Introduction of Portfolio Management

EXECUTIVE
SUMMARY
Institute Of Management & Research, Jalgaon.
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EXECUTIVE SUMMARY
The project titled “PORTFOLIO MANAGEMENT
SERVICES” has been carried out for “KARVY STOCK
BROKING LTD.”
The evaluation of financial planning has been increased
through decades, which can be best seen in customers. Now a
days investments have become very important part of income
saving.
Karvy Stock Broking Ltd. operates in various financial
products and services like, Consultancy, Stock Broking, Mutual
Fund, Tax Planning & Insurance.
According to study of the markets, it is being observed
that there are various financial instruments available in the
markets out of which some gives the well returns.
In this project I have shown the details of financial
planning as well as wealth management so as to understand
about the customer’s needs and wants with respect to market
and how a client’s portfolio can be designed and what factors a
portfolio manager must consider for designing a portfolio.
The area of the project work is Pune city and its location
where the survey has been undertaken those are Hinjewadi IT
Park, Kothrud, Senapati Bapat Road, Aundh IT Park,
Magarpatta City, Kharadi, Yerawada and Baner.
Karvy is the only personalized service provider offering a
range of investment services depending on the customer
requirements.
I hope KARVY will recognize this as well as take more
references from this project report.
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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
corporate, comprising the who is who of Corporate India.
KARVY covers the entire spectrum of financial services

such as Stock broking, Depository Participants, Distribution of
financial products like mutual funds, bonds, fixed deposit,
Merchant Banking & Corporate Finance, Insurance Broking,
Commodities Broking, Personal Finance Advisory Services,
placement of equity, IPOs, among others. Karvy has a
professional management team and ranks among the best in
technology, operations, and more importantly, in research of
various industrial segments.
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KARVY CREDO
Our Clients. Our Focus
Clients are the reason for our being.

Respect for the individual
Each and every individual is an essential building block

of our organization.
Teamwork
None of us is more important than all of us.

Responsible Citizenship
A social balance sheet is as rewarding as a business one.

Integrity
Everything else is secondary.
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MILESTONES
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ACHIVEMENTS
Among the top 5 stock brokers in India (4% of NSE

volumes)
India's No. 1 Registrar & Securities Transfer Agents
Among the to top 3 Depository Participants
Largest Network of Branches & Business Associates
ISO 9002 certified operations by DNV
Among top 10 Investment bankers
Largest Distributor of Financial Products
Adjudged as one of the top 50 IT uses in India by MIS

Asia
Full Fledged IT driven operations
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KARVY GROUP COMPANIES
Karvy Consultants Limited
Karvy Stock Broking Limited
Karvy Investors Services Limited
Karvy ComputersharePvt.Limited
Karvy Globle Services Limited
Karvy Commodities Broking Limited
Karvy Insurance Broking Pvt. Limited
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OBJECTIVE OF THE PROJECT
The following are the main objective of project: -
 To the partial fulfillment of the requirement of the award
of the Master In Business Administration.
 To know the concept of Portfolio Management.
 To know about the schemes offered by the different
insurance companies, new IPO’s, Mutual Funds.
 To know in depth about Insurance, Mutual Funds, Stock,
Bonds etc.
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Introduction of Portfolio
Management
The field of investments traditionally been divided into

security analysis and portfolio management. The heart of
security analysis is the valuation of financial assets. Value in
turn is the function of risk and return. These two concepts are
very important in the study of investments. Investment can be
defined the commitment of funds to one or more assets that will
be held over for some future time period.
MEANING: -
Rule 2, cla use (d ) of the SEBI (p ort fo lio
ma nag ers ) Rules , 19 93 defines the term “Portfolio” as
“t otal ho ldin gs of sec ur ities belon gin g to any
pe rson ”.
As a matter of fact, portfolio is combination of assets the
outcome of which cannot be defined with certainty new assets
could be physical assets, real estates, land, buildings, gold etc.
or financial assets like stocks, equity, debentures, deposits etc.
Our concern in this project is to discuss the topic with reference
to financial assets only.
Portfolio management refers to managing efficiently the
investment in the securities held by professionals for others.
Merchant bankers and the portfolio managers render the
services of portfolio management with a view to ensure
maximum return by such investments with minimum risk of
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loss of return on the money invested in securities held by them
for their clients.
The aim of Portfolio Management is to achieve the
maximum return from a portfolio, which has been delegated to
be managed by an individual? Manager or financial institution.
The manager has to balance the parameters which define a
Good investment i.e. security, liquidity and return. The goal is
to obtain the highest return for the client of the managed
portfolio
Why Financial Planning is needed ?

This can be explained by very simple example. Assume a
person is 40 years old and will require 70% of his current
annual income for each of the 15 years expect to live after his
retirement. He wants to retain his purchasing ability after
certain age.
In this case he will have to plan his finance and hence the
terms portfolio and portfolio management come in picture
Need of Portfolio Management

Investors should periodically review their asset allocation
across different assets as the portfolio can get skewed over a
period of time. This can be largely due to appreciation / deprec--
iation in the value of the investments.
As the financial goals are diverse, the investment choices
also need to be different to meet those needs. No single
investment is likely to meet all the needs, so one should keep
some money in bank deposits and / liquid funds to meet any
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urgent need for cash and keep the balance in other investment
products/ schemes that would maximize the return and
minimize the risk. Investment allocation can also change
depending on ones risk-return profile.
Objectives of Portfolio Management: -
1. Safety Of Fund: -
The investment should be preserved, not be lost,
and should remain in the returnable position in cash or kind.
2. Marketability: -
The investment made in securities should be
marketable that means, the securities must be listed and traded
in stock exchange so as to avoid difficulty in their encashment.
3. Liquidity: -
The portfolio must consist of such securities,
which could be en-cashed without any difficulty or involvement
of time to meet urgent need for funds. Marketability ensures
liquidity to the portfolio.
4. Reasonable return: -
The investment should earn a reasonable return to
upkeep the declining value of money and be compatible with
opportunity cost of the money in terms of current income in the
form of interest or dividend.
5. Appreciation in Capital: -
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The money invested in portfolio should grow and
result into capital gains.
6. Tax planning: -
Efficient portfolio management is concerned with
composite tax planning covering income tax, capital gain tax,
wealth tax and gift tax.
7. Minimize risk: -
Risk avoidance and minimization of risk are
important objective of portfolio management. Portfolio
managers achieve these objectives by effective investment
planning and periodical review of market, situation and
economic environment affecting the financial market.
Markowitz portfolio Theory
In the earlier days the investment communities talked

