TABLE OF CONTENTS

Chapter No. Title Page No.

1. Introduction of Mutual Funds 8
2. Types of Mutual Funds 10
3. Scope & Importance 14
4. Objectives 17
5. Regulatory Aspects 18
6. Current Market Trend 22
7. Company’s Profile
(i) Overview 42
(ii) Product Profile 45
(iii) Objective of the study 60
(iv) Research Methodology 61
8. Limitations 63
9. Conclusion and Reccommendation 64
10. Frequently used terms 66
11. Questionnaire 70
12. Biblography 77
 INTRODUCTION
MUTUAL FUNDS – CONCEPT, ORGANISATIONAL STRUCTURE
& ADVANTAGES & TYPES: -
Concept: -
A Mutual Fund is a trust that pools the savings of a number of
investors who share a common financial goal. The money thus collected is
then invested in capital market instruments such as shares, debentures and
other securities. The income earned through these investments and the
capital appreciation realized are shared by its unit holders in proportion to
the number of units owned by them. Thus a Mutual Fund is the most
suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a
relatively low cost.
The flow chart below describes broadly the working of a mutual
fund:

Mutual Fund Operation Flow Chart

Organisation of Mutual Funds:-

There are many entities involved and the diagram below illustrates
the organizational set up of a mutual fund:
 Organization of a Mutual Fund
Advantages of Mutual Funds:-
The advantages of investing in a Mutual Fund are:
 Professional Management
 Diversification
 Convenient Administration
 Return Potential
 Low Costs
 Liquidity
 Transparency
 Flexibility
 Choice of schemes

TYPES OF MUTUAL FUNDS

Wide variety of Mutual Fund Schemes exists to cater to the needs
such as financial position, risk tolerance and return expectations etc. The
figure below gives an overview into the existing types of schemes in the
Industry.
 TYPES OF MUTUAL FUND SCHEMES

By By Other
Schemes
Structure Investment

Objectiv
Open Close Tax
ended ended Interval Special
Scheme Scheme Scheme Saving Scheme

Sche

Growth Income Balanced Money

Scheme Scheme Scheme
Market

Sector
Index
Specie
Scheme
Sche
More abruptly, Mutual fund schemes may be explained as under:-
By Structure:
Open-ended Funds
An open-end fund is one that is available for subscription all
through the year. These do not have a fixed maturity. Investors can
conveniently buy and sell units at Net Asset Value (‘‘NAV’’) related
prices. The key feature of open-end schemes is liquidity.

Closed-ended Funds
 A Closed-end fund has a stipulated maturity period which generally
ranging from 3 to 15 years. The und is open for subscription only during a
specified period. Investors can invest in the scheme at the time of the initial
public issue and thereafter they can buy or sell the units of the scheme on
the stock exchanges where they are listed. In order to provide an exit route
to the investors, some close-ended funds give an option of selling back the
units to the Mutual Fund through periodic repurchase at NAV related
prices. SEBI Regulations stipulate that at least one of the two exit routes is
provided I investor.
Interval Funds
Interval funds combine the features of open-ended and close-ended
schemes. They are open for sale or redemption during pre-determined
intervals at NAV related prices.
By Investment Objective :
Growth Funds
The aim of growth funds is to provide capital appreciation over the
medium to long-term. Such schemes normally invest a majority of their
corpus in equities. It has been proven that returns from stocks, have
outperformed most other kind of investments helf over the long term.
Growth schemes are ideal for investors having a long-term outlook seeking
growth over a period of time.
Income Funds
The aim of income funds is to provide regular and steady income to
investors. Such schemes generally invest in fixed income securities such as
bonds, corporate debentures and government securities. Income Funds are
ideal for capital stability and regular income.
Balanced Funds
The aim of balanced funds is to provide both growth and regular
income. Such schemes periodically distribute a part of their earning and
invest both in equites and fixed income securities in the proportion
indicated in their offer documents. In a rising stock market, the NAV of
these schemes may not normally keep pace, or fall equally when the market
falls. These ar5e ideal for investors looking for a combination of income
and moderate growth.
Money Market Funds
The aim of money market funds is to provide easy liquidity,
preservation of capital and moderate income. These schemes generally
invest in safer short-term instruments such as treasury bills, certificates of
deposit commercial paper and inter-bank call money. Returns on these
schemes may fluctuate depending upon the interest rates prevailing in the
market. These are ideal for Corporate and individual investors as a means
to part their surplus funds for short periods.
Other Schemes :
Tax Saving Schemes
These schemes offer tax rebates to the investors under specific
provisions of the Indian Income Tax laws as the government offers tax
incentives for investment in specified avenues.
Investments made in Equity Linked Savings Schemes (ELSS) and Pension
Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The
Act also provides opportunities to investors to save capital gains u/s 54EA
and 54EB by investing in Mutual Funds, Provided the capital asset has
been sold prior to April 1, 2000 and the amount is invested before
September 30, 2000.

Special Schemes
• Industry Specific Schemes
 Industry Specific Schemes invest only in the industries specified in
the offer document. The investment of these funds is limited to specific
industries like Info Tech, FMCG, Pharmaceuticals etc.
• Index Schemes
Index funds attempts to replicate the performance of a particular
index number as the BSE Sensex or the NSE 50.
• Sectoral Schemes
Sectoral funds are those which invest excusively in a specified
industry or group of industries or various segments such as ’A’
Group shares or initial public offering.

SCOPE & IMPORTANCE OF MUTUAL FUND

 Return Potential
Over a medium to long-term, Mutual Funds have the potential to
provide a higher return as they invest in a diversified basket of selected
securities.
 Low Costs
Mutual Funds are a relatively less expensive way to invest
compared to directly investing in the capital markets because the benefits
of scale in brokerage, custodial and other fees translate into lower costs for
investors.
 Liquidity
In open-end schemes, the investor gets the money back promptly at
net asset value related prices from the Mutual Fund. In close-end schemes,
the units can be sold on a stock exchange at the prevailing market price or
the investor can avail of the facility of direct repurchase at NAV related
prices by the Mutual Fund.
  Transparency
You get regular information on the value of your investment in
addition to disclosure on the specific investments made by your scheme,
the proportion invested in each class of assets and the fund manager’s
investment strategy and outlook.

 Flexibility
Through features such as regular investment plans, regular
withdrawal plans and dividend reinvestment plans, you can systematically
invest or withdraw funds according to your needs and convenience.
 Affordability
Investors individually may lack sufficient funds to invest in high-
grade stocks. A mutual fund because of its large corpus allows even a small
investor to take the benefit of its investment strategy.
 Choice of Schemes
Mutual Funds offer a family of schemes to suit our varying needs
over a lifetime.
 Well Regulated
All Mutual Funds are registered with SEBI and they function within
the provisions of strict regulations designed to protect the interests of
investors. The operations of Mutual Funds are regularly monitored by
SEBI.
 Net Asset Value (NAV)
The net asset value of the fund is the cumulative market value of the assets
fund net of its liabilities. In other words, if the fund is dissolved or
liquidated, by selling off all the assets in the fund, this is the amount that
the shareholders would collectively own. This gives rise to the concept of
net asset value per unit, which is the value, represented by the ownership of
one unit in the fund. It is calculated simply by dividing the net asset value
of the fund by the number of units. However, most people refer loosely to
the NAV per unit as NAV, ignoring the ‘‘per unit’’. We also abide by the
same convention.

Note: - In order to understand the term NAV more accurately it is

important to learn it’s calculation which is explained as under: -

Calculation of NAV
The most important part of the calculation is the valuation of the
assets owned by the fund. Once it is calculated, the NAV is simply the net
value of assets divided by the number of units outstanding. The detailed
methodology for the calculation of the asset value is given below.
Asset value is equal to
Sum of market value of shares/debentures + Liquid assets/cash
held, if any + Dividends/interest accrued Amount due on unpaid assets
Expenses accrued but not paid.
Details on the above items
For liquid shares/debentures, valuation is done on the basis of the
last or closing market price on the principal exchange where the security is
traded.
For illiquid and unlisted and/or thinly traded shares/debentures, the
value has to be estimated. For shares, this could be the book value per
share or an estimated market price if suitable benchmarks are available. For
debentures and bonds, value is estimated on the basis of yields of
comparable liquid securities after adjusting for illiquidity. The value of
fixed interest bearing securities moves in a direction opposite to interest
rate changes Valuation of debentures and bonds is a big problem since
most of them are unlisted and thinly traded. This gives considerable leeway
to the AMCs on valuation and some of the AMCs are believed to take
advantage of this and adopt flexible valuation policies depending on the
situation.
Interest is payable on debentures/bonds on a periodic basis say
every 6 months. But, with every passing day, interest is said to be accrued,
at the daily interest rate, which is calculated by dividing the periodic
interest payment with the number of days in each period. Thus, accrued
interest on a particular day is equal to the daily interest rate multiplied by
the number of days since the last interest payment date.
Usually, dividends are proposed at the time of the Annual General
meeting and become due on the record date. There is a gap between the
dates on which it becomes due and the actual payment date. In the
intermediate period, it is deemed to be ‘‘accrued’’.
Expenses including management fees, custody charges etc. are calculated
on a daily basis.

