ACKNOWLEDGEMENT

I take this chance to specify my acknowledgement and deep sense of feeling to the
people for rendering valuable help. Their input has vied an important role in
success of this project. Formal piece of acknowledgement might not be adequate to
specify the sensation of feeling towards people that have helped me in with success
completion of my summer internship project.

I take this opportunity to express my sincere gratitude to my company guide Mr.

Anil Sharma (Territory Manager) SHAREKHAN LIMITED for guiding me
through the project and resolving my queries every time I had them.

I would like to extent my sincere gratitude to Mrs. Swati (placement incharge)

SGTBIMIT affiliated to Guru Gobind Singh Indraprastha University for the
freedom she gave me in choosing my report topic and his continuous guidance
hence forth. Her guidance has been of extreme help to me I am utmost thankful for
all the times, I consulted her and she answered with utmost patience and
perseverance.

I take this chance to give thanks to all respondents who spared their precious time
to produce me with valuable input for project without which it’d have not been
attainable. I firmly believe that there is forever a scope of improvement. I welcome
any suggestions for any enriching the standard of this report.

1
 AUTHORISATION

This hereby state that the project report entitled “ ” is undertaken by me during
the 8 weeks of internship at Sharekhan Limited. The report is submitted as partial
fulfilment of the requirement of BBA program of SGTBIMIT OF IP University.
This project report is a record of original work done by me and no part of the
report has been submitted for an award of any degree, diploma, fellowship or any
other similar study.

It also declares that all the work depicted in my project report and has been
completed at Sharekhan Limited corporate office in Delhi. The report was prepared
during a span of 8 weeks from 10th June to 10th August 2019.

This report has been certified and authenticated by:

Company Guide

Anil Sharma

Territory Manager

2
DECLARATION

I, Tannu Arora, here by state that the report entitled A STUDY OF “ ” at

SHAREKHAN Ltd. In Jhandewalan is a genuine and bonafide work prepared by
me under the able guidance of Mr. Anil Sharma, Manager of SHAREKHAN Ltd.

The empirical findings in this report are based on the data collected by myself and
the matters present in this report are not copied from any sources.

This project report is submitted to Sri Guru Tegh Bahadur Institute of

Management and Information Technology in partial fulfilment for the award of
degree of BBA.

Date: 16 October 2019

Place: Delhi

Tannu Arora

3
 TABLE OF CONTENT
PAGE
CH. No. TOPIC No.

1 EXECUTIVE SUMMARY 8
2 INTRODUCTION OF THE COMPANY 10
2.1 SERVICES PROVIDED BY SHAREKHAN 12
2.2 PRODUCT PROFILE 13
2.3 TWO IN ONE ACCOUNT 13
2.4 ONLINE TRADING ACCOUNT 14
2.5 PROCESS OF ONLINE TRADING 14
3 FINANCIAL SYSTEM OVERVIEW 15
3.1 FINANCIAL SYSTEM- AN OVERVIEW 16
3.2 FINANCIAL MARKETS 16
3.3 COMPONENT OF CAPITAL MARKET 20
3.4 PRIMARY AND SECONDARY MARKET 22
PRODUCTS DEALT IN SECONDARY
3.5 MARKET 24
3.6 ACCOUNT OPENING 26
4 OBJECTIVES & SCOPE 30
4.1 PRIMARY OBJECTIVES 31
4.2 SCOPE OF THE STUDY 31
5 ORGANISATION STRUCTURE 32
5.1 OVERALL ORGANISATIONAL STRUCTURE 33
5.2 FUNCTIONS OF DEPARTMENTS 33
5.3 MARKETING 34
5.4 ACCOUNTS 34
5.5 HR & ADMINISTRATION 35
6 STOCK EXCHANGES 36
6.1 FUNCTIONS OF STOCK EXCHANGES 37
6.2 THE BOMBAY STOCK EXCHANGE 39
6.3 THE NATIONAL STOCK EXCHANGE 40
7 THEORETICAL PERSPECTIVE 41
8 SWOT ANALYSIS 44

4
 8.1 STRENGTH 45
8.2 WEAKNES 45
8.3 OPPORTUNITY 45
8.4 THREATS 45
9 RESEARCH METHODOLOGY 46
9.1 DEFINES THE PROBLEM 47
9.2 DEVELOPING RESEARCH PLAN 47
9.3 DATA SOURCE 47
8.4 RESEARCH APPROACH 49
9.5 SAMPLING 49
9.6 SAMPLING PLAN 49
9.7 STATEMENT OF PROBLEM 50
1
0 DATA ANALYSIS 51
10.1 INVESTMENT OPTION 52
10.2 BRAND AWARENESS 53
10.3 IS ONLINE TRADING EASY? 54
10.4 DO YOU NEED TRANNING 55
10.5 SOURCES OF ADVERTISEMENT 56
10.6 WHICH IS BETTER, NSE OR BSE 57
10.7 AWARENESS OF E-BROKING 58
KNOWLEDGE THROUGH COMPANY
10.8 WEBSITE 59
10.9 VISIT BY COMPANY REPRESENTIVE 60
10.10 INTEREST IN E-BROKING 61
10.11 PEFERRED SYSTEMS OF SHARE TRADING 62
10.12 TRADITIONAL-INFLUENCING FACTORS 63
10.13 PREFERENCE FOR INVERTMENT 64
10.14 INFLUENCING FACTOR 65
10.15 FUTURE PLANNING FOR ONLINE TRADING 66
REASONS FOR NOT ENTERING IN TO E-
10.16 BROKING 67
1
1 FINDING AND OBSERVATION 68
1 LIMITATIONS 70

5
 2
1
3 SUGGESTIONS AND RECOMMENDATIONS 72
1
4 CONCLUSION 74
1
5 ANNEXURE 76

6
 CHAPTER-1
EXECUTIVE SUMMARY

COMPANY: - SHAREKHAN LTD.

PROJECT TITLE:-
“.”
SCOPE OF THE PROJECT
The research has been conducted within the geographical area of Delhi city. I have
targeted students, businessmen, and other people.
OBJECTIVE
The objective behind conducting this project is as followed:-
PRIMARY OBJECTIVE
 To find out the people who are willing to be an agent for SHAREKHAN
LTD.
 To find potential customer of SHAREKHAN LTD. who involved in trading
activities and generate the business for SHAREKHAN LTD.
SECONDARY OBJECTIVE
 To know and understand the thinking and perception of different people
about equity market, D-mat account ,online trading account and mutual
funds.
 To see the interest of people for SHAREKHAN LTD.
 To create the image about SHAREKHAN financial product.

7
  Promotion of the product.
For conducting the research the data was collected through-
1-Primary Data
2- Secondary Data
PRIMARY DATA:- Primary data is the data which is actually collected from the
field it is a fresh data which is not used by anybody.
Primary data was collected using the following techniques-
# Questionnaire Method
# Direct Interview Method
# Observation Method
The main tool used was the questionnaire method. Further direct interview method,
where face to face formal interview was taken. Lastly observation method was
used continuously with the questionnaire method.
SECONDARY DATA :- It is the second hand data it used by the other person
before we use it. This data has been published in magazine, News Paper and
Websites.

