It is an internship project report

1. A COMPARATIVE STUDY ON DIRECT
EQUITY INVESTING AND MUTUAL FUND
INVESTING

3. INTRODUCTION
Geojit BNP Paribas, today, is a leading retail financial services company in
India with a growing presence in the Middle East. The company rides on its
rich experience in the capital market to offer its clients a wide portfolio of
savings and investment solutions. The gamut of value-added products and
services offered ranges from equities and derivatives to Mutual Funds, Life &
General Insurance and third party Fixed Deposits. The needs of over 710,000
clients are met via multichannel services - a countrywide network of over 486
offices, phone service, dedicated Customer Care Centre and the Internet.

4. PRODUCTS & SERVICES OF GEOJIT
BNP PARIBAS
 Derivatives
 Currency futures
 Equities
 Mutual fund distribution
 Life insurance, general insurance & IPO
 PMS
 Property services
 Margin funding
 3 in 1 account

5. THE EQUITY CAPITAL
 Investors owning equity shares of a company are owners of the company.
They are issued equity shares of the company, as evidence of such ownership.
 Equity investors are not entitled to any fixed return or repayment of capital.
However, they are entitled to the benefits that arise out of the performance of
the company. If the business fails, they may lose the entire investment. Of all
the financiers, they take the most risk.
 Total equity capital of a company is divided into equal units of small
denominations, each called a share.

6. MUTUAL FUND
 A mutual fund is a professionally managed type of collective investment
scheme that pools money from many investors and invests it in stocks,
bonds, short-term money market instruments and other securities.
 Mutual funds have a fund manager who invests the money on behalf of the
investors by buying / selling stocks, bonds etc.
 Currently, the worldwide value of all mutual funds totals more than $US 26
trillion.

7. RESEARCH METHODOLOGY
Aim:
 This study aims at creating awareness in the minds of investor in terms of
risk, return, liquidity & marketability of their investments. Also focuses
on which would be the better investment for an individual investor.
Objectives:
 To compare Equity and Mutual Fund Schemes in respect of their risk &
return.
 Analysing the performance of equity shares and mutual fund schemes
with their benchmark NSE CNX Nifty.
 Finding the performance by taking the quarterly average of 10 years.
 Provide information about pros and cons of investing in Equity and
Mutual Funds

8. Scope of the study:
 The study is primarily deals with equity and mutual fund investments. The
study covers 10 randomly selected stocks out of 50 NSE CNX NIFTY
companies and 10 randomly selected mutual fund schemes out of mutual
fund industry in India for comparison. The analysis is strictly based on share
prices and Net asset values of the mutual funds which will help an investor
to identify better investment avenues from the market. The study goes
through a period in which the market has shown booms, depression, and
consistent performance.

9. Research Methodology:
 Sampling technique: - Since the population is heterogeneous stratified
random sampling were taken
 Sample size: - Ten companies and ten mutual fund scheme were selected.
 Sample description: - In this study 10 companies have been selected from
NSE CNX Nifty and 10 mutual funds selected on the basis of their Net
Asset Value and after that comparison made between them, using their
benchmark.

10. Data collection methods:
 The entire date were collected from the secondary source. Internet is
main source of secondary sources of date collection used. Magazines,
Newspapers and Journals were also used for collecting data.
Analysis and Interpretations:
 The analysis and interpretation has been made with the help of graphs
and percentage of returns of securities. Microsoft Excel 2013 is the
software used for this purpose.

11. Limitations of the study:
 The sample size is limited by 10 each on equity shares and mutual funds
 The benchmark for equity shares and mutual funds is NSE CNX NIFTY,
other benchmarks for securities may have shown good or bad performance.
 The data was collected from the time horizon of 10 financial years starting
from April 2004 to March 2014.
 The comparison here made strictly on price of equity shares and NAV of
mutual funds, the study hasn’t gone deep into other factors.
 The data has been collected from secondary sources only, relevance of
information may not fully trustworthy.

12. ANALYSIS AND INTERPRETATION
Benchmark:
NSE CNX NIFTY
FY POINT(Avg) %RETURN % RETURN(YoY)
2004-05 1841.81 0% 0%
2005-06 2765.28 50% 50%
2006-07 3626.14 97% 31%
2007-08 5053.19 174% 39%
2008-09 3485.46 89% -31%
2009-10 4956.30 169% 42%
2010-11 5827.68 216% 18%
2011-12 5127.63 178% -12%
2012-13 5642.46 206% 10%
2013-14 6146.43 234% 9%

13. 250%
200%
150%
100%
50%
0%
-50%
7000.00
6000.00
5000.00
4000.00
3000.00
2000.00
1000.00
0.00
NSE CNX NIFTY
2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
POINT(Avg) %RETURN % RETURN(YoY)

14. EQUITY SHARES
1. Hindustan Unilever limited
2. Larsen & Toubro Ltd.
3. Bharat Petroleum Corporation Limited
4. Infosys Ltd.
5. Dr. Reddy's Laboratories Ltd.
6. State Bank of India
7. Tata Steel Ltd.
8. Maruti Suzuki India Ltd.
9. Bharat Heavy Electricals Limited
10. Bharti Airtel Ltd.

