AJAY Reliance Money 30

8/8/2019 AJAY Reliance Money 30

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Project Report

On

Demat Opening Schemes of RelianceMoney with other competitors,

Mutual Fund, Financial and Technicalanalysis.

Submitted in requirement of partial

fulfillment ofMASTER OF BUSSINESSADMINISTRATION

2007-09

Under The Guidance Of :Mr. MANISH SHUKLA

Center Manager,Reliance Money,

MEERUTSubmitted to: Submitted By:

Ms. Jasika ShuklaFaculty, Finance

Pramod KumarMBA


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PUNJAB TECHNICAL UNIVERSITY,JALANDHAR


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ACKNOWLEDGMENTS

It was a great opportunity for me to work with Reliance money, pioneersin the field of online trading. I am extremely grateful to those who have

shared their expertise and knowledge with me and without whom the

completion of this project would have been virtually impossible.

Firstly, I would like to thank my project guide Mr. Manish Shukla

Center Manager, Reliance Money Ltd., who has been a constant

source of inspiration for me during the completion of this project. He gave

me invaluable inputs during my endeavor to complete this project.

I am indebted to all staff members of Reliance Money Ltd. for their

valuable support and co-operation during the entire tenure of this project.

Not to forget, all those who have kept our spirits surging and helped me

in delivering my best.

(Pramod Kumar)


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INDEX

1. Introduction

2. Executive Summary

3. Project Objective

4. Methodology

5. Company Profile

6. Corporate Structure

7. Reliance money Services8. Services Provided

9. Mutual Fund

10. Indian Stock Market Overview

11. About NSE

12. About BSE

13. Indian Scenario14. Products and Required Documents

15. Competitive Analysis

16. Analysis of Questionnaire

17. Findings

18. Suggestions

19. Learnings

20. Limitations

21. Conclusion

22. Bibliography

23. Annexure


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INTRODUCTION

In todays scenario Online Share Trading in Stock market is gaining

popularity. Till now most of the customers were working with offline but inmetro cities Online Share Trading is preferred because no one has muchtime to go to market and work with offline.

So, online share trading come in picture. In Online Share Tradinginvestors invest their money in stock market through the internet. Theydo not want to go to a broker. Today companies provided all informationon a company website or make their own software. Investors buy or selltheir securities in a few seconds by clicking a mouse.

Online Share Trading is beneficiary for customer as well as companybecause in online customers have not take much pain for investing moneyin a market. All process is done automatically in a few seconds.Companies provided research reports, monthly magazine etc throughInternet. Investors get this information online. These reports helpinvestors for investment in securities. Online Share Trading is very lesstime consuming and expensive. So Online share Trading is much betterthan offline share trading. Online Share Trading is safer and fasteralternative to the offline Share Trading as it offer freedom from delays,thefts and paperwork. So Online Share Trading is quick, convenient and

efficient.

About Reliance Money:Reliance Money is India's leading retail financial services company. Theyhave over 300 share shops across 175 cities in India. While their size andstrong balance sheet allow them to provide customers with variedproducts and services at very attractive prices, their over 750 ClientRelationship Managers are dedicated to serving customers unique needs.

Reliance Money is lead by a highly regarded management team that hasinvested crores of rupees into a world class Infrastructure that providesclients with real-time service & 24/7 access to all information andproducts. Their flagship Reliance Money offers real-time prices, detaileddata and news, intelligent analytics, and electronic trading capabilities,right at your finger-tips. This powerful technology complemented by theirknowledgeable and customer focused Relationship Managers is creating aworld of Smart Investor.

Reliance Money offers a full range of financial services and products


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ranging from Equities to Derivatives enhance your wealth and hence,achieve your financial goals.

Reliance Money' Client Relationship Managers are available to thecustomers to help with their financial planning and investment needs. To

provide the highest possible quality of service,Reliance Money providesfull access to all our products and services through multi-channels.

Services provided by the RELIANCE MONEY :--

1. Equities & Derivatives :--Comprehensive services forindependent investors,active traders & Non-Resident Indians.

2. Reliance Money equity analysis :--Premium research on401+ companies updated daily.

3. Depository Services :--Value added services forseamless delivery.


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EXECUTIVE SUMMARY

I am Kapil Kumar from the batch of 2007-09, Dev Bhoomi Institute of

Technology, Dehradun. I did my Summer Training with Reliance Money(www.reliancemoney.com) from 24th of May 2008 to 19th of July 2008.I was assigned the task of Competitive Analysis, Promotion and Future ofOnline Trading & Mutual fund..

This research is based on the comparative analysis of Reliance Moneywith other broking houses and study of Future of Online Share Trading inIndia. Its totally based on realistic approach towards the online share-trading senario in India.

In the first phase I covered some other stock broking companies ascompared to Reliance Money. I examined thoroughly areas such asnumber of players, technology they are offering their customer base theirproducts and offerings and how they market their products etc.

In between to acquire new customers for Reliance Money was also anintegral part of the job. In this process I spoke to different potentialcustomers about the organization and its products in order to increase thepopularity of Reliance Money.

I took places in Gurgaon & Delhi as a sample. I did follow marketresearch procedure to get an idea about the future of Online ShareTrading. For this I divided the whole Delhi into a five zones (East ,West,South ,North ,Central).
http://www.reliancemoney.com/http://www.reliancemoney.com/


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PROJECT OBJECTIVE

I was assigned with the task of comparing different online brokingcompanies and predicting the future of online share trading in India as apart of the summer training curriculum. The entire project was dividedinto six parts:

a) Gathering data about the leading online broking houses andcompare the main points and find the strengths of Reliance Moneycompared to them.

b) Conducting Market Research in various parts of the city in order to

get statistical data for commenting on the future of online sharetrading in India.

c) Customer Acquisition through sales of Trading / Demat Accounts inorder to get a deep insight as to how the Organization actuallyperforms these functions.

.

d) To increase the product awareness of Reliance money as onewindow shop for investment solutions.

e) To find the potential market for Reliance Money products andgetting information about pricing strategy of competitors to fight cutthroat competition.

d) To collect the real time information about preference level ofcustomers using Demat account and their inclination towardsvarious other brokerage firms e.g. Indiabulls, ICICI direct.com,

Sharekhan , Indiainfoline , Religare , Alankit, Unicon etc.


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METHODOLOGY

Methodology for Market Research

I divided the entire city into zones and drew out samples out of eachzone. The size of samples drawn from each zone depended on theprospective ness of the particular area. For e.g., if a particular researcharea consisted of Offices then the sample size would obviously be higherthan an area like Shopping mall or PVR. This is because Office employeesconstitute the service sectors who are the active investors of today. Also,the office areas consist of people from the business class who havealways been in the hunt for quick money, not to forget that smart andtimely investment in the share market can yield to enormous returns.


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Methodology for Customer Acquisition

The leads for customer acquisition primarily came from the questionnairesfilled up by prospective customers. Apart from these customers were also

pitched through personal references and contacts. Moreover theorganization takes every possible effort in order to spread massawareness. As a result of this publicity campaign, influenced prospectivecustomers approach the organization. There are various ways to makepeople aware about the organization as such Marketing Research,Canopy, Personal References, Pop-up windows having collaboration withvarious portals e.g. Rediffmail.com etc. Person with adequate interestleaves his contact information. Later on these leads are contactedpersonally for further development. The organization has efficient salesstuff who excel in this job. Part time trainees are also appointed for the

same. This work force been perfectly supervised by the Managers. Thusall these factors sum up into a result oriented work force. These leadswere the contacted through tele-calling and after developing arelationship, they were pitched in at the addresses provided by them.After giving them a presentation about the product and its advantagesover its competitors, they were promised of a Demo by company salesforce in case a sale had resulted. Also references were collected from suchpeople and the same methodology was repeated. For each and everycustomer personal quarries have been entertained after the sale is done.


