Beruflich Dokumente
Kultur Dokumente
SRM UNIVERSITY
SCHOOL OF MANAGEMENT
SRM UNIVERSITY
in partial fulfillment of the requirements for the award of the degree of
MASTER OF BUSINESS ADMINISTRATION
By
Under the Supervision and Guidance
of
Mr. YAASEEN MASVOOD
FACULTY OF SRM SCHOOL OF MANAGEMENT
SRM SCHOOL OF
MANAGEMENT
1
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SRM UNIVERSITY
kattankulathur Campus
CERTIFICATE
This is to certify that the Summer Training Report entitled COMPRHENSIVE ANALYSIS OF
INVESTMENT AVENUES STOCK MARKET & INSURANCE IN INDIA, in partial
fulfillment of the requirements for the award of the Degree of Master of Business
Administration is a record of original training undergone by
during the year
2008-10 of his study SRM School Of Management, SRM University, kattankulathur Campus
under my supervision and the report has not formed the basis for the award of any
Degree/Fellowship or other similar title to any candidate of any University
Place: Chennai
Signature of Guide
Date: 14.08.09
YAASEEN MASVOOD
(B. E., M.B.A.) Senior Lecturer
SRM School Of Management
SRM University
Kattankulathur Campus
Chennai 603203
DECLARATION
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I, Radha Motani, hereby declare that the Summer Training Report, entitled
COMPRHENSIVE ANALYSIS OF INVESTMENT AVENUES STOCK MARKET &
INSURANCE IN INDIA, submitted to the SRM University in partial fulfillment of the
requirements for the award of the Degree of Master of Business Administration is a record of
original training undergone by me during the period June-July 2009 under the supervision and
guidance of YASEEN MASOOD (B.E., M.B.A.) Senior Lecturer, SRM SCHOOL OF
MANAGEMENT, SRM University, Kattankulathur Campus and it has not formed the basis for the
award of any Degree/Fellowship or other similar title to any candidate of any University.
ACKNOWLEDGEMENT
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ABSTRACT
This report begins with an overview of the investment avenues, which highlights the
phenomenal growth experienced recently, in line with the country's improving economic
fundamentals.
This study analysis the investment portfolio of the individual and the various Risks and
Returns calculation are made for the various avenues in order to suggest the suitable portfolio for the
individual based on the risk appetite of the person.
The methodology used is descriptive and exploratory research. The data were collected from
200 respondents using questionnaires. Most of the respondents were qualified and income group
people. It is shown from the analysis that the majority of the respondents feels that the risk and the
return are more important factor in the investment and also in the insurance plan they prefer,
accumulation plan.
Statistical test shows that the occupation of the respondents have directly influence. There is
significant relationship between the income of the individual and the choice of investment Avenues.
The ANOVA proves the risk and return are most important factor and the rank co-relation show that
the investment Porto folio doesnt suit the scientific portfolio.
Finally it has been suggested that insurance should be viewed as a risk cover not an
investment avenues, 50 % should be in guaranteed addition, 30 % in mutual fund and 20% in stocks.
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CONTENTS
CHAPTER
NO.
1.
PARTICULARS
INTRODUCTION:
9-11
12-13
14
15
16
17
18
19
20
21
22
23
23-24
25-28
COMPANY PROFILE
2.1. SMC- At Glance
2.2. Vision & Approach
PAGE
NO.
29-30
31
32
33
34-35
36
37
RESEARCH METHODOLOGY
38
38
39
39
39
40
40
41
42
42-58
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5.1 Findings
5.2 Suggestions
5.3 Conclusion
BIBLIOGRAPHY
59
60
61
64
LIST OF TABLES
TABLE NO
TITLE
PAGE NO
42
4.1
4.2
Educational Qualification
43
4.3
4.4
4.5
4.6
44
45
46
47
49
50-51
4.7
4.8
4.2.1
4.2.2
4.2.3
4.3.1
4.3.2
4.3.3
48
52-53
54
55
56
57
LIST OF CHARTS
TABLE NO
TITLE
PAGE NO
42
4.1
4.2
Educational Qualification
43
4.3
4.4
4.5
4.6
44
45
46
47
49
50-51
4.7
4.8
4.2.1
4.2.2
4.2.3
4.3.1
4.3.2
4.3.3
48
52-53
54
55
56
57
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CHAPTER 1
INTRODUCTION
One of the most significant factors in our life is the state of our personal finances, we rarely
spend time on managing them since unlike businesses. The reason being, we are not accountable to
any one for our personal financial goals and results. As a result we tend to get careless in our
financial matters. I know we all understand the importance of savings but let us not get confused
between savings and investment. Mere savings (putting aside a portion of earnings) do not insure or
guarantee achievement of future financial goals.
