Date post: | 09-Apr-2018 |
Category: |
Documents |
Upload: | narain-tanwani |
View: | 223 times |
Download: | 0 times |
of 95
8/8/2019 AJAY Reliance Money 30
1/95
Project Report
On
Demat Opening Schemes of RelianceMoney with other competitors,
Mutual Fund, Financial and Technicalanalysis.
Submitted in requirement of partial
fulfillment ofMASTER OF BUSSINESSADMINISTRATION
2007-09
Under The Guidance Of :Mr. MANISH SHUKLA
Center Manager,Reliance Money,
MEERUTSubmitted to: Submitted By:
Ms. Jasika ShuklaFaculty, Finance
Pramod KumarMBA
8/8/2019 AJAY Reliance Money 30
2/95
PUNJAB TECHNICAL UNIVERSITY,JALANDHAR
8/8/2019 AJAY Reliance Money 30
3/95
ACKNOWLEDGMENTS
It was a great opportunity for me to work with Reliance money, pioneersin the field of online trading. I am extremely grateful to those who have
shared their expertise and knowledge with me and without whom the
completion of this project would have been virtually impossible.
Firstly, I would like to thank my project guide Mr. Manish Shukla
Center Manager, Reliance Money Ltd., who has been a constant
source of inspiration for me during the completion of this project. He gave
me invaluable inputs during my endeavor to complete this project.
I am indebted to all staff members of Reliance Money Ltd. for their
valuable support and co-operation during the entire tenure of this project.
Not to forget, all those who have kept our spirits surging and helped me
in delivering my best.
(Pramod Kumar)
8/8/2019 AJAY Reliance Money 30
4/95
INDEX
1. Introduction
2. Executive Summary
3. Project Objective
4. Methodology
5. Company Profile
6. Corporate Structure
7. Reliance money Services8. Services Provided
9. Mutual Fund
10. Indian Stock Market Overview
11. About NSE
12. About BSE
13. Indian Scenario14. Products and Required Documents
15. Competitive Analysis
16. Analysis of Questionnaire
17. Findings
18. Suggestions
19. Learnings
20. Limitations
21. Conclusion
22. Bibliography
23. Annexure
8/8/2019 AJAY Reliance Money 30
5/95
INTRODUCTION
In todays scenario Online Share Trading in Stock market is gaining
popularity. Till now most of the customers were working with offline but inmetro cities Online Share Trading is preferred because no one has muchtime to go to market and work with offline.
So, online share trading come in picture. In Online Share Tradinginvestors invest their money in stock market through the internet. Theydo not want to go to a broker. Today companies provided all informationon a company website or make their own software. Investors buy or selltheir securities in a few seconds by clicking a mouse.
Online Share Trading is beneficiary for customer as well as companybecause in online customers have not take much pain for investing moneyin a market. All process is done automatically in a few seconds.Companies provided research reports, monthly magazine etc throughInternet. Investors get this information online. These reports helpinvestors for investment in securities. Online Share Trading is very lesstime consuming and expensive. So Online share Trading is much betterthan offline share trading. Online Share Trading is safer and fasteralternative to the offline Share Trading as it offer freedom from delays,thefts and paperwork. So Online Share Trading is quick, convenient and
efficient.
About Reliance Money:Reliance Money is India's leading retail financial services company. Theyhave over 300 share shops across 175 cities in India. While their size andstrong balance sheet allow them to provide customers with variedproducts and services at very attractive prices, their over 750 ClientRelationship Managers are dedicated to serving customers unique needs.
Reliance Money is lead by a highly regarded management team that hasinvested crores of rupees into a world class Infrastructure that providesclients with real-time service & 24/7 access to all information andproducts. Their flagship Reliance Money offers real-time prices, detaileddata and news, intelligent analytics, and electronic trading capabilities,right at your finger-tips. This powerful technology complemented by theirknowledgeable and customer focused Relationship Managers is creating aworld of Smart Investor.
Reliance Money offers a full range of financial services and products
8/8/2019 AJAY Reliance Money 30
6/95
ranging from Equities to Derivatives enhance your wealth and hence,achieve your financial goals.
Reliance Money' Client Relationship Managers are available to thecustomers to help with their financial planning and investment needs. To
provide the highest possible quality of service,Reliance Money providesfull access to all our products and services through multi-channels.
Services provided by the RELIANCE MONEY :--
1. Equities & Derivatives :--Comprehensive services forindependent investors,active traders & Non-Resident Indians.
2. Reliance Money equity analysis :--Premium research on401+ companies updated daily.
3. Depository Services :--Value added services forseamless delivery.
8/8/2019 AJAY Reliance Money 30
7/95
EXECUTIVE SUMMARY
I am Kapil Kumar from the batch of 2007-09, Dev Bhoomi Institute of
Technology, Dehradun. I did my Summer Training with Reliance Money(www.reliancemoney.com) from 24th of May 2008 to 19th of July 2008.I was assigned the task of Competitive Analysis, Promotion and Future ofOnline Trading & Mutual fund..
This research is based on the comparative analysis of Reliance Moneywith other broking houses and study of Future of Online Share Trading inIndia. Its totally based on realistic approach towards the online share-trading senario in India.
In the first phase I covered some other stock broking companies ascompared to Reliance Money. I examined thoroughly areas such asnumber of players, technology they are offering their customer base theirproducts and offerings and how they market their products etc.
In between to acquire new customers for Reliance Money was also anintegral part of the job. In this process I spoke to different potentialcustomers about the organization and its products in order to increase thepopularity of Reliance Money.
I took places in Gurgaon & Delhi as a sample. I did follow marketresearch procedure to get an idea about the future of Online ShareTrading. For this I divided the whole Delhi into a five zones (East ,West,South ,North ,Central).
http://www.reliancemoney.com/http://www.reliancemoney.com/8/8/2019 AJAY Reliance Money 30
8/95
PROJECT OBJECTIVE
I was assigned with the task of comparing different online brokingcompanies and predicting the future of online share trading in India as apart of the summer training curriculum. The entire project was dividedinto six parts:
a) Gathering data about the leading online broking houses andcompare the main points and find the strengths of Reliance Moneycompared to them.
b) Conducting Market Research in various parts of the city in order to
get statistical data for commenting on the future of online sharetrading in India.
c) Customer Acquisition through sales of Trading / Demat Accounts inorder to get a deep insight as to how the Organization actuallyperforms these functions.
.
d) To increase the product awareness of Reliance money as onewindow shop for investment solutions.
e) To find the potential market for Reliance Money products andgetting information about pricing strategy of competitors to fight cutthroat competition.
d) To collect the real time information about preference level ofcustomers using Demat account and their inclination towardsvarious other brokerage firms e.g. Indiabulls, ICICI direct.com,
Sharekhan , Indiainfoline , Religare , Alankit, Unicon etc.
8/8/2019 AJAY Reliance Money 30
9/95
METHODOLOGY
Methodology for Market Research
I divided the entire city into zones and drew out samples out of eachzone. The size of samples drawn from each zone depended on theprospective ness of the particular area. For e.g., if a particular researcharea consisted of Offices then the sample size would obviously be higherthan an area like Shopping mall or PVR. This is because Office employeesconstitute the service sectors who are the active investors of today. Also,the office areas consist of people from the business class who havealways been in the hunt for quick money, not to forget that smart andtimely investment in the share market can yield to enormous returns.
8/8/2019 AJAY Reliance Money 30
10/95
Methodology for Customer Acquisition
The leads for customer acquisition primarily came from the questionnairesfilled up by prospective customers. Apart from these customers were also
pitched through personal references and contacts. Moreover theorganization takes every possible effort in order to spread massawareness. As a result of this publicity campaign, influenced prospectivecustomers approach the organization. There are various ways to makepeople aware about the organization as such Marketing Research,Canopy, Personal References, Pop-up windows having collaboration withvarious portals e.g. Rediffmail.com etc. Person with adequate interestleaves his contact information. Later on these leads are contactedpersonally for further development. The organization has efficient salesstuff who excel in this job. Part time trainees are also appointed for the
same. This work force been perfectly supervised by the Managers. Thusall these factors sum up into a result oriented work force. These leadswere the contacted through tele-calling and after developing arelationship, they were pitched in at the addresses provided by them.After giving them a presentation about the product and its advantagesover its competitors, they were promised of a Demo by company salesforce in case a sale had resulted. Also references were collected from suchpeople and the same methodology was repeated. For each and everycustomer personal quarries have been entertained after the sale is done.
8/8/2019 AJAY Reliance Money 30
11/95
COMPANY PROFILE
Reliance Money is a group company of Reliance Capital. It is under the
Anil Dhirubhai Ambani Group. Reliance Capital Ltd (RCL ), formerly known
as Reliance Capital and Finance Trust, was promoted by Reliance
Industries Ltd (RIL) in 1986 at Ahmedabad, in state of Gujarat with a
capital of Rs 70,000/-. The company intended to access the capital
market as part of the resource raising programme, which materialized in
the year 1990 and active operations commenced soon after its maiden
public issue of equity shares aggregating Rs 20 crore in April 1990. In
Jan.'1995, it came out with a rights-cum-public issue at a premium of Rs130, aggregating Rs 600 crore to strengthen the company's equity base
and meet its long-term working capital requirements. The company was
granted approval by the Securities and Exchange Board of India (SEBI) to
act as an Approved Intermediary under the provisions of SEBI's Securities
Lending Scheme, 1997. During 1998-99, the company disinvested part of
its holding in Reliance Share and Stock Brokers and Reliance Land. These
companies have accordingly ceased to be subsidiary of the company. At
present RCL has four wholly-owned subsidiaries. Reliance Capital Asset
Management is the investment manager of Reliance Capital Mutual Fund,
Reliance Capital Trustee Co, is the trustee company of the Reliance
Capital Mutual Fund, Reliance Net Private Ltd and Observer Network
Private Ltd. The company has shifting its focus from a traditional NBFC to
a special purpose vehicle and venture capital outfit developing
infrastructure projects and investing in infotech, media, Internet and
biotech startups, will help it boost its performance in the coming years.