8
 CHAPTER-1
INTRODUCTION OF THE INDUSTRY

FINANCIAL SYSTEM- AN OVERVIEW:

The financial system of any country consists of specialized and non-
specialized financial institutions, organized and unorganized financial markets,
financial instruments and services that facilitate flow of funds from areas of
surplus funds to the areas of deficit. Financial system is a composition of various
institutions, markets, regulations, law practices, money managers, analysts, etc. By
making funds available, the financial system helps the growth of modern
economics and the increase in the standard of living among the citizens.

FINANCIAL MARKETS:
A financial market can be defined as the market in which financial assets are
created or transferred. Financial assets represents represent a claim to the payments
of a sum of money sometime in the future and/or periodic payment in the form of
interest or dividend. Financial Market performs an important function of
mobilization of savings and channeling them into the most productive uses. The
participants in the financial markets are financial institutions, agents, brokers,
dealers, borrowers, lenders, savers and others who are inter-linked by the laws,
contracts and communication networks.
Financial markets consist of Primary and SecondaryMarkets. The Primary
markets deal in new financial claims and securities and hence are known as new
issue markets. The secondary market deals in securities already issued, existing or
outstanding. Financial markets are also classified as Money and Capital Markets.

9
Money markets deals with transactions in short-term instruments (with period of
maturity one year or less, e.g. treasury bills), while capital market deals with
transactions in long-term instruments (with period of maturity above one year, e.g.
corporate debentures and government bonds).
On the basis of the type of the financial claim, financial markets are classified as
Debt and Equity markets. By the timing of delivery, financial markets are
classified as Cash or Spot markets and Forward or Future markets.

The classification of Financial markets can be summarized as follows:

 Money Market
 Debt Market
 Forex Market
 Capital Market.

MONEY MARKETS:
Money markets can be defined as a market for short term money and
financial assets that are near substitutes for money (any financial assets that can be
quickly converted into money with minimum transaction cost). One more
important function of this market is to channel savings into short term productive

10
investments like working capital. Money market aids banking, operates as a
medium of integration between sub markets, promotes maintaining of minimum
reserve in the form of cash and liquidity and controls the interest rates.
Money market is a collection of market for the instruments like Call money,
Treasury bills, Commercial papers, Certificate of deposits, Money Market Mutual
Funds, etc. A certain degree of flexibility in the regulatory framework exists and
there are constant endeavors for introducing a new instruments or innovating
dealing techniques. It is a wholesale market and the volume of funds or financial
assets traded are very large i.e. in crores of rupees.

ORGANIZED MONEY MARKET:

Indian financial system consists of money market and capital market. The money
market has two components - the organized and the unorganized. The organized
market is dominated by commercial banks. The other major participants are the
Reserve Bank of India, Life Insurance Corporation, General Insurance
Corporation, Unit Trust of India, Securities Trading Corporation of India Ltd.,
Discount and Finance House of India, other primary dealers, commercial banks
and mutual funds. The core of the money market is the inter-bank call money
market whereby short-term money borrowing/lending is effected to manage
temporary liquidity mismatches. The Reserve Bank of India occupies a strategic
position of managing market liquidity through open market operations of
government securities, access to its accommodation, cost (interest rates),
availability of credit and other monetary management tools. Normally, monetary
assets of short-term nature, generally less than one year, are dealt in this market.

UN-ORGANIZED MONEY MARKET:

11
Despite rapid expansion of the organized money market through a large network of
banking institutions that have extended their reach even to the rural areas, there is
still an active unorganized market. It consists of indigenous bankers and
moneylenders. In the unorganized market, there is no clear demarcation between
short-term and long-term finance and even between the purposes of finance. The
unorganized sector continues to provide finance for trade as well as personal
consumption. The inability of the poor to meet the ‘creditworthiness’ requirements
of the banking sector make them take recourse to the institutions that still remain
outside the regulatory framework of banking. But this market is shrinking.
FOREIGN EXCHANGE MARKET:
Every sovereign country in the world has a currency, which is a legal tender
in its territory, and which does not act as money outside its boundaries. Foreign
exchange or Forex market is the one where a country’s currency is traded for
another. The rate at which one currency is converted to another is known as the
rate of exchange. Forex market is the largest financial market in the world having a
daily turn over of couple of trillion dollars. The key participants in the Forex
market are importers (who need foreign currency to pay off their imports),
exporters (who want to convert their foreign currency receipts into domestic),
traders (who make a market in the foreign currency), foreign exchange brokers
(who bring together buyers and sellers), speculators (who tries to profit from
exchange rate movements) and portfolio managers who buy and sell foreign
currency. Speculative transactions account for more than 95% of the turnover on
the Forex markets.
In India, the key participants in the Forex markets are RBI, banks and
business undertakings. Business undertakings can participate in the Forex market
only to the extent that they need cover for the exchange exposure arising from a

12
merchant transaction or a foreign currency borrowing and cannot resort to
speculative transaction. One reason justified for the existence of the Forex market
is that each nation has decided to keep their sovereign right to have control on their
own currency. If every country had the same currency, then there will be no need
for a foreign exchange market.

CAPITAL MARKET
The function of the financial market is to facilitate the transfer of funds from
surplus sectors (lenders) to deficit sectors (borrowers). Normally, households have
investible funds or savings, which they lend to borrowers in the corporate and
public sectors whose requirement of funds far exceeds their savings. A financial
market consists of investors or buyers of securities, borrowers or sellers of
securities, intermediaries and regulatory bodies. Financial market does not refer to
a physical location. Formal trading rules, relationships and communication
networks for originating and trading financial securities link the participants in the
market.
Capital markets provide the resources needed by medium and large-scale
industries for investment purposes unlike money markets that provide the
resources for working capital needs. While money markets deal in short-term
claims (with a period of maturity 1 year or less) capital market deals in long-term
claims (with a period of maturity more than 1 year). Stock market and Government
bond markets are example of capital markets.
Capital market consists of primary and secondary markets. The primary
markets create long-term instruments through which corporate entities borrow and
the secondary market provides liquidity and marketability to these instruments.
Companies can raise capital in the primary market through the issue of shares and

13
debentures for which prior approval of The SEBI is required. The secondary
market that operates through the medium of stock exchanges is that segment of the
capital market where securities already issued are traded.
The primary market in which public issue of securities is made through a
prospectus is a retail market and there is no physical location. Offer for
subscription to securities is made to investing community. The secondary market
or stock exchange is a market for trading and settlement of securities that have
already been issued. The investors holding securities sell securities through
registered brokers/sub-brokers of the stock exchange. Investors who are desirous of
buying securities purchase securities through registered broker/sub-broker of the
stock exchange. It may have a physical location like a stock exchange or a trading
floor. Since 1995, trading in securities is screen-based and Internet-based trading
has also made an appearance in India. The secondary market consists of 22 stock
exchanges. The secondary market provides a trading place for the securities
already issued, to be bought and sold. It also provides liquidity to the initial buyers
in the primary market to re-offer the securities to any interested buyer at any price,
if mutually accepted..

