SUMMER INTERNSHIP REPORT

Conducted at

“RELIGARE SECURITIES LTD.”

“PERCEPTION OF PEOPLE TOWARDS INVESTMENT AND VARIOUS INVESTMENT

AVENUES”

Submitted to:

DEPARTMENT OF MANAGEMENT STUDIES

Deenbandhu Choturam University Of Science And Technology,

Murthal.

In the partial fulfillment of requirements for the award of degree of

master of business administration session(2015-2020)

SUBMITTED BY:

Mr. SUNNY NASA (15001432081)

S.NO. TOPICS PAGE NO.

1. Introduction 3-22

2. Sales & marketing 24-56

3. Project objective (research methodology) 58-60

4. Data analysis & interpretation 62-72

5. Limitation & recommendation 74-76

 1
INTRODUCTION
 ACKNOWLEDGEMENT

With immense pleasure I am presenting “PERCEPTION OF PEOPLE TOWARDS

INVESTMENT AND VARIOUS INVESTMENT AVENUES” project report as part of the
curriculum of ‘Master of Business Administration ’(INTEGRATED 5 YEAR) . I wish to thank
all the people who gave me unending support.

I am extremely thankful to RELIGARE SECURITIES LTD. & Ms. JOLLY WADHVA for
giving me an opportunity to undergo training and making my stay at RELIGARE SECURITIES
LTD. a memorable learning experience.

I am highly indebted to my project mentor, Mr. JOLLY WADHVA for his continuous support,
supervision, motivation and guidance throughout the tenure of my project in spite of his hectic
schedule who truly remained driving spirit in my project and his experience gave me the light in
handling research project and helped me in clarifying the abstruse concepts, requiring knowledge
and perception, handling critical situations and in understanding the objective of my work. I
would like to thank all the staff of RELIGARE SECURITIES LTD. for their guidance &
support.

I also like to extend my gratitude to my parents and friends who are integral part of the project
and have helped me to reduce stress and tiredness.

sunny

15001432081
 PREFACE
Summer training is essential for the fulfillment of MBA curriculum. It provides an opportunity to
the students to understand the industry with special emphasis on the development of skill in
analysing interoperating practical problem through application of management. I have done my
summer training in RELIGARE SECURITIES LTD. (SONEPAT). It was a splendid experience
to work with the professionals. In RELIGARE SECURITIES LTD. I have come to know a lot
and I believe this will show me the path during my working in the corporate world. The project
report consists of detailed study of “PERCEPTION OF PEOPLE TOWARDS INVESTMENT
AND VARIOUS INVESTMENT AVENUES” and some more learning about CUSTOMER
PERCEPTION practices. This project is a sincere attempt to study and understand the working
pattern of a public sector. The whole study has been divided into six parts: - The first part
introduction, wherein I have presented the organization visited by me. The second part of the
report contains facts and figures gathered by me in the course of the study. The third part of the
report is a project objective, methodology, scope and limitation of the study .The fourth part of
the study contains data analysis and interpretation. The fifth part of the study includes limitations
and recommendation. The last part of the study includes Annexure and Bibliography .I hope that
the research work made by me will be of great help to get the comprehensive knowledge of the
organization.
 DECLARATION

I, SUNNY, a student of The DEENBANDHU CHOTU RAM UNIVERSITY OF

SCIENCE AND TECHNOLOGY, hereby declare that the Institutional Training Report

submitted in partial fulfillment of the requirements of the Degree of Masters of Business

Administration Integrated (5YEAR) of the Deenbandhu Chotu Ram University of Science

And Technology is my original work.

