Study Of Indian Equity Market And Various Financial Instrument Of Shcil

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Study Of Indian Equity Market And Various Financial Instrument Of Shcil

  1. 1. Study of Indian equity market and various financial instruments of SHCIL Submitted By: Manish Sonowal Symbiosis Institute of International Business Symbiosis International University External Guide: Internal Guide: Mr R Keshav Mrs. Asmita Chitnis Branch Manager Faculty SHCIL, Guwahati SIIB, PuneSubmitted in partial fulfillment of the requirements for the award of degree of Master of Business Administration of Symbiosis International University. Session 2010-2012
  2. 2. ACKNOWLEDGEMENT I would like to express my sincere gratitude to all those who have given their valuable time, guidance, support and have been a source of inspiration during the course of this project. My sincere thanks go to Mr R Keshav, Branch Manager SHCIL Guwahati, for giving me an opportunity to gain more knowledge and for his support, guidance and cooperation throughout to accomplish this project. I would also like to express my deep sense of gratitude to my Project guide, Mr Jugma Jyoti Bordoloi, Executive/Sub Broker SHCIL Guwahati, for his valuable guidance, continuous encouragement and patience in discussing my problems. Words fall short acknowledging immense support lent to me by the entire team of SHCIL Guwahati, who have been of the greatest help in bringing out my task in the present shape. I would like to thank all the respondents who have offered their opinions and suggestions through the survey. I am equally grateful to my college mentor Ms. Asmita Chitnis and Finance Professor Ms. Madhvi Sethi for their continuous help and support throughout the project. Best Regards, Manish Sonowal SIIB, Pune1
  3. 3. DECLARATION I hereby declare that the project work entitled “Study of Indian Equity Market and the Financial Instruments of SHCIL” conducted at Stock Holding Corporation of India Ltd., Guwahati Submitted in partial fulfillment of the requirements for the degree of Master of Business Administration of Symbiosis International University, is a record of an original work done by me under the guidance of my college mentor Mrs. Asmita Chitnis, Symbiosis Institute of International Business, Pune. This project work has not been submitted for the award of any other degree/ diploma/ fellowship of other similar titles or prizes. Regards, Manish Sonowal SIIB, Pune2
  4. 4. TABLE OF CONTENT 1. INTRODUCTION a. Preface…………………………………………………………5 i. Increasing popularity of investment ii. Objective of investment iii. Top 10 investment options in India b. Objectives of the study…………………………………………10 c. Research Methodology…………………………………………11 i. Title of the study ii. Duration of the study iii. Significance and need of the study iv. Research type v. Source of the data vi. Data collection method vii. Sample size viii. Preliminary study ix. Questionnaire design x. Analysis technique xi. Limitations of the study 2. COMPANY PROFILE a. About the company……………………………………………14 i. Subsidiaries ii. Credentials iii. Accolades and certifications iv. Financials b. Services offered by SHCIL……………………………………..17 3. LITERATURE REVIEW a. Equity market………………………………………………...20 b. Indian Equity Market……………………………………….....213
  5. 5. c. SEBI securities and exchange board of India…………………...22 d. Role of Stock Exchanges……………………………………..23 e. Index……………………………………………………….25 f. Sensex the barometer of Indian Capital Market………………..25 i. Sensex Calculation Methodology ii. BSE Sensex iii. Maintenance of SENSEX g. NIFTY………………………………………………………28 h. Depository…………………………………………………..28 i. Listing of Securities…………………………………………..29 j. The big picture of equity market………………………………30 k. Equity as an investment……………………………………….30 l. Market trend in equity investment…………………………….31 i. Bull Trend ii. Bear Trend m. Fluctuation in Stock Market…………………………………..35 4. ANALYSIS AND INTERPRETATION a. Analysis of the market trend of some companies……………….39 b. SWOT analysis for equity investment…………………………41 c. Analysis of the questionnaire………………………………....43 i. Sub-Brokers ii. Investors 5. SUGGESTIONS AND RECOMMENDATION……………………..54 6. CONCLUSION…………………………………………………...55 7. ANNEXURE a. Questionnaire……………………………………………….56 b. Bibliography…………………………………………………604
  6. 6. Preface Personal finance discipline demands every individual to plan for expenditure and savings against current income. As investors are getting more educated, aware and prudent, they look for innovative investment instruments so that they are able to reduce investment risk, minimize transaction costs and maximize returns along with certain level of convenience. As a result there has been advent of numerous innovative financial instruments such as bonds, company deposits, insurance, equity and mutual funds. In the present situation where stock market is going up and down, it is necessary to invest consciously in the market. This study is about the trend in the stock market which enables the investor in taking decision regarding investment. Before working on the project a brief study was done on some of the various investment options in India and reasons for the increasing popularity of investment, these are: Increase in gross domestic savings. Change in risk adverse nature of Indian investors. Increase in working population. Larger family incomes. Provision of tax initiatives in respect of investment in specified channels. Attractive investment alternatives. Increase in investment related publicity. Ability of investment to provide income and capital gains.5
  7. 7. OBJECTIVE OF INVESTMENT An investor has various avenues for investment for his savings to flow on. Savings can be invested in assets depending on their risk and return characteristics. The objective of the investor is to minimize the risk involved in the investment and maximize the return from the investment. Rise in price or inflation erodes the value of the money. When the general price of the goods rises, each unit of currency buys fewer goods and services. The value of money declines. Thus saving is invested to provide a hedge or protection against inflation. Thus the objective of investor can be stated as: Objective of InvestmentMaximization Minimization of Hedge against of return the Risk inflation Investor should be prepared to assume higher risk only if he expects to get proportional high returns. There is trade-off between risk and return. The expected return is directly proportional to the risk. There are different financial assets with varying risk return combinations in financial markets. Debentures and preference shares of the companies constitute the medium risk category, whereas equity shares are high risk category of financial assets. Investor tries to maximize his wealth by choosing the optimum combination of risk and expected return in accordance to his preference and capacity.6
  8. 8. TOP 10 INVESTMENTS OPTIONS IN INDIA: Fixed Deposit(FD) Fixed deposit accrues 10% of yearly profits, depending on the bank’s tenure and guidelines, which makes it widely sought after and safe investment alternative. The minimum tenure of FD is 15 days and maximum tenure is 5 years and above. Senior citizens are entitled for exclusive rate of interests on FD. Insurance Policies Insurances features among the best investment alternative as it offers services to indemnify your life, assets and money besides providing satisfactory and risk free profits. Indian Insurance market offers various investment options with reasonably prices premium. Some of the popular insurance policies in India are Home Insurance policies, Life Insurance policies, Health Insurance policies and Car Insurance policies. National Saving Certificate(NSC) National Saving Certificate (NSC) is subsidized and supported by government of India as it is a secure investment technique with a lock in tenure of 6 years. There is no utmost limit in this investment option while the highest amount is estimated as 100. The investor is entitled for the calculated interest if 8% which is forfeited two times in a year. National Saving Certificate falls under Section 80 C of IT Act and the profit accrued by the investors stands valid for tax deduction up to 1,00,000. Real estate Indian real estate industry has huge prospects in sectors like commercial, housing, hospitality, retail, manufacturing, healthcare etc. termed as the “money making industry”, reality sector of India promises annual profits of 30% to 100% through real estate investment.7