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COMPANY PROFILE

Reliance Money is a group company of Reliance Capital. It is under the

Anil Dhirubhai Ambani Group. Reliance Capital Ltd (RCL ), formerly known

as Reliance Capital and Finance Trust, was promoted by Reliance

Industries Ltd (RIL) in 1986 at Ahmedabad, in state of Gujarat with a

capital of Rs 70,000/-. The company intended to access the capital

market as part of the resource raising programme, which materialized in

the year 1990 and active operations commenced soon after its maiden

public issue of equity shares aggregating Rs 20 crore in April 1990. In

Jan.'1995, it came out with a rights-cum-public issue at a premium of Rs130, aggregating Rs 600 crore to strengthen the company's equity base

and meet its long-term working capital requirements. The company was

granted approval by the Securities and Exchange Board of India (SEBI) to

act as an Approved Intermediary under the provisions of SEBI's Securities

Lending Scheme, 1997. During 1998-99, the company disinvested part of

its holding in Reliance Share and Stock Brokers and Reliance Land. These

companies have accordingly ceased to be subsidiary of the company. At

present RCL has four wholly-owned subsidiaries. Reliance Capital Asset

Management is the investment manager of Reliance Capital Mutual Fund,

Reliance Capital Trustee Co, is the trustee company of the Reliance

Capital Mutual Fund, Reliance Net Private Ltd and Observer Network

Private Ltd. The company has shifting its focus from a traditional NBFC to

a special purpose vehicle and venture capital outfit developing

infrastructure projects and investing in infotech, media, Internet and

biotech startups, will help it boost its performance in the coming years.

The company's fee-based activities include a packaged deal offer to the

corporates besides like issue management, underwriting, corporate

advisory, corporate valuation, restructuring of operations, privatization,

divestment, mergers and acquisitions. RCL has also obtained approval

from the Reserve Bank of India (RBI) and Insurance Regulatory and


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Development Authority (IRDA) for financial participation in the insurance

sector. It has firmed up plans to enter both life and general insurance

categories, and accordingly has floated the two companies Reliance

General Insurance Company and Reliance Life Insurance Company.


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MANAGEMENT TEAM

Reliance capital Director panel list

Name Designation

Anil D Ambani Chairman

Amitabh Jhunjhunwala Vice Chairman

Rajendra P Chitale Director

V R Mohan Company Secretary

C P Jain Director

Reliance capital has following groups of companies

Reliance capital entered into online trading business through Reliance

Money. Reliance Money is offering highly competitive brokerage fees with

the option for fixed flat fee structure.Reliance Money, promoted by Anil

Dhirubhai Ambani Group firm Reliance Capital, is offering the brokerage

services across 700 cities including Delhi and Mumbai through

3,000outlets.


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Reliance Money consumers can trade in equities, commodities and

offshore investments, IPOs, mutual funds, insurance and money transfer.

Reliance money is offering 3 types of accounts to its customers. Accountfor beginners, for middlers and for experts.

Reliance Money offers a single window facility, enabling people to access,

amongst others, equity, equity and commodity derivatives, offshore

investments, IPOs, mutual funds, life insurance products.

The new wonder is Reliance Money's pre-paid card for stock market

brokerage. Reliance Money, the financial servi RelianceMoney.com is

offering most dynamic web based trading environment to its customers.

The new trading platform has many new features which basically fill up

the gap between old online trading companies in India and their

customers.

The Reliance Money trading websites comes with special security features

'Security Token', which makes you online trading experience more secure

without complexity.

Stock Trading is available in BSE and NSE. Offline trading is also available

through Reliance Money partners in your city and through phone by

dialing 022-39886000.
http://funopenchild%28%27http//www.chittorgarh.com/stockmarket/Reliance-Money-Security-Token.asp');http://funopenchild%28%27http//www.chittorgarh.com/stockmarket/Reliance-Money-Security-Token.asp');


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RELIANCE MONEY SERVICES

RELIANCEMONEY


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Why You must choose Reliance Money?

Single window for multiple products: Reliance money through its

affiliates partners, facilitates transactions in Equity, Equity & Commodity

Derivatives, Offshore investments , Mutual Funds , IPOs.

Reliance Money is the most cost effective, convenient, and secure way to

transact in a wide range of financial products and services. The highlights

of Reliance Money offerings are:

PRODUCTS

OFEEREDBY Reliance

Money

SHARES DERIVATIVESMUTUAL

FUNDS IPOs

POSTALSAVINGS &

BONDSINSURANCE COMMODITIES

DELIVERY

TRDING

DAY

TRADING

MARGINPLUS

ATST

SPOT

GENERAL LIFE


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Cost Effective: The fee charged by the affiliates of Reliance Money ,

through whom the transactions can be placed is among the lowest

charged in the present scenario.

Convenience: You have the flexibility to access Reliance Money

services in multiple ways; through the Internet, Transaction Kiosks ,

Call and Transact (Phone) or seek assistance through business

partners.


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Security: Reliance money provides secure access through an electronic

token that flashes a unique a security number of Six digits after every 32

seconds (and ensures that the number used for earlier transaction is

discarded). This number works as a third level password that keeps youraccount extra safe.

3 in 1 integrated access : Reliance Money offers integrated access to

your Banking , Trading and Demat Account.


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SERVICES PROVIDED BY THE RELIANCE MONEY

1. Equities and Derivatives

Our Retail Equity Business caters to the needs of individual Indian and

Non-Resident Indian (NRI) investors. Reliance money offers broker

assisted trade execution, automated online investing and access to all

IPO's.

Through various types of brokerage accounts, Reliance money offers the

purchase and sale of securities which includes Equity, Derivatives and

Commodities Instruments listed on National Stock Exchange of India Ltd

(NSEIL), The Stock Exchange, Mumbai (BSE) and NCDEX.

Reliance Easy Trade - Comprehensive services including research

and investing guidance for independent investors.

Reliance Insta trade - Reliance is dedicated to empower Active

Traders through personal service and advanced trading technology.

2. Reliance equity analysis

Building and maintaining your ideal portfolio demands objective,

dependable information. Reliance Equity Analysis helps satisfy that need

by rating stocks based on carefully selected, fact-based measures. And

because we're not focused on investment banking, we don't have the

same conflicts of interest as traditional brokerage firms. This objectivity is

only one important difference in our ratings

3. Depository Services

Reliance is a depository participant with the Central Depository Services

(India) Limited for trading and settlement of dematerialised shares.

Reliance Money performs clearing services for all securities transactions

through its accounts. Its Services is part of our value added services for

our clients that create multiple interfaces with the client and provide for a

solution that takes care of all your needs.


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.

Reliance Money is dealing in all mutual funds explained in the diagram

given below.


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INTRODUCTION TO MUTUAL FUNDS

EMERGENCE OF MUTUAL FUNDS:

Mutual funds now represent perhaps the most appropriate investment

opportunity for most investors. As financial market becomes more

sophisticated & complex investors need a financial intermediary who

provide the required knowledge and professionals expertise on successful

investment .The Indian mutual fund industry has already stared opening

many of the exciting investment opportunities to Indian investors. Despite

the expected continuing growth in the industry, mutual funds are still

anew financial intermidartry in India.

