PROJECT REPORT ON

Understanding The Equity and Debt Market Through Reliance Money

AT

RELIANCE MONEY
SUBMITTED BY

DURGESH SINGH
SUBMITTED IN PARTIAL FULFILLMENT FOR MBA SUMMER PROJECT 2009-2011

SCHOOL OF MANAGEMENT GAUTAM BUDDHA UNIVERSITY Greater Noida

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RELIANCE MONEY
CERTIFICATE OF COMPLETION This is to certify that the dissertation entitled Understanding The Equity and Debt Market Through Reliance Money. carried out by Mr. Durgesh Singh student of MASTER of OF BUSINESS OF

ADMINISTRATION

[2009-20011],

SCHOOL

MANAGEMENT,GAUTAM BUDDHA UNIVERSITY, GREATER NOIDA, is hereby accepted and approved as a credible work. Submitted in the partial fulfillment for the requirement of degree of MBA. Its a bona fide record of the work done by him under my supervision during his stay as a project trainee at Reliance money. From May 17, 2010 to July17, 2010.

Signature (Name) Designation Company

Seal / stamp of the company

DISSERTATION CERTIFICATE

This is to certify that the dissertation entitled Understanding The Equity and Debt Market through Reliance Money by Mr.Durgesh Singh , student of MASTER OF BUSINESS ADMINISTRATION, session [2009-2011], of SCHOOL OF MANAGEMENT, GAUTAM BUDDHA UNIVERSITY,

GREATER NOIDA, is hereby accepted and approved as a credible work. It is further certified that this work has not been submitted for similar purpose anywhere else. His work has been found satisfactory for the partial fulfillment of the award of the degree of MBA

Internal Examiner

External Examiner

DECLARATION
I, Durgesh Singh , hereby declare that the project work entitled Understanding The Equity and Debt Market Through Reliance Money is an authenticated work carried out by me at Reliance money Under the guidance of Mr. Navneet Kapoor for the partial fulfillment of the award of the degree of MASTER OF BUSINESS ADMINISTRATION and this work has not been submitted for SCHOOL OF UNIVERSITY,

similar purpose anywhere else except to MANAGEMENT, GREATER NOIDA. GAUTAM BUDDHA

Date: Place: Greater Noida

Durgesh Singh

ACKNOWLEDGEMENT
It gives immense gratification to place on records my profound gratitude and sincere appreciation to each and everyone who has helped me in this endeavor. I would like to thank Mr. Navneet Kapoor for giving me the opportunity of being associated with this project. I extend my sincere thanks to Mr. Abhishek Srivastav his cooperation and valuable suggestion to initiate the training. On a personal note I would like to thank all my batch mates for their support. Any omission in this brief acknowledgement does not mean lack of gratitude.

( Durgesh Singh) 5

PREFACE
Decision making is a fundamental part of the research process. Decisions regarding that what you want to do, how you want to do, what tools and techniques must be used for the successful completion of the project. In fact it is the researchers efficiency as a decision maker that makes project fruitful for those who concern to the area of study. Basically when we are playing with computer in every part of life, I used it in my project not for the ease of my but for the ease of result explanation to those who will read this project. The project presents the role of financial system in life of persons. I had toiled to achieve the goals desired. Being a neophyte in this highly competitive world of business, I had come across several difficulties to make the objectives a reality. I am presenting this hand carved efforts in black and white. If anywhere something is found not in tandem to the theme then you are welcome with your valuable suggestions.

EXECUTIVE SUMMARY
Financial service Industry which is basically my concern industry around which my project has to be revolved is really a very complex industry. And to work for this was really a complex and hectic task and few times I felt so frustrated that I thought to left the project and go for any new industry and new project. Challenges which I faced while doing this project were following Financial service sector was quite similar in offering and products and because of that it was very difficult to discriminate between our product and products of the competitors. Target customers and respondents were too busy persons that to get their time and view for specific questions was very difficult. Sensitivity of the industry was also a very frequent factor which was very important to measure correctly. Area covered for the project while doing job also was very large and it was very difficult to correlate two different customers/respondents views in a one. Every financial customer has his/her own need and according to the requirements of the customer product customization was possible. So above challenges some time forced me to leave the project but any how I did my project in all circumstances. Basically in this project I analyzed thatWhat factors are really responsible for Designing of portfolio of an investor in this competitive era determine which strategy may be appropriate to help the achieve our financial goals.

TABLE OF CONTENT Certificate of the company Acknowledge Preface Executive summary of the project Chapter 1 :- Introduction to securities market Chapter 2 :- objective of project Chapter3:- scope of project Chapter 4:-research methodology Chapter 5:- organizational overview Chapter 6 :- SECURITIES MARKET AND FINANCIAL SYSTEM Chapter7:-finding and data analysis Chapter 8 :-conclusion and data interpretation Chapter9 :-suggestion Chapter10:-limitation Annexure(questionnaire) References

CHAPTER- 1 INTRODUCTION TO THE SECURITIES MARKET

INTRODUCTION
SECURITIES MARKET IN INDIAAN OVERVIEW
The securities markets in India have witnessed several policy initiatives, which has refined the market micro-structure, modernized operations and broadened investment choices for the investors. The irregularities in the securities transactions in the last quarter of 2000-01, hastened the introduction and implementation of several reforms. While a Joint Parliamentary Committee was constituted to go into the irregularities and manipulations in all their ramifications in all transactions relating to securities, decisions were taken to complete the process of demutualisation and corporatisation of stock exchanges to separate ownership, management and trading rights on stock exchanges and to effect legislative changes for investor protection, and to enhance the effectiveness of SEBI as the capital market regulator. Rolling settlement on T+5 basis was introduced in respect of most active 251 securities from July 2, 2001 and in respect of balance securities from 31s t December 2001. Rolling settlement on T+3 basis commenced for all listed securities from April 1, 2002 and subsequently on T+2 basis from April 1, 2003. All deferral products such as carry forward were banned from July 2, 2002. At the end of March 2008, there were 1,381 companies listed at NSE and 1,236 companies were available for trading. The Capital Market segment of NSE reported a trading volume of Rs.35,51,038 crore during 2007-08 and at the end of March 2008, the NSE Market Capitalisation was Rs.48,58,122 crore. The derivatives trading on the NSE commenced with the S&P CNX Nifty Index Futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. Thereafter, a wide range of products have been introduced in the derivatives segment on the NSE. The Index futures and options are available on Indices - S&P CNX Nifty, CNX Nifty Junior, CNX 100, CNX IT, Bank Nifty and Nifty Midcap 50. Single stock futures are available on more than 250 stocks. The mini derivative contracts (futures and

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options) on S&P CNX Nifty were introduced for trading on January 1, 2008 while the Long term Options Contracts on S&P CNX Nifty were launched on March 3, 2008. Due to rapid changes in volatility in the securities market from time to time, there was a need felt for a measure of market volatility in the form of an index that would help the market participants. NSE launched the India VIX, a volatility index based on the S&P CNX Nifty Index Option prices. Volatility Index is a measure of markets expectation of volatility over the near term. Other than the introduction of new products in the Indian stock markets, the Indian Stock Market Regulator, Securities & Exchange Board of India (SEBI) allowed the direct market access (DMA) facility to investors in India on April 3, 2008. To begin with, DMA was extended to the institutional investors. In addition to the DMA facility, SEBI also decided to permit all classes of investors to short sell and the facility for securities lending and borrowing scheme was operationalised on April 21, 2008. The Debt markets in India have also witnessed a series of reforms, beginning in the year 2001-02 which was quite eventful for debt markets in India, with implementation of several important decisions like setting up of a clearing corporation for government securities, a negotiated dealing system to facilitate transparent electronic bidding in auctions and secondary market transactions on a real time basis and dematerialisation of debt instruments. Further, there was adoption of modified Delivery-versus-Payment mode of settlement (DvP III in March 2004). The settlement system for transaction in government securities was standardized to T+1 cycle on May 11, 2005. To provide banks and other institutions with a more advanced and more efficient trading platform, an anonymous order matching trading platform (NDS-OM) was introduced in August 2005. Short sale was permitted in G-secs in 2006 to provide an opportunity to market participants to manage their interest rate risk more effectively and to improve liquidity in the market. When issued(WI) trading in Central Government Securities was introduced in 2006. As a result of the gradual reform process undertaken over the years, the Indian G-Sec market has become increasingly broad-based and characterized by an efficient auction process, an active secondary market, electronic trading and settlement technology that ensures safe settlement with Straight through Processing (STP).

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This chapter, however, takes a review of the stock market developments since 1990. These developments in the securities market, which support corporate initiatives, finance the exploitation of new ideas and facilitate management of financial risks, hold out necessary impetus for growth, development and strength of the emerging market economy of India.