about risk and returns but there was no specific model to further
term.
The basic portfolio model was developed by Harry
Markowitz, who derived the expected rate of return for a
portfolio of assets and an expected risk measure. Before
Markowitz, investors dealt loosely with the concepts of return
and risk. He was first to develop the concept of portfolio
diversification in a formal way – He quantified the concept of
diversification. He showed quantitatively why and how
portfolio diversification works to reduce the risk of portfolio to
an investors. He was first to develop specific measure of
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portfolio risk and to derive the expected rate of return and risk
for a portfolio based on co – variance relationship. Markowitz
model is based on several assumptions regarding investment
behavior as: -
1. Investors consider each investment alternative as being
represented by a probability distribution of expected
return over some holding period.
2. Investors maximize one period-expected utility, and their
utilities curves demonstrate diminishing marginal utility
of wealth.
3. Investors estimate the risk of the portfolio on the basis of
the variability of expected returns.
4. Investors base decisions solely on expected return on
risk, so their utility curves are functions of expected
return and expected variance of returns only.
5. For a given risk level, investor prefer, higher returns to
lower returns. Similarly for a given level of expected
return, investors prefer less risk to more risk.
Under these assumptions, a single asset or a portfolio
assets is considered to be efficient if no other assets or portfolio
assets offers higher expected return with the same (or lower)
risk, or lower risk with same (or higher) expected returns.
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Activities of portfolio management: -
There are three major activities involved in portfolio
management.
I. Asset or securities allocation and identifying asset class.
II. Weighing shift across major asset class.
III. Security selection within asset class.
The above major activities are performed to achieve the

sole purpose to maximize return and minimize risk in the
investments. The said purpose depends upon the class of assets.
The assets may be classified in to following main investments
channels:
(a) Fixed income class

(i) Bonds/Debentures
(ii) Preference shares
(b) Non Specific income on investment class
(i) Equity of common stock
(c) Cash equivalent class
(i) Treasury bills
(ii) Commercial Papers.
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Class Type of Period Return Certaint Tax Risk
Security Of Shape y Of Structure
Maturity Return
Govt. Bonds Long Interest Definite Tax relief No
Coupon
Local Long Interest Definite Tax relief No
Bonds /
authorities Coupon
Debentures
bonds
(1). Public sector Long Interest Definite Tax relief No
bonds Coupon
Fixed
Preference Long Interest High Taxable Medi-
Income
Stock Coupon -um
Class
Redeemable Long Dividend High Taxable Medi-
Corporate
um
Debentures
Non- Perpetual Dividend Moderat Taxable
Redeemable ely High
(2) Perpetual Dividend Least Tax relief High

Non &
Equity
Specific Capital
Income Gains
(3) Short Discount High Taxable Low
Treasury
Cash
Bills
Equivalent
Commercial Short Discount High Taxable Low
Papers
Risk Aversion: -
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Portfolio theory also assumes that investors are basically
risk averse, meaning that, given a choice between two assets
with equal rates of return they will select the asset with lower
level of risk.
For example,
They purchased various type of insurance including life
insurance, Health insurance and car insurance.
The Combination of risk preference and risk aversion can
be explained by an attitude toward risk that depends on the
amount of money involved.
Definition of Risk: -
Although there is a difference in the specific definitions
of risk and uncertainty, for our purpose and in most financial
literature the two terms are used interchangeably. In fact, one
way to define risk is the uncertainty of future outcomes. An
alternative definition might be the probability of an adverse
outcome.
Composite risks involve the different

risk as explained below: -
(1). Interest rate risk: -

It occurs due to variability cause in return by changes in
level of interest rate. In long runs all interest rate move up or
downwards. These changes affect the value of security. RBI, in
India, is the monitoring authority which effectalises the change
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in interest rate. Any upward revision in interest rate affects fixed
income security, which carry old lower rate of interest and thus
declining market value. Thus it establishes an inverse
relationship in the prize of security.
Types Risk E xtent
Cash equivalent Less vulnerable to interest

rate risk
Long terms bonds More vulnerable to interest
rate risk.
(2) Purchasing power risk: -

It is known as inflation risk also. This risk emanates from
the very fact that inflation affects the purchasing power
adversely.
Purchasing power risk is more in inflationary times in
bonds and fixed income securities. It is desirable to invest in
such securities during deflationary period or a period of
decelerating inflation.
Purchasing power risk is less in flexible income securities
like equity shares or common stuffs where rise in dividend
income offset increase in the rate of inflation and provide
advantage of capital gains.
(3) Business risk:

Business risk emanates from sale and purchase of
securities affected by business cycles, technological changes
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etc. Business cycle affects all the type of securities viz. there is
cheerful movement in boom due to bullish trend in stock prizes
where as bearish trend in depression brings downfall in the
prizes of all types of securities.
Flexible income securities are nearly affected than fix
rate securities during depression due to decline in the market
prize.
(4) Financial risk: -

Financial risk emanates from the changes in the capital
structure of the company. It is also known as leveraged risk and
expressed in term of debt equity ratio. Excess of debts against
equity in the capital structure indicates the company to be
highly geared or highly levered. Although leveraged company’s
earnings per share (EPS) are more but dependence on
borrowing exposes it to the risk of winding up. For its inability
to honor its commitments towards the creditors.
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Here it is imperative to express the relationship between risk
and return, which is depicted graphically below –
Maximize returns, minimize risks
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Techniques of portfolio management
Various types of portfolio require different techniques to
be adopted to achieve the desired objectives. Some of the
techniques followed in India by portfolio managers are
summarized below.
(1). Equity portfolio

Equity portfolio is affected by internal and external
factors:
(a) Internal factors –
Pertain to the inner working of the particular company of
which equity shares are held. These factors generally include:
(1). Market value of shares

(2). Book value of shares
(3). Price earning ratio (P/e ratio)
(4). Dividend payout ratio
(b) External factors –
(1). Government policies

(2). Norms prescribed by institutions
(3). Business environment
(4). Trade cycles
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(2). Equity stock analysis –
The basic objective behind the analysis is to determine
the probable future – value of the shares of the concerned
company. It is carried out primarily fewer than two ways. :
(a). Earning per share
(b). Price earning ratio
(A) Trend of earning: -

(i). A higher price-earning ratio discounts expected profit
growth. Conversely, a downward trend in earning results in a
low price-earning ratio to discount anticipated decrease in
profits, price and dividend.
Rising EPS causes appreciation in price of shares, which
benefits investors in lower tax brackets? Such investors have
not pay tax or to give lower rate tax on capital gains.
(ii). Many institutional investor like stability and growth
and support high EPS.
(iii). Growth of EPS is diluted when a company finances
internally its expansion program and offers new stock.
(iv). EPS increase rapidly and result in higher P/e ratio
when a company finances its expansion program from internal
sources and borrowings without offering new stock.
(B) Quality of reported earning: -
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Quality of reported earnings affects P/e ratio. The factors
that affect the quality of reported earnings are as under:
(i). Depreciation allowances: -

Larger (Non Cash) deduction for depreciation provides
more funds to company to finance profitable expansion schemes
internally. This builds up future earning power of company.
(ii). Research and development outlets: -

There is higher P/e ratio for a company, which carries
R&D programs. R&D enhances profit-earning strength of the
company through increased future sales.
(iii). Inventory and other non-recurring type

of profit: -
Low cost inventory may be sold at higher price due to
inflationary conditions among profit but such profit may not
always occur and hence low P/e ratio.
(C). Dividend policy: -