CAPITAL MARKET PARTICIPANTS:

There are several major players in the primary market.These include the merchant
bankers, mutual funds, financial institutions, foreign institutional investors (FIIs)
and individual investors. In the secondary market, there are the stock exchanges,
stock brokers (who are members of the stock exchanges), the mutual funds,
financial institutions, foreign institutional investors (FIIs), and individual investors.
Registrars and Transfer Agents, Custodians and Depositories are capital market

14
intermediaries that provide important infrastructure services for both primary and
secondary markets.
COMPONENTS OF CAPITAL MARKET:
Following are the three main components of capital market:
1. New Issue Market
2. Financial Institutions
3. Stock Market

1. NEW ISSUE MARKET

The new issue market represents the primary market where new securities,
i.e. shares or bonds that have never been previously issued, are offered. Both the
new companies and the existing ones can raise capital on the new issue market.
The prime function of new issue market is to facilitate the transfer of funds from
willing investors to the entrepreneurs setting up new corporate enterprise or going
for expansion, diversification, growth or modernization. Besides, the helping
corporate enterprise in securing their funds, the new issue market channelises
saving of individuals and others into investors.
It must be noted that although the functions and organization of new issue market
are quiet different from that of the secondary (stock) market, the sentiment in the
stock market influence the activity of new issue market.

2. FINANCIAL INSTITUTIONS
Specialized Financial Institutions are the most active constituent of the
Indian Capital Market. Such organizations provide medium and long-term loans on
easy installments to big business house. Such institutions help in promoting new
companies during economic depressions.

15
 The need for establishing financial institutions was felt in many countries
immediately after the Second World War to reestablish war-shattered economies.
Need for such institution was more in underdeveloped countries.
Following are the main special financial institutions that are most active
constituents of the Indian Capital Market.

1. The industrial Finance Corporation of India. (I.F.C.I)

2. The Industrial Credit and Investment Corporation of India. (I.C.I.C.I)
3. The Refinance Corporation of India. (R.F.C.)
4. State Financial Development Corporation. (S.F.Cs.)
5. National Industrial Development Corporations. (N.I.D.C.)
6. State Industrial Development Corporations. (S.I.D.Cs.)
7. National Small Industries Corporations. (N.S.I.C.)
8. Industrial Development Bank of India. (I.D.B.I.)
9. Unit Trust of India. (U.T.I.)
10. Life Insurance Corporation of India. (L.I.C.)
11. Nationalized Commercial Banks. (N.C.B.)
12. Merchant Banking Institutions. (M.B.Is.)

3. STOCK MARKET
Capital Market also includes Stock market. It is a place where securities
which have been issued the past are traded. It is a secondary market. In stock
market the participants are Stock Exchanges, Brokers and the investors. The
investors want liquidity of their investments. The securities, which they hold,
should be easily sold when they need cash. Similarly there are others who want to
invest in new securities. So there should be a place where securities should be

16
purchased and sold. Stock exchange provides such a place where securities of
different companies can be purchased and sold via stock market.
One can trade in stock market two ways:
1. On Market
2. Off Market
In On market trading is done via stock exchanges, where the buyer and seller
don’t know each other. But one can also trade Off market without the
interference of stock exchange may be through stock broker or not.
DEBT MARKET:
Traditionally debt instruments are known for generating a predetermined income
for a given period of time, other than in cases of default. Hence they are also
known as fixed income instruments. The debt markets in advanced are
significantly larger and deeper than equity markets. But in India, the trend is just
the opposite. The development of debt market in India has not been as remarkable
as in the equity market. However the debt markets in India have undergone a
considerable change in the last few years. Characterized by regulated interest rates,
limited players and lack of trading earlier, the markets have become more
integrated and less regulated. The debt market in India is divided into two
categories:
 Government securities market consisting of Central Government and State
Government securities.
 Bond market consisting of FI bond, PSU bonds and Corporate
bonds/debentures.

3.4 PRIMARY AND SECONDARY MARKET:

17
There are two ways for investors to get shares from the primary and secondary
markets. In primary markets, securities are bought by way of public issue directly
from the company. In Secondary market share are traded between two investors.
PRIMARY MARKET
Market for new issues of securities, as distinguished from the Secondary
Market, where previously issued securities are bought and sold. A market is
primary if the proceeds of sales go to the issuer of the securities sold. This is part
of the financial market where enterprises issue their new shares and bonds. It is
characterized by being the only moment when the enterprise receives money in
exchange for selling its financial assets.
Stocks available for the first time are offered through new issue market. The issue
may be a new company or an existing company. These issues may be of new type
or the security used in the past. In the new issuing houses, investment bankers act
as the channel of distribution for the new issues. They take responsibility of selling
the stocks to the public.

IPO – INITIAL PUBLIC OFFERING

Public issues can be classified into Initial Public offerings and further
public offerings. In a public offering, the issuer makes an offer for new
investors to enter its shareholding family. The issuer company makes detailed
disclosures as per the DIP guidelines in its offer document and offers it for
subscription. Initial Public Offering (IPO) is when an unlisted company makes
either a fresh issue of securities or an offer for sale of its existing securities or
both for the first time to the public. This paves way for listing and trading of
the issuer’s securities.

18
 IPO is new shares Offered to the public in the Primary Market .The first
time the company is traded on the stock exchange. A prospectus is issued to
read about its risk before investing. IPO is a company's first sale of stock to the
public. Securities offered in an IPO are often, but not always, those of young,
small companies seeking outside equity capital and a public market for their
stock. Investors purchasing stock in IPO’s generally must be prepared to
accept very large risks for the possibility of large gains. Sometimes, just before
the IPO is launched, Existing share Holders get very liberal bonus issues as a
reward for their faith in risking money when the project was new.

SECONDARY MARKET
The market where securities are traded after they are initially offered in the
primary market. Most trading is done in the secondary market. To explain further,
it is Trading in previously issued financial instruments. An organized market for
used securities. Examples are the New York Stock Exchange (NYSE), Bombay Stock
Exchange (BSE),National Stock Exchange NSE, bond markets, over-the-counter
markets, residential mortgage loans, governmental guaranteed loans etc.The
secondary market is the financial market for trading of securities that have
already been issued in an initial private or public offering. Alternatively, secondary
market can refer to the market for any kind of used goods. The market that exists
in a new security just after the new issue, is often referred to as the aftermarket.
Once a newly issued stock is listed on a stock exchange, investors and speculators
can easily trade on the exchange, as market makers provide bids and offers in the
new stock.

19
PRODUCTS DEALT IN SECONDARY MARKET
EQUITY: The ownership interest in a company of holders of its common and

preferred stock. The various kinds of equity shares are as follows –

EQUITY SHARES: An equity share, commonly referred to as ordinary share also

represents the form of fractional ownership in which a shareholder, as a fractional

owner, undertakes the maximum entrepreneurial risk associated with a business
venture. The holders of such shares are members of the company and have voting
rights. A company may issue such shares with differential rights as to voting,
payment of dividend, etc.

RIGHTS ISSUE/ RIGHTS SHARES: The issue of new securities to existing

shareholders at a ratio to those already held.

BONUS SHARES: Shares issued by the companies to their shareholders free of cost

by capitalization of accumulated reserves from the profits earned in the earlier

years.

  PREFERENCE SHARES: Owners of these kind of shares are entitled to a fixed

dividend or dividend calculated at a fixed rate to be paid regularly before dividend

can be paid in respect of equity share. They also enjoy priority over the equity
shareholders in payment of surplus. But in the event of liquidation, their claims
rank below the claims of the company’s creditors, bondholders / debenture holders.

GOVERNMENT SECURITIES (G-Secs): These are sovereign (credit risk-free)

coupon bearing instruments which are issued by the Reserve Bank of India on
behalf of Government of India, in lieu of the Central Government's market
borrowing programme. These securities have a fixed coupon that is paid on

20
specific dates on half-yearly basis. These securities are available in wide range of
maturity dates, from short dated (less than one year) to long dated (upto twenty
years).

