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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

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

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