Dividend policy is significant in affecting P/e ratio. With
higher dividend ratio, equity price goes up and thus raises P/e
ratio. Dividend rates are raised to push in share prices up.
Dividend cover is calculated to find out the time the dividend is
protected, In terms of earnings. It is calculated as under:
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Di vid end C ov er = EPS / Div iden d pe r
Sha re
(D). Investors demand: -

Demand from institutional investors for equity also
enhances the P/e ratio.
(3). Quality of management: -

Investors decide about the ability and caliber of
management and hold and dispose of equity academy. P/e ratio
is more where a company is managed by reputed entrepreneurs
with good past records of management performance.
Types of Portfolios:
•Aggressive Portfolio:
Objective: Growth. This strategy might be appropriate for
investors who seek High growth and who can tolerate wide
fluctuations in market values, over the short term.
•Growth Portfolio:
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Objective: Growth. This strategy might be appropriate
for investors who have a preference for growth and who can
withstand significant fluctuations in market value.
•Balanced Portfolio:
Objective: Capital appreciation and income. This
strategy might be appropriate for investors who want the
potential for capital appreciation and some growth, and who
can withstand moderate fluctuations in market values
•Conservative Portfolio:
Objective: Income and capital appreciation. This strategy

may be appropriate for investors who want to preserve their
capital and minimize fluctuations in market value.
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Advantages of Portfolio Management
services
• Individually managed accounts:

Provides a flexible format for optimizing return
through effective fund management.
• Customized portfolios:
Tailor-made investment strategies to suit individual
requirement.
• Individually managed accounts:

Provides a flexible format for optimizing returns
through better information.
• Support/client servicing:
Regular investment disclosures makes the investor
feel comfort and in control of his money.
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• Supportive tax structure:
Tax changes support rise in equity
There is a cut in Capital gains tax on listed
equities:
NIL for holdings > 12mths
10% (from 30%) for holding <12mths
• SEBI regulated:
A Regulated industry makes the investor feel
comfortable with the investment techniques adopted to
optimize returns
Investment Strategy in PMS:
Focus on select/clear stock

opportunities:
Investments in stocks where there is a clear
earnings visibility.
Relatively concentrated portfolio:

Portfolio compositions of not more than 25-30
stocks of what there are compelling opportunities.
Usage of Derivatives as a tool:

One must have a selective use of derivative in
various option to enhance returns / portfolio protection.
Flexible cash allocation strategy:

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We have an efficient allocation among assets with
flexibility to sit on 100% cash.
FINANCIAL MARKETS
A financial market can be defined as the market in which

financial assets are created or transferred. A financial asset
represents a claim to the payments of a sum of money sometime
in the future and/or periodic payment in the form of interest or
dividend. Financial Market performs an important function of
mobilization of savings and channeling them into the most
productive uses. The participants in the financial markets are
financial institutions, agents, brokers, dealers, borrowers,
lenders, savers and others who are inter-linked by the laws,
contracts and communication networks.
Financial markets consist of Primary and Secondary
Markets. The Primary markets deal in new financial claims and
securities and hence are known as new issue markets. The
secondary market deals in securities already issued, existing or
outstanding. Financial markets are also classified as Money and
Capital Markets. Money markets deals with transactions in
short-term instruments (with period of maturity one year or less,
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e.g. treasury bills), while capital market deals with transactions
in long-term instruments (with period of maturity above one
year, e.g. corporate debentures and government bonds).
On the basis of the type of the financial claim, financial

markets are classified as Debt and Equity markets. By the
timing of delivery, financial markets are classified as Cash or
Spot markets and Forward or Future markets.
The classification of financial markets can be

summarized as follows:
o Money Market
o Debt Market
o Forex Market
o Capital Market
FINANCIAL
MARKET
MONEY MARKET FOREX MARKET CAPITAL MARKET DEBT MARKET
MONEY MARKETS:
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Money markets can be defined as a market for short-term
money and financial assets that are near substitutes for money
(any financial assets that can be quickly converted into money
with minimum transaction cost). One more important function
of this market is to channel savings into short-term productive
investments like working capital. Money market aids banking,
operates as a medium of integration between sub markets,
promotes maintaining of minimum reserve in the form of cash
and liquidity and controls the interest rates.
Money market is a collection of market for the

instruments like Call money, Treasury bills, Commercial papers,
Certificate of deposits, Money Market Mutual Funds, etc. A
certain degree of flexibility in the regulatory framework exists
and there are constant endeavors for introducing a new
instruments or innovating dealing techniques. It is a wholesale
market and the volume of funds or financial assets traded are
very large i.e. in crores of rupees.
DEBT MARKET:
Traditionally debt instruments are known for generating a

predetermined income for a given period of time, other than in
cases of default. Hence they are also known as fixed income
instruments. The debt markets is significantly larger and deeper
than equity markets. But in India, the trend is just the opposite.
The development of debt market in India has not been as
remarkable as in the equity market. However the debt markets
in India have undergone a considerable change in the last few
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years. Characterized by regulated interest rates, limited players
and lack of trading earlier, the markets have become more
integrated and less regulated. The debt market in India is
divided into two categories:
o Government securities market consisting of Central
Government and State Government securities.
o Bond market consisting of FI bond, PSU bonds and
Corporate bonds/debentures.
FOREIGN EXCHANGE MARKET / FOREX:
Every sovereign country in the world has a currency,

which is a legal tender in its territory, and which does not act as
money outside its boundaries. Foreign exchange or Forex
market is the one where a country’s currency is traded for
another. The rate at which one currency is converted to another
is known as the rate of exchange. Forex market is now deeper
and wider as gauged in terms of parameters such as the range of
products, participation, liquidity and turnover. The key
particip--ants in the forex market are importers (who need
foreign currency to pay off their imports), exporters (who want
to convert their foreign currency receipts into domestic), traders
(who make a market in the foreign currency), foreign exchange
brokers (who bring together buyers and sellers), speculators
(who tries to profit from exchange rate movements) and
portfolio managers who buy and sell foreign currency.
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CAPITAL MARKET
Capital markets provide the resources needed by medium

and large-scale industries for investment purposes unlike money
markets that provide the resources for working capital needs.
While money markets deal in short-term claims (with a period
of maturity 1 year or less) capital market deals in long-term
claims (with a period of maturity more than 1 year). Stock
market and Government bond markets are example of capital
markets.
Capital market consists of primary and secondary
markets. The primary markets create long-term instruments
through which corporate entities borrow, and the secondary
market provides liquidity and marketability to these
instruments. Companies can raise capital in the primary market
through the issue of shares and debentures for which prior
approval of The SEBI is required. The secondary market that
operates through the medium of stock exchanges is that
segment of the capital market where securities already issued
are traded.
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BASKET OF FINANCIAL
PRODUCT
•Bonds
•Mutual Funds
•Insurance
•Stocks
•Real Estate
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BONDS
Meaning of BONDS: -
Bonds are excellent investment because they offer
investors dependable income, a certain amount of safety and
also portfolio diversification. Because bonds usually have an
anticipated income stream of payments and repayment of
principal investment, many people invest in bonds to preserve
their capital, grow their capital and receive a constant amount of
interest income.
Buying a bond means that investor’s are loaning their

money to a corporation, a government, a federal agency or any
other municipality. Each bond is a loan for a defined time
frame. When the bond reaches maturity (specified time frame
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has ended), then the bondholder can cash in the bond and be
paid the amount they loaned plus any accrued interest earned.
Advantages of BONDS: -
 Interest rate is set in advance and paid regularly.
 The value of a bond in the open market may go up.