DEBENTURES: Bonds issued by a company bearing a fixed rate of interest usually

payable half yearly on specific dates and principal amount repayable on particular
date on redemption of the debentures. Debentures are normally secured/ charged
against the asset of the company in favour of debenture holder.

BOND: A negotiable certificate evidencing indebtedness. It is normally unsecured.

A debt security is generally issued by a company, municipality or government

agency. A bond investor lends money to the issuer and in exchange, the issuer
promises to repay the loan amount on a specified maturity date. The issuer usually
pays the bond holder periodic interest payments over the life of the loan.

COMMERCIAL PAPER: A short term promise to repay a fixed amount that is

placed on the market either directly or through a specialized intermediary. It is

usually issued by companies with a high credit standing in the form of a
promissory note redeemable at par to the holder on maturity and therefore, doesn’t
require any guarantee. Commercial paper is a money market instrument issued
normally for a tenure of 90 days.

  TREASURY BILLS: Short-term (up to 91 days) bearer discount security issued by

the Government as a means of financing its cash requirements.

21
 CHAPTER-2

INTRODUCTION OF THE COMPANY

Sharekhan Ltd is one of the leading retail stock broking house of SSKI Group
which is running successfully since 1922 in the country. It is the retail broking arm
of the Mumbai-based SSKI Group, which has over eight decades of experience in
the stock broking business. Sharekhan offers its customers a wide range of equity
related services including trade execution on BSE, NSE, Derivatives, depository
services, online trading, investment advice etc The firm’s online trading and
investment site - www.sharekhan.com - was launched on Feb 8, 2000. The site
gives access to superior content and transaction facility to retail customers across
the country. Known for its jargon-free, investor friendly language and high quality
research, the site has a registered base of over one lakh customers. The content-rich
and research oriented portal has stood out among its contemporaries because of its
steadfast dedication to offering customers best-of-breed technology and superior
market information. The objective has been to let customers make informed
decisions and to simplify the process of investing in stocks.
On April 17, 2002 Sharekhan launched Speed Trade, a net-based executable
application that emulates the broker terminals along with host of other information
relevant to the Day Traders. This was for the first time that a netbased trading
station of this caliber was offered to the traders. In the last six months Speed Trade
has become a de facto standard for the Day Trading community over the net.
Sharekhan’s ground network includes over 640 centers in 280 cities in India which
provide a host of trading related services.Sharekhan has always believed in
investing in technology to build its business. The company has used some of the

22
best-known names in the IT industry, like Sun Microsystems, Oracle, Microsoft,
Cambridge Technologies, Nexgenix, Vignette, Verisign Financial Technologies
India Ltd, Spider Software Pvt Ltd. to build its trading engine and content. The
Morakhiya family holds a majority stake in the company. HSBC, Intel & Carlyle
are the other investors. With a legacy of more than 80 years in the stock markets,
the SSKI group ventured into institutional broking and corporate finance 18 years
ago. Presently SSKI is one of the leading players in institutional broking and
corporate finance activities. SSKI holds a sizeable portion of the market in each of
these segments. SSKI’s institutional broking arm accounts for 7% of the market for
Foreign Institutional portfolio investment and 5% of all Domestic Institutional
portfolio investment in the country. It has 60 institutional clients spread

Presently SSKI is one of the leading players in institutional broking and corporate
finance activities. Sharekhan offers its customers a wide range of equity related
services including trade execution on BSE, NSE, Derivatives. Depository services,
online trading, Investment advice, Commodities, etc.
The Company's online trading and investment site - www.Sharekhan.com -
was launched on Feb 8, 2000. The site gives access to superior content and
transaction facility to retail customers across the country. Known for its jargon-
free, investor friendly language and high quality research, the content-rich and
research oriented portal has stood out among its contemporaries because of its
steadfast dedication to offering customers best-of-breed technology and superior
market information.
Sharekhan's management team is one of the strongest in the sector and has
positioned Sharekhan to take advantage of the growing consumer demand for

23
financial services products in India through investments in research, pan-Indian
branch network and an outstanding technology platform. Further, Sharekhan's
lineage and relationship with SSKI Group provide it a unique position to
understand and leverage the growth of the financial services sector.
SSKI Corporate Finance Private Limited (SSKI) is a leading India-based
investment bank with strong research-driven focus. Company team members are
widely respected for their commitment to transactions and their specialized
knowledge in their areas of strength. The team has completed over US$5 billion
worth of deals in the last 5 years - making it among the most significant players
raising equity in the Indian market. SSKI, a veteran equities solutions company
with over 8 decades of experience in the Indian stock markets.
If you experience Company profile, content or for that matter the online
trading facility, you'll find a common thread; one that helps you make informed
decisions and simplifies investing in stocks. The common thread of empowerment
is what Sharekhan's all about!
"Sharekhan has always believed in collaborating with like-minded
Corporates into forming strategic associations2 for mutual benefit relationships"
says JaideepArora, Director - Sharekhan Limited.

Vision
 To be the best retail brokering Brand in the retail business of stock market.

Mission
 To educate and empower the individual investor to make better investment
decisions through quality advice and superior service.

24
OWNERSHIP PATTERN AT SHAREKHAN
Major shareholders Citi Venture Capital And Other Private Equity Firms 60%
Barings Pvt. Equity Asia 23% IDFC 6% Employees 11%
Management Team
Mr. Tarun P. Shah. CEO. Mr. Shankar Vailaya. Director-Operations. Mr. Jaideep
Arora. Director-Product and Technology. Mr. Ketan Parekh. Chief Technology
Officer.

AREA OF OPERATION OF SHAREKHAN:

The area of operations of SHAREKHAN is spread over two countries. They are: 1.
INDIA 2. UAE The services are available through a network of 1437 Share shops
spanning 170 major towns and cities in the country along with an international
branch in Dubai (UAE) Growing retail network across 1120 franchisees 168
branches 325 cities

AWARDS AND ACHIEVEMENTS :

 Share khan is amongst the top 2 online trading websites from India
 Share khan is the most preferred financial destination amongst the online
banking customers.
 Share khan is the winner of “Best Financial Website Award”
 Share khan is awarded at the Awaaz “Consumer Awards 2005” in the
India’s stock broking firm

25
 SWOT ANALYSIS

STRENGTHS:

• Online Trading Facility

• Largest Chain of Retail Share Shops in India
• 88 years of Experience in securities market
• Dedicated and responsive workforce/staff
• Value added service for HNI client
• Research Center
• Membership of NSE & BSE
• Trading option like Future & Option and Commodities
• Volume based differentiated product.

WEAKNESSES:

• Less informative website

• Does not have slab rate brokerage which is provided by competitors
• Problems due to network crash
• Unawareness Among Investors

OPPORTUNITY:
• Collaboration with international financial institution
• To tap the Untapped market
• To capture the market lost to its Competitors.

26
• To focus on developing a superior and powerful portal
• To spread awareness of its Brand Name.

THREATS:
• Follow government laws
• Competitors develops
• Prolonged depression and high volatility in the market
• New Entrants.

SERVICES PROVIDED BY SHAREKHAN

PRODUCTS AND SERVICES OF SHAREKHAN LIMITED

The different types of products and services offered by Sharekhan Ltd. are as
follows:
 Equity and derivatives trading
 Depository services
 Online services
 Commodities trading
 Dial-n-trade
 Portfolio management
 Share shops
 Fundamental research
 Technical research
 Mutual funds.