It is important to save but more important is to invest your money. By merely stashing away
money into that neighborhood bank's savings account, you are neither making any more money, nor
preserving its value. The inflation rate at around 4-5 per cent p.a. in excess of your bank savings
account rate at 3.5 per cent p.a. mercilessly erodes your wealth to that extent. The purchasing power
of rupee keeps depreciating. So, to fight against such depreciation one has to invest the money saved
in assets that will help it work for you and earn more than the erosion in value through inflation over
a period of time. That's just one of the primary reasons why each individual should invest. Another
more definitive reason is the 'Power of Compounding'. Put simply, it means that "Interest on Interest
is Interesting".
One can select the services according to their requirements, be it personal or professional.
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real estate (among many other things), or starting your own business. Sometimes people refer to
these options as "investment vehicles," which is just another way of saying "a way to invest."
Each of these vehicles has positives and negatives, which will be discussed later in the thesis.
The point is that it doesn't matter which method you choose for investing your money, the goal is
always to put your money to work so it earns you an additional profit. Even though this is a
simple idea, it's the most important concept in the current scenario to understand.
1.2.1.1. Safety:
Perhaps there is truth to the axiom that there is no such thing as a completely safe and
secure investment. Yet we can get close to ultimate safety for our investment funds through
the purchase of government-issued securities in stable economic systems, or through the
purchase of the highest quality corporate bonds issued by the economy's top companies. Such
securities are arguably the best means of preserving principal while receiving a specified rate
of return.
1.2.1.2. Income:
However, the safest investments are also the ones that are likely to have the lowest
rate of income return, or yield. Investors must inevitably sacrifice a degree of safety if they
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want to increase their yields. This is the inverse relationship between safety and yield:
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but some bonds are highly illiquid, or non-tradable, possessing a fixed term. Similarly,
money market instruments may only be redeemable at the precise date at which the fixed
term ends.
1.2.2.4. Retirement
Anyone who will retire needs to plan for it. There is more than one reason to save for
retirement. The all important reason is the rising cost of living. Its called inflation. If you
start planning for retirement early on, you can bridge the gap between what you have in
your hand today and what you would like to have when you retire. If you begin saving for
retirement early on in your life, you can set aside smaller amounts. You can also take on
more risk by investing larger amounts in equities i.e., stocks and equity funds
TRADE OFF: As we have seen from each of the objectives discussed above, the advantages
of one often come at the expense of the benefits of another. If an investor desires growth, for
instance, he or she must often sacrifice some income and safety. Therefore, most portfolios
will be guided by one pre-eminent objective, with all other potential objectives occupying less
significant weight in the overall scheme. Choosing a single strategic objective and assigning
weightings to all other possible objectives is a process that depends on such factors as the
investor's temperament, his or her stage of life, marital status, family situation, and so forth.
You need only be concerned with spending the appropriate amount of time and effort in
finding, studying and deciding on the opportunities that match your objectives.
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Investments Avenues
Non-Marketable
Financial Assets
Equity Shares
Bonds
Money Market
Instruments
Mutual Funds
Real Estates
Precious Objects
Financial Derivatives
Almost everyone has a portfolio of investments; the portfolio is likely to comprise financial assets
and real assets. This project will be mainly focused on the financial assets such as insurance and
stock among investment avenues. There are many ways to invest your money. Of course, to decide
which investment vehicles are suitable for you, you need to know their characteristics and why they
may be suitable for a particular investing objective.
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Equity
Bonds
Co. Debentures
Co. FDs
Bank Deposits
PPF
Life Insurance
Gold
Real Estate
Mutual Funds
Return
High
Moderate
Moderate
Moderate
Low
Moderate
Low
Moderate
High
High
Safety
Low
High
Moderate
Low
High
High
High
High
Moderate
High
Volatility
High
Moderate
Moderate
Low
Low
Low
Low
Moderate
High
Moderate
Liquidity
High
Moderate
Low
Low
High
Moderate
Low
Moderate
Low
High
Convenience
Moderate
High
Low
Moderate
High
High
Moderate
Gold
Low
High
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RETURN
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1.5. Equity
1.5.1. Overview:
Equities are often regarded as the best performing asset class vis--vis its peers over
longer time frames. However equity-oriented investments are also capable of exposing
investors to the highest degree of volatility and risk. There are a number of factors, which
affect the performance of equities ad studying and understanding all of them on an ongoing
basis, can be challenging for most.