OBJECTIVES
 To define and maintain high professional and ethical standards in
all areas of operation of mutual fund industry.
 To recommend and promote best business practices and code of
conduct to be followed by members and other engaged in the
activities of mutual fund and asset management including agencies
connected or involved in the field of capital markets and financial
services.
 To interact with the Securities and Exchange Board of India (SEBI)
and to represent to SEBI on all matters concerning the mutual fund
industry.
 To represent to the Government, Reserve Bank of India and other
bodies on all matters relating to the Mutual Fund Industry.
 To develop a cadre of well-trained Agent distributors and to
implement a program of training and certification for all
intermediaries and others engaged in the industry.
 To undertake nation wide investor awareness program so as to
promote proper understanding of the concept and working of
mutual funds.
 To disseminate information on Mutual Fund Industry and to
undertake studies and Research directly and/or in association with
other bodies.

REGULATORY ASPECTS
Schemes of a Mutual Fund
• The asset management company shall launch no scheme unless the
trustees approve such scheme and a copy of the offer document has
been filed with the Board.
• Every mutual fund shall along with the offer document of each
scheme pay filing fees.
• The offer document shall contain disclosures which are adequate in
order to enable the investors to make informed investment decision
including the disclosure on maximum investments proposed to be
made by the scheme in the listed securities of the group companies
of the sponsor. A close-ended scheme shall be fully redeemed at the
end of the maturity period. “Unless a majority of the unit holders
otherwise decide for its rollover by passing a resolution”.
 • The mutual fund and asset management company shall be liable to
refund the application money to the applicants,-
(i) If the mutual fund fails to receive the minimum subscription
amount referred to in clause (a) of sub-regulation (1);
(ii) If the moneys received from the applicants for units are in excess of
subscription as referred to in clause (b) of sub-regulation (1).
• The asset management company shall issue to the applicant whose
application has been accepted, unit certificates or a statement of
accounts specifying the number of units allotted to the applicant as
soon as possible but not later than six weeks from the date of
closure of the initial subscription list and or from the date of receipt
of the request from the unit holders in any open ended scheme.
Rules Regarding Advertisement :
The offer document and advertisement materials shall not be
misleading or contain any statement or opinion, which are incorrect or
false.
Investment Objectives And Valuation Policies:
The price at which the units may be subscribed or sold and the price
at which such units may at any time be repurchased by the mutual fund
shall be made available to the investors.
General Obligations :
• Every asset management company for each scheme shall keep and
maintain proper books of accounts, records and documents, for each
scheme so as to explain its transactions and to disclose at any point
of time the financial position of each scheme and in particular give
a true and fair view of the state of affairs of the fund and intimate to
the Board the place where such books of accounts, records and
documents are maintained.
 • The financial year for all the schemes shall end as of March 31 of
each year. Every mutual fund or the asset management company
shall prepare in respect of each financial year an annual report and
annual statement of accounts of the schemes and the fund as
specified in Eleventh Schedule.
• Every mutual fund shall have the annual statement of accounts
audited by an auditor who is not in any way associated with the
auditor of the asset management company.
Procedure For Action In Case of Default :
On and from the date of the suspension of the certificate or the
approval, as the case may be, the mutual fund, trustees or asset
management company, shall cease to carry on any activity as a mutual
fund, trustee or asset management company, during the period of
suspension, and shall be subject to the directions of the Board with regard
to any records, documents, or securities that may be in its custody or
control, relating to its activities as mutual fund, trustees or asset
management company.
Restrictions On Investments:
• A mutual fund scheme shall not invest more than 15% of its NAV
in debt instruments issued by a single issuer, which are rated not
below investment grade by a credit rating agency authorized to
carry out such activity under the Act. Such investment limit may be
extended to 20% of the NAV of the scheme with the prior approval
of the Board of Trustees and the Board of asset management
company.
• A mutual fund scheme shall not invest more than 10% of its NAV
in unrated debt instruments issued by a single issuer and the total
investment in such instruments shall not exceed 25% of the NAV of
 the scheme. All such investments shall be made with the prior
approval of the Board of Trustees and the Board of asset
management company.
• No mutual fund under all its schemes should own more than ten per
cent of any company’s paid up capital carrying voting rights.
• Such transfers are done at the prevailing market price for quoted
instruments on spot basis.
The securities so transferred shall be in conformity with the
investment objective of the scheme to which such transfer has been
made.
• A scheme may invest in another scheme under the same asset
management company or any other mutual fund without charging
any fees, provided that aggregate interscheme investment made by
all schemes under the same management or in schemes under the
management of any other asset management company shall not
exceed 5% of the net asset value of the mutual fund.
• The initial issue expenses in respect of any scheme may not exceed
six per cent of the funds raised under that scheme.
• Every mutual fund shall buy and sell securities on the basis of
deliveries and shall in all cases of purchases, take delivery of
relative securities and in all cases of sale, deliver in the securities
and shall in no case put itself in a position whereby it has to make
short sale or carry forward transaction or engage in badla finance.
• Every mutual fund shall, get the securities purchased or transferred
in the name of the mutual fund on account of the concerned
scheme, wherever investments are intended to be of long-term
nature.
 • Pending deployment of funds of a scheme in securities in terms of
investments objectives of the scheme a mutual fund can invest the
funds of the scheme in short term deposits of scheduled commercial
banks.
• No mutual fund scheme shall make any investment in;
i. Any unlisted security of an associate or group
company of the sponsor, or
ii. Any security issued by way of private placement by
an associate or group company of the sponsor; or
The listed securities of group companies of the sponsor which is in
excess of 30% of the net assets [of all the schemes of a mutual fund]

• No mutual fund scheme shall invest more than 10 per cent of its
NAV in the equity shares or equity related instruments of any
company. Provided that, the limit of 10 per cent shall not be
applicable for investments in index fund or sector or industry
specific scheme.

• A mutual fund scheme shall not invest more than 5% of its NAV in
the equity shares or equity related investments in case of open-
ended scheme and 10% of its NAV in case of close-ended scheme.

CURRENT MARKET TREND OF MUTUAL FUNDS

IN KARVY
Hold Kingfisher Airlines, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can hold
Kingfisher Airlines.

Buy Axis Bank on declines: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can buy
Axis Bank on declines.

Nifty has support at 27502700: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, the

indices may find support around 90008700/27502700 levels for the day.

See crude at $68/bbl if OPEC cuts output: Karvy Comtrade

Harish G of Karvy Comtrade feels if OPEC decides on a second round of

production cuts the supplydemand difference would tighten and prices
should move up towards USD 68 per barrel.

Buy Everest Kanto, target of Rs 310: Karvy

Karvy Stock Broking has maintained its buy rating on Everest Kanto
Cylinder (EKC) with a target of Rs 310. EKC reported net profit of Rs 432
million as against Rs 284 million reported during 2QFY08.

Buy Shree Cements, target of Rs 653: Karvy

Karvy Stock Broking has recommended a buy rating on Shree Cements

with a target of Rs 653. The company has reported adj. Net profit of Rs
1.07 billion.
Buy Oriental Bank, target of Rs 224: Karvy

Karvy Stock Broking has maintained its buy rating on Oriental Bank of
Commerce (OBC) with a target of Rs 224. In 2QFY09, Oriental Bank of
Commerce reported NII growth of 31% (Y/Y) to Rs 5.2 billion.

Difficult time for mkts, stay away: Experts

Sudarshan Sukhani, Technical Trends said this is an extreme on the

downside and should not be sold into. Ambareesh Baliga of Karvy Stock
Broking said this is not the time to look at the markets or invest in these
markets because we don’t know as to where the bottom is.

Cinemax India an outperformer: Karvy

Karvy Stock Broking has downgraded its rating on Cinemax India from
buy to outperformer with a target of Rs 61. Cinemax is expected to show a
topline growth of 44% YoY and 34% QoQ. The YoY growth will be
primarily on the back of 8 new properties with 23 screens, which have been
launched since 2Q FY08.

Baliga bullish on IT stock for long term

Ambareesh Baliga of Karvy Stock Broking is bullish on IT stocks with

long term perspective.

Buy PNB, target of Rs 627: Karvy

Karvy Stock Broking has recommended a buy rating on Punjab National

Bank (PNB) with a target of Rs 627. During 2QFY09, the research firm
expects the bank would its deposit and advances by 19.5% and 20% (Y/Y)
respectively.
SBI a market performer: Karvy

Karvy Stock Broking has recommended a market performer rating on State

Bank of India (SBI) with a target of Rs 1559. In 2QFY09, the research firm
expects for State Bank (Standalone) to report total business to grow by
around 27.5% (Y/Y) on the back of 25.5% growth in deposits and 30% in
advances.