27
DIAL-N-TRADE
Along with enabling access for trade online, the CLASSIC and SPEEDTRADE
ACCOUNT also gives Dial-n-trade services. With this service, one can dial Share
khan’s dedicated phone lines 1800-22-7500, 3970-7500. Beside this, Relationship
Managers are always available on Office Phone and Mobile to resolve customer
queries.

SHAREMOBILE
Share khan had introduced Share Mobile, mobile based software where one can
watch Stock Prices, Intra Day Charts, Research & Advice and Trading Calls live
on the Mobile.

PRE PAID ACCOUNT

Customers pay Advance Brokerage on trading Account and enjoy uninterrupted
trading in their Account. Beside this, great discount are also available (up to 50%)
on brokerage

IPO ON-LINE
Customers can apply to all the forthcoming IPOs online. This is quite hassle-free,
paperless and time saving. Simply allocate fund to IPO Account, Apply for the IPO
and Sit Back & Relax.

Mutual Fund Online

Investors can apply to Mutual Funds of Reliance, Franklin Templeton
Investments, ICICI Prudential, SBI, Birla, Sundaram, HDFC, DSP Merrill Lynch,
PRINCIPAL and TATA with Share khan

28
Zero Balance ICICI Saving Account

Share khan had tied-up with ICICI bank for Zero Balance Account for Share
khan’s Clients. Now their customers can have a Zero Balance Saving Account with
ICICI Bank after your demat account creation with Share khan
TYPES OF ACCOUNT IN SHAREKHAN LIMITED

Sharekhan offers two types of trading account for its clients

 Classic Account (which include a feature known as Fast Trade
 Advanced Classic Account for the online users) and
 Speed Trade Account

CLASSIC ACCOUNT
This is a User Friendly Product which allows the client to trade through website
www.sharekhan.com and is suitable for the retail investor who is risk-averse and
hence prefers to invest in stocks or who does not trade too frequently. This account
allow investors to buy and sell stocks online along with the following features like
multiple watch lists, Integrated Banking, Demat and digital contracts, Real-time
portfolio tracking with price alerts and Instant credit & transfer.
This account comes with the following features:
a) Online trading account for investing in Equities and Derivatives
b) Free trading through Phone (Dial-n-Trade)
 Two dedicated numbers(1800-22-7500 and 39707500) for placing the
orders using cell phones or landline phones
 Automatic funds transfer with phone banking facilities (for Citibank
and HDFC bank customers)

29
  Simple and Secure Interactive Voice Response based system for
authentication
 get the trusted, professional advice of Sharekhan limited’s Tele Brokers
 After hours order placement facility between 8.00 am and 9.30 am

c) Integration of: Online Trading +Saving Bank + Demat Account.

d) Instant cash transfer facility against purchase & sale of shares.
e) IPO investments.
f) Instant order and trade confirmations by e-mail.
g) Single screen interface for cash and derivatives.

SPEED TRADE ACCOUNT

This is an internet-based software application, which enables one to buy and sell in
an instant. It is ideal for active traders and jobbers who transact frequently during
day’s session to capitalize on intra-day price movement.
 This account comes with the following features:
 Instant order Execution and Confirmation.
 Single screen trading terminal for NSE Cash, NSE F&O & BSE.
 Technical Studies.
 Multiple Charting.
 Real-time streaming quotes, tic-by-tic charts.
 Market summary (Cost traded scrip, highest value etc.)
 Hot keys similar to broker’s terminal.
 Alerts and reminders.
 Back-up facility to place trades on Direct Phone lines.
 Live market debts

30
HOW TO OPEN AN ACCOUNT WITH SHARE KHAN LIMITED?
For online trading with Sharekhan Ltd., investor has to open an account. Following
are the ways to open an account with Sharekhan Ltd.:
 One need to call them at phone number provided below and asks that he
want to open an account with them. , can call on the Toll Free Number: 1-
800-22-7500 to speak to a Customer Service executive
 One can visit any one of Sharekhan Limited’s nearest branches.Sharekhan
has a huge network all over India (640 centers in 280 cities).
 One can also log on to “http://sharekhan.com/Locateus.aspx” link to find out
the nearest branch.
 One can send them an email at info@sharekhan.com to know about their
products and services.
 One can also visit the site www.sharekhan.com and click on the option
“Open an Account” to fill a small query form which will ask the individual
to give details regarding his name, city he lives in, his email address, phone
number, pin code of the city, his nearest Sharekhan Ltd. shop and his
preferences regarding the type of account he wants.

These information are compiled in the headquarter of the company that is in

Mumbai from where it is distributed through out the country’s branches in the form
of leads on the basis of cities and nearest share shops. After that the executives of
the respective branches contact the prospective clients over phone or through email
and give them information regarding the various types of accounts and the
documents they need to open an account and then fix appointment with the
prospective clients to give them demonstration and making them undergo the

31
formalities to open the account. After that the forms that has collected from the
clients, is scrutinized in the branch and then it is sent to Mumbai for further
processing where after a few days the clients’ account are generated and activated.
After the accounts are activated, a Welcome Kit is dispatched from Mumbai to the
clients’ address mentioned in the documents provided by them. As soon as the
clients receive the Welcome Kit, which contains the clients’ Trading ID and
Trading Password, they can start trading and investing in shares.

2.2 PRODUCT PROFILE

SHAREKHAN is one of the leading Depository Participants (DP) in the country

with over 8 Lac demat accounts. SHAREKHAN Demat services offers you a
secure and convenient way to keep track of your securities and investments, over a
period of time, without the hassle of handling physical documents that get
mutilated or lost in transit. SHAREKHAN is Depository participants both with
-National Securities Depositories Limited (NSDL) and Central Depository
Services Limited (CDSL).

2.3 TWO IN ONE ACCOUNT:-

SHAREKHAN is providing 2-in- 1 account to its customer i.e.
1) D-mat Account
2) Online Trading Account

D-MAT ACCOUNT :-
It is called as demateralised account. It is used for keeping share in our account .

32
After placing order to BSE or NSE for share , the share transfer to your D-mat
account
And amount price of that share you purchased deducted from your saving account.
D-mat account is used for holding share for particular period .

FEATURES & BENEFITS

As opposed to the earlier form of dealing in physical certificates with delays in transaction,
holding and trading in Demat form has the following benefits :

  Settlement of Securities traded on the exchanges as well as off market transactions.

  Shorter settlements thereby enhancing liquidity.

  Pledging of Securities.

  Electronic credit in public issue.

  Auto credit of Rights / Bonus / Public Issues / Dividend credit through ECS.

  Auto Credit of Public Issue refunds to the bank account.

  No stamp duty on transfer of securities held in demat form.

  No concept of Market Lots.

  Change of address, Signature, Dividend Mandate, registration of power of

attorney, transmission etc. can be effected across companies held in demat form by
a single instruction to the Depository Participant (DP).

ONLINE TRADING ACCOUNT:-

Online trading account is used for purchasing the share or to sale the share of particular
company.
 It is provided for Rs.700 to the customer .
 Normal plan is also available at Rs.299.
Client has to give the cheque on name of SHAREKHAN LTD.