DATE: SUNNY
 EXECUTIVE SUMMARY

Every organization needs to have well trained and experienced people to perform the activities
that have to be done. If current or potential job occupants can meet these requirements, training
is not important. When this not the case, it is necessary to raise the skills levels and increase the
versatility and adaptability of employees. It is being increasing common for individual to change
careers several times during their working lives. The probability of any young person learning a
job today and having those skills go basically unchanged during the forty or so years if his career
is extremely unlikely, may be even impossible. In a rapid changing society employees training is
not only an activity that an organization must commit resources to if it is to maintain a viable and
knowledgeable work Force .The entire project talks about the customer perception in theoretical
as well as new concepts, which are in trend now. Here we have discussed what would be the
input of training if we ever go for and how can it be goo d to any organization in reaping the
benefits from the money invested in terms like return on investment. What are the ways we can
identify the training need of any employees and how to know what kind of training he can go
for? Customer perception being in different aspect likes integrating it with organizational culture
.The best and latest available trends in sales method, the benefits which we can derive out of it.
How the evaluation should be done and how effective is the customer perception all together.
Some of the companies practicing selling in unique manner a lesson for other to follow as to how
train and retain the best resource in the world to reap the best out of it. Sales and distribution is
integral part of training if somebody is trained properly and efficiently the developments of that
individual and the company for whom he is working. Here we discussed about customer
perception, how much to identify the needs, and after developing how to develop executive skill
to sharpen their knowledge. Learning should be continues process and one should not hesitate to
learn any stage. Learning and developing is fast and easy at RELIGARE SECURITIES
LIMITED..
 1.1 Aim & Establishment of the company
Religare Securities Limited (RSL) is a diversified financial services group present across three
verticals. REL offers an integrated suite of financial services through its underlying subsidiaries
and operating entities, including loans to SMEs, Affordable Housing Finance, Health Insurance
and Retail Broking. RSL is listed on the BSE (formerly Bombay Stock Exchange) and National
Stock Exchange (NSE) in India.

As a group, Religare caters to diverse segments of the market from mass retail to affluent, SMEs
to mid-size corporates. Subsidiaries service over 1.1 mn. clients from over 1,275 locations
having presence in more than 400 cities.

Religare securities ltd. Founded in 1982, initially Religare was a stock brokerage firm called
Religare Securities Ltd (RSL) and was admitted to the National Stock Exchange (NSE) in 1994.
In 2000, it secured membership of the Futures and Options segment of the NSE and also
registered with National Securities Depository Limited (NSDL) as a depository participant.

Religare Finvest, a group company, was founded in 2001 as a private non-banking financial
institution. In 2002, RSL received registration as ‘Portfolio Manager’ from Securities and
Exchange Board of India (SEBI). RSL registered with Central Depository Services
Limited (CDSL) as a depository participant in 2003. It also became a stock broker at the Bombay
Stock Exchange (BSE) in 2004. In the same year, Religare Commodities Ltd., a commodities
broking company, started operations as a ‘trading cum clearing member’ at both the Multi
Commodity Exchange (MCX) and the National Commodity and Derivatives
Exchange (NCDEX).

An office was established in London in 2006. In 2006, RSL received registration as Merchant
Banker in Category - I from SEBI. Religare announced a joint venture with Macquarie Bank Ltd.
in October 2007 to expand its wealth management business. REL went public with an initial
public offering (IPO) of its stock in November, 2007, which was oversubscribed 159 times. The
same year, RSL received membership of derivative segment of the BSE as trading-cum-clearing
member.
AEGON Religare, a life insurance joint venture between AEGON, Religare and Bennett,
Coleman & company, launched its pan-India operations in 2008. Religare Asset Management
Company was formed on the back of Religare’s acquisition of Lotus India AMC and received
the final regulatory approval from SEBI to launch mutual fund business in India. Religare
entered into the institutional equities business and Religare Global Asset Management formed,
for international expansion. In May, 2015 Religare exited the life insurance joint venture.

In 2011, Religare Finvest successfully issued non-convertible debentures (NCDs) worth Rs. 800
crore. In December 2011, Avigo Capital and in January 2012, Jacob Ballas invest in Religare
Finvest Limited (RFL). In 2012 International Finance Corporation (IFC), an arm of World Bank
Group, invested in Religare. Religare Health Insurance Company Limited (RHIC) started
operations in 2012. Union Bank of India and Corporation Bank tie up with Religare Health
Insurance. In 2013 Religare bought Macquarie's stake in the wealth management business. In the
same year the name of Religare Mutual Fund was changed to Religare Invesco Mutual Fund. In
2014 Religare announced acquiring a 26% stake in Your Nest Angel Fund through its Global
Asset Management arm (RGAM). Religare has exited its global asset management business. In
February 2017, Anand Rathi Wealth Management acquired Religare’s wealth management
business. In April 2017, Religare announced that it had sold its stake to the True North a
consortium of PE investors.
 1.2 AIM OF THE COMPANY
Religare is a Latin word that means to bind together. We chose this name to reflect the integrated
nature of our services. Our name is paired with the symbol of a four leaf clover. Traditionally. It
is considered good fortune to find a four leaf clover as there is only one four leaf clover for every
10,000 leaf clovers found.

Each leaf of the religare clover has a special meaning. It is a symbol of hope, trust, care, fortune.

Hope

The aspirations of succeed. The dream of becoming of new possibilities. It is the beginning of
every step and the foundation on which a person reaches for the stats.

Trust

The ability to place ones own faith in another. To have a relationship as a partner 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.