  9. 9. Public Provident Fund Like NSC, Public Provident Fund (PPF) is also supported by the Indian government. An investment of minimum 500 and maximum 70,000 is required to be deposited in a fiscal year. The prospective investor can create a PPF account in a GPO or head post office or in any sub divisions of the centralized bank. PPF also falls under Section 80C of IT Act so investors could gain income tax deduction of up to 1,00,000. The rate of interest of PPF is evaluated yearly with a lock in tenure of maximum 15 years. The basic rate of interest in PPF is 8%. Stock Market Investing in share market yields higher profits. Influenced by unanticipated turn of market events, stock market to some extent cannot be considered as the safest investment options. However, to accrue higher gains, an investor must update himself on the recent stock market news and events. Mutual Funds Mutual funds firm accumulate cash from willing investors and invest it in share market. Like stock market, mutual fund investment are also entitled for various market risks but with a fair share of profits. Equity Private equity is expanding at a fast pace. India acquired US $13.5 billion in 2008 under equity shares and featured among the top 7 nations in the world. In 2011, the total equity investment is predicted to increase up to USD 20 billion. Indian equities promise satisfactory returns and have more than 365 equity investment firms functioning under it.8
  10. 10. Gold Deposit Scheme Controlled by SBI, gold deposit scheme was instigated in the year 1999. Investments in this scheme are open for trusts, firms and HUFs with no specific upper limit. The investor can deposit invest minimum of 200 gm in exchange for gold bonds holding a tariff free rate of interest of interest of 3%-4% in the basis of the period of the bond varying with a lock in period of 3 to 7 years. Moreover, gold bonds are not entitled of capital gains tax and wealth tariff. The sum insured can be accrued back in cash or gold, as per the investor’s preferences. Non Resident Ordinary(NRO) Funds Investing in domestic (NRO) is one of the best investment alternatives for NRIs who wish to deposit their income accrued abroad and maintain it in Indian rupees. Investment can be done in Indian financial institutions including the Non-banking Finance Companies which are listed with RBI. The interest returns accrued on in this account is entitled under the IT Act and is subject to 40 % tax reduction at source including the appropriate surcharge and education-cess. The NRI investor can repatriate up to USD 1 million every year, for genuine reasons, by forfeiting valid tariffs.9
  11. 11. Objectives of the study To study the trend in equity market. To understand the reasons for fluctuation in the equity market. To know the effect of these fluctuations on the Indian Economy. To know the basis on which the money is invested in equities by brokers/investors. To know the various financial instruments of SHCIL. To know the level of awareness among the people about the services of SHCIL. To know the level of satisfaction among the investors with the services of SHCIL.10
  12. 12. Research Methodology TITLE OF THE STUDY The Study of Indian Equity market and various financial instruments of SHCIL DURATION OF THE STUDY The study was conducted during 2 months training from April 18, 2011 to June13, 2011. SIGNIFICANCE AND NEED OF THE STUDY Being the fourth largest economy in the world that has second largest GDP among the developing countries, in purchasing power terms, India is poised for growth with macro-economic stability and by 2025 Indian economy is projected to be about 60% in size of the US economy. The investment scenario in India has gone through area fall changes than what it was twenty years back, after the liberation policy of 1991. The study is an attempt to acquire knowledge on the trend of equity market and to know about the various financial instruments provided by SHCIL and also to know the level of awareness and satisfaction among the investors of SHCIL. RESEARCH TYPE The research type used is Descriptive in nature as this research is used to obtain information on the current status of the phenomena to describe “what exists” with respect to the variables or conditions in a situation. The research carried out is both quantitative and qualitative in nature.11
  13. 13. SOURCE OF THE DATA: Data and information for the study were collected from both primary and secondary sources. The primary data are collected from the investors and sub- brokers through personal and telephonic interview. Secondary data were collected from books, magazine and internet. DATA COLLECTION METHODS: a. Questionnaire b. Personal interview c. Telephonic interview d. Observation SAMPLE SIZE: The study on the financial instruments of SHCIL was done with its 100 existing investors. PRELIMINARY STUDY: Prior to the actual questionnaire design and data collection, preliminary study was conducted through general discussion with the experienced personals of SHCIL. QUESTIONNAIRE DESIGN: The questionnaire was designed on basis of the information available from the preliminary study. Most of the questions were multiple choices. Special care was taken while designing the questionnaire to gather maximum information.12
  14. 14. ANALYSIS TECHNIQUE: Data collected from the observation and respondents were analyzed using standard statistical techniques. Further discussions were held with the organizational guide in this connection. The conclusion of the study and recommendation were made on the basis of findings and analysis of the survey. LIMITATIONS OF THE STUDY: The survey was restricted to only a small sample of respondents as compared to the total clientele of SHCIL. The sample size may not adequately represent the actual market. The research was conducted within a short period of two months. So this may not reflect the actual picture of the market. Lack of interest and busy life of the customers may have influenced the responses. As some of the questions are related to the financial status of the respondents and people generally don’t want to reveal their financial status, the answers may not be genuine. As the study also has some secondary data, the study has gained vulnerability; the correctness of this report is restricted and limited by the data so collected and with the sincerity of the respondents. Some of the data have been collected from the telephonic interview, so the respondents were not properly able to go through the questionnaire.13
  15. 15. ORGANIZATIONAL PROFILE Stock Holding Corporation of India Stock Holding Corporation of India Ltd. (SHCIL) was incorporated as a special initiative of the Government of India as a Public Limited Company in 1986. It has been jointly promoted and owned by leading Banks and Financial Institutions viz., IDBI Bank Ltd., ICICI Bank Ltd., SU-UTI, IFCI Ltd., LIC, GIC, NIA, NIC, UIC, and TOICL, all leaders in their fields of business. SHCIL has established itself in India as a one-stop solution provider in the Financial Services domain. It has 192 offices/facilitation centers across the country and 225 branches all over India and is now expanding its presence in the North Eastern region. SHCIL provides a portfolio of clearing and settlement, physical custody (vault), institutional DP, asset servicing, client relationship management and ancillary services for corporate customers. The products offered by the company are Equibuy, Fund Invest, GOI Bonds, Insurance, STOCK direct and Pension Fund. The company also offers derivatives clearing, PF fund accounting, SGL constituent account services, distribution of mutual funds and other capital market instruments, besides distribution of life and non-life insurance policies. The Internet services of the company entail online net trading, loan against shares, Western Union Money Transfer and E-stamping. It is a proud recipient of Computer Society of India award for best IT usage in the country. It also received Medal from Smithsonian Institute, Washington D.C, for Visionary and Innovative use of Technology in Finance, Banking and Insurance Industry.14
