Project From Introduction

7/29/2019 Project From Introduction

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MUTUAL FUNDS BALANCE FUNDS

INTRODUCTION

Mutual Funds are professionally managed pool of money from a group of investors. A

Mutual Fund manager invests your funds in securities including stocks and bonds, Money

Market instruments or some combination and decides the best time to buy and sell. By

polling your resources with other investors in Mutual Funds, you can diversify even a

small investment over a wide spectrum.

With the emergence of the capital market at the center stage of the Indian financial

system from its marginal role a decade earlier, the Indian capital market also witnessed

during the same period a significant institutional development in the form of diversified

structure of Mutual Funds. A Mutual fund is a special type of investment institution

which acts as an investment conduit.

It pools the savings, particularly of the relatively small investors, and invests them in a

well-diversified portfolio of sound investment. As an investment intermediary, it offers a

variety of services/advantages to the relatively small investors who on their own cannot

successfully construct and manage investment portfolio mainly due to the small size of

their funds, lack of expertise and experience, and so on. These services include the

diversification of portfolio, expertise of the professional management, liquidity of

investment, tax shelter, reduced risk and reduced cost.

Mutual fund is the most suitable investment mode for the common man as it offers an

opportunity to invest in a diversified, professionally managed portfolio at a relatively low

cost. Any body with an investible surplus of as little as a few thousand rupees can invest

in mutual funds. Each Mutual fund scheme has a defined investment objective and

strategy.

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NEED FOR THE STUDY

The basic purpose of the study is to give broad idea on Mutual Funds and analyze various

schemes to highlight the diversified investment that Mutual Fund offers to its investors.

Through this study one can understand how to invest in Mutual Funds and turn the raw

investment into ripen fruits by taking wise decisions, taking the risk factors into account.

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SCOPE OF THE STUDY

The Study presents basic concept and trends in the Mutual fund Industry.

The Study enables a fresh investor to understand easily the various benefits

offered by Mutual Funds and their working in the Market.

The Study provides a clear idea on growth of Mutual Funds from past to the

present scenario and its scope in the future.

The Study gives a brief idea on the Open- Ended Balanced Growth Schemes

of five major organizations.

At the end of the study, one can conclude what type of investments would be

ideal with reference to the risk taking abilities of the investors and which type of

investments would suit their financial needs and goals.

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OBJECTIVES OF THE STUDY

The Main objective of this project is to study and analyze Open-Ended Balanced

growth schemes of five Mutual Funds and to compare and Rank each of them.

To give a broad idea on basics, structure, constituents, characteristics, advantages,

disadvantages, types, and risk associated with Mutual Funds.

To give investor an idea on Mutual Funds and its working in the market with

illustrations.

To help and guide investors to take wise investment decisions.

To help the investors have an understanding of the Risks associated with Mutual

fund investment.

The Tax benefits of investing in Mutual Funds under various schemes.

To understand the recent trends in the world of Mutual Funds.

The project gives a detailed idea which enables even a common man or fresh

investor to understand the functioning of Mutual Funds and to take wise investment

decisions.

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RESEARCH METHODOLOGY

All information related to the topic needs to be carefully scrutinized to avoid the risk of

biased analysis. Having once identified which information is relevant and need to be

collected, we will have to define how this will be done.

The Method employed in the investigation depends on the purpose and scope of the

study.

Research Design

Research design is some statement or specification of procedures for collecting and

Analyzing the information required for the solution of some specific problem. Here, the

exploratory research is used as investigation and is mainly concerned with determining

the trends and returns in Mutual Funds and Bank returns.

Data Collection Methods

The key for creating useful system is selectivity in collection of data and linking that

selectivity to the analysis and decision issue of the action to be taken. The accuracy of

collected data is of great significance for drawing correct and valid conclusions from the

research.

Sources of Information

Data available in marketing research are either primary or secondary. Primary Data is not

included in this study, only secondary data is taken in to account since, it is a comparative

analysis

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Primary Data

The key for creating useful system is selectivity in collection of data and linking that

selectivity to the analysis and decision issue of the action to be taken. The accuracy of

collected data is of great significance for drawing correct and valid conclusions from the

research.

Secondary Data

Secondary data can be defined as - data collected by someone else for purpose other

than solving the problem being investigated. Secondary data is collected from

external sources which include information from published material of SEBI and some of

the information is collected online. The data sources also include various books,

magazines, newspapers, websites etc. The organization profile is collected from the

Hyderabad Stock Exchange.

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SCOPE OF THE STUDY

The Study covers the basic meaning, concept, structure and the organization of the

Mutual Funds.

The Study is restricted to explain only the returns provided by the Mutual Funds

from various schemes.

Under this study investments relating to Open-Ended Balanced Growth Fund of

Mutual Funds are taken into account.

The theoretical part of the study include the following concepts:-

Characteristics of Mutual Funds.

Advantages/ Disadvantages of Mutual Funds.

Net Asset Value (NAV).

Investment Process.

Risk return grid of Mutual Funds.

SEBI guidelines.

The tools used for graphical representation of data include Pie charts, bar diagrams,

and other accessories.

The Study is made to equip the investors with the information, which will enable

them to choose the type of Scheme depending upon their investing objective and

respective Risk return grid.

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LIMITATIONS OF THE STUDY

The data that is considered for the Comparative analysis of various Mutual Funds

returns of Open-Ended Balanced Growth Fund are only for a short period of one

year and performance during this period may not be same in future. Project period is

only 45 days , so I have taken two months portfolios into consideration

As the project period is limited, the long-term data of Mutual Funds are not taken

into consideration in analysis section.

Mutual Funds of only five organizations are taken into account for analyzing their

performance, because the time duration of the project is short and limited. The

performance of these funds since inception is not considered.

This study on Mutual Funds is restricted to Open-Ended Balanced Schemes only.

The core details are untouched.

The data taken into account for analysis is very general. Confidential data is

ignored as it is highly sensitive. As a result the information presented in the research

report is limited.

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REVIEW OF LITERATURE

According to SEBI - Mutual Fund is defined as - A fund established in the form of a

trust to raise moneys through the sale of units to the public or a section of the public

under one or more schemes for investing in securities, including money market

instruments.

Mutual Fund is a mechanism for pooling the resources by issuing units to the investors

and investing funds in securities in accordance with objectives as disclosed in the offer

document.

DEFINITION

A Mutual Fund is a financial intermediary which acts as an instrument of investment. It

collects the funds from different investors to a common pool of investible funds and then

invests these funds in a wide variety of investment opportunities in diversified portfolios

of securities such as Money Markets instrument, corporate and government bonds and

equity shares of joint stock companies.

The investment may be diversified to spread risk and to ensure good return to the

investors. The Mutual Funds employ professional, experts and investment consultants to

conduct investment analysis and then to select the portfolio of securities where the funds

are to be invested.

Each investor owns units, which represent a portion of the holdings of the fund. You can

make money from a MF in three ways

Income is earned from dividends on stocks and interest on bonds. A Fund pays out

nearly all income it receives over the year to fund owners in the form of a distribution.

If the fund sells securities that have increased in price, the fund has a capital gain.

Most funds also pass on these gains to investors in the form of dividends.

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If fund holdings increase in price but are not sold by the fund manager, the funds

shares increase in price. You can then sell your Mutual Fund units for a profit. Funds

will also usually give you a choice either to receive a cheque for dividends or to re-

invest the same and get more units.

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FIGURE SHOWING THE WORKING OF MUTUAL FUND

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STRUCTURE AND CONSTITUENTS OF FUND

SPONSOR

Establishes the MUTUAL FUND

Need to have sound financial track record.

Appoints TRUSTEES.

Appoints Asset Management Company.

Must contribute 40% of the net worth of the AMC.

Sometimes this power is given by the sponsor to the trustees through the trust

deed.