MUTUAL FUND CONCEPT

A Mutual Fund is a trust that pools the savings of a number of investors

who share a common financial goal. The money thus collected is then

invested in capital market instruments such as equities, debentures andother securities. The income earned through these investments and the

capital appreciation realized (after deducting the expenses and profits of

mutual fund managers) is shared by its unit holders in proportion to the

number of units owned by them. Thus a Mutual Fund strives to meet the

investment needs of the common man by offering him or her an

opportunity to invest in a diversified, professionally managed basket of

securities at a relatively low cost. An open-ended fund operated by an

investment company which raises money from shareholders and invests

in a group of assets, in accordance with a stated set of objectives. Mutual

funds raise money by selling shares of the fund to the public, much like

any other type of company can sell stock in itself to the public. Mutual

funds then take the money they receive from the sale of their shares

(along with any money made from previous investments) and use it to
http://www.advfn.com/money-words_term_2609_investment_company.htmlhttp://www.advfn.com/money-words_term_4525_shares.htmlhttp://www.advfn.com/money-words_term_2609_investment_company.htmlhttp://www.advfn.com/money-words_term_4525_shares.html


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purchase various investment vehicles, such as stocks, bonds and money

market instruments. In return for the money they give to the fund when

purchasing shares, shareholders receive an equity position in the fund

and, in effect, in each of its underlying securities. For most mutual funds,shareholders are free to sell their shares at any time, although the price

of a share in a mutual fund will fluctuate daily, depending upon the

performance of the securities held by the fund. Benefits of mutual funds

include diversification and professional money management. Mutual funds

offer choice, liquidity, and convenience, but charge fees and often require

a minimum investment. A closed-end fund is often incorrectly referred to

as a mutual fund, but is actually an investment trust. There are many

types of mutual funds, including aggressive growth fund,

asset allocation fund, balanced fund, blend fund, bond fund,

capital appreciation fund, clone fund, closed fund, crossover fund,

equity fund, fund offunds, global fund, growth fund,

growth and income fund, hedge fund, income fund, index fund,

international fund, money market fund, municipal bond fund,

prime rate fund, regional fund, sector fund,

Before I dive into the definition of a mutual fund, it is important

that you have a basic understanding of stocks and bonds

Stocks

Stocks represent shares of ownership in a public company. Examples of

public companies include IBM, Microsoft, Ford, Coca-Cola, and General

Mills. Stocks are the most common ownership investment traded on the

market.

Bonds
http://www.advfn.com/money-words_term_4725_stocks.htmlhttp://www.advfn.com/money-words_term_521_bonds.htmlhttp://www.advfn.com/money-words_term_4527_shareholders.htmlhttp://www.advfn.com/money-words_term_1726_equity.htmlhttp://www.advfn.com/money-words_term_5125_underlying.htmlhttp://www.advfn.com/money-words_term_1922_fees.htmlhttp://www.advfn.com/money-words_term_3173_mutual_fund.htmlhttp://www.advfn.com/money-words_term_3173_mutual_fund.htmlhttp://www.advfn.com/money-words_term_162_aggressive_growth_fund.htmlhttp://www.advfn.com/money-words_term_276_asset_allocation_fund.htmlhttp://www.advfn.com/money-words_term_392_balanced_fund.htmlhttp://www.advfn.com/money-words_term_493_blend_fund.htmlhttp://www.advfn.com/money-words_term_527_bond_fund.htmlhttp://www.advfn.com/money-words_term_696_capital_appreciation_fund.htmlhttp://www.advfn.com/money-words_term_696_capital_appreciation_fund.htmlhttp://www.advfn.com/money-words_term_886_clone_fund.htmlhttp://www.advfn.com/money-words_term_891_closed_fund.htmlhttp://www.advfn.com/money-words_term_1223_crossover_fund.htmlhttp://www.advfn.com/money-words_term_1729_equity_fund.htmlhttp://www.advfn.com/money-words_term_2129_fund_of_funds.htmlhttp://www.advfn.com/money-words_term_2129_fund_of_funds.htmlhttp://www.advfn.com/money-words_term_2181_global_fund.htmlhttp://www.advfn.com/money-words_term_2181_global_fund.htmlhttp://www.advfn.com/money-words_term_2260_growth_fund.htmlhttp://www.advfn.com/money-words_term_2259_growth_and_income_fund.htmlhttp://www.advfn.com/money-words_term_2296_hedge_fund.htmlhttp://www.advfn.com/money-words_term_2404_income_fund.htmlhttp://www.advfn.com/money-words_term_2429_index_fund.htmlhttp://www.advfn.com/money-words_term_2568_international_fund.htmlhttp://www.advfn.com/money-words_term_2568_international_fund.htmlhttp://www.advfn.com/money-words_term_3107_money_market_fund.htmlhttp://www.advfn.com/money-words_term_3163_municipal_bond_fund.htmlhttp://www.advfn.com/money-words_term_3163_municipal_bond_fund.htmlhttp://www.advfn.com/money-words_term_3838_prime_rate_fund.htmlhttp://www.advfn.com/money-words_term_4123_regional_fund.htmlhttp://www.advfn.com/money-words_term_4123_regional_fund.htmlhttp://www.advfn.com/money-words_term_4431_sector_fund.htmlhttp://www.advfn.com/money-words_term_4725_stocks.htmlhttp://www.advfn.com/money-words_term_521_bonds.htmlhttp://www.advfn.com/money-words_term_4527_shareholders.htmlhttp://www.advfn.com/money-words_term_1726_equity.htmlhttp://www.advfn.com/money-words_term_5125_underlying.htmlhttp://www.advfn.com/money-words_term_1922_fees.htmlhttp://www.advfn.com/money-words_term_3173_mutual_fund.htmlhttp://www.advfn.com/money-words_term_162_aggressive_growth_fund.htmlhttp://www.advfn.com/money-words_term_276_asset_allocation_fund.htmlhttp://www.advfn.com/money-words_term_392_balanced_fund.htmlhttp://www.advfn.com/money-words_term_493_blend_fund.htmlhttp://www.advfn.com/money-words_term_527_bond_fund.htmlhttp://www.advfn.com/money-words_term_696_capital_appreciation_fund.htmlhttp://www.advfn.com/money-words_term_886_clone_fund.htmlhttp://www.advfn.com/money-words_term_891_closed_fund.htmlhttp://www.advfn.com/money-words_term_1223_crossover_fund.htmlhttp://www.advfn.com/money-words_term_1729_equity_fund.htmlhttp://www.advfn.com/money-words_term_2129_fund_of_funds.htmlhttp://www.advfn.com/money-words_term_2181_global_fund.htmlhttp://www.advfn.com/money-words_term_2260_growth_fund.htmlhttp://www.advfn.com/money-words_term_2259_growth_and_income_fund.htmlhttp://www.advfn.com/money-words_term_2296_hedge_fund.htmlhttp://www.advfn.com/money-words_term_2404_income_fund.htmlhttp://www.advfn.com/money-words_term_2429_index_fund.htmlhttp://www.advfn.com/money-words_term_2568_international_fund.htmlhttp://www.advfn.com/money-words_term_3107_money_market_fund.htmlhttp://www.advfn.com/money-words_term_3163_municipal_bond_fund.htmlhttp://www.advfn.com/money-words_term_3838_prime_rate_fund.htmlhttp://www.advfn.com/money-words_term_4123_regional_fund.htmlhttp://www.advfn.com/money-words_term_4431_sector_fund.html


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Bonds are basically a chance for you to lend your money to the

government or a company. You can receive interest and your principle

back over predetermined amounts of time. Bonds are the most common

lending investment traded on the market.

There are many other types of investments other than stocks and

bonds (including annuities, real estate, and precious

metals), but the majority of mutual funds invest in stocks

and/or bonds.

DEFINITION OF MUTUAL FUND

A mutual fund is simply a financial intermediary that allows a group of

investors to pool their money together with a predetermined investment

objective. The mutual fund will have a fund manager who is responsible

for investing the pooled money into specific securities (usually stocks or

bonds). When you invest in a mutual fund, you are buying shares (or

portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they

are very cost efficient and very easy to invest in (you don't have to figure

out which stocks or bonds to buy).


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The flow chart below describes broadly the working of a mutual

fund:

GROWTH AND INCOME SCHEMES

Mutual fund products or schemes are broadly categorized into Growth

(also called Equity) and Income schemes. Growth schemes invest

predominantly in equity securities and Income schemes invest

predominantly in fixed income securities such as debentures, moneymarket instruments and government securities. Equities are a riskier class

of assets, as they are susceptible for severe volatility in prices and hence

growth schemes are recommended only for those investors who are

interested in capital appreciation over the long term (five years and

beyond). For risk-averse investors who are interested in investing in fixed

income instruments or those with a shorter time horizon for investment

(less than five years), income schemes are considered suitable.


