A            Project Report                   OnA STUDY OF RELIGARE MUTUAL FUND        Submitted to fulfillmentOf the requ...
In order to study the above information the researcher has organized thepresent report as per the following:Chapter 1: Foc...
Chapter 1Focuses attention on introduction to equity and mutual funds and  Company Profile of Religare  Securities Ltd., K...
INTRODUCTION TO EQUITY CAPITAL AND                     MUTUAL FUND        Issue of shares is the most important method of ...
Concept of Equity Capital and Mutual Fund       The term Equity literally means the stock or ownership of a company. They ...
A mutual fund is a trust that pools the money of many investors -- itsshareholders -- to invest in a variety of different ...
A mutual fund scheme can be classified into open-ended scheme or close-endedscheme depending on its maturity period.Open-e...
funds have comparatively high risks. These schemes provide different options to theinvestors like dividend option, capital...
These funds invest exclusively in government securities. Government securitieshave no default risk. NAVs of these schemes ...
In times of prosperity, the equity shareholders get a very high rate of dividend,sufficiently higher than that on preferen...
Mutual funds invest in a broad range of securities. This limits investment risk byreducing the effect of a possible declin...
investments by authorizing electronic fund transfers from your checking account in anyamount and on a date you choose.7. T...
11. Periodic Withdrawals:-       If you want steady monthly income, many funds allow you to arrange formonthly fixed check...
them by registered mail. You dont even have to worry about handling the mutual fundstock certificates; the fund maintains ...
2. Benefits only in prosperity:-        During the periods of prosperity, the company has to distribute heavy dividendson ...
1. No Insurance:-       Mutual funds, although regulated by the government, are not insured againstlosses. The Federal Dep...
Returns on a mutual fund are by no means guaranteed. In fact, on average,around 75% of all mutual funds fail to beat the m...
Mutual funds usually maintain large cash reserves as protection against a largenumber of simultaneous withdrawals. Althoug...
Our Brand IdentityName        Religare is a Latin word that translates as to bind together. This name has beenchosen to re...
Each leaf of the four-leaf clover has a special meaning in the sphere of Religare.       The first leaf of the clover repr...
Market Cap         : Rs. 4022.15 Cr.       Listings        Incorporation   Public Issue Date       BSE , NSE       30/01/1...
Our Envisaged Group StructureClient InterfaceRetail Spectrum- To cater to a large number of retail clients by offering all...
 Equity and Commodity Trading      Personal Finance Services      Mutual Funds      Insurance      Saving Products   ...
Religare is on a fast and ambitious growth trajectory with some interesting plansin the pipeline    AEGON Religare Life In...
Chapter 2                   Focuses on design of study,              problem, scope and objectives of                    t...
investment. This is primarily, because investments are risky in nature and investors haveto consider various factors befor...
It focuses on every month ending closing prices of during the period from 1st Apr,2003 to 31st Mar, 2006.Limitations of th...
Chapter 3        Concentrates on the methodology          and sources of data collection,           Sample design and tool...
The whole study can be termed as comparative study. It is also a desk researchhence; there is no field work and collection...
The quality of research output and the validity of its findings depend uponappropriateness of the sampling design selected...
EQUITIES                           BENCHMARKACC LIMITED                        BSE SENSEXBAJAJ AUTO LIMITED               ...
CALCULATION OF RETURN AND RISK OF SELECTED MUTUAL FUND           SCHEMES AND THEIR BENCH MARKS                   RISK AND ...
30-04-09           6154.44        -5.21     -9.12       83.17             30-05-09           6715.11         9.11      5.2...
Date       BSE100         Return in %   R-R1     (R-R1)2             30-03-07         1716.28             30-04-07        ...
R1 = ΣR/n,     Where n=number of months.R1 = 133.96/36   = 3.72SD = √ Σ(R- R1)2 /n   = √1679.66/36SD = 6.83   3. BSE 500: ...
30-06-09             2928.31         3.50         -0.59            0.34            30-07-09             3124.78         6....
Where n=number of months.   SD = √ Σ(R- R1)2 /n,      = √1704.71/36   SD = 6.88Calculation of Beta  B = [Σ(Ra –Ra1)(Rm-Rm1...
Calculation of AlphaAlpha = (Ra1 - Rm1)*B      =(5.16-3.9)*0.96      =1.2                    CALCULATION OF RISK AND RETUR...
CONCLUSION               Saving money is not enough. Each of us also need to invest one’s savingsintelligently in order to...
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Papai project (2)

  1. 1. A Project Report OnA STUDY OF RELIGARE MUTUAL FUND Submitted to fulfillmentOf the requirement to award the degree of Master of Business Administration
  2. 2. In order to study the above information the researcher has organized thepresent report as per the following:Chapter 1: Focuses attention on introduction to equity and mutual funds and Company Profile of Religare Securities Ltd., kolkata.Chapter 2: Focuses on design of study, problem, scope and objectives of the study, and limitations.Chapter 3: Concentrates on the methodology and sources of data collection, Sample design and tools and techniques of data collection.Chapter 4: Is concerned with the analysis and interpretation of data.Chapter 5: Provides the summary of findings.Chapter 6: Deals with the suggestions and conclusions for the benefits of prospective Investors and market analysers. Lastly, it includes the annexure and bibliography.
  3. 3. Chapter 1Focuses attention on introduction to equity and mutual funds and Company Profile of Religare Securities Ltd., KOLKATA.