15. MUTUAL FUNDS
1. Birla sun life equity fund-regular plan-growth
2. Reliance growth fund-regular plan-growth
3. ICICI prudential top 200 fund-regular plan-growth
4. Tata pure equity fund-regular plan-growth
5. SBI magnum equity fund-regular plan-growth
6. Canara Robeco equity diversified fund-regular plan-growth
7. HDFC top 200 fund-regular plan-growth
8. Franklin India prima fund-regular plan-growth
9. UTI equity fund-regular plan-growth
10. Sundaram growth fund-regular plan-growth

16. COMPARATIVE ANALYSIS AND
INTERPRETATION
 One of the main advantage of investing directly into equity stocks is that,
huge fluctuations will affect 100% positively or negatively to investors.
Wherein such a huge fluctuations will balanced in mutual funds, as mutual
funds has a bunch of equity stocks in its portfolio. Thus investing in mutual
funds are less risky than direct equity investing.
 Here 2 of the companies – State bank of India and Bharti airtel limited has
given returns to long term investors in 400s percent. The mutual funds has
not given such huge returns. As the graphs and tables shows that the price of
direct investing in equity stocks is too high than the NAV of mutual funds,
which is not affordable for investors with small amount of money.

17.  One of the main advantage of mutual fund is that diversification, if an
investor has got lessor money, as he buys mutual fund units, his/her money is
investing in diversified manner. In a mutual fund industry the portfolio is
managed by the fund manager and his team. But in a direct investing method
his/her portfolio has to manage by the investors himself.
 All is about the investor’s preference, some investors find satisfaction in
managing his funds in portfolio. An investor can’t order the fund manager to
buy stocks of his preference in a mutual fund investing.
 The main 3 things every investor has to bear in mind before going to invest
directly are:
1. The time of entry,
2. Choosing a company, and
3. Time of exit.

18.  But it is not so important when an investor invest in a mutual funds, because
the fund’s fund manager will take care of these things. Only one thing the
investor has to bear in mind which is choosing a scheme from the bunch of
schemes of the AMCs. If an investor is investing through a distributor, he
will help the investor to choose a better funds which suit with the investors
financial goals.
 About the huge fluctuation in equity shares, few of the main examples of
stock which had fluctuate more for the past 10 years are:
Suzlon Energy – low: ₹ 5.72 (mid 2013) & high: ₹ 460(early 2008)
Adani Enterprises – low: ₹ 5(mid 2001) & high: ₹ 785.25(late 2011)
Reliance Communications – low: ₹ 46.50(mid 2012) & high: ₹ 844(early 2008)
Wockhardt Pharma – low: ₹ 67.50(early 2009) & high: ₹ 2166.05(early 2013)

19. CONCLUSION AND
RECOMMENDATIONS
Conclusion
 For a start-up investor mutual fund investment method is more favourable
and affordable, as risk is low compared to direct investing.
 For an investor with lessor money, he/she should go for mutual fund
investing as NAV is lower than the price of a stock.
 If an investor wants to make profits out of speculation then he should choose
direct investing in equity shares.
 Investing in direct equities makes an investor to study more about the
company, the financial market, and the economy.

20.  People need a systematic way of investing should go for mutual fund
investing.
 Investing with a fixed income strategy, should choose mutual fund as an
investment choice.
 Short term as well as medium term investors should choose direct equity
investing as an investment choice.
 Mutual fund investing is termed as a long term horizon of getting a good
return, as the fund is going in a systematic way.
 If an investor has got time in making a market study and managing his/her
portfolio, should invest in equity shares directly, otherwise go for mutual
fund investing.
 If an investor like in buying and selling stocks, managing the stocks in his
portfolio should choose direct investing in equity stocks.

21. Recommendations
 Direct investing in equity shares is the best way to learn about stock market
and economy of a nation.
 If you really enjoy in managing the portfolio, should choose direct investing.
 If you don’t know anything about stock market, just getting an income is
your concern, you should choose a mutual fund scheme.
 Make a good study before choosing an investment option.
 Be aware that investing in any securities whether direct investing or mutual
fund investing, involves a certain risk. Analysis the risk with the financial
backups and then choose an investment option.

22. THANK YOU
BY,
MR. AKASH JEEVAN
BBA+GDBA(2013-2016)
AGBS, COCHIN