The company's fee-based activities include a packaged deal offer to the
corporates besides like issue management, underwriting, corporate
advisory, corporate valuation, restructuring of operations, privatization,
divestment, mergers and acquisitions. RCL has also obtained approval
from the Reserve Bank of India (RBI) and Insurance Regulatory and
8/8/2019 AJAY Reliance Money 30
12/95
Development Authority (IRDA) for financial participation in the insurance
sector. It has firmed up plans to enter both life and general insurance
categories, and accordingly has floated the two companies Reliance
General Insurance Company and Reliance Life Insurance Company.
8/8/2019 AJAY Reliance Money 30
13/95
MANAGEMENT TEAM
Reliance capital Director panel list
Name Designation
Anil D Ambani Chairman
Amitabh Jhunjhunwala Vice Chairman
Rajendra P Chitale Director
V R Mohan Company Secretary
C P Jain Director
Reliance capital has following groups of companies
Reliance capital entered into online trading business through Reliance
Money. Reliance Money is offering highly competitive brokerage fees with
the option for fixed flat fee structure.Reliance Money, promoted by Anil
Dhirubhai Ambani Group firm Reliance Capital, is offering the brokerage
services across 700 cities including Delhi and Mumbai through
3,000outlets.
8/8/2019 AJAY Reliance Money 30
14/95
Reliance Money consumers can trade in equities, commodities and
offshore investments, IPOs, mutual funds, insurance and money transfer.
Reliance money is offering 3 types of accounts to its customers. Accountfor beginners, for middlers and for experts.
Reliance Money offers a single window facility, enabling people to access,
amongst others, equity, equity and commodity derivatives, offshore
investments, IPOs, mutual funds, life insurance products.
The new wonder is Reliance Money's pre-paid card for stock market
brokerage. Reliance Money, the financial servi RelianceMoney.com is
offering most dynamic web based trading environment to its customers.
The new trading platform has many new features which basically fill up
the gap between old online trading companies in India and their
customers.
The Reliance Money trading websites comes with special security features
'Security Token', which makes you online trading experience more secure
without complexity.
Stock Trading is available in BSE and NSE. Offline trading is also available
through Reliance Money partners in your city and through phone by
dialing 022-39886000.
http://funopenchild%28%27http//www.chittorgarh.com/stockmarket/Reliance-Money-Security-Token.asp');http://funopenchild%28%27http//www.chittorgarh.com/stockmarket/Reliance-Money-Security-Token.asp');8/8/2019 AJAY Reliance Money 30
15/95
RELIANCE MONEY SERVICES
RELIANCEMONEY
8/8/2019 AJAY Reliance Money 30
16/95
Why You must choose Reliance Money?
Single window for multiple products: Reliance money through its
affiliates partners, facilitates transactions in Equity, Equity & Commodity
Derivatives, Offshore investments , Mutual Funds , IPOs.
Reliance Money is the most cost effective, convenient, and secure way to
transact in a wide range of financial products and services. The highlights
of Reliance Money offerings are:
PRODUCTS
OFEEREDBY Reliance
Money
SHARES DERIVATIVESMUTUAL
FUNDS IPOs
POSTALSAVINGS &
BONDSINSURANCE COMMODITIES
DELIVERY
TRDING
DAY
TRADING
MARGINPLUS
ATST
SPOT
GENERAL LIFE
8/8/2019 AJAY Reliance Money 30
17/95
Cost Effective: The fee charged by the affiliates of Reliance Money ,
through whom the transactions can be placed is among the lowest
charged in the present scenario.
Convenience: You have the flexibility to access Reliance Money
services in multiple ways; through the Internet, Transaction Kiosks ,
Call and Transact (Phone) or seek assistance through business
partners.
8/8/2019 AJAY Reliance Money 30
18/95
Security: Reliance money provides secure access through an electronic
token that flashes a unique a security number of Six digits after every 32
seconds (and ensures that the number used for earlier transaction is
discarded). This number works as a third level password that keeps youraccount extra safe.
3 in 1 integrated access : Reliance Money offers integrated access to
your Banking , Trading and Demat Account.
8/8/2019 AJAY Reliance Money 30
19/95
SERVICES PROVIDED BY THE RELIANCE MONEY
1. Equities and Derivatives
Our Retail Equity Business caters to the needs of individual Indian and
Non-Resident Indian (NRI) investors. Reliance money offers broker
assisted trade execution, automated online investing and access to all
IPO's.
Through various types of brokerage accounts, Reliance money offers the
purchase and sale of securities which includes Equity, Derivatives and
Commodities Instruments listed on National Stock Exchange of India Ltd
(NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX.
Reliance Easy Trade - Comprehensive services including research
and investing guidance for independent investors.
Reliance Insta trade - Reliance is dedicated to empower Active
Traders through personal service and advanced trading technology.
2. Reliance equity analysis
Building and maintaining your ideal portfolio demands objective,
dependable information. Reliance Equity Analysis helps satisfy that need
by rating stocks based on carefully selected, fact-based measures. And
because we're not focused on investment banking, we don't have the
same conflicts of interest as traditional brokerage firms. This objectivity is
only one important difference in our ratings
3. Depository Services
Reliance is a depository participant with the Central Depository Services
(India) Limited for trading and settlement of dematerialised shares.
Reliance Money performs clearing services for all securities transactions
through its accounts. Its Services is part of our value added services for
our clients that create multiple interfaces with the client and provide for a
solution that takes care of all your needs.
8/8/2019 AJAY Reliance Money 30
20/95
.
Reliance Money is dealing in all mutual funds explained in the diagram
given below.
8/8/2019 AJAY Reliance Money 30
21/95
INTRODUCTION TO MUTUAL FUNDS
EMERGENCE OF MUTUAL FUNDS:
Mutual funds now represent perhaps the most appropriate investment
opportunity for most investors. As financial market becomes more
sophisticated & complex investors need a financial intermediary who
provide the required knowledge and professionals expertise on successful
investment .The Indian mutual fund industry has already stared opening
many of the exciting investment opportunities to Indian investors. Despite
the expected continuing growth in the industry, mutual funds are still
anew financial intermidartry in India.
MUTUAL FUND CONCEPT
A Mutual Fund is a trust that pools the savings of a number of investors
who share a common financial goal. The money thus collected is then
invested in capital market instruments such as equities, debentures andother securities. The income earned through these investments and the
capital appreciation realized (after deducting the expenses and profits of
mutual fund managers) is shared by its unit holders in proportion to the
number of units owned by them. Thus a Mutual Fund strives to meet the
investment needs of the common man by offering him or her an
opportunity to invest in a diversified, professionally managed basket of
securities at a relatively low cost. An open-ended fund operated by an
investment company which raises money from shareholders and invests
in a group of assets, in accordance with a stated set of objectives. Mutual
funds raise money by selling shares of the fund to the public, much like
any other type of company can sell stock in itself to the public. Mutual
funds then take the money they receive from the sale of their shares
(along with any money made from previous investments) and use it to
http://www.advfn.com/money-words_term_2609_investment_company.htmlhttp://www.advfn.com/money-words_term_4525_shares.htmlhttp://www.advfn.com/money-words_term_2609_investment_company.htmlhttp://www.advfn.com/money-words_term_4525_shares.html8/8/2019 AJAY Reliance Money 30
22/95
purchase various investment vehicles, such as stocks, bonds and money
market instruments. In return for the money they give to the fund when
purchasing shares, shareholders receive an equity position in the fund
and, in effect, in each of its underlying securities. For most mutual funds,shareholders are free to sell their shares at any time, although the price
of a share in a mutual fund will fluctuate daily, depending upon the
performance of the securities held by the fund. Benefits of mutual funds
include diversification and professional money management. Mutual funds
offer choice, liquidity, and convenience, but charge fees and often require
a minimum investment. A closed-end fund is often incorrectly referred to
as a mutual fund, but is actually an investment trust. There are many
types of mutual funds, including aggressive growth fund,
asset allocation fund, balanced fund, blend fund, bond fund,
capital appreciation fund, clone fund, closed fund, crossover fund,
equity fund, fund offunds, global fund, growth fund,
growth and income fund, hedge fund, income fund, index fund,
international fund, money market fund, municipal bond fund,
prime rate fund, regional fund, sector fund,
Before I dive into the definition of a mutual fund, it is important
that you have a basic understanding of stocks and bonds
Stocks
Stocks represent shares of ownership in a public company. Examples of
public companies include IBM, Microsoft, Ford, Coca-Cola, and General
Mills. Stocks are the most common ownership investment traded on the
market.