At least 50% of directors on the board of Asset Management Company should be

independent of the sponsor.

Asset Management Company shall not deal with any broker or firm associated

with sponsor beyond 5% of daily gross business of the Mutual Fund.

All securities transactions of the Asset Management Company with its associates

should be disclosed.

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MUTUAL

FUND

Sponsor Trustee AMC Custodian


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TRUSTEE

Manages the Mutual Fund and look after the operation of the appointed AMC.

The investments are held by the Trustees, in a fiduciary responsibility.

Trustees approve each Mutual Fund Scheme floated by AMC.

Furnish report to SEBI on half yearly basis on AMC and Fund Functioning.

ASSET MANAGEMENT COMPANY

AMC acts as investment manager of the trust under the board supervision and

direction of the trustees.

AMC floats the different Mutual Fund schemes.

Submits report to the Trustees on quarterly basis, mentioning activity and

compliance factor.

AMC is responsible to the trustees.

AMC fees have a ceiling, decided by SEBI.

Should have a net worth of at least Rs.10 crores at all the times.

CUSTODIAN

Appointed by board of trustees for safekeeping of securities.

Its an entity independent of sponsors.

SEBI regulates the securities market in India. According to SEBI every Mutual Fund

require that at least two thirds of the directors of trustee company or board of trustees

must be independent i.e. they should not be associated with the sponsors. Also, 50% of

the directors of AMC must be independent. All Mutual Fund are required to be registered

with SEBI before they launch any Scheme

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ORGANISATION OF MUTUAL FUND

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CHARACTERISTICS OF MUTUAL FUNDS

A Mutual Fund actually belongs to the investors who have pooled their funds. The

ownership of the Mutual Fund is in the hands of the investors.

Mutual funds are trusts or registered associations managed by investment

professionals and other service providers, who earn a fee for their services from the

fund.

The pools of the funds are invested in a portfolio of marketable investments

(Shares and Securities). The value of the portfolio is updated everyday.

Mutual funds collect money from small investors and in return, they will issue a

certificate in units.

The investors share in the fund is denoted by UNITS". The value of the units

changes with the change in the portfolios value every day.

The profits of investments will be distributed to the unit holders. The unit holders

can sell their units in the open market at Net Asset Value (NAV).

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NET ASSET VALUE (NAV)

Mutual Funds invest the money collected from the investors in securities markets. In

simple words, Net Asset Value is the market value of the securities scheme also varies on

day to day basis. The NAV per unit is the market value of securities of a scheme divided

by the total number of units of the scheme on any particular date. The performance of a

particular scheme of a Mutual Fund is denoted by Net Asset Value.

For example; if the market value of securities of a MF Scheme is Rs. 200 lakhs and the

Mutual Fund has issued 10 lakhs units of Rs. 10 each to the investors, then the NAV per

unit of the fund is Rs. 20. NAV is required to be disclosed by the MF on a regular basis

daily or weekly depending on the type of scheme.

NAV = Market value of the funds investments + Receivables + Accrued Income

Liabilities Accrued Expenses

Number of Outstanding units

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.

SCHEMES OF MUTUAL FUNDS

Mutual fund schemes are usually open-ended (Perpetually open for investors and

redemption) or close-ended (with a fixed term). A Mutual Fund scheme issues units that

are normally priced at Rs.10/- during the initial offer. The number of units you own

against the total number of units issued by a Mutual Fund scheme determines your share

in the profits or losses in the scheme.

TYPES OF MUTUAL FUND SCHEMES

The Mutual Funds can be classified under the following types

ACCORDING TO STRUCTURE

OPEN - ENDED SCHEME

An open-ended scheme is a scheme in which an investor can buy and sell units on a daily

basis. The scheme has a perpetual existence and flexible, ever changing corpus. Open-

Ended schemes do not have a fixed maturity period. The investors are free to buy and sell

any number of units, at any point of time, at prices that are linked to the NAV of the units.

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STRUCTURE

OPEN-ENDED

SCHEME

CLOSED-ENDED

SCHEME

INTERVAL

SCHEME


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In these schemes the investor can invest and disinvest any amount, any time after a short

initial lock in period.

Advantages of Open-ended funds over Close-ended funds

Any time Entry Option.

This provides ready liquidity to the investors and avoids reliance on transfer

deeds, signature verifications and bad deliveries.

Allows to enter the fund at any time and even to invest at regular intervals.

Any time Exit Option.

CLOSE ENDED SCHEME

A Close-ended scheme has a stipulated maturity period. E.g. 5-7 years. A Close-ended

scheme is one in which the subscription period for the Mutual Fund remains open only

for a specific period, called the redemption period. At the end of this period, the entire

corpus is disinvested and the proceeds distributed to unit holders. After final distribution

the scheme ceases to exist. Such schemes can be rolled over by approval of unit holders.

Reasons for fluctuations in NAV

Investors doubts about the abilities of the funds management.

Lack of sales effort (Brokers earn less commission on closed end schemes than on

open ended schemes).

Riskiness of the fund.

Lack of marketability of the funds units.

INTERVAL SCHEMES

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Interval schemes are those that combine both the features of both open-ended and close-

ended schemes. The units may be traded on the stock exchange or may be open for sale

redemption during during predetermined intervals at NAV related prices.

ACCORDING TO INVESTMENT OBJECTIVE

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INVESTMENT

OBJECTIVE

EQUITY SCHEME

DEBT OR BOND SCHEME

BALANCED SCHEME

MONEY MARKETSCHEME

GROWTH & INCOME

FUND

OTHER SCHEMES


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ADVANTAGES OF MUTUAL FUNDS

The key advantages of both open and close-end Mutual Funds is that they put

professional managers with experience and access to sophisticated financial research to

work for you this, and other wide range of key benefits are as follows

Professional Management

Experienced portfolio managers carefully select a funds holdings according to the funds

seated investment objective. The portfolio management team continuously monitors and

evaluates the funds holdings to help make sure it keeps pace with changing market

conditions. The team decides when to buy and sell securities. There is a fee associated

with this professional management.

Diversification

A Single diversified Mutual Fund may invest in dozens even hundreds of different

holdings. This approach may reduce the impact on your return if any one investment held

by the fund declines. Diversification spreads your assets among different types of

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holdings and may be one of the best ways to protect yourself amid the complexity and

uncertainty of the financial markets.

Compounding

In a Mutual Fund, you may choose to reinvest your earnings automatically to buy more

shares. When you reinvest, not only do you have the potential to earn money on your

initial investment, you may also have the opportunity to earn money on the dividends and

capital gains you accumulate. of what you contribute and can help your money grow

faster. And the longer you invest, the greater the potential growth.

SYSTEMATIC INVESTING

You can invest in most mutual funds automatically through regular payments directly

from your bank account; you can start building a long-term investment program. With

systematic investing you invest a fixed amount of money at regular intervals regardless of

market conditions, helping out market fluctuations.

Hassle-free operations

With most Mutual Funds, buying and selling shares, changing distribution options, and

obtaining information can be accomplished conveniently by telephone, by mail, or online.

Although a funds shareholder is relieved of the day-to-day tasks involved in researching,

buying and selling securities, an investor will still need to evaluate a Mutual Fund based

on investment goals and risk tolerance before making a purchase decision. Investors

should always read the prospectus carefully before investing in any Mutual Fund.

Buying Power

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When you invest in a mutual fund, you join the other investors in a pool of investment

money. The result is that you have a partial stake in each company the fund holds for

a relatively small amount of principal invested, while potentially offsetting some of the

risk associated with holding individual securities.

Choice

There is an incredible array of mutual funds more than 10,000 available to meet your

specific Investment objective. Funds have different investment objectives and degrees of

investment risk often indicated through asset classes and sub-classes, such as money

market funds, fixed income funds, balanced funds, growth and income funds, growth

funds and aggressive growth funds.