  4. 4. INTRODUCTION TO EQUITY CAPITAL AND MUTUAL FUND Issue of shares is the most important method of raising capital. Finance raised bythe issue of shares serves as a financial floor to the company’s capital structure. Sharesindicate the ownership or equity interest in the assets of the company. Shares are ofdifferent nominal or face values and of different kinds to attract different kinds ofinvestors. The maximum amount of capital to be raised by the issue of shares ismentioned in the memorandum of association. During 1990-91 and 1991-92, equity accounts for 35 to 39 percent of the totalcapital raised respectively. This proportion was reversed in 1992-93, the first year of freepricing, when the share of equity increased to 62 percent. His share of equity financeincreased to a high of 73.18 percent in 1994-95. However, in 1995-96 there is a rise inthe importance of debt largely due to the high interest rates in the economy and negativereturns from the secondary market. The mutual fund industry in India started in 1964 with the formation of UnitTrust of India, at the initiative of the Government of India. The 1993 SEBI Regulationswere substituted by a more comprehensive and revised Mutual Fund Regulations in1996. The end of millennium marks 36 years of existence of mutual funds in thiscountry. The ride through these 36 years is not been smooth. Investor opinion is stilldivided. While some are for mutual funds others are against it. UTI commenced itsoperations from July 1964. The impetus for establishing a formal institution came fromthe desire to increase the propensity of the middle and lower groups to save and toinvest. UTI came in to existence during a period marked by great political and economicturmoil that depressed the financial market; entrepreneurs were rather hesitant to enterthe capital markets.
  5. 5. Concept of Equity Capital and Mutual Fund The term Equity literally means the stock or ownership of a company. They arealso known as ordinary shares. The rate of dividend on equity shares varies according tothe amount of profit available and the intention of board of directors. In the event ofwinding up of the company, equity shares can be refunded only after all other claims,including those of preference shares for the refund of their capital, have been met. Equity capital or financing is money raised by a business in exchange for a shareof ownership in the company. Ownership is represented by owning shares of stockoutright or having the right to convert other financial instruments into stock of thatprivate company. Two key sources of equity capital for new and emerging businesses areangel investors and venture capital firms. Equity capital is represented by funds that are raised by a business, in exchangefor a share of ownership in the company. Equity financing allows a business to obtainfunds without incurring debt, or without having to repay a specific amount of money at aparticular time. The Equity Capital Markets Group (ECM) oversees the Firms activities in theprimary equity and equity-linked markets, as well as monetization and equityderivatives. It provides support in the origination of primary market transactions andmanages their structuring, syndication, marketing and distribution. The world over, it’s been shown that over long tenures, equities–with their riskpremium–have provided approximately 7 percentage points higher returns than risk-freeoptions. People have to accumulate significant amounts of wealth during their workingyears. Right now, a 17-year bond gives you only 5.5 per cent. So, it is imperative thatthese people have some exposure to equity.
  6. 6. A mutual fund is a trust that pools the money of many investors -- itsshareholders -- to invest in a variety of different securities. Investments may be in stocks,bonds, money market securities or some combination of these. Those securities areprofessionally managed on behalf of the shareholders, and each investor holds a pro ratashare of the portfolio -- entitled to any profits when the securities are sold, but subject toany losses in value as well. A mutual fund is a group of investors operating through a fund manager topurchase a diverse portfolio of stocks or bonds. There are myriad kinds of mutual funds,each with its own goals and methodologies. Whether or not a mutual fund is a goodinvestment is a matter of much public debate, with many claiming they are excellent forthe average person, and others saying they are simply a poor way to invest. For the individual investor, mutual funds provide the benefit of having someoneelse manage your investments, take care of recordkeeping for your account, anddiversify your rupees over many different securities that may not be available oraffordable to you otherwise. Today, minimum investment requirements on many fundsare low enough that even the smallest investor can get started in mutual funds. A mutual fund, by its very nature, is diversified -- its assets are invested in manydifferent securities. Beyond that, there are many different types of mutual funds withdifferent objectives and levels of growth potential, furthering your chances to diversify. Many critics of mutual funds point out that scarcely over 20% of mutual fundsoutperform the Standard and Poors 500 Index. This means that nearly 80% of the time,an investor would have been more profitable by simply buying equal shares in all 500 ofthe companies currently on the S&P 500.SCHEMES OF MUTUAL FUNDS:Schemes according to Maturity Period:
  7. 7. A mutual fund scheme can be classified into open-ended scheme or close-endedscheme depending on its maturity period.Open-ended Scheme: An open-ended fund or scheme is one that is available for subscription andrepurchase on a continuous basis. These schemes do not have a fixed maturity period.Investors can conveniently buy and sell units at Net Asset Value (NAV) related priceswhich are declared on a daily basis. The key feature of open-end schemes is liquidity.Close-ended Scheme: A close-ended fund or scheme has a stipulated maturity period e.g. 5-7 years. Thefund is open for subscription only during a specified period at the time of launch of thescheme. Investors can invest in the scheme at the time of the initial public issue andthereafter they can buy or sell the units of the scheme on the stock exchanges where theunits are listed. In order to provide an exit route to the investors, some close-ended fundsgive an option of selling back the units to the mutual fund through periodic repurchase atNAV related prices. SEBI Regulations stipulate that at least one of the two exit routes isprovided to the investor i.e. either repurchase facility or through listing on stockexchanges. These mutual funds schemes disclose NAV generally on weekly basis.Schemes according to Investment Objective: A scheme can also be classified as growth scheme, income scheme, or balancedscheme considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:Growth / Equity Oriented Scheme: The aim of growth funds is to provide capital appreciation over the medium tolong- term. Such schemes normally invest a major part of their corpus in equities. Such