Bonds
http://www.advfn.com/money-words_term_4725_stocks.htmlhttp://www.advfn.com/money-words_term_521_bonds.htmlhttp://www.advfn.com/money-words_term_4527_shareholders.htmlhttp://www.advfn.com/money-words_term_1726_equity.htmlhttp://www.advfn.com/money-words_term_5125_underlying.htmlhttp://www.advfn.com/money-words_term_1922_fees.htmlhttp://www.advfn.com/money-words_term_3173_mutual_fund.htmlhttp://www.advfn.com/money-words_term_3173_mutual_fund.htmlhttp://www.advfn.com/money-words_term_162_aggressive_growth_fund.htmlhttp://www.advfn.com/money-words_term_276_asset_allocation_fund.htmlhttp://www.advfn.com/money-words_term_392_balanced_fund.htmlhttp://www.advfn.com/money-words_term_493_blend_fund.htmlhttp://www.advfn.com/money-words_term_527_bond_fund.htmlhttp://www.advfn.com/money-words_term_696_capital_appreciation_fund.htmlhttp://www.advfn.com/money-words_term_696_capital_appreciation_fund.htmlhttp://www.advfn.com/money-words_term_886_clone_fund.htmlhttp://www.advfn.com/money-words_term_891_closed_fund.htmlhttp://www.advfn.com/money-words_term_1223_crossover_fund.htmlhttp://www.advfn.com/money-words_term_1729_equity_fund.htmlhttp://www.advfn.com/money-words_term_2129_fund_of_funds.htmlhttp://www.advfn.com/money-words_term_2129_fund_of_funds.htmlhttp://www.advfn.com/money-words_term_2181_global_fund.htmlhttp://www.advfn.com/money-words_term_2181_global_fund.htmlhttp://www.advfn.com/money-words_term_2260_growth_fund.htmlhttp://www.advfn.com/money-words_term_2259_growth_and_income_fund.htmlhttp://www.advfn.com/money-words_term_2296_hedge_fund.htmlhttp://www.advfn.com/money-words_term_2404_income_fund.htmlhttp://www.advfn.com/money-words_term_2429_index_fund.htmlhttp://www.advfn.com/money-words_term_2568_international_fund.htmlhttp://www.advfn.com/money-words_term_2568_international_fund.htmlhttp://www.advfn.com/money-words_term_3107_money_market_fund.htmlhttp://www.advfn.com/money-words_term_3163_municipal_bond_fund.htmlhttp://www.advfn.com/money-words_term_3163_municipal_bond_fund.htmlhttp://www.advfn.com/money-words_term_3838_prime_rate_fund.htmlhttp://www.advfn.com/money-words_term_4123_regional_fund.htmlhttp://www.advfn.com/money-words_term_4123_regional_fund.htmlhttp://www.advfn.com/money-words_term_4431_sector_fund.htmlhttp://www.advfn.com/money-words_term_4725_stocks.htmlhttp://www.advfn.com/money-words_term_521_bonds.htmlhttp://www.advfn.com/money-words_term_4527_shareholders.htmlhttp://www.advfn.com/money-words_term_1726_equity.htmlhttp://www.advfn.com/money-words_term_5125_underlying.htmlhttp://www.advfn.com/money-words_term_1922_fees.htmlhttp://www.advfn.com/money-words_term_3173_mutual_fund.htmlhttp://www.advfn.com/money-words_term_162_aggressive_growth_fund.htmlhttp://www.advfn.com/money-words_term_276_asset_allocation_fund.htmlhttp://www.advfn.com/money-words_term_392_balanced_fund.htmlhttp://www.advfn.com/money-words_term_493_blend_fund.htmlhttp://www.advfn.com/money-words_term_527_bond_fund.htmlhttp://www.advfn.com/money-words_term_696_capital_appreciation_fund.htmlhttp://www.advfn.com/money-words_term_886_clone_fund.htmlhttp://www.advfn.com/money-words_term_891_closed_fund.htmlhttp://www.advfn.com/money-words_term_1223_crossover_fund.htmlhttp://www.advfn.com/money-words_term_1729_equity_fund.htmlhttp://www.advfn.com/money-words_term_2129_fund_of_funds.htmlhttp://www.advfn.com/money-words_term_2181_global_fund.htmlhttp://www.advfn.com/money-words_term_2260_growth_fund.htmlhttp://www.advfn.com/money-words_term_2259_growth_and_income_fund.htmlhttp://www.advfn.com/money-words_term_2296_hedge_fund.htmlhttp://www.advfn.com/money-words_term_2404_income_fund.htmlhttp://www.advfn.com/money-words_term_2429_index_fund.htmlhttp://www.advfn.com/money-words_term_2568_international_fund.htmlhttp://www.advfn.com/money-words_term_3107_money_market_fund.htmlhttp://www.advfn.com/money-words_term_3163_municipal_bond_fund.htmlhttp://www.advfn.com/money-words_term_3838_prime_rate_fund.htmlhttp://www.advfn.com/money-words_term_4123_regional_fund.htmlhttp://www.advfn.com/money-words_term_4431_sector_fund.html8/8/2019 AJAY Reliance Money 30
23/95
Bonds are basically a chance for you to lend your money to the
government or a company. You can receive interest and your principle
back over predetermined amounts of time. Bonds are the most common
lending investment traded on the market.
There are many other types of investments other than stocks and
bonds (including annuities, real estate, and precious
metals), but the majority of mutual funds invest in stocks
and/or bonds.
DEFINITION OF MUTUAL FUND
A mutual fund is simply a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment
objective. The mutual fund will have a fund manager who is responsible
for investing the pooled money into specific securities (usually stocks or
bonds). When you invest in a mutual fund, you are buying shares (or
portions) of the mutual fund and become a shareholder of the fund.
Mutual funds are one of the best investments ever created because they
are very cost efficient and very easy to invest in (you don't have to figure
out which stocks or bonds to buy).
8/8/2019 AJAY Reliance Money 30
24/95
The flow chart below describes broadly the working of a mutual
fund:
GROWTH AND INCOME SCHEMES
Mutual fund products or schemes are broadly categorized into Growth
(also called Equity) and Income schemes. Growth schemes invest
predominantly in equity securities and Income schemes invest
predominantly in fixed income securities such as debentures, moneymarket instruments and government securities. Equities are a riskier class
of assets, as they are susceptible for severe volatility in prices and hence
growth schemes are recommended only for those investors who are
interested in capital appreciation over the long term (five years and
beyond). For risk-averse investors who are interested in investing in fixed
income instruments or those with a shorter time horizon for investment
(less than five years), income schemes are considered suitable.
8/8/2019 AJAY Reliance Money 30
25/95
Table 1: shows scheme-wise break-up of assets managed by mutual
funds in India. The Indian mutual fund investor has so far displayed a
clear inclination to be risk averse with over 80 per cent of the funds
invested in Income, Money Market and Gilt schemes and only about 20
per cent in Growth and Balanced (a mix of Growth and Income) schemes
8/8/2019 AJAY Reliance Money 30
26/95
ADVANTAGES OF MUTUAL FUNDS
Portfolio Diversification:
Mutual Funds normally, invest in a well-diversified portfolio or
securities. MF enables investors to hold a diversified investment
portfolio even with a small amount of investment.
Reduction of Risk:
Investors in a mutual fund acquire a diversified portfolio, no matter
how small his investment. Diversification reduces the risk of loss, ascompared to investing directly in one or two shares, debentures, or
others instruments. When investors invest directly, all the risk of
potential loss is his own. A fund investor also reduces his risk in an
other way.
Reduction transaction cost:
What is true of risk is also true of the transaction cost a direct
investors bears all the cost of investing such as brokerage or custody
of securities when going through a fund he has the benefit of
economies of scale the funs pay lesser cost because of larger
volumes, a benefit past on to its investors.
Liquidity:
Often Investors hold shares or bonds they can not directly easily and
quickly sell. Investment in a mutual fund on the other hand is more
liquid an investors can liquidate the investment by selling the unit to
the fund if open end or selling them in the market if the fund is
close- end and the collect the funds at the end of a period specified
the mutual fund or the stock market .
8/8/2019 AJAY Reliance Money 30
27/95
8/8/2019 AJAY Reliance Money 30
28/95
DISADVANTAGE OF INVESTING THROUGH MUTUAL
FUNDS
No Control Over Cost:
An investor in a mutual fund has no control over the overall cost of
investing. His investment management fees as long as he remains
with the funds, albeit in returns for the professional management and
research. A mutual fund investor also pays distribution cost which
he would not incur in the direct investing . However this shortcoming
only means that there is a cost obtains the benefits of mutualservices.
No tailor made portfolio:
Investors who invest their own can build their own portfolios of
shares, bonds and other securities. Investing through funds means
he delegates this decision to the fund manager. The very high net
worth individuals or large corporate investors may find this to be a
constraint in achieving their objectives however most mutual funds
help investors to overcome this constraint by offering miles of
schemes- a large number of different schemes with in the same fund
an investor can choose from different investment plans and construct
a portfolio of his choice.
Managing a Portfolio of funds:
Availability of large number of funds can actually mean too much
choice for the investors. He may again need advice on how to select a
fund to achieve his objective quite similar to the situation when he
has to select individual shares or bonds to invest in.
8/8/2019 AJAY Reliance Money 30
29/95
TAX BENEFITS
Tax benefits to mutual fund:
Mutual fund in India has a special feature as to income tax provision.