Care

The secret ingredient that is the cement of 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.

Good fortune

Signifying that rare ability to meld opportunity and planning with circumstances to generate
those often looked for remunerative moments of success.
PRODUCTS AND SERVICES :
EQUITY

Equity investing needs time, patience and a sound understanding of how it all works. Find
everything you need to trade stocks right here. From a range of trading options to advanced
features for buying and selling effortlessly, we’ll help you simplify the game.

EXCHANGE TRADE FUNDS

Exchange Traded Funds have the power to amplify your small investment by diversifying your
portfolio it in a big way. Invest in various country indices, participate in profits of global brands
or tap into sectors not available in India. The world is your playground.

CURRENCY

Dive into the largest liquid financial market. Ride currency movements with confidence.

Advanced technology and increased globalization are swiftly shifting market trends. Currencies
are impacted by various events in the international markets, as currency rates move against each
other.
SERVICES :

TIN FC

Tax Information Network (TIN), has been established by National Securities Depository Limited
on behalf of Income Tax Department of India (ITD). TIN is an initiative by ITD for the
modernization of the current system for collection, processing, monitoring and accounting of
direct taxes using information technology; and to provide TIN services NSDL has appointed
Religare to commence the same. Starting with more than 100 centres today, it is growing at a
rapid pace to cover a Pan- India network equipped with the right insight and technology.

NPS

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme
designed to enable the subscribers to make optimum decisions regarding their future through
systematic savings during their working life

Under the NPS, individual savings are pooled in to a pension fund which are invested by PFRDA
regulated professional fund managers in to the diversified portfolios comprising of government
bonds, bills, corporate debentures and shares. These contributions grow and accumulate over the
years, depending on the returns earned on the investment made.

DSC
A digital signature is an electronic form of a signature that can be used to authenticate the
identity of the sender of a message. It ensures that the original content is unchanged while in
transit. Digital signatures cannot be copied by someone else. It ensures that the original signed
message arrived means that the sender cannot disclaim it later.
Digital Signature Certificates (DSC) is the electronic format of physical certificate like a driving
License, passport etc. All Certificates serve a certain purpose; for example, a Passport identifies
someone as a citizen of that country in same manner a Digital Signature Certificate can be
presented electronically to prove your identity, to sign certain documents digitally.

DEMAT ACCOUNT

A Demat Account is an account that allows investors to hold their shares in an electronic
form.Stocks in Demat account remain in dematerialized form. Dematerialization is the process of
converting physical shares into electronic format. A demat account number is required to enable
electronic settlements of all the trades. Demat account functions like a bank account, where you
hold your money and respective entries are done in bank passbook. In a similar form, securities
too are held in electronic form and are debited or credited accordingly. A demat account can be
opened with no balance of shares. You can have a zero balance in your account.

TRADING ACCOUNT

For conducting online transactions in stock market, traders have to get themselves register with
stock-exchange. For this purpose, Traders can open account with Brokers or Financial
institutions who trade on their behalf in the stock market. This account contains the list of all the
investments of a particular investor. Our real time stock trading platform is power packed with
useful features like advanced portfolio tracker, live market watch, stock screener, technical
analysis of stocks and many more. Open an online trading account with Religare Broking today
and enjoy these exclusive features for free!
 1.3. POLICY OF THE COMPANY

Company Policy defines the scope or spheres within which decisions can be taken by the
subordinates in an organization. It permits the lower level management to deal with the problems
and issues without consulting top level management every time for decisions.

Policies are the guidelines developed by an organization to govern its actions. They define the
limits within which decisions must be made. Business policy also deals with acquisition of
resources with which organizational goals can be achieved. Business policy is the study of the
roles and responsibilities of top level management, the significant issues affecting organizational
success and the decisions affecting organization in long-run.

An effective policy of company must have following features-

1. Specific- Policy should be specific/definite. If it is uncertain, then the implementation

will become difficult.

2. Clear- Policy must be unambiguous. It should avoid use of jargons and connotations.

There should be no misunderstandings in following the policy.

3. Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed

by the subordinates.

4. Appropriate- Policy should be appropriate to the present organizational goal.

5. Simple- A policy should be simple and easily understood by all in the organization.

6. Inclusive/Comprehensive- In order to have a wide scope, a policy must be

comprehensive.

7. Flexible- Policy should be flexible in operation/application. This does not imply that a
policy should be altered always, but it should be wide in scope so as to ensure that the

line managers use them in repetitive/routine scenarios.