 Paying interest on bonds is a higher priority for
companies than paying dividends on shares
Disadvantages of BONDS:-
 The bond issuer may default on interest payment or
be unable to make the final repayment.
 The value of a bond in the open market may go
down.
 The bond market may be difficult to understand.
Types of BONDS: -
Bonds have many characteristics such as the way they

pay their interest, the market they are issued in, the currency
they are payable in, protective features and their legal status.
Bond issuers may be governments, corporations, special
purpose trusts or even non-profit organizations. Usually it is the
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type of issuer or the particular nature of a bond that sets it apart
in its own category.
Government Bonds:-
Government bond are the bond, which is issued by
the central as well as state government and under
government.
National saving certificate:

National Savings Certificates (NSC) is equally
comparable to the RBI bonds 8% taxable. The lock in is
6 years with a rate of interest of 8% paid at maturity.
These are offered by Post office of India.
Public Provident Fund:

The Government of India declares the rate of interest
every year. The current rate of interest is 8% tax-free. The lock
in period is for 15 year Minimum investment is 500/- every year
and maximum investment is every year 70000.
Secured bonds: -
Secured Bonds are bonds, which are secured by specific

collateral. The most common type of secured bond is
mortgage bond. This collateral (i.e. mortgage bond) would then
be transferred to the bondholder in the event of default. Secured
bonds are backed either real estate or actual physical equipment
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that can be sold. Secured bonds are believed to be high grade
and therefore safe investment bonds.
Other bonds are secured by the revenues created by
projects. If an issuer defaults and has secured and unsecured
bonds outstanding, the secured bondholders are always paid
first, & then unsecured bondholders are paid. Unsecured bonds
carry a larger risk than secured bonds. Larger risk bonds will
pay higher yields and lower risk bonds will pay lower yields.
Zero-coupon bonds: -
Zero-coupon bonds can either be secured or unsecured.
Zero coupon bonds are issued at a large discount from the face
value. This is because zero coupon bonds pay all the interest at
maturity, making no payments until they mature.
Zero coupon bonds offer quite a few advantages to bond
investors. A zero coupon bond has the advantage of being free
of reinvestment risk, although there is no way to enjoy the
effects of a rise in market interest rates. Zero coupon bonds are
conducive to being sensitive to and fluctuations in interest rates,
because there are no coupon payments to reduce the impact of
interest rate changes. In addition, markets for zero coupon
bonds are relatively liquid.
Municipal bonds: -
Municipal bonds are issued by state or city governments,
or their agencies, and come in two principal varieties:
• General obligation bonds are backed by the full taxing
authority of the government.
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• Revenue bonds are backed only by the receipts from a
specific source of revenue, such as a bridge or
highway toll, and are not perceived to be as secure as
general obligation bonds.
Redeemable and Irredeemable Bonds: -

A redeemable debenture is a bond, which has been issued
for a certain period in the expiry of which its holder will be
repaid the amount thereof with or without premium.
A bond without the aforesaid redemption period is termed
as an irredeemable debenture.
MUTUAL FUND
Meaning of Mutual Fund:-

Mutual fund is a mechanism for pooling
the resources by issuing units to the
investors and investing funds in securities in
accordance with objectives as disclosed in
offer document.
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 invested by the fund manager in
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different types of securities depending upon the objective of the
scheme. These could range from shares to debentures to money
market instruments. The income earned through these
investments and the capital appreciations realized by the
scheme 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 portfolio at a relatively low
cost. Anybody with an invest surplus of as little as a few
thousand rupees can invest in Mutual Funds. Each Mutual Fund
scheme has a defined investment objective and strategy.
The flow chart below describes broadly the working of a mutual

fund:
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Advantages of Mutual Fund:-
Professional Management
Mutual Funds provide the services of experienced and
skilled professionals, backed by a dedicated investment research
team that analyses the performance and prospects of companies
and selects suitable investments to achieve the objectives of the
scheme.
Diversification
Mutual Fund invests in a number of companies across a
broad cross-section of industries and sectors. This
diversification reduces the risk because seldom do all stocks
decline at the same time and in the same proportion. Investor
achieves this diversification through a Mutual Fund with far
less money than his own.
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Convenient Administration
Investing in a Mutual Fund reduces paperwork and helps
to investor to avoid many problems such as bad deliveries,
delayed payments and follow up with brokers and companies.
Mutual Funds save investor’s time and make investing easy and
convenient.
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
Disadvantages of Mutual Fund:-
No Guarantees
No investment is risk free. If the entire stock market

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
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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.
Taxes
During a typical year, most actively managed mutual