Liquidity

Mutual fund shares are liquid and orders to buy or sell are placed during market hours.

However, orders are not executed until the close of business when the NAV (Net Asset

Value) of the fund can be determined. Fees or commissions may or may not be

applicable. Fees and commissions are determined by the specific fund and the Institution

that executes the order.

Transparency

You get regular information on the value of your investments in addition to disclosure on

the specific investments made by your scheme, the proportion invested in each class of

assets and the fund managers investment strategy and outlook.

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COMPANY PROFILE

Incorporated in 1993, Net worth Stock Broking Limited (NSBL) has been a listed

company at Bombay Stock Exchange (BSE), Mumbai since 1995.

A Member, at the National Stock Exchange of India (NSE) and Bombay Stock Exchange,

Mumbai (BSE) on the Capital Market and Derivatives (Futures & Options) segment,

NSBL has been traditionally servicing Institutional clients and in the recent past has

forayed into retail broking, establishing branches across the country. Presence is being

marked in the Middle East, Europe and the United States too, as part of our attempts to

cater to global markets. We are a Depository participant at Central Depository Services

India (CDSL) with plans to become one at National Securities Depository (NSDL) by the

end of this quarter. We have our customers participating in the booming commodities

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markets with our membership at the Multi Commodity Exchange of India (MCX) and

National Commodity & Derivatives Exchange (NCDEX), through Networth Stock.Com

Ltd. With its strong support and business units of research, distribution & advisory,

NSBL aims to become a one-stop solution to the broking and investment needs of its

clients, globally.

Strong team of professionals experienced and qualified pool of human resources drawn

from top financial service & broking houses form the backbone of our sizeable

infrastructure. Highly technology oriented, the companys scalability of operations and

the highest level of service standards has ensured rapid growth in the number of locations

& the clients serviced in a very short span of time. Networthians, as each one of our 400

plus and ever growing team members are addressed, is a dedicated team motivated to

continuously progress by imbibing the best of global practices, Indian sing

Such practices, and to constantly evolve a comprehensive suite of products &

Services trying to meet every financial / investment need of the clients.

NSE CM and Derivatives Segment SEBI Regn. 1NB230638639 & 1NF230638639

BSE CM and Derivatives Segment SEBI Regn. 1NB010638634 &

PMS SEBI Regn. 1NP000001371 CDSL DP SEBI Regn. IN-DP-CDSL

251-2004

Commodities Trading: MCX -10585 and NCDEX - 00011 (through Networth

Stock.Com Ltd.)

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Hyderabad (Somajiguda)

401, Dega Towers, 4th Floor, Raj Bhavan Road, Somajiguda Hyderabad - 500 082

Andhra Pradesh.

Phone Nos.: 040-55560708, 55562256, and 30994985

Mumbai (MF Division)

49, Au Chambers, 4th Floor, Tamarind Lane, Fort

Mumbai - 400 001

Maharashtra.

Phone Nos.: 022- 22650253

Mumbai (Registered Office)

5, Church gate House, 2nd Floor, 32/ 34 Veer Narirnan Road, Fort

Mumbai - 400 001

Maharashtra.

Phone No. 022-22850428

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The Net worth connectivity with 107 branches and growing

1 0 7 b r a n c h1 0 7 b r a n c h

Products and services portfolio

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Retail and institutional broking

Research for institutional and retail clients

Distribution of financial products

PMS

Corporate finance

Net trading

Depository services

Commodities Broking

Infrastructure

A corporate office and 3 divisional offices in CBD of Mumbai which houses state-

of-the-art dealing room, research wing & management and back offices.

All of 107 branches and franchisees are fully wired and connected to hub at

Corporate office at Mumbai. Add on branches also will be wired and connected to

central hub

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Web enabled connectivity and software in place for net trading.

60 operative IDs for dealing room

In house technology back up team to ensure un-interrupted connectivity.

1993: Networth Started with 300 Sq.ft. of office space & 10 employees

2006: Spread over 42 cities (around 70,000 Sq.ft of office space) with over 107 branches

& employee strength over 400

Market & research

Focusing on your needs

investor prefer to make own investment decisions or desire more in-depth assistance,

company committed to providing the advice and research to help you succeed.

Networth providing Every investor has different needs, different preferences, and

different viewpoints. Whether following services to their customers,

Daily Morning Notes

Market Musing

Company Reports

Theme Based Reports

Weekly Notes

IPOs

Sector Reports

Stock Stance

Pre-guarter/Updates

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Bullion Tracker

F&O Tracker

QUALITY POLICY

To achieve and retain leadership, Networth shall aim for complete customer satisfaction,

by combining its human and technological resources, to provide superior quality financial

services. In the process, Networth will strive to exceed Customers expectations.

As per the quality policy, Networth will

Build in house processes that will ensure transparent and harmonious relationships

with its clients and investors to provide high quality of services.

Establish a partner relationship with in its investor service agents and vendors that

will help in keeping up its commitments to the customers.

Provide high quality of work life for all its employees and equip them with

adequate knowledge & skill so as to respond to customers needs.

Continue to uphold the values of honesty & integrity and strive to establish

unparalleled standards in business ethics.

Use state-of-the art information technology in developing new and innovative

financial products and services to meet the changing needs of investors and

clients.

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Strive to be a reliable source of value-added financial products and services and

constantly guide the individuals and institutions in making a judicious choice of it.

Strive to keep all stake-holders (share holders, clients, investors, employees, suppliers and

regulatory authorities) proud and satisfied.

Key Personnel

Mr. S P Jain CMD Networth Stock Broking Ltd.

A qualified Chartered Accountant with over 15 years of experience in the

capital markets.

Mr. Deepak Mehta Head PMS

Over 12 years of experience in the capital markets and has the prior work

experience of serving on the Equity desk of Reliance.

Mr.Viral Doshi Equity Strategist

A qualified Chartered Accountant with experience of over a decade in technical

analysis with respect to equity markets.

Mr. Vinesh Jain Asst. Fund Manager

A qualified MBA graduate specializing in finance and over two years of

experience in the capital markets.

Research and the Back office.

We have sought to provide premium financial services and information, so

that the power of investment is vested with the client. We equip those who invest

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with us to make intelligent investment decisions, providing them with the

flexibility to either tap into our extensive knowledge and expertise, or make their

own decisions. We made our debut into the financial world by servicing

Institutional clients, Now, powered by a top-notch research team and a network of

experts, we provide an array of financial products & services spanning entire

India. Our strong support, technology-driven operations and business units of

research, distribution, advisory, wide array of products & services coalesce to

provide you with a one-stop solution to cater to all your investment needs. Our

single minded objective is to help you grow your Networth.

OUR GROUP COMPANIES

Net worth Stock Broking Ltd. [NSBL]

NSBL is a member of the National Stock Exchange of India Ltd (NSE) and the Bombay

Stock Exchange Ltd (BSE) in the Capital Market and Derivatives (Futures & Options)

segment. NSBL has also acquired membership of the currency derivatives segment

with NSE, BSE & MCX-SX. It is Depository participants with Central Depository

Services India (CDSL) and National Securities Depository (India) Limited (NSDL). With

a client base of over 1L loyal customers, NSBL is spread across the country though its

over 230+ branches. NSBL is listed on the BSE since 1994.

Net worth Wealth Solutions Ltd. [NWSL]

NWSL is into the business of delivery of Financial Planning & Advice. Its vision is to

Advice & Execute money related solutions to/for our customers in the most Convenient

& Consolidated manner, while making sure that their experience with us is always

pleasant & memorable resulting in positive advocacy. The product & Services include

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Financial Planning, Life Insurance, On-line Trading Account, Mutual Funds,

Debentures/Bonds, General Insurance, Loans and Depository Services.

NetworthStock.ComLtd.[NSCL]

NSCL is the commodities arm of NSBL. It is a member at the Multi Commodity

Exchange of India (MCX) and National Commodity & Derivatives Exchange (NCDEX)

and is backed by solid research & analytics in Commodities.