  8. 8. funds have comparatively high risks. These schemes provide different options to theinvestors like dividend option, capital appreciation, etc. and the investors may choose anoption depending on their preferences.Income / Debt Oriented Scheme: The aim of income funds is to provide regular and steady income to investors.Such schemes generally invest in fixed income securities such as bonds, corporatedebentures, Government securities and money market instruments. Such funds are lessrisky compared to equity schemes. These funds are not affected because of fluctuationsin equity markets.Balanced Scheme: The aim of balanced funds is to provide both growth and regular income as suchschemes invest both in equities and fixed income securities in the proportion indicated intheir offer documents. These are appropriate for investors looking for moderate growth.They generally invest 40-60% in equity and debt instruments. These funds are alsoaffected because of fluctuations in share prices in the stock markets. However, NAVs ofsuch funds are likely to be less volatile compared to pure equity funds.Money Market or Liquid Fund: These funds are also income funds and their aim is to provide easy liquidity,preservation of capital and moderate income. These schemes invest exclusively in safershort-term instruments such as treasury bills, certificates of deposit, commercial paperand inter-bank call money, government securities, etc. Returns on these schemesfluctuate much less compared to other funds. These funds are appropriate for corporateand individual investors as a means to park their surplus funds for short periods.Gilt Fund:
  9. 9. These funds invest exclusively in government securities. Government securitieshave no default risk. NAVs of these schemes also fluctuate due to change in interestrates and other economic factors as is the case with income or debt oriented schemes.Index Funds: Index Funds replicate the portfolio of a particular index such as the BSESensitive index, S&P NSE 50 index (Nifty), etc, these schemes invest in the securities inthe same weightage comprising of an index. NAV’s of such schemes would rise or fall inaccordance with the rise or fall in the index, though not exactly by the same percentagedue to some factors known as "tracking error" in technical terms. Necessary disclosuresin this regard are made in the offer document of the mutual fund scheme.Sector Specific Schemes: These are the funds/schemes which invest in the securities of only those sectorsor industries as specified in the offer documents. e.g. Pharmaceuticals, Software, FastMoving Consumer Goods (FMCG), Petroleum stocks, etc. The returns in these funds aredependent on the performance of the respective sectors/industries.Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of theIncome Tax Act, 1961 as the Government offers tax incentives for investment inspecified avenues. e.g. Equity Linked Savings Schemes (ELSS). Pension schemeslaunched by the mutual funds also offer tax benefits. These schemes are growth orientedand invest pre-dominantly in equities. Their growth opportunities and risks associatedare like any equity-oriented scheme.Advantages of Equity Capital:1. High dividend and high value:-
  10. 10. In times of prosperity, the equity shareholders get a very high rate of dividend,sufficiently higher than that on preference shares. At the same time, their share valuewill also go up in the market.2. Voting rights:- It is only the equity shareholders who enjoy voting rights on all the policymatters of the company.3. Pre-emptive right to new shares:- Equity shareholders have the pre-emptive right to purchase new shares. Underthe provisions of the companies act, the existing shareholders of the company have aright to allotment of newly issued shared.4. Many privileges and rights:- Equity shareholders enjoy many privileges and rights. For example, they can voteat meetings, elect directors, control the directors to run the company efficiently andprofitably, look into the books and records of the company and transfer or sell theirshareholdings.Advantages of Mutual Fund:1. Professional Investment Management:- By pooling the funds of thousands of investors, mutual funds provide full-time,high-level professional management that few individual investors can afford to obtainindependently. Such management is vital to achieving results in todays complexmarkets. Your fund managers interests are tied to yours, because their compensation isbased not on sales commissions, but on how well the fund performs.2. Diversification:-
  11. 11. Mutual funds invest in a broad range of securities. This limits investment risk byreducing the effect of a possible decline in the value of any one security. Mutual fundshareowners can benefit from diversification techniques usually available only toinvestors wealthy enough to buy significant positions in a wide variety of securities.3. Low Cost:- If you tried to create your own diversified portfolio of 50 stocks, youd need atleast Rs.1,00,000 and youd pay thousands of rupees in commissions to assemble yourportfolio. A mutual fund lets you participate in a diversified portfolio for as little asRs.10,000, and sometimes less. And if you buy a no-load fund, you pay or no salecharges to own them.4. Convenience and Flexibility:- You own just one security rather than many, yet enjoy the benefits of adiversified portfolio and a wide range of services. Fund managers decide what securitiesto trade, clip the bond coupons, collect the interest payments and see that your dividendson portfolio securities are received and your rights exercised.5. Quick, Personalized Service:- Most funds now offer extensive websites with a host of shareholder services forimmediate access to information about your fund account. Or a phone call puts you intouch with a trained investment specialist at a mutual fund company who can provideinformation you can use to make your own investment choices, assist you with buyingand selling your fund shares.6. Ease of Investing:- You may open or add to your account and conduct transactions or business withthe fund by mail, telephone or bank wire. You can even arrange for automatic monthly
  12. 12. investments by authorizing electronic fund transfers from your checking account in anyamount and on a date you choose.7. Total Liquidity, Easy Withdrawal:- You can easily redeem your shares anytime you need cash by letter, telephone,bank wire or check, depending on the fund. Your proceeds are usually available within aday or two.8. Life Cycle Planning:- With no-load mutual funds, you can link your investment plans to futureindividual and family needs -- and make changes as your life cycles change. You caninvest in growth funds for future college tuition needs, then move to income funds forretirement, and adjust your investments as your needs change throughout your life.9. Market Cycle Planning:- For investors who understand how to actively manage their portfolio, mutualfund investments can be moved as market conditions change. You can place your fundsin equities when the market is on the upswing and move into money market funds on thedownswing or take any number of steps to ensure that your investments are meeting yourneeds in changing market climates.10. Investor Information:- Shareholders receive regular reports from the funds, including details oftransactions on a year-to-date basis. The current net asset value of your shares (the priceat which you may purchase or redeem them) appears in the mutual fund price listings ofdaily newspapers. You can also obtain pricing and performance results for the all mutualfunds at this site, or it can be obtained by phone from the fund.