Buy Patel Engg, target of Rs 366: Karvy

Karvy Stock Broking has recommended a buy rating on Patel Engineering

Company (PEL) with a target of Rs 366. PEL’s business is diversified into
nature; the research firm has valued the company on SOTP valuation
method.

Buy Dishman Pharma, target of Rs 310: Karvy

Karvy Stock Broking has upgraded its rating on Dishman Pharmaceuticals

Chemicals to buy with a target of Rs 310. The research firm expects
revenues and earnings to grow at a CAGR of 31.4% and 27% from FY08
to FY10E driven primarily from the high margin CRAMS segment.

Buy HDFC Bank, target of Rs 1435: Karvy

Karvy Stock Broking has recommended a buy rating on HDFC Bank with
a target of Rs 1435. In FY200810, we expect that the bank\’s total
business, NII and net profit would grow by 32%, 34% and 31.3% CAGR
respectively.
Buy Petronet LNG, target of Rs 63: Karvy

Karvy Stock Broking has changed its rating on Petronet LNG from market
performer to buy with a target of Rs 63. For FY09, the research firm
expects the revenue growth of 9.8% to Rs 71,948 million and adjusted
profit to rise by 11.9% to Rs 5,309 million.

Buy Unichem Labs, target of Rs 240: Karvy

Karvy Stock Broking has maintained its buy rating on Unichem

Laboratories with a target of Rs 240. Net revenues for the quarter is
expected to grow by 18% to Rs 1,771 million on the back of 15 % growth
in domestic formulations business to Rs 1357 million.

Buy Aventis Pharma, target of Rs 1000: Karvy

Karvy Stock Broking has maintained its buy rating on Aventis Pharma
with a target of Rs 1000. Net revenues for the quarter are expected to be
higher by 8 % to Rs 2.44 billion.

Buy Jubilant Organosys, target of Rs 300: Karvy

Karvy Stock Broking has recommended a buy rating on Jubilant Organosys

with a target of Rs 300. The research firm expects 37% CAGR growth in
net revenues from Rs 24.9 billion in FY08 to Rs 46.8 billion in FY10E.

HCL Technologies an underperformer: Karvy

Karvy Stock Broking has recommended an underperformer rating on HCL

Technologies with a target of Rs 160. HCL Tech for Q1FY09 is likely to
report a sequential revenue growth of 6.5% (to Rs 23.09 billion), with
rupee aiding the growth to the tune of 6%, and we expect the volume
growth to improve by a meek 0.5%.

Buy Satyam, target of Rs 350: Karvy

Karvy Stock has upgraded its rating on Satyam Computer Services from
outperformer to buy with a target of Rs 350. The research firm expects
Satyam to report a sequential revenue growth of 10.3%.

Nifty has support at 3450: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, supports

for the day are placed at the 1135011050/35003450 levels, while,
resistances for the day are placed at the 11700/3650 levels.

Buy TCS, target of Rs 950: Karvy

Karvy Stock Broking has recommended a buy rating on Tata Consultancy

Services (TCS) with a target of Rs 950. The research firm expects TCS to
report a sequential revenue growth of 8.5% in Q2FY09.

Buy Cairn India, target of Rs 287: Karvy

Karvy Stock Broking has upgraded its rating on Cairn India (CIL) from
outperformer to buy with a target of Rs 287. The research firm believes
that the market has become overly negative on CIL due to the recent fall in
crude oil price in dollar terms.

Expect weak opening: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, Domestic

markets are likely to open on a weak note following negative global cues.
Cement sector an underperformer: Karvy

Karvy Stock Broking has maintained its underperformer rating on Cement

Sector. Expected marginal increase in cement price and easing of cost
pressure coupled with attractive valuation would provide the short term
bounce back in cement stocks.

Sensex has support at 1180011350: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, supports

for the day are placed at the 1180011350/36503580 levels, while,
resistances for the day are placed at the 12000/3800 levels.

Buy Infy, Wipro, TCS: Karvy Stock Broking

R Ravi, Karvy Stock Broking maintains a buy on TierI IT stocks but is

underweight on TierII companies. According to him, Infosys, Wipro and
TCS are good opportunities to get into because valuations look very
attractive.

See Nifty trading in 40004400 range: Karvy Stock Broking

Ambarish Baliga of Karvy Stock Broking said there is no trend in the

market and that sentiment is badly affected. “Participation is extremely low
and no trigger is lasting long enough.” He sees Nifty trading rangebound
between 4,000 and 4,400.

Expect flat opening: Karvy

According to Karvy Stock Broking\’s Technical Analysis report, Global

indices are trading on a mixed note. Our indices are expected to open on a
flat note and lower supports may witness short covering.
EID Parry a market performer: Karvy

Karvy Stock Broking has recommended a market performer rating on EID

Parry (India) with a target of Rs 245 in its September 22, 2008 research
report.

Balrampur Chini Mills an underperformer: Karvy

Karvy Stock Broking has recommended an underperformer rating on

Balrampur Chini Mills with a target of Rs 68 in its September 22, 2008
research report.

Exit Hindalco on upside: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one should
use higher level to exit from Hindalco Industries.

Dishman Pharma an outperformer: Karvy

Karvy Stock Broking has downgraded its rating on Dishman

Pharmaceuticals Chemicals from buy to outperformer with a target of Rs
380. The research firm expects revenues and earnings to grow at a CAGR
of 31.4% and 27% from FY08 to FY10E driven primarily from the high
margin CRAMS segment.

Hexaware Technologies an underperformer: Karvy

Karvy Stock Broking has recommended an underperformer rating on

Hexaware Technologies with a target of Rs 35. At the end of CY07, the
debtors which were above 6 months were Rs 195 million (8.5% of total
debtors), of which the company has provided for Rs 128 million, which
works to 66% of the long debtors.
Buy SpiceJet, target of Rs 33: Karvy

Karvy Stock Broking has maintained its buy rating on SpiceJet with a
target of Rs 33. The research firm expects SpiceJet to report full year seat
factor of 65.3%.

Nifty has support at 4150: Karvy

According to Karvy Stock Broking\’s Weekly Technical Analysis report,

Domestic markets are likely to find support at the 13700/4150 levels after
the heavy sell off witnessed last week.

Jubilant Organosys a market performer: Karvy

Karvy Stock Broking has downgraded its rating on Jubilant Organosys

from outperformer to market performer with a target of Rs 380. The
research firm maintains their net revenue estimates at Rs 37.19 billion in
FY09 and Rs 46.8 billion in FY10E with strong growth propelling the
CRAMS and DDDS segments coupled with good growth from IPP
business.

Sell Sterlite Industries: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can sell
Sterlite Industries. But one can hold on to Madras Aluminium and not
actually buy it at this point of time, he added.

Sell Sesa Goa, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can sell
Sesa Goaat this level.
Sensex has support at 14600: Karvy

According to Karvy Stock Broking Technical Analysis report, supports for

the day are placed at the 14600/4370 levels.

Buy Puravankara Projects,target of Rs 302: Karvy

Karvy Stock Broking has maintained its buy rating on Puravankara

Projects with a target price of Rs 302. The research firm believes that, with
low leveraged balance sheet and inhouse construction activities,
Puravankara stands to benefit in the long run.

Sensex has support at 14750: Karvy

According to Karvy Stock BrokingTechnical Analysis report, resistances

are placed at the 15100/4525 levels while supports for the day are placed at
the 14750/4420 levels.

Mkts overreacting to nuke deal: Karvy Stk Broking

Hemindra Hazari of Karvy Stock Broking feels the market’s attention has
now been focused on capital goods stocks. However, Hazari feels the
market is overreacting at the moment and he does not see anything
happening in the immediate future; even in the nuclear power space.

Buy Cairn India, target of Rs 287: Karvy

Karvy Stock Broking has recommended a buy rating on Cairn India with a
target of Rs 287. The research firm believes that Cairn India Limited (CIL)
stock is attractively priced and offers upside as crude oil price continues to
remain high.
Nifty has resistance at 4450: Karvy

According to Karvy Stock Broking Technical Analysis report, most world

markets have ended in the green suggesting resistances to watch out for in
our markets are 14750/4450 levels.

Buy Godawari Power, target Rs 260: Karvy

Karvy Stock Broking has recommended a buy rating on Godawari Power

Ispat (GPIL) with a 12month target price of Rs 260. The research firm
expects net profit to record a CAGR of 31% on net sales CAGR of 37%
over the next three years (FY0810E).

A Mittal bullish on sugar space

Ashok Mittal of Karvy Comtrade is bullish on sugar space.

SpiceJet a marketperformer: Karvy Stock Broking

Karvy Stock Broking has maintained its market performer rating on

SpiceJet with a target price of Rs 33. During 1QFY09, SpiceJet reported
net losses of Rs 1292 million as against our estimate of Rs 778 million.