1.1 EQUITY MARKET

The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. According to the latest report by ADB, it has a market capitalization of nearly $600 billion. As of March 2009, the market capitalization was around $598.3 billion (Rs 30.13 lakh crore) which is one-tenth of the combined valuation of the Asia region. The market was slow since early 2007 and continued till the first quarter of 2009. A stock exchange has been defined by the Securities Contract (Regulation) Act, 1956 as an organization, association or body of individuals established for regulating, and controlling of securities. After the securities are issued in the primary market, they are traded in the secondary market by the investors. The stock exchanges along with a host of other intermediaries provide the necessary platform for trading in secondary market and also for clearing and settlement. The securities are traded, cleared and settled within the regulatory framework prescribed by the Exchanges and the SEBI. Till recently, it was mandatory for the companies to list their securities on the regional stock exchange nearest to their registered office, in order to provide an opportunity to investors to invest/trade in the securities of local companies. However, following the withdrawal of this restriction, the companies have an option to choose from any one of the existing stock exchanges in India to list their securities. Due to the earlier regulation requiring companies to get listed first at the regional stock exchange, there are in all 23 exchanges operating today in the country. With the increased application of information technology, the trading platforms of all the stock exchanges are accessible from anywhere in the country through their trading terminals.

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However, the trading platform of NSE is also accessible through internet and mobile devices. In a geographically widespread country like India, this has significantly expanded the reach of the exchanges to the homes of ordinary investors and assuaged the aspirations of people to have exchanges in their vicinity. As a result of the reforms/initiatives taken by the Government and the Regulators, the market microstructure has been refined and modernized. The investment choices for the investors have also broadened. The securities market moved from T+3 settlement periods to T+2 rolling settlement with effect from April 1, 2003. Further, straight through processing has been made mandatory for all institutional trades executed on the stock exchange.

The Indian equity market depends on three factors * Funding into equity from all over the world * Corporate houses performance * Monsoons The stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactions which are based on the two major indices - Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE). The market also includes the debt market which is controlled by wholesale dealers, primary dealers and banks. The equity indexes are allied to countries beyond the border as common calamities affect markets. E.g. Indian and Bangladesh stock markets are affected by monsoons. The equity market is also affected through trade integration policy. The country has advanced both in foreign institutional investment (FII) and trade integration since 1995. This is a very attractive field for making profit for medium and long term investors, short-term swing and position traders and very intraday traders. The Indian market has 22 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter

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Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities Exchange Board of India). History of Indian Equity Market The history of the Indian equity market goes back to the 18th century when securities of the East India Company were traded. Till the end of the 19th century, the trading of securities was unorganized and the main trading centers were Calcutta (now Kolkata) and Bombay (now Mumbai). Trade activities prospered with an increase in share price in India with Bombay becoming the main source of cotton supply during the American Civil War (1860-61). In 1865, there was drop in share prices. The stockbroker association established the Native Shares and Stock Brokers Association in 1875 to organize their activities. In 1927, the BSE recognized this association, under the Bombay Securities Contracts Control Act, 1925.

The Indian Equity Market was not well organized or developed before independence. After independence, new issues were supervised. The timing, floatation costs, pricing, interest rates were strictly controlled by the Controller of Capital Issue (CII). For four and half decades, companies were demoralized and not motivated from going public due to the rigid rules of the Government. In the 1950s, there was uncontrollable speculation and the market was known as 'Satta Bazaar'. Speculators aimed at companies like Tata Steel, Kohinoor Mills, Century Textiles, Bombay Dyeing and National Rayon. The Securities Contracts (Regulation) Act, 1956 was enacted by the Government of India. Financial institutions and state financial corporation were developed through an established network. In the 60s, the market was bearish due to massive wars and drought. Forward trading transactions and 'Contracts for Clearing' or 'badla' were banned by the Government. With financial institutions such as LIC, GIC, some revival in the markets could be seen. Then in 1964, UTI, the first mutual fund of India was formed. In the 70's, the trading of 'badla' resumed in a different form of 'hand delivery contract'. But the Government of India passed the Dividend Restriction Ordinance on 6th July, 1974.

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According to the ordinance, the dividend was fixed to 12% of Face Value or 1/3 rd of the profit under Section 369 of The Companies Act, 1956 whichever is lower. This resulted in a drop by 20% in market capitalization at BSE (Bombay Stock Exchange) overnight. The stock market was closed for nearly a fortnight. Numerous multinational companies were pulled out of India as they had to dissolve their majority stocks in India ventures for the Indian public under FERA, 1973. The 80's saw a growth in the Indian Equity Market. With liberalized policies of the government, it became lucrative for investors. The market saw an increase of stock exchanges, there was a surge in market capitalization rate and the paid up capital of the listed companies. The 90s was the most crucial in the stock market's history. Indians became aware of 'liberalization' and 'globalization'. In May 1992, the Capital Issues (Control) Act, 1947 was abolished. SEBI which was the Indian Capital Market's regulator was given the power and overlook new trading policies, entry of private sector mutual funds and private sector banks, free prices, new stock exchanges, foreign institutional investors, and market boom and bust. In 1990, there was a major capital market scam where bankers and brokers were involved. With this, many investors left the market. Later there was a securities scam in 1991-92 which revealed the inefficiencies and inadequacies of the Indian financial system and called for reforms in the Indian Equity Market.

MAIN PLAYERS IN THE INDIA STOCK MARKET The India stock market is steered on by the two exchanges viz, Bombay Stock Exchanges (BSE) and National Stock Exchange (NSE). The trade and business of the entire country is dependant on the performance of these two main stock exchanges. Any minor developments in the economy might push the indexes on these exchanges down or vice versa.

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CHAPTER -2 OBJECTIVE

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OBJECTIVE OF STUDY
The primary objective was to analysis the market and find out the potential customer and motivate or promote them to invest their money in modern Investment plan rather than traditional Investment plan.

The secondary objective were:

To know Equity and Debt market and the customers perception and the conception about the financial services market. To create awareness among the customer To create marketing awareness of the Investment product and also identify the potential customer for this product. To analyze the marketing strategy of the competitors

To analyze Investment pattern of the investor.

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CHAPTER -3 SCOPE OF STUDY

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SCOPE OF THE STUDY

Each and every project study along with its certain objectives also have scope for future. And this scope in future gives to new researches a new need to research a new project with a new scope. Scope of the study not only consist one or two future business plan but sometime it also gives idea about a new business which becomes much more profitable for the researches then the older one. Scope of the study could give the projected scenario for a new successful strategy with a proper implementation plan. Whatever scope I observed in my project are not exactly having all the features of the scope which I described above but also not lacking all the features . Research study could give an idea of network expansion for capturing more market and customer with better services and lower cost, without compromising with quality. In future investor requirements could be added with the product and services for getting an edge over competitors. Investor behavior could also be used for the purpose of launching a new product with extra benefits which are required by customers for their investment of future. and/or for their investments. Factors which I observed while doing project study are followingRisk factor , Investment Approach , Volatility, Attitude of investor towards equity and debt market and Economic conditions These all could also be interchanged with each other for investing strategies and for making a final investment portfolio. Understanding the tolerance for investment risk relative to investment return expectations .

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CHAPTER -4 RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY
Achieving accuracy in any research requires in depth study regarding the subject. As the prime objective of the project is compare various Investment products available in the market with the existing players in the market and the impact of entry of private players in the market, the research methodology adopted was basically based on primary data via which the most recent and accurate piece of first hand information that could be collected from all possible source. Secondary data was used to support primary data wherever needed.

Objective of research;
The main objective of this project is concerned with getting the opinion of people regarding the investment in equity and debt and create awareness while with the generation of leads. I have tried to explore the general opinion about stock market. It also covers why/ why not investors are availing the services of financial advisors. Along with it a brief introduction to Indias largest financial intermediary, RELIANCE MONEY has been given and it is shown that what is trading of stock and how it works.

Scope of the study:

The research was carried on in Delhi and NCR. I have visited people randomly nearby my locality, different shopping malls, small retailers etc. Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites and some special publications of R-MONEY. Primary data was collected using the following techniques:

Questionnaire method Direct interview method Observation method

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The main tool used was the questionnaire method. Further direct interview method, where a face to face formal interview will be taken. Lastly observation method was used continuously with the questionnaire method, as one continuously observes the surrounding environment he works in.

Procedure of Research Methodology:

To conduct this research on the target population was about to know investment objectives and experience, time horizon, risk tolerance and financial situation that people are aware or not aware from Investment in equity and debt market. With accurate information that will assist us in providing the best recommendations that will be suitable for your investment needs and to reallocate the investments in your portfolio. Target geographic area was Delhi and NCR. Sample size of 100 people was taken To these 100 people a questionnaire was given, the questionnaire was a closed ended questionnaire. Some people already have investment plan were also interviewed to know their prospective. Finally the collected data and information was analyzed and compiled to arrive at the conclusion and recommendation given.

Sources of Secondary Data:

These source were use to obtain information on, Reliance money and other competitors history, current issues, policies, procedures etc, wherever required.

INTERNET MAGZINES NEWSPAPERS JOURNALS

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SAMPLING: Sampling procedure:

The sample is selected in a random way, irrespective of them being investor or not or availing the services or not. It was collected through mails and personal visits to the known persons, by formal and informal talks and through filling up the questionnaire prepared. The data has been analyzed by using the measures of central tendencies like Mean, median, mode. The group has been selected and the analysis has been done on the basis statistical tools available .

Sample size:
The sample size of my project is limited to 100 only. Out of which only 44 people attempted all the questions. Other 56 not investing in equity market nor in debt market.

Sample design:
Data has been presented with the help of bar graph, pie charts, line graphs etc.