funds sell anywhere from 20 to 70 percent of the securities in
their portfolios. If investor’s fund makes a profit on its sales,
investor will pay taxes on the income receive, even if investor
reinvest the money.
Management risk
When investor invests in a mutual fund, investor depends
on the fund's manager to make the right decisions regarding the
fund's portfolio. If the manager does not perform as well as
investor had hoped, investor might not make as much money on
her investment as investor expected. Of course, if any invest in
Index Funds, investor foregoes management risk, because these
funds do not employ managers.
Types of Mutual Fund: -
41
Mutual fund schemes may be classified on the basis of its
structure and its investment objective.
By Structure
Open-ended Funds
An open-ended 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. Open-end funds continuously offer
new shares to the public, and provide liquidity via redemption
of shares at Net Asset Value.
Closed-ended Funds
42
A closed-ended fund has a stipulated maturity period
which generally ranging from 3 to 15 years. The fund 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 to
the investor.
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 proved that returns from stocks, have outperformed most
other kind of investments held 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
43
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 equities 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
are 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 park 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
44
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.
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 Infotech, like
Infotech, Ranbaxy, and Tata Infrastructure Fund, etc.
• Index Schemes
Index Funds attempt to replicate the performance of a
particular index such as the BSE Sensex or the NSE 50
• Sector Schemes
Sector Funds are those, which invest, exclusively in a
specified sector. This could be an industry or a group of
industries or various segments such as 'A' Group shares or
initial public offerings.
45
INSURANCE.
Meaning: -
All assets have economic value. The asset would have
been created through the efforts of the owner, in the expectation
that, either through the income generated there from or some
other output, some of his needs would be met. In the case of
motorcar, it provides comfort & convenience in transportation.
There is no direct income. There is a normally expected life
time for the asset during which time it is expected to perform.
The owner, aware of this, can so manage his affairs that by the
end of that life time, a substitute is made available to ensure that
the value or income is not lost.
However, if the asset gets lost earlier, being destroyed or
made non-functional, through an accident or other unfortunate
event, the owner & those deriving benefits there from suffer.
Hence Insurance is a tool, which helps to reduce effects
of such adverse events.
Need of INSURANCE:-
Protection
Savings through life insurance guarantee full protection
against risk of death of the saver. Also, in case of demise, life
insurance assures payment of the entire amount assured (with
46
bonuses wherever applicable) whereas in other savings
schemes, only the amount saved (with interest) is payable.
Aid to Thrift
Life insurance encourages 'thrift'. It allows long-term
savings since payments can be made effortlessly because of the
'easy installment' facility built into the scheme. (Premium
payment for insurance is monthly, quarterly, half yearly or
yearly).
For example: The Salary Saving Scheme popularly
known as SSS provides a convenient method of paying
premium each month by deduction from ones salary. In this case
the employer directly pays the deducted premium to LIC. The
Salary Saving Scheme is ideal for any institution or
establishment subject to specific terms and condition.
Liquidity:
In case of insurance, it is easy to acquire loans on the sole
security of any policy that has acquired loan value. Besides, a
life insurance policy is also generally accepted as security, even
for a commercial loan.
Tax Relief
Life Insurance is the best way to enjoy tax deductions on
income tax and wealth tax. This is available for amounts paid
by way of premium for life insurance subject to income tax
rates in force. Assesses can also avail of provisions in the law
47
for tax relief. In such cases the assured in effect pays a lower
premium for insurance than otherwise.
Money When You Need It

A policy that has a suitable insurance plan or a
combination of different plans can be effectively used to meet
certain monetary needs that may arise from time-to-time.
Children's education, start-in-life or marriage provision or even
periodical needs for cash over a stretch of time can be less
stressful with the help of these policies. Alternatively, policy
money can be made available at the time of one's retirement
from service and used for any specific purpose, such as,
purchase of a house or for other investments. Also, loans are
granted to policyholders for house building or for purchase of
flats (subject to certain conditions).
Types of INSURANCE:-
LIFE INSURANCE
Life insurance is a contract that pledges payment of an
amount to the person assured (or his nominee) on the happening
of the event insured against. The contract is valid for payment
of the insured amount during:
• The date of maturity, or
• Specified dates at periodic intervals, or
• Unfortunate death, if it occurs earlier.
48
Among other things, the contract also provides for the
payment of premium periodically to the Corporation by the
policyholder. Life insurance is universally acknowledged to be
an institution, which eliminates 'risk', substituting certainty for
uncertainty and comes to the timely aid of the family in the
unfortunate event of death of the breadwinner.
By and large, life insurance is civilization’s partial solution to
the problems caused by death. Life insurance, in short, is
concerned with two hazards that stand across the life-path of
every person:
1. That of dying prematurely is leaving a dependent family
to fend for itself.
2. That of living till old age without visible means of
support.
General Insurance:-
Automobile insurance
Automobile Insurance also known as auto insurance, car
insurance and as motor insurance, is probably the most common
form of insurance and may cover both legal liability claims
against the driver and loss of or damage to the vehicle
itself.
Casualty insurance
49
Casualty Insurance insures against accidents, not necessarily
tied to any specific property.
Credit insurance
Credit Insurance pays some or all of a loan back when
certain things happen to the borrower such as
unemployment, disability, or death.
• Financial loss insurance protects individuals and
companies against various financial risks. For example, a
business might purchase cover to protect it from loss
of sales if a fire in a factory prevented it from
carrying out its business for a time. Insurance might also
cover failure of a creditor to pay money it owes to
the insured. Fidelity bonds and surety bonds are
included in this category.
Health insurance
Health Insurance covers medical bills incurred because of
sickness or accidents.
Liability insurance
Liability Insurance covers legal claims against the insured.
For example, a doctor may purchase insurance to cover any
50
legal claims against him if he were to be convicted of a mistake
in treating a patient.
Political risk insurance
Political Risk Insurance can be taken out by businesses with
operations in countries in which there is a risk that
revolution or other political conditions will result in a
loss.
Property insurance
Property Insurance provides protection against risks to
property, such as fire, theft or weather damage. This
includes specialized forms of insurance such as fire
insurance, flood insurance, earthquake insurance,
home insurance or boiler insurance.
Title insurance
Title Insurance provides a guarantee that title to real
property is vested in the purchaser and/or mortgage, free
and clear of liens or encumbrances. It is usually issued in
conjunction with a search of the public records done at the time
of a real estate transaction.
51
Workers' compensation insurance
Worker’s compensation Insurance replaces all or part of a
worker's wages lost and accompanying medical expense
incurred due to a job-related injury.
COMMDITIES
Commodity Futures are contracts to buy specific quantity

of a particular commodity at a future date. It is similar to the
Index futures and Stock Futures but the underlying happens to
be commodities instead of Stocks and Indices.
In current situation, all goods and products of agricultural
(including plantation), mineral and fossil origin are allowed for
commodity trading recognized under the FCRA. The national
commodity exchanges, recognized by the Central Government,
permits commodities which include precious (gold and silver)
and non-ferrous metals; cereals and pulses; ginned and un-
ginned cotton; oilseeds, oils and oilcakes; raw jute and jute
52
goods; sugar and gud; potatoes and onions; coffee and tea;
rubber and spices, etc.
Government of India has allowed forward transactions in
commodities through Online Commodity Exchanges, a
modification of traditional business known as Aadat and Vayda
Vyapar to facilitate better risk coverage and delivery of
commodities. The three exchanges are:
• National Commodity & Derivatives Exchange Limited
(NCDEX)
• Multi Commodity Exchange of India Limited (MCX)
• National Multi-Commodity Exchange of India
Limited (NMCEIL)
All the exchanges have been set up under overall control of
Forward Market Commission (FMC) of Government of India.
Major commodities traded in Most

popular Exchanges of the world are:
Exchange Major Commodities

Traded
New York Mercantile Exchange Crude Oil, Heating Oil
(NYMEX)
Chicago Board of Trade(CBOT) Soy Oil, Soy Beans, Corn
London Metals Exchange Aluminum, Copper, Tin,
(LME) Lead
Chicago Board Option Options on Energy, Interest
Exchange (CBOE) Rate
Tokyo Commodity Exchange Silver, Gold, Crude Oil,
(TCE) Rubber
Malaysian Derivatives Rubber, Soy Oil, Palm Oil
53
Exchange (Mdex)
Commodity Exchange Gold, Silver, Platinum
(COMEX)
Who regulates the Commodity