  16. 16. Subsidiaries SHCIL SERVICES LIMITED SHCIL PROJECTS LIMITED SHCIL COMMODITIES AND DERIVATIVES TRADING LIMITED UNITEC VALUE SOLUTIONS PTE. LIMITED, SINGAPORE Credentials: SHCIL, apart from being the country’s premier Custodian and Depository Participant, is also the largest Professional Clearing Member; backed by an immense capacity to process volumes with precision.  Every year it processes around40% of number of transactions on BSE and NSE.  20% of the market capitalization of all scripts listed on BSE, in terms of value processes. Well integrated front and back office, paper and electronic systems. A focussed Client Relation Team to manage your needs & queries. A single point contact for your comfort. In-house capability to address all IT needs in terms of software development, maintenance, back office processing, database administration, network maintenance, backups and disaster recovery. Multilevel security is maintained in software, applications and guards to access to various data, client and internal reports. Expertise in running processes utilising digital signatures. Regular Audits internal and external, by SEBI, Depositories, Clients and compliance to rules and regulations Constant review and benchmarking of processes to ensure adherence to global best practices Insurance cover with international re-insurance. Full Confidentiality of business operations.15
  17. 17. Accolades and certification: SHCIL has been conferred with the prestigious ISO/IEC 27001:2005 certification for “Data Centre and its Operations” by TUV-NORD, Germany. ISO/IEC 27001:2005 certification for SHCIL’s Data Centre and its Operations is an assurance to customer and other stockholders that SHCIL has benchmarked itself with the highest standards of security and due diligence in their IT system. Citation and Medal from Smithsonian Institute, Washington D.C, U.S.A. for “Visionary and Innovative use of Technology in Finance, Insurance and Real Estate". First South Asian Corporate to receive this. Computer Society of India Award for best IT usage in the Country. Our software processes have been assessed at SEI CMM Level 3. Accepted industry leader and pioneer in Custodial Systems. Financials: A zero-debt, financially sound company with healthy reserves. Have a consistent dividend-paying track record. During the financial year 2009-2010, SHCIL earned Profit Before Tax (PBT) of 38,100 lakh as against 9,020 lakh in the previous year recording increase by 322%. Profit After Tax (PAT) recorded growth of 329% to 28, 440 lakh after making a provision for tax of 9,660 lakh as against PAT of 6,640 lakh in 2008-09.16
  18. 18. SERVICES OFFERD BY SHCIL The company focuses to direct its product and services for the all-round benefit of the investors. Making available more and more financial services under one roof has always been a priority and investors have been the hallmark of SHCIL’s products and services. The various products and services provided by SHCIL are:  Institutional segment Custodial Services provided by SHCIL to institutional clients, include post trade settlement, safe-keeping, corporate actions and customized reporting.  Retail segment Depository services, sub-broking services, distribution of large number of financial products auxiliary services are offered to clients in the retail segment.  Depository services Since 1998, SHCIL has been extending depository related services to retail segment. The services offered by SHCIL include account opening, dematerializing and rematerialisation of securities, transaction processing and certain/ closure of the pledge.  Sub broking services As a part of its endeavor to be a market leader in financial services and provide quality services to its clients, SCHIL offers sub-broking operations through its subsidiary company, SHCIL Services Ltd (SSL) on the Bombay Stock Exchange (BSE). SCHIL through SSL, provides speedy, safe, reliable17
  19. 19. and affordable broking services to the retail, HNI and corporate clients, through its wide network of branches spread across the country. The clients also have the option of trading online through internet. The forthcoming initiatives are trading platform for Cash and Futures & Options Segment on the NSE.  Distribution of third party products SHCIL has tied up with all leading mutual fund houses for distributing their mutual fund schemes. The corporation is a corporate agent of LIC of India and the new India Assurance Company Ltd for promoting their Life and non-Life insurance products. SHCIL has tied up with reputed institutions, NBFCs & companies for distribution of their Fixed Deposit Schemes. It also distributes various other investment products viz. Capital gain bonds, Debt instruments, Initial Public Offers and Western Union Money Transfer. The Corporation has tied up with IDBI Bank Ltd for providing its investors Loan against Securities.  The auxiliary services The auxiliary services provided by SHCIL include extension of Professional Clearing Member service in Futures and Options (F&O) segment of stock exchanges, constituent SGL account services and PF accounting services. SHCIL is one of largest clearing member of the country.  E-stamping The corporation is authorized by the Ministry of Finance, Government of India to act as a Central Record keeping Agency (CRA) to design and implement an electronic method of stamp duty collection. The Corporation has entered into agreements and implemented the e- Stamping systems in the states of Gujarat, Karnataka, NCT of Delhi,18
  20. 20. Maharashtra and Assam. SHCIL has signed agreements with the governments of Tamil Nadu and Bihar. SHCIL is in discussion with the other State Governments.  Investment in advisory services The services provided by SHCIL include market insight, covering overview of all markets, morning report Indian Equity market to retail investors, comprehensive newsletter covering the daily news, Insurance reports and Mutual Fund report to investors. SHCIL brings out an analysis of quarterly results of selected top companies every quarter and a journal on mutual funds titled as, “M.F. Guide to Gain” every month.  Information technology SHCIL has in-house capability to address all IT needs in terms of software development and maintenance, back-office processing, data base administration and network maintenance methodologies. The Corporation’s Disaster Recovery Centre has become operational in respect of intuitional, retail back office and e-stamping segment.  Web initiative The Corporation’s website www.shcil.com provides a host of value added features to its clients. End of day (EOD) reports, intra-day statements and other time-critical settlement reports like delivery out and pay out receipt report re made available to all registered clients through the website. Clients can access personalized portfolio tracker, which tracks changes in their portfolio validation update to the hour. The corporate action tracker alert clients of the fourth coming corporate events relevant to their holding. As before the website continues to offer live stock quotes and various updated capital market and company related information19
  21. 21. Literature Review EQUITY MARKET An equity market or stock market is a public market for trading of company stock and derivatives at an agreed price; these are listed on a stock exchange as well as those only traded privately. The stocks are listed and traded on stock exchanges which are entities of a corporation or mutual organization specialized in the business of bringing buyers and sellers of the organizations to a listing of stocks and securities together. The World Federation of Exchanges reported that the total value of equities trading on the world’s major stock exchanges reached $54.9 trillion in December 2010. Hong Kong France Germany WORLD STOCK MARKET 4.90% 3.60% 3.00% CAPITALIZATION(JANUARY 2011) England 6.39% Rest of the World Canada 26.47% 4.10% Japan 7.79% Russia 1.40% Brazil 2.80% India 2.80% United States China 30.07% 6.69%20
  22. 22. THE INDIAN EQUITY MARKET The Indian Equity Market is more popularly known as the Indian Stock Market. The Indian equity market has become the third biggest after China and Hong Kong in the Asian region. The Indian equity market depends on three factors -  Funding into equity from all over the world  Corporate houses performance  Monsoon The stock market in India does business with two types of fund namely private equity fund and venture capital fund. It also deals in transactions which are based on the two major indices - Bombay Stock Exchange (BSE) and National Stock Exchange of India Ltd. (NSE). The equity market is also affected through trade integration policy. The country has advanced both in foreign institutional investment (FII) and trade integration since 1995. This is a very attractive field for making profit for medium and long term investors, short-term swing and position traders and very intraday traders. The Indian market has 23 stock exchanges. The larger companies are enlisted with BSE and NSE. The smaller and medium companies are listed with OTCEI (Over The counter Exchange of India). The functions of the Equity Market in India are supervised by SEBI (Securities and Exchange Board of India). Structure and size of equity market The two national exchanges, the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), each have fully electronic trading platforms with around 9400 participating broking outfits. Foreign brokers account for 29 of these. The combined market capital nears $126billion with over 10000 companies listed on the exchanges.21