33
RESEARCH METHODOLGY

DEFINES THE PROBLEM AND RESEARCH OBJECTIVES

34
STATEMENT OF PROBLEM
Problem definition is one of the most important parts of the study. It is very
important to properly define the problem. If the problem is properly defined then
it will provide proper guide line for the further study. The properly defined
problem will direct the surveyor on the proper path. And it is truly said that a
properly defined problem is a half solve.
Here the main problem is to study on the “about sharekhan andcomparision
between equity market and mutual fund”.Market potential is nothing but the
finding out potential customers for the product of organization; which gives
maximum profitability. To find out market potential study of competitors;
consumer behavior; brand positioning is must which gives idea about the market
scenario.

The objective of the research conducted was to study of comparison between equity
investment and mutual fund investment.. Secondary objective of the survey was to
know the customer’s satisfaction level. My other objectives were to find out the
overall perception about the system and what motivates the people to think about
going for online share trading.

DEVELOPING RESEARCH PLAN

35
The second stage of marketing research calls for developing a most efficient plan for
gathering needed information. Designing a research plan calls for taking decision on
data sources research, approach, research instrument, sampling plan and contact
methods.

In the research study there is no perfect study to solve the problem. The research
design has broadly three categories as follow.
1. Exploratory Research
2. Descriptive Research
3. Casual Research

I have used Descriptive Research Design for research purpose.

 Descriptive research, also known as statistical research. It describes data and
characteristics about the population or phenomenon being studied.
 Descriptive research answers the questions who, what, where, when and
how. This study is complex and determines high degree scientific skill to
study the problem.
 The description is used for frequencies, averages and other statistical
calculations. Often the best approach, prior to writing descriptive research, is
to conduct a survey investigation. Qualitative research often has the aim of
description and researchers may follow-up with examinations of why the
observations exist and what the implications of the findings are. In short
descriptive research deals with everything that can be counted and studied.

In this report, I have used this Descriptive Research Design for conducting survey
on “comparison between equity market and mutual fund.”

36
DATA SOURCE
There are two types of methods used in data collection i.e. primary data &
secondary data
.
A) PRIMARY DATA
Those data which are collected at first hand by the researcher especially for the
purpose of the study ,are known as primary Data .The data is collected directly
from the person in sample population. In this project research the collection of data
is directly interviewing customer.In the collection of the primary data, I have used
survey method and use the questionnaire methods.
There are mainly two methods for the collection of the primary data which are
given below,

 Observational Method.
 Survey Method.

OBSERVATION METHOD:-
In the observation method, it requires the observer. The observer will keenly
observe the person at the time of the interview & record his behavior accurately. it is
also one of The important method for the collection of data but it requires good &
experienced observer who can observer The behavior of the respondent properly and
record it with great accuracy.
SURVEY METHOD:-
It is most popular method for the collection of necessary data from the respondents.
I have used survey method for the collection of the necessary data.

37
Different types of the survey are given below,
 Personal interview.
 Telephonic survey.
 Mail questionnaires.

PERSONAL INTERVIEW:-
In the personal interview, the interviewer will personally meet the respondent and
will take is interview. The interviewer will ask question in face to face direction to
the respondents or group of respondents.
TELEPHONIC SURVEY:-
In the telephonic interview, the interviewer will make call to respondents, inform the
respondents about the purpose of the call and then he will ask the related questions
to the respondents. This method is used, when the information to be collected is
limited. It is mostly used when information to be collected is limited.
MAIL QUESTIONNAIRE:-
In the mail questioner the interviewer will mail the questionnaire to the respondents
and inform them about the purpose of the survey. Also the time limit for the
questionnaire is specified in the mail. This method is used when the area to be
covered is large and the survey has to be conducted in the specific limit.
In my survey, I have used the personal interview to know customer awareness
towards online share trading. I have visited respondents personally.

B) SECONDARY DATA

38
Any data which had been gathered earlier for other purposes are secondary data in
hand of marketing research. These data has been collected from company dealer like
Dealer profile, industrial profile, company profile are collected from the internet.
The secondary data are collected from the magazines, internet and
Web -sites. Different web sites like www.sharekhan.com and GOOGLE
Search engine help in collecting the detailed information.

RESEARCH APPROACH
Out of 4 ways of research approaches i.e.
1. Observation research.
2. Survey Research
3. Focus Group research
4. Experimental research.
In this project the approach used was survey approach because the main objective of
our survey was to study of the market potential and have an idea about the customer
awareness.
SAMPLING
Research instruments can be of two types firstly questionnaire methods and
secondly mechanical instruments. In this survey the research instrument was
questionnaire method.
Sample Size:
For getting better result of the given problem I have to determine the perfect
sample size as on 90% confidence level which is calculated statically by the given
formula.

39
 n = p*q (z /c) 2 Where, n = sample size p = percentage picking a choice
(expressed as decimal) q = (1 - p) Z = Z value (e.g. 1.645 for 90% confidence
level) c = confidence interval, expressed as decimal (e.g., 0.05 = ±5)

For Example:
p = 0.80 q = 0.20 z = 1.645 c = 0.05
so,
n = p*q (z /c) = 0.80*0.20 (1.645/0.05) 2
= 173.1856 = 175
Therefore, I used sample size is 175

Confidence interval: In statistics, a confidence interval (CI) is a particular kind of

interval estimate of a population parameter. Instead of estimating the parameter by
a single value, an interval likely to include the parameter is given. Thus,
confidence intervals are used to indicate the reliability of an estimate.
The end points of the confidence interval are referred to as confidence limits.

SAMPLING PLAN:-
Sampling size : 175
Field Work area : Delhi City
Random sampling

SAMPLING PROCEDURE:-
The sampling Procedure can be of two types:
1. Probable Samplings
2. Non-probable sampling

40
Response Rate:
 The response rate was average.
 I have used questionnaire method for the financial information of the
respondent, most of the people hesitated to provide the required information
and also the questionnaire contained some financial terms that were
technical in nature, which resulted into reduced response rate.
 I have visited nearly 200 potential respondents, out of which only 175 gave
proper response. Hence, Response Rate = 175/200 = 87.5%

Data analysis tools:

I have used SPSS software (Statistical Package for the Social Sciences) for
analysis purpose. In that I have used Mean, Median, Mode, Frequency Table, and
Cross Tabulation, Graphical representation & interpretation with each graphs and
charts. Microsoft Office is used for data typing formatting and analyzing the data.

41
 LIMITATIONS

There is no activity without limitations so it had too. The main Limitation has been
faced during project research are as follows:-

 The research has been carried on time span of one an half month.
 The research is totally based on the personal opinion of the respondents
which may vary depending upon their personal view.
 The research has done along with achieving our target given by company.
 People’s response was also not favorable.
 Due to instability of market people were afraid of it, so they were less
interested in these things.

42
MUTUAL FUND
The concept of “Mutual fund” is a new feature in the cap of Indian capital market
but not to international market. The concept of mutual fund spread to USA in the
beginning of 20th century and three mutual fund companies were started in 1924.
Mutual funds have been successfully working in the USA and some western
countries. These funds have been useful in filling the gap between the demand and
supply of capital in the market. A mutual fund motivates small and big investors to
entrust their savings to it so that these are professionally employed in sharing good
return. A large number of investors have small savings with them. They can at the
most buy shares of one or two companies. When small savings are pooled and
entrusted to mutual fund then these can be used to buy blue chips where regular
returns and capital appreciation are ensured.
Fund is an American concept. The terms like investment company, money fund
investment trust and mutual funds are used interchangeably and used to describe
the same thing in American literature. In British literature mutual funds has not
been explained but is considered as a synonym of investment trust of USA.