8. Stable- Policy should be stable else it will lead to indecisiveness and uncertainty in minds

of those who look into it for guidance.

 2.
CUSTOMER PERCEPTION TOWARDS
INVESTMENT AND VARIOUS
INVESTMENT AVENUES
 DEFINE CUSTOMER PERCEPTION
Customer Perception is a marketing concept that tells us what customers think about a brand or a
company or its offerings. It can be positive or negative feelings, perceptions, inhibitions,
predispositions, expectations or experiences that a customer has.

Customer Perception decides how much a product sells and how a company is perceived. Let us
study a few examples to understand the importance of customer perception and why it is
important in customer decision making.

Factors deciding customer perception

In general, customer perception can be influence by a lot of factors. Some of the major factors
are

 Consistency of performance – How has the brand performed in the past and how it is
performing currently.
 Emotional connect – Superb brands know that emotional connection with the customer
is critical to brand development.
 Marketing communications – How the brand communicates with the customers using
the various media vehicles.
 Holistic marketing – A brand cannot be excellent if it has good sales staff but pathetic
support staff. A brand has to be a good all rounder and satisfy customers from all its
touch points.

A financial market is the vertebrae of an economic scheme. It helps the allotment of share capital
crosswise in the productive sectors of the economy. This allocation of capital helps to keep up
strong weather for savings and investment. The financial system has more dynamic than the real
system as it has always reacted to the needs of the economy to help to complete its goals. In the
present financial system, there are so many investment avenues to choose, today in financial
market it has involved for anyone to decide about these avenues. Some of these investment
avenues offer attractive returns but with high risks, some propose lower returns with very low
risks. An overall analysis of these investment avenues with risk and return trade is present in this
article. An investment is can describe as perfect investment, if it satisfies all the needs of all
investors. Therefore, the starting point of searching of any perfect investment must look at
through the investor needs. If all those needs are meets by the investment, then that investment
termed the perfect investment. The most investors and advisors use a big deal of time thoughtful
qualities of the thousands of investments offered in India.

INDIAN STOCK MARKET

Introduction

Indian Stock Markets is one of the oldest in Asia. The East India Company was the dominant
institution in those days and business in its loan securities used to be transacted towards the
close of the eighteenth century.

By 1830's business on corporate stocks and shares in Bank and Cotton presses took place in
Bombay. Though the trading list was broader in 1839, there were only half a dozen brokers
recognized by banks and merchants during 1840 and 1850. The 1850's witnessed a rapid
development of commercial enterprise and brokerage business attracted many men into the field
and by 1860 the number of brokers increased into 60. In 1860-61 the American Civil War broke
out and cotton supply from United States to Europe was stopped; thus, the 'Share Mania' in
India began. The number of brokers increased to about 200 to 250.

In 1887, they formally established in Bombay, the "Native Share and Stock Brokers'
Association”, which is alternatively known as “The Stock Exchange". In 1895, the Stock
Exchange acquired a premise in the same street and it was inaugurated in 1899. Thus, the Stock
Exchange at Bombay was consolidated.

The two major stock exchanges in India are:-

 National Stock Exchange (NSE)

 Bombay Stock Exchange (BSE).
National Stock Exchange

The National Stock Exchange (NSE) is India's leading stock exchange covering various cities
and towns across the country. NSE was set up by leading institutions to provide a modern, fully
automated screen-based trading system with national reach. The Exchange has brought about
unparalleled transparency, speed & efficiency, safety and market integrity. It has set up
facilities that serve as a model for the securities industry in terms of systems, practices and
procedures.

NSE Nifty

S&P CNX Nifty is a well-diversified 50 stock index accounting for 22 sectors of the economy.
It is used for a variety of purposes such as benchmarking fund portfolios, index based
derivatives and index funds.

NSE came to be owned and managed by India Index Services and Products Ltd. (IISL), which is
a joint venture between NSE and CRISIL. IISL is India's first specialized company focused upon
the index as a core product. IISL have a consulting and licensing agreement with Standard &
Poor's (S&P), who are world leaders in index services. CNX stands for CRISIL NSE Indices.
CNX ensures common branding of indices, to reflect the identities of both the promoters, i.e.
NSE and CRISIL. Thus, 'C' Stands for CRISIL, 'N' stands for NSE and X stands for Exchange or
Index. The S&P prefix belongs to the US-based Standard & Poor's Financial Information
Services.