NetworthSoftTechLtd.[NSL]

NSL is an ISO 9001:2000 Certified Company. It is into Application Development &

maintenance. Building & Implementation of packaged software across various functions

within the Financial Services Industry is at its core. It also provides data center services

which include hosting of websites, applications & related services. It combines a unique

delivery model infused by a distinct culture of customer satisfaction.

Ravisha Financial Services Pvt. Ltd. [RFSL]

RFSL is a RBI registered NBFC engaged in financing, primarily it provides loan against

securities

Principles & Values

At Net worth Stock Broking Ltd. success is built on teamwork, partnership and the

diversity of the people. At the heart of our values lie diversity and inclusion. They are a

fundamental part of our culture, and constitute a long-term priority in our aim to become

the world's best international bank.

Values

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Responsive

Trustworthy

Creative

Courageous

Approach

Participation:- Focusing on attractive, growing markets where we can leverage our

relationships and expertise

Competitive positioning:- Combining global capability, deep local knowledge and

creativity to outperform our competitors

Management Discipline:- Continuously improving the way we work, balancing

the pursuit of growth with firm control of costs and risks Commitment to

stakeholders

Customers:- Passionate about our customers' success, delighting them with the

quality of our service

Our People:- Helping our people to grow, enabling individuals to make a

difference and teams to win

Communities:- Trusted and caring, dedicated to making a difference

Investors:- A distinctive investment delivering outstanding performance and

superior returns

Regulators: - Exemplary governance and ethics wherever we are.

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MARKET PROFILE

NATIONAL STOCK EXCHANGE

The National Stock Exchange of India (NSE) situated in Mumbai - is the largest and most

advanced exchange with 1016 companies listed and 726 trading members. Capital market

reforms in India and the launch of the Securities and Exchange Board of India (SEBI)

accelerated the incorporation of the second Indian stock exchange called the National

Stock Exchange (NSE) in 1992. After a few years of operations, the NSE has become the

largest stock exchange in India.

Three segments of the NSE trading platform were established one after another. The

Wholesale Debt Market (WDM) commenced operations in June 1994 and the Capital

Market (CM) segment was opened at the end of 1994. Finally, the Futures and Options

segment began operating in 2000. Today the NSE takes the 14th position in the top 40

futures exchanges in the world.

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In 1996, the National Stock Exchange of India launched S&P CNX Nifty and CNX

Junior Indices that make up 100 most liquid stocks in India. CNX Nifty is a diversified

index of 50 stocks from 25 different economy sectors. The Indices are owned and

managed by India Index Services and Products Ltd (IISL) that has a consulting and

licensing agreement with Standard & Poor's.

In 1998, the National Stock Exchange of India launched its web-site and was the first

exchange in India that started trading stock on the Internet in 2000. The NSE has also

proved its leadership in the Indian financial market by gaining many awards such as 'Best

IT Usage Award' by Computer Society in India (in 1996 and 1997) and CHIP Web

Award by CHIP magazine (1999).

The NSE is owned by the group of leading financial institutions such as Indian Bank or

Life Insurance Corporation of India. However, in the totally de-metalized Exchange, the

ownership as well as the management does not have a right to trade on the Exchange.

Only qualified traders can be involved in the securities trading.

The NSE is one of the few exchanges in the world trading all types of securities on a

single platform, which is divided into three segments: Wholesale Debt Market (WDM),

Capital Market (CM), and Futures & Options (F&O) Market.

Each segment has experienced a significant growth throughout a few years of their

launch. While the WDM segment has accumulated the annual growth of over 36% since

its opening in 1994, the CM segment has increased by even 61% during the same period.

The National Stock Exchange of India has stringent requirements and criteria for the

companies listed on the Exchange. Minimum capital requirements, project appraisal, and

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company's track record are just a few of the criteria. In addition, listed companies pay

variable listing fees based on their corporate capital size.

NSE Nifty

The S&P CNX Nifty (nicknamed Nifty 50 or simply Nifty), is the leading index for large

companies on the National Stock Exchange of India. S&P CNX Nifty is a well diversified

50 stock index accounting for 22 sectors of the economy. It is used for a variety of

purposes such as benchmarking fund portfolios, index based derivatives and index funds.

Nifty was developed by the economists Ajay Shah and Susan Thomas, then at IGIDR.

Later on, it came to be owned and managed by India Index Services and Products Ltd.

(IISL), which is a joint venture between NSE and CRISIL. IISL is India's first specialized

company focused upon the index as a core product. IISL have a consulting and licensing

agreement with Standard & Poor's (S&P), who are world leaders in index services.

CNX stands for CRISIL NSE Indices. CNX ensures common branding of indices, to

reflect the identities of both the promoters, i.e. NSE and CRISIL. Thus, 'C' stands for

CRISIL, 'N' stands for NSE and X stands for Exchange or Index. The S&P prefix belongs

to the US-based Standard & Poor's Financial Information Services.

NSE other indices

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S&P CNX Nifty

CNX Nifty Junior

CNX 100

S&P CNX 500

CNX Midcap

S&P CNX Defty & CNX Midcap 200

BOMBAY STOCK EXCHANGE

The Bombay Stock Exchange Limited (formerly, The Stock Exchange, Mumbai;

popularly called The Bombay Stock Exchange, or BSE) is the oldest stock exchange in

Asia. It is located at Dalal Street, Mumbai,India.

Bombay Stock Exchange was established in 1875. There are around 5,600 Indian

companies listed with the stock exchange, and has a significant trading volume. As of

October2006, the market capitalization of the BSE was about Rs. 33.4 trillion (US $ 730

billion). The BSE SENSEX (SENSitive indEX), also called the BSE 30, is a widely used

market index in India and Asia. As of 2005, it is among the 5 biggest stock exchanges in

the world in terms of transactions volume.

History

38
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An informal group of 22 stockbrokers began trading under a banyan tree opposite the

Town Hall of Bombay from the mid-1850s, 1875, was formally organized as the Bombay

Stock Exchange (BSE).In January 1899, the stock exchange moved into the Brokers Hall

after it was inaugurated by James M MacLean. After the First World War, the BSE was

shifted to an old building near the Town Hall. In 1956, the Government of India

recognized the Bombay Stock Exchange as the first stock exchange in the country under

the Securities Contracts (Regulation) Act.1995, when it was replaced by an electronic

(eTrading) system named BOLT, or the BSE Online Trading system. In 2005, the status

of the exchange changed from an Association of Persons (AoP) to a full fledged

corporation under the BSE (Corporatization and Demutualization) Scheme, 2005 (and its

name was changed to The Bombay Stock Exchange Limited).

BSE Sensex

The BSE SENSEX (also known as the BSE 30) is a value-weighted index composed of

30 scrips, with the base April 1979 = 100. The set of companies which make up the index

has been changed only a few times in the last 20 years. These companies account for

around one-fifth of the market capitalization of the BSE.

SENSEX, first compiled in 1986 was calculated on a "Market Capitalization-Weighted"

methodology of 30 component stocks representing a sample of large, well-established and

financially sound companies. The base year of SENSEX is 1978-79. The index is widely

reported in both domestic and international markets through print as well as electronic

media. SENSEX is not only scientifically designed but also based on globally accepted

construction and review methodology. From September 2003, the SENSEX is calculated

on a free-float market capitalization methodology. The "free-float MarketCapitalization-

39
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Weighted"methodology is a widely followed index construction methodology on which

majority of global equity benchmarks are based.

The growth of equity markets in India has been phenomenal in the decade gone by. Right

from early nineties the stock market witnessed heightened activity in terms of various bull

and bear runs. More recently, the bourses in India witnessed a similar frenzy in the 'TMT'

sectors. The SENSEX captured all these happenings in the most judicial manner. One can

identify the booms and bust of the Indian equity market through SENSEX.