  23. 23. SEBI- SECURITIES AND EXCHANGE BOARD OF INDIA SEBI is the Regulator for the Securities Market in India. It was formed officially by the Government of India in 1992 with SEBI Act 1992 being passed by the Indian Parliament. SEBI is headquartered in the business district of Bandra-Kurla complex in Mumbai, and has Northern, Eastern, Southern and Western regional offices in New Delhi, Kolkata, Chennai and Ahmedabad. The basic objectives of the board were defined as: to protect the interest of investors in securities to promote the development of securities market to regulate the securities market and for matters connected therewith or incidental thereto SEBI has introduced the comprehensive regulatory measures, prescribed registration norms, the eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and sub-brokers, registrars, portfolio managers, credit rating agencies, underwriters and others. It has framed by-laws, risk identification and risk management systems for Clearing houses of stock exchanges, surveillance system etc. which has made dealing in securities both safe and transparent to the end investor. SEBI has the right to search and seizure where just cause can be given. In matters of security trading, SEBI has the power to restrict and allow trading in a given scrip without any external (i.e. judicial or executive) intervention.22
  24. 24. ROLE OF STOCK EXCHANGES Stock exchanges have multiple roles in the economy, this may include the following: 1. Raising capital for businesses The Stock Exchange provides companies with the facility to raise capital for expansion through selling shares to the investing public. 2. Corporate governance By having a wide and varied scope of owners, companies generally tend to improve on their management standards and efficiency in order to satisfy the demands of these shareholders and the more stringent rules for public corporations imposed by public stock exchanges and the government. 3. Mobilizing savings for investment When people draw their savings and invest in shares, it leads to a more rational allocation of resources because funds, which could have been consumed, or kept in idle deposits with banks, are mobilized and redirected to promote business activity with benefits for several economic sectors such as agriculture, commerce and industry, resulting in stronger economic growth and higher productivity levels and firms. 4. Barometer of the economy At the stock exchange, share prices rise and fall depending, largely, on market forces. Share prices tend to rise or remain stable when companies and the economy in general show signs of stability and growth. An economic recession, depression, or financial crisis could eventually lead to a stock market crash. Therefore the movement of share prices and in general of the stock indexes can be an indicator of the general trend in the economy.23
  25. 25. 5. Facilitating company growth Companies view acquisitions as an opportunity to expand product lines, increase distribution channels, hedge against volatility, increase its market share, or acquire other necessary business assets. A takeover bid or a merger agreement through the stock market is one of the simplest and most common ways for a company to grow by acquisition or fusion. 6. Creating investment opportunities for small investors As opposed to other businesses that require huge capital outlay, investing in shares is open to both the large and small stock investors because a person buys the number of shares they can afford. Therefore the Stock Exchange provides the opportunity for small investors to own shares of the same companies as large investors. 7. Government capital-raising for development projects Governments at various levels may decide to borrow money in order to finance infrastructure projects such as sewage and water treatment works or housing estates by selling another category of securities known as bonds. These bonds can be raised through the Stock Exchange whereby members of the public buy them, thus loaning money to the government. The issuance of such bonds can obviate the need to directly tax the citizens in order to finance development, although by securing such bonds with the full faith and credit of the government instead of with collateral, the result is that the government must tax the citizens or otherwise raise additional funds to make any regular coupon payments and refund the principal when the bonds mature. 8. Redistribution of wealth Stock exchanges do not exist to redistribute wealth. However, both casual and professional stock investors, through dividends and stock price increases that may result in capital gains, will share in the wealth of profitable businesses.24
  26. 26. INDEX An index is basically an indicator. The Sensex is an "index". It gives a general idea about whether most of the stocks have gone up or most of the stocks have gone down. The Sensex is an indicator of all the major companies of the BSE. The Nifty is an indicator of all the major companies of the NSE. If the Sensex goes up, it means that the prices of the stocks of most of the major companies on the BSE have gone up. If the Sensex goes down, this tells you that the stock price of most of the major stocks on the BSE have gone down. On-Line Computation of the Index During trading hours, value of the Index is calculated and disseminated on real time basis. This is done automatically on the basis of prices at which trades in Index constituents are executed. SENSEX- THE BAROMETER OF INDIAN CAPITAL MARKET SENSEX, first compiled in 1986, was calculated on a "Market Capitalization- Weighted" methodology of 30 component stocks representing large, well- established and financially sound companies across key sectors. The base year of SENSEX was taken as 1978-79. SENSEX today is widely reported in both domestic and international markets through print as well as electronic media. It is scientifically designed and is based on globally accepted construction and review methodology. Since September 1, 2003, SENSEX is being calculated on a free-float market capitalization methodology. The "free-float market capitalization-weighted" methodology is a widely followed index construction methodology on which majority of global equity indices are based; all major index providers like MSCI, FTSE, STOXX, S&P and Dow Jones use the free- float methodology.25
  27. 27. The growth of the equity market in India has been phenomenal in the present decade. Right from early nineties, the stock market witnessed heightened activity in terms of various bull and bear runs. In the late nineties, the Indian market witnessed a huge frenzy in the TMT sectors. More recently, real estate caught the fancy of the investors. SENSEX has captured all these happenings in the most judicious manner. One can identify the booms and busts of the Indian equity market through SENSEX. As the oldest index in the country, it provides the time series data over a fairly long period of time (from 1979 onwards). Small wonder, the SENSEX has become one of the most prominent brands in the country. Sensex Calculation Methodology SENSEX is calculated using the "Free-float Market Capitalization" methodology, wherein, the level of index at any point of time reflects the free-float 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. This market capitalization is further multiplied by the free-float factor to determine the free-float market capitalization. The base period of SENSEX is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of SENSEX involves dividing the free-float market capitalization of 30 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 adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate SENSEX on a continuous basis.26