Stock markets have always been a draw for investors for their ability to generate
wealth over the long-term. Fear, greed and a short-term investment approach act as hurdles
that frustrate the investor from achieving his/her investment goals. You need to keep in mind
the risk associated with the stocks. You also need to diversify your equity portfolio i.e.,
include more stocks and sectors. This helps you diversify your investment risk, so even if
something were to go wrong with a stock/industry in your portfolio, other stocks/industries
should help you shore up your portfolio.
Two important resources that are critical to investing directly in stock markets are:
Quality stock research and
Reliable and inexpensive stock broker.
The first one is research on stocks is the most critical input that investors need to
identify before they begin investing in stock markets. This is because even while you
may have the risk appetite for equities, you still need credible, stock market related
research that can help you make the right investment decision.
The second one is important service provider for you is the stockbroker; he is the one
who helps you execute the transaction over the stock exchange.
Securities
Market
Equity Market
Government
Securities
Market
Corporate Debt
Market
Debt Market
Money Market
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Derivatives
Market
Options
Market
Futures Market
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EQUITY SHARES
Equity Share represents ownership capital. As a Equity share holder, you have a ownership
stake in the company. This essentially means that you have a residual interest in income and wealth.
The Share movements are reflected in the various index points.
o Bombay Stock Exchanges Sensitive Index
o S&P Nifty Index
BOMBAY STOCK EXCHANGES SENSITIVE INDEX:
Perhaps most widely followed stock market index in India, Bombay Stock Exchange Index,
Popularly called sensex reflects the movements of 30 sensitive shares from specified and non
specified groups.
S&P Nifty Index:
Arguably the most rigorously constructed stock market index in India, the nifty index reflects
the price movements of 50 stocks selected on the bases of market capitalization and liquidity.
THE 4,962 STOCKS LISTED ON BSE AND THE NSE OVERALL.
TEN ACTIVE SECURITIES DURING 2008-2009
Rank
Turnover
(Rs. crore)
% Share in Total
Turnover
Market Capitalisation
% Share in
as on 31.3.2008
Total Market
(Rs. crore)
Capitalisation
198439.98
7.21
239964.86
8.29
118914.86
4.32
37034.37
1.28
99307.76
3.61
8681.89
0.30
74259.53
2.70
118782.36
4.10
72639.18
2.64
67748.07
2.34
71991.35
2.62
39315.66
1.36
68397.40
2.49
75836.97
2.62
67355.00
2.45
11742.70
0.41
HDFC LTD
62913.80
2.29
40170.59
1.39
DLF LIMITED
62492.90
2.27
28394.67
0.98
10
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DELIVERY
FUTURES
OPTIONS
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1.6. INSURANCE
1.6.1. WHAT IS 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:
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 civilizations 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:
That of dying prematurely leaves a dependent family to fend for itself.
That of living till old age without visible means of support.
Traditionally, buying life insurance has always formed an integral part of an
individuals annual tax planning exercise also. While it is important for individuals to have
life cover, it is equally important that they buy insurance keeping both their long-term
financial goals and their tax planning in mind. This note explains the role of life insurance in
an individuals tax planning exercise while also evaluating the various options available at
ones disposal.
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Life is full of dangers, but with insurance, you can at least ensure that you and your
dependents dont suffer. Its easier to walk the tightrope if you know there is a safety net. You
should try and take cover for all insurable risks. If you are aware of the major risks and buy
the right products, you can cover quite a few bases. The major insurable risks are as follows:
Life
Health
Income
Professional Hazards
Assets
Outliving Wealth
Debt Repayment
1.6.2. CAN INSURANCE BE AN INVESTMENT AVENUE?
Life is uncertain. But the perils faced by human life are certain. Death may take away a
individual but disability is the worst. The scientific principles upon which life insurance is based
upon are as follows:
1. Shared Risk
2. Law of Large Numbers
3. Predictable Mortality
4. Invested Assets
5.Fair and accurate Risk selection.
The concept of Life Insurance has evolved over a period of time to meet the different needs of the
customers. The two basic needs that are common for any individual are
(a) Risk Coverage and
(b) Future savings. Risk here means Death.
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DETAILS
Europeans started the Oriental Life Insurance Co in Calcutta
The first Indian Insurance Company Bombay Mutual Life Insurance
The British Govt. enacted The Insurance Act
First Indian Insurance Act was passed with an Enactment in 1938.