Crude prices to bounce back in Oct: Experts

Ashok Mittal of Karvy Comtrade feels that the crude undertone is bearish.
But he sees support at USD 100 per barrel levels. Kishore Narne,
VicePresident of Anand Rathi Commodities expects crude to bounce in
nearterm on short covering. He sees doubledigit figures for crude over the
next quarter.
Nifty has support at 4440: Karvy

According to Karvy Stock Broking Technical Analysis report, 14800/4440

levels are supports for the day while 15100/4545 will serve as resistance
points.

Nifty may go up to 46004650 levels: Karvy Stock Broking

Ambareesh Baliga of Karvy Stock Broking feels that the market will move
up from 4500 levels in two weeks or so. The Nifty will consolidate from
this range and it can go upto 46004650 to may be 4850 levels.

Buy Kalpataru Power; Tgt Rs 1030: Karvy

Karvy Stock Broking has recommended a buy rating on Kalpataru Power

with a target of Rs 1030 in its report on 1st September, 2008.

Buy Lupin; tgt Rs 930: Karvy Stock Broking

Karvy Stock Broking has recommended buy rating on Lupin, with price
target of Rs 930, in its report dated September 2, 2008.

Stay with Punj Lloyd: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can stay
invested in Punj Lloyd. Over the next eightnine months we should see
levels of closer to Rs 373380 because clearly the order book position is
extremely good and the fixed price contract in that order book is just about
10%.
Exit Moser Baer, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can exit
Moser Baer. The optical media, which was the main business of the
company earlier is not doing well in fact they are suffering losses there and
at the same time the new business of photo voltaic sales is yet to takeoff
and show performance.

Hold Firstsource Solutions, says Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that one can hold
Firstsource Solutions for possibly the next twothree weeks by which one
should see levels of Rs 4850.

SBI can test Rs 16001650: Baliga

Ambareesh Baliga of Karvy Stock Broking is of the view that SBI can test
Rs16001650. If one sees level closer to around Rs 1,2501,275, should be
utilize to average out and possibly over the next sixseven months one
should be able to get out of this stock at Rs 1,6001,650.

Buy Opto Circuits, target of Rs 531: Karvy

Karvy Stock Broking has maintained its buy rating on Opto Circuits India
with a target price of Rs 531. Opto Circuits is planning to raise fund of Rs
10 billion for future expansion, joint ventures, acquisition, research
development and other purposes.

Nifty has resistance at 43004350: Karvy

According to Karvy Stock Broking Technical Analysis report, Resistances

post yesterday’s sell off are placed at the 1430014350/43004350 levels
 STRUCTURE OF INDIAN MUTUAL FUND INDUSTRY
The Indian mutual fund industry is dominated by the Unit Trust of
India which has a total corpus of Rs 700bn collected from more than 20
million investors. The UTI has many funds/schemes in all categories ie
equity, balanced income etc with some being open-ended and some being
closed-ended. The Unit Scheme 1964 commonly referred to as US 64,
which is a balanced fund, is the biggest scheme with a corpus of about Rs
200 bn. UTI was floated by financial institutions and is governed by a
special act of Parliament. Most of its investors believe that the UTI is
government owned and controlled, which, while legally incorrect, is true
for all practical purposes.
The second largest category of mutual funds are the ones floated by
nationalized banks. Canbank Asset Management floated by Canara Bank
and SBI Funds Management floated by the State Bank of India are the
largest of these. GIC AMC floated by General Insurance Corporation and
Jeevan Bima Sahayog AMC floated by the LIC are some of the other
prominent ones. The aggregate corpus of funds managed by this category
of AMCs is about Rs 150 bn.
The third largest category of mutual funds is the ones floated by the private
sector and by foreign asset management companies. The largest of these
are Prudential ICICI AMC and Birla Sun Life AMC>The aggregate corpus
of assets managed by this category of AMCs is in excess of Rs 250 bn.
Some of the AMCs operating currently are :
Name of the AMC Nature of
ownership
Alliance Capital Asset management (I) Private Limited Private foreign
Birla Sun Life Asset Management Company Limited Private Indian
Mank of Baroda Asset management Company Limited Banks
Bank of India Asset Management Company Limited Banks
Canbank Investment Management Servies Limited Banks
Cholamanadalam Cazenove Asset Management Company Private foreign
Limited
Dundee Asset Management Company Limited Private foreign
DSP Merrill Lynch Asset Management Company Limited Private foreign
Escorts Asset Management Limited Private Indian
First India Asset Management Limited Private Indian
GIC Asset Management Company Limited Institutions
IDBI Investment Management Company Limited Institutions
Indfund Management Limited Banks
ING Investment Asset Management Company Private Private foreign
limited
JM Capital Management Limited Private Indian
Jardine Fleming (I) Asset Management Limited Private foreign
Kotak Mahindra Asset Management company Limited Private Indian
Jeevan Bima Sahayog Asset Management Company Institutions
Limited
Morgan Stanley Asset Management Company Private Private foreign
Limited
Punjab National Bank Asset Management Company Banks
Limited
Reliance Capital Asset Management Company Limited Private Indian
State Bank of India Funds Management Limited Banks
Shriram Asset Management company Limited Private
Indian
Sun F and C Asset Management (I) Private Limited Private
foreign
Sundaram Newton Asset Management Company Limited Private
foreign
Tata Asset Management Company Limited Private
Indian
Credit Capital Asset Management Company Limited Private
Indian
Templeton Asset Management (India) Private Limited Private
foreign
Unit Trust of India Institutions
Zurich Asset management Company (I) Limited Private
foreign

Global Scenario

Some basic facts:

• The money market mutual fund segment has a total corpus of $ 1.48
trillion in the U.S. against a corpus of $ 100 million in India.

• Out of the top 10 mutual funds worldwide, eight are bank-

sponsored. Only Fidelity and Capital are non-bank mutual funds in
this group.

• In the U.S. the total number of schemes is higher than that of the
listed companies while in India we have just 277 schemes

• Internationally, mutual funds are allowed to go short. In India fund

managers do not have such leeway.

• In the U.S. about 9.7 million households will manage their assets
on-line by the year 2003, such a facility is not yet of avail in India.
 • On- line trading is a great idea to reduce management expenses
from the current 2 % of total assets to about 0.75 % of the total
assets.

• 72% of the core customer base of mutual funds in the top 50-
broking firms in the U.S. are expected to trade on-line by 2003.

(Source: The Financial Express September, 99)

Internationally, on-line investing continues its meteoric rise. Many have

debated about the success of e- commerce and its breakthroughs, but it is
true that this aspect of technology could and will change the way financial
sectors function. However, mutual funds cannot be left far behind. They
have realized the potential of the Internet and are equipping themselves to
perform better.

In fact in advanced countries like the U.S.A, mutual funds buy- sell
transactions have already begun on the Net, while in India the Net is used
as a source of Information.

Such changes could facilitate easy access, lower intermediation costs and
better services for all. A research agency that specializes in internet
technology estimates that over the next four years Mutual Fund Assets
traded on- line will grow ten folds from $ 128 billion to $ 1,227 billion ;
whereas equity assets traded on-line will increase during the period from $
246 billion to $ 1,561 billion. This will increase the share of mutual funds
from 34% to 40% during the period.

(Source: The Financial Express September ,99)

Such increases in volumes are expected to bring about large changes in the
way Mutual Funds conduct their business.

Here are some of the basic changes that have taken place since the advent
of the Net.

• Lower Costs: Distribution of funds will fall in the online trading

regime by 2003 . Mutual funds could bring down their
administrative costs to 0.75% if trading is done on- line. As per
SEBI regulations , bond funds can charge a maximum of 2.25% and
equity funds can charge 2.5% as administrative fees. Therefore if
the administrative costs are low , the benefits are passed down and
hence Mutual Funds are able to attract mire investors and increase
their asset base.

• Better advice: Mutual funds could provide better advice to their

investors through the Net rather than through the traditional
investment routes where there is an additional channel to deal with
the Brokers. Direct dealing with the fund could help the investor
with their financial planning.
• In India , brokers could get more Net savvy than investors and
could help the investors with the knowledge through get from the
Net.

• New investors would prefer online : Mutual funds can target

investors who are young individuals and who are Net savvy, since
servicing them would be easier on the Net.
• India has around 1.6 million net users who are prime target for
these funds and this could just be the beginning. The Internet users
are going to increase dramatically and mutual funds are going to be
 the best beneficiary. With smaller administrative costs more funds
would be mobilized .A fund manager must be ready to tackle the
volatility and will have to maintain sufficient amount of
investments which are high liquidity and low yielding investments
to honor redemption.

• Net based advertisements: There will be more sites involved in ads

and promotion of mutual funds. In the U.S. sites like AOL offer
detailed research and financial details about the functioning of
different funds and their performance statistics. A is witnessing a
genesis in this area.