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Table 1: shows scheme-wise break-up of assets managed by mutual

funds in India. The Indian mutual fund investor has so far displayed a

clear inclination to be risk averse with over 80 per cent of the funds

invested in Income, Money Market and Gilt schemes and only about 20

per cent in Growth and Balanced (a mix of Growth and Income) schemes


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ADVANTAGES OF MUTUAL FUNDS

Portfolio Diversification:

Mutual Funds normally, invest in a well-diversified portfolio or

securities. MF enables investors to hold a diversified investment

portfolio even with a small amount of investment.

Reduction of Risk:

Investors in a mutual fund acquire a diversified portfolio, no matter

how small his investment. Diversification reduces the risk of loss, ascompared to investing directly in one or two shares, debentures, or

others instruments. When investors invest directly, all the risk of

potential loss is his own. A fund investor also reduces his risk in an

other way.

Reduction transaction cost:

What is true of risk is also true of the transaction cost a direct

investors bears all the cost of investing such as brokerage or custody

of securities when going through a fund he has the benefit of

economies of scale the funs pay lesser cost because of larger

volumes, a benefit past on to its investors.

Liquidity:

Often Investors hold shares or bonds they can not directly easily and

quickly sell. Investment in a mutual fund on the other hand is more

liquid an investors can liquidate the investment by selling the unit to

the fund if open end or selling them in the market if the fund is

close- end and the collect the funds at the end of a period specified

the mutual fund or the stock market .


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DISADVANTAGE OF INVESTING THROUGH MUTUAL

FUNDS

No Control Over Cost:

An investor in a mutual fund has no control over the overall cost of

investing. His investment management fees as long as he remains

with the funds, albeit in returns for the professional management and

research. A mutual fund investor also pays distribution cost which

he would not incur in the direct investing . However this shortcoming

only means that there is a cost obtains the benefits of mutualservices.

No tailor made portfolio:

Investors who invest their own can build their own portfolios of

shares, bonds and other securities. Investing through funds means

he delegates this decision to the fund manager. The very high net

worth individuals or large corporate investors may find this to be a

constraint in achieving their objectives however most mutual funds

help investors to overcome this constraint by offering miles of

schemes- a large number of different schemes with in the same fund

an investor can choose from different investment plans and construct

a portfolio of his choice.

Managing a Portfolio of funds:

Availability of large number of funds can actually mean too much

choice for the investors. He may again need advice on how to select a

fund to achieve his objective quite similar to the situation when he

has to select individual shares or bonds to invest in.


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TAX BENEFITS

Tax benefits to mutual fund:

Mutual fund in India has a special feature as to income tax provision.

Under section 10(23D) of income tax Act1961, a mutual fund has been

conferred total tax exemption from income tax on all its income provided

it is recognized fund. Recognized fund implies that the fund should be

registered under SEBI (mutual fund) Regulation, 1993. Thus income

accrued to assets Management Company by way of dividend or by way of

capital gain is totally exempt. This meant to provide a much higher yield

to the mutual fund to enable them to distribute a higher return to the

investors.

According to union budget 2002-03, mutual funds are also relived of the

tax liability as the incidence of tax is shifted on the unit holders of UTI

and other mutual funds and sub clause (ii) & (iii) of clause 33 section (10)

are omitted. Income from investment is otherwise taxable but underincome tax act, mutual funds are treated as pass through entities since

they invest fund of public and earns income on their behalf. It implies that

whether the income is in form of dividends, interest, underwriting,

commission or capital appreciation, the income of mutual fund in not

taxable.

Tax benefits to investor

The income-received but the investor of mutual fund is taxable in their

hands as dividends unless these are capital redemption. One of the

reason for mutual funds schemes being quoted at discount to NAV was

the differential in tax treatment to equity shares and mutual funds units,

which made investments in mutual fund units less attractive than the

equity.


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How to invest in mutual fund

Step one: Identify your investment needs

Your financial goals will very, based on your age, lifestyle, facial

independence, family commitments, ad level of income and expenses

among other many factors. Therefore, the first step is to assess your

needs. Begins by asking you these question:

What are my investment objective and needs?

Probable answer: I need regular income or need to buy a home or

finance a wedding or educate my children or a combination of all

these needs.

How much risk am I willing to take?

Probable answer: I can take a minimum amount of risk or I am

willing to accept the fact that my investment value may fluctuate or

that may be for short-term loss in order to achieve a long term

potential gain.

What are my cash flow requirements?

Probable answer: I need a regular cash flow or I need a lump sumamount to meet a specific need after a certain period or I dont

require a current cash but I want to build my assets for the future.

Going through this exercise, you will know what you want out of your

investment and can set the foundation for a sound mutual fund

investment.

Step two: Choose the right mutual fund


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Once you have a clear strategy in mind you own have to choose which

Mutual Fund scheme you want to invest in. the offer document of the

scheme tells you its objectives and provides supplementary details like

the track records of other schemes managed by the same Mutual Fundmanager. Some factors to evaluate before choosing a particular Mutual

Fund.

The track records or performance over the last few years &

relation to the appropriate yardstick and similar funds in the same

category.

How well the mutual fund is organized to provide efficient, promptand personalized service.

Degree of transparency as reflected in fraudulence and quality of

their communication.

Step three: Select the ideal mix of schemes

Investing in just mutual fund scheme may to meet all your investment

needs. You may consider investing in a combination of schemes to

achieve specific goals.

Step four: Invest regularly

For most of us, the approach that works best is to invest a fixed amount

at specific intervals, say every month. By investing a fixed sum each

month, you buy fewer units when the price is higher and more units when

the price is low, thus bringing down your average cost per unit. This is

called free cost averaging and is a disciplined investment strategy

followed by investor all over the world. With many open- ended schemes

offering systematic investment plans, this regular investing habit is made

easy for you.


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Step five: Keep your taxes in mind

As per the current tax laws, dividend / income distribution made by

mutual fund is exempt from income tax in the hands of investor. Further,

there are other benefits available for investment in mutual fund under the

provision of the prevailing tax laws. You may therefore consult your tax

advisor or chartered accountant for specific advice to achieve maximum

tax efficiency by investing in mutual fund.

Step six: Start early

It is desirable to start investing early and stick to a regular investment

plan. If you start now, you will make more than if you wait and invest

later. The power of compounding lets you year income and your money

multiplies on monthly basis

Step seven:The final step

All you need to do now is to get in touch with mutual fund or your agent /

broker and start investing. Reap the rewards in the years to come. Mutual

fund is suitable for every kind of investor- whether taking an investor or

retiring, conservative or risk taking growth oriented or income earning.


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MUTUAL FUNDS CLASSIFICATION

There are many types of mutual funds available to the investor however

theses different types funs can be grouped into certain classification for

better understanding .from investors perspective there basic

classifications & that are as follows:

OPEN-END VS CLOSE END FUNDS

LOAD AND NO LOAD FUNDS

TAX EXEMPT VS NON TAX EXEMPT FUNDS

OPEN END VS CLOSE END FUND:

An OPEN END FUND is one that has unit available for sale and purchase at

all times an investor can buy or redeem units from the fund itself at a

price based on the net assest value (NAV) per unit. NAV per unit is

obtained by dividing the amount of market value of the funds assest by

number of unit outstanding the number of unit outstanding goes up or

down every time the fund issue new units or repurchase existing units. in

other words the unit capital of an open end mutual fund is not fixed but

variable .note that an open end fund is not obliged to keep selling /

issuing new units at all times, and, many successful funds stop issuing

further subscriptions from new investors after they reach ascertain size

and think they can not manage a larger fund without adversely affecting

profitability.

Unlike an open end funds the unit cap[ital of a close end fixed ,as it

makes a one time sale of affixed number of unit later on unlike open

end funs , close end funds do not allow investors to buy or redeem units

directly from the funds .however to provide the much needed liquidity to

investors many close end funds get themselves listed on a stock


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exchange . trending through stock exchange enable investors to buy or

sell units of a close end mutual fund from each other , through a stock

broker in the same fashion as buying or selling shares of a company.

