. Interest is entirely taxable Tax relief available under section 80L. Mutual Fund Pension Plans:

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Few Mutual Fund Pension Plans available in market are Templeton India Pension Plan UTI Retirement Benefit Pension Plan (UTI-RBT) These Mutual Fund Pension Fund Plans are open-ended debt oriented mutual fund schemes. Better returns are expected in Long terms. Eligible for tax rebate under section 80C. 

Life Insurance: Any amount paid towards Life Insurance premium for the family and oneself is eligible for tax break under section 80C. Life Insurance Saving Schemes include Government owned Life Insurance Corporation of India and Private Life insurance Companies such as Bajaj Alliance, Birla Sun Life, HDFC Life Insurance and ICICI Prudential etc. Public Sector Banks Tax saving Options: 6.5% Saving Bonds Cumulative Bonds 6.5& Saving bonds non-Cumulative bonds Lock in Period =5 years Rate of Interest =6.5% Complete Tax exemption under Income Tax Act,2961. Private Sector Banks Tax Saving Options:

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UTI Bank, HDFC, IDBI bank, ICICI Bank offer the following schemes to Indian Citizens 8% Cumulative saving Bonds 8% Non Cumulative Saving Bonds Lock in Period= 6years Entitled to pay tax on interest income of the bond but not deductible at source. Tax Rebates can be availed under section 88 of Income Tax Act, 1961.

Deduction Under Section 80CCC(1) In case of an Individual, in respect of contribution to pension scheme of any other Insurance companies deduction up to Rs.10,000 under section 80CCC(1) is available. The following are some tax saving plans available in the market LIC Jeevan Suraksha ICICI Prudential Life Time Pension Aviva Life Pension Plus Max Easy Life Policy Tata AIGs Nirvana Plus etc. Deduction Under Section 80CCE Aggregate deduction Under Section 80C, 80CCC and 80CCD is available for Section 80CCE. The maximum limit is Rs.1,00,000. Deduction under Section 80D: Deduction Up to Rs. 10,000 (Rs.15,000 in case of Senior Citizens is allowed in respect of Premium paid by Cheque towards Health Insurance Policies. Mediclaim on such premium can be paid towards health insurance of spouse, dependent parents and dependent children.

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Comparison of various investment avenues

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DO NOT borrow to invest DO NOT invest just to get quick and high return DO NOT invest in high-risk investments unless you are ready for it DO NOT invest on the basis of 'hot' tips and rumours

Project your interests for any investment you make
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Picking several different investments can be a good way to manage risk Understand the investment and the risks involved Select financial advisers carefully if you are engaging one. Don’t be pressured into making a decision. Watch out for aggressive sales tactics that urge you to decide and act hastily Keep records of all transactions you enter into Be wary of schemes which guarantee a quick profit with minimal or no risk

Suggested Readings for Investment

"The Intelligent Investor" (1949) by Benjamin Graham 

2. "Common Stocks And Uncommon Profits" (1958) by Philip Fisher   3. "Stocks For The Long Run" (1994) by Jeremy Siegel . 4. "Learn To Earn" (1995), "One Up On Wall Street" (1989) or "Beating The Street" (1994) by Peter 5. "A Random Walk Down Wall Street" (1973) by Burton G. Malkiel  6. "The Essays Of Warren Buffett: Lessons For Corporate America" (2001) by Warren Buffett and Lawrence Cunningham  7. " How To Make Money In Stocks" (2003, 3rd ed.) by William J. O'Neil  8. " Rich Dad Poor Dad" (1997) by Robert T. Kiyosaki  9. "Common Sense On Mutual Funds" (1999) by John Bogle  10. "Irrational Exuberance" (2000) by Robert J. Shiller 


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