  28. 28. BSE Sensex The Bombay Stock Exchange SENSEX (acronym of Sensitive Index) more commonly referred to as SENSEX or BSE 30 is a free-float market capitalization- weighted index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies which are some of the largest and most actively traded stocks are representative of various industrial sectors of the Indian economy. Published since January 1, 1986, the SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the SENSEX is taken as 100 on April 1, 1979, and its base year as 1978-79. On 25 July, 2001 BSE launched DOLLEX-30, a dollar- linked version of SENSEX. As of 21 April 2011, the market capitalization of SENSEX was about 29,733 billion (US$660 billion) (42.34% of market capitalization of BSE), while its free-float market capitalization was 15,690 billion (US$348 billion) Maintenance of SENSEX One of the important aspects of maintaining continuity with the past is to update the base year average. The base year value adjustment ensures that replacement of stocks in Index, additional issue of capital and other corporate announcements like rights issue etc. do not destroy the historical value of the index. The beauty of maintenance lies in the fact that adjustments for corporate actions in the Index should not per se affect the index values. The BSE Index Cell does the day-to-day maintenance of the index within the broad index policy framework set by the BSE Index Committee. The BSE Index Cell ensures that SENSEX and all the other BSE indices maintain their benchmark properties by striking a delicate balance between frequent replacements in index and maintaining its historical continuity. The BSE Index Committee comprises of capital market expert, fund managers, market participants and members of the BSE Governing Board.27
  29. 29. NIFTY NIFTY is an Index computed from performance of top stocks from different sectors listed on NSE (National Stock Exchange). NIFTY consists of 50 different companies from 24 different sectors. NIFTY stands for National Stock Exchange’s Fifty. The companies which form index of NIFTY may vary from time to time based on may factors considered be NSE. NIFTY is for NSE similarly SENSEX is for BSE. Some mutual funds use NIFTY as a benchmark meaning the mutual fund’s performance is compared against the performance of NIFTY. On NSE there are futures and options available for trading with NIFTY as underlying index. India Index Services and Products Ltd. (IISL) own NIFTY. IISL is a joint venture with NSE and CRISIL. CRISIL is a subsidiary of Standard and Poor (S&P). And so NIFTY is also called as S&P CNX NIFTY. DEPOSITORY A depository holds shares and other securities of investors in electronic form. Through Depository Participants (DPs),it also provides services related to transactions insecurities. Its structure and functioning are similar to the Bank. Presently in India, there are two depository viz. National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). Both of them are registered with SEBI. What is a DP? DP is a member of a Depository who offers its services to hold securities of Investors (Beneficial Owners) in dematerialized form. DP is like a Bank branch. It is an agent of the depository. DP works as an interface between Depository and Investors. DPs are required to be registered with SEBI. If an investor wants to avail the services offered by Depository, he has to open a Demat account with DP similar to opening of a bank account with a branch of the bank.28
  30. 30. Depository is responsible for keeping stocks of investors in electronics form. There are two depositories in India, NSDL (National Securities Depository Ltd) and CDSL (Central Depository Services Ltd). LISTING OF SECURITIES Listing means admission of securities to dealings on a recognized stock exchange. The securities may be of any public limited company, Central or State Government, quasi-governmental and other financial institutions/corporations, municipalities, etc. The objectives of listing are mainly to: Provide liquidity to securities; mobilize savings for economic development; Protect interest of investors by ensuring full disclosures. The Bombay Stock Exchange (BSE) has a dedicated Listing Department to grant approval for listing of securities of companies in accordance with the provisions of the Securities Contracts (Regulation) Act, 1956, Securities Contracts (Regulation) Rules, 1957, Companies Act, 1956, Guidelines issued by SEBI and Rules, Bye-laws and Regulations of BSE. BSE has set various guidelines and forms that need to be adhered to and submitted by the companies. These guidelines will help companies to expedite the fulfillment of the various formalities and disclosure requirements that are required at various stages of  Public Issues  Indian Depository Receipts  Initial Public Offering  Amalgamation  Further Public Offering  Qualified Institutions Placements  Preferential Issues29
  31. 31. THE BIG PICTURE OF EQUITY MARKET Everything that rises has to fall in the equity market. There is no solid proof way to determine the trend of the equity market. Anything could happen to make all of this information collected to study the trend of the equity market worthless, but you do have to at least consider the past trends and understand that there is a chance the market will behave similarly and we’ll enter a period of significant decline. The best thing is to continuously invest in a diversified portfolio. If you keep buying even as the market falls, you’re just adding more shares at a lower price. Could you make more money if you only invested at the low points and sold at the high points compared to rupee cost averaging? Sure , but the likelihood of succeeding on a regular basis is low. For most people, the best thing to do is just continue investing bi-weekly, monthly or quarterly into the same diversified portfolio regardless of market conditions. When the market is down markets are choppy you’re just buying stocks or fund on sale. It will eventually come up again. EQUITY AS AN INVESTMENT An equity investment generally refers to the buying and holding of shares of stock on a stock market by individuals and firms in anticipation of income from dividends and capital gains, as the value of the stock rises. It may also refer to the acquisition of equity (ownership) participation in a private (unlisted) company or a startup company. When the investment is in infant companies, it is referred to as venture capital investing and is generally understood to be higher risk than investment in listed going-concern situations. The equities held by private individuals are often held via mutual funds or other forms of collective investment scheme, many of which have quoted prices that are listed in financial newspapers or magazines; the mutual funds are typically managed by prominent fund management firms. Such holdings allow individual30
  32. 32. investors to obtain the diversification of the fund(s) and to obtain the skill of the professional fund managers in charge of the fund(s). An alternative, which is usually employed by large private investors and pension funds, is to hold shares directly; in the institutional environment many clients who own portfolios have what are called segregated funds, as opposed to or in addition to the pooled mutual fund alternatives. A calculation can be made to assess whether an equity is over or underpriced, compared with a long-term government bond. This is called the Yield Gap or Yield Ratio. It is the ratio of the dividend yield of equity and that of the long- term bond. MARKET TREND IN EQUITY INVESTMENT Trends refer to the direction of share price movement for a long period of time such as month and quarter. The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities Bull Trend: The Accumulation Phase The first stage of a bull market is referred to as the accumulation phase, which is the start of the upward trend. This is also considered the point at which informed investors start to enter the market. The accumulation phase typically comes at the end of a downtrend, when everything is seemingly at its worst. But this is also the time when the price of the market is at its most attractive level because by this point most of the bad news is priced into the market, thereby limiting downside risk and offering attractive valuations. Public Participation Phase When informed investors entered the market during the accumulation phase, they did so with the assumption that the worst was over and a recovery lay31