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CHAPTER -5 ORGANIZATIONAL OVERVEIW

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COMPANY OVERVEIW
Reliance Money is pro mot ed by Reliance Capit al; one o f I ndia's leading and fast est growing pr ivat e sect or financial ser vices co mpanies, ranking amo ng t he t op 3 pr ivat e sect or financial ser vices and banking co mpanies, in t er ms o f net wort h. Reliance Cap it al is a part of t he Reliance Anil Dhir ubhai Amban i Group. Thus, Reliance Money provides a co mprehens ive plat for m, o ffer ing an invest ment avenue for a wide range o f asset classes. It s endeavor is t o change t he way I ndia t ransact s in financia l market and avails financia l ser vices. Reliance Mone y o ffers a sing le window facilit y, enabli ng yo u t o access amo ngst ot hers, Equit ies, Equit y and Co mmodit y der ivat ives, Offshore I nvest ment s, IPOs, Mut ual Funds, Life I nsurance and General I nsurance product s.

RELIANCE CAPITAL

RELIANCE MONEY

RELIANCE GENERAL INSURANCE

RELIANCE LIFE INSURANCE

RELIANCE ASSET MANAGEMENT COMPANY

RELIANCE MONEY EXPRESS COMPANY

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Vision of Reliance Money

To achieve & sustain market leadership, Reliance Money shall aim for complete customer satisfaction, by combining its human and technological resources, to provide world class quality services. In the process Reliance Money shall strive to meet and exceed customer's satisfaction and set industry standards.

Mission statement
Our mission is to be a leading and preferred service provider to our customers, and we aim to achieve this leadership position by building an innovative, enterprising , and technology driven organization which will set the highest standards of service and business ethics.

Success sutras of Reliance Money: The success story of the company is driven by 9 success sutras adopted by it namely Trust, Integrity, Dedication, Commitment, Enterprise, Hard work, Home work, Team work play, Learning and Innovation, Empathy and Humility and last but not the least its the Network . These are the values that bind success with Reliance Money.

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THE RELIANCE MONEY OFFERS THE FOLLOWING SERVICES

Online Trading in Equit ies in bot h cash and der ivat ive segment s t hrough Reliance Secur it ies Lt d, which is a member of bot h NSE and BSE Online Trading in Co mmodit ies t hrough Reliance Co mmod it ies Lt d, which is a member of MCX, NCDEX and NMCE. The ser vices will be o n offer soon. Overseas invest ment will be available t hr ough a separat e plat for m. CFD (Cont ract for Difference) P lat for m Deposit or y Ser vices t hrough Reliance Capit a l Lt d. Online / Offline subscr ipt ion o f Init ia l Public Offer ings (IPO). Online / Offline bu ying and redempt io n of Mut ual Funds. Online enquir y o f all Reliance Money product s, name ly equit y, co mmodit y, overseas invest ment s, Life and General I nsurance t hrough Online quer y in Cust omer Ser vice. A host of value added ser vices like live news fro m Dow Jones and Co mmodit y Cont rol, fundament al and t echnical research report s, risk analyzer, personal finance t racker, port fo lio t racker, et c.

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PRODUCTS OFFERED BY RELIANCE MONEY

RELIANCE MONEY
TRADING GOLD MUTUAL FUNDS INSURANCE CREDIT CARD LOAN

GENERAL INSURANCE OFFSORE TRADING COMMODITY TRADING DERIVATIVES LIFE INSURANCE HOUSE LOAN AUTO PERSONAL LOAN LOAN

FOREX Through Reliance Money Express

EQUITY TRADING & DEMAT ACCOUNT

Equity Reliance Money o ffer s it s c lient s co mpet it ively pr iced Equit y broking, PMS and Port fo lio Advisor y Ser vices. Trading execut io n assist ance provided t o client s. I n addit io n Reliance Money provides independent and unbiased view on market s alo ng wit h t rading st rat egies and ent r y / exit po int s for t aking an infor med decis io n.

Mutual Fund s A mut ual fund is a pro fessio nally managed fund o f co llect ive invest ment s t hat collect s money fro m many invest ors and put s it in st ocks, bonds, short -t erm mo ney market inst rument s, and/or ot her secur it ies. Reliance Money o ffers dedicat ed research & expert a dvice on Mut ual Funds. Mut ua l

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funds are considered t o have lo w r isk factors owing t o diver sificat io n of asset s int o var ious sect ors and scr ipt s or inst rument s wit hin.

Life-In su ran ce Reliance Mo ney assist s it s client s in choosing a cust omized pla n which wi ll secure t he familys fut ure and t heir expenses post -ret ir ement . Client s can choose fro m different plans o f almo st all I nsurance Co mpanies where t hey can invest t heir mo ney. Client s can choose fro m product s and ser vices t hat channelise t heir savings and p rot ect t heir needs while guarant eeing secur it y and ret urns for life. A t eam o f expert s w ill suggest t he best Insurance scheme which suit s t he client s requirement .

General Insu rance General I nsurance is all about prot ect ing aga inst all kind o f insurable r isks. Reliance Money assist s you in areas o f Healt h insurance, Trave l insurance, Ho me insurance and Motor insurance.

Commodities A sing le. plat for m to trade on bot h t he major co mmod it y exchanges i.e. NCDEX and MCX. I n addit io n In - house research desk shall provide resear ch report s on all ma jor co mmodit ies which shall enable in get t ing views for t rading and diver sify client s holdings. Trade E xecut ion assist ance is also provided t o client s.

Structu red Product s , Art Invest ment s St ruct ured Product s is a new class o f financial product s for invest ors apprehensive o f increased vo lat ilit y in st ock market s. Specially designed product s could include Equit y, I ndex - linked in nat ure, Real E st at e Funds, Art Funds, Overseas I nvest ment s and I nfrast ruct ure Invest ment s

Tax Plannin g Wit h a view t o provide complet e wealt h management so lut io ns, Reliance Mo neys wealt h management offer ings include t ax re lat ed ser vices like: Tax P lanning & advisor y Filin g Tax ret urns for ind ividuals

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Real Estate Advi sory Services Broking Model for lease/rent and buy/ sell o f propert y Propert y Valuat ion Real-est at e Consult ing Corporat e ear nings model, Lease rent als, et c.

Offshore Invest ments Reliance Money provides a u nique opport unit y t o invest in int er nat ional financia l mar ket s t hrough t he online plat for m which inc ludes different product ranges.

Credit card Co mplet e financial flexibilit y and convenience. Whet her it is for t ravelling, ent ert ainment , shopping or day t o day use, t he Reliance Card can prove t o be a source o f unmat ched financia l power ! Fr eedo m t o do away wit h t he burden o f carr ying Cash Ear n Rewards at Reliance ADA Group out let s for spend ing on t he card Per io dic pro mot ions and o ffer s from group co mpanies B enefit o f add o n card

Trading SHARE TRADING & D-MAT A/C : S imply put , acquir ing equit y shares o f a co mpany t o t he ext ent of shar es t hat you have acquired. D - mat account is just like a bank account but t he basic differ ence is t hat we keep mo ney in bank account and shares in D - Mat account .

DERIVATIVES : The t er m Der ivat ive refers t o an asset t hat has no independent value, but der ives it s value fro m t hat of an under lying asset . The under lying asset could be secur it ies, co mmodit ies, bullio n, currenc y, livest ock, or anyt hing else.

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COMMODITIES TRADING : Now we can t rade in co mmod it ies and make mo ney, just like buying and selling shares of co mpanies wit hout owning an iot a of t he co mmodit ies we t rade in. T he kind of co mmo dit ies being t raded are : Agr icult ure based co mmodit ies such as rice, wheat , suga r et c. Mineral based co mmodit ies such as go ld, plat inum, aluminium, copper et c. Energy based co mmodit ies such as crude oil.

Gold coin s DENOMINATION : Av ailable in 0.5, 1,2,5 & 8 ( Weight in gr ams ) PURITY : 24 Karat , 99.99% pure gold Swiss Co in ( Valca mbi Su isse ) Fineness : 999.9 ( highest pur it y t hat can be achieved in go ld). Packaging: See t hrough, t amper proof packaging wit h cert ificat e o f pur it y fro m Swiss Assayer

Availabilit y : Reliance Mone y and Reliance Wor ld Out let s .