The Indian Life Assurance Companies Act enacted as the first statute to regulate the life insurance
business
The Indian Insurance Companies Act enacted to enable the government to collect statistical
information about both life and non-life insurance business
Earlier legislation consolidated and amended to by the insurance act with the objective of protecting
the interests of the insuring people
245 Indian and Foreign insurers and provident societies taken over by the central government and
nationalized. LIC formed by an act of parliament.
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All life insurance companies have to comply with the strict regulations laid out by IRDA.
Therefore there is risk in going in for private insurance players.
Even if Life Insurance Corporation of India (LIC), the state owned behemoth is the largest
player in the market, the private companies are coming out with better products which are more
beneficial to the customer. Among such products are the ULIPs or the Unit Linked Investment Plans
which offer both life cover as well as scope for savings or investment options as the customer
desires. Further, these types of plans are subject to a minimum lock-in period of three years to
prevent misuse of the significant tax benefits offered to such plans under the Income Tax Act. Hence,
comparison of such products with mutual funds would be erroneous.
The Insurance Act, 1938
The Insurance Act, 1938 was the first legislation governing all forms of insurance to provide strict
state control over insurance business.
Life Insurance Corporation Act, 1956
Even though the first legislation was enacted in 1938, it was only in 19 January 1956, that life
insurance in India was completely nationalized, through the Life Insurance Corporation Act, 1956.
There were 245 insurance companies of both Indian and foreign origin in 1956. Nationalization was
accomplished by the govt. acquisition of the management of the companies. The Life Insurance
Corporation of India was created on 1st September, 1956, as a result and has grown to be the largest
insurance company in India as of 2009.
Insurance Regulatory and Development Authority (IRDA) Act, 1999
Till 1999, there were not any private insurance companies in Indian insurance sector. The Govt. of
India, then introduced the Insurance Regulatory and Development Authority Act in 1999, thereby deregulating the insurance sector and allowing private companies into the insurance. Further, foreign
investment was also allowed and capped at 26% holding in the Indian insurance companies.
26%
74%
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e) Endowment Plans:
Individuals with a low risk appetite, who want an insurance cover, which will also
give them returns on maturity could consider buying traditional endowment plans. Such
plans invest most of their money in specified debt instruments like corporate bonds,
government securities and the money market.
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CHAPTER II
COMPANY PROFILE
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OUR VISION
To be a global major in providing complete investment solutions, with relentless focus on investor
care, through superior efficiency and complete transparency.
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4th largest broking house of India in terms of trading terminals (Source: Dun and Bradstreet, 2008)
5th largest sub-broker network in the country (Source: Dun and Bradstreet, 2007)
5th largest distributors of IPO in Retail. (Source: Prime Data Rankings)
Awarded the Fastest Growing Retail Distribution Network in Financial Services (Source: Business
Sphere, 2008)
Received Major Volume Driver by BSE for 3 years consecutively.
Nominated among the top 3, in the CNBC Optimum Financial Services Award 2008 under the
"National Level Retail Category".
One of the first financial firms in India to expand operations in the lucrative gulf market, by
acquiring license for broking and clearing member with Dubai Gold and Commodities exchange
(DGCX)
One of the largest proprietary desk for doing risk-free arbitrage in equities and commodities
Executed the First trade on DGCX for Silver Rebar , Crude Oil and Rupee-Dollar contract.
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SMC Partners
PUNJAB NATIONAL BANK
Punjab National Bank is serving over 35 million customers through 4,540 Offices including 421
extension counters - largest amongst Nationalized Banks.
SMC Group has signed a Memorandum of Understanding (MoU) with Punjab National Bank
(PNB), to offer State of art online trading facilities , This alliance is providing
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SMC SERVICES
SMC Group
Brokerage
(Online/Offline Trading Platforms)
Other
Financial Services
Commodities
Arbitrage
Description:
Engaged in
Arbitrage
operations
employing both
proprietary
& client funds,
for
monetizing the
market
mis-pricings
Research
Services
(Equity &
Commodity)
Description:
Fundamental
&
Technical
Research
Investment
Banking
Insurance
Distribution
Description:
Fund
Raising
Through
IPO,
Debt & PE
Routes
Description:
Distribution of
Life, Non-life
Insurance
products
IPO & MF
Distribution
Description:
Distribution of
IPO & MF
products
33
NRI &
Institutional
Division
Description:
NRI Trading
& Institutional
Advisory
Services
Asset
Management
Description:
In-house
mutual fund
In JV
with Sanlam
Wealth
Management
Description:
Wealth
Management
Services
& Advisory in
JV with Sanlam
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PRODUCTS:
Offline Products
Online Products
Equity
Commodity
Currency
Equity Diet
Commodity Diet
Currency Diet
Exclusive
Equity
Commodity
Privilege
Equity
Commodity
Depository products
Networking Products
Sub-broker
BDR
Business Associate
Premium Services
Wealth Management
PMS
d) Portfolio Management Services
The main idea behind Portfolio Management Services is to manage our clients wealth more
efficiently, reduce risk by diversifying across assets, sectors and funds, and maximizing returns.