Future Scenario

The asset base will continue to grow at an annual rate of about 30 to 35 %

over the next few years as investor’s shift their assets from banks and other
traditional avenues. Some of the older public and private sector players will
either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with
stronger players in three to four years. In the private sector this trend has
already started with two mergers and one takeover. Here too some of them
will down their shutters in the near future to come.

But this does not mean there is no room for other players. The market will
witness a flurry of new players entering the arena. There will be a large
number of offers from various asset management companies in the time to
come. Some big names like Fidelity, Principal, Old Mutual etc. are looking
at Indian market seriously. One important reason for it is that most major
players already have presence here and hence these big names would
hardly like to get left behind.

In the U.S. most mutual funds concentrate only on financial funds like
equity and debt. Some like real estate funds and commodity funds also take
an exposure to physical assets. The latter type of funds are preferred by
corporate’s who want to hedge their exposure to the commodities they deal
with.

For instance, a cable manufacturer who needs 100 tons of Copper in the
month of January could buy an equivalent amount of copper by investing
in a copper fund. For Example, Permanent Portfolio Fund, a conservative
U.S. based fund invests a fixed percentage of it’s corpus in Gold, Silver,
Swiss francs, specific stocks on various bourses around the world, short –
term and long-term U.S. treasuries etc.

In U.S.A. apart from bullion funds there are copper funds, precious metal
funds and real estate funds (investing in real estate and other related assets
as well.).In India, the Canada based Dundee mutual fund is planning to
launch a gold and a real estate fund before the year-end.

In developed countries like the U.S.A there are funds to satisfy

everybody’s requirement, but in India only the tip of the iceberg has been
explored. In the near future India too will concentrate on financial as well
as physical funds.

The mutual fund industry is awaiting the introduction of DERIVATIVES

in the country as this would enable it to hedge its risk and this in turn
would be reflected in it’s Net Asset Value (NAV).
SEBI is working out the norms for enabling the existing mutual fund
schemes to trade in Derivatives. Importantly, many market players have
called on the Regulator to initiate the process immediately, so that the
mutual funds can implement the changes that are required to trade in
Derivatives.

COMPANY PROFILE

Overview: -

KARVY, is a premier integrated financial services provider, and

ranked among the top five in the country in all its business segments,
services over 16 million individual investors in various capacities, and
provides investor services to over 300 corporates, comprising Corporate
India. KARVY covers the entire spectrum of financial services such as
Stock broking, Depository Participants, Distribution of financial products –
mutual funds, bonds, fixed deposit, equities, Insurance Broking,
Commodities Broking, Personal Finance Advisory Services, Merchant
Banking & Corporate Finance, placement of equity, IPOs, among others.
Karvy has a professional management team and ranks among the best in
technology, operations and research of various industrial segments.

Karvy – Early Days:

The birth of Karvy was on a modest scale in 1981. It began with the
vision and enterprise of a small group of practicing Chartered Accountants
who founded the flagship company, Karvy Consultants Limited. They
started with consulting and financial accounting automation, and carved
inroads into the field of registry and share accounting by 1985. Since then,
they have utilized their experience and superlative expertise to go from
strength to strength…to better their services, to provide new ones, to
innovate, diversify and in the process, evolved Karvy as one of India’s
premier integrated financial service enterprise.

Thus over the last 20 years Karvy has traveled the success route,
towards building a reputation as an integrated financial services provider,
offering a wide spectrum of services. And it has made this journey by
taking the route of quality service, path-breaking innovations in service,
versatility in service and finally…totality in service.

Highly qualified manpower, cutting-edge technology,

comprehensive infrastructure and total customer-focus has secured the
position of an emerging financial services giant enjoying the confidence
and support of an enviable clientele across diverse fields in the financial
world.

Its values and vision of attaining total competence in its servicing

has served as the building block for creating a great financial enterprise.

The Karvy Credo:-

• Its Clients & Its Focus:-

Clients are the reason.
Personalized service, professional care, pro-activeness are the
values that help to nurture enduring relationships with the clients.
• Respect for the individual:-
Each and every individual is an essential building block of the
organization.
Karvy Group is the kiln that hones individuals to perfection.
Be they are employees, shareholders or investors. It do so by
 upholding their dignity & pride, inculcating trust and achieving a
sensitive balance of their professional and personal lives.
• Teamwork:-
None of us is more important than all of us.
Each team member is the face of Karvy. Together we offer
diverse services with speed, accuracy and quality to deliver only
one product: excellence. Transparency, co-operation, invaluable
individual contributions for a collective goal, and respecting
individual uniqueness within a corporate whole, is how we deliver
again and again.
• Responsible Citizenship:-
A social balance sheet is as rewarding as a business one.
As a responsible corporate citizen, our duty is to foster a better
environment in the society where we live and work. Abiding by its
norms, and behaving responsibly towards the environment, is some
of our growing initiatives towards realizing it.
• Integrity:-
Everything else is secondary.
Professional and personal ethics are our bedrock. It take pride
in an environment that encourages honesty and the opportunity to
learn from failures than camouflage them. It insists on consistency
between works and actions.
Milestones: -

Product Profile :-

Karvy Consultants Limited: -

As the flagship company of the Karvy Group, Karvy Consultants

Limited has always remained at the helm of organizational affairs,
pioneering business policies, work ethic and channels of progress.
 Having emerged as a leader in the registry business, the first of the
businesses that have now transferred into a joint venture with Computer
share Limited of Australia, the world’s largest registrar. With the advent of
depositories in the Indian capital market and the relationships that have
created in the registry business. Karvy was one of the early entrants
registered as Depository Participant with NSDL (National Securities
Depository Limited), the first Depository in the country and then with
CDSL (Central Depository Services Limited). Today, it service over 6
lakhs customer accounts in this business, spread across over 250
cities/towns in India and are ranked amongst the largest Depository
Participants in the country. With a growing secondary market presence,
this business of Karvy was then decided to transferred into Karvy Stock
Broking Limited (KSBL), our associate and a member of NSE, BSE and
HSE.

IT enabled services:-

Technology Services division forms the ideal platform to unleash

our technology initiatives and make our presence felt on the Internet. Past
achievements include many quality websites designed, developed and
deployed. Karvy Group also possesses own web hosting facilities with
dedicated bandwidth and a state-of-the-art server farm (data center) with
services functioning on a variety of operating platforms such as Windows,
Solaris, Linux and Unix.
The corporate website of the company, “www.karvy.com”, gives
access to in-depth information on financial matters including Mutual
Funds, IPOs, Fixed Income Schemes, Insurance, Stock Market and much
more. A link called ‘Resource Center’, devoted solely to research
conducted by the team of experts on various financial aspects like ‘Sector
Research’, deals exclusively with in-depth analysis of the key sectors of the
Indian economy. Besides, a host of other links like ‘My Portfolio’ which
acts as a personalized and customized financial measure, makes this site
extremely informative about investment options, market trends, news as
also about the company and each of the services offered here.

Karvy Stock Broking Limited: -

Member - National Stock Exchange (NSE), The Bombay Stock

Exchange (BSE), and The Hyderabad Stock Exchange (HSE).

Karvy Stock Broking Limited, one of the cornerstones of the

Karvy edifice, flows freely towards attaining diverse goals of the customer
through varied services. Creating a plethora of opportunities for the
customer by opening up investment vistas backed by research-based
advisory services. Here, growth knows no limits and success recognizes no
boundaries. Helping the customer create waves in his portfolio and
empowering the investor completely is the ultimate goal.

Stock Broking Services:-

It is an undisputed fact that the stock market is unpredictable and

yet enjoys a high success rate as a wealth management and wealth
accumulation option. The difference between unpredictability and a safety
anchor in the market is provided by in-depth knowledge of market
functioning and changing trends, planning with foresight and choosing
one’s options with care. This is what we provide in our Stock Broking
services.

We offer services that are beyond just a medium for buying and
selling stocks and shares. Instead we provide services, which are multi
dimensional and multi-focused in their scope. There are several advantages
in utilizing our Stock Broking services, which are the reasons why it is one
of the best in the country.

We offer trading on a vast platform – National Stock Exchange,

Bombay Stock Exchange and Hyderabad Stock Exchange. More
importantly, we make trading safe to the maximum possible extent, by
accounting for several risk factors and planning accordingly. We are
assisted in this task by our in-depth research, constant feedback and sound
advisory facilities. Our highly skilled research team, comprising of
technical analysts as well as fundamental specialists, secure result-oriented
information on market trends, market analysis and market predictions. This
crucial information is given as a constant feedback to our customers,
through daily reports delivered thrice daily – The Pre-session Report,
where market scenario for the day is predicted, The Mid-session Report,
timed to arrive during lunch break , where the market forecast for the rest
of the day is given and The Post-session Report, the final report for the
day, where the market and the report itself is reviewed. To add to this
repository of information, we publish a monthly magazine “Karvy – The
Finapolis”, which analyzes the latest stock market trends and takes a close
look at the various investment options, and products available in the
market, while a weekly report, called “ Karvy Bazaar Baatein”, keeps you
more informed on the immediate trends in the stock market. In addition,
our specific industry reports give comprehensive information on various
industries. Besides this, we also offer special portfolio analysis packages
that provide daily technical advice on scripts for successful portfolio
management and provide customized advisory services to help you make
the right financial moves that are specifically suited to your portfolio.