Bombay Stock Exchange

The Bombay Stock Exchange is one of the oldest stock exchanges in Asia. It was established
as "The Native Share & Stock Brokers Association" in 1875. It is the first stock exchange in
the country to obtain permanent recognition in 1956 from the Government of India under the
Securities Contracts (Regulation) Act, 1956. The Exchange's pivotal and pre-eminent role in the
development of the Indian capital market is widely recognized and its index, SENSEX, is
tracked worldwide.
 SENSEX

The Stock Exchange, Mumbai (BSE) in 1986 came out with a stock index that subsequently
became the barometer of the Indian stock market.

SENSEX is not only scientifically designed but also based on globally accepted construction
and review methodology. First compiled in 1986, SENSEX is a basket of 30 constituent
stocks representing a sample of large, liquid and representative companies. The base year of
SENSEX is 1978-79 and the base value is 100. The index is widely reported in both domestic
and international markets through print as well as electronic media.

Due to is wide acceptance amongst the Indian investors; SENSEX is regarded to be the pulse of
the Indian stock market. As the oldest index in the country, it provides the time series data over
a fairly long period of time. Small wonder, the SENSEX has over the years become one of the
most prominent brands in the country.

The SENSEX captured all these events in the most judicial manner. One can identify the booms
and busts of the Indian stock market through SENSEX.

The launch of SENSEX in 1986 was later followed up in January 1989 by introduction of BSE
National Index (Base: 1983-84 = 100). It comprised of 100 stocks listed at five major stock
exchanges.

REGULATORY FRAMEWORK OF THE CAPITAL MARKET IN INDIA

India has a financial system that is regulated by independent regulators in the sectors of
banking, insurance, capital markets and various service sectors. The Indian Financial system is
regulated by two governing agencies under the Ministry of Finance. They are

 Reserve Bank of India

The RBI was set up in 1935 and is the central bank of India. It regulates the financial and
banking system. It formulates monetary policies and prescribes exchange control norms.
 The Securities Exchange Board of India

The Government of India constituted SEBI on April 12, 1988, as a non-statutory body to
promote orderly and healthy development of the securities market and to provide investor
protection.

Department Economic Affairs

The capital markets division of the Department of Economic Affairs regulates capital markets
and securities transactions.

The capital markets division has been entrusted with the responsibility of assisting the
Government in framing suitable policies for the orderly growth and development of the
securities markets with the SEBI, RBI and other agencies. It is also responsible for the
functioning of the Unit Trust of India (UTI) and Securities and Exchange Board of India
(SEBI).

TRADING WITH STOCK MARKET

This section will introduce us about the process and instruments used to help a customer or a
client to trade with arcadia securities. This process is almost similar to any other trading firm
but there will be some difference in the cost of brokerage commission.

Trading

It is a process by which a customer is given facility to buy and sell share this buying and selling
can only be done through some broker and this is where Arcadia helps its customer. A customer
willing to trade with any brokerage house need to have a Demat account, trading account and
saving account with a brokerage firm. Anyone having following document can open all the
above mentioned account and can start trading.
Documents Required

 2 Photographs
 Copy of PAN Card is mandatory.
 Photo Identification Proof - any of the following – Voter ID/Driving License/Passport.
 Address Proof any of the following - Voter ID/Driving License/ Passport/Bank
statement or pass book sealed and attestation by bank official/ BSNL landline bill.
 A crossed Cheque favoring “Karvy Stock Broking Ltd.” of the required amount. The
amount for Demat as well as trading will be Rs. 900/-(free Demat +900 Trading
Account) the minimum amount being Rs. 900 a cheque can be given for a larger
amount.
 Copy of Bank Passbook. First page and last Transaction page. Transaction must not be
older than 3 months.

These documents are used to avoid illegal transaction and to prevent black money. This ensures
that money invested is accounted.

Basic Requirements for doing Trading

Trading requires Opening a Demat account. Demat refers to a dematerialized account. You
need to open a Demat account if you want to buy or sell stocks. So it is just like a bank
account where actual money is replaced by shares. We need to approach the Depository
Participants (DP, they are like bank branches), to open Demat account.

A depository is a place where the stocks of investors are held in electronic form. The
depository has agents who are called depository participants (DPs).

Think of it like a bank. The head office where all the technology rests and details of all
accounts held is like the depository. And the DPs are the branches that cater to individuals.

There are only two depositories in India –

 The National Securities Depository Ltd (NSDL) and the

  Central Depository Services Ltd (CDSL).