LOAD AND NON LOAD FUNDS:

Marketing of mutual funds schemes involves initial expense. These

expenses may be recovered from the investors n different ways at

different times. Three usual ways in which funds sales expenses may be

recovered from the investors are. At the time of investors entry in to the

fund/scheme, by deducting a specific amount from his initial contribution

or By changing the funds/scheme with a fixed amount each year, during

the stated number of years, or .At the time of investor exit from the

fund/scheme, by deducting a specified amount from the redemption

proceeds payable to investor

These charges made by the fund manager t the investor to cover

distributing/sales/marketing expenses are often called load. In

IndiaSEBI has defined aload as the one time fee by the investorto allow the fund to meet initial issue expenses including

brokers/agent/distributers/commisson, advertising and

marketing expenses. The load charged to the investor at the time of his

entry is called front-end and entry load the load amount charged to the

scheme over a period of time is called a deferred load. The load that the

investor pay at the of exit is called a back-end or exit load. Funds that

charge front end, back-end or deferred load are load funds. Funds that

make no such charges or load for sale expenses are called non load

fund.

TAX-EXEMPT 0R NON- TAX EXEMPT-

Generally, when a fund invests in tax-exempt securities, it is called a tax-

exempt fund. In India, after the 1999 union government budget, all of the


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dividend income received from any of the mutual funds is tax free in the

hands of the investor. However, funds other than equity funds have to

pay a distribution tax, before distributing income to investor. In other

words, equity mutual fund scheme are tax-exempt investment avenues,while other funds are taxable distributable income. While Indian mutual

funds currently offer tax-free income, any capital gains arising out of sale

of funds units are taxable. Hence, classification of mutual funds from tax

ability prospective has great significance for investors.


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SCHEMES OF RELIANCE MUTUAL FUND

There are various schemes provided by RELIANCE Mutual Fund

but as far my study is concerned that are undertaken foe further

study is as follows:

RELIANCE GROWTH PLAN

RELIANCE LIQUID PLAN

RELIANCE VISION PLAN

RELIANCE TAX SAVER PLAN

RELIANCE POWER PLAN

RELIANCE SIP PLAN

RELIANCE GROWTH PLAN

INVESTMENT PATTERN:

TYPE APPOX.

ALLOCATION

Equity and equity related securities

Debt, money market securities and cash

Upto 65%

Upto35%


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CHANGE IN INVESTMENT PATTERN

Subject to the regulations, the assets allocation pattern indicated

above may change from time to time, keeping in view market

conditions, market opportunities, applicable regulation and

political and economic factors. It must be clearly understood that

the percentage stated above are only indicative and not absolute

and that they can vary substantially depending upon the

perception of the investment manager , the intition being at all

times to seek to protect the interest of the unit holders. Such

changes in the investment pattern will be for shot term.

INVESTMENT STRATEGY:

Approach to stock picking will be the dominant theme in stock selection

for the Scheme. The AMC in selecting scrip will focus on the fundamentals

of the business, the industry structure, the quality of management,

sensitivity to economic factors, the financial strength of the company andthe key earnings drivers.

Risk will be reduced through adequate diversification of the portfolio. For

a corpus size of upto Rs.100 crores, the AMC intends to invest in about

20-30 scrips. Diversification will also be achieved by spreading the

investments over a diverse range of industries/sectors. The Scheme,

under most market conditions does not intend investing in illiquid equity

and equity related securities. The Scheme may however, invest in

unlisted and/or privately placed and/or unrated debt securities subject to

the limits indicated above, from issuers of repute and sound financial

standing. If investment is made in unrated debt securities, the approval of

the Board of the AMC shall be obtained, as per the Regulations. Subject to

the limits indicated above for investment in debt securities and money

market instruments, the Fund may invest a part of the portfolio in


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securities issued and/or guaranteed by State and Central Governments.

The Fund may also invest in Securities of issuers supported by

Government of India or State Governments subject to such securities

satisfying the criteria relating to rating etc.

Portfolio Turnover:

The portfolio turnover shall generally not exceed 75% per year, once the

entire corpus is invested.

. Growth Option

The Scheme will not declare any dividends under this option. The income

earned by the Scheme will remain reinvested in the Scheme and will be

reflected in the Net Asset Value.

Dividend Option

The Trustee may approve the distribution of dividend by AMC either half

yearly or yearly out of the net surplus under this Option. The remaining

net surplus after considering the dividend and tax, if any, payable there

on will be ploughed back in the Scheme and be reflected in the NAV.

As per the Finance Act 1999, any income received from a mutual fund

specified under clause (23D) of section 10 of Income Tax Act, 1961

is exempt from tax. This amendment will apply in relation to the

Assessment Year 2000-2001 and the subsequent years. The income

distributed by the Fund after April 1,1999 will, accordingly, is exempt

from income tax in the hands of the recipient under the above provisions.

FUNDAMENTAL ATTRIBUTES OF GROWTH PLAN

Type : The growth plan is the open end equity plan


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Investment Pattern: Equity and equity related instruments upto

65 % & debt money market and cash upto 35%.

Fund objective: To seek to generate long term capital

appreciation from a portfolio that is invested predominantly in

equity and equity related securities.

Investment horizon: Suitable for the investors who seek to invest

in equity securities.

Net assets value: Calculated & declared on every business day.

Systematic Investment Plan: monthly minimum rupees Rs. 1000

plus 4 post dated cheques for a minimum of Rs. 500 each.

Switch Facility: switch facility is avaible in this plan.

Nomination facility: nomination facility is also available in this

plan.

TERMS OF THE SCHEME

Application amount: Minimum Rs.5, 000, additional investments

in multiples of Rs. 500. Under monthly SIP the minimum investment

is Rs.3,000 and Rs.500 per month for a block of 6 months. Under

Quarterly SIP the minimum investment is Rs.3,000 and Rs.1,500

per quarter for at least 2 quarters.

Entry load: Entry load of 1.50%


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Repurchase / Redemption: units will be offered for sale and

redemption can be done on every business day. Redemption

request can be made for any amount for Rs. 500 or more.

Redemption price : At NAV based price.

Dispatch of Redemption proceeds: Under normal circumstances

with in three business days of acceptance of redemption request..

Recurring fees & expenses:

Investment management

expenses

1.25%

Other recurring expenses 1.25%

Total 2.50%

TERMS OF THE SCHEMES

Application amount: Minimum Rs.5,000 per application and a minimum

additional amount in Multiples of Rs 500 thereafter. .

Load structure: Entry Load: Nil

Exit Load: Nil

Further, the Trustee reserves the right to modify/alter the load

structure under the Plan and may decide to charge an entry

load/exit load or a combination of entry/exit loads or introduce a

differential load structure on the Units subscribed/redeemed,

subject to a maximum as prescribed under the Regulations.

Redemption price: . At applicable NAV subject to exit

load, if any, computed as follows: Redemption / Repurchase Price

Recurring expenses

Investment management expenses 1.00%

Other recurring expenses .50%


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Total 1.50%

FUNDAMENTAL ATTRIBUTES OF RELIANCE VISION FUND

Type: open-ended fund.

Investment pattern: equity & equity related instruments in

companies upto 75% in & debt , money market and cash upto

25% .

Fund objective: To seek to generate long term capital appreciation

from a portfolio that is invested predominantly in equity and equity

related securities of companies.

Investment horizon: sect oral f und , suitable for investors

seeking an exposure to the various sector.

Net assets value; calculated and declared on every business day.

Systematic Investment Plan : monthly minimum rupees Rs.

1000 plus 4post dated cheques for a minimum of Rs. 500 each.

Quarterly minimum Rs 1000 plus 4 post-dated cheque for a

minimum of Rs 1000 each.

Switch Facility: switch facility is available in this plan.

Nomination Facility: nomination facility is also available in

this plan.


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Income

Growth

Balanced

Liquid/ money market

Gilt

ELSS

117

120

35

32

31

47

Total 382

The investor has various alternatives avenue of investment for the saving

the major avenues for the investment among corporate securities are

Equity shares, preference shares & debentures. As an investors want to

Make such type of portfolio in which they can get higher return with

minimum risk. Now a days Indian mutual fund industry has already

started opening up many of exciting investment opportunities to Indian

Investors. During past years there is a major change in Indian mutual

Market. Many new players have launched their new schemes in the

market. But this study is confined with schemes of mutual fund provided

by Reliance Mutual Fund.