Our Stock Broking services are widely networked across India,

with the number of our trading terminals providing retail stock broking
facilities. Our services have increasingly offered customer oriented
convenience, which we provide to a spectrum of investors, high-net worth
or otherwise, with equal dedication and competence.

But true to our spirit, this success is not our final destination, but
just a platform to launch further enhanced quality services to provide you
the latest in convenient, customer-friendly stock management.

Over the years we have ensured that the trust of our customers is
our biggest returns. Factors such as our success in the Electronic custody
business has helped build on our tradition of trust even more.
Consequentially our retail client base expanded very fast.

To empower the investor further we have made serious efforts to

ensure that our research calls are disseminated systematically to all our
stock broking clients through various delivery channels like email, chat,
SMS, phone calls etc.

Our foray into commodities broking has been path breaking and we
are in the process of converting existing traders in commodities into the
more organized mainstream of trading in commodity futures, both as a
trading and risk hedging mechanism.
In the future, our focus will be on the emerging businesses and to
meet this objective, we have enhanced our manpower and revitalized our
knowledge base with enhances focus on Futures and Options as well as the
commodities business.

Depository Participants:-

The onset of the technology revolution in financial services

Industry saw the emergence of Karvy as an electronic custodian registered
with National Securities Depository Ltd (NSDL) and Central Securities
Depository Ltd (CSDL) in 1998. Karvy set standards enabling further
comfort to the investor by promoting paperless trading across the country
and emerged as the top 3 Depository Participants in the country in terms
of customer serviced.

Offering a wide trading platform with a dual membership at both

NSDL and CDSL, we are a powerful medium for trading and settlement of
dematerialized shares. We have established live DPMs, Internet access to
accounts and an easier transaction process in order to offer more
convenience to individual and corporate investors. A team of professional
and the latest technological expertise allocated exclusively to our demat
division including technological enhancements like SPEED-e, make our
response time quick and our delivery impeccable. A wide national network
makes our efficiencies accessible to all.
www.karvydp.com

Distribution of Financial Products:-

The paradigm shift from pure selling to knowledge based selling

drives the business today. With our wide portfolio offerings, we occupy all
segments in the retail financial services industry.
 A 1600 team of highly qualified and dedicated professionals drawn
from the best of academic and professional backgrounds are committed to
maintaining high levels of client service delivery. This has propelled us to a
position among the top distributors for equity and debt issues with an
estimated market share of 15% in terms of applications mobilized, besides
being established as the leading procurer in all public issues.

To further tap the immense growth potential in the capital markets

we enhanced the scope of our retail brand, Karvy – The Finapolis , thereby
providing planning and advisory services to the mass affluent. Here we
understand the customer needs and lifestyle in the context of present
earnings and provide adequate advisory services that will necessarily help
in creating wealth. Judicious planning that is customized to meet the future
needs of the customer deliver a service that is exemplary. The market-
savvy and the ignorant investors, both find this service very satisfactory.
The edge that we have over competition is our portfolio of offerings and
our professional expertise. The investment planning for each customer is
done with an unbiased attitude so that the service is truly customized.

Our monthly magazine, Finapolis, provides up-dated market

information on market trends, investment options, opinions etc. Thus
empowering the investor to base every financial move on rational thought
and prudent analysis and embark on the path to wealth creation.

http://mfportfolio.karvy.com

Advisory Services

Under our retail brand ‘Karvy – The Finapolis’, we deliver advisory

services to a cross-section of customers. The service is backed by a team of
dedicated and expert professionals with varied experience and background
in handling investment portfolios. They are continually engaged in
designing the right investment portfolio for each customer according to
individual needs and budget considerations with a comprehensive support
system that focuses on trading customers' portfolios and providing valuable
inputs, monitoring and managing the portfolio through varied technological
initiatives. This is made possible by the expertise we have gained in the
business over the years. Another venture towards being investor-friendly is
the circulation of a monthly magazine called ‘Karvy - the Finapolis'.
Covering the latest of market news, trends, investment schemes and
research-based opinions from experts in various financial fields. www.the-
finapolis.com
Research: -

Private Client Group:-

This specialized division was set up to cater to the high net worth
individuals and institutional clients keeping in mind that they require a
different kind of financial planning and management that will augment not
just existing finances but their life-style as well. Here we follow a hard-
nosed business approach with the soft touch of dedicated customer care and
personalized attention.

For this purpose we offer a comprehensive and personalized service

that encompasses planning and protection of finances, planning of business
needs and retirement needs and a host of other services, all provided on a
one-to-one basis.

Our research reports have been widely appreciated by this segment.

The delivery and support modules have been fine tuned by giving our
clients access to online portfolio information, constant updates on their
portfolios as well as value-added advise on portfolio churning, sector
switches etc. The investment recommendations given by our research team
in the cash market has enjoyed a high success rate.

Karvy Investors Service Limited: -

Merchant Banking:-

Recognized as a leading merchant banker in the country, we are

registered with SEBI as a Category I merchant banker. This reputation was
built by capitalizing on opportunities in corporate consolidations, mergers
and acquisitions and corporate restructuring, which have earned us the
reputation of a merchant banker. Raising resources for corporate or
Government Undertaking successfully over the past two decades have
given us the confidence to renew our focus in this sector.

Our quality professional team and our work-oriented dedication

have propelled us to offer value-added corporate financial services and act
as a professional navigator for long term growth of our clients, who include
leading corporates, State Governments, foreign institutional investors,
public and private sector companies and banks, in Indian and global
markets.

We have also emerged as a trailblazer in the arena of relationships,

both at the customer and trade levels because of our unshakable integrity,
seamless service and innovative solutions that are tuned to meet varied
needs. Our team of committed industry specialists, having extensive
experience in capital markets, further nurtures this relationship.
Our financial advice and assistance in restructuring, divestitures,
acquisitions, de-mergers, spin-offs, joint ventures, privatization and
takeover defense mechanisms have elevated our relationship with the client
to one based on unshakable trust and confidence.

Karvy Computer Share Private Limited: -

We have traversed wide spaces to tie up with the world’s largest

transfer agent, the leading Australian company, Computer share Limited.
The company that services more than 75 million shareholders across 7000
corporate clients and makes its presence felt in over 12 countries across 5
continents has entered into a 50-50 joint venture with us.

With our management team completely transferred to this new

entity, we will aim to enrich the financial services industry than before.
The future holds new arenas of client servicing and contemporary and
relevant technologies as we are geared to deliver better value and foster
bigger investments in the business. The worldwide network of Computer
share will hold us in good stead as we expect to adopt international
standards in addition to leveraging the best of technologies from around the
world.
Excellence has to be the order of the day when two companies with
such similar ideologies of growth, vision and competence, get together.
www.karisma.karvy.com
 We have attained a position of immense strength as a provider of
across-the-board transfer agency services to AMCs, Distributors and
Investors.

Mutual Fund Services:-

Nearly 40% of the top-notch AMCs including prestigious clients like

Deutsche AMC and UTI swear by the quality and range of services that we
offer. Besides providing the entire back office processing, we provide the
link between various Mutual Funds and the investor, including services to
the distributor, the prime channel in this operation.

Carrying the ‘limitless' ideology forward, we have explored new

dimensions in every aspect of Mutual Fund servicing right from volume
management, cost effective pricing, delivery in the least turnaround time,
efficient back-office and front-office operations to customized service. We
have been with the AMCs every step of the way, helping them serve their
investors better by offering them a diverse and customized range of
services. The ‘first to market' approach that is our anthem has earned us the
reputation of an innovative service provider with a visionary bent of mind.

Our service enhancements such as ‘Karvy Converz', a full-fledged

call center, a top-line website (www.karvymfs.com), the ‘m-investor' and
many more, creating a galaxy of customer advantages.

www.karvymfs.com

Issue Registry:-
 In our voyage towards becoming the largest transaction-processing
house in the Indian Corporate segment, we have mobilized funds for
numerous corporate, Karvy has emerged as the largest transaction-
processing house for the Indian Corporate sector. With an experience of
handling over 700 issues, Karvy today, has the ability to execute
voluminous transactions and hard-core expertise in technology applications
have gained us the No.1 slot in the business. Karvy is the first Registry
Company to receive ISO 9002 certification in India that stands testimony to
its stature

Karvy has the backing of skilled human resources complemented by

requisite technological packages to ensure a faster processing capability.
Karvy has the benefit of a good synergy between depositories and registry
that enables faster resolution to related customer queries. Apart from its
unique investor servicing presence in all the phases of a public Issue, it is
actively coordinating with both the main depositories to develop special
models to enable the customer to access depository (NSDL, CDSL)
services during an IPO.