DEFINITION & MEANING

A mutual fund is an investment vehicle for investors, who pool their savings for
investing in diversified portfolio of securities with the aim of attractive yields and
appreciation in their value.
As per mutual fund book published by investment company institute of
US,“Mutual fund is a financial service organization that receives money from
shareholders, invest it, earns return on it, attempt to make it grow and agree to pay
the shareholder cash on demand for the current value of investment”

43
SEBI (mutual fund) regulations, 1996 defines mutual funds as
“A fund established in the form of a trust to raise monies through the sale of units
to the public or a section of public under one or more schemes for investing in
securities including money market instruments”

A mutual fund is a special type of institution a trust or an investment company

which acts as an investment – intermediary and channelises the savings of large
number of people to the corporate securities in such a way that investors get a
steady return, capital appreciation and low risk
A mutual fund is a trust that pools the savings of a number of investors who wish
to start investing but do not have a large amount of capital to work with or who
want to take hands of approach and let the professional take all decisions. Mutual
funds are basically large funds operated by investment companies and pull money
from many different people and then invest according to a certain goal for the fund.
This allows for greater diversification than would be possible for a single person
with less-than-generous assets and also removes the burden of researching market
conditions and constantly adjusting investments accordingly from the individual.

HISTORY OF MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust
of India, at the initiative of the Government of India and Reserve Bank the. The
history of mutual funds in India can be broadly divided into four distinct phases

FIRST PHASE – 1964-87 Unit Trust of India (UTI) was established on 1963 by
an Act of Parliament. It was set up by the Reserve Bank of India and functioned

44
under the Regulatory and administrative control of the Reserve Bank of India. In
1978 UTI was de-linked from the RBI and the Industrial Development Bank of
India (IDBI) took over the regulatory and administrative control in place of RBI.
The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI
had Rs.6,700 crores of assets under management.

SECOND PHASE – 1987-1993 (Entry of Public Sector Funds) 1987 marked the
entry of non- UTI, public sector mutual funds set up by public sector banks and
Life Insurance Corporation of India (LIC) and General Insurance Corporation of
India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in
June 1987 followed by Canara Bank Mutual Fund (Dec 87), Punjab National Bank
Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun
90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in
June 1989 while GIC had set up its mutual fund in December 1990. At the end of
1993, the mutual fund industry had assets under management of Rs.47,004 crores.

THIRD PHASE – 1993-2003 (Entry of Private Sector Funds) With the entry of
private sector funds in 1993, a new era started in the Indian mutual fund industry,
giving the Indian investors a wider choice of fund families. Also, 1993 was the
year in which the first Mutual Fund Regulations came into being, under which all
mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations
were substituted by a more comprehensive and revised Mutual Fund Regulations in
1996. The industry now functions under the SEBI (Mutual Fund) Regulations
1996. The number of mutual fund houses went on increasing, with many foreign

45
mutual funds setting up funds in India and also the industry has witnessed several
mergers and acquisitions. As at the end of January 2003, there were 33 mutual
funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with
Rs.44,541 crores of assets under management was way ahead of other mutual
funds.

FOURTH PHASE – since February 2003 In February 2003, following the repeal
of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities.
One is the Specified Undertaking of the Unit Trust of India with assets under
management of Rs.29,835 crores as at the end of January 2003, representing
broadly, the assets of US 64 scheme, assured return and certain other schemes. The
Specified Undertaking of Unit Trust of India, functioning under an administrator
and under the rules framed by Government of India and does not come under the
purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd,
sponsored by SBI, PNB, BOB and LIC.
It is registered with SEBI and functions under the Mutual Fund Regulations. With
the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
crores of assets under management and with the setting up of a UTI Mutual Fund,
conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking
place among different private sector funds, the mutual fund industry has entered its
current phase of consolidation and growth. As at the end of September, 2004, there
were 29 funds, which manage assets of Rs.153108 crores under 421 schemes. The
graph indicates the growth of assets over the years.

46
CONCEPT OF MUTUAL FUND

A Mutual Fund is a trust that pools the savings of a number of investors who share
a common financial goal. The money thus collected is then invested in capital
market instruments such as shares, debentures and other securities. The income
earned through these investments and the capital appreciation realised are shared
by its unit holders in proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities
at a relatively low cost. The flow chart below describes broadly the working of a
mutual fund:

BENEFITS OF MUTUAL FUNDS

1) Professional Investment Management: By pooling the funds of thousands of

investors, mutual funds provide full-time, high-level professional management that
few individual investors can afford to obtain independently. Such management is
vital to achieving results in today's complex markets. Your fund managers'
interests are tied to yours, because their compensation is based not on sales 35
commissions, but on how well the fund performs. These managers have
instantaneous access to crucial market information and are able to execute trades
on the largest and most cost-effective scale. In short, managing investments is a
full-time job for professionals.

47
2) Diversification: Mutual funds invest in a broad range of securities. This limits
investment risk by reducing the effect of a possible decline in the value of any one
security. Mutual fund shareowners can benefit from diversification techniques
usually available only to investors wealthy enough to buy significant positions in a
wide variety of securities.

3) Low Cost: If you tried to create your own diversified portfolio of 50 stocks,
you'd need at least $100,000 and you'd pay thousands of dollars in commissions to
assemble your portfolio. A mutual fund lets you participate in a diversified
portfolio for as little as $1,000, and sometimes less. And if you buy a no-load fund,
you pay or no sale charges to own them
.
4) Convenience and Flexibility: You own just one security rather than many, yet
enjoy the benefits of a diversified portfolio and a wide range of services. Fund
managers decide what securities to trade, clip the bond coupons, collect the interest
payments and see that your dividends on portfolio securities are received and your
rights exercised. It's easy to purchase and redeem mutual fund shares, either
directly online or with a phone call.

5) Quick, Personalized Service: Most funds now offer extensive websites with a
host of shareholder services for immediate access to information about your fund
account. Or a phone call puts you in touch with a trained investment specialist at a
mutual fund company who can provide information you can use to make your own
investment choices, assist you with buying and selling your fund shares, and
answer questions about your account status.

48
 6) Ease of Investing: You may open or add to your account and conduct
transactions or business with the fund by mail, telephone or bank wire. You can
even arrange for automatic monthly investments by authorizing electronic fund
transfers from your checking account in any amount and on a date you choose.
Also, many of the companies featured at this site allow account transactions online.

7) Total Liquidity, Easy Withdrawal: You can easily redeem your shares
anytime you need cash by letter, telephone, bank wire or check, depending on the
fund. Your proceeds are usually available within a day or two.

8) Life Cycle Planning: With no-load mutual funds, you can link your investment
plans to future individual and family needs -- and make changes as your life cycles
change. You can invest in growth funds for future college tuition needs, then move
to income funds for retirement, and adjust your investments as your needs change
throughout your life. With no-load funds, there are no commissions to pay when
you change your investments.

9) Market Cycle Planning: For investors who understand how to actively manage
their portfolio, mutual fund investments can be moved as market conditions
change. You can place your funds in equities when the market is on the upswing
and move into money market funds on the downswing or take any number of steps
to ensure that your investments are meeting your needs in changing market
climates.