DEMAT ACCO UNT There ar e many broking houses do ing business in I ndia and t hey charge a brokerage o n ever y t ransact io n made online or offline. (Buying and S elling ar e t reat ed as separ at e t ransact ion). Reliance Moneys advant age over ot hers is t hat it s charging t he lo west brokerag e in t he market which is just 1 paisa on ever y execut ive t rade irr espect ive o f t he volume t raded. Reliance Mo ney, t he brokerage and dist r ibut ion ar m o f Reliance ADA Group, aims t o t ap invest ors in t he smaller towns and cit ies t hrough a flat fee st ruct ure. The current leaders in t he ret ail broking segment like ICI CI Dir ect , India I nfo line and I ndiabulls o ffer a pay per use model wher e t he cust o mer pays a percent age of the a mount t ransact ed by him. Reliance Moneys brokerage rat es are quit e co mpet it ive. The new wonder is Reliance Money's pre -paid card for st ock market brokerage. Reliance Mone y, t he financial ser vices divisio n o f Anil Dhirubha i Ambani Group-pro mot ed Reliance Capit al, is br inging t o t he market pre -paid cards in deno minat io ns o f Rs500, Rs1,350 and Rs2,500 wit h valid it y per iod o f t wo mo nt hs, six mo nt hs and t welve mo nt hs respect ively. These cards would o ffer brokerage at one -t hird o f t he r at e being charged by inst it ut ional and individual brokerage houses. Sample t his. For a pre -paid card wort h R s500, an invest or can t rade up t o Rs90 lakh in fut ures and opt ion

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segment or can undert ake int ra -day t rade of similar amount . Besides, an invest or can undert ake a deliver y- based act ivit y o f Rs10 lakh. The Rs1350 wort h pre-paid card, t ot al t rading limit wo uld reach Rs 3 crore, of which Rs 2.70 crore is for t he F&O segment and balance Rs30 lakh for deliver y- based act ivit ies. For Rs2500 pre-paid card, t ot al t rading limit is fixed at Rs16 crore, t hat inc lude F&O limit o f Rs15.40 crore and balance Rs 60 lakh f or deliver y- based broking.

(Sour ce Web )

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Fig.4.1 Fee Stru ctu re

Convert ed t o percent age t er ms - Reliance Money o ffer s mo st co mpet it ive brokerage rat es - 0.05% for deliver y t rades and 0.005% for no n -deliver y t rades

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( fixed fee o f Rs500/ - for deliver y t rades up t o Rs10 lacs and/or non-deliver y t rades up t o Rs1 crore). Indust r y rat es var y bet ween 0.4% t o 0.85% for deliver y t rades and bet ween 0.05% and 0.10% for non deliver y t rades. Target low level o f ret ail penet rat ion in India - less t han 3 per cent o f househo ld financing savings makes it int o equit y market s Reliance Money co nsumers can t rade in equit ies, co mmodit ies and offshore I nvest ment s , IPOs, Mut ual Funds, I nsurance, Money t ransfer and Money Chang ing - all t hrough sing le window, bot h off - line and online. Reliance Money has already t ied -up w it h CMC Capit al P lc UK t o offer offshore I nvest ment product s to Indian consumer s as per guidelines.

Advantages offered by Reliance money over other companies:

Cost Effect ive Convenience Secur it y S ingle Window for Mult iple Product s 3 in 1 I nt egrat ed Access Demat Account wit h Reliance Capit al Ot her Ser vices like resear ch, live news fr om Reut er and Dow Jones, et c.

How reliance money scored over others?

1. Two way authentication : Reliance o ffer s it s cust omer s wit h a token (an elect ronic gadget ) t hat generat es a password, which ar e a t hird level o f secur it y in addit io n t o t he cust omer log in and a password provided. The password generat ed by t he t oken is valid only for a per io d of 20 seconds. I f t he web page expires, for t he fresh login, a new password generat ed b y t he token has t o be keyed in by t he cust omer.

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2. Lowest brokerage : Reliance o ffer s t he lo west brokerage o f 1 paisa whic h is ver y less wit h respect t o t he ot her DPs in t he ma rket . 3. User fri endly software : T he port al o ffered is ver y eas y t o underst and and use. 4. Forex and offshore investm ent : Reliance provides t he o ffshore facilit y which no ot her AMC is pro viding in t he market . 5. Better research and news : Re liance o ffers news fro m t he DOW JONE S and REUTERS. Seeking t o br ing shar e t rading clo ser to consumer s just like ATMs, Reliance Capit al's st ock brokerage ar m Reliance Money launched I nt er net t rading ser vices t hrough web- enabled ret ail kio sks.

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CHAPTER-6
SECURITIES MARKET AND FINANCIAL SYSTEM

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6.1 EQUITY
Equity is a share in the ownership of a company. It represents a claim on the company''s assets and earnings. As you acquire more stock, your ownership stake in the company increases. The terms share, equity and stock mean the same thing and can be used interchangeably. Holding a company''s stock means that you are one of the many owners (shareholders) of a company, and, as such, you have a claim (to the extent of your holding) to everything the company owns. Yes, this means that technically, you own a portion of every piece of furniture; every trademark; every contract, etc. of the company. As an owner, you are entitled to your share of the company''s earnings as well as any voting rights attached to the stock.

Reasons For Issuing Equity

To expand its business, a company, at some point, needs to raise money. To do this, it can either borrow by taking a loan or raise funds by offering prospective investors a stake in the company --- which is known as issuing stock. A company usually borrows from banks and/or financial institutions. This is called debt financing. On the other hand, issuing stock is called equity financing. While raising loans is used for temporary cash requirements (such as borrowing to fund a project), issuing stock is used to raise funds of a permanent nature. While a lender gets interest for the loan given to the company, an equity shareholder gets a share in the company.

6.2 CHARACTERISTICS OF EQUITY

Equity is unsecured and a high risk-return investment When you invest your money in a debt investment such as a bank deposit, bonds, etc., you are promised a fixed amount of interest on your investment and return of capital. This isn''t the case with an equity investment. By becoming an owner, you bear the risk of the company not being successful. However, the rewards for bearing this risk are high. You, as an equity shareholder, are entitled to a share in the profits of the companys business as well as any appreciation in the perceived value of the shares.

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The risks and rewards of investing in equity are clearly apparent from the Bombay Stock Exchange Sensitive Index (BSE Sensex), which is a popular stock market index. This index reflects the movement of the share prices on the stock markets. The Sensex rises and/or falls continuously during trading hours. Rises indicate gains and falls indicate losses. True equity money is unsecured and directly reflects the faith of the investor in the business, its management and the commitment of its principals to it.

Equity Remains In Perpetual Existence

The perpetual existence of a company implies that the death, disability, retirement or termination of a shareholder, director or officer, will not affect the existence of the company. For an equity shareholder, this is convenient since he does not need to renew/renegotiate the terms of his investment (like in the case of a fixed tenure debt investment). He also has the option to sell his equity holding through the stock exchange if he no longer wants to remain invested in the company.

Limited liability
Another extremely important feature of equity is its limited liability, which means that, as a part-owner of the company, you are not personally liable if the company is not able to pay its debts. In case of other entities such as partnerships, if the partnership goes bankrupt, the partners are personally liable towards the creditors/lenders and they may have to sell off their personal assets like their house, car, furniture, etc., to make good the loss. In case of holding equity shares, the maximum value you can lose is the value of your investment. Even if a company of which you are a shareholder goes bankrupt, you can never lose your personal assets.

6.3 INCOME FROM EQUITY INVESTING

capital appreciation
Equity shares of companies are listed and traded on a stock exchange (the Bombay Stock Exchange or the National Stock Exchange). The market prices of these shares are continuously

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moving up or down depending on the interest in the companys stock, its business potential, etc. As an equity shareholder, you can profit/lose from the market price rise/fall. For instance, if you have purchased the equity shares of Company ABC at Rs 25 per share and the market price of the share rises to Rs 30, you can sell the shares at this price to make a profit. This is called capital appreciation. However, if the market price falls to below Rs 25, you would lose. This loss would be notional till you actually sell at this price and book the loss.

Bonus shares
When you purchase shares of a company, you become a shareholder of the company. When the company is doing well, it may declare a bonus issue. This means that the company will issue fresh equity shares to its existing shareholders, for free. As a shareholder, you will be entitled to receive bonus shares in proportion to your holding in the company. For instance, if the company declares a bonus in the ratio of 1:2 (this means it will issue one share for every two shares you hold) and if you hold 100 shares, you will be entitled to 50 shares as a bonus. When you sell your bonus shares in the stock market, the market price at which you sell your bonus, minus brokerage charges and necessary taxes (Service Tax, Securities Transaction Tax, etc.), will be your profit i.e. capital appreciation. In this case, there will be no cost of purchase since you have received the bonus for free. For instance, if the company declares a bonus issue in the ratio of 1:2 (this means it will issue one bonus share for every two shares you hold) and if you hold 100 shares, you will be entitled to 50 shares as a bonus shares. The cost of these shares will be nil. In this case, if you sell your bonus shares in the market at say, Rs 35, your capital appreciation will be the entire Rs 35 per share minus brokerage, taxes, etc.

Rights shares
Another way a company offers benefits to its shareholders is by offering rights shares. This means that the company will offer fresh equity shares to its existing shareholders at a price, which is lower than the current market price of the share. For instance, if the current market price of the companys share is Rs 35, it will offer shares at below this price, say Rs 25. As a shareholder, you will be entitled to receive rights shares in proportion to your holding in the company. For instance, if the company declares a rights issue in the ratio of 1:2 (this means it will issue one share for every two shares you hold) and if you hold 100 shares, you will be

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entitled to 50 shares as a rights shares. This implies that to obtain the rights shares, you will have to pay Rs 1,250 (50 shares you are entitled to x Rs 25 per share). In this case, if you sell your rights shares in the market at say, Rs 35, your capital appreciation will be Rs 10 per share minus incidental selling costs.