Under section 10(23D) of income tax Act1961, a mutual fund has been
conferred total tax exemption from income tax on all its income provided
it is recognized fund. Recognized fund implies that the fund should be
registered under SEBI (mutual fund) Regulation, 1993. Thus income
accrued to assets Management Company by way of dividend or by way of
capital gain is totally exempt. This meant to provide a much higher yield
to the mutual fund to enable them to distribute a higher return to the
investors.
According to union budget 2002-03, mutual funds are also relived of the
tax liability as the incidence of tax is shifted on the unit holders of UTI
and other mutual funds and sub clause (ii) & (iii) of clause 33 section (10)
are omitted. Income from investment is otherwise taxable but underincome tax act, mutual funds are treated as pass through entities since
they invest fund of public and earns income on their behalf. It implies that
whether the income is in form of dividends, interest, underwriting,
commission or capital appreciation, the income of mutual fund in not
taxable.
Tax benefits to investor
The income-received but the investor of mutual fund is taxable in their
hands as dividends unless these are capital redemption. One of the
reason for mutual funds schemes being quoted at discount to NAV was
the differential in tax treatment to equity shares and mutual funds units,
which made investments in mutual fund units less attractive than the
equity.
8/8/2019 AJAY Reliance Money 30
30/95
How to invest in mutual fund
Step one: Identify your investment needs
Your financial goals will very, based on your age, lifestyle, facial
independence, family commitments, ad level of income and expenses
among other many factors. Therefore, the first step is to assess your
needs. Begins by asking you these question:
What are my investment objective and needs?
Probable answer: I need regular income or need to buy a home or
finance a wedding or educate my children or a combination of all
these needs.
How much risk am I willing to take?
Probable answer: I can take a minimum amount of risk or I am
willing to accept the fact that my investment value may fluctuate or
that may be for short-term loss in order to achieve a long term
potential gain.
What are my cash flow requirements?
Probable answer: I need a regular cash flow or I need a lump sumamount to meet a specific need after a certain period or I dont
require a current cash but I want to build my assets for the future.
Going through this exercise, you will know what you want out of your
investment and can set the foundation for a sound mutual fund
investment.
Step two: Choose the right mutual fund
8/8/2019 AJAY Reliance Money 30
31/95
Once you have a clear strategy in mind you own have to choose which
Mutual Fund scheme you want to invest in. the offer document of the
scheme tells you its objectives and provides supplementary details like
the track records of other schemes managed by the same Mutual Fundmanager. Some factors to evaluate before choosing a particular Mutual
Fund.
The track records or performance over the last few years &
relation to the appropriate yardstick and similar funds in the same
category.
How well the mutual fund is organized to provide efficient, promptand personalized service.
Degree of transparency as reflected in fraudulence and quality of
their communication.
Step three: Select the ideal mix of schemes
Investing in just mutual fund scheme may to meet all your investment
needs. You may consider investing in a combination of schemes to
achieve specific goals.
Step four: Invest regularly
For most of us, the approach that works best is to invest a fixed amount
at specific intervals, say every month. By investing a fixed sum each
month, you buy fewer units when the price is higher and more units when
the price is low, thus bringing down your average cost per unit. This is
called free cost averaging and is a disciplined investment strategy
followed by investor all over the world. With many open- ended schemes
offering systematic investment plans, this regular investing habit is made
easy for you.
8/8/2019 AJAY Reliance Money 30
32/95
Step five: Keep your taxes in mind
As per the current tax laws, dividend / income distribution made by
mutual fund is exempt from income tax in the hands of investor. Further,
there are other benefits available for investment in mutual fund under the
provision of the prevailing tax laws. You may therefore consult your tax
advisor or chartered accountant for specific advice to achieve maximum
tax efficiency by investing in mutual fund.
Step six: Start early
It is desirable to start investing early and stick to a regular investment
plan. If you start now, you will make more than if you wait and invest
later. The power of compounding lets you year income and your money
multiplies on monthly basis
Step seven:The final step
All you need to do now is to get in touch with mutual fund or your agent /
broker and start investing. Reap the rewards in the years to come. Mutual
fund is suitable for every kind of investor- whether taking an investor or
retiring, conservative or risk taking growth oriented or income earning.
8/8/2019 AJAY Reliance Money 30
33/95
MUTUAL FUNDS CLASSIFICATION
There are many types of mutual funds available to the investor however
theses different types funs can be grouped into certain classification for
better understanding .from investors perspective there basic
classifications & that are as follows:
OPEN-END VS CLOSE END FUNDS
LOAD AND NO LOAD FUNDS
TAX EXEMPT VS NON TAX EXEMPT FUNDS
OPEN END VS CLOSE END FUND:
An OPEN END FUND is one that has unit available for sale and purchase at
all times an investor can buy or redeem units from the fund itself at a
price based on the net assest value (NAV) per unit. NAV per unit is
obtained by dividing the amount of market value of the funds assest by
number of unit outstanding the number of unit outstanding goes up or
down every time the fund issue new units or repurchase existing units. in
other words the unit capital of an open end mutual fund is not fixed but
variable .note that an open end fund is not obliged to keep selling /
issuing new units at all times, and, many successful funds stop issuing
further subscriptions from new investors after they reach ascertain size
and think they can not manage a larger fund without adversely affecting
profitability.
Unlike an open end funds the unit cap[ital of a close end fixed ,as it
makes a one time sale of affixed number of unit later on unlike open
end funs , close end funds do not allow investors to buy or redeem units
directly from the funds .however to provide the much needed liquidity to
investors many close end funds get themselves listed on a stock
8/8/2019 AJAY Reliance Money 30
34/95
exchange . trending through stock exchange enable investors to buy or
sell units of a close end mutual fund from each other , through a stock
broker in the same fashion as buying or selling shares of a company.
LOAD AND NON LOAD FUNDS:
Marketing of mutual funds schemes involves initial expense. These
expenses may be recovered from the investors n different ways at
different times. Three usual ways in which funds sales expenses may be
recovered from the investors are. At the time of investors entry in to the
fund/scheme, by deducting a specific amount from his initial contribution
or By changing the funds/scheme with a fixed amount each year, during
the stated number of years, or .At the time of investor exit from the
fund/scheme, by deducting a specified amount from the redemption
proceeds payable to investor
These charges made by the fund manager t the investor to cover
distributing/sales/marketing expenses are often called load. In
IndiaSEBI has defined aload as the one time fee by the investorto allow the fund to meet initial issue expenses including
brokers/agent/distributers/commisson, advertising and
marketing expenses. The load charged to the investor at the time of his
entry is called front-end and entry load the load amount charged to the
scheme over a period of time is called a deferred load. The load that the
investor pay at the of exit is called a back-end or exit load. Funds that
charge front end, back-end or deferred load are load funds. Funds that
make no such charges or load for sale expenses are called non load
fund.
TAX-EXEMPT 0R NON- TAX EXEMPT-
Generally, when a fund invests in tax-exempt securities, it is called a tax-
exempt fund. In India, after the 1999 union government budget, all of the
8/8/2019 AJAY Reliance Money 30
35/95
dividend income received from any of the mutual funds is tax free in the
hands of the investor. However, funds other than equity funds have to
pay a distribution tax, before distributing income to investor. In other
words, equity mutual fund scheme are tax-exempt investment avenues,while other funds are taxable distributable income. While Indian mutual
funds currently offer tax-free income, any capital gains arising out of sale
of funds units are taxable. Hence, classification of mutual funds from tax
ability prospective has great significance for investors.
8/8/2019 AJAY Reliance Money 30
36/95
SCHEMES OF RELIANCE MUTUAL FUND
There are various schemes provided by RELIANCE Mutual Fund
but as far my study is concerned that are undertaken foe further
study is as follows:
RELIANCE GROWTH PLAN
RELIANCE LIQUID PLAN
RELIANCE VISION PLAN
RELIANCE TAX SAVER PLAN
RELIANCE POWER PLAN
RELIANCE SIP PLAN
RELIANCE GROWTH PLAN
INVESTMENT PATTERN:
TYPE APPOX.
ALLOCATION
Equity and equity related securities
Debt, money market securities and cash
Upto 65%
Upto35%
8/8/2019 AJAY Reliance Money 30
37/95
CHANGE IN INVESTMENT PATTERN
Subject to the regulations, the assets allocation pattern indicated
above may change from time to time, keeping in view market
conditions, market opportunities, applicable regulation and
political and economic factors. It must be clearly understood that
the percentage stated above are only indicative and not absolute
and that they can vary substantially depending upon the
perception of the investment manager , the intition being at all
times to seek to protect the interest of the unit holders. Such
changes in the investment pattern will be for shot term.
INVESTMENT STRATEGY:
Approach to stock picking will be the dominant theme in stock selection
for the Scheme. The AMC in selecting scrip will focus on the fundamentals
of the business, the industry structure, the quality of management,
sensitivity to economic factors, the financial strength of the company andthe key earnings drivers.
Risk will be reduced through adequate diversification of the portfolio. For
a corpus size of upto Rs.100 crores, the AMC intends to invest in about
20-30 scrips. Diversification will also be achieved by spreading the
investments over a diverse range of industries/sectors. The Scheme,
under most market conditions does not intend investing in illiquid equity
and equity related securities. The Scheme may however, invest in
unlisted and/or privately placed and/or unrated debt securities subject to
the limits indicated above, from issuers of repute and sound financial
standing. If investment is made in unrated debt securities, the approval of
the Board of the AMC shall be obtained, as per the Regulations. Subject to
the limits indicated above for investment in debt securities and money
market instruments, the Fund may invest a part of the portfolio in
8/8/2019 AJAY Reliance Money 30
38/95
securities issued and/or guaranteed by State and Central Governments.