Expert Portfolio Managers find best of avenues to achieve optimum returns at managed levels of
risk.
This service could also be called as transparent collective investments. You get an upper hand in
many ways.
Advantage of Portfolio Management Services
Constant monitoring of portfolios asset mix to ensure effectively position to meet
long-term objectives.
Performance linked fees, constant disclosure of the portfolio on daily and monthly
basis.
It defines the customized risk and return.
Great flexibility of deploying and exposing the initial investment in the market.
High water mark level for profit sharing.
No transaction and custodian charges.
Diversification across asset classes and investment styles.
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CHAPTER III
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SECONDARY OBJECTIVE:
To calculate the Risk and Return for Insurance plan, Mutual Funds Schemes and Stocks.
To correlate the ranks and suggest the Portfolio.
To the organization it is to get to know that which avenue attacks more number of investors
in the type of portfolio they follow.
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Sampling units
Sampling Frame
Type of Sampling
Size of Sample
SAMPLING UNITS:
The Samples are derived from the list of Clients of SMC Global Securities Ltd.
SAMPLING FRAME:
Sampling Frame is Representation of elements of target population that consist of a list or
set of direction for identifying the target population. This study done under the consideration of
SMC Global Securities Ltd. clients. These lists of Clients are taken to the sampling frame.
TYPE OF SAMPLING:
PROBABILITY SAMPLING:
Under this Sampling procedure, every item of the universe has an equal chance of inclusion
in the sample. The Suitable method for this study is probability sampling, In probability sampling
technique, Simple Random Technique has been followed for this Study.
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The research design chosen for the project has been descriptive in nature.
DESCRIPTIVE RESEARCH:
Descriptive research includes surveys and fact-finding enquiries of different kinds. The major
purpose of descriptive research is description of the state of affairs as it exists at present. The
questionnaires are used for collecting responses from the respondents.
SURVEY METHOD:
Survey method is the systematic gathering of data from the respondents survey is the most
commonly used method of primary data. This is widely used because of its
Extreme Flexibility
Reliability
Easy Understand ability
The main purpose of survey is facilitate understanding or enable prediction of some aspects
of the population being surveyed.
SURVEY TECHNIQUE:
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The technique used for conducting the survey is called Survey Technique. There are three
techniques to conduct the survey Viz.
Personal Interview
Telephone Interview
Mail Survey
DATA COLLECTION METHOD:
The instrument used to collect data for the study was the structured and non-disguised
questionnaire through open ended and close ended questions.
RANK CORRELATION:
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Correlation studies the joint variation of two or more variables for determining the amount
of correlation between two or more variables.
FORMULA:
Rs =
6(d)
n (n 1)
CHAPTER IV
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NO. OF RESPONDENTS
PERCENTAGE
20 - 30 years
32
16
30 - 40 years
40 - 50 years
50 - 60 years
Above 60 years
74
37
60
30
20
10
14
Total
200
100
TABLE 4.2.
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UG
PG
Professional
Others
Total
(Source: Primary Data)
NO. OF RESPONDENTS
PERCENTAGE
76
54
48
22
200
38
27
24
11
100
INFERENCE:
From the above table it can infer that 38% of the respondents possess UG qualifications. 11%
are however others.
CHART 4.2.
EDUCATIONAL QUALIFICATION OF THE RESPONDENTS
TABLE 4.3.
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SALARY OF RESPONDENTS
SALARY SLAB
150000 - 250000
250000 350000
350000 450000
450000 & above
Total
(Source: Primary Data)
NO. OF
RESPONDENT
PERCENTAGE
22
40
72
66
200
11
20
36
33
100
INFERENCE:
From the above table it can be inferred that 36% of the respondents belongs to 350,000450000 Salary Slab. Very few (i.e.) 11 % belong to the Salary Slab 150000 250000.