Capital Market Participants

 Banks
 Exchanges
 Clearing Corporations
 Brokers
 Custodians
 Depositories
 Investors
 Merchant Bankers

Types of Investors

 Institutional Investors- MFs / FI / FIIs / Banks

 Retail Investors
 Arbitrageurs / Speculators
 Hedgers
 Day traders/Jobbers
 PARAMETERS OF INVESTMENT

 The nature of investment differs from individual to individual and is unique to each one
because it depends on various parameters like future financial goals, the present & the
future income model, capacity to bear the risk, the present requirements and lot more.
Investment means person’s commitments towards his future.


 INVESTMENT
  Generally, investment is the application of money for earning more money. Investment
also means savings or savings made through delayed consumption. According to
economics, investment is the utilization of resources in order to increase income or
production output in the future.
 An amount deposited into a bank or machinery that is purchased in anticipation of
earning income in the long run are both examples of investments. Although there is a
general broad definition to the term investment, it carries slightly different meanings to
different industrial sectors.
 According to economists, investment refers to any physical or tangible asset, for
example, a building or machinery and equipment.
 According to finance, the practice of investment refers to the buying of a financial
product or any valued item with anticipation that positive returns will be received in the
future.

 The most important feature of financial investments is that they carry high market
liquidity. The method used for evaluating the value of a financial investment is known as
valuation.

PRINCIPLES OF INVESTMENT

Five basic principles serve as the foundation for the investment approach. They are as follows:

 Focus on the long term

There is substantive empirical evidence to suggest that equities provide the maximum risk
adjusted returns over the long term. In an attempt to take full advantage of this phenomenon,
investments would be made with a long term perspective.

 Investments confer proportionate ownership

The approach to valuing a company is similar to making an investment in a business.

Therefore, there is a need to have a comprehensive understanding of how the business
operates.
  Maintain a margin of safety

The benchmark for determining relative attractiveness of stocks would be the intrinsic value
of the business. The Investment Manager would endeavor to purchase stocks that represent a
discount to this value, in an effort to preserve capital and generate superior growth.

 Maintain a balanced outlook on the market

The investment portfolio would be regularly monitored to understand the impact of changes in
business and economic trend as well as investor sentiment. While short-term market volatility
would affect valuations of the portfolio, this is not expected to influence the decision to own
fundamentally strong companies.

 Disciplined approach to selling

The decision to sell a holding would be based on either the anticipated price appreciation
being achieved or being no longer possible due to a change in fundamental factors affecting
the company or the market in which it competes, or due to the availability of an alternative
that, in the view of the Investment Manager, offers superior returns.

INVESTMENT TYPES
A particular investor normally determines the investment types after having formulated the
investment decision, which is termed as capital budgeting in financial lexicon. With the
proliferation of financial markets there are more options for investment types.

According to the financial terminology investment means the following:

 Purchasing Securities in Money or Capital Markets

 Buying Monetary or Paper Financial Assets in Money or Capital Markets
 Investing in Liquid Assets like Gold, Real Estate and Collectibles

Investments are often made through the intermediaries who use money taken from individuals to
invest. It is common practice for the particular intermediaries to have separate legal procedures
of their own.

Following are some intermediaries:

 Banks
 Mutual Funds
 Pension Funds
 Insurance Companies
 Collective Investment Schemes
 Investment Clubs

Investment in the domain of personal finance signifies funds employed in the purchasing of
shares, investing in collective investment plans or even purchasing an asset with an element of
capital risk. In the field of real estate, investments imply buying of property with the sole
purpose of generating income.

Why should one invest?

One needs to invest to:

 earn return on your idle resources

 generate a specified sum of money for a specific goal in life
 make a provision for an uncertain future

VARIOUS OPTIONS AVAILABLE FOR INVESTMENT

One may invest in

 Physical assets like real estate, gold/jewellery, commodities etc. or

 Financial assets such as fixed deposits with banks, small saving instruments with post
offices, insurance/ provident/
  Pension fund etc. or securities market related instruments like shares, bonds, debentures
etc.

Various Short-term financial options available for investment:

Broadly speaking, savings bank account, money market/liquid funds and fixed deposits with
banks may be considered as short-term financial investment options.

Savings Bank Account is often the first banking product people use, which offers low interest
4% -5% p.a., making them only marginally better than fixed deposits.

Fixed Deposits with Banks are also referred to as term deposits and minimum investment
period for bank FDs is 30 days. Fixed Deposits with banks are for investors with low risk
appetite, and may be considered for 6-12 months investment period as normally interest on less
than 6 months bank FDs is likely to be lower than money market fund returns.

Various Long-term financial options available for investment:

Post Office Savings

Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed
through any post office. It provides an interest rate of 8% per annum, which is paid monthly.