Our trust-worthy reputation, competent manpower and high-end

technology and infrastructure are the solid foundations on which our
success is built. http://karisma.karvy.com
Corporate Shareholder Services:-

Karvy has been a customer centric company since its inception.

Karvy offers a single platform servicing multiple financial instruments in
its bid to offer complete financial solutions to the varying needs of both
corporate and retail investors where an extensive range of services are
provided with great volume-management capability.
 Today, Karvy is recognized as a company that can exceed customer
expectations which is the reason for the loyalty of customers towards
Karvy for all his financial needs. An opinion poll commissioned by “The
Merchant Banker Update” and conducted by the reputed market research
agency, MARG revealed that Karvy was considered the “Most Admired”
in the registrar category among financial services companies.

We have grown from being a pure transaction processing business,

to one of complete shareholder solutions.

http://karisma.karvy.com

Karvy Global Service Limited: -

The specialist Business Process Outsourcing unit of the Karvy

Group. The legacy of expertise and experience in financial services of the
Karvy Group serves us well as we enter the global arena with the
confidence of being able to deliver and deliver well.

Here we offer several delivery models on the understanding that

business needs are unique and therefore only a customized service could
possibly fit the bill. Our service matrix has permutations and combinations
that create several options to choose from.

Be it in re-engineering and managing processes or delivering new

efficiencies, our service meets up to the most stringent of international
standards. Our outsourcing models are designed for the global customer
and are backed by sound corporate and operations philosophies, and
domain expertise. Providing productivity improvements, operational cost
control, cost savings, improved accountability and a whole gamut of other
advantages.

We operate in the core market segments that have emerging

requirements for specialized services. Our wide vertical market coverage
includes Banking, Financial and Insurance Services (BFIS), Retail and
Merchandising, Leisure and Entertainment, Energy and Utility and
Healthcare.

Our horizontal offerings do justice to our stance as a

comprehensive BPO unit and include a variety of services in Finance and
Accounting Outsourcing Operations, Human Resource Outsourcing
Operations, Research and Analytics Outsourcing Operations and Insurance
Back Office Outsourcing Operations. www.karvyglobal.com

Karvy Commodities Broking Private Limited: -

At Karvy Commodities, we are focused on taking commodities

trading to new dimensions of reliability and profitability. We have made
commodities trading, an essentially age-old practice, into a sophisticated
and scientific investment option.

Here we enable trade in all goods and products of agricultural and

mineral origin that include lucrative commodities like gold and silver and
popular items like oil, pulses and cotton through a well-systematized
trading platform.
Our technological and infrastructural strengths and especially our
street-smart skills make us an ideal broker. Our service matrix is holistic
with a gamut of advantages, the first and foremost being our legacy of
human resources, technology and infrastructure that comes from being part
of the Karvy Group.
Our wide national network, spanning the length and breadth of India,
further supports these advantages. Regular trading workshops and seminars
are conducted to hone trading strategies to perfection. Every move made is
a calculated one, based on reliable research that is converted into valuable
information through daily, weekly and monthly newsletters, calls and
intraday alerts. Further, personalized service is provided here by a
dedicated team committed to giving hassle-free service while the brokerage
rates offered are extremely competitive.

Our commitment to excel in this sector stems from the immense

importance that commodities broking has to a cross-section of investors –
farmers, exporters, importers, manufacturers and the Government of India
itself.

www.karvycommodities.com

Karvy Insurance Broking Private Limited: -

At Karvy Insurance Broking Pvt. Ltd., we provide both life and

non-life insurance products to retail individuals, high net-worth clients and
corporates. With the opening up of the insurance sector and with a large
number of private players in the business, we are in a position to provide
tailor made policies for different segments of customers. In our journey to
emerge as a personal finance advisor, we will be better positioned to
leverage our relationships with the product providers and place the
requirements of our customers appropriately with the product providers.
With Indian markets seeing a sea change, both in terms of investment
pattern and attitude of investors, insurance is no more seen as only a tax
saving product but also as an investment product. By setting up a separate
entity, we would be positioned to provide the best of the products available
in this business to our customers.

Our wide national network, spanning the length and breadth of

India, further supports these advantages. Further, personalized service is
provided here by a dedicated team committed in giving hassle-free service
to the clients.

Objective of the Study And Methodology: -

Perspective by comparing the investors' preferences for MF
products with their preferences for other major financial products,
including equity shares, bonds, bank FDs and the structure of the Indian
mutual fund industry has been transformed during the last ten years or so
from a monolithic to a highly competitive structure. The investors now
have to choose from amongst a large number of MF organizations and
schemes. An important aspect examined in this study is how far
competition has progressed and what kind of pattern can be discerned in
regard to the investors' preferences among MF organizations/schemes. We
also attempt to examine the MF industry's development against a wider
government savings schemes.

Research Methodology: -

The methodology of the research work for this project includes:

• Literature Research
• Different Mutual Fund Scheme
• Classification of Mutual fund scheme
• Data Collection

Literature Research:-
To study the various aspects of the mutual funds various literature
works has been considered which includes various books related to the
Mutual Funds, AMFI guidelines, SEBI and SBI guidelines, various
business magazines and news papers. All the basic information from this
source regarding the various aspects of Mutual Fund helps in
understanding the Mutual Fund industry. Different Mutual Fund Scheme
Next to the literature work it is important to look over the various Mutual
Fund schemes, the service providers and other related information. This
may be gathered from the prospectus and websites of the Mutual Fund
service providers, various magazines and news papers.

Classification of Mutual fund scheme: -

For the analysis among different mutual fund schemes proper
classification of the schemes is the important. The scheme are available in
various pre classified forms. So for the purpose of analysis here six
different categories of mutual fund schemes have been considered.
• Equity Funds
 • Liquid Funds
• Balanced Funds
• Floating Rate Funds
• Gilt Funds
• Monthly Income Plan Funds
Data Collection:-
The main data required for the purpose of the analysis are:
• List of Various Mutual fund schemes:-For the analysis to know the
various mutual funds schemes available for the Indian investors it is
important to look over then various schemes. This information is being
collected from the website
http://www.eastindiavyapaar.com.
• High rated Mutual funds schemes:-The mutual funds schemes
analyzed in for the present analysis are highly rated on annual average till
30 June 2004 as rated by Credit Rating Information Services India Limited
(CRISIL). The data collected for this purpose is sourced from
http://www.infoline.com.
• Various Data Related to Mutual Funds:-Data like monthly
returns, quartly returns, annual returns, corpus size, risks involved,
maturity period, expenses ratio etc. are also important for the analysis of
various mutual funds. Such informations are collected from the prospectus
and websites of various matual funds services providers like Prudential
ICICI Mutual Fund , Tata Mutual Fund, Birla Sun Life Mutual Fund,
Kotak Mutual Fund, Tempelton Mutual Fund, SBI Mutual Fund, UTI
Mutual Fund etc.. The data are also collected from
http://www.mutualfundsindia.com
 LIMITATIONS
Like many investments, mutual fund also offer advantages and
disadvantages, which are important to understand before buying them.
Here we explore some of the limitations of mutual funds investment.
• No Guarantees: No investment is risk free. If the entire declines in
value, the value of mutual fund shares will go down as well, no
matter how balanced the portfolio. Investors encounter fewer risks
when they invest in mutual funds than when they buy and sell
stocks on their own. However, anyone who invests through a
mutual fund runs the risk of losing money.
• Fees and commissions: All funds charge administrative fees to
cover their day-to-day expenses. Some funds also charge sales
commissions or "loads" to compensate brokers, financial
consultants, or financial planners. Even if you don't use a broker or
other financial adviser, you will pay a sales commission if you buy
shares in a Load Fund.
• Taxes: During a typical year,most actively managed mutual funds
sell anywhere from 20 to 70 percent of securities in their portfolios.
If your funds makes a profit on its sales, you will pay taxes on the
income you receive, even if you re-invest the money you made.
• Management risk: When you invest in a mutual fund, you depend
on the fund's manager to make the right decisions regarding the
fund's portfolio. If the manager does not perform as well as you had
hoped, you might not make as much money on your investment as
you expected. Of course, if you invest in Index Funds, you forego
management risk, because these funds do not employ managers.
 CONCLUSION
Therefore after the complete study it is concluded that mutual funds should
create value which can be done through several ways, such as by
(1) adopting a research-driven investment strategy aimed at discovering
value and identifying the best performing companies and stocks,
thereby also putting pressure on company management’s to improve
their performance.
(2) Designing investment products based on a better understanding of the
investor’s needs.
(3) Providing liquidity (through open-ended schemes which are akin to
market-making service) to securities, like bonds or infrequently traded
shares, which may otherwise be liquid.
(4) Providing an easy way to investors to diversity risk.
(5) Improving the reach of investment products to small investors through
widest possible distribution networks.
Mutual funds, as institutional providers of investment products,
have a tremendous advantage over other institutional providers, viz Banks,
insurance to Rs. 15 due to market boom against his purchase price of Rs.
10. He decides to exit from the scheme realizing Rs. 15,00,000 from the
Fund. Subsequently, the NAV falls ro Rs. 12.50 and he re-invests the
whole of Rs. 15,00,000 at the reduced price of Rs. 12.50 per unit, thus
increasing his holding from the original 100,000 units to 1,20,000 units
without having to increase his original investment. This dilutes the earnings
of all the other unit holders who have stayed with the scheme through out.
Tit hurts the scheme for another reason too, because the presence of such
trader-unit holders requires the maintenance of a larger proportion of assets
in low-yielding liquid forms in order to meet the demand for repurchases.
 If the Indian mutual fund industry has not been able to achieve a
sustained and fast growth in its savings mobilization role despite the
emergence of so many new mutual fund organizations, it is mainly because
it has been relying more on special tax concessions in order to sell its wares
than on the creation of value for investors through its services. This attitude
has to change.
In order to facilitate a steady growth of the mutual fund industry,
there is also a clear responsibility on the Government, viz. to provide a
rational and stable tax environment relating to mutual funds. The present
tax system is irrational and there is too much adochism Further as the
mutual fund industry’s fortunes are directly linked to the stock market, any
manufacturing of the market impinges on the mutual funds. Ensuring the
stock market’s orderly functioning is also the Government’s regulatory
responsibility. There is much to be done on the Government’s part in
regard to the above.
 FREQUENTLY USED TERMS