Exchanges ?
Commodity exchanges are regulated by Forward Market
Commission (FMC); Forward market Commission works under
the purview of the ministry of food, Agriculture and Public
Distribution.
Benefits in dealing commodities

futures are:
If you are an Investor, commodities futures represent a
good form of investment because of the following reasons.
• Diversification: The returns from commodities market are

free from the direct influence of the equity and debt
market, which means that they are capable of being used
as effective hedging instruments providing better
diversification.
• Less Manipulation: Commodities markets, as they are
governed by international price movements are less prone
to rigging or price manipulations by individuals.
• High Leverage: The margins in the commodity futures
market are less than the F & O section of the Equity
market.
54
How risky are these markets compared
to stock & bond markets ?
Commodity prices are generally less volatile than the

stocks and this has been statistically proven. Therefore it’s
relatively safer to trade in commodities.
Also the regulatory authorities ensure through continuous

vigil that the commodity prices are market- driven and free
from manipulations.
STOCK
Stock Broking:
It consists of two markets those are primary market
and secondary market.
Primary Market:
Primary markets bring together buyers and sellers -
either directly or through intermediaries - by providing an arena
in which sellers’ investment propositions can be priced, brought
to the marketplace, and sold to buyers. In this context, the seller
is called the issuer and the price of what’s sold is called the
issue price.
55
It is the initial market for any item or service. It
also signifies an initial market for a new stock issue. The jargon
also means a firm, trading market held in a security by a trader
who performs the activities of a specialist by being ready to
execute orders in that stock.
Secondary Markets
Secondary Markets are the stock exchanges and the
over-the-counter market. Securities are first issued as a primary
offering to the public. When the securities are traded from that
first holder to another, the issues trade in these secondary
markets.
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 &
choose options with care.
56
REAL ESTATE
The booming real estate market is forcing everyone to

take a look at it. Real estate Prices have seen the highest
appreciation in the last three years since India’s Independence.
The sector has immense significance as its holds largest
portion of our domestic savings. Real Estate as an asset class is
not a widely tracked today. As an investor one needs to
understand the emerging trends in the real estate market.
Real Estate market background
57
As with any other boom the real estate boom that we are
witnessing today has its origin in the demand supply mismatch.
Land is a limited natural resource and its incremental demand
due to increasing population and economic growth in the
country is driving real estate prices upwards. India occupies
only 2.4 percent of the world’s area, while 16 percent of total
global population lives here.
India’s average population density is higher than that of
any other nation of comparable size. In addition to that India is
the second fastest growing economy in the world and is
attracting global investor attention. An illustrative example of
the supply demand gap, during the ninth plan, India was facing
shortage of 4.1 crores houses in urban and rural areas, out of
which 3.3 crores is the shortfall in urban areas.
Emerging trends in the real estate

market
Central Business Districts or CBD’s as it is popularly

known are the commercial hubs of a city. Traditionally, the
CBD’s are located close to the center of the city, where most
CBD’s are developed and evolved over the years. They have
commanded the highest rentals and prices. With the
transformations in the real estate sector, the traditional CBD’s
seem to be losing out gradually to the suburbs. Besides that, the
large cities appear to be losing out gradually to the suburbs.
Besides that, the large cities appear to be heading for the
58
situation, where multiple CBD’s dot the Landscape. The reason
for this is the sharp upswing in rentals.
Shift of business locations to tier-2 & tier-3 cities: High

real estate cost drives up wages and establishment costs and can
create potential problems in the long term. Already Tier-1 cities
have competition from Tier-2 & Tier-3 cities because real estate
costs have reached unrealistic levels. Also these high real estate
prices exist with poor civic infrastructure and services. This is
increasingly forcing companies to look at the alternative options
available and move to less congested (reasonably priced) cities.
Rental & Capital values-CBD(Grade A Cities)
200
Rental value Rs/sq. Ft / pm
180
160
140 Mumbai
120
Delhi
100
80 Banglore
60 Chennai
40
20
0
1998 1999 2000 2001 2002 2003 2004 2005 2006
Future outlook of the Sector

59
Primary driver for the real state is rapid urbanization and
development of residential and commercial properties in semi
urban and rural areas. In present scenario land value in metros is
increasing faster than inflation. This helps property holders to
receive huge capital gains. Increasing urbanization, higher
employment, rising income, easy availability of credit and tax
benefits have led to an increase in demand for residential and
office space. India has all the characteristics required to attract
international investments in the real states and provide
comparatively higher returns. This has made international
companies look towards Indian realty sectors. In India housing
finance account for just 2% of the GDP, as against 30-50% in
developed countries which points to the future growth potential
in investments.
DERIVATIVES
60
Commodities whose value is derived from the price of
some underlying asset like securities, commodities, bullion,
currency, interest level, stock market index or anything else are
known as “Derivatives”.
In simpler form, derivatives are financial security such as

an option or future whose value is derived in part from the value
and characteristics of another security, the underlying asset.
‘Futures’ and ‘options’ are two commodity-traded types
of derivatives. An ‘options’ contract gives the owner the right to
buy or sell an asset at a set price on or before a given date. On
the other hand, the owner of a ‘futures’ contract is obligated to
buy or sell the assets.
The other examples of derivatives are warrants and
convertible bonds (similar to shares in that they are assets). But
61
derivatives are usually contracts. Beyond this, the derivatives
range is only limited by the imagination of investment banks. It
is likely that any person who has funds invested, an insurance
policy or a pension fund that they are investing in, and exposed
to, derivatives – wittingly or unwittingly.
Types of traders in a derivatives

market
Hedgers: -
Hedgers are those who protect themselves from the risk
associated with the price of an asset by using derivatives. A
person keeps a close watch upon the prices discovered in
trading and when the comfortable price is reflected according to
his wants, he sells futures contracts. In this way he gets an
assured fixed price of his produce.
In general, hedgers use futures for protection against
adverse future price movements in the underlying cash
commodity. Hedgers are often businesses, or individuals, who at
one point or another deal in the underlying cash commodity.
Take an example: A Hedger pay more to the farmer or dealer

of a produce if its prices go up. For protection against higher
prices of the produce, he hedges the risk exposure by buying
enough future contracts of the produce to cover the amount of
produce he expects to buy. Since cash and futures prices do tend
to move in tandem, the futures position will profit if the price of
the produce rise enough to offset cash loss on the produce.
Speculators: -
62
Speculators are somewhat like a middle man. They are
never interested in actual owing the commodity. They will just
buy from one end and sell it to the other in anticipation of future
price movements. They actually bet on the future movement in
the price of an asset.
They are the second major group of futures players.
These participants include independent floor traders and
investors. They handle trades for their personal clients or
brokerage firms.
Buying a futures contract in anticipation of price
increases is known as ‘going long’. Selling a futures contract in
anticipation of a price decrease is known as ‘going short’.
Speculative participation in futures trading has increased with
the availability of alternative methods of participation.
Speculators have certain advantages over

other investments they are as follows:
• If the trader’s judgment is good, he can make more
money in the futures market faster because prices tend,
on average, to change more quickly than real estate or
stock prices.
• Futures are highly leveraged investments. The trader puts
up a small fraction of the value of the underlying contract
as margin, yet he can ride on the full value of the contract
as it moves up and down. The money he puts up is not a
down payment on the underlying contract, but a
performance bond. The actual value of the contract is
only exchanged on those rare occasions when delivery
takes place.
63
Arbitrators: -
A person who has been officially chosen to make a
decision between two people or groups who do not agree is
known as Arbitrator. In commodity market Arbitrators are the
person who take the advantage of a discrepancy between prices
in two different markets. If he finds future prices of a
commodity edging out with the cash price, he will take
offsetting positions in both the markets to lock in a profit. Move
over the commodity futures investor is not charged interest on
the difference between margin and the full contract value.
Definition of Future Contracts