  13. 13. 11. Periodic Withdrawals:- If you want steady monthly income, many funds allow you to arrange formonthly fixed checks to be sent to you, first by distributing some or all of the incomeand then, if necessary, by dipping into your principal.12. Dividend Options:- You can receive all dividend payments in cash. Or you can have them reinvestedin the fund free of charge, in which case the dividends are automatically compounded.This can make a significant contribution to your long-term investment results.13. Automatic Direct Deposit:- You can usually arrange to have regular, third-party payments -- such as SocialSecurity or pension checks -- deposited directly into your fund account. This puts yourmoney to work immediately, without waiting to clear your checking account, and itsaves you from worrying about checks being lost in the mail.14. Recordkeeping Service:- With your own portfolio of stocks and bonds, you would have to do your ownrecordkeeping of purchases, sales, dividends, interest, short-term and long-term gainsand losses. Mutual funds provide confirmation of your transactions and necessary taxforms to help you keep track of your investments and tax reporting.15. Safekeeping:- When you own shares in a mutual fund, you own securities in many companieswithout having to worry about keeping stock certificates in safe deposit boxes or sending
  14. 14. them by registered mail. You dont even have to worry about handling the mutual fundstock certificates; the fund maintains your account on its books and sends you periodicstatements keeping track of all your transactions.16. Retirement and College Plans:- Mutual funds are well suited to Individual Retirement Accounts and most fundsoffer IRA-approved prototype and master plans for individual retirement accounts(IRAs) and Keogh, 403(b), SEP-IRA and 401(k) retirement plans.17. Online Services:- The internet provides a fast, convenient way for investors to access financialinformation. A host of services are available to the online investor including directaccess to no-load companies. Visit Company Links to access these Companies.18. Sweep Accounts:-With many funds, if you choose not to reinvest your stock or bond fund dividends, youcan arrange to have them swept into your money market fund automatically. You get allthe advantages of both accounts with no extra effort.19. Asset Management Accounts:- These master accounts, available from many of the larger fund groups, enableyou to manage all your financial service needs under a single umbrella from unlimitedcheck writing and automatic bill paying to discount brokerage and credit card accounts.Disadvantages of Equity Capital:1. No refund of capital:- Since equity shares cannot be refunded, excessive issue of such shares may leadsto overcapitalization, particularly when the earning capacity of the company declining.
  15. 15. 2. Benefits only in prosperity:- During the periods of prosperity, the company has to distribute heavy dividendson these shares.3. Manipulation of control:- Since the equity shares have proportionate voting power, the company’smanagement may be vitiated by manipulation of votes, clique-formation, abuse of proxyrights etc.4. High risk:- Equity share holders cannot claim dividend as a matter of right, because thedecision to fit the rate of dividend on equity shares is vested in the Board of Directors.Therefore investors as a class may find equity shares unsafe, unattractive and lessremunerative.5. Unhealthy Speculation:- During the period of boom, the market value of shares will go up, which leads tounhealthy speculation in the stock market.Disadvantages of Mutual Fund: There are certainly some benefits to mutual fund investing, but you should alsobe aware of the drawbacks associated with mutual funds.
  16. 16. 1. No Insurance:- Mutual funds, although regulated by the government, are not insured againstlosses. The Federal Deposit Insurance Corporation (FDIC) only insures against certainlosses at banks, credit unions, and savings and loans, not mutual funds. That means thatdespite the risk-reducing diversification benefits provided by mutual funds, losses canoccur, and it is possible (although extremely unlikely) that you could even lose yourentire investment.2. Dilution:- Although diversification reduces the amount of risk involved in investing inmutual funds, it can also be a disadvantage due to dilution. For example, if a singlesecurity held by a mutual fund doubles in value, the mutual fund itself would not doublein value because that security is only one small part of the funds holdings. By holding alarge number of different investments, mutual funds tend to do neither exceptionally wellnor exceptionally poorly.3. Fees and Expenses:- Most mutual funds charge management and operating fees that pay for the fundsmanagement expenses (usually around 1.0% to 1.5% per year). In addition, some mutualfunds charge high sales commissions, 12b-1 fees, and redemption fees. And some fundsbuy and trade shares so often that the transaction costs add up significantly. Some ofthese expenses are charged on an ongoing basis, unlike stock investments, for which acommission is paid only when you buy and sell (see Investor Guide University: Fees andExpenses).4. Poor Performance:-
  17. 17. Returns on a mutual fund are by no means guaranteed. In fact, on average,around 75% of all mutual funds fail to beat the major market indexes, like the S&P 500,and a growing number of critics now question whether or not professional moneymanagers have better stock-picking capabilities than the average investor.5. Loss of Control:- The managers of mutual funds make all of the decisions about which securities tobuy and sell and when to do so. This can make it difficult for you when trying to manageyour portfolio. For example, the tax consequences of a decision by the manager to buy orsell an asset at a certain time might not be optimal for you. You also should rememberthat you are trusting someone else with your money when you invest in a mutual fund.6. Trading Limitations:- Although mutual funds are highly liquid in general, most mutual funds (calledopen-ended funds) cannot be bought or sold in the middle of the trading day. You canonly buy and sell them at the end of the day, after theyve calculated the current value oftheir holdings.7. Size:- Some mutual funds are too big to find enough good investments. This isespecially true of funds that focus on small companies, given that there are strict rulesabout how much of a single company a fund may own. If a mutual fund has $5 billion toinvest and is only able to invest an average of $50 million in each, then it needs to find atleast 100 such companies to invest in; as a result, the fund might be forced to lower itsstandards when selecting companies to invest in.8. Inefficiency of Cash Reserves:-
  18. 18. Mutual funds usually maintain large cash reserves as protection against a largenumber of simultaneous withdrawals. Although this provides investors with liquidity, itmeans that some of the funds money is invested in cash instead of assets, which tends tolower the investors potential return.9. Different Types:- The advantages and disadvantages listed above apply to mutual funds in general.However, there are over 10,000 mutual funds in operation, and these funds vary greatlyaccording to investment objective, size, strategy, and style. Mutual funds are availablefor virtually every investment strategy (e.g. value, growth), every sector (e.g. biotech,internet), and every country or region of the world. So even the process of selecting afund can be tedious.Company Profile: Religare is one of the leading integrated financial services institution of India.The company offers a large and diverse bouquet of services ranging from equities,commodities, insurance broking, to wealth advisory, portfolio management services,personal finance services, Investment banking and institutional broking services. Theservices are broadly clubbed across three key business verticals- Retail, Wealthmanagement and the Institutional spectrum. Religare Enterprises Limited is theholding company for all its businesses, structured and being operated throughvarious subsidiaries. Religare’s retail network spreads across the length and breadth of the countrywith its presence through more than 1,217 locations across more than 392 cities andtowns. Having spread itself fairly well across the country and with the promise of notresting on its laurels, it has also aggressively started eyeing global geographies.