Net Asset Value (NAV)

Net Asset Value is the market value of the assets of the scheme
minus its liabilities. The per unit NAV is the net asset value of the scheme
divided by the number of units outstanding on the Valuation Date.
Advisor
The organization employed by a mutual fund to give professional
advice on the fund’s investments and to supervise the management of its
assets.
Asked or Offering Price
The price at which a mutual fund’s shares can be purchased. The
asked or offering price means the current net asset value (NAV) per share
plus sales charge, if any. For a no-load fund, the asked price is the same as
the NAV.
Asset Allocation Fund
A fund that spreads its portfolio among a wide variety of investments,
including domestic and foreign stocks and bonds, government securities,
gold bullion and real estate stocks. This gives small investors far more
diversification than they could get allocating money on their own some.
Capital Appreciation Fun
A mutual fund that seeks maximum capital appreciation through the
use of investment techniques involving greater than ordinary risk, such as
borrowing money in order to provide leverage, short-selling and high
portfolio turnover.
Capital Gains Distributions
Payments (usually annually) to mutual fund shareholders of gains
realized on the sale of portfolio securities.
 Capital Growth
A rise in market value of a mutual fund’s securities, reflected in its
net asset value per share. This is a specific long-term objective of many
mutual funds.

Certificate of Deposit
Interest-bearing, short-term debt instrument issued by banks and
thrifts.
Closed-End Investment Company
An investment company that offers a limited number of shares.
They are traded in the securities markets, usually through brokers. Price is
determined by supply and demand. Unlike open-end investment companies
(mutual funds), closed-end funds do not redeem their shares.
Commercial Paper
Short-term, unsecured promissory notes with maturates no longer
than 270 days. They are issued by corporations, to fund short-term credit
needs.
Common Stock Fund
An open-end investment company whose holdings consist mainly
of common stocks and usually emphasize growth of these funds keep the
proportions allocated between different sectors relatively constant, while
others alter the mix as market conditions change.
Automatic Reinvestment
A service offered by most mutual funds whereby income dividends
and capital gain distributions are automatically invested into the fund by
buying additional shares and thus building up holdings through the effects
of compounding.
 Balanced Fund
A mutual fund that maintains a balanced portfolio, generally 60%
bonds or preferred stocks and 40% common stocks.
Bid or Sell Price
The price at which a mutual fund’s shares are redeemed (bought
back) by the fund. The bid or redemption price means the current net asset
value per share, less any redemption fee or backend load.
Bond Fund
A mutual fund whose portfolio consists primarily of corporate or
Government bonds. These funds generally emphasize income rather than
growth.
Bond Rating
System of evaluating the probability of whether a bond issuer will
default. Various firms analyze the financial stability of both corporate and
government bond issuers. Ratings range from AAA or Aaa (extremely
unlikely to default) to D (currently in default). Bonds rated BBB or below
are not considered to be of investment grade. Mutual funds generally
restrict their bond purchases to issues of certain quality ratings, which are
specified in their prospectuses.
Rupee-Cost Averaging
The technique of investing a fixed sum at regular intervals
regardless of stock market movements. This reduces average share costs to
the investor, who acquires more shares in periods of lower securities prices
and fewer shares in periods of high prices. In this way, investing risk is
spread over time.
Exchange Privilege (Or switching privilege)
The right to transfer investments from one fund into another,
generally within the same fund group, at nominal cost.
 Ex-Dividend Date
The date on which a fund’s Net Asset Value (NAV) will fall by an
amount equal to the dividend and/or capital gains distribution (although
market movements may alter the fund’s closing NAV somewhat). Most
publications which list closing NAVs place an “X” after a fund’ name on
its ex-dividend date.
Expense Ratio
The ratio of total expenses to net assets of the fund. Expenses
include management fees, the cost of shareholder mailings and other
administrative expenses. The ratio is listed in a fund’s prospectus. Expense
ratios may be a function of a fund’s size rather than of its success in
controlling expenses.
Fiscal Year
An accounting period consisting of 12 consecutive months.
Global Fund
A fund that invests in both Indian and foreign securities.
Confirm Date
The date the fund processed your transaction, typically the same
day or the day after your trade date.

Contingent Deferred Sales Charge (CDSC)

A fee (or back-end load) imposed by certain funds on shares
redeemed within a specific period following their purchase. These charges
are usually assessed on a sliding scale, such as four percent to one percent
of the amounts redeemed, with the fee reduced each year the units are held.
 QUESTIONNAIRE

Q1) Are you trading in Karvy?

Options No. of % of

Respondents Respondents
Yes 120 75%

No 40 25%

Interpretation:-
 25%

Yes
No

75%

75% of respondents are the customers of karvy, whereas 25% of

respondents are doing trading with some other company or sub broker.

Q2) From how many years you are the customer of Karvy?

Options No. of Respondents % of Respondents

More than 10 60 50%

years
5 – 10 years 30 25%
1 - 5 years 24 20%
Less than 1 year 6 5%
Interpretation: -

Maximum no.of respondents are the customers of Karvy i.e. of the

category lies in the category of More than 10 years

5%
20%
Less than 6 Months
6 m onths – 1 year
50% 1 year – 2 year
More than 2 year
25%

Q3) What are the reason of investing in Mutual Funds in Karvy?

 Options No. of Respondents % of Respondents
Very Cheap 14 35%

Schemes
Company’s Brand 16 40%

Name
Tie up with their 10 25%

bank
Any other - -

Interpretation:-

40% of respondents are doing trading with other companies because of their

brand image. Rest are trading with other companies because of tie up with their

banks and innovative schemes provided by them

Very cheap schem es

0%

40% 35% Tie up w ith their bank

Company’s brand
name
25% Any other

Q4)Would you like to switch to Karvy if it provide you with some

extra benefits?

Options Number of % of
Respondents Respondents
 Yes 90 75%
No 10 25%

Interpretation:-

75% of the respondents agree that they will switch over. But still 25% of
the respondents were there who will not switch to any other company.

25%

Yes
No
75%

Q5) In Karvy,are you fully satisfied by the benefits provided

Options Number of % of
Respondents Respondents

Yes 120 100%

No - -

Interpretation:-

100% of the customers of Karvy are satisfied by the benefits and services
provided.
Q6) If no, then what are the reasons behinds that?

Interpretation:-

Every customer was satisfied. Not a single customer of Karvy was there
who was dissatisfied with the services provided .

Q7) Do you invest in mutual fund online?

Options Number of % of
Respondents Respondents

Yes 40 80%
No 10 20%

Interpretation:-

80% of respondents are investing in Mutual Fund online, whereas 20% of

respondents invest through offline process.
No
20%

Ye s
80%
 BIBLIOGRAPHY

A. Books
(1) Pandey I.M. ‘Financial Management’, Eigth Edition,
Vikas Publicating House Pvt. Ltd., pp 1074-1092
(2) Kothari C.R. (1990) ‘Research Methodology’, Second
Edition,
Wishwa Prakashan, pp 39-149.

B. Websites
1. www.businessweek.com
2. www.google.com
3. www.karvy.com

C. Newspapers
1. Business line
2. Economic Times