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INDIAN STOCK MARKET OVERVIEW

The Bombay stock exchanges (BSE) and the NationalStock Exchange of India Ltd (NSE) are the two

primary exchange in India. In addition, there are 28

Regional Stock Exchanges However, the BSE and

NSE have established themselves as the two leading

exchanges and account for about 80% of the equity

volume traded in India.

The average daily turnover at the exchanges has increased from Rs. 851

crore in 1997-98 to Rs. 1,284 crore in 1998-99 and further to Re. 2273

crore in 1999-2000 (April- August 1999). NSE has around 1500 shares

listed with a total market capitalization of around Rs. 921500 crore (Rs.

9215 Bln). The BSE has over 6000 stocks listed and has a market

capitalization of around Rs. 968000 crore (9680 Bln). Most key stocks are

traded on both the exchanges and hence the investor could buy them on

either exchange. Both exchanges have a different settlement cycle, which

allows investors to shift their positions on the bourse. The primary index

of BSE is BSE Sensex comprising 30 stocks. NSE has the S&P NSE 50

index (Nifty) which consists of fifty stocks.

The BSE Sensex is the older and more widely followed index. Both

these indices are calculated on the basis of market capitalization and

contain the heavily traded shares from key sectors. The markets are

closed on Saturdays and Sundays. Both the exchanges have switched

over from the open outcry trading system to a fully automated

computerized mode of trading known as BOLT (BSE On Line Trading) and

NEAT (National Exchange Automated Trading) System. It facilitates more


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efficient processing, automatic order matching, faster execution of trades

and transparency.

The Scripts traded on the BSE have been classified into A, B1, B2, C,F and Z groups. The A group shares represent those, which are in the

carry forward system (Badla). The F group represents the debt market

(fixed income securities) segment. The Z group scripts are the

blacklisted companies. The C group covers the odd lot secutities in A,

B1& B2 groups and Rights renunciations. The key regulator governing

Stock Exchanges, Brokers, Depositories, Depository participants, Mutual

Funds, FIIs and other participants in Indian secondary and primary

market is the Securities and Exchange Board of India (SEBI) Ltd.


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ABOUT NSE

The National Stock Exchange of India Limited has genesis in the report of the High

Powered Study Group on Establishment of New Stock Exchanges, which recommended

promotion of a National Stock Exchange by financial institutions (FIs) to provide access

to investors from all across the country on an equal footing. Based on the

recommendations, NSE was promoted by leading Financial Institutions at the behest of

the Government of India and was incorporated in November 1992 as a tax-paying

company unlike other stock exchanges in the country.

On its recognition as a stock exchange under the Securities Contracts (Regulation) Act,

1956 in April 1993, NSE commenced operations in the Wholesale Debt Market (WDM)

segment in June 1994. The Capital Market (Equities) segment commenced operations in

November 1994 and operations in Derivatives segment commenced in June 2000.

NSE Group

NSCCL

IISL NSE.IT

NSDL DotEx Intl. Ltd.
http://www.nseindia.com/content/us/us_dotex.htmhttp://www.nseindia.com/content/us/us_nsdl.htmhttp://www.nseindia.com/content/us/us_nseit.htmhttp://www.nseindia.com/content/us/us_iisl.htmhttp://www.nseindia.com/content/us/us_nsccl.htm


47/95

ABOUT BSE

The Stock Exchange, Mumbai, popularly known as "BSE" was established

in 1875 as "The Native Share and Stock Brokers Association". It is

the oldest one in Asia, even older than the Tokyo Stock Exchange, which

was established in 1878. It is a voluntary non-profit making Association of

Persons (AOP) and is currently engaged in the process of converting itself

into demutualised and corporate entity. It has evolved over the years into

its present status as the premier Stock Exchange in the country. It is the

first Stock Exchange in the Country to have obtained permanent

recognition in 1956 from the Govt. of India under the Securities Contracts

(Regulation) Act, 1956.

The Exchange, while providing an efficient and transparent market for

trading in securities, debt and derivatives upholds the interests of the

investors and ensures redressal of their grievances whether against the

companies or its own member-brokers. It also strives to educate and

enlighten the investors by conducting investor education programs and

making available to them necessary informative inputs.

A Governing Board having 20 directors is the apex body, which decides

the policies and regulates the affairs of the Exchange. The Governing

Board consists of 9 elected directors, who are from the broking

community (one third of them retire ever year by rotation), three SEBI

nominees, six public representatives and an Executive Director & Chief

Executive Officer and a Chief Operating Officer.

The Executive Director as the Chief Executive Officer is responsible for the

day-to-day administration of the Exchange and he is assisted by the Chief

Operating Officer and other Heads of Departments.


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The Exchange has inserted new Rule No.126 A in its Rules, Bye-laws &

Regulations pertaining to constitution of the Executive Committee of the

Exchange. Accordingly, an Executive Committee, consisting of three

elected directors, three SEBI nominees or public representatives,Executive Director & CEO and Chief Operating Officer has been

constituted. The Committee considers judicial & quasi matters in which

the Governing Board has powers as an Appellate Authority, matters

regarding annulment of transactions, admission, continuance and

suspension of member-brokers, declaration of a member-broker as

defaulter, norms, procedures and other matters relating to arbitration,

fees, deposits, margins and other monies payable by the member brokers

to the Exchange, etc.


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INDIAN SCENARIO

Strengths

The `do-it-yourself' framework of online share trading offers retail

investors the three benefits of transparency, access and efficiency.

Paperwork diminishes significantly, and no more painful trips to your

broker to check if everything's in order. Online trading has made it

possible to universalize access to retail investors. This was earlier very

difficult, as the cost of servicing often-outweighed transaction volumes.

Online brokerage ranges between 0.05-0.20 per cent of the value of

transactions for non-delivery-based trades, and between 0.25-0.95 percent for delivery-based trades. Once major investments in online

infrastructure are over and done with - and with the economies of scale

coming into play - it is expected that brokerage rates would head further

downwards.

Access to online trading and latest financial happenings, apart from

quotes and unbiased investment analyses, all consolidate into a value-added product mix in tandem with evolving markets that are freer and

fairer. The Net result: An inquisitive, informed and demanding investor.

Today's investor is more involved in managing his or her assets and

analyzing a vast array of investment options. Technology and today's

enabled investor have, in turn, driven competition, resulting in reduced

costs of trading, transparency in dealings, and pricing info that is accurate

and real-time. More and more investors now want to know how their

trades are executed, and whether they have received the best possible

price. Critical components of execution quality include the prices at which

orders were executed as well as the

speed of execution. The quality of execution, in turn, hinges on efficient

order routing. We owe this to our investor fraternity.


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Weaknesses

Every thing in the world has a flip side to it - Transaction velocity is

crucial. And more often than not, connections are lousy. There's also a

degree of investor skepticism about online payment and settlement

mechanisms in spite of all the encryption and fire walling brought into

play. Time and technology will soon assuage these concerns, which hark

back to the `physical' days.

The three main technology obstacles which have prevented Internet

broking from taking off are:

Lack of Internet penetration

Bandwidth infrastructure

Poor quality of ISP infrastructure.

Opportunities

You have some money to dabble with. Trading shares on BSE/NSE has

always been your dream. When will you ever find the time? And besides,

the hassle of finding a broker is not easy. This is your main opportunity.

Realizing there is untapped market of investors who want to be able to

execute their own trades when it suits them, brokers have taken their

trading rooms to the Internet. Known as online brokers, they allow you to

buy and sell shares via Internet.

There are 2 types of online trading service: discount brokers and full

service online broker. Discount online brokers allow you to trade via

Internet at reduced rates. Some provide quality research, other dont. Full

service online brokerage is linked to existing brokerages. These brokers

allow their clients to place online orders with the option of talking/

chatting to brokers if advice is needed. Brokerage rates here are higher.


