Revised version of retail investment in corporate securities b.v.raghunandan
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Revised version of retail investment in corporate securities b.v.raghunandan






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Revised version of retail investment in corporate securities b.v.raghunandan Revised version of retail investment in corporate securities b.v.raghunandan Presentation Transcript

  • Retail Investment in Corporate Securities-B.V.Raghunandan, SVS College, Bantwal
    National Conference on Indian Retail Industry,
    Nehru Memorial College, Sullia.
    September 16, 2011
  • Corporate Securities: A Unique Investment
    Regular Income by way of Annual Dividend, Interim Dividend, Special Dividend, Surplus Dividend
    Capital Appreciation by way of Bonus Shares
    Capital Appreciation by way of Increase in market value
    Benefits from Corporate Action like share splitting, sponsored ADR, M&A
    Real Time knowledge of prices
  • Significance of Retail Industry
    Managerial Stability due to wide-spread customers
    Requisite to move towards a perfect market
    Contrarian opinions needed for a well functioning market
    Independent opinions will dilute the broker domination
    Availability of a huge size of funds
  • Retail Industry: A Fair Weather Concept
    Fluctuations in prices due to speculative activities
    Speculation is needed in any organised market
    Lack of stability in prices make the life of the investors a hell
    Untrained Investors with short-term perspective
    Emotional decisions: frenzy of the movement
    The market sensitivity to every major event terrorises the investors
    Buffoons in the form of experts giving misjudged opinions
  • Investor Education: The Most Difficult Exercise
    Converting emotional decisions into rational decisions
    Convincing them about long-term investment
    Exposure to analysis of financial information
    Wisdom not to be moved by the vested opinions
    ignore the concept of loss of profit
  • Traditional Retailers
    Geographic concentration: Gujarat, Rajastan, and West Bengal
    Community Biased: Parsis, Marwadis, Chettiars, GSBs and Brahmins
    Urban Concentration
    Broker Dominated with broker participating in the sale and purchase
  • Change Agents
    DhirubhaiAmbani of Reliance Industries70s
    IT Companies of the 80s
    Media Companies of the 90s
    Establishment of SEBI in 1988
    Establishment of NSE in 1994
    Entry of FIIs
    Corporate Brokerage
    Shorter Period of Allotment in Book-Building
    Shorter Settlement Cycle
  • Primary market
    CCI assured a stable market
    SEBI introduced free pricing
    Corporates found it highly profitable
    Follow on Issues brought in huge premium
    Investors incurred a huge loss
    Less Credibility
  • Challenges
    Bringing back credibility to primary market
    Free pricing to be done away with in IPOs
    SEBI should develop a formula for fixing the price or price band on the conservative model of CCI
    More stringent implementation of SEBI regulation on recommendations
    Risk Factors must be more clearly highlighted
  • Opportunities
    Infrastructure projects
    Commercial Agriculture
    Pharma Research and Pharmaceuticals
    Power Sector Development
    Indigenisation of Defence Armaments
    Aircraft Manufacturing
  • Strategies
    Better Investor Education
    Screening the activities of institutions in IPOs
    Avoiding the doomsday opinions
    More slick prospectus accompanying the application forms rather than a part of it
    Better screening of the SEBI approval for an IPO
  • Stock Exchange: Challenges
    Curbing speculative transactions
    Avoiding technical analysis
    Value investment strategies
    Prohibiting cross-holding in the companies
    Screening the activities of the promoters
    Restricting managerial remuneration in Companies
  • Opportunities
    More Inflow of FII money
    Better public finance through disinvestment
    Gains for the Government through recapitalisation of banks
    More Venture Capital Participation
    Larger body of retailers
    More stable operations