Future contracts is an agreement made and traded on the
exchange between two parties to buy or sell a commodity at a
particular time in the future for a pre-defined price. Since both
the parties are unaware of each other, the exchange provides a
mechanism to give the party assurance of honored contract. The
exchange specifies standardized features of the contract. The
risk to the holder is unlimited, and because the pay off pattern is
symmetrical, the risk to the seller is unlimited as well.
Money lost and gained by each party on a futures contract
is equal and opposite. In other words, a future trading is a zero-
sum game. These are basically forward contracts, meaning they
represent a pledge to make a certain transaction at a future date.
The exchange of assets occurs on the date specified in the
contract. These are regulated by overseeing agencies, and are
guaranteed by clearinghouses. Hedgers often trade futures for
the purpose of keeping price risk in check.
64
Future contracts are often used by commercial enterprises
as ‘hedging tools’ to reduce the risk of expected future
purchases or sales of the underlying asset. If used to speculate,
risk increases. So risk depends on the underlying instrument and
the use of the future.
Advantages of Futures Contracts:

• If price moves are favorable, the producer realizes the
greatest return with this marketing alternative.
• No premium charge is associated with futures market
contracts.
Disadvantages of Future Contracts:

• Subject to margin calls
• Unable to take advantage of favorable price moves
• Net price is subject to Basis change
Futures contracts are similar to Options. Both represent actions
that occur in future. But Options are contract on the underlying
futures contract where as futures are either to accept or deliver
the actual physical commodity. To make a decision between
using a futures contract or an options contract, producers need
to evaluate both alternatives.
65
RESEARCH METHODOLOGY
Research can be defined as systemized effort to gain new

knowledge. A research is carried out by different methodologies
which have their own pros and cons. Research methodology is a
way to solve research in studying and solving research problem
along with logic behind them are defined through research
methodology. Thus while talking about research methodology
we are not only talking of research methods but also considered
the logic behind the methods. We are in context of our research
66
studies and explain why it is being used a particular method or
technique and why the others are not used. So that research
result is capable of being evaluated either by researcher himself
or by others
Research has its special significance in solving various

operational and planning problems of business and industry.
Research methodology is the way to systematically solve the
research problem.
Execution of the project: -

It is the very important step in the research process
accuracy findings depends on how systematically the study has
been carried out in time so that it can make some sense when
required. I have executed the project after prior discussion with
the guide and structured in following steps:
a. Preparation of questionnaire.
b. Collection of list of some of the clients interview of
the customer so that more interaction is impossible
and the variety of responses can be registered to have
a good data for analysis.
c. Visiting and asking about their feedback on the
financial services like share broking, mutual fund, etc.
try to find out their interest about share market.
1. Data requirements --
a. Name, address and phone number of individuals
67
b. Present earning pattern of the respective individuals
c. Assets hold and liabilities to be carried out.
d. Expected earnings and returns.
2. Primary data –
a. Data collected by going to different companies and
meeting people over the PU NE .
b. Data collected by putting canopies and Desk in various
companies.
3. Secondary data –
a. Data collected official website of KARVY ST OCK
BR0KI NG LTD.
b. Data collected by referring to the database already
maintained in the company.
4. Data Collection Instruments:-
1. Questionnaire
2. Finapolis
3. Telephonic communication.
4. E-mail.
The questionnaire contained the question that

touched upon every aspect of the study and are rendered in
the status of being complete in proving full information
needed for the study.
Multiple option questions made the interview easier
as all the options were in front of user.
68
The presentation of the question in the
questionnaire, in the tabular form, helped to get the
maximum information in fully systematic manner, through
minimum number of question. This also gave it an
attractive and presentable look.
The question was straightforward in easy language
and clear meaning. No question was ambiguous to confuse
the subject.
Due to the general nature of the topic, questionnaire
could be administered with the customer with equal and
labor.
QUESTIONNAIRE
1. PERSONAL DATA
NAME: _____________________________
BOD: ______________________________
ADDRESS: ______________________________
_______________________________
CONTACT NO:________________________________
69
E-MAIL: ________________________________
2 ARE YOU AWARE OF KARVY STOCK BROKING LTD?

A) Yes B) No
3. WHICH PRODUCTS DO YOU KNOW OFFERED BY

KARVY?
A) Mutual Funds B) Shares C) Insurance
D) Bonds E) Fixed Deposits
F) PPF (Public Provident Funds)
4. WHAT PERCENTAGE OF YOUR INCOME DO YOU

INVEST?
A) Below 10% B) 10% to 30%
C) 30% to 50% D) Above 50%
5. WHAT ARE THE VARIOUSE INVESTMENTS SCHEMES

IN WHICH YOU HAVE INVESTRED?
A) Insurance B) Mutual Funds
C) Shares D) Bonds & Fixed Deposits
E) PPF (Public Provident Funds)
70
6. WHAT IS THE PROPORTION YOU HAVE INVESTED IN
VARIOUSE SCHEMES?
TYPE OF INVESTMENTS PERCANTAGE

Insurance %
Mutual Funds %
Share %
Real Estate %
PPF %
Bonds %
GRAPHICAL REPRESENTATION OF
QUESTIONAIRE
(1Q). Age group analysis
Sample size --- 50
71
15% 0%
35% 20 -- 29
30 --39
40 --49
50 --59
50%
As India is going to be the youngest nation of the world,

our main thrust should be on the youngsters. As we see the age
group distribution graph, I also tried to concentrate more on
younger generation within a age group of 20 – 35.
In Pune, 50% of the total sample size belongs to the age
group of 30 – 39 and 35% of the sample size belongs to the age
group of 20 – 29, constituting a major chunk of 85%. Thus our
main aim is to target young group.
(2Q). Income group analysis
Sample size -- 50
72
12% 0% 19% UPTO 2 LACS
2 -4 LACS
4 -7 LACS
ABOVE 7 LACS
69%
Income is one of the major criteria for designing a

portfolio of individual, so that we need to analyze properly the
income distribution of the sample.
69% of the total sample size belongs to the income group

of 2 – 4 lacs and 19%belongs to the group of up to 2 lacs.
(3Q). Percentage of saving of income analysis.
Sample size --- 50
73
4%
13%
10 --20
44%
20 --30
30 --40
40 --50
39%
As investment pattern highly depends on the pattern of