CHART 4.3.
SALARY OF RESPONDENTS
TABLE: 4.4.
INVESTMENT FACTORS (As per Investors choice):
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FACTORS
HIGHLY
IMPORTAN
T
IMPORTAN
T
NEITHER
IMPORTANT
OR NOT
IMPORTANT
NOT
IMPORTAN
T
HIGHLY
NOT
IMPORTANT
RETURN
LOW RISK
SAFETY
SAVINGS
TAX
BENEFITS
86
91
19
2
2
72
74
18
13
13
13
27
80
60
30
29
8
58
45
60
Nil
Nil
25
80
95
INFERENCE:
From the above table that the risk and the return are considered to be the most important
factor for an investment about 43% have said that returns are important and around 45% says that
low risk in investment places a major role. Safety, Savings and Tax benefits are also taken into
consideration for making an investment decision.
CHART : 4.4.
INVESTMENT FACTORS (As per Investors choice):
TABLE : 4.5.
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NO. OF RESPONDENT
32
48
120
200
PERCENTAGE
16
24
60
100
INFERENCE
From the above table it can be inferred that 60% of the respondents look for Accumulation,
24% and 16% look for protection and Tax benefits from insurance.
CHART : 4.5.
PERCEPTION ABOUT INSURANCE
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TABLE : 4.6.
ACCUMULATION PRODUCTS IN INSURANCE PLAN:
AVENUES
BUDGET 08-09
ENDOWMENT
28
MONEY BACK
17
ULIP
22
WHOLE LIFE
15
RERTIRMENT
18
INFERENCE:
From the above table it can be seen that there is a more importance given to ULIP and
Endowment policies in the case of Accumulation.
CHART : 4.6.
INVESTOR PREFERENCE IN INSURANCE POLICY
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TABLE : 4.7.
KNOWLEDGE LEVEL OF RESPONDENTS IN SHARE MARKET AND INSURANCE
KNOWLEDGE
SHARE
MARKET
INSURANCE
SOMEKNOWLEDGE
85
115
SUFFICENT KNOWLEDGE
100
75
MORE KNOWLEDGE
15
10
INFERENCE:
From the above chart it is clearly stated that the knowledge level of the investor in
Share market and insurance is considerably low, since it is a recent avenue.
CHART : 4.7.
KNOWLEDGE LEVEL OF RESPONDENTS IN SHARE MARKET AND INSURANCE
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TABLE 4.8.
RISK AND RETURN IN AVENUES
RANKS OF
RESPONDENT
RANKS OF
RESPONDENT
AVENUES
RISK
RETURN
STOCK
MUTAL FUND
INSURANCE
FIXED DEPOSIT
GOVT.SECURITES
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STATISTICAL ANALYSIS
4.2.1 CHI-SQUARE TEST:
PURPOSE:
It is to know whether the choices of the investments are made according to the
income of the individual.
CROSS TABULATION BETWEEN INCOME OF THE INDIVIDUAL
AND CHOICE OF INVESTMENT AVENUE
TABLE 4.2.1
AVENUES
SALARY SLAB
150000 - 250000
250000 -350000
350000-450000
Total
STOCKS
12
25
43
MUTUAL
FUNDS
INSURANCE
18
13
45
13
20
44
GOVT. BONDS
15
12
29
FIXED
DEPOSITS
Total
17
39
22
40
72
66
200
HYPOTHESIS:
Ho: There is no significant relationship between the Income of the Individual and the choice of
Investment Avenues.
H1: There is significant relationship between the Income of the Individual and the choice of
Investment Avenues.
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Ei
(Oj Eij)2
(Oj Ej )2/ Ej
0
6
12
25
8
6
18
13
3
8
13
20
2
15
12
0
9
5
17
8
4.73
8.6
15.48
14.19
4.95
9
16.2
14.85
4.84
8.8
15.84
14.52
3.19
5.8
10.44
9.57
4.29
7.8
14.04
12.87
22.3729
6.76
12.1104
116.8561
9.3025
9
3.24
3.4225
3.3856
.64
8.0656
5.48
1.4161
84.64
2.4336
91.5849
22.1841
7.84
8.7616
23.72
4.73
0.786
0.78
8.23
1.88
1
0.2
0.23
0.7
0.073
0.51
0.377
0.44
14.59
0.233
9.57
5.17
1.005
0.624
1.84
TOTAL
52.968
Degree of freedom =
(r 1) (c 1)
= (5 1) (4 1)
= 12
(Table value at 5% level of significance is 23.3, whereas the calculated value is 52.968)
Since the calculated value is greater than the table value, the null hypothesis is rejected.