  33. 33. ahead. As this starts to materialize, the new primary trend moves into what is known as the public participation phase. During this phase, negative sentiment starts to dissipate as business conditions - marked by earnings growth and strong economic data - improve. As the good news starts to permeate the market, more and more investors move back in, sending prices higher. This phase tends not only to be the longest lasting, but also the one with the largest price movement. The Excess Phase The last stage in the upward trend, the excess phase, is the one in which the smart money starts to scale back its positions, selling them off to those now entering the market. This is also usually the time when the last of the buyers start to enter the market - after large gains have been achieved. The late entrants hope that recent returns will continue. Unfortunately for them, they are buying near the top. During this phase, a lot of attention should be placed on signs of weakness in the trend, such as strengthening downward moves. Also, if the upward moves start to show weakness, it could be another sign that the trend may be near the start of a primary downtrend.32
  34. 34. Bear Trend The Distribution Phase The first phase in a bear market is known as the distribution phase, the period in which informed buyers sell (distribute) their positions. This is the opposite of the accumulation phase during a bull market in that the informed buyers are now selling into an overbought market instead of buying in an oversold market. In this phase, overall sentiment continues to be optimistic, with expectations of higher market levels. It is also the phase in which there is continued buying by the last of the investors in the market, especially those who missed the big move but are hoping for a similar one in the near future. As was the case in the accumulation phase, the distribution phase can be difficult to spot in its early stages. The reason for this is that it may be disguised as a secondary downward trend within the primary upward trend. From a technical standpoint, the distribution phase is represented by a topping of the market where the price movement starts to flatten as selling pressure increases. The mid to latter stages of the distribution phase will see prices start to fall as more and more investors, anticipating weakness, exit their positions. A new downward trend will be confirmed when the previous trend fails to make another consecutive higher high and low.33
  35. 35. Public Participation Phase This phase is similar to the public participation phase found in a primary upward trend in that it lasts the longest and will represent the largest part of the move - in this case downward. During this phase it is clear that the business conditions in the market are getting worse and the sentiment is becoming more negative as time goes on. The market continues to discount the worsening conditions as selling increases and buying dries up. This is also the point at which most trend followers and technical traders start to dump their positions and take short positions as the new downward trend has confirmed itself. The Panic Phase The last phase of the primary downward market tends to be filled with market panic and can lead to very large sell-offs in a very short period of time. In the panic phase, the market is wrought up with negative sentiment, including weak outlooks on companies, the economy and the overall market. During this phase we see many investors selling off their stakes in panic. Usually these participants are the ones that just entered the market during the excess phase of the previous run-up in share price. But just when things start to look their worst is when the accumulation phase of a primary upward trend will begin and the cycle repeats itself.34
  36. 36. FLUCTUATIONS IN STOCK MARKET These fluctuations occur partly because companies make money, or lose money, but it is much more involved than that. A stock is only worth what someone will pay for it. Usually, if a company makes a lot of money, its value rises, because people are willing to pay more for a company’s stock if the company is doing well. There are many other factors that affect the value of stocks. It is very hard to say just one or two factors affect the share prices. So, let us have a look at some of the factors that affect share prices. INTEREST RATES Interest rates, or the amount of money we have to pay a bank to loan money, or how much it has to pay us to keep our money in the bank. If interest rates are high, stock prices generally go down, because if people can make a decent amount of money, by keeping their money in banks, or buying bonds, they feel like they should not take the risk in the stock market. THE STATE OF THE ECONOMY If there is more money floating around, there is more flowing into companies making their prices rise. TIME OF THE YEAR Many stocks are seasonal, meaning they do well during certain parts of the year, and worse during the others. An example is an ice company. During the summer their products sell well, and thus their stock price goes up. But during the winters their price goes down.35
  37. 37. PUBLICITY Publicity has an effect on stock prices. If an article comes out saying that company ABC, has just invented this new type of ice that will revolutionize the industry, odds are their price will increase. Conversely, if an article comes out saying that company ABC’s president is a crook, and stole the pension funds, it is a good bet that the price will go down. DEMAND AND SUPPLY This is the first factor that affects share prices. When we get to see that more people are buying stocks, then there is an increase in the price of that particular stock. On the other hand price of stocks falls when people are setting their stocks. So it is very difficult to predict the Indian Stock Market. This is the main reason why we need to get in touch with a good stock market consultant. MARKET CAPITALIZATION It is very big mistake when we try to guess a company’s worth from the price of a stock. We should know that the more important is the market capitalization of the particular company. This helps determine the worth of a company. So market cap serves as an important use to determine share prices. EARNING PER SHARE Now when it comes to the term, “earning per share”, it means the profit that a particular company has made per share and that too on the last quarter. If need to know the health of the company then this is the most important factor. What’s more earning per share also influences the buying tendency in the market that results in the increase of the particular stock price. This is the reason why it is very important for every public company to bring out the quarterly report. So when we wish to make a profitable investment, then the best thing for us would36
  38. 38. be to keep a gapped watch on the quarterly reports of different companies. This is very important before we wish to invest our hard earned money in the share market. IMPACT OF THE NEWS News is another factor that affects the share price. When there is positive news about a particular stock or company, people try to invest their money in that particular stock or market. This leads to increase in the interest of buying the stock. But there are many circumstances where we can invest our money so that it grows within a very short period of time. So, we have come to know about the factors affecting share prices. Remember that is very important to make a good market research before investing in any stock or company. If we want to profit from buying a stock, we must decide one successful company to invest our money in. there are many factors about the company we have to base our decision on. By analyzing all of the aspects, we have a better chance of predicting whether or not the stock will rise in value. Some questions to keep in mind are: How much profit the company has made recently? If the company has not recently made a lot of profit, chances are it may never profit and it is not a good idea to invest in it. If the company has made a lot of profit recently, then it may be a good investment, since the profit may continue to rise.37
  39. 39. Is the product or services provided popular and in demand? If the company offers an undesirable product, then the company may fail, since no one will but from them. If the company dies, then we suffer massive losses, so we do not want to invest in companies with undesirable product or service. We want to invest in a company with a service or product that is in high demand. If a company invests a new kind of food that is incredible, and everyone wants tons of it, then we can profit greatly, since the company will make tons of profit. Is there lot of close competition? If the company is the only company that offers something, then everyone has to buy from that company, meaning the company will grow larger, and profit will grow larger, and profit a lot. For example, if there was a company called Sneakiest and it was the only company to offer sneakers, then everyone would be forced to buy from them, and that would result in huge profits for Sneakiest. In real life, though, there are big time competitors, such as Nike and Reebok. Therefore, Sneakiest would not make whole lot of profit, and neither would we. Stock analysts regularly get the answers to these questions, and many others, and make a prediction about the stock’s value in the future.38