.

SENSEX calculation

SENSEX is calculated using a "Market Capitalization-Weighted" methodology. As per

this methodology, the level of index at any point of time reflects the total market value of

30 component stocks relative to a base period. (The market capitalization of a company is

determined by multiplying the price of its stock by the number of shares issued by the

company). An index of a set of combined variables (such as price and number of shares)

is commonly referred as a 'Composite Index' by statisticians. A single indexed number is

used to represent the results of this calculation in order to make the value easier to work

with and track over time. It is much easier to graph a chart based on indexed values than

one based on actual values.

The base period of SENSEX is 1978-79. The actual total market value of the stocks in the

Index during the base period has been set equal to an indexed value of 100. This is often

indicated by the notation 1978-79=100. The formula used to calculate the Index is fairly

straightforward. However, the calculation of the adjustments to the Index (commonly

called Index maintenance) is more complex.

The calculation of SENSEX involves dividing the total market capitalization of 30

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companies in the Index by a number called the Index Divisor. The Divisor is the only link

to the original base period value of the SENSEX. It keeps the Index comparable over time

and is the adjustment point for all Index maintenance adjustments. During market hours,

prices of the index scrips, at which latest trades are executed, are used by the trading

system to calculate SENSEX every 15 seconds and disseminated in real time. During

market hours, prices of the index scrips, at which trades are executed, are automatically

used by the trading computer to calculate the SENSEX every 15 seconds and

continuously updated on all trading workstations connected to the BSE trading computer

in real time.

BSE - other Indices

Apart from BSE SENSEX, which is the most popular stock index in India, BSE uses

other stock indices as well:

BSE 500

BSE PSU

BSE MIDCAP

BSE SMLCAP

BSE BANKEX

The most important trend in the Mutual Fund industry is the aggressive expansion of the

foreign owned Mutual Fund companies and the decline of the companies floated by

nationalized banks and smaller private sector players.

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Funds issue and redeem shares on demand at the fund's net asset value (NAV). Mutual

fund management fees typically range between 0.5% and 2% of assets per year, exchange

fees and other administrative charges also apply.

GROWTH AND HISTORY OF MUTUAL FUNDS

The First investment trust (now called Mutual Fund) began in the Netherlands in the early

1800s. The first in the U.S. was the New York Stock Trust, which started in 1889. Since

Boston was the economic center of the nation until the turn of the century, the majority of

funds started thereFidelity, Pioneer and Putnum Fund, to name a few. A Fund that was

comprised of both stocks and bonds (the Wellington Fund) started in 1928 and is still part

of Vanguard. As the 20's crashed to a close, there were 10 Mutual Funds in the nation.

Foundation for the Mutual Fund in India was laid by the parliament in 1963. With the

enactment of Unit Trust of India (UTI) Act the then Finance Minister Mr. T.T.

Krishnamacharya who initiated the act made it clear to the parliament act UTI would

provide an opportunity for the middle and lower income groups to acquire property

in the form of share. Thus UTI came out with the mission of catering to the needs of

individuals investors whose means are small, with its maiden fund, an open ended fund in

1964.

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The Indian Mutual Fund Industry can be studied in four phases

FIRST PHASE BETWEEN 1964 1987

The genesis of the Mutual Fund industry in India can be traced back to 1964 with the

setting up of the Unit Trust of India (UTI) by the Government of India. Since then UTI

has grown to be a dominant player in the industry. UTI is governed by a special

legislation, the Unit Trust of India Act, 1963. It was setup by the Reserve Bank of India

and functioned under the regulatory and administrative control of RBI. In 1978, UTI was

de-linked from the RBI and the administrative control in place of RBI.

SECOND PHASE 1987-1993(Entry of Public Sector Funds)

Till 1986, UTI was the only mutual player in India. The industry was opened up for wider

participation in 1987 when public sector banks and insurance companies were permitted

to setup Mutual Funds.

Since then, many public sector banks have setup Mutual Funds. SBI Mutual Fund was

the first non-UTI Mutual Funds established in June 1987 followed by can bank Mutual

Funds, Punjab National Bank Mutual Fund, India bank Mutual Funds, Bank of India,

Bank of Boroda Mutual Funds. Also the two Insurance companies LIC (June 1987) and

GIC (December 1990) have established Mutual Funds. At the end of 1993, the Mutual

Fund industry had assets under management of Rs. 47004 crores. This phase changed the

mind set of the investors.

THIRD PHASE 1993-2003

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

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was the year in which the first Mutual Funds 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 sector Mutual Fund

registered in July 1993.

Securities Exchange Board of India (SEBI) formulated the Mutual Fund (Regulation)

1993, which for the first time established a comprehensive regulatory framework for the

Mutual Fund Industry. Since then several Mutual Funds have been setup by the private

and joint sectors.

FOURTH PHASE - Since February 2003

In February 2003, following the repeal of the Unit Trust of India act 1963, UTI was

bifurcated into separate entities. One is the specified undertaking of the UTI with asset

under management of Rs. 29835 crores as at the end of January 2003, representing

broadly, the assets of US 64 schemes, assured return and certain other schemes.

The second is UTI Mutual Fund ltd, sponsored by SBI, PNB, BOB and LIC. It is

registered in SEBI and functions under the Mutual Fund regulations. With the bifurcation

of the erstwhile UTI which had in March 2000 more than Rs. 76000 crores of assets

under management and with the setting up of the UTI Mutual Fund. At the end of

October 31, 2006 there were 39 funds which manage assets of Rs. 176726 crores under

426 schemes.

PRESENT SCENARIO

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The decade of 80s witnessed the emergence of stock markets as major source of finance

for trade and industry. The process of liberalization and deregulation had led to a pace of

growth almost unparallel in the history of any nation.

Average annual capital mobilization from the marked, which used to be about Rs.70

crores in the 60s and Rs.90 crores in the 70s increased manifold during the 8-s with the

amount raised in 1989-90 being of the order of Rs.647.3 crores. The number of listed

companies rose from 2265 in 1980 to over 8600 at the end of 2006; the daily turnover

accordingly shot up from Rs.25 crores in 1979-80 to about Rs.585 crores in 2007-2008.

Distribution of Worldwide Mutual Fund Assets by Region, 2012

(Percentage of Total Assets)

At present, there are 20 stock exchanges recognized under the Securities Contracts

(Regulation) Act, 1956. These recognized stock exchanges mobilize and direct the flow

of savings of the general public into productive channels of investment.) . According the

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latest statistics the market capitalization (assets) of Mutual Funds in India is

amounting to Rs. 3, 00,000 Crores.

ASSOCIATION OF MUTUAL FUNDS OF INDIA

With the increase in Mutual Fund players in India, a need for mutual fund association in

India was generated to function as a non-profit organization. Association of Mutual Funds

in India (AMFI) was incorporated on 22nd August 1995.

AMFI is an APEX body of all Asset Management Companies (AMC), which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund

schemes are its members. It functions under the supervision and guidelines of its Board of

Directors.

Association of Mutual Funds of India has brought down the Indian Mutual Fund Industry

to a professional and healthy market with ethical lines enhancing and maintaining

standards. It follows the principle of both protecting and promoting the interests of mutual

funds as well as their unit holders.

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Objectives

The AMFI works with 30 registered AMCs of the country. It has certain defined

objectives, which juxtaposes the guidelines of its Board of Directors. The objectives are

as follows

This mutual fund association of India maintains high professional and ethical

standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of

conduct which is followed by members and related people engaged in the activities of

MF and asset management. The agencies who are by any means connected or

involved in the field of capital markets and financial services also involved in this

code of conduct of the association.

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AMFI interacts with SEBI and works according to SEBIs guidelines in the

mutual fund industry.

AMFI do represent the Government of India, the Reserve Bank of India and other

related bodies on matters relating to the Mutual Fund Industry.