INFERENCE:
There is significant relationship between the income of the individual and the choice of
investment Avenues.
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PURPOSE:
It is in order to find whether the ranks given by the respondent with respect to Risk for the
investment have any significant difference or not.
HYPOTHISES:
Ho: There is no significant difference between the ranks of the Respondent regarding the
Risk for the investment.
H1: There is significant difference between the ranks of the Respondent regarding the Risk for the
investment.
TABLE 4.2.2
RANKS
AVENUES
SHARE
82
78
40
MUTUAL FUND
78
82
40
INSURANCE
40
22
57
20
61
GOVT.
SECURITIES
FIXED
DEPOSITS
18
42
100
40
21
80
99
AVENUES
SHARE
-18
-22
-60
MUTUAL FUND
-22
-18
-60
INSURANCE
-60
-78
-43
-80
-39
GOVT.
SECURITIES
FIXED
DEPOSITS
SUB-TOTAL
-82
-58
-60
-79
-20
-1
-100
-200
-300
-100
-100
RANKS
TOTAL
-800
SCHOOL OF MANAGEMENT
SRM UNIVERSITY
SSC (Sum of Square of Column) = [{(-100) + (-200) + (-300) + (-100) + (-100) } / 5 C.F.]
= 32000 25600
= 6400
SSE (Sum of Square of Errors) = 23000 6400
= 16600
SOURCE OF
VARIATION
SUM OF
SQUARE
Between the
Ranks
6400
Within the
Ranks
Total
16600
DEGREE OF
FREEDOM
4
20
MEAN SUM
OF SQUARE
RATIO (F
TEST)
6400 / 4
=1600
= 1600 / 830
16600 / 20
= 830
= 1.9277
24
From the table at 0.01 for (4, 20) of the critical value is 3.26
Calculated value of F is less than Critical value of F,
We Cannot Reject the Null Hypothesis.
INFERENCE:
There is no significant difference between the ranks of the individuals with respect to Risk for
Investment.
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RANK BASED
ON SURVEY
(iii)
d
(ii-iii)
d *d
(i)
RANK BASED
ON
FINDINGS (ii)
STOCK
-2
MUTUAL
FINDS
INSURANCE
-1
FIXED
DEPOSITS
GOVT
SECURITIES &
OTHERS
TOTAL
2.5
-1.5
2.25
2.5
-2.5
6.25
22.5
(R s Rank correlation)
FORMULA:
R s = 1 - 6(di) / n (n2 1)
HYPOTHESIS:
H o: There is no correlation between the ranks of the portfolio
H 1: There is correlation between the ranks of the portfolio
Rs = 1 6 * 22.5 / 5 (52 1)
= - 0.125
INFERENCE:
Since n = less than 30 we use Spearman Rank correlation value table.
For n = 5, = 0.05 the critical values are + or 0.9. Since Rs = - 0.125. Here
it lies in the acceptance region. We accept H o (There is no correlation in the
rank data of the portfolio)
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RETURNS
ENDOWMENT
MONEY BACK
ULIP
RETIREMENT
12%
8%
10%
10%
CHART 4.3.1
INFERENCE:
From the above table we can able to see that all Insurance Products generates an average
return of ranging from 8 % 12%, When the Tax Benefits are taken in to account it may extend to
14%.
RISK:
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SCHOOL OF MANAGEMENT
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Since the Insurance products are not based on speculation, the risk attached towards is normal
risk which are explained above.
4.3. STOCKS INDEX :( 2008-2009)
TABLE 4.3.2.
MONTHS
INDEX
Sep. 2008
Oct 2008
Nov.2008
Dec. 2008
Jan. 2009
Feb 2009
Mar 2009
April 2009
May 2009
June 2009
July 2009
August 2009
13,102.18
8701.07
9483
9647.31
8,779.17
8,954.86
10,048.49
11023.09
13,589.23
14764.64
15670.31
15411.63
CHART 4.3.2.
INFERENCE:
From the above table it is clear that the index has increased by 2309.45 points
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MONTHS
INDEX
3,921.20
2,885.60
2,755.10
2,959.15
2,874.80
2,763.65
3,020.95
3,473.95
4,448.95
4,291.10
4,636.45
4580.05
Sep. 2008
Oct 2008
Nov.2008
Dec. 2008
Jan. 2009
Feb 2009
Mar 2009
April 2009
May 2009
June 2009
July 2009
Aug 2009
CHART 4.3.2.