  40. 40. ANALYSIS AND INTERPRETATION Analysis of the market trend of some of the companies sector wise: OIL AND SECTOR STEEL NATURAL REALITY BANKING IT POWER AUTO GAS COMPANIES MAHINDRA HINDALCO RIL L&T SBI INFOSYS NTPC AND DATE(year MAHINDRA 2011) 19-Apr 204.1 1010.15 1679.55 2752.95 2905.2 184.75 721.55 26-Apr 220.25 1039.95 1703 2860.35 2909.25 186.9 766.15 4-May 206.5 943.95 1537.95 2583.1 2910.75 178.3 707.85 9-May 201.6 955.4 955.4 2642.95 2886.9 174.9 712.55 16-May 198.3 948.65 945.65 2649.05 2880.05 175.05 691.9 23-May 188.5 908 908 2252.85 2835.7 168.1 687.1 30-May 186.7 933.25 933.1 2188.85 2779.3 170.6 682.65 6-Jun 186.35 938.1 938.1 2311.65 2838.45 173.6 657.1 13-Jun 180.35 908 908 2252.85 2877.55 180.1 664.2539
  41. 41. Following is a graph of the above readings: 3500 3000 2500 Hindalco RIL 2000 L&T SBI 1500 Infosys NTPC 1000 Mahindra & Mahindra 500 0 April April May May May May May June June 19,2011 26,2011 4,2011 9,2011 16,2011 23,2011 30,2011 6,2011 13,2011 Interpretation: It is observed from the graph that the stock of no company stays the same. There has been up and down in the market. These fluctuations have occurred because of the reasons already discussed. Stock price can either go up or go down depending upon the demand and supply and is also affected by the volume of a particular stock.40
  42. 42. SWOT ANALYSIS: STRENGTHS: For Shareholders: One of the primary advantages of investing in stocks is the possibility of greater returns. As companies grow, the value of stocks also increases. If an investor picks the right companies to buy stocks from, the probability of profit is very high due to the tendency of the market to have an upward trend. Further, if the investor traded actively, he may profit more and in such a short period of time. Another advantage of investing in stocks is its accessibility. There are many stocks available in the market today. With proper research and analysis of the stocks and the companies that issued them, anybody with sufficient capital can acquire ownership of stocks. The stocks traded in the market also have greater liquidity than other securities. This means that it can be easily converted into cash by selling the equities with other traders in the market. Last, but not the least, investing in stocks can also reduce the amount of taxes from capital gains. This is done by offsetting the capital gains from the losses incurred with stocks, which value significantly decreased in the market. For company: The funding is committed to the business and the intended projects. Investors only realize their investment if the business is doing well, e.g. through stock market flotation or a sale to new investors. The right business angels and venture capitalists can bring valuable skills, contacts and experience to the business. They can also assist with strategy and key decision making. Common to the company, investors have a vested interest in the business success, i.e. its growth, profitability and increase in value. Investors are often prepared to provide follow-up funding as the business grows.41
  43. 43. WEAKNESS: For Shareholders: One of the main disadvantages of trading in the stock market is the risk involved. The value of the stocks highly depends on the financial capability of the company, which issued them. Once the company goes bankrupt, the investors owning their stocks also lose money. Further, the general status of the economy of a country determines how a company fares in the stock market. If the companies are down such as in the case of recession, the prices of stocks also go down. Another disadvantage of investing in stocks is the extra cost due to brokerage services. Employing the services of a broker is necessary in order to effectively find the best deals in the market. Their services, however, are not free, which entails reduction in the income gained from the profits acquired in stock ownership. For company: Raising equity finance is demanding, costly and time consuming. Potential investors will seek background information on the business - they will closely scrutinize past results and forecasts and will probe the management team. However, many businesses find this discipline useful regardless of whether or not they actually receive any funding. Depending on the investor, the company might lose a certain amount of power to make management decisions. The company will have to invest management time to provide regular information for the investor to monitor. At first the management will have a smaller share in the business - both as a percentage and in absolute monetary terms. However, the reduced share may become worth a lot more in absolute monetary terms if the investment leads to the business becoming more successful. There can be legal and regulatory issues to comply with when raising finance, e.g. when promoting investments.42
  44. 44. OPPORTUNITY Lot of people want to invest but do not invest due to insufficient knowledge. Market is providing new opportunities and new options to invest. THREATS Recession New government Bubble burst Fluctuating dollar prices Competitors Low brokerage rate of competitors Analysis of the questionnaire Sub-Brokers-  How do you select the stock to invest o Income level of the investor o Income source of the investor, if the investor has retired o Number of family members dependent on the investor o Client wish to invest in long term of short term investment. For long term investment investments are made in under value stocks and for the short term investment it is invested in fluctuating stocks  What market trend affects your business? o Quarterly Results o Dividends paid by the company o FII holdings more FII holdings adds risk to the investment43
  45. 45. Investors- Age group of the respondent Age Group of the Respondent Greater than 55 45-55 35-45 22-35 Age Group 0 5 10 15 20 25 30 35 40 22-35 35-45 45-55 Greater than 55 Numbers 22 36 24 18 Interpretation: It is observed that mostly the investors are of the age group 35-45 which mainly falls in the earning group and those greater than 55 are the least as people in this category are the ones who have or are about to retire from their job. Gender Gender of the Respondent Female Male 0 10 20 30 40 50 60 70 80 90 Male Female Number 77 23 Interpretation: It is observed that mostly male gender have invested in various equities in SHCIL, Guwahati.44
  46. 46. Occupation Occupation of the Respondent House wife Business Retired Service 0 10 20 30 40 50 60 Occupation Service Retired Business House wife Number 48 12 27 13 Interpretation: It is observed that mostly the service class people invest, as they get a fixed salary at regular interval whereas retired people with no source of income feel at a risk to invest with their saved money. Annual income Annual Income No response More than 5 lakh 1 lkah-5 lakh Less than 1 lakh 0 10 20 30 40 50 60 More than 5 Less than 1 lakh 1 lkah-5 lakh No response Income lakh Number 16 56 24 4 Interpretation: Most of the investors are the middle income group people earning 1lakh to 5 lakh per annum. Few people didn’t like to share information about their income.45
  47. 47. Awareness about different investment opportunities Awareness of different investment oppurtunities No Yes 0 10 20 30 40 50 60 70 80 90 Yes No Number 79 21 Interpretation: It is observed that mostly the investors are aware of the various investment opportunities Awareness about different investment options Awareness about different Investment Options Bond/Debenture Shares Bank Fixed Savings Post Office Mutual Funds Investment 0 20 40 60 80 100 120 Option Bank Fixed Bond/Debent Mutual Funds Post Office Shares Savings ure Number 88 51 80 96 28 Interpretation: The most popular investment options about which the investors are well aware are Shares, Mutual Funds and Fixed Savings. Though only a few know about Bond and Debentures.46