Minimum amount, which can be invested, is Rs. 1,000/- and additional investment in multiples
of 1,000/-. Maximum amount is Rs. 3, 00,000/- (if Single) or Rs. 6, 00,000/- (if held jointly)
during a year. It has a maturity period of 6 years.

Public Provident Fund

A long term savings instrument with a maturity of 15 years and interest payable at 8% per annum
compounded annually. A PPF account can be opened through a nationalized bank at anytime
during the year. Tax benefits can be availed for the amount invested and interest accrued is tax-
free.

Company Fixed Deposits

These are short-term (six months) to medium-term (three to five years) borrowings by companies
at a fixed rate of interest which is payable monthly, quarterly, semi-annually or annually. The
rate of interest varies between 7-14% per annum for company FDs. The interest received is after
deduction of taxes

Bonds

It is a fixed income (debt) instrument issued for a period of more than one year with the purpose
of raising capital.

The central or state government, corporations and similar institutions sell bonds. A bond is
generally a promise to repay the principal along with a fixed rate of interest on a specified date,
called the Maturity Date.

Mutual Funds

These are funds operated by an investment company which raises money from the public and
invests in a group of assets (shares, debentures etc.). It is a substitute for those who are unable to
invest directly in equities or debt because of resource, time or knowledge constraints.

Equity Investment

Equity investment refers to the trading of stocks and bonds in the share market. It is also referred
to as the acquisition of equity or ownership participation in the company. In this kind of
investment there is always a risk of the investor not earning a specific amount of money. Equity
investment can also be termed as payment to a firm in return for partial ownership of that firm.

In order to understand equity investment properly, it is necessary to see the technical and
fundamental analysis. The technical analysis of equity investment is primarily the study of price
history of the shares and stock market. A fundamental analysis of equity investment involves the
study of all available information that is relevant to the share market in order to predict the future
trends of the stock market. The annual reports, industry data and study of the economic and
financial environment are also included in the fundamental information of equity investment

Mutual Funds and Segregated Funds

Mutual funds or other forms of pooled investment measures are equities held by private
individuals but managed and governed by prominent management firms. These types of financial
holdings allow individual investors to diversify their holdings and avoid potential loss.
Segregated funds, on the other hand, are used by large private investors who wish to hold their
shares directly rather than in a mutual fund.
The prime advantage in investing in a pooled fund is that it gives the individual access to
professional advice through the fund manager. The major disadvantages involved are that the
investors must pay a fee to the fund managers and that the diversification of the fund may not be
appropriate for all investors. In those cases, the investors may over-diversify by holding several
funds, thus reducing the risk.

Mutual funds are supposed to be the best mode of investment in the capital market since they
are very cost beneficial and simple, and do not require an investor to figure out which securities
to invest into. A mutual fund could simply be described as a financial medium used by a group
of investors to increase their money with a predetermined investment. The responsibility for
investing the pooled money into specific investment channels lies with the fund manager of said
mutual fund.

Therefore investment in a mutual fund means that the investor has bought the shares of the
mutual fund and has become a shareholder of that fund. Investors are able to purchase securities
with much lower trading costs by pooling money together in a mutual fund rather than try to do it
on their own. However the biggest advantage that mutual funds offer is diversification which
allows the investor to spread out his money across a wide spectrum of investments. Therefore
when one investment is not doing well, another may be doing taking off, thereby balancing the
risk to profit ratio and considerably covering the overall investment.

DEBENTURES

In financial context, Debentures are Debt Instruments issued for a long term by governments and
big institutions for rising funds. The Debenture has some resemblances to bonds but the
securitization terms and conditions are different for Debentures compared to a bond.

A Debenture is commonly considered as insecure because there is no pledge on particular assets.

Nevertheless, a Debenture is secured by all the assets which are otherwise not pledged.

If there is a bankruptcy, Debenture holders will be counted as general creditors. The benefit that
the issuer enjoys from issuing a debenture is that they keep particular assets free of
encumbrances so the option is open to issue them for future financing.
Usually, Debentures are freely negotiable debt instruments. The Debenture holder works as a
lender to the Debenture issuer.

In return, the Debenture issuer pays interest to the Debenture holders as it is paid in case of a
loan. In practical application, the difference between a Bond and a Debenture is not always kept.
In some instances, Debentures are also referred to as Bonds and vice-versa.

TYPES OF DEBENTURES
 Convertible Debenture
 Non-Convertible Debenture
 Participative Debenture
 Non- Participative Debenture
 Redeemable Debenture
 Irredeemable Debenture
BOND MARKET
The bond market is a financial market that acts as a platform for the buying and selling of debt
securities. The bond market is a part of the capital market serving platform to collect fund for the
public sector companies, governments, and corporations. There are a number of bond indices that
reflect the performance of a bond market.