INFERENCE:
From the above table it is clear that the index has decreased by 658.85 points.
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58
SCHOOL OF MANAGEMENT
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CHAPTER V
SUMMARY OF FINDINGS, SUGGESTIONS AND CONCLUSION
5.1. FINDINGS
From the above calculation we can able to inference that:
Most of the respondent belongs to the age of 30 and 40 and very few belong to the age
group of above 60 years. (Table- 4.1)
Many of the respondents possess UG qualification and very few are belong to Professional
qualification. (Table- 4.2)
The Salary of the respondent are between 350,000 450,000 and very few are above
15,0,000-250000. ( Table- 4.3)
To first and fore most findings is that the investor is looking Risk and Return as foremost
factors in investment(Table-4.4)
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The bank F.D. and government securities will consistently give 3% to 6.5% and the risk
attached is nil, (expect interest rate risk which is external)
5.2. SUGGESTIONS
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For constructing an efficient portfolio the investor should have adequate amount of insurance cover.
Adequate insurance cover = (monthly expenses *36 times +current liabilities + future liabilities) *
inflation factor.
The investment should start from investing in those products which give guaranteed additions such
as government bonds and fixed deposits.
The third step is to invest in products which generates more returns, here the investor must
be ready to take risk and look for capital appreciation (mutual funds)
The next step is to invest in stock markets where the investor will gain some knowledge by
dealing with mutual funds. We can invest in those scripts, which is performing well.
It is necessary to concentrate on these products, which the investor likes to invest more such as
mutual funds and stocks.
5.3. CONCLUSION
There are various investment avenues, which highlights the phenomenal growth experienced
recently, in line with the country's improving economic fundamentals.
The study analysis the investment portfolio of the individual and the various Risks and
Returns calculation are made for the various avenues in order to suggest the suitable portfolio for the
individual based on the risk appetite of the person.
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Finally it has been suggested that insurance should be viewed as a risk cover not an
investment avenues, 50 % should be in guaranteed addition, 30 % in mutual fund and 20% in stocks.
QUESTIONNAIRE
1. Name:
2. Age :
25-35
3. Educational Qualification:
Graduate
36-45
46 55
Post Graduate
62
Above 55
Others
SCHOOL OF MANAGEMENT
SRM UNIVERSITY
4. Designation:
5. Your Gross Annual Income Will Be? (p.a)
150000 250,000
250,000 350,000
350000 450000
450,000 & Above
6.What do you expect from an Investment?
FACTORS
HIGHLY
IMPORTAN
T
IMPORTAN
T
NEITHER
IMPORTANT
OR NOT
IMPORTANT
NOT
IMPORTAN
T
RETURN
SAFETY
SAVINGS
TAX
TAX
BENEFITS
INVESTMENT IN
Fixed Deposit
Mutual FundsStocks InsuranceOthers 8. How do you see an insurance plan ?
ESSENTIAL
NON-ESSENTIAL
Protection:
Accumulation:
Tax Benefits:
9. Incase if you invest in Insurance, Which would you opt for Accumulation?
Endowment
Money Back
ULIP
Whole Life Plan
Retirement Plan
10. Do you have the Knowledge about the Mutual Fund Market?
63
HIGHLY
NOT
IMPORTANT
SCHOOL OF MANAGEMENT
SRM UNIVERSITY
Some Knowledge
Sufficient Knowledge
More Knowledge
Brokers Knowledge is
13. Convey your idea about nature of Return in the following investment Avenues
(Rank 1 = High Returns)
14. Convey your idea about nature of Risk in the following investment Avenues
(Rank 1 = High Risk)
RANK
Stock
Mutual Fund
Insurance
Fixed Deposits
Government
Securities
Stock
Mutual Fund
Insurance
Fixed Deposits
Government
Securities
BIBLIOGRAPHY:
Equity market
www.nseindia.com
www.moneymarket.com
www.yahoofinance.com
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SCHOOL OF MANAGEMENT
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Insurance detail
www.irdaindia.com
Company profile
www.smcindia.com
For Calculation of Risk and Return in STOCKS:
INVESTMENT MANAGEMENT
Maheshwari
For Statistical Analysis:
STATISTICAL METHOD
STATISTICS FOR MANAGEMENT
SM
S.P.Gupta
T. N. Srivastava &
Shailaja Rego
65