It develops a term of well-qualified and trained Agent distributors. It implements a

programmed of training and certification for all intermediaries and other engaged in

the mutual fund industry.

AMFI undertakes all India awareness programmed for investors in order to

promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate

information on Mutual funds Industry and undertakes studies and research either

directly or in association with other bodies

BEFORE INVESTING IN MUTUAL FUNDS

First choose a scheme (equity/debt/balanced) according to your returns/risk

profile.

Select the scheme which is giving income according to your requirements.

(Short term returns like income fund, long term returns like growth fund).

Select the fund which gives maximum returns and high security and liquidity

and low risk.

Then compare similar schemed offered by various MFs and their track record.

Examine the track record of the mutual fund and its sponsors.

Study the track record of the fund manager.

Examine the investment strategy of the scheme.

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Check the load (entry/exit).

Check out on special facilities like switching options, account statements,

sale/repurchases policy etc.

Do not buy in to new schemes that are deceptively being offered at par.

RIGHTS AND OBLIGATIONS OF INVESTORS

Right to proportionate beneficial ownership.

Right to timely service.

Right to information.

Right to approve changes in fundamental attributes.

Rights to wind up a scheme.

Right to terminate the AMC.

LEGAL LIMITATIONS TO INVESTORS RIGHTS

Investors cannot sue the trust.

Investors can initiate legal proceedings against the trustees.

Sponsors of mutual funds have no obligations to meet the shortfall in

non-assured schemes.

Only if the OD has specifically provided such guarantee by a named

sponsor, the investors have the right to sue the sponsor.

Prospective investors cannot sue the trust/the AMC or any other

constituent.Companies act cannot protect investors as fund investors are neither share

holders in the AMC nor depositors.

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ORIGIN:

Rapid growth in industries in the erstwhile Hyderabad State saw efforts at starting

the Stock Exchange. In 1942, Mr. Gulag Mohammad, the Finance Minister formed a

committee for the purpose of constituting Rules and Regulations of the Stock Exchange.

Sri Purushothamas Thakurdas, present and Founder Member of the Hyderabad Stock

Exchange performed and the opening ceremony of the Exchange on 14-11-1943 under the

Hyderabad Securities Contract Act Mr. Kamal Yar Jung Bahadur was the first President

of the Exchange.

The HSE started functioning under Hyderabad Securities Contract Act of No.21 of 1352

under H.E.H Nizams Government as a Company Limited by guarantee. It was the 6 th

Stock Exchange recognized under Securities Contract Act, after the premier Stock

Exchange, Ahmedabad, Bombay, Calcutta, Madras and Bangalore Stock Exchange. All

the deliveries were completed every Monday or the next working day.

The Securities Contract Act, 1956 was enacted by the Parliament passed into Law and

Rules were also framed in 1957. The Act and Rules were brought into force from 20 th

February 1957 by the Government of India.

The HSE was first recognized by the Government of India on 29 th September 1958 as

Securities Regulation Act was made applicable to twin cities as Hyderabad and

Secunderabad from that date. In View of Substantial growth in trading activities, and for

the Yeoman services rendered by the Exchange was bestowed a permanent recognition

with effect from 29th September 1983.

OBJECTIVES

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The Exchange was established on 18th October, 1943 with the main objective to create,

protect and develop a healthy Capital Market in the State of Andhra Pradesh to effectively

serve the Public and the investors interests.

The property, Capital and Income of the Exchange, as per the Memorandum and Articles

of Association of the Exchange, shall have to be applied solely towards the promotion of

the objects of the Exchange. Even in case of dissolution, the surplus funds shall have to

be devoted to any activity having the same objects, as Exchange or be distributed in

Charity, as may be determined by the Exchanged or the High Court of Judicature.

Thus, in short it is a Charitable Institution. The Hyderabad Stock Exchange Limited is

now on its stride of completing its 57 th year in the history of Capital Markets serving the

cause of saving and investments.

The Exchange has made its beginning in 1943 and today occupies a prominent place

among the Regional Stock Exchange in India. It thus, promotes the mobilization of the

funds to the Industry and develops the industrialization in the state of Andhra Pradesh.

GROWTH

The HSE Ltd was established in the year 1943 as a non-profit making organization

catering to the needs of investing population in a small way in a rented building in Koti

area. In September 1989, then Vice-President of India Honorable Dr. Shanker Dayal

Sharma had inaugurated the own building of the Stock Exchange at Himayat nagar,

Hyderabad. Considerably, there has been a tremendous perception growth that could be

observed from statistics.

The number of members of the Exchange was 55 in 1943, 117 in 1193, and 295 in 1995

and increased to 413 in 2006. The business turnover stood more than Rs.1200 crores in

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2006. The Exchange has got a very weekly settlement system earlier and now a daily

Rolling settlement

GOVERNING BOARD

At present, the Governing Board consists of the following:

Members of the Exchange

Sri Hari Narayan Rathi

Sri Rajendra V Naniwadekari

Sri Raj Kishore Harkut

Sri Ram Swaroop Agarwal

Sri Dattatraya

SEBI Nominee Directors

Shri R.P Singh IAS Joint Secretary of Department of Defence Production and Supplies,

Ministry of Defence, New Delhi.

Shri N.S Ponnunambi Register of Companies, Hyderabad.

Public Nominee Directors

Shri D. Seetharamaiah - Practicing CA

Dr. Braj Kishore - Professor (Retd.)

Shri S. Dasaratharama Reddy - Retired Judge

Dr. B. Brahmaiah - Professor

Shri M. Subramanyam - Executive Director

COMPUTERISATION

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The Stock Exchange business operations are equipped with modern communications

systems. Online computerization for simultaneously carrying out the trading transactions,

monitoring functions have been introduced at this Exchange since 1988 and the

settlement and the Delivery System has become simple and easy to the Exchange

members.

The HSE in-line Securities Trading system was built around the most sophistication state

of the Art Computers, Communication System, the proven VECTOR Software from

CMC and was one of the most powerful SBT Systems in the Country, operating in a

WAN environment, connected through 9.6 KBPS 2 wire leased lines from the offices of

the Members to the office of the Stock Exchange at Somajiguda, where the Central

System CHALLENGE-L DESK SIDE SERVER made of silicon graphics (SGI Model

No. 95602-S2) was located and connected to all the members who were provided with

COMPAQ DESKPRO 2000/DESKTOP 5120 computers connected through

MOTOROLA 3265 V 34 MANAGEABLE STAND ALONE MODEMS (28.8KBPS) for

carrying out business from computer terminal located in the offices of the Members.

HSE is the only Exchange in the country which has provided infrastructure to its

members for its members for trading through WAN and leased lines from the day one.

The HOST system exchange not only to expand its operations later to other Prime

Trading Centers outside the twin cities of Hyderabad and Secunderabad but also to link

itself into the inter-connected market system (ECMS) proposed by the federation of

Indian Stock Exchange (FISE) to inter-connect various Regional Stock Exchanges in

various States.

In the age of electronic Trading on-line information on rates from other major markets

was an essential input for efficiency. HSE provided on-line rates from BSE and NSE

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which not only enhanced the ability of HOST terminals to attract the investors but also

enable the members to avail arbitraging opportunities between Exchanges.

Clearing Houses

The Exchange set-up a Clearing House to collect the Securities from all the Members and

distribute to each member, all the securities due in respect of every settlement. The whole

of the operations of the Clearing House were also computerized.

Inter-Connected Market System (ICMS)

The HSE was the convener of a committee constituted by the Federation of Indian Stock

Exchanges for implementing an Inter-connected by Market System (ICMS) in which the

Screen Based Training System of Various Stock Exchanges was inter-connected to create

a large National Market. SEBI welcomed the creation of ICMS.