The bond market can also called the debt market, credit market, or fixed income market. The size
of the current international bond market is estimated to be $45 trillion. The major bond market
participants are: governments, institutional investors, traders, and individual investors.
According to the specifications given by the Bond Market Association, there are five types of
bond markets.

They are:

 Corporate Bond Market

 Municipal Bond Market
 Government and Agency Bond Market
 Funding Bond Market
 Mortgage Backed and Collateralized Debt Obligation Bond Market

Share Market Investment

Shares are purchased and sold on the primary and secondary share markets. To invest in the
share market, investors acquire a call option, which is the right to buy a share, or a put option,
which is the right to sell a share. In general, investors buy put options if they expect prices to
rise, and call options if they expect prices to fall.. The value of a derivative depends on the value
of the underlying asset.

The various classifications of derivatives relevant to share market investment are:

 Swap
 Futures Contract
 Forward Contract
  Option Contract

A forward contract is agreements between two parties purchase or sell a product in the future, at
a price determined now. This mutual agreement satisfies the profit motive of both the buyer and
seller, and the uncertainties and risks of price fluctuations in the future are aborted. A future
contract is different from a forward contract in the sense that the former requires the presence of
a third party and the commitment for trade is simply notional.

Before a share is chosen for investment, a technical analysis of the share is performed. The price
and volume of a share over a period of time are tracked and then a business plan is constructed.
A fundamental analysis involves a close study of the company associated with the share, and its
performance over time. The fundamental analysis is important for the share market investor.

The price levels of a traded share are as follows:

 Opening Price: This is the price at which the market opens. In other words, it is the price
of the first transaction.
 Closing Price: This is the price at the time of closing of the market or the price of the last
trade.
 Intra-Day High: This denotes the maximum price at which the share was traded in the
day.

Intra-Day Low: This is the minimum price at which the share traded in the day

Debt Investments

Debt securities (in the form of non-convertible debentures, bonds, secured premium notes, zero
interest bonds, deep discount bonds, floating rate bond / notes, securitised debt, pass through
certificates, asset backed securities, mortgage backed securities and any other domestic fixed
income securities including structured obligations etc.) include, but are not limited to :
  Debt obligations of the Government of India, State and local Governments, Government
Agencies and statutory bodies (which may or may not carry a state / central government
guarantee),
 Securities that have been guaranteed by Government of India and State Governments,
 Securities issued by Corporate Entities (Public / Private sector undertakings),
 Securities issued by Public / Private sector banks and development financial institutions.

Money Market Instruments Include

 Commercial Papers
 Commercial bills
 Treasury bills
 Government securities having an unexpired maturity upto one year
 Call or notice money
 Certificate of deposit
 Permitted securities under a repo / reverse repo agreement
 Any other like instruments as may be permitted by RBI / SEBI from time to time
Investments will be made through secondary market purchases, initial public offers, other
public offers, placements and right offers (including renunciation) and negotiated deals.
The securities could be listed, unlisted, privately placed, secured / unsecured, rated /
unrated of any maturity.

The AMC retains the flexibility to invest across all the securities / instruments in debt and money
market.

Investment in debt securities will usually be in instruments which have been assessed as "high
investment grade" by at least one credit rating agency authorized to carry out such activity under
the applicable regulations. In case a debt instrument is not rated, prior approval of the Board of
Directors of Trustee and AMC will be obtained for such an investment. Investment in debt
instruments shall generally have a low risk profile and those in money market instruments shall
have an even lower risk profile. The maturity profile of debt instruments will be selected in
accordance with the AMC's view regarding current market conditions, interest rate outlook.
Pursuant to the SEBI Regulations, the Scheme shall not make any investment in:

 any unlisted security of an associate or group company of the Sponsor; or

 any security issued by way of private placement by an associate or group company of the
Sponsor; or
 the listed securities of group companies of the Sponsor which is in excess of 25% of the
net assets.

The Scheme may invest in other schemes managed by the AMC or in the schemes of any other
mutual funds, provided it is in conformity with the investment objectives of the Scheme and in
terms of the prevailing SEBI Regulations. As per the SEBI Regulations, no investment
management fees will be charged for such investments and the aggregate inter Scheme
investment made by all the schemes of HDFC Mutual Fund or in the schemes of other mutual
funds shall not exceed 5% of the net asset value of the HDFC Mutual Fund.

INVESTMENT PROCESS