The Fund may also invest in Securities of issuers supported by
Government of India or State Governments subject to such securities
satisfying the criteria relating to rating etc.
Portfolio Turnover:
The portfolio turnover shall generally not exceed 75% per year, once the
entire corpus is invested.
. Growth Option
The Scheme will not declare any dividends under this option. The income
earned by the Scheme will remain reinvested in the Scheme and will be
reflected in the Net Asset Value.
Dividend Option
The Trustee may approve the distribution of dividend by AMC either half
yearly or yearly out of the net surplus under this Option. The remaining
net surplus after considering the dividend and tax, if any, payable there
on will be ploughed back in the Scheme and be reflected in the NAV.
As per the Finance Act 1999, any income received from a mutual fund
specified under clause (23D) of section 10 of Income Tax Act, 1961
is exempt from tax. This amendment will apply in relation to the
Assessment Year 2000-2001 and the subsequent years. The income
distributed by the Fund after April 1,1999 will, accordingly, is exempt
from income tax in the hands of the recipient under the above provisions.
FUNDAMENTAL ATTRIBUTES OF GROWTH PLAN
Type : The growth plan is the open end equity plan
8/8/2019 AJAY Reliance Money 30
39/95
Investment Pattern: Equity and equity related instruments upto
65 % & debt money market and cash upto 35%.
Fund objective: To seek to generate long term capital
appreciation from a portfolio that is invested predominantly in
equity and equity related securities.
Investment horizon: Suitable for the investors who seek to invest
in equity securities.
Net assets value: Calculated & declared on every business day.
Systematic Investment Plan: monthly minimum rupees Rs. 1000
plus 4 post dated cheques for a minimum of Rs. 500 each.
Switch Facility: switch facility is avaible in this plan.
Nomination facility: nomination facility is also available in this
plan.
TERMS OF THE SCHEME
Application amount: Minimum Rs.5, 000, additional investments
in multiples of Rs. 500. Under monthly SIP the minimum investment
is Rs.3,000 and Rs.500 per month for a block of 6 months. Under
Quarterly SIP the minimum investment is Rs.3,000 and Rs.1,500
per quarter for at least 2 quarters.
Entry load: Entry load of 1.50%
8/8/2019 AJAY Reliance Money 30
40/95
Repurchase / Redemption: units will be offered for sale and
redemption can be done on every business day. Redemption
request can be made for any amount for Rs. 500 or more.
Redemption price : At NAV based price.
Dispatch of Redemption proceeds: Under normal circumstances
with in three business days of acceptance of redemption request..
Recurring fees & expenses:
Investment management
expenses
1.25%
Other recurring expenses 1.25%
Total 2.50%
TERMS OF THE SCHEMES
Application amount: Minimum Rs.5,000 per application and a minimum
additional amount in Multiples of Rs 500 thereafter. .
Load structure: Entry Load: Nil
Exit Load: Nil
Further, the Trustee reserves the right to modify/alter the load
structure under the Plan and may decide to charge an entry
load/exit load or a combination of entry/exit loads or introduce a
differential load structure on the Units subscribed/redeemed,
subject to a maximum as prescribed under the Regulations.
Redemption price: . At applicable NAV subject to exit
load, if any, computed as follows: Redemption / Repurchase Price
Recurring expenses
Investment management expenses 1.00%
Other recurring expenses .50%
8/8/2019 AJAY Reliance Money 30
41/95
Total 1.50%
FUNDAMENTAL ATTRIBUTES OF RELIANCE VISION FUND
Type: open-ended fund.
Investment pattern: equity & equity related instruments in
companies upto 75% in & debt , money market and cash upto
25% .
Fund objective: To seek to generate long term capital appreciation
from a portfolio that is invested predominantly in equity and equity
related securities of companies.
Investment horizon: sect oral f und , suitable for investors
seeking an exposure to the various sector.
Net assets value; calculated and declared on every business day.
Systematic Investment Plan : monthly minimum rupees Rs.
1000 plus 4post dated cheques for a minimum of Rs. 500 each.
Quarterly minimum Rs 1000 plus 4 post-dated cheque for a
minimum of Rs 1000 each.
Switch Facility: switch facility is available in this plan.
Nomination Facility: nomination facility is also available in
this plan.
8/8/2019 AJAY Reliance Money 30
42/95
8/8/2019 AJAY Reliance Money 30
43/95
Income
Growth
Balanced
Liquid/ money market
Gilt
ELSS
117
120
35
32
31
47
Total 382
The investor has various alternatives avenue of investment for the saving
the major avenues for the investment among corporate securities are
Equity shares, preference shares & debentures. As an investors want to
Make such type of portfolio in which they can get higher return with
minimum risk. Now a days Indian mutual fund industry has already
started opening up many of exciting investment opportunities to Indian
Investors. During past years there is a major change in Indian mutual
Market. Many new players have launched their new schemes in the
market. But this study is confined with schemes of mutual fund provided
by Reliance Mutual Fund.
8/8/2019 AJAY Reliance Money 30
44/95
INDIAN STOCK MARKET OVERVIEW
The Bombay stock exchanges (BSE) and the NationalStock Exchange of India Ltd (NSE) are the two
primary exchange in India. In addition, there are 28
Regional Stock Exchanges However, the BSE and
NSE have established themselves as the two leading
exchanges and account for about 80% of the equity
volume traded in India.
The average daily turnover at the exchanges has increased from Rs. 851
crore in 1997-98 to Rs. 1,284 crore in 1998-99 and further to Re. 2273
crore in 1999-2000 (April- August 1999). NSE has around 1500 shares
listed with a total market capitalization of around Rs. 921500 crore (Rs.
9215 Bln). The BSE has over 6000 stocks listed and has a market
capitalization of around Rs. 968000 crore (9680 Bln). Most key stocks are
traded on both the exchanges and hence the investor could buy them on
either exchange. Both exchanges have a different settlement cycle, which
allows investors to shift their positions on the bourse. The primary index
of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50
index (Nifty) which consists of fifty stocks.
The BSE Sensex is the older and more widely followed index. Both
these indices are calculated on the basis of market capitalization and
contain the heavily traded shares from key sectors. The markets are
closed on Saturdays and Sundays. Both the exchanges have switched
over from the open outcry trading system to a fully automated
computerized mode of trading known as BOLT (BSE On Line Trading) and
NEAT (National Exchange Automated Trading) System. It facilitates more
8/8/2019 AJAY Reliance Money 30
45/95
efficient processing, automatic order matching, faster execution of trades
and transparency.
The Scripts traded on the BSE have been classified into A, B1, B2, C,F and Z groups. The A group shares represent those, which are in the
carry forward system (Badla). The F group represents the debt market
(fixed income securities) segment. The Z group scripts are the
blacklisted companies. The C group covers the odd lot secutities in A,
B1& B2 groups and Rights renunciations. The key regulator governing
Stock Exchanges, Brokers, Depositories, Depository participants, Mutual
Funds, FIIs and other participants in Indian secondary and primary
market is the Securities and Exchange Board of India (SEBI) Ltd.
8/8/2019 AJAY Reliance Money 30
46/95
ABOUT NSE
The National Stock Exchange of India Limited has genesis in the report of the High
Powered Study Group on Establishment of New Stock Exchanges, which recommended
promotion of a National Stock Exchange by financial institutions (FIs) to provide access
to investors from all across the country on an equal footing. Based on the
recommendations, NSE was promoted by leading Financial Institutions at the behest of
the Government of India and was incorporated in November 1992 as a tax-paying
company unlike other stock exchanges in the country.
On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,
1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)
segment in June 1994. The Capital Market (Equities) segment commenced operations in
November 1994 and operations in Derivatives segment commenced in June 2000.
NSE Group
NSCCL
IISL NSE.IT
NSDL DotEx Intl. Ltd.
http://www.nseindia.com/content/us/us_dotex.htmhttp://www.nseindia.com/content/us/us_nsdl.htmhttp://www.nseindia.com/content/us/us_nseit.htmhttp://www.nseindia.com/content/us/us_iisl.htmhttp://www.nseindia.com/content/us/us_nsccl.htm8/8/2019 AJAY Reliance Money 30
47/95
ABOUT BSE
The Stock Exchange, Mumbai, popularly known as "BSE" was established
in 1875 as "The Native Share and Stock Brokers Association". It is
the oldest one in Asia, even older than the Tokyo Stock Exchange, which
was established in 1878. It is a voluntary non-profit making Association of
Persons (AOP) and is currently engaged in the process of converting itself
into demutualised and corporate entity. It has evolved over the years into
its present status as the premier Stock Exchange in the country. It is the
first Stock Exchange in the Country to have obtained permanent
recognition in 1956 from the Govt. of India under the Securities Contracts
(Regulation) Act, 1956.
The Exchange, while providing an efficient and transparent market for
trading in securities, debt and derivatives upholds the interests of the
investors and ensures redressal of their grievances whether against the
companies or its own member-brokers. It also strives to educate and
enlighten the investors by conducting investor education programs and
making available to them necessary informative inputs.