49
10) Investor Information: Shareholders receive regular reports from the funds,
including details of transactions on a year-to-date basis. The current net asset value
of your shares (the price at which you may purchase or redeem them) appears in
the mutual fund price 37 listings of daily newspapers. You can also obtain pricing
and performance results for the all mutual funds at this site, or it can be obtained
by phone from the fund
.
11) Periodic Withdrawals: If you want steady monthly income, many funds allow
you to arrange for monthly fixed checks to be sent to you, first by distributing
some or all of the income and then, if necessary, by dipping into your principal.

12) Dividend Options: You can receive all dividend payments in cash. Or you can
have them reinvested in the fund free of charge, in which case the dividends are
automatically compounded. This can make a significant contribution to your long-
term investment results. With some funds you can elect to have your dividends
from income paid in cash and your capital gains distributions reinvested.

13) Automatic Direct Deposit: You can usually arrange to have regular, third-
party payments -- such as Social Security or pension checks -- deposited directly
into your fund account. This puts your money to work immediately, without
waiting to clear your checking account, and it saves you from worrying about
checks being lost in the mail.

14) Recordkeeping Service: With your own portfolio of stocks and bonds, you
would have to do your own recordkeeping of purchases, sales, dividends, interest,
short-term and long-term gains and losses.

50
15) Safekeeping: When you own shares in a mutual fund, you own securities in
many companies without having to worry about keeping stock certificates in safe
deposit boxes or sending them by registered mail. .

16) Online Services: The internet provides a fast, convenient way for investors to
access financial information. A host of services are available to the online investor
including direct access to no-load companies.

17) Sweep Accounts: With many funds, if you choose not to reinvest your stock or
bond fund dividends, you can arrange to have them swept into your money market
fund automatically. You get all the advantages of both accounts with no extra
effort.

18) Asset Management Accounts: These master accounts, available from many of
the larger fund groups, enable you to manage all your financial service needs under
a single umbrella from unlimited check writing and automatic bill paying to
discount brokerage and credit card accounts.

19) Margin: Some mutual fund shares are marginable. You may buy them on
margin or use them as collateral to borrow money from your bank or broker. Call
your fund company for details.

51
PROBLEMS & PROSPECTS OF MUTUAL FUNDS

1) Wrong positioning : The mutual funds in India have been quite wrongly
promoted as an alternative to equity industry. Thus creating very high expectations
in the minds of the investors. In a falling market, these expectations have been
belied. Only the pure equity schemes can be compared with the stock market
index. However pure equity schemes are few in India, further, investment is not
purely linked to a particular index. Therefore returns form mutual funds cannot
really be compared with stock market index.

2) Limited product range: Indian mutual funds have remained centered around a
limited product range basically income, income cum-growth and tax saving
schemes. Efforts to develop and expand the market through innovative new
products have been negligible. These have happened due to the tendency to avoid
risk, inability to understand future market developments, and change in investor
preference. Therefore the extent of mutual funds market has remained limited
.
3) Confused market situation: probably the introduction and implementation of
new regulatory norms has contributed in some measure to market sluggishness, as
the emerging market was, initially, not able to respond to the regulatory objectives.

4) Absence of Innovative Marketing Network: The absence of product

diversification and a confused market situation has been made worse by the
absence of an innovative marketing network for 46 mutual funds. The agent
oriented network has largely been failure because most of the agents have not been
specifically trained to sell mutual funds products,

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5) Lack of adequate research infrastructure: the passive approach of some
mutual funds in managing investor’s funds is compounded by the lack of adequate
research infrastructure. Consequently, returns commensurate with the market
movement could not be realized by many schemes, which has tended to show up
Indian mutual funds in a bad light.

6) Inefficient management: Management is considered to be a key factor for the

operational efficiency of any business venture. This factor becomes even more
crucial for service ventures such as mutual funds. What mutual funds require are
managers who have a clear understanding of prevailing and emerging market
potential, investor preference and macro economic fundamentals.

7) Lack of investor’s education: The market success of any new product

particularly a financial product depends largely on its acceptance by consumers, in
this case investors. Mutual funds must undertake a well design and comprehensive
program of investor education especially aimed at investors in rural and semi-
urban areas. However this has been mostly neglected in India.

8) Lack of media support: investors understanding about mutual funds product

and it feature must be increased as it was found to be very low so far. This problem
requires quick and structured attention. This can be solved with effective use of
media. A positive media support is also required and mutual funds need to be
media friendly.

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9) Ignorance of liquidity management: over emphasis on asset management has
often ignored the crucial importance of liability management in mutual funds,
leading many Indian funds into a liquidity trap at the time of redemption. A more
scientific approach needs to be adopted by the funds.

10) Risk management ignored: Derivatives have been widely used by the mutual
funds as a measure of risk management as a complex and competitive market
place. Further the practice of stock lending, used widely in the western market has
induced efficiency in funds management a regulatory environment for mutual
funds need to encouraged this practices in India.

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INTRODUCTION ON EQUITY FUND

Equity is a term commonly used to describe the ordinary share capital of the
business. Ordinary share in the equity capital of the business entitle the holders to
all distributed profits after the holders of debentures and preference shares have
been paid. Ordinary shares are issued to the owners of the company. It is important
to understand the market values of company’s shares have little relationship to
their 48 nominal or face value. The market value of the company share is
determined by the price another investor is prepared to pay for them. In the case of
publicly quoted companied, this is reflected in the market value of the ordinary
shares traded on the stock exchange. In case of privately owned companies, where
there is unlikely to be much trading in shares, market value is often determined
when the business is sold or when the minority share holding is valued for taxation
purpose. Differed ordinary shares are a form of ordinary shares which are entitled
to a dividend only after a certain date or only if profits rise above a certain amount.
Voting rights might also differ from those attach to other ordinary shares.
Financing a company through the sale of stock in accompany is known as equity
financing. Alternatively debt financing can be done to avoid giving up shares of
ownership of the company. Equity financing are usually used for longer term
investment projects such as investment in a new factory or a new foreign market.
Equity investment generally refers to the buying and holding of shares of stock on
a stock market by individuals and funds in anticipation of income from dividends
and capital gain as the value of stock rises. It also sometimes refers to the
acquisition of equity (ownership) participation in a private (unlisted) company or a
start up. (A company being created or newly created). When the investment is in

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infant companies it is refer to as venture capital investing and is generally
understood to be higher risk than investment in listing, going concern situations.

ON INDEX INTRODUCTION
Stock market talk is everywhere, from T.V and radio, to the newspapers and the
web. But what does it mean? When people say that “the market turned a great
performance today”. “What is the market anyway?” As it turns out, when most
people talk about “the market” they are actually referring to an index. With the
growing importance of the stock 49 market in our society the names of indexes
such as S&P 500, NIFTY, and SENSEX have become part of our every
vocabulary. Index can be defined as “a statistical measure of changes in the
portfolio of stocks representing the portion of the overall market.” It would be
difficult to track every single security trading in the country. To get around this we
take a smaller sample of the market that is representative of the whole. Thus, just a
pollster’s use a political survey to gauge the sentiment of population, the investors
use indexes to track the performance of the stock market. Ideally change in price of
an index would represent and exactly proportionate change in the stocks included
in the index. Indexes are great tools for telling us what direction the market is
taking, what trends are prevailing. “An index is a number use to represent the
changes in a set of values between a base time period and another time period” A
stock index is number that helps you measure the levels of the market. Most stock
indexes attempt to be proxies for the market they exist in. returns on the index are
thus supposed to represent the returns on the market i.e the returns that u could get
if u had the entire market in your portfolio.

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