  19. 19. Our Brand IdentityName Religare is a Latin word that translates as to bind together. This name has beenchosen to reflect the integrated nature of the financial services the company offers. Thename is intended to unite and bring together the phenomenon of money and wealth to co-exist and serve the interest of individuals and institutions, alike.Symbol The Religare name is paired with the symbol of a four-leaf clover. The four-leafclover is used to define the rare quality of good fortune that is the aim of every financialplan. It has traditionally been considered good fortune to find a single four leaf cloverconsidering that statistically one may need to search through over 10,000 three-leafclovers to even find one four leaf clover.
  20. 20. Each leaf of the four-leaf clover has a special meaning in the sphere of Religare. The first leaf of the clover represents Hope. The aspirations to succeed. The dream of becoming. Of new possibilities. It is the beginning of every step and the foundations on which a person reaches for the stars. The second leaf of the clover represents Trust. The ability to place ones own faith in another. To have a relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all not in the binding but in the bond that is built. The third leaf of the clover represents Care. The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all. The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative moments of success. Hope. Trust. Care. Good fortune. All elements perfectly combine in the emblematic and rare, four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision.Industry : Finance - GeneralGroup : Ranbaxy GroupBSE Code : 532915NSE Code : RELIGAREMarket Lot :1Face Value : Rs. 10.00
  21. 21. Market Cap : Rs. 4022.15 Cr. Listings Incorporation Public Issue Date BSE , NSE 30/01/1984 29/10/2007
  22. 22. Our Envisaged Group StructureClient InterfaceRetail Spectrum- To cater to a large number of retail clients by offering all productsunder one roof through the Branch Network and Online mode
  23. 23.  Equity and Commodity Trading  Personal Finance Services  Mutual Funds  Insurance  Saving Products  Personal Credit  Personal Loans  Loans against Shares  Online Investment PortalInstitutional Spectrum- To Forge & build strong relationships with Corporate andInstitutions  Institutional Equity Broking  Investment Banking  Merchant Banking  Transaction Advisory  Corporate FinanceWealth Spectrum - To provide customized wealth advisory services to High Net worthIndividuals  Wealth Advisory Services  Portfolio Management Services  International Advisory Fund Management Services  Priority Equity Client Services  Arts InitiativeNew Initiatives:
  24. 24. Religare is on a fast and ambitious growth trajectory with some interesting plansin the pipeline AEGON Religare Life Insurance - Life Insurance Company, aJoint Venture with Aegon one of the largest insurance and pensioncompanies, globally Religare AEGON AMC - Asset Management Company, a Joint Venture with Aegon Religare Finance - Personal Loans / Credit Cards / Loan against Property / Mortgage& Reverse Mortgage Online Trading - Agreement with IndusInd Bank to offeronline trading services Religare Macquarie Wealth Management Ltd - WealthManagement Company , a Joint Venture with Macquarie Wealth Management Services - with WallStreet Electronica,Inc., a U.S. broker - dealer to give our Indian clients access to U.Smarkets Religare Securities Ltd - Agreement with Vijay Co-operative Bank Ltd. andTamilnadu Mercantile Bank Ltd. to offer offline trading services *******
  25. 25. Chapter 2 Focuses on design of study, problem, scope and objectives of the study, and limitations.Statement of the Problem: In the current economic scenario interest rates are falling and fluctuation in theshare market has put investors in confusion. One finds it difficult to take decision on
  26. 26. investment. This is primarily, because investments are risky in nature and investors haveto consider various factors before investing in investment avenues. Therefore the studyaims to compare equity and mutual fund schemes in form their risk, return & liquidityand also creating awareness about Equity and Mutual Fund Schemes among theinvestors.Objectives of the Study: Saving money is not enough. Each of us also need to invest one’s savingsintelligently in order to have enough money available for funding the higher education ofone’s children, for buying a house, or for one’s own golden years. But the rapidlygrowing number of investment avenues often lead to confusion. Objectives of the studyare to provide information to individual investors regarding their risk, and choosing thebest investment options to match their goals and attitude to risk. 1. To compare Equity and Mutual Fund Schemes in respect of their risk & return. 2. Analyzing the performance of equity shares and mutual fund schemes with their benchmark. 3. Finding the Volatility of shares by using beta. 4. Provide information about pros and cons of investing in Equity and Mutual FundsScope of the Study The project primarily deals with equity, derivatives, mutual funds, portfoliomanagement. The study is limited to compare equity capital and mutual fund schemes inrespect of their risk, return and liquidity. The study covers 5 randomly selected stocksout of 30 BSE Sensex companies and 5 randomly selected mutual fund schemes out ofmutual fund industry in India for comparison. The analysis is strictly based on shareprice and unit price information. Other company performance indicators are notconsidered.