  48. 48. Investment categories where investors have invested Investment categories where Investors have invested Bonds/Debenture Shares Bank Fixed Deposit Post Office Savings Mutual Funds 0 10 20 30 40 50 60 70 80 90 Investment Options Post Office Bank Fixed Bonds/Debe Mutual Funds Shares Savings Deposit nture Number 48 8 48 84 16 Interpretation: Most of the investors have invested in shares. Only a few of them have invested in Post office savings. Duration of investment Duration of the Investment(in years) Greater than 5 years 1-5 years Less than 1 year 0 5 10 15 20 25 30 35 40 45 Duration Less than 1 year 1-5 years Greater than 5 years Number 29 39 32 Interpretation: Duration for which the investor invest their money for is equally almost equally divided. The people investing for less than 1 year are less than the ones investing for more than 1 year.47
  49. 49. Investment in equities Investment in Equity No Response More than 5 lakh 1 lakh-5 lakh 50,000-1 lakh Less than 50,000 0 5 10 15 20 25 30 35 40 45 Amount Invested Less than 50,000-1 More than 5 1 lakh-5 lakh No Response 50,000 lakh lakh Number 40 20 8 8 24 Interpretation: It is observed that most of the investors have just invested an amount with in Rs 50,000 though a lot many numbers of investors didn’t like to give their details. Satisfaction with investment Satisfaction with Investment No Yes 0 10 20 30 40 50 60 70 80 Response Yes No Number 68 32 Interpretation: Most of the investors are happy with the investments they have made through SHCIL.48
  50. 50. Satisfaction with the services of SHCIL Satisfaction with the services of SHCIL No Yes 0 10 20 30 40 50 60 70 80 Yes No Number 73 27 Interpretation: Majority of the people are satisfied with the services that are offered at SHCIL. Reasons for satisfaction with the services of SHCIL Reasons for satisfaction with the services of SHCIL Less chance of default Interaction with clients Account maintenance Prompt response Market advice Service Delivery System 0 10 20 30 40 50 60 70 80 90 Service Account Interaction Less Market Prompt Delivery maintenan with chance of Reasons advice response System ce clients default Numbers 84 38 49 58 78 83 Interpretation: Various factors that add to the satisfaction level of the investors are analyzed of which the most preferred is Service Delivery System of SHCIL, interaction with the client and less chance of default.49
  51. 51. Reason for dissatisfaction with the services of SHCIL Reasons for dissatisfaction with the services of SHCIL Less chance of default Interaction with clients Account maintenance Prompt response Market advice Service Delivery System 0 10 20 30 40 50 60 70 Reasons Service Account Less Market Prompt Interaction Delivery maintenanc chance of advice response with clients System e default Numbers 4 61 36 32 24 24 Interpretation: Various reasons that dissatisfy the investors are analyzed of which the most disturbing factor is the inability to give prompt response and giving a good market advice.50
  52. 52. Influence of various factors on the investment decision Influence of various factors on Investment decisions General discussion with the friends Experts of SHCIL Own judgment Dividend Newspaper columns Business news on TV 0 10 20 30 40 50 60 70 80 General Influencing Business Newspaper Own Experts of discussion factors Dividend news on TV columns judgment SHCIL with the friends Numbers 67 37 23 73 59 17 Interpretation: Of the various factors influencing the decisions of the investors to invest in share market the most important ones are business news on TV and own decisions of the investors.51
  53. 53. Better time for investment Better time for Investment After quarterly results April to July Depends on the market situation Bull market Time for Bear market Investment 0 10 20 30 40 50 60 70 Depends on After Bear market Bull market the market April to July quarterly situation results Number 58 27 7 4 4 Interpretation: Many investors believe that the Bear market condition is a better time to invest their money in various equities. Are you satisfied with the brokerage charges of SHCIL Satisfaction with the brokerage charge No Yes 0 20 40 60 80 100 Yes No Number 23 77 Interpretation: It is observed that most of the investors are not satisfied with the brokerage charges of SHCIL.52
  54. 54. How did you come to know about SHCIL Number Others Friends and relatives Internet Newspaper and Banners TV ad 0 10 20 30 40 50 60 70 Sources Newspaper Friends and TV ad Internet Others and Banners relatives Number 0 17 21 62 0 Interpretation: It is observed that most of the people have come to know about the services of SHCIL through friends and their relatives53
  55. 55. SUGGESTIONS AND RECOMMENDATION A low rate of brokerage than the existing rate will encourage the existing investors to invest more and would attract more new clients. Providing more in depth insight of the market to the investors will strengthen their confidence and help them to take quick decisions. Introduction of market alerts through SMS and e-mails will raise the satisfaction level of the clients. Introduction of more flexibility in the process of investment should increase the turnover of the company and will also be more convenient for the clients. Introduction of FUTURE and OPTIONS, should improve the market holdings of the company, and will help to diversify the portfolio of the clients. A little promotion about the various services will go a long way in attracting new clients.54
  56. 56. CONCLUSION Everything that rises has to fall in the equity market. There is no solid proof way to determine the trend of the equity market. Anything could happen to make all of this information collected to study the trend of the equity market worthless, but we have to at least consider the past trends and understand that there is a chance the market will behave similarly and we’ll enter a period of significant decline. Political, social happenings and emotions of the investors play a big role in the equity market. That’s why a good and constant study of the market and how the equity of various companies behaves in the market should be studied well and if possible a constant touch with the experts too helps a long way. From the SHCIL point of view a better marketing of its product and a good advice regarding investment can go a long way in attracting more investors. As it is a period of stiff competition it is necessary that the instruments of SHCIL do offer attractive returns.55
  57. 57. ANNEXURE QUESTIONNAIRE Name: Gender: Age: Occupation: Income: Less than 1 lakh 1-5 lakhs More than 5 lakhs 1. Are you interested in investing your money through SHCIL? YES NO 2. Which of the following investment opportunities you are aware of? a. Mutual fund b. Post office savings c. Bank fixed deposits d. Bonds/ Debentures e. Shares 3. In which of the following options have you invested a. Mutual fund b. Post office savings c. Bank fixed deposits d. Bonds/ Debentures56
  58. 58. e. Shares 4. Do you have a trading account with SHCIL? YES NO 5. How much have you invested in the stock market till date? a. Less than 50,000 b. Between 50,000 & 1 lakh c. Between 1 & 5 lakhs d. More than 5 lakhs 6. Are you satisfied with your investment? YES NO 7. How long have you been investing through SHCIL? a. Less than 1 year b. Between 1-5 years c. More than 5 years 8. Are you satisfied with the services of SHCIL? YES NO Reasons for satisfaction/ dissatisfaction: Satisfaction Reasons Dissatisfaction Service delivery system Market advice Prompt response Account maintenance Interaction with clients Less chance of default57
  59. 59. 9. How your investment decisions are influenced by the following? Please indicate ranking with 5- Most important; 4-Important; 3- Not so important; 2-Least important; 1- Not applicable a. Business news in T.V b. Newspaper columns c. Dividend d. General discussion with friends/ colleagues e. Experts view of SHCIL f. Own judgment 10. How frequently you make your investments? a. Daily b. Monthly c. Quarterly d. Yearly 11. Are you aware of other services of SHCIL a. NPS b. e-stamping c. Mutual funds d. Fixed Deposits e. Government Bonds 12. How did you come to know about SHCIL a. TV ad b. Newspaper c. Friends and Relatives58
  60. 60. d. Internet e. Ohters 13. Are you satisfied with the investment decision made by sub-brokers a. Very satisfied b. Satisfied c. Neutral d. Dissatisfied e. Very Dissatisfied 14. Are you happy with the brokerage charges of SHCIL? a. Very satisfied b. Satisfied c. Neutral d. Dissatisfied e. Very Dissatisfied 15. What time do you invest in the shares? a. Bear b. Bull c. Depends upon market situation d. April to July e. After quarterly result59
  61. 61. BIBLIOGRAPHY www.shcil.com www.business.mapsofindia.com www.finance-advices.tk www.moneycontrol.com www.bseindian.com www.wikepedia.com www.investopedia.com › Tutorials Study materials provided by the company-SHCIL60

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