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5Paisa.com, ICICIDirect.com, IndiaBulls.com, Sharekhan.com, Geojit

securities.com, HDFCsec.com, Tatatdw.com, Kotakstreet.com are some of

the online broking sites in India.

And daily trading turnover is estimated in the vicinity of 0.75 per cent of

the combined BSE and NSE daily turnover of about RS 11,000 crore!!!

The point is, there's tremendous scope for growth. Especially when you

consider the US, where trading over the Net accounts for about 55 per

cent of the total volumes. And, I believe, in some Asian markets the

figures as high as 70 per cent.

Threats

On to some threat perception - Domestic funds, foreign institutional

investors and operators comprise the three main market constituents.

And all three include term investors as well as opportunists in their

pecking order. Some, for instance, hitch their fate with what the FIIs are

up to. All this spells spurting volumes. But nobody gives a damn about

the resultant volatility. And some, not all, offer free investment advice

over the Net to lure rookie investors with misleading information. Prices of

scripts can also be influenced to the advantage of vested interests,

courtesy the Net. Unlike in the US, stockbrokers out here willingly (or

under the force of circumstance) assume the role of `advisors', sans the

neutral, non-vested stance.

Hurdles for online share trading

1. Internet fraud

In India, we see this kind of frauds happening in different way due to

nature of our society. Here when you talk to broker's staff while buying or


52/95

selling, he will usually advise you to buy share which he has bought and

plans to dump when price goes up.

We have seen enough of PUMP and DUMP even without help of internet in

cases of Harshad Mehta boom of 1992 and Ketan Parekh boom of 2000

(he even had cult following with Index of 10 shares called K-10).

Today lot of investors depending on TV channel for recommendation

about stocks to sell, or buy or hold. Channels like CNBS offer array of

experts from economist to brokers to analyst. Most of these people have

vested interest in stocks they recommend and promote.

One of the most common forms of securities fraud on the Internet

involves an imposter who attempts to manipulate the price of a stock by

disseminating phony press releases or information, or creating phony

websites. A recent example of this scheme is the hoax perpetrated

against US based, PairGain Technologies.

2. Volatility of Indias Stock Markets

Recent market developments have once more focused attention on the

volatility that has come to characterise Indias stock markets.

Movements in the Sensex during the two years have clearly been driven

by the behaviour of foreign institutional investors (FIIs), who were

responsible for net equity purchases of as much as $6.6 and $8.5 billion

respectively in 2005 and 2006. These figures compare with a peak level ofnet purchases of $3.1 billion as far back as 1996 and net investments by

FIIs of just $753 million in 2002. In sum, the sudden FII interest in Indian

markets in the last two years account for the two bouts of medium-term

buoyancy that the Sensex recently displayed.

Given the presence of foreign institutional investors in Sensex companies

and their active trading behaviour, their role in determining share price


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movements must be considerable. Indian stock markets are known to be

narrow and shallow in the sense that there are few companies whose

shares are actively traded. Thus, although there are more than 4700

companies listed on the stock exchange, the BSE Sensex incorporates just30 companies, trading in whose shares is seen as indicative of market

activity. This shallowness would also mean that the effects of FII activity

would be exaggerated by the influence their behaviour has on other retail

investors, who, in herd-like fashion tend to follow the FIIs when making

their investment decisions.

REQUIRED DOCUMENTS

DOCUMENTS:Pan card is must.

Photo ID Proof Residence Proof

Passport Pan Card Driving Licence Voter's ID

Passport(valid) Voter's ID Driving Licence(valid) Bank Statement(latest)

Telephone Bill(latest) Electricity Bill(latest) Ration Card Flat Maintenance Bill(latest) Insurance Policy(latest)

Leave-Licence/PurchaseAgreement(latest)

3 Photographs.

1 Cheque of Rs.(750+500)/=In Favour of Reliance Money Ltd.or1 Cheque of Rs.(750+2500)/=In Favour of Reliance money Ltd.


54/95

Competitive Analysis

The Major competitors are:

5paisa.com

KotakStreet.com

IndiaBulls.com

ICICIDirect.com

HDFCsec.com

5paisa

Company Background

Indiainfoline was founded in 1995 and was positioned as a research firmIn 2000 e-broking was started under the brand name of 5 paisa.com.Apart from offering online trading in stock market the company offersmutual funds online.It also acts as a distributor of various financial services i.e. GOI securities,Company Fixed Deposits, Insurance.Limited ground network, present in 20 Cities

Online Account Types

Investor Terminal : Investors / Students

Trader Terminal : Day Traders / HNIs

PRICING FOR RETAIL CLIENTS


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Investor Terminal

Account Opening : Rs 500

Demat 1st Yr : Rs 250Initial Margin : Rs 2500(Compulsory)Min Margin Retainable : Rs 1000Brokerage :

Trading 0.10% each side + STDelivery 0.50% each side + ST

PRICING FOR HNI CLIENTS

Trader Terminal


Demat 1st Yr : Rs 250

Initial Margin : Rs 5000(Compulsory)

Min Margin Retainable : Rs 1000

Brokerage :Trading 0.10% each side + STDelivery 0.50% each side + ST

( Negotiable to 0.05% each side & 0.25%)

Account Access ChargesMonthly Rs 800, adjustable against BrokerageYearly Rs 8000, adjustable against brokerage


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Deal Clinchers v/s 5 Paisa

Company Background

Not having a very positive image, relatively new in the

broking arena, limited network

Downtime

Recent past 5 paisa Trader Terminal (T.T) is experiencing high

frequency downtime between 3 3:30 p.m due to server load ( as their

T.T is feature heavy compared to Speetrade charting)

Manual Accounting

The 5 paisa accounting system is manual, Online fund

transfer through bank is not credited instantly.

Limit is provided EOD for shares sold from DP, or call

Similarly limit released for shares sold under BTST is manual

Delay in receiving pay-out of clear funds from trading to Bank Account

Min Account Balance

Concept of Min Rs 1,000 to be maintained in form of cash /

securities to keep account active. This can be withdrawn only on closureof account.


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KOTAKSECURITIES

Company Background

Kotak Securities is the sister concern of Kotak Mahindra bank. KotakSecurities limited is a joint venture between Kotak Mahindra Bank andGoldman Sachs.

Online Account Types

Kotak Gateway Account : KEAT desktop version, Sms chargeRs 100, KEAT premium at RS 500 pm, Min margin Rs 20000.

Kotak Value Account: KEAT desktop version, Sms charge Rs 75,KEAT premium at Rs 500 pm, Min margin Rs 5 lakhs.

Kotak Privilege Circle Account: KEAT premium free, Sms free,Min margin Rs 10 lakhs

PRICING OF KOTAK

Account Opening : Rs 550 with kotak savings account, Rs 750with margin of Rs 50000, otherwise Rs 1200.

Demat : Rs 30 pm. Min Margin Retainable : Rs 1000. Brokerage Slab Wise : Higher the volume, lower the brokerage.

Even older customers (on 0.25% & 0.40%) have been moved tothe slab wise structure wef 1/4/2004.

Slab Structure of Kotak

Delivery volume pm Brokerage

< 1 lakh 0.59% Gateway Acc.1 lakh 5 lakhs 0.55%5 lakhs 10 lakhs 0.45%10 lakhs 20 lakhs 0.36% Value Acc.20 lakhs 60 lakhs 0.27%60 lakh 2 Cr 0.23%> 2 Cr 0.18% Privilege Circle

Delivery volume pm Brokerage Square off


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25 lakhs 2 Cr 0.05% both sides Value acc.2 Cr 5 Cr 0.04% both sides> 5 Cr 0.03% both sides Privilege acc.