6.4 EQUITY INVESTING STRATEGIES

Value investing
Value investing means investing in companies that are believed to be currently undervalued but whose worth will be recognized by the market eventually. These companies intrinsic or fundamental values are higher than their market values. This strategy implies investing in such companies before the markets recognize their true values and push up their share prices accordingly.

Investing in dividend yield stocks

Dividend yield is a ratio, which divides the dividend paid out by a company with the current market price. For instance, if a company pays out Rs 5 per share as dividend and its current market price is Rs 55, its dividend yield is about 9 per cent (Rs 5 / Rs 55 x 100). Companies, which offer high dividend yields, are usually value companies, which value investors look for. These companies have strong fundamentals and good potential, which the market has yet to recognize. When the market recognizes the worth of these companies, their dividend yields fall because of rise in their market prices. They, then offer a significant amount of capital appreciation.

Diversification methods.
Diversification can be done across different asset classes (equity, debt, mutual funds, gold, property, etc.) as well as across different investment options (say, in case of equity investment in companies with different market capitalisations, in different sectors, etc.). The

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amount of investment made in each asset class and investment option will depend on your investment risk profile and expected investment returns.

Growth investing
Growth investing means investing in companies, whose turnover and profits are expected to grow significantly, which will result in appreciation in their share prices. These companies are in a phase of rapid growth and expansion of their businesses.

Rupee cost averaging / value averaging

To buy low and sell high is very difficult to do, especially in volatile markets (where prices rise and fall significantly over very short periods of time). One investment strategy that helps overcome this volatility and take advantage of it by averaging out cost of investment, is Rupee cost averaging (RCA) or Value averaging. Under RCA, you decide how much you want to increase your investment by at fixed periodical intervals of time, say on a monthly basis. If the markets rise, you will need to invest a lesser amount or book profits. However, if the markets fall, you will need to invest more to achieve your target investment amount. Lets understand this with an example. You plan to increase your equity portfolio by Rs 15,000 every month. In the first month, you invest Rs 15,000. In the next month, due to a market fall, your portfolio value falls to Rs 12,000. You will need to invest Rs 18,000 in this month to make up the loss of Rs 3,000 and add fresh investments of Rs 15,000. If in the following month, the market is bullish and your portfolio rises by Rs 13,000, you will invest only Rs 2,000 to bring up your portfolio value by Rs 15,000. Similarly, if the market is very bullish and your equity portfolio value shoots up by Rs 17,000, instead of investing that month, you will book profits to the extent of Rs 2,000. RCA helps you undertake disciplined investing. You need to set a target and use the market movement to achieve it. It also helps you decide when and to what extent to exit from the market. However, in a long bull or bear phase, this strategy becomes difficult to implement. However, if you dont want to subscribe to the rights offered to you, you can sell your rights entitlements. The price that you receive to sell your rights entitlements will depend on the rights offer price, the current market price and the demand for the companys shares. For instance,

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taking the above example forward, if you decide to sell your rights entitlements of 50 shares and you receive Rs 2.50 per share, you will get a total of Rs 125. This will be your profit after deducting incidental selling expenses.

Dividend income
Companies report their profits earned on a quarterly basis. Based on the quantum of profits, companies declare dividends to distribute a portion of these profits to their shareholders. Dividends are declared as a percentage of the shares face value. For instance, if a company declares a dividend of 10 per cent and its share has a face value of Rs 10, it implies that it will pay Re 1 per share as dividend (Rs 10 x 10 per cent). As a shareholder, you will be entitled to dividend to the extent of your share holding. For instance, in this case if you hold 500 shares, you will get a dividend of Rs 500 (500 shares x Re 1 per share). However, dividend income is uncertain. Companies dont declare dividends regularly. Dividends are declared only when there are profits available for distribution.

6.5 TAX IMPACT ON EQUITY INVESTING

Tax impact on your dividend income
Dividend received on your equity investment is tax-free in your hands. However, companies need to pay a dividend distribution tax at the rate of 14.025 per cent (12.5 per cent for tax + 2 per cent for education cess + 10 per cent for surcharge) on the dividend declared and paid out to shareholders. Tax impact on your capital gains (sale of shares at a profit) When you hold your equity investments for less than 12 months before selling them, they are considered as short-term capital assets. If you hold these investments for more than 12 months before selling them, they are considered as long-term capital assets. Computing the date of holding of your equity investments Purchase from the stock exchange

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When you purchase shares from the stock exchange, the date of the purchase is taken as the date on the brokers purchase contract note. Similarly, the date of sale is taken as the date on the brokers sale contract note. Right shares Where you have been allotted right shares, the period of holding will be computed from the date of allotment of the shares. The amount actually paid for purchase of the rights is taken as cost of the shares. Rights entitlement Where you have sold your rights entitlements, the period of holding will be computed from the date of offer to subscribe to the shares to the date when such rights entitlement was renounced by you. The cost of rights entitlement is taken as nil. The amount, you receive on selling your rights entitlement, is taken as short-term capital gain. Bonus shares When you receive bonus shares, the period of holding is computed from the date of allotment of the bonus shares. The cost of the bonus shares is taken as nil. Computing the capital gain Computing capital gain on short-term equity investments (short-term capital gain) To compute tax on short-term capital gains, reduce the cost of shares from the sale value of the shares and compute tax at 10 per cent + surcharge of 10 per cent, if applicable (if your total income exceeds Rs10 lakh, surcharge is applicable to you) + education cess of 2 per cent. Tax rate on short-term capital gains: If surcharge is applicable If surcharge is not applicable 11.22 per cent 10.20 per cent

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Computing capital gain on long-term equity investments (long-term capital gain) Long-term capital gains earned on your equity investment is completely tax-free so there is no question of computing gain for tax purposes. However, this exemption is available only when you sell your equity through the stock exchange. Setting off capital losses If you have incurred a capital loss, the tax authorities allow you to use this loss to reduce taxable capital gains from another source under certain conditions. Here is a simplistic example for explanation. If you have incurred a loss of Rs 1,000 from sale of shares of Company ABC and you have made a profit of Rs 2,000 from sale of shares of Company XYZ, you can use the loss on sale of shares of Company ABC to reduce the taxable capital gains earned on sale of shares of Company XYZ. In other words, you will pay capital gains tax on only Rs 1,000 (gain of Rs 2,000 earned on sale of shares of Company XYZ loss of Rs 1,000 incurred on sale of shares of Company ABC). Long-term capital losses Since long-term capital gains earned on your equity investment are tax-free, long-term capital losses incurred on your equity investment cannot be used to reduce taxable capital gains.

Short-term capital losses Short-term capital losses incurred on your equity investment can be set off against any capital gain (long-term or short-term). If in the current year you dont have any taxable capital gain to set off the loss against, you can carry forward this loss for 8 years and set it off against any future taxable capital gain (long-term or short-term).

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6.6 RISKS ASSOCIATED WITH EQUITY INVESTING

Systemic risk
This implies risk in the system. This risk applies to the entire market and includes risks such as interest rate risk, inflation risk, exchange rate risk, political risk, etc. Some of the important systemic risks are indicated below: Interest rate risk. Interest rate risk can affect the overall market. Interest is the cost of borrowing money. As interest rates rise, money become more expensive to borrow, and companies that have lined up expansion plans may postpone their plans due to the high interest cost they have to bear. Moreover, for consumers high interest rates can alter their plans for purchasing a home or car due to high monthly installments. This results in lower consumption and reduced economic activity. Inflation risk. Inflation risk can influence all asset classes. Inflation is nothing but the steady increase in prices of goods and services. With rising inflation, manufacturers of goods incur higher raw material costs and see profit declines. Such a risk is detrimental to the stock market and the overall economy.

Exchange rate risk.

Exchange rate risk is the risk of an investment''s value changing due to changes in currency exchange rates. This risk usually affects businesses that export and/or import but can also affect the overall economy. For example, if the rupee depreciates against the dollar then Indian exporters will benefit since they will be able to get more rupees for every dollar. An appreciating rupee against the dollar has the opposite effect. However, a continuously falling currency does not always augur well for our capital markets. FIIs are one of the main investors in our capital markets. If our currency continuously depreciates, it will result in lower investment values when FII sell their holdings and convert the sale proceeds back into the original currency.

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Political risk.
Political risk implies political instability, which can affect the general economy. A stable and progressive government can influence the investment climate in a country and have an affect on the overall market. Further, war, riots, etc. will have a similar affect on the economy.

Non-systematic Risk
This is risk that is very specific to a particular stock or an industry. Some of the important nonsystemic risks are indicated below: Industry Risk. Industry risk implies risk that directly impacts a sector or industry. For example, the tobacco industry is penalised with high duties due to the adverse health factors associated with this sector. Risk of employee Strike. Employee agitations result in stoppage of production, which, in turn, results in lower profitability of the company. Technology risk. This risk is applicable to a company that does not adapt to new technology, which could significantly improve its business functioning and prospects. Coping with Risks While systemic risks are not in ones control, non-systemic risks can be assessed for each company before one makes an investment decision.

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6.7 SECURITIES MARKET AND FINANCIAL SYSTEM

The securities market has two interdependent and inseparable segments, the new issues (primary market) and the stock (secondary) market.