A Governing Board having 20 directors is the apex body, which decides
the policies and regulates the affairs of the Exchange. The Governing
Board consists of 9 elected directors, who are from the broking
community (one third of them retire ever year by rotation), three SEBI
nominees, six public representatives and an Executive Director & Chief
Executive Officer and a Chief Operating Officer.
The Executive Director as the Chief Executive Officer is responsible for the
day-to-day administration of the Exchange and he is assisted by the Chief
Operating Officer and other Heads of Departments.
8/8/2019 AJAY Reliance Money 30
48/95
The Exchange has inserted new Rule No.126 A in its Rules, Bye-laws &
Regulations pertaining to constitution of the Executive Committee of the
Exchange. Accordingly, an Executive Committee, consisting of three
elected directors, three SEBI nominees or public representatives,Executive Director & CEO and Chief Operating Officer has been
constituted. The Committee considers judicial & quasi matters in which
the Governing Board has powers as an Appellate Authority, matters
regarding annulment of transactions, admission, continuance and
suspension of member-brokers, declaration of a member-broker as
defaulter, norms, procedures and other matters relating to arbitration,
fees, deposits, margins and other monies payable by the member brokers
to the Exchange, etc.
8/8/2019 AJAY Reliance Money 30
49/95
INDIAN SCENARIO
Strengths
The `do-it-yourself' framework of online share trading offers retail
investors the three benefits of transparency, access and efficiency.
Paperwork diminishes significantly, and no more painful trips to your
broker to check if everything's in order. Online trading has made it
possible to universalize access to retail investors. This was earlier very
difficult, as the cost of servicing often-outweighed transaction volumes.
Online brokerage ranges between 0.05-0.20 per cent of the value of
transactions for non-delivery-based trades, and between 0.25-0.95 percent for delivery-based trades. Once major investments in online
infrastructure are over and done with - and with the economies of scale
coming into play - it is expected that brokerage rates would head further
downwards.
Access to online trading and latest financial happenings, apart from
quotes and unbiased investment analyses, all consolidate into a value-added product mix in tandem with evolving markets that are freer and
fairer. The Net result: An inquisitive, informed and demanding investor.
Today's investor is more involved in managing his or her assets and
analyzing a vast array of investment options. Technology and today's
enabled investor have, in turn, driven competition, resulting in reduced
costs of trading, transparency in dealings, and pricing info that is accurate
and real-time. More and more investors now want to know how their
trades are executed, and whether they have received the best possible
price. Critical components of execution quality include the prices at which
orders were executed as well as the
speed of execution. The quality of execution, in turn, hinges on efficient
order routing. We owe this to our investor fraternity.
8/8/2019 AJAY Reliance Money 30
50/95
Weaknesses
Every thing in the world has a flip side to it - Transaction velocity is
crucial. And more often than not, connections are lousy. There's also a
degree of investor skepticism about online payment and settlement
mechanisms in spite of all the encryption and fire walling brought into
play. Time and technology will soon assuage these concerns, which hark
back to the `physical' days.
The three main technology obstacles which have prevented Internet
broking from taking off are:
Lack of Internet penetration
Bandwidth infrastructure
Poor quality of ISP infrastructure.
Opportunities
You have some money to dabble with. Trading shares on BSE/NSE has
always been your dream. When will you ever find the time? And besides,
the hassle of finding a broker is not easy. This is your main opportunity.
Realizing there is untapped market of investors who want to be able to
execute their own trades when it suits them, brokers have taken their
trading rooms to the Internet. Known as online brokers, they allow you to
buy and sell shares via Internet.
There are 2 types of online trading service: discount brokers and full
service online broker. Discount online brokers allow you to trade via
Internet at reduced rates. Some provide quality research, other dont. Full
service online brokerage is linked to existing brokerages. These brokers
allow their clients to place online orders with the option of talking/
chatting to brokers if advice is needed. Brokerage rates here are higher.
8/8/2019 AJAY Reliance Money 30
51/95
5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit
securities.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of
the online broking sites in India.
And daily trading turnover is estimated in the vicinity of 0.75 per cent of
the combined BSE and NSE daily turnover of about RS 11,000 crore!!!
The point is, there's tremendous scope for growth. Especially when you
consider the US, where trading over the Net accounts for about 55 per
cent of the total volumes. And, I believe, in some Asian markets the
figures as high as 70 per cent.
Threats
On to some threat perception - Domestic funds, foreign institutional
investors and operators comprise the three main market constituents.
And all three include term investors as well as opportunists in their
pecking order. Some, for instance, hitch their fate with what the FIIs are
up to. All this spells spurting volumes. But nobody gives a damn about
the resultant volatility. And some, not all, offer free investment advice
over the Net to lure rookie investors with misleading information. Prices of
scripts can also be influenced to the advantage of vested interests,
courtesy the Net. Unlike in the US, stockbrokers out here willingly (or
under the force of circumstance) assume the role of `advisors', sans the
neutral, non-vested stance.
Hurdles for online share trading
1. Internet fraud
In India, we see this kind of frauds happening in different way due to
nature of our society. Here when you talk to broker's staff while buying or
8/8/2019 AJAY Reliance Money 30
52/95
selling, he will usually advise you to buy share which he has bought and
plans to dump when price goes up.
We have seen enough of PUMP and DUMP even without help of internet in
cases of Harshad Mehta boom of 1992 and Ketan Parekh boom of 2000
(he even had cult following with Index of 10 shares called K-10).
Today lot of investors depending on TV channel for recommendation
about stocks to sell, or buy or hold. Channels like CNBS offer array of
experts from economist to brokers to analyst. Most of these people have
vested interest in stocks they recommend and promote.
One of the most common forms of securities fraud on the Internet
involves an imposter who attempts to manipulate the price of a stock by
disseminating phony press releases or information, or creating phony
websites. A recent example of this scheme is the hoax perpetrated
against US based, PairGain Technologies.
2. Volatility of Indias Stock Markets
Recent market developments have once more focused attention on the
volatility that has come to characterise Indias stock markets.
Movements in the Sensex during the two years have clearly been driven
by the behaviour of foreign institutional investors (FIIs), who were
responsible for net equity purchases of as much as $6.6 and $8.5 billion
respectively in 2005 and 2006. These figures compare with a peak level ofnet purchases of $3.1 billion as far back as 1996 and net investments by
FIIs of just $753 million in 2002. In sum, the sudden FII interest in Indian
markets in the last two years account for the two bouts of medium-term
buoyancy that the Sensex recently displayed.
Given the presence of foreign institutional investors in Sensex companies
and their active trading behaviour, their role in determining share price
8/8/2019 AJAY Reliance Money 30
53/95
movements must be considerable. Indian stock markets are known to be
narrow and shallow in the sense that there are few companies whose
shares are actively traded. Thus, although there are more than 4700
companies listed on the stock exchange, the BSE Sensex incorporates just30 companies, trading in whose shares is seen as indicative of market
activity. This shallowness would also mean that the effects of FII activity
would be exaggerated by the influence their behaviour has on other retail
investors, who, in herd-like fashion tend to follow the FIIs when making
their investment decisions.
REQUIRED DOCUMENTS
DOCUMENTS:Pan card is must.
Photo ID Proof Residence Proof
Passport Pan Card Driving Licence Voter's ID
Passport(valid) Voter's ID Driving Licence(valid) Bank Statement(latest)
Telephone Bill(latest) Electricity Bill(latest) Ration Card Flat Maintenance Bill(latest) Insurance Policy(latest)
Leave-Licence/PurchaseAgreement(latest)
3 Photographs.
1 Cheque of Rs.(750+500)/=In Favour of Reliance Money Ltd.or1 Cheque of Rs.(750+2500)/=In Favour of Reliance money Ltd.
8/8/2019 AJAY Reliance Money 30
54/95
Competitive Analysis
The Major competitors are:
5paisa.com
KotakStreet.com
IndiaBulls.com
ICICIDirect.com
HDFCsec.com
5paisa
Company Background
Indiainfoline was founded in 1995 and was positioned as a research firmIn 2000 e-broking was started under the brand name of 5 paisa.com.Apart from offering online trading in stock market the company offersmutual funds online.It also acts as a distributor of various financial services i.e. GOI securities,Company Fixed Deposits, Insurance.Limited ground network, present in 20 Cities
Online Account Types
Investor Terminal : Investors / Students
Trader Terminal : Day Traders / HNIs
PRICING FOR RETAIL CLIENTS
8/8/2019 AJAY Reliance Money 30
55/95
Investor Terminal
Account Opening : Rs 500
Demat 1st Yr : Rs 250Initial Margin : Rs 2500(Compulsory)Min Margin Retainable : Rs 1000Brokerage :
Trading 0.10% each side + STDelivery 0.50% each side + ST
PRICING FOR HNI CLIENTS
Trader Terminal
Account Opening : Rs 500
Demat 1st Yr : Rs 250
Initial Margin : Rs 5000(Compulsory)
Min Margin Retainable : Rs 1000
Brokerage :Trading 0.10% each side + STDelivery 0.50% each side + ST
( Negotiable to 0.05% each side & 0.25%)
Account Access ChargesMonthly Rs 800, adjustable against BrokerageYearly Rs 8000, adjustable against brokerage
8/8/2019 AJAY Reliance Money 30
56/95
Deal Clinchers v/s 5 Paisa
Company Background
Not having a very positive image, relatively new in the
broking arena, limited network
Downtime
Recent past 5 paisa Trader Terminal (T.T) is experiencing high
frequency downtime between 3 3:30 p.m due to server load ( as their
T.T is feature heavy compared to Speetrade charting)
Manual Accounting
The 5 paisa accounting system is manual, Online fund
transfer through bank is not credited instantly.