savings, it constitutes a major part of our analysis.
44% of the sample size saves 10 – 20 percent of their

respective income and 39% saves 20 – 30 percent of their
respective income. Savings determine investment pattern of the
individuals.
(4Q). Current investment pattern analysis
Sample size --- 50
74
insurance
bank FD
25% MF
32%
NSC
PPF
IPO
3%
Shares
2%
5% 8% Commodity
7% 2% 16%
Real estate
Savings is not only the sole measurement of investment

pattern but awareness about the different investment vehicles is
also one of the major aspects of investment pattern
In Pune, 32% of the sample sizes are insured, 25% invest
in real estate, 16% invest in mutual fund (MF) and 8% invest in
direct IPOs.
5Q). Future prospect investment analysis
Sample size --- 50
75
TAX PLANNING
INSURANCE
MF
9% 0%2% SECONDARY MARKET
9% 29%
IPO
BANK FD
PPF
15%
BOND
6%
30% COMMODITY
REAL ESTATE
From the pie diagram its clear that most of the people like
to will like to choose Tax planning and insurance as their
investment option.
(6Q). Near future predictable events analysis
Sample size --- 50
76
12% 20% MARRIAGE
12%
CHILD EDUCATION
CHILD MARRIAGE
HIGHER
EDUCATION
56%
The near future predictable events are those events which

require some pre-hand planning to make your money go out
without suffering from a loss.
In the above places, people are very concerned about
their children’s education.
(7Q). Liabilities analysis
Sample size --- 50
77
6% 0%
25%
PERSONAL LOANS
CAR LOANS
HOUSING LOANS
STUDY LOANS
TAX LIABILITY
50%
19%
Liabilities are the major areas of application of money,

which very much needs to be analyzed.
In above Chart in Pune, major liability is housing loan.

But people have taken personal loans as their second priority of
liability.
8Q). Expected income analysis
Sample size --- 50

78
30% 30% BONUS
INHERITENCE
INTEREST/DIVIDEND
GIFT
10% OTHERS
19% 11%
As liability is considered as one of the major areas of

application, future incomes should be considered as one of
additional source of income, which is discussed as under:
In Pune, 30% of the sample size got the opportunity to
get bonus from different sources and as they are keen in
investing their money in equities their second major source of
future income is interest and dividend.
LIFECYCLE INVESTMENT GUIDE
79
According various age groups standard portfolios are as
follows:
Mid Twenties
12%
8%
REAL ESTATE
CASH
55% BONDS
25% STOCKS
Late Thirties to Early Forties
10%
5% REAL ESTATE
CASH
55% BONDS
30%
STOCKS
Mid Fifties
13%
5% REAL ESTATE
44% CASH
Institute Of Management & Research, Jalgaon. BONDS
STOCKS
38%
80
Late Sixties and beyond
15%
25%
REAL ESTATE
10%
CASH
BONDS
STOCKS
50%
81
CONCLUSION
As per the analysis mentioned in this report following points

can be concluded:
•Since the young age group is able to undertake more risk
portfolio manager has to design aggressive portfolio wherein
the individual’s investments contains stocks in more proportion.
•People of old age have to follow a more conservative
approach in their portfolios. Their investments also contain
bonds and real estate in greater proportion.
82
SUGGESTION
•According to the respondents the quality of the service is

very important. So the KARVY should project itself as a brand
in the market that gives end user the best quality of service with
handy operations.
•Also most of respondents having their personal consultant
or the company consultants. KARVY have to differentiate their
services from other consultants effectively by delivering value
added services to its customers.
•KARVY has to concentrate on direct marketing activities.
The consultancy should develop its long-term relationship with
the customers.
•For creating a brand image in our country KARVY should
go for a brand ambassador.
•The consultancy must give much more emphasis on
creation of customer who make repurchase.
•The amount of awareness has been generated is through
newspaper. As it can be one of the potential media for
advertisement.
•It is seen that KARVY brand is not seen enough in the
market place and hence the brand is invisible to the naked eyes
of the consumer and hence KARVY should beef up its publicity
campaigns and promotional activities so that KARVY becomes
an easily recognizable brand.
83
BIBLIOGRAPHY
• www.moneycontrol.com
• www.karvy.com
• www.amfi.com
• www.indiabulls.com
• www.indiainfoline.com
• www.ilfsndia.com
• www.valueresearchonline.com
• www.angelbroking.com
• www.sharekhan.com
• www.sebi.in.gov
• www.bseindia.com
84

Introduction of Portfolio Management

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EXECUTIVE

Institute Of Management & Research, Jalgaon.

KARVY is a premier integrated financial services

KARVY covers the entire spectrum of financial services

Institute Of Management & Research, Jalgaon.

Our Clients. Our Focus

Clients are the reason for our being.

Each and every individual is an essential building block

None of us is more important than all of us.

A social balance sheet is as rewarding as a business one.

Everything else is secondary.

Institute Of Management & Research, Jalgaon.

Institute Of Management & Research, Jalgaon.

Among the top 5 stock brokers in India (4% of NSE

India's No. 1 Registrar & Securities Transfer Agents

Among the to top 3 Depository Participants

Largest Network of Branches & Business Associates

ISO 9002 certified operations by DNV

Among top 10 Investment bankers

Largest Distributor of Financial Products

Adjudged as one of the top 50 IT uses in India by MIS

Full Fledged IT driven operations

Institute Of Management & Research, Jalgaon.

Karvy Consultants Limited

Karvy Stock Broking Limited

Karvy Investors Services Limited

Karvy Globle Services Limited

Karvy Commodities Broking Limited

Karvy Insurance Broking Pvt. Limited

Institute Of Management & Research, Jalgaon.

The following are the main objective of project: -

 To the partial fulfillment of the requirement of the award

of the Master In Business Administration.

 To know the concept of Portfolio Management.

 To know about the schemes offered by the different

insurance companies, new IPO’s, Mutual Funds.

 To know in depth about Insurance, Mutual Funds, Stock,

Institute Of Management & Research, Jalgaon.

The field of investments traditionally been divided into

Why Financial Planning is needed ?

Need of Portfolio Management

Objectives of Portfolio Management: -

Markowitz portfolio Theory

In the earlier days the investment communities talked

Institute Of Management & Research, Jalgaon.

Institute Of Management & Research, Jalgaon.

The above major activities are performed to achieve the

(a) Fixed income class

Institute Of Management & Research, Jalgaon.

(2) Perpetual Dividend Least Tax relief High

Composite risks involve the different

(1). Interest rate risk: -

Institute Of Management & Research, Jalgaon.

Types Risk E xtent

Cash equivalent Less vulnerable to interest

(2) Purchasing power risk: -

(3) Business risk:

(4) Financial risk: -

Institute Of Management & Research, Jalgaon.

Maximize returns, minimize risks

Institute Of Management & Research, Jalgaon.

(1). Equity portfolio

(1). Market value of shares