6.7(a) PRIMARY MARKET

The primary market provides the channel for sale of new securities. Primary market provides opportunity to issuers of securities; government as well as corporates, to raise resources to meet their requirements of investment and or discharge some obligation. They may issue the securities at face value, or at a discount/premium and these securities may take a variety of forms such as equity, debt etc. They may issue the securities in domestic market and/or international market. The primary market issuance is done either through public issues or private placement. A public issue does not limit any entity in investing while in private placement, the issuance is done to select people. In terms of the Companies Act, 1956, an issue becomes public if it results in allotment to more than 50 persons. This means an issue resulting in allotment to less than 50 persons is private placement. There are two major types of issuers who issue securities. The corporate entities issue mainly debt and equity instruments (shares, debentures, etc.), while the governments (central and state governments) issue debt securities (dated securities, treasury bills). The price signals, which subsume all information about the issuer and his business including associated risk, generated in the secondary market, help the primary market in allocation of funds.

6.8(b) SECONDARY MARKET

Secondary market refers to a market where securities are traded after being initially offered to the public in the primary market and/or listed on the Stock Exchange. Majority of the trading is done in the secondary market. Secondary market comprises of equity markets and the debt markets. The secondary market enables participants who hold securities to adjust their holdings in response to changes in their assessment of risk and return. They also sell securities for cash to meet their

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liquidity needs. The secondary market has further two components, namely the over-the-counter (OTC) market and the exchange-traded market. OTC is different from the market place provided by the Over The Counter Exchange of India Limited. OTC markets are essentially informal markets where trades are negotiated. Most of the trades in government securities are in the OTC market. All the spot trades where securities are traded for immediate delivery and payment take place in the OTC market. The exchanges do not provide facility for spot trades in a strict sense. Closest to spot market is the cash market where settlement takes place after some time. Trades taking place over a trading cycle, i.e. a day under rolling settlement, are settled together after a certain time (currently 2 working days). Trades executed on the leading exchange (National Stock Exchange of India Limited (NSE) are cleared and settled by a clearing corporation which provides novation and settlement guarantee. Nearly 100% of the trades settled by delivery are settled in demat form. NSE also provides a formal trading platform for trading of a wide range of debt securities including government securities. A variant of secondary market is the forward market, where securities are traded for future delivery and payment. Pure forward is out side the formal market. The versions of forward in formal market are futures and options. In futures market, standardised securities are traded for future delivery and settlement. These futures can be on a basket of securities like an index or an individual security. In case of options, securities are traded for conditional future delivery. There are two types of optionsa put option permits the owner to sell a security to the writer of options at a predetermined price while a call option permits the owner to purchase a security from the writer of the option at a predetermined price. These options can also be on individual stocks or basket of stocks like index. Two exchanges, namely NSE and the Bombay Stock Exchange, (BSE) provide trading of derivatives of securities. The past few years in many ways have been remarkable for securities market in India. It has grown exponentially as measured in terms of amount raised from the market, number of stock exchanges and other intermediaries, the number of listed stocks, market capitalisation, trading volumes and turnover on stock exchanges, and investor population. Along with this growth, the profiles of the investors, issuers and intermediaries have changed significantly. The market has witnessed fundamental institutional changes resulting in drastic reduction in transaction costs and significant improvements in efficiency, transparency and safety.

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Difference between the primary market and secondary market PRIMARY MARKET In
the primary market,

SECONDARY MARKET
Secondary market is an equity trading venue in which already existing or pre-issued securities are traded among investors. Secondary market could be either auction or dealer market. While stock exchange is the part of an auction market, Over-the-Counter (OTC) is a part of the dealer market. A secondary market is where you sell or buy existing issues. i.e. If you bought a bond last year, now need to get your principal, you can sell it in the secondary market. You may not get par value. If rates are up since you bought the bond, then you will likely have to sell it at a discount to be able to get rid of it. If rates have fallen since you bought it, you could get a premium for it.

securities are offered to public for subscription for the purpose of raising capital or fund.

A primary offering, such as

with a corporate bond, means you are buying it directly from the issuer, at par value.

For Primary Markets we can give the example of Reliance Power Investors submit application forms for the Reliance Power Initial Public Offering at an outlet for Reliance Money, an arm of the Anil Dhirubhai Ambani owned Reliance Capital in Mumbai, India, Tuesday, Jan. 15, 2008. Investors took up all available shares in the initial public offering of India's Reliance Power within a minute Tuesday, raising some US$3 billion (euro2. 0 billion) for the company, officials said, making it the country's largest IPO ever.

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6.8 MARKET AROUND ( major indices)

INDIAN MARKETS Nifty - 50 stocks representing various sector. Sensex -30 stocks representing various sector.

WORLD MARKETS
US :DOW JONES, NASDEQ, S&P 500. UK : FSTE 100 ASIAN : NIKKEI 225, HANG SANG. EUROPE : CAC 40

Nifty Fifty was an informal term used to refer to 50 popular large cap stocks on the New York Stock Exchange in the 1960s and 1970s that were widely regarded as solid buy and hold growth stocks.The fifty are credited with propelling the bull market of the early 1970s. Most are still solid performers, although a few are now defunct or otherwise worthless.

BSE Sensex or Bombay Stock Exchange Sensitive Index is a value-weighted index composed of 30 stocks started in 01 of Jan, 1986. It consists of the 30 largest and most actively traded stocks, representative of various sectors, on the Bombay Stock Exchange. These companies account for around one-fifth of the market capitalization of the BSE. The base value of the sensex is 100 on April 1, 1979, and the base year of BSE-SENSEX is 1978-79. NASDAQ The NASDAQ (acronym of National Association of Securities Dealers Automated Quotations) is an American stock exchange. It is the largest electronic screen-based equity securities trading market in the United States. With approximately 3,800 companies, it has more trading volume per hour than any other stock exchange in the world. It was founded in 1971 by the National Association of Securities Dealers (NASD), who divested themselves of it in a series of sales in 2000 and 2001. It is owned and operated by the NASDAQ OMX Group, the stock of which was listed on its own stock exchange in 2002, and is monitored by the Securities and Exchange Commission (SEC) .

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6.9 THE CYCLE OF MARKET EMOTIONS AT STOCK MARKET

The Cycle of Market Emotions

Point of Maximum Risk Temporary Setback, I am a long term investor.

Euphoria Thrill

Anxiety Denial

Fear Excitement Desperation Optimism

Optimism

Wow I feel great about this investment

Panic

Relief

Capitulation

Point of Maximum Financial Opportunity

Hope

maybe the markets just arent for me.

Despondency

Depression

confidential

12 of 26

A Reliance Capital company

The reason for running this graphic of the Cycle of Market Emotions is because it's so central to understanding market psychology and investor emotions during bull markets and bear markets.

I don't know where most people are on this curve, but the odds are it's somewhere between Denial and Hope. That covers a lot of ground and you could argue the distinction between the terms desperation, despondency (sadness, misery) and depression is somewhat arbitrary.

The point is that we are certainly not at the cycle's top emotion, Euphoria, which is when most of us pile in to trends like technology and Emerging Markets, oblivious to the fact that's actually the point of maximum financial risk. You have to wonder how many times we have to experience this cycle before we finally get it right.

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 It is human nature to put too much weight on current conditions and extrapolate them far into the future." Today, the market prices of many stocks are "well below the underlying value of the business.

IMPORTANT POINTS Here is a timeline on the rise and rise of the Sensex through Indian stock market history.

1000, July 25, 1990 - On July 25, 1990, the Sensex touched the four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results.

2000, January 15, 1992 - On January 15, 1992, the Sensex crossed the 2,000-mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and current Prime Minister Dr Manmohan Singh.

3000, February 29, 1992 - On February 29, 1992, the Sensex surged past the 3000 mark in the wake of the market-friendly Budget announced by Manmohan Singh.

4000, March 30, 1992 - On March 30, 1992, the Sensex crossed the 4,000-mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and Sensex witnessed unabated selling.

6.10 DEBT INSTRUMENTS:

FUNDAMENTAL FEATURES Debt instruments are contracts in which one party lends money to another on predetermined terms with regard to rate of interest to be paid by the borrower to the lender, the periodicity of such interest payment, and the repayment of the principal amount borrowed (either in installments or in bullet). In the Indian securities markets, we generally use the term bond for debt instruments issued by the Central and State governments and public sector organisations, and the term debentures for instruments issued by private corporate sector. INSTRUMENT FEATURES The principal features of a bond are: a) Maturity b) Coupon c) Principal

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In the bond markets, the terms maturity and term-to-maturity, are used quite frequently. Maturity of a bond refers to the date on which the bond matures, or the date on which the borrower has agreed to repay (redeem) the principal amount to the lender. The borrowing is extinguished with redemption, and the bond ceases to exist after that date. Term to maturity, on the other hand, refers to the number of years remaining for the bond to mature. Term to maturity of a bond changes everyday, from the date of issue of the bond until its maturity. Coupon Rate refers to the periodic interest payments that are made by the borrower (who is also the issuer of the bond) to the lender (the subscriber of the bond) and the coupons are stated upfront either directly specifying the number (e.g.8%) or indirectly tying with a benchmark rate (e.g. MIBOR+0.5%). Coupon rate is the rate at which interest is paid, and is usually represented as a percentage of the par value of a bond. Principal is the amount that has been borrowed, and is also called the par value or face value of the bond. The coupon is the product of the principal and the coupon rate. Typical face values in the bond market are Rs. 100 though there are bonds with face values of Rs. 1000
and Rs.100000 and above. All Government bonds have the face value of Rs.100. In many cases, the name of the bond itself conveys the key features of a bond. For examplea GS CG2008 11.40% bond refers to a Central Government bond maturing in the year 2008, and paying a coupon of 11.40%. Since Central Government bonds have a face value of Rs.100, and normally pay coupon semi-annually, this bond will pay Rs. 5.70 as six- monthly coupon, until maturity, when the bond will be redeemed.