The HOST provided the networks for HSE to hook itself into the ISE. The ISE provided

the members of HSE and their investors, access to a large National network of Stock

Exchange.

The inter-connected Stock Exchanges is a National Exchange and all HSE members could

have Trading terminals with access to the National market without any fee, which was a

boon to the members of an exchange to have the Trading rights on a National Stock

Exchange (NSE), without any fee or expenditure.

Stock Brokers Insurance Policy

HSE had taken a comprehensive Stock Brokers Insurance Policy covering the members to

an extent of Rs.10 lakhs each and also insured the Clearing house. HSE was one of the

few to have such comprehensive Insurance policy coverage.

On-Line Surveillance

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HSE pays special attention to Market Surveillance and monitoring exposures of the

members, particularly the mark to market losses. By taking prompt steps to collect the

margins to mark the market losses, the risk of default by members is avoided in any

settlement. It is heartening that there have been no defaults by members since the

introduction of Screen Based Trading.

The Exchange restricted the effective Trading volumes and linked to the Capital

deposited with the Exchange, to obviate defaults and losses and contain speculation.

BASE MINIMUM GROSS EXPOSURE INTRA-DAY

CAPITAL LIMIT TRADING LIMIT

Rs. 4.00 lakhs Rs.40.00 lakhs Rs.132.00 lakhs

ADDITIONAL CAPITAL

Upto Rs. 6.00 lakhs Rs.60.00 lakhs Rs.120.00 lakhs

FURTHER ADDITIONAL CAPITAL:

Upto Rs. 8.00 lakhs Rs. 48.00 lakhs Rs. 96.00 lakhs

Settlement Guarantee Fund

The Exchange has introduced Trade Guarantee fund on 25.01.2000. This will insulate the

trading member from the counter-party risks while trading with another member. The

trading member and his investors will be assured of the timely completion of the pay-out

of funds and securities not with standing the default, if any, of any trading member of the

Exchange.

The short falls, if any, arising from the default of any member will be met out of the

settlement guarantee fund. Several pay-ins worth of crores of rupees in all the settlement

have been successfully completed after the introduction of the Settlement Guarantee fund,

without utilizing any amount from the Settlement Guarantee Fund.

CURRENT PLANS

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Depository Participant

The Exchange had also become a Depository Participant with National Securities

Depository Limited (NSDL) and Central Depository Services Limited (DCSL). The

depository functions can be undertaken by the Exchange by opening the accounts of

investors, members of the Exchange etc.

Floating of a Subsidiary Company For The Membership of Major Stock

Exchange Of The Country

The Exchange has already floated a Subsidiary Company in the name and style of HSE

Securities Limited for obtaining the Membership of NSE and BSE. The process of

acquiring the Membership of NSE has already been completed and SEBI was kind

enough to grant its registration to HSE Securities Limited.

Facility To Trade At NSE, Derivatives Trading, Net Trading Etc

The Exchange Incorporated a Subsidiary HSE Securities Limited with a paid up capital

of Rs.4.00 crores to NSE Membership, so that the members of the Exchanges had access

to the NSEs Trading Screen as Sub-brokers, Derivatives Trading and Bet Trading etc.

The Members of this Exchange had equal opportunity of participating in such trading like

any other NSDE member. The Subsidiary of the exchange commenced trading with HSE

members sub-brokers on NSE segment. During the year, the Exchange also acquired the

membership if BSE and Trading will commence soon.

Commodity Exchange

The Exchange by seeking the support of the State Government is planning to set up

online commodities Exchange to trade in certain Commodities since our State is one of

the major Agriculture Economies. The Online Commodity Trading with WAN

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connectivity will minimize the middle men operation and provide price support to the

producers.

DATA ANALYSIS & INTERPRETATION

FUND: TATA OPEN-ENDED BALANCED GROWTH FUND

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OBJECTIVE: Aims to invest in equity and debt oriented securities so as to give investor

balanced returns.

PORTFOLIO OF THE FUND

Sector

Nov 2012 Dec 2012

A Energy 9.87 11.31

B Finance 12.44 10.56

C Technology 7.55 8.26

D Automobile 6.91 7.25

E Health care 5.54 7.05

F Engineering 4.85 6.84

G Diversified 2.72 5.84

H FMCG 2.65 4.65

I Metals 2.06 4.01

J Services 1.94 3.43

Table No: 4.1

Note: Reasons for taking two months portfolio details in above mentioned fund are

If you observe two months portfolio November and December, you can see some

differences in values. Reason is Fund Manager will churn portfolio every month. So asset

allocation changes every month. But investors units will be same.

Portfolio of equity is 66.38%, but the above portfolio shows less than 66.38% reason, is

here I have taken only 10 sectors for every fund. This will not get any affect for the

analysis.

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Sector wise chart

Portfolio allocation chart

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Figure No:4.1(a)

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75.11

14.98

9.91

0

CHART SHOWING ASSET ALLOCATION OF

TATA BALANCED FUND

EQUITY

DEBT

OTHERS

Figure No: 4.1(b)

INTERPRETATION

The TATA Balanced Fund Portfolio consists of 75.11% Equity holdings, 14.98% Debt,

9.91% Money Market. It is evident from the data that though the investors have risk

taking ability, they balanced their investments by investing in Debt also. The advantage

of balanced fund based on market conditions, portfolio allocations can decrease to 50%

also. It is evident that fund manager is bullish side on market.

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FUND : BIRLA OPEN-ENDED BALANCED GROWTH FUND

OBJECTIVE: The Scheme aims to balance income requirements with growth of

Capital through balanced mix of investment in equity and debt.


Sector

NOV

2012

DEC 2012

A Finance 14.39 11.41

B Energy 11.55 7.15

Health care 6.18 6.97

D Technology 5.28 6.92

E Engineering 4.56 6.34

F Diversified 4.54 6.10

G Metals 4.22 4.28

H Automobiles 3.86 3.51

I FMCG 3.03 1.80

J Chemicals 1.31 1.67

Table No:4.2

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Figure No: 4.2(a)

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Figure No:4.2(b)

INTERPRETATION

The BIRLA Balanced Fund Portfolio consists of 30.07% Equity holdings, 24.02%

Debt, 45.91% Money Market. It is evident from the data that though the Investors

have risk taking ability, they balanced their investments by investing in Debt also.

Here fund manager, behaving portfolio very conservatively, so equity proportion

selected less when compare to remaining four funds.

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FUND : Pru ICICI OPEN-ENDED BALANCED GROWTH FUND

OBJECTIVE : Aims to invest in equity and debt oriented securities so as to give

Investor balanced returns.


65

SectorNOV 12 DEC 12

AFinancial

14.85 16.37

BTechnology

12.46 10.47

CAutomobile

8.25 7.85

DEnergy

5.76 6.92

EHealth care

7.25 6.43


GFmcg

4.31 4.04

HDiversified

3.5 3.85

IServices

3.29 3.59

J

Communication

3.9 3.00

K Metals 2.23 2.85


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Table No: 4.3


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Figure No: 4.3(a)

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70.6

18.75

10.65

0

CHART SHOWING ASSET ALLOCATION OF PRU ICICI

BALANCED FUND

EQUITY

DEBT

OTHERS

Figure No: 4.3(b)

INTERPRETATION

The Pru ICICI Balanced Fund Portfolio consists of 70.6% Equity holdings, 18.75% Debt

and 10.6% others. It is evident from the data that though the fund manager is taking high

risk even in balanced fund for this particular period. And at the same time have gave

priority to debt and other safety investment products.

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FUND : DSP BLACK ROCK OPEN-ENDED BALANCED

GROWTH FUND

OBJECTIVE: Seeks to generate long term capital appreciation and current income

from a portfolio constituted of equity and equity related securities as well as fixed income

securities.