Limit is provided EOD for shares sold from DP, or call
Similarly limit released for shares sold under BTST is manual
Delay in receiving pay-out of clear funds from trading to Bank Account
Min Account Balance
Concept of Min Rs 1,000 to be maintained in form of cash /
securities to keep account active. This can be withdrawn only on closureof account.
8/8/2019 AJAY Reliance Money 30
57/95
KOTAKSECURITIES
Company Background
Kotak Securities is the sister concern of Kotak Mahindra bank. KotakSecurities limited is a joint venture between Kotak Mahindra Bank andGoldman Sachs.
Online Account Types
Kotak Gateway Account : KEAT desktop version, Sms chargeRs 100, KEAT premium at RS 500 pm, Min margin Rs 20000.
Kotak Value Account: KEAT desktop version, Sms charge Rs 75,KEAT premium at Rs 500 pm, Min margin Rs 5 lakhs.
Kotak Privilege Circle Account: KEAT premium free, Sms free,Min margin Rs 10 lakhs
PRICING OF KOTAK
Account Opening : Rs 550 with kotak savings account, Rs 750with margin of Rs 50000, otherwise Rs 1200.
Demat : Rs 30 pm. Min Margin Retainable : Rs 1000. Brokerage Slab Wise : Higher the volume, lower the brokerage.
Even older customers (on 0.25% & 0.40%) have been moved tothe slab wise structure wef 1/4/2004.
Slab Structure of Kotak
Delivery volume pm Brokerage
< 1 lakh 0.59% Gateway Acc.1 lakh 5 lakhs 0.55%5 lakhs 10 lakhs 0.45%10 lakhs 20 lakhs 0.36% Value Acc.20 lakhs 60 lakhs 0.27%60 lakh 2 Cr 0.23%> 2 Cr 0.18% Privilege Circle
Delivery volume pm Brokerage Square off
8/8/2019 AJAY Reliance Money 30
58/95
25 lakhs 2 Cr 0.05% both sides Value acc.2 Cr 5 Cr 0.04% both sides> 5 Cr 0.03% both sides Privilege acc.
Derivative Brokerage Slab
Delivery volume pm Daily Sq. up Settlement< 2 Cr 0.07% both sides 0.09% both sides2 5.5 Cr 0.045% 0.073% 5.5 Cr 10 Cr 0.036% 0.046% 10 Cr 25 Cr 0.027% 0.046% > 25 Cr 0.023% 0.032%
Deal Clinchers v/s Kotakstreet
Rigid Account Opening TermsNo Flexibility of A/c opening charges (Rs 550) + Compulsory
margin Rs 5000/-No Customization of commercial Terms
No Flexibility in Leverage Dependent on Type of Account ( 4to 6 times only)
No flexibility in Brokerage, driven by slab structureMany Other Charges
Rs 30 p.m towards DP AMC chargesDP incoming charges extra, 0.02%Rs 1,000 as retainable Margin to keep account activeRs 25 per call after 20 calls for the month
Restricted Access to Terminal Like productKEAT Desktop restricted distribution on payment of Rs 500,
Non refundable
8/8/2019 AJAY Reliance Money 30
59/95
INDIABULLS
Company Background
IndiaBulls is a retail financial services company present in 70 locations
covering 62 cities. It offers a full range of financial services and
Products ranging from Equities to Insurance. 450 + Relationship
Managers who act as personal financial advisors
Online Account Type
Signature Account : Plain Vanilla Account with focus on EquityAnalysis. The equity analysis is a paid service even for A/c holders
Power Indiabulls: Account with sophisticated trading tools, low
commissions and priority access to R.M
Pricing of IB Accounts
Signature Account
Account Opening : Rs 250
Demat: Rs 200 if POA is signed, No AMC for this DP
Initial Margin : NIL
Brokerage : Negotiable
Power IndiaBulls
Account Opening : Rs 750Demat: Rs 200 if POA is signed, No AMC for this DP
Initial Margin : NIL
Brokerage : Negotiable.
8/8/2019 AJAY Reliance Money 30
60/95
Deal Clinchers v/s IndiaBulls
POA for Clients DMAT
All shares held by client trading with IB are moved to IB Pool
Account and the same is shown as a reflection in client DP account.
Charges are levied to move shares from IB pool Account to client DP
account
Paid Research Services
Access to an research even for an IB trading account holder is
charged a min of Rs 500 a month
Margin Funding hoax
The interest on funding starts on leveraged delivery trades
from T+1 day itself @21% p.a, on a daily basis
The role of Relationship Manager
Each RM is looked upon as a revenue generator and he gets a
% on business generated from client. This can lead to over leveraged
(Interest) & high frequency(Brokerage) trading, which may not be in thebest interest of the client.
8/8/2019 AJAY Reliance Money 30
61/95
ICICI Direct
Company Background
ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an
Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank
Limited
Account Types
ICICI Direct e-invest Account : Plain Vanilla Account with focus on 3
in 1 advantage. Differentiated in services within the account
1.Cash on spot
2.MarginPlus
Premium Trading interface of ICICIDirect Link is given to DBC partners
and HNIs
Account Opening : Rs 750
Schemes : For short periods Rs 750 is refundable against brokerage
generated in a qtr. These schemes are introduced 3-4 times a year.
Demat: NIL, 1st year charges included in Account Opening Plus a facility
to open additional 4 DPs without 1st yr AMC
Initial Margin : Nil
Brokerage : All brokerage is inclusive of stamp duty and exclusive of
other taxes.
Delivery Vol per qtr Brokerage * Square Vol off p mBrokerage **
< 10 lakhs 0.75%
10 lakhs - 25 lakhs 0.70%
25 lakhs -50 lakhs 0.55%
50 lakhs 1 Cr 0.45%
1 Cr 2 Cr 0.35%
2 Cr 5 Cr 0.30%
8/8/2019 AJAY Reliance Money 30
62/95
> 5 Cr 0.25%
Deal Clinchers v/s ICICIDirect
Poor online Interface
Slow website interface with no real-time quotes creates a
dissatisfaction among high frequency traders
Margin trading restriction
The margin trading system is available up to 2:45 p.m, with
outstanding net positions under margin segment automatically squared
off at any time between 2:45 3:30 p.m. Thus no control of square offprice.
Morning Trades Issue
Being one of the websites with largest no of after hour orders
which are pushed 1st thing in the morning, creates a choking of orders to
the exchange, causes delay of confirmations for new order placed during
the early morning trades
Restriction of BTST
The sale of shares purchased is restricted to T+1 day and is
not permitted on T+2 Day.
No leverage for Delivery trades
Delivery is restricted to the total money allocated into the
trading account.
No flexibility on leverage on Intra-day trades
The leverage of 4 times is available for intra- day trades.
Restriction of Bank Account
The choice of bank is restricted to ICICI Bank.
Higher Brokerage rates with slabs
The delivery brokerage is pegged at 0.75% and trading at
0.10% each side, this makes is very unviable for customers dealing in
8/8/2019 AJAY Reliance Money 30
63/95
large volumes. Although progressively the delivery and trading brokerage
reduce as volumes go up.
HDFC SECURITIES
Company Background
HDFC Securities Ltd, is promoted by the HDFC Bank, HDFC and Chase
Capital Capital Partners and their associates. Pioneers in setting
up Dial-a-share services with the largest team of Tele-brokers
Online Account Type
HDFC Online Trading A/c : Plain Vanilla Account with focus on 3 in 1advantage
Pricing of HDFC Account
Account Opening : Rs 750
Demat: NIL, 1st year charges included in Account Opening
Initial Margin : Rs 5000/- for non HDFC Bank customers ( AQB)
Brokerage :
Trading 0.15%* each side + ST
Delivery 0.50%** each side + ST
* Rs 25 Min Brokerage per transaction
** Rs 8 Min Brokerage per transaction
Deal Clinchers v/s HDFC Securities
Poor online Interface
Apart from having no product to cater to Day-Traders, the
hdfcsec.com website is plagued with downtime. The same is currently
being revamped.
Lack of focus on Broking
The core business of HDFC is Housing Finance and that of
HDFC Bank is Banking. Broking as a business is a small part of the
portfolio of financial services and hence the commitment to resources is
limited.
8/8/2019 AJAY Reliance Money 30
64/95
No Leverage
No leverage is available to clients even for Intra-Day trades,
effectively all clients are on cash and carry system.
ANALYSIS OF THE QUESTIONNAIRE
In which of these Financial Instruments do you invest into?
Frequency PercentValid
PercentCumulative
Percent
Valid Shares 70 67.3 67.3 67.3MutualFunds
19 18.3 18.3 85.6
Bonds 6 5.8 5.8 91.3
Others 9 8.7 8.7 100.0Total 104 100.0 100.0
Shares Mutual Funds Bonds Others
0
10
20
30
40
50
60
70
Frequency
70
19
69
Comments- This question was meant to closely study the pulse andinvestment pattern in the stock market. It is clearly evident that 70% ofthe sample size prefer to invest in the share market over other financialinstruments.
8/8/2019 AJAY Reliance Money 30
65/95
Which type of trading do you prefer?