6.11 INDIAN DEBT MARKETS: A PROFILE

Indian debt markets, in the early nineties, were characterised by controls on pricing of assets, segmentation of markets and barriers to entry, low levels of liquidity, limited number of players, near lack of transparency, and high transactions cost. Financial reforms have significantly changed the Indian debt markets for the better. Most debt instruments are now priced freely on the markets; trading mechanisms have been altered to provide for higher levels of transparency, higher liquidity, and lower transactions costs; new participants have entered the markets, broad basing the types of players in the markets; methods of security issuance, and innovation in the structure of instruments have taken place; and there has been a significant improvement in the dissemination of market information.

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6.12 MARKET SEGMENTS

There are three main segments in the debt markets in India, viz., 1. Government Securities, 2. Public Sector Units (PSU) bonds, and 3. Corporate securities.

The market for Government Securities comprises the Centre, State and State-sponsored securities. In the recent past, local bodies such as municipalities have also begun to tap the debt markets for funds.

The PSU bonds are generally treated as surrogates of sovereign paper, sometimes due to explicit guarantee and often due to the comfort of public ownership. Some of the PSU bonds are tax free, while most bonds including government securities are not tax-free. The RBI also issues tax-free bonds, called the 6.5% RBI relief bonds, which is a popular category of tax-free bonds in the market.

Corporate bond markets comprise of commercial paper and bonds. These bonds typically are structured to suit the requirements of investors and the issuing corporate, and include a variety of tailor- made features with respect to interest payments and redemption. The less dominant fourth segment comprises of short term paper issued by banks, mostly in the form of certificates of deposit. The debt markets also have a large segment which is a non-securitized transactions based segment, where players are able to lend and borrow amongst themselves. These are typically short term segments and comprise of call and notice money markets, which is the most active segment in the debt markets, inter-bank market for term money, markets for intercorporate loans and markets for ready forward deals (repos).

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6.12 PARTICIPANTS IN THE DEBT MARKETS

Participants and Products in Debt Markets

ISSUER
Central Government Central Government State Government PSUs Dated Securities Bonds, Structured Obligations Corporates Corporates, PDs Scheduled Commercial Banks Financial Institutions Scheduled Commercial Banks Municipal Corporation Municipal Bonds 0-7 years Certificates of Deposit (CDs) Bank Bonds 1-10 years 1 year to 3 years Certificates of Deposit (CDs) 7 days to 1 year Debentures Commercial paper 1-12 years 7 days to 1 year 5-10 years 5-13 years

INSTRUMENT
Dated Securities T-Bills

MATURITY
2-30years

INVESTORS
RBI, Banks, Insurance Companies, Provident Funds, Mutual Funds, PDs, Individuals

91/182/364 days

RBI, Banks, Insurance Companies, Provident Funds, Mutual Funds, PDs, Individuals Banks, Insurance Companies, Provident Funds, RBI, Mutual Funds, Individuals, PDs. Banks, Insurance Companies, Provident Funds, RBI, Mutual Funds, Individuals, PDs. Banks, Mutual Funds, Corporates, Individuals Banks, Corporate, Financial institutions, Mutual Funds, Individuals, FIIs Banks, Corporations, Individuals, Companies, Trusts, Funds, Associations, FIs, NRIs Banks, Corporations, Individuals, Companies, Trusts, Funds, Associations, FIs, NRIs Corporations, Individual Companies, Trusts, Funds, Associations, FIs, NRIs Banks, Corporations, Individuals, Companies, Trusts, Funds, Associations, FIs, NRIs

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6.13 SECONDARY MARKET FOR DEBT INSTRUMENTS

The NSE- WDM segment provides the formal trading platform for trading of a wide range of debt securities. Initially, government securities, treasury bills and bonds issued by public sector undertakings (PSUs) were made available for trading. This range has been widened to include non-traditional instruments like, floating rate bonds, zero coupon bonds, index bonds, commercial papers, certificates of deposit, corporate debentures, state government loans, SLR and non-SLR bonds issued by financial institutions, units of mutual funds and securitized debt. The WDM trading system, known as NEAT (National Exchange for Automated Trading), is a fully automated screen based trading system that enables members across the country to trade simultaneously with enormous ease and efficiency. The trading system is an order driven system, which matches best buy and sell orders on a price/time priority. Central Government securities and treasury bills are held as dematerialized entries in the Subsidiary General Ledger (SGL) of the RBI. In order to trade these securities, participants are required to have an account with the SGL and also a current account with the RBI. The settlement is on Delivery versus Payment (DvP) basis. The Public Debt Office which oversees the settlement of transactions through the SGL enables the transfer of securities from one participant to another. Since 1995, settlements are on delivery-versus payment basis. However, after creation of Clearing Corporation of India (CCIL), most of the institutional trades are being settled through CCIL with settlement guarantee. The settlement through CCIL is taking place on DvP-III where funds and securities are netted for settlement. Government debt, which constitutes about three-fourth of the total outstanding debt, has the highest level of liquidity amongst the fixed income instruments in the secondary market. The share of dated securities in total turnover of government securities has been increasing over the years. Two way quotes are available for active gilt securities from the primary dealers. Though many trades in gilts take place through telephone, a larger chunk of trades gets routed through NSE brokers.

6.14 RETAIL DEBT MARKET (RDM) TRADING:

Trading takes place in the existing Capital Market segment of the Exchange and in the same manner in which the trading takes place in the equities (Capital Market) segment. The RETDEBT Market facility on the NEAT system of Capital Market Segment is used for entering

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transactions in RDM session. The trading holidays and market timings of the RDM segment are the same as the Equities segment.

6.15 Trading Parameters:

The trading parameters for RDM segment are as below:
Face Value Permitted Lot Size Tick Size Operating Range Mkt. Type Indicator Book Type

Rs. 100 Rs . 10
Rs. 0.01 +/- 5% D (RETDEBT)

RD

Trading in Retail Debt Market is permitted under Rolling Settlement, where in each trading day is considered as a trading period and trades executed during the day are settled based on the net obligations for the day. Settlement is on a T+2 basis. National Securities Clearing Corporation Limited (NSCCL) is the clearing and settlement agency for all deals executed in Retail Debt Market.

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CHAPTER 7 FINDING AND DATA ANALYSIS

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FINDING AND DATA ANALYSIS

1. Relationship between Age & Tenure of investment
COUNT OF AGE LESS TO1 YRS MORE THEN 5 YRS 2 6 3 2 2 1 12

AGE 25 TO 40 40 TO 60 ABOVE 60 BELOW 25 GRAND TOTAL

1 TO 3 YRS

7 4 2 7 20

3 TO 5 3 2 1 2 8

GRAND TOTAL 18 9 5 12 44

20 18 16 14 12 10 8 6 4 2 0 25 to 40 40 to 60 above 60 below 25

more then 5 yrs less to1 yrs 3 to 5 1 to 3 Yrs

2. INCOME 1.5L TO 4L 4L TO 6.5 ABOVE 6.5L BELOW 1.5L GRAND TOTAL HIGH 1 2 3

Relation between Income & Risk

COUNT OF INCOME LOW MEDIUM 7 4 11 7 3 8 1 21 20 GRAND TOTAL 12 18 13 1 44

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20 15 10 5 0 1.5L to 4L 4L to 6.5 Above 6.5L below 1.5L medium low high

3 Relation between Investment & Satisfaction

PREFERRED INVESTMENT BULLION FIXED DEPOSITS KISAN VIKAS PATRA LIFE INSURANCE POLICIES MUTUAL FUNDS REAL ESTATE SHARES/DEBENTURES ULIP GRAND TOTAL COUNT OF PREFERRED INVESTMENT HIGH LOW MEDIUM 1 3 1 2 1 2 1 3 6 6 5 6 1 4 1 1 17 2 25 GRAND TOTAL 2 5 3 4 12 11 5 2 44

14 12 10 8 6 4 2 0

Medium Low High

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4. Relation between Age of Investor and Objective of Investment

AGE 25 TO 40 40 TO 60 ABOVE 60 BELOW 25 GRAND TOTAL CHILD MARIAGE 2 1 2 5 COUNT OF AGE GROWTH/RETURNS N/A SAFETY 9 6 2 1 5 22 1 SAVING 2 TAX SAVING 3 2 5 10 GRAND TOTAL 18 9 5 12 44

2 4

20 15 10 5 0 25 to 40 40 to 60 Above 60 Below 25 Tax Saving Saving Safety Growth/Returns N/A Child Mariage