  27. 27. It focuses on every month ending closing prices of during the period from 1st Apr,2003 to 31st Mar, 2006.Limitations of the Study The time period for the project was limited to only one and half month andinformation provided is limited to the extent of internet and journals. • A good number of explanatory variables must be taken in to consideration in order to assess the share price movement. But due to time constraints detailed analysis of each company were not made. • The information regarding the company’s, which were considered for the analysis, not uniform in nature. That is, number of observations differs from one/two company’s to other company’s. • Generalization of findings and conclusions of the study are likely to be disputed as security prices are determined by so many factors. However, the findings and conclusions drawn upon the primary and secondary data collected are expected to throw some light on volatility of share prices. • This is a one time study. • This being an academic study suffers from time and cost constraints. *******
  28. 28. Chapter 3 Concentrates on the methodology and sources of data collection, Sample design and tools and techniques of data collection.Methodology:
  29. 29. The whole study can be termed as comparative study. It is also a desk researchhence; there is no field work and collection of primary date for this research. The study centers on comparing equity and mutual fund schemes in respect oftheir risk, return and liquidity. However, with the objective and scope of the study inmind, it was decided to base the study on return series of selected stocks and mutual fundschemes. BSE being the premier exchange of India was chosen for selecting stocks. It iswidely accepted that BSE Sensex is the one of the most reliable index of the stockexchange that reflects present day market condition. Since it is not possible to compareall the 30 scrip’s in the index with all Mutual Fund Schemes due to time and resourceconstraints, sampling techniques were considered. Randomly selected samples willfacilitate inference of the population, in our case BSE Sensex and mutual fund industryin India. Hence by stratified random sampling 5 scrip’s out of 30 Sensex and 5 mutualfund schemes out of whole mutual fund industry were selected. The initial examination of the composition of index revealed that it is composedof primarily two types of industries: manufacturing and services in the ratio of 3 : 2.there for to give correct picture appropriate weight was assigned to manufacturingindustries and hence three scrip’s from manufacturing and two from service industrieswere randomly selected and in case of mutual funds it consists basically large cap, midcap, small cap, sectoreal funds and contra funds there fore one fund from each area wereselected. Monthly share price and unit prices of the selected scrip’s and units werecollected from historical data. In order to avoid bias, at least three years monthly datawas decided to be necessary. The reference period is from 1 st Apr, 2003 to 31st Mar,2006.Sampling technique:
  30. 30. The quality of research output and the validity of its findings depend uponappropriateness of the sampling design selected for the study. It was needed to applyinferential statistical analysis, hence probability sampling was chosen to be essential.Criteria for Selecting Sampling Techniques  It is intended to generalize the finding based on the sample examination to the population, therefore, probability sampling adopted in order to have a representative sample. Since the population is heterogeneous stratified random sampling was taken.  Probability sampling produces high degree of precision compared to non probability sampling.Sample Design : 1. Relative population – 30 BSE sensitivity index companies and mutual fund industry in India. 2. Sampling frame – list of population, elements from which sample is drawn (see the annexure). 3. Method of sampling – stratified random sampling. Stratification or division of population into homogeneous group was done on the basis of industry. 4. Variables – monthly calculated risk and returns were used for comparing equity and mutual fund schemes.Sample size: Five company’s equity shares and five mutual fund schemes were selected.Sample Description:
  31. 31. EQUITIES BENCHMARKACC LIMITED BSE SENSEXBAJAJ AUTO LIMITED BSE SENSEXBHEL BSE SENSEXICICI BANK LIMITED BSE SENSEXSATYAM COMPUTER SERVICES LIMITED BSE SENSEXMUTUAL FUNDS BENCHMARKRELIANCE MUTUAL FUND BSE SENSEXFRANKLIN INDIA PRIMA FUND BSE 100SUNDARAM SMILE FUND BSE 500PRUDENTIAL ICICI MUTUAL FUND BSE 100SBI MUTUAL FUND BSE 100
  32. 32. CALCULATION OF RETURN AND RISK OF SELECTED MUTUAL FUND SCHEMES AND THEIR BENCH MARKS RISK AND RETURN OF BENCH MARKS1. BSE SENSEX: Calculation of Return and Standard Deviation Date SENSEX Return in % R-R1 (R-R1)2 30-03-07 3048.72 30-04-07 2959.79 -2.92 -6.83 46.65 31-05-07 3180.75 7.47 3.56 12.67 30-06-07 3607.13 13.41 9.50 90.25 31-07-07 3792.61 5.14 1.23 1.51 29-08-07 4244.73 11.92 8.01 64.16 30-09-07 4453.24 4.91 1.00 1.00 30-10-07 4906.87 10.19 6.28 39.44 30-11-07 5044.82 2.81 -1.10 1.21 30-12-07 5838.96 15.74 11.83 139.95 30-01-08 5695.67 -2.45 -6.36 40.45 30-02-08 5667.51 -0.49 -4.40 19.36 30-03-08 5590.6 -1.36 -5.27 27.77 30-04-08 5655.09 1.15 -2.76 7.62 30-05-08 4759.62 -15.83 -19.74 389.67 30-06-08 4795.46 0.75 -3.16 9.99 30-07-08 5170.32 7.82 3.91 15.29 30-08-08 5192.08 0.42 -3.49 12.18 30-09-08 5583.61 7.54 3.63 13.18 30-10-08 5672.27 1.59 -2.32 5.38 30-11-08 6234.29 9.91 6.00 36.00 30-12-08 6602.69 5.91 2.00 4.00 30-01-09 6555.94 -0.71 -4.62 21.34 30-02-09 6713.86 2.41 -1.50 2.25 30-03-09 6492.82 -3.29 -7.20 51.84
  33. 33. 30-04-09 6154.44 -5.21 -9.12 83.17 30-05-09 6715.11 9.11 5.20 27.04 30-06-09 7193.85 7.13 3.22 10.37 30-07-09 7635.42 6.14 2.23 4.97 30-08-09 7805.43 2.23 -1.68 2.82 30-09-09 8634.48 10.62 6.71 45.02 30-10-09 7892.32 -8.6 -12.51 156.50 30-11-09 8788.81 11.36 7.45 55.50 30-12-09 9397.93 6.93 3.02 9.12 30-01-10 9919.89 5.55 1.64 2.69 28-02-10 10370.2 4.54 0.63 0.40 31-03-10 11280 8.77 4.86 23.62 Total 140.6 1474.39Bench Mark Return and Risk (BSE Sensex)Return = (P1 /P0 *100)-100 Where, P1 = Current month price, P0 = Previous month price R1 = ΣR/n, where n=number of months. R1 = 140.60/36 =3.9SD = √ Σ(R- R1)2 /n =√1474.39/36SD = 6.4 2. BSE 100: Calculation of Return and Standard Deviation
  34. 34. Date BSE100 Return in % R-R1 (R-R1)2 30-03-07 1716.28 30-04-07 1671.63 -2.60 -6.32 39.96 31-05-07 1641.44 -1.81 -5.53 30.54 30-06-07 1819.36 10.84 7.12 50.68 31-07-07 1893.45 4.07 0.35 0.12 29-08-07 2229.25 17.73 14.01 196.42 30-09-07 2314.62 3.83 0.11 0.01 30-10-07 2485.43 7.38 3.66 13.39 30-11-07 2594.94 4.41 0.69 0.47 30-12-07 3074.87 18.49 14.77 218.30 30-01-08 2946.14 -4.19 -7.91 62.51 30-02-08 2923.99 -0.75 -4.47 20.00 30-03-08 2966.31 1.45 -2.27 5.16 30-04-08 3025.14 1.98 -1.74 3.02 30-05-08 2525.35 -16.52 -20.24 409.71 30-06-08 2561.16 1.42 -2.30 5.30 30-07-08 2755.22 7.58 3.86 14.88 30-08-08 2789.07 1.23 -2.49 6.21 30-09-08 2997.97 7.49 3.77 14.21 30-10-08 3027.96 1.00 -2.72 7.40 30-11-08 3231.25 6.71 2.99 8.96 30-12-08 3456.54 6.97 3.25 10.58 30-01-09 3521.71 1.89 -1.83 3.37 30-02-09 3611.9 2.56 -1.16 1.34 30-03-09 3481.88 -3.60 -7.32 53.58 30-04-09 3313.45 -4.84 -8.56 73.23 30-05-09 3601.73 8.70 4.98 24.80 30-06-09 3800.24 5.51 1.79 3.21 30-07-09 4072.15 7.16 3.44 11.80 30-08-09 4184.83 2.77 -0.95 0.91 30-09-09 4566.63 9.12 5.40 29.20 30-10-09 4159.59 -8.91 -12.63 159.60 30-11-09 4849.87 16.59 12.87 165.76 30-12-09 4953.28 2.13 -1.59 2.52 30-01-10 5254.97 6.09 2.37 5.62 28-02-10 5422.67 3.19 -0.53 0.28 31-03-10 5904.17 8.88 5.16 26.62 Total 133.96 1679.66Bench Mark Return and Risk (BSE 100)Return = (P1 /P0 *100)-100 Where, P1 = Current month price, P0 = Previous month price
  35. 35. R1 = ΣR/n, Where n=number of months.R1 = 133.96/36 = 3.72SD = √ Σ(R- R1)2 /n = √1679.66/36SD = 6.83 3. BSE 500: Calculation of Return and Standard Deviation Date BSE500 Return in % R-R1 (R-R1)2 30-03-07 1164.68 30-04-07 1182.01 1.49 -2.60 6.77 31-05-07 1235.78 4.55 0.46 0.21 30-06-07 1373.56 11.15 7.06 49.83 31-07-07 1439.3 4.79 0.70 0.48 29-08-07 1687.35 17.23 13.14 172.77 30-09-07 1748.43 3.62 -0.47 0.22 30-10-07 1877.14 7.36 3.27 10.70 30-11-07 1991.74 6.11 2.02 4.06 30-12-07 2366.36 18.81 14.72 216.64 30-01-08 2246.83 -5.05 -9.14 83.56 30-02-08 2228.41 -0.82 -4.91 24.11 30-03-08 2243.6 0.68 -3.41 11.62 30-04-08 2321.25 3.46 -0.63 0.40 30-05-08 1891.75 -18.50 -22.59 510.44 30-06-08 1923.78 1.69 -2.40 5.74 30-07-08 2081.26 8.19 4.10 16.78 30-08-08 2125.65 2.13 -1.96 3.83 30-09-08 2276.87 7.11 3.02 9.14 30-10-08 2319.3 1.86 -2.23 4.96 30-11-08 2518.67 8.60 4.51 20.31 30-12-08 2634.51 4.60 0.51 0.26 30-01-09 2726.49 3.49 -0.60 0.36 30-02-09 2825.65 3.64 -0.45 0.21 30-03-09 2434.66 -13.84 -17.93 321.38 30-04-09 2610.5 7.22 3.13 9.81 30-05-09 2829.2 8.38 4.29 18.38