Sector NOV

2012

DEC 2012

A Financial 14.49 11.34

B Energy 11.72 10.64

C Technology 8.43 8.63

D Engineering 5.87 8.48

E Health care 3.85 6.61

F FMCG 2.92 5.48G Services 2.83 4.54

H Automobiles 2.57 3.42

I Chemicals 2.51 3.17

J Construction 1.84 2.58

K Diversified 2.27 2.53

Table No: 4.4


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Figure No: 4.4(a)

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72.72

23.29

3.99 0

CHART SHOWING ASSET ALLOCATION OF DSP

BLAKROCK BALANCED FUND

EQUITY

DEBT

OTHERS

Figure No: 4.4(b)

INTERPRETATION

The DSP Black RockBalanced Fund Portfolio consists of 72.72% Equity holdings,

23.29% Debt, 3.39% Money Market. It is evident from the data that though the Investors

have risk taking ability more here also, their investment is not getting balanced properly,

so risk element is there.

FUND: JM FINANCIAL OPEN-ENDED BALANCED GROWTFUND

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OBJECTIVE:Aims to provide investors with liquidity and current income along with

capital appreciation.


Sector Nov 2012 Dec 2012

A Energy 12.45 14.79

B Automobile 7.75 9.85

C Diversified 5.65 7.66

D Metals 7.34 7.37

E Financials 10.65 5.99


G Technology 4.71 5.40

H FMCG 2.60 4.94

I HEALTH CARE 3.15 3.20

J Construction 2.67 3.12

Table No: 4.5


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Figure No:4.5(a)

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70.27

24.58

5.16

0

CHART SHOWING ASSET ALLOCATION OF

JM BALANCED FUND

EQUITY

DEBT

OTHERS

Figure No:4.5(b)

INTERPRETATION

The JM Balanced Fund Portfolio consists of 70.27% Equity holdings, 24.58% Debt,

5.16% Money Market. It is evident from the data that though the Investors have risk

taking ability, they balanced their investments by investing in Debt also. When compare

to last year portfolio, fund manager has taken less exposure towards equity, so it clearly

understands that fund manager is aggressive on equity markets.

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TATA OPEN-ENDED BALANCED GROWTH FUND

Table No: 4.6

Fund performance and NAV values over a period of 1 year.

Figure No: 4.6

BIRLA OPEN-ENDED BALANCED GROWTH FUND

75

DATE

1st APR

2012

1ST

JUNE

2012

1st AUG

2012

1st OCT

2012

1ST DEC

2012

1st FEB

2013

31st MAR

2013

NAV44.0946

60.4396 63.8779 68.8779 73.853 72.95 76.0252


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Table No: 4.7


76

DATE

1st APR

2012

1ST

JUNE

2012

1st AUG

2012

1st OCT

2012

1ST

DEC

2012

1st FEB

2013

31st MAR

2013

NAV161.2176

230.133 238.42 258.07 265.98 264.03 277.09


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Figure No: 4.7

Prudential ICICI OPEN-ENDED BALANCED GROWTH FUND

Figure No: 4.8

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78

DATE

1st APR

2012

1ST

JUNE

2012

1st AUG

2012

1st OCT

2012

1ST

DEC

2012

1 ST FEB

2013

31st MAR

2013

NAV36.139

48.675 51.262 55.79 58.042 57.988 59.945


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Figure No: 4.8

DSP MERRILL LYNCH OPEN-ENDED BALANCED GROWTH FUND

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Table No: 4.9


Figure No: 4.9

PERFORMANCE EVALUATION

80

DATE

1st APR

2012

1ST

JUNE

2012

1st AUG

2012

1st OCT

2012

1ST

DEC

2012

1 ST FEB

2013

31st MAR

2013

NAV42.139

45.720 50.571 55.77 56.455 58.584 60.352


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We are interested in discovering if the management of a mutual fund is performing well;

that is, has management done better through its selective buying and selling of securities

than would have been achieved through merely buying the market picking a large

number of securities randomly and holding them throughout the period?

One of the most popular ways of measuring managements performance is by comparing

the yields for the managed portfolio with the market or with a random portfolio.

The following formula can be used to evaluate Mutual fund performance:-

Where:

NAV t = per-share net asset value at the end of year t

D t = Capital appreciation during two years.

NAV t-1 = per-share net asset value at the end of the previous year.

PERFORMANCE EVALUATION OF SELECTED FUNDS

81

NAVt + Dt

1

NAVt 1


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NAV t-1 = 1st October 2011

NAV t= 30th September 2012

TATA Open-Ended Balanced growth Fund

NAV t-1 NAV t D t (NAV t NAV t-1)

51.6559 86.7045 35.0486

Applying the formula we get

= 35.0486

51.6559

= 0.6785 x 100

= 67.85 %

BIRLA Open-Ended Balanced growth Fund


177.8434 323.33 115.8724

Applying the formula we get-

= 145.4866

177.8434

= 0.8180 x 100

= 81.80%

Pru ICICI Open-Ended Balanced growth Fund


31.7077 46.97 15.2623

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= 15.2623__

31.7077

= 0.4813x 100

= 48.13%

DSP MERRILL LYNCH Open-Ended Balanced growth Fund


43.6076 70.11 26.5024


= 26.5024__

43.6076

= 0.6077x 100

= 60.77%

JM FINANCIAL Open-Ended Balanced growth Fund


18.9417 25.0424 6.1007


= 6.1007__

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18.9417

= 0.322 x 100

= 32.20%

FUND PERFORMANCE RANKING

Name of the Fund Returns Rank

BIRLA open-ended Balanced Growth Fund81.80% 1

TATA open-ended Balanced Growth Fund

67.85%2

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DSP Black Rock Balanced Growth Fund

60.77%3

Prudential ICICI open-ended Balanced Growth Fund48.13% 4

JM financial open-ended Balanced Growth Fund 32.20% 5

Table No: 4.10

CHART OF FUND PERFORMANCE RANKING

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Figure No: 4.10

FINDINGS

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The Biggest advantage with Mutual Funds is that the investor doesnt need huge amount

tube invested in all his favorite stocks and bonds. Most Mutual Funds have a minimum

investment of Rs.5000.

The Balanced fund investments are a combination of Equity, Debt & Money

markets. As such, the investments are diversified and the risk is balanced.

The Balanced Fund Investments provide, steady and assured returns to the investors.

This is one of the important reasons, for choosing the balanced investments.

Five Balanced fund schemes are chosen for the study Tata, Birla, Pru ICICI, DSP

BLACK ROCK & JM Financial. The Funds Chosen for the study are some of the

top performers in the Market.

Birla Mutual fund has recorded highest returns in this period and least generated by

JM and Prudential ICICI.

Asset allocation in balanced fund depends upon fund manager, but market conditions

are same to the all funds, TATA fund manager expected growth in equity diversified

and high priority given towards equity.

All the funds performed above bench mark in the study.

SUGGESTIONS

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In the market have less risk taking capabilities, the balanced fund investments are

suitable one.

Launch new mutual fund schemes according to investors perception.

The Balanced fund investments are a combination of Equity, Debt & Money

markets. So Balanced funds are suitable to lower income group investors.

In volatility market conditions balanced funds are better than equity funds, and

investors who are not ready to bear risk, they can go for balanced funds.

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CONCLUSION

The information in this project report will provide the investors the basic knowledge

about Mutual Funds and enable them to choose the best investments suiting their

risk/return profile. Basing on the information in this project, recommendations made to

investors are as follows

Mutual funds provide regular and steady income to investors.

Systematic investment plan in Mutual Funds is the best tool for sound investment to

small investors who prefer investments in installments.

Liquidity, transparency, well regulated and flexibility are some of the features of

Mutual funds which is very advantageous to investors.

The entry load and exit load in Mutual Funds is very low which does not affect the

ultimate yields.

Safety of funds & positive rate of return over inflation are the basic two needs of

traditional investor. Mutual Fund is well equipped to cater to these basic desires of

investors.

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