5. Relation between Investment & Tenure

PREFERED INVESTMENT BULLION FIXED DEPOSITS KISAN VIKAS PATRA MUTUAL FUNDS REAL ESTATE SHARES/DEBENTURES ULIP LIFE INSURANCE POLICIES GRAND TOTAL COUNT OF PREFERED INVESTMENT 1 TO 3 YRS 3 TO 5 YRS LESS THAN 1 YRS 2 3 1 1 1 1 1 8 3 3 3 3 2 1 20 8 4 MORE THEN 5 YRS 1 1 5 2 3 12 GRAND TOTAL 2 5 3 12 11 5 2 4 44

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25

life insurance policies ULIP

20
15 10 5 0 1 to 3 yrs 3 to 5 yrs Less than 1 More then yrs 5 yrs

Shares/Debentures
Real Estate Mutual Funds Kisan Vikas Patra Fixed Deposits Bullion

6. Relation between Age of Investor & Tenure

AGE 25 TO 40 40 TO 60 ABOVE 60 BELOW 25 GRAND TOTAL
20 18 16 14 12 10 8 6 More than 5 yrs Less than 1yrs 3 to 5 yrs 1 to 3 yrs

1 TO 3 YRS 7 4 2 7 20

COUNT OF AGE 3 TO 5 YRS LESS THAN 1YRS 3 2 2 1 2 2 8 4

MORE THAN 5 YRS 6 3 2 1 12

GRAND TOTAL 18 9 5 12 44

4
2 0 25 to 40 40 to 60 Above 60 Below 25

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7. Relation between Age of Investor & Objective of Investment

AGE 25 TO 40 40 TO 60 ABOVE 60 BELOW 25 GRAND TOTAL CHILD MARRIGE 2 1 2 5 COUNT OF AGE GROWTH/RETURNS N/A 9 2 6 2 5 22 2 SAFTY SAVING 2 1 1 2 4 5 10 TAX SAVING 3 2 GRAND TOTAL 18 9 5 12 44

20 15 10 5 0 25 to 40 40 to 60 Above 60 Below 25 Tax saving Saving Safty N/A Growth/Returns Child Marrige

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CHAPTER-8 CONCLUSION AND INTERPRETATION

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CONCLUSION AND INTERPRETATION

The income group which fall under the category of 4.5-6 L invest more money then the other income group. The level of satisfaction is more of investor during investment in mutual fund and in real estate. In the long term people usually go for other alternative like real estate (property)as compared to the financial instrument. Younger people invest money for long term as depicted by the graphs the age group 25 40, go for long term gain usually. Generally people invest in the stock market for high return at younger age Equity investment is high risk and high gain therefore it is mostly done by the younger age group people for long term investment and for wealth appreciation.

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CHAPTER-9 RECOMMENDATION AND SUGGESTION

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RECOMMENDATIONS & SUGGESTIONS

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing. Equity market is high risk and high gain market therefore investor should make sure before investing into the securities that he should be fundamentally and technically sound with the information before investing into the equities. Mutual fund is the better option for the lay man to invest instead of directly into the equity market . New product innovation, low money investment plans and better service is crucial for the company to increase its market share. Reliance money should decrease its demat registration fees to attract new and more customers.

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CHAPTER -10 LIMITATIONS

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LIMITATIONS

1. Cold Calling
Voice and accent plays a major role. The right time to call a customer cannot be decided, as the customer may in a different mood at the time of calling. Time consuming

Less success rate 2. Corporate

Time consuming Contacts with higher authorities play a major role 3. Data Collection Research has been done only at Delhi and NCR. Some of the persons were not so responsive. Possibility of error in data collection. Possibility of error in analysis of data due to small sample size. Some of the people provide false data as they were scared about providing actual data

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CHAPTER -11 MY LEARNING AT RELIANCE MONEY

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MY LEARNING AT RELIANCE MONEY

During the training period of 2 month i.e. from 17th may to 17th july. I have gone through various stages Job role. I was basically given the work to Target various Consumer Groups, Markets and Different Organizations to whom and where the company can pitch its differential financial products/services as well as to create Awareness about the company and its offerings in the regard to Promote which create a Position in minds of the consumer. Moreover I was given some training classes about Mutual funds and Life Insurance. I have worked for two financial product/service offered by R-Money which are MUTUAL FUND EQUITY DEBT INSTRUMENTS LIFE INSURANCE (I AM JUST IN THE INITIAL STAGE OF IT).

The t ime durat ion o f t he pro ject is 2 mo nt hs st art ing fro m 17 s t may and ending o n 17 t h July. We were given t arget s t o be achieved dur ing t raining mo nt hs. The t arget s of each mo nt h were: 15 Demat Account s I was supposed t o use t he dat abase provided by t he co mpany t o make co ld calls or by direct ly meet ing people to get new leads While making co ld calls, we need t o have: Good Communicat io n Skills (Vo ice qualit y is clear and art iculat e) Persist ent and able t o bounce back fro m r eject io n Good organizat ional skills. Abilit y t o pro ject a t elephone perso nalit y (Ent husiasm, fr iend liness) Flexibilit y: can adapt to different t ypes of client s and new sit uat ions.

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MY LEARNINGS AT RELIANCE MONEY

To get init ial success in t his fie ld is ver y difficult . Alt hough t he business generat io n beco mes easier wit h t ime as we ser ve more people who t hen get added up in t he lo ya l client age. Thus t ime and ser vice are t wo most fact ors to get in t his fie ld. Also t he corporat e remains a ver y important segment which get s business in bulk but ret ail cannot be ignored which makes your business t icking. Cust o mer remains in t he pivot al posit io n

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ANNEXURE
(Questionnaire)
The purpose of these questions is to assist us in defining your investment goals by assessing your attitude toward risk and return. This questionnaire deals with the assets you are considering investing in a new account and will be a helpful tool in determining your current investment profile. It will run through a short series of questions designed to outline your current financial objectives, your time horizon and the amount of risk you are willing and able to assume. The answers to these questions will help us determine which strategy may be appropriate to help you achieve your financial goals.

1. What is the primary objective for these assets(Objective of Investment)? Wealth preservation Source of Income Capital Appreciation Retirement planning/ Education funding/long term wealth accumulation 2. What is the time horizon you have to achieve your financial goal? 0-5 years 6-10 years 11-14 years 15 years or longer 3. What is your present age? 55 or Over Between 45-54 Between 30-44 Less than 30 4. What is your monthly income (including interest income)? Below 1,50,000 1,50,000 to 4,00,000 4,00,000 to 6,50,000 Above 6,50,000 5. During the next five years, your monthly income will most likely: Decline Remain about the same

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Increase slightly Increase significantly

6. Your Preferred Area of Investment: Mutual Funds, ULIP, Shares/Debentures, Real Estate, Life Insurance Policies, Bullion, Fixed Deposits, Others... 7. Are you planning any major expenditures greater than 10% of your investment assets? Within the next year Within the next 5 years Within the next 5 to 10 years None expected 8.How do you intend to use the income earned by your investment portfolio? Reinvest at least 80% of my earnings Reinvest between 20% and 80% of my earnings Receive at least 80% of my earnings as income 9. Taking into consideration all sources of income, what is your current attitude towards your income needs: I can forego at least 10% of my current income Present income is adequate for present needs I need at least 10% more income 10. How many months of living expenses could be safely covered by your current liquid investments? o More than 12 months o Between 4 and 12 months o Less than 4 months 11. Which of the following investments would you feel most comfortable with taking into consideration the risk return trade-off? Equity securities of established companies

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Mix of equity securities and government bonds Government bonds

12. What factor would you consider most important before choosing an investment? How quickly I will be able to increase my wealth. The opportunity for steady growth. The amount of monthly income the investment will generate. The safety of my investment principal. 13. Which of the following best describes your reaction if the value of your portfolio suddenly declined 15%? I would be very concerned because I cannot accept fluctuations in the value of my portfolio. I invest for long term growth, but would be concerned about even a temporary decline. If the amount of income I received was unaffected, it would not bother me. I invest for long term growth and accept temporary fluctuations due to market influences. 14. When it comes to investing in stock or bond mutual funds (or individual stocks and bonds), I would describe myself as a/an... Very inexperienced investor Somewhat inexperienced investor Somewhat experienced investor Experienced investor Very experienced investor

Name:

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REFERENCES

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References websites www.reliancemoney.com www.mutualfundsindia.com www.valueresearchonline.com www.moneycontrol.com www.morningstar.com www.yahoofinance.com www.theeconomictimes.com www.rediffmoney.com www.bseindia.com www.nseindia.com www.investopedia.com www.scribd.com www.online.sagepub.com www.google.com www.reliancemoney.co.in

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Journals & other references:

1.Fama, Eugene (1970), Efficient Capital Markets: A Review of Theory and Empirical Work, Journal ofFinance. 2. Aggarwal, R., Klapper, L. & Wysocki, P. D. 2005. Portfolio preferences of foreign institutional investors, Journal of Banking and Finance, Vol. 29(12), pp2919-2946. 3. The Economic Times, Jan 2007 issue 4. R-Money factsheet and journals, year 2006, vol.3, page- 33-45 5. Business Standard, June 2009 issue 6. The Telegraph, 5th, Feb 2007 Business India, September,2004 issue 7. Fact sheet and statements of various fund houses.2009

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