  36. 36. 30-06-09 2928.31 3.50 -0.59 0.34 30-07-09 3124.78 6.71 2.62 6.86 30-08-09 3273 4.74 0.65 0.43 30-09-09 3521.83 7.60 3.51 12.34 30-10-09 3198.69 -9.18 -13.27 175.97 30-11-09 3568.37 11.56 7.47 55.76 30-12-09 3795.96 6.38 2.29 5.23 30-01-10 4004.96 5.51 1.42 2.00 28-02-10 4130.07 3.12 -0.97 0.93 31-03-10 4516.73 9.36 5.27 27.79 Total 147.26 1790.64Bench Mark Return and Risk (BSE 500)Return = (P1 /P0 *100)-100 Where, P1 = Current month price, P0 = Previous month priceX1 = ΣR/n, Where,n=number of months.R1 = 147.26/36 = 4.09SD = √ Σ(R- R1)2 /n = √1790.64/36SD = 7.051. Reliance Vision Fund:- Reliance Vision Fund is large cap open ended growth fund. Its objective is toachieve long term growth of capital through a research based investment approach.Monthly risk and return from 30th Apr 2003 to 31st Mar 2006 is calculated below.Return=P1 /P0 *100 Where, P1 = Current month price, P0 = Previous month priceR1 = ΣR/n, = 190.14/36, = 5.28
  37. 37. Where n=number of months. SD = √ Σ(R- R1)2 /n, = √1704.71/36 SD = 6.88Calculation of Beta B = [Σ(Ra –Ra1)(Rm-Rm1)]/ Σ(Rm-Rm1)2 Where Ra = Return on Company, Ra1= Average return on company Rm= Return on market, Rm1= Average return on market =1424.07/1474.39B = 0.96
  38. 38. Calculation of AlphaAlpha = (Ra1 - Rm1)*B =(5.16-3.9)*0.96 =1.2 CALCULATION OF RISK AND RETURN Date Net Asset Value Return in %(R) R - R1 (R- R1)2 30-03-07 27.66 ------ ----- ---- 30-04-07 27.86 4.85 -0.43 0.18 31-05-07 31.45 13.7 8.42 70.89 30-06-07 34.70 10.03 4.75 22.56 31-07-07 37.58 8.29 3.01 9.06 29-08-07 43.31 16.39 11.11 123.43 30-09-07 48.11 9.99 4.71 22.18 30-10-07 53.04 10.24 4.96 24.6 30-11-07 57.89 9.14 3.86 14.89 30-12-07 68.51 18.34 13.06 170.56 30-01-08 63.69 -7.03 -12.31 151.53 30-02-08 65.39 2.66 -2.62 6.86 30-03-08 63.11 -3.48 -8.76 76.73 30-04-08 65.34 3.53 -1.8 3.24 30-05-08 54.44 -16.68 -21.96 482.24 30-06-08 56.26 3.34 -1.94 3.76 30-07-08 60.9 8.24 2.96 8.76 30-08-08 63.94 4.99 -1.04 1.08 30-09-08 68.7 7.44 2.16 4.66 30-10-08 69.11 1.45 -3.83 14.66DATE 30-11-08Return of Return of 74.76 Ra-Ra1 Rm-Rm1 7.25 [(Ra-Ra1) 1.97 (Rm-Rm1)2 3.88 Company 30-12-08 market 82.08 9.79 4.51(Rm-Rm1)] 20.3427-02-09 30-01-09 -7.45 3.64 83.14 -7.23 1.6 -0.45 -3.68 3.25 13.54 0.2030-03-09 30-02-09 -1.18 -13.84 90.19 -0.96 8.14-17.93 2.86 17.21 8.17 321.4830-04-09 30-03-09 0.7 7.22 86.7 0.92 -3.86 3.13 -9.14 2.88 83.53 9.8030-05-09 30-04-09 8.48 8.38 86.10 8.7 -0.69 4.29 5.97 37.32 35.64 18.4030-06-09 30-05-09 2.09 3.5 91.64 2.31 6.43 -0.59 1.15 -1.36 1.32 0.3530-07-09 30-06-09 8.73 6.71 91.49 8.95 -0.16 2.62 -5.44 23.45 29.59 6.8630-08-09 30-07-09 8.03 4.74 99.74 8.25 9.01 0.65 3.73 5.36 13.91 0.42 30-08-0930-09-09 2.35 104.82 7.6 2.57 5.09 3.51 -0.19 9.02 0.03 12.32 30-09-09 -24.3730-10-09 114.32 -9.18 -24.15 9.06-13.27 3.78 320.47 14.28 176.09 30-10-0930-11-09 -0.78 105.35 11.56 -0.56 -7.84 7.47 13.12 -4.18 172.13 55.80 30-11-0930-12-09 -0.10 118.05 6.38 0.12 12.05 2.29 6.77 0.27 45.83 5.24 30-12-0930-01-10 0.10 125.97 5.51 0.32 6.7 1.42 1.42 0.45 2.01 2.02 30-01-1028-02-10 0.10 134.38 3.12 0.32 6.67 -0.97 1.39 -0.31 1.93 0.94 28-02-10 139.26 3.63 5.27 -1.92 3.68 27.7731-03-10 0.00 9.36 0.22 1.16 31-03-10 155.75 11.84 6.65 43.03Total -3.33 147.26 415.00 637.71 Total 190.14 1704.71 CALCULATION OF BETA: DATE Return of Return of Ra-Ra1 Rm-Rm1 [(Ra-Ra1) (Rm-Rm1)2
  39. 39. CONCLUSION Saving money is not enough. Each of us also need to invest one’s savingsintelligently in order to have enough money available for funding the highereducation of one’s children, for buying a house, or for one’s own golden years. The study will guide the new investor who wants to invest in equity andmutual fund schemes by providing knowledge about how to measure the risk andreturn of particular scrip or mutual fund scheme. The study recommends newinvestors to go for mutual funds rather than equities, because of high risk and marketinstability. From the calculation it is found that the average risk of equities based onsample size is 9.87 & they are earning 5.43% returns per month where as mutualfunds average risk based on sample size is only 8.74 & they are earning 4.39% permonth *****

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