Frequency PercentValid
PercentCumulative
Percent
Valid Online 77 74.0 74.0 74.0Offline 16 15.4 15.4 89.4NotApplicable
11 10.6 10.6 100.0
Total 104 100.0 100.0
Online
Offline
Not Applicable
0 20 40 60 80
Frequency
77
16
11
Comments- The result shows that online trading has taken the driversseat over the conventional trading ever since internet triggered arevolution across the globe.
8/8/2019 AJAY Reliance Money 30
66/95
If you prefer online trading then the reasons for it?
Frequency PercentValid
PercentCumulative
Percent
Valid Privacy 20 19.2 22.7 22.7UserFriendlyand timesaving
27 26.0 30.7 53.4
Convenience
20 19.2 22.7 76.1
All theabove
21 20.2 23.9 100.0
Total 88 84.6 100.0Missing System 16 15.4Total 104 100.0
Privacy User Friendly andtime saving
Convenience All the above
0
5
10
15
20
25
30
Frequency
20
27
2021
Comments- The preferred choice of online trading itself is a proven factthat most of them find it user friendly, time saving, convenient etc.Hence it does not come as a surprise as 20% of the sample size preferredall the three options.
8/8/2019 AJAY Reliance Money 30
67/95
What factors motivates you to invest in securities?
Frequency PercentValid
PercentCumulative
Percent
Valid New IPO's 25 24.0 24.0 24.0Entry ofFII's
9 8.7 8.7 32.7
Morereturns inless time
63 60.6 60.6 93.3
Others 7 6.7 6.7 100.0Total 104 100.0 100.0
25
9
63
7
New IPO's
Entry of FII's
More returns inless time
Others
Comments This question was meant to understand why more andmore investors have started creeping in the share market as neverbefore. About 3/5th of the sample size believed that there is a possibility inmultiplying their money within a short period of time and about 1/4th ofthe sample population is driven by the IPOs issued by potentialcompanies.
8/8/2019 AJAY Reliance Money 30
68/95
Does online trading motivate you to deal in securities?
Frequency PercentValid
PercentCumulative
Percent
Valid
Yes84 80.8 80.8 80.8
No 20 19.2 19.2 100.0Total 104 100.0 100.0
84
20
Yes
No
Comments-It is clear and transparent that online trading has becomemore convenient way to deal in securities as majority (as much as 85% )of the sample population voted for it.
8/8/2019 AJAY Reliance Money 30
69/95
Have you heard about Reliance money?
Frequency PercentValid
PercentCumulative
Percent
Valid Yes 81 77.9 77.9 77.9No 18 17.3 17.3 95.23 5 4.8 4.8 100.0
Total 104 100.0 100.0
81
18
5
Yes
No
3
Comments Out of the 100 people surveyed, Reliance Money has itsslice of share as it is familiar and popular among 80% of the samplepopulation. Hence Reliance Money is a well heard off name among theinvestors.
8/8/2019 AJAY Reliance Money 30
70/95
Which brokerage firm do you prefer for online trading?
Frequency PercentValid
PercentCumulative
Percent
Valid ICICIDirect
14 13.5 13.5 13.5
Reliancemoney
27 26.0 26.0 39.4
Indiabulls
23 22.1 22.1 61.5
Kotak
Securities
21 20.2 20.2 81.7
5 Paisa 18 17.3 17.3 99.07 1 1.0 1.0 100.0Total 104 100.0 100.0
ICICI Direct Sharekhan Indiabulls Kotak
Securities
5 Paisa 7
0
5
10
15
20
25
30
Frequency
14
27
23
21
18
1
Comments- This question was framed to understand the effectiveness of
Reliance money among its competitors. The push and pull factor worked
out well for Reliance Money as it grabbed 27% of the market share out of
8/8/2019 AJAY Reliance Money 30
71/95
the 100 people surveyed. But the survey also reveals an interesting point
that there is not much variation among the players in terms of investors
consideration for a brokerage firm.
What differentiates your share trading company fromothers?
Frequency PercentValid
PercentCumulative
Percent
Valid Brokerage 32 30.8 30.8 30.8ResearchReport
51 49.0 49.0 79.8
Dial upTrade
facility
8 7.7 7.7 87.5
Exposure 3 2.9 2.9 90.4Accountopeningcharges
7 6.7 6.7 97.1
Others 3 2.9 2.9 100.0Total 104 100.0 100.0
BrokerageResearchReport
Dial upTradefacilityExposure
Account openingchargesOthers
0
10
20
30
40
50
60
Frequency
32
51
8
37
3
Comments- This question was framed to read the mind of an investor.The survey reveals that investors have become more analytical andrationale over the period of time as they have compelled themselves totake decisions on the basis of pre and post market research reportsoffered to them at regular intervals. Also to some extent investors look in
8/8/2019 AJAY Reliance Money 30
72/95
for the brokerages charged by the trading firm while other options werehardly considered as pre requisites for online trading.
How often do you trade?
Frequency PercentValid
PercentCumulative
Percent
Valid Daily 53 51.0 51.0 51.0Weekly 31 29.8 29.8 80.8Monthly 7 6.7 6.7 87.5Yearly 13 12.5 12.5 100.0
Total 104 100.0 100.0
Daily Weekly Monthly Yearly
0
10
20
30
40
50
60
Frequency
53
31
713
Comments- This shows how stock market has swept the nation as a
whole. Most of the investors prefer daily and weekly trading to keep a
watch on the volatility of the stock market so as to take decisions
accordingly.
8/8/2019 AJAY Reliance Money 30
73/95
In which category does your income fall?(Per month in Rs)
Frequency PercentValid
PercentCumulative
Percent
Valid 0-15000 26 25.0 25.0 25.015000-35000 61 58.7 58.7 83.735000-60000 17 16.3 16.3 100.0
Total 104 100.0 100.0
0-15000
15000-35000
35000-60000
0 10 20 30 40 50 60 70
Frequency
17
61
26
Comments- People from different categories of income group have takentheir chance to invest in the booming stock market. The upper middle andmiddle class (income category ranging from 15000 35000) people havetaken the primary seat as far as the number of people involved in tradingis concerned.
8/8/2019 AJAY Reliance Money 30
74/95
What percentage of your earnings do you invest in sharetrading?
Frequency PercentValid
PercentCumulative
Percent
Valid Up to10%
39 37.5 37.5 37.5
Up to25%
33 31.7 31.7 69.2
Up to50%
13 12.5 12.5 81.7
Above50%
14 13.5 13.5 95.2
5 5 4.8 4.8 100.0Total 104 100.0 100.0
Up to 10% Up to 25% Up to 50% Above 50%
0
10
20
30
40
Frequency
40
34
15 15
8/8/2019 AJAY Reliance Money 30
75/95
8/8/2019 AJAY Reliance Money 30
76/95
(i) Rank the attribute "customer service" of a share tradingcompany?
Frequency PercentValid
PercentCumulative
Percent
Valid mostImportant
27 26.0 26.0 26.0
Important 24 23.1 23.1 49.0Neutral 22 21.2 21.2 70.2LessImportant
18 17.3 17.3 87.5
NotImportantat all
13 12.5 12.5 100.0
Total 104 100.0 100.0
most Important Important Neutral Less Important Not Important at
all
0
5
10
15
20
25
30
Frequency 2724
22
18
13
Comments- Investors feel that they should be provided with the best ofthe services in order to associate themselves with a brokerage companyover a long period of the time. Hence more than half of the sample sizesurveyed preferred it to be an important parameter of a brokerage firm.
8/8/2019 AJAY Reliance Money 30
77/95
8/8/2019 AJAY Reliance Money 30
78/95
(iii) Rank the attribute "regular updates" of a share tradingcompany?
Frequency PercentValid
PercentCumulative
Percent
Valid mostImportant
20 19.2 19.2 19.2
Important 14 13.5 13.5 32.7Neutral 17 16.3 16.3 49.0LessImportant
35 33.7 33.7 82.7
Not Importantat all
18 17.3 17.3 100.0
Total 104 100.0 100.0
35
Comments- Surprisingly about 35 people out of the 104 surveyedthought that the regular updates provided by the company were not thatimportant. Only 34 of the sample population felt the importance of regularmarket updates.
8/8/2019 AJAY Reliance Money 30
79/95
(iv)Rank the attribute "trustworthiness" of a share tradingcompany?
Frequency PercentValid
PercentCumulative
Percent
Valid mostImportant
10 9.6 9.6 9.6
Important 7 6.7 6.7 16.3Neutral 28 26.9 26.9 43.3LessImportant
25 24.0 24.0 67.3
Not Importantat all
34 32.7 32.7 100.0
Total 104 100.0 100.0
most Important Important Neutral Less Important Not Important atall
0
10
20
30
40
Frequency
10
7
28
25
34
Comments- A mere 20% of the sample population do consider thesignificance of the trustworthiness of the brokerage company with whomthey have been associated.
8/8/2019 AJAY Reliance Money 30
80/95
8/8/2019 AJAY Reliance Money 30
81/95
(i) Rank the company "RELIANCE MONEY" according to thequality of service?
Frequency PercentValid
PercentCumulative
Percent
Valid Excellent 31 29.8 29.8 29.8VeryGood
24 23.1 23.1 52.9
Good 29 27.9 27.9 80.8Average 17 16.3 16.3 97.1BelowAverage
3 2.9 2.9 100.0
T