Derivative Brokerage Slab

Delivery volume pm Daily Sq. up Settlement< 2 Cr 0.07% both sides 0.09% both sides2 5.5 Cr 0.045% 0.073% 5.5 Cr 10 Cr 0.036% 0.046% 10 Cr 25 Cr 0.027% 0.046% > 25 Cr 0.023% 0.032%

Deal Clinchers v/s Kotakstreet

Rigid Account Opening TermsNo Flexibility of A/c opening charges (Rs 550) + Compulsory

margin Rs 5000/-No Customization of commercial Terms

No Flexibility in Leverage Dependent on Type of Account ( 4to 6 times only)

No flexibility in Brokerage, driven by slab structureMany Other Charges

Rs 30 p.m towards DP AMC chargesDP incoming charges extra, 0.02%Rs 1,000 as retainable Margin to keep account activeRs 25 per call after 20 calls for the month

Restricted Access to Terminal Like productKEAT Desktop restricted distribution on payment of Rs 500,

Non refundable


59/95

INDIABULLS

Company Background

IndiaBulls is a retail financial services company present in 70 locations

covering 62 cities. It offers a full range of financial services and

Products ranging from Equities to Insurance. 450 + Relationship

Managers who act as personal financial advisors

Online Account Type

Signature Account : Plain Vanilla Account with focus on EquityAnalysis. The equity analysis is a paid service even for A/c holders

Power Indiabulls: Account with sophisticated trading tools, low

commissions and priority access to R.M

Pricing of IB Accounts

Signature Account


Demat: Rs 200 if POA is signed, No AMC for this DP

Initial Margin : NIL

Brokerage : Negotiable

Power IndiaBulls

Account Opening : Rs 750Demat: Rs 200 if POA is signed, No AMC for this DP

Initial Margin : NIL

Brokerage : Negotiable.


60/95

Deal Clinchers v/s IndiaBulls

POA for Clients DMAT

All shares held by client trading with IB are moved to IB Pool

Account and the same is shown as a reflection in client DP account.

Charges are levied to move shares from IB pool Account to client DP

account

Paid Research Services

Access to an research even for an IB trading account holder is

charged a min of Rs 500 a month

Margin Funding hoax

The interest on funding starts on leveraged delivery trades

from T+1 day itself @21% p.a, on a daily basis

The role of Relationship Manager

Each RM is looked upon as a revenue generator and he gets a

% on business generated from client. This can lead to over leveraged

(Interest) & high frequency(Brokerage) trading, which may not be in thebest interest of the client.


61/95

ICICI Direct

Company Background

ICICI Web Trade Limited (IWTL) maintains ICICIdirect.com. IWTL is an

Affiliate of ICICI Bank Limited and the Website is owned by ICICI Bank

Limited

Account Types

ICICI Direct e-invest Account : Plain Vanilla Account with focus on 3

in 1 advantage. Differentiated in services within the account

1.Cash on spot

2.MarginPlus

Premium Trading interface of ICICIDirect Link is given to DBC partners

and HNIs


Schemes : For short periods Rs 750 is refundable against brokerage

generated in a qtr. These schemes are introduced 3-4 times a year.

Demat: NIL, 1st year charges included in Account Opening Plus a facility

to open additional 4 DPs without 1st yr AMC

Initial Margin : Nil

Brokerage : All brokerage is inclusive of stamp duty and exclusive of

other taxes.

Delivery Vol per qtr Brokerage * Square Vol off p mBrokerage **

< 10 lakhs 0.75%

10 lakhs - 25 lakhs 0.70%

25 lakhs -50 lakhs 0.55%

50 lakhs 1 Cr 0.45%

1 Cr 2 Cr 0.35%

2 Cr 5 Cr 0.30%


62/95

> 5 Cr 0.25%

Deal Clinchers v/s ICICIDirect

Poor online Interface

Slow website interface with no real-time quotes creates a

dissatisfaction among high frequency traders

Margin trading restriction

The margin trading system is available up to 2:45 p.m, with

outstanding net positions under margin segment automatically squared

off at any time between 2:45 3:30 p.m. Thus no control of square offprice.

Morning Trades Issue

Being one of the websites with largest no of after hour orders

which are pushed 1st thing in the morning, creates a choking of orders to

the exchange, causes delay of confirmations for new order placed during

the early morning trades

Restriction of BTST

The sale of shares purchased is restricted to T+1 day and is

not permitted on T+2 Day.

No leverage for Delivery trades

Delivery is restricted to the total money allocated into the

trading account.

No flexibility on leverage on Intra-day trades

The leverage of 4 times is available for intra- day trades.

Restriction of Bank Account

The choice of bank is restricted to ICICI Bank.

Higher Brokerage rates with slabs

The delivery brokerage is pegged at 0.75% and trading at

0.10% each side, this makes is very unviable for customers dealing in


63/95

large volumes. Although progressively the delivery and trading brokerage

reduce as volumes go up.

HDFC SECURITIES

Company Background

HDFC Securities Ltd, is promoted by the HDFC Bank, HDFC and Chase

Capital Capital Partners and their associates. Pioneers in setting

up Dial-a-share services with the largest team of Tele-brokers

Online Account Type

HDFC Online Trading A/c : Plain Vanilla Account with focus on 3 in 1advantage

Pricing of HDFC Account


Demat: NIL, 1st year charges included in Account Opening

Initial Margin : Rs 5000/- for non HDFC Bank customers ( AQB)

Brokerage :

Trading 0.15%* each side + ST

Delivery 0.50%** each side + ST

* Rs 25 Min Brokerage per transaction

** Rs 8 Min Brokerage per transaction

Deal Clinchers v/s HDFC Securities

Poor online Interface

Apart from having no product to cater to Day-Traders, the

hdfcsec.com website is plagued with downtime. The same is currently

being revamped.

Lack of focus on Broking

The core business of HDFC is Housing Finance and that of

HDFC Bank is Banking. Broking as a business is a small part of the

portfolio of financial services and hence the commitment to resources is

limited.


64/95

No Leverage

No leverage is available to clients even for Intra-Day trades,

effectively all clients are on cash and carry system.

ANALYSIS OF THE QUESTIONNAIRE

In which of these Financial Instruments do you invest into?

Frequency PercentValid

PercentCumulative

Percent

Valid Shares 70 67.3 67.3 67.3MutualFunds

19 18.3 18.3 85.6

Bonds 6 5.8 5.8 91.3

Others 9 8.7 8.7 100.0Total 104 100.0 100.0

Shares Mutual Funds Bonds Others

0

10

20

30

40

50

60

70

Frequency

70

19

69

Comments- This question was meant to closely study the pulse andinvestment pattern in the stock market. It is clearly evident that 70% ofthe sample size prefer to invest in the share market over other financialinstruments.


65/95

Which type of trading do you prefer?


PercentCumulative

Percent

Valid Online 77 74.0 74.0 74.0Offline 16 15.4 15.4 89.4NotApplicable

11 10.6 10.6 100.0

Total 104 100.0 100.0

Online

Offline

Not Applicable

0 20 40 60 80

Frequency

77

16

11

Comments- The result shows that online trading has taken the driversseat over the conventional trading ever since internet triggered arevolution across the globe.


66/95

If you prefer online trading then the reasons for it?


PercentCumulative

Percent

Valid Privacy 20 19.2 22.7 22.7UserFriendlyand timesaving

27 26.0 30.7 53.4

Convenience

20 19.2 22.7 76.1

All theabove

21 20.2 23.9 100.0

Total 88 84.6 100.0Missing System 16 15.4Total 104 100.0

Privacy User Friendly andtime saving

Convenience All the above

0

5

10

15

20

25

30

Frequency

20

27

2021

Comments- The preferred choice of online trading itself is a proven factthat most of them find it user friendly, time saving, convenient etc.Hence it does not come as a surprise as 20% of the sample size preferredall the three options.


67/95

What factors motivates you to invest in securities?


PercentCumulative

Percent

Valid New IPO's 25 24.0 24.0 24.0Entry ofFII's

9 8.7 8.7 32.7

Morereturns inless time

63 60.6 60.6 93.3

Others 7 6.7 6.7 100.0Total 104 100.0 100.0

25

9

63

7

New IPO's

Entry of FII's

More returns inless time

Others

Comments This question was meant to understand why more andmore investors have started creeping in the share market as neverbefore. About 3/5th of the sample size believed that there is a possibility inmultiplying their money within a short period of time and about 1/4th ofthe sample population is driven by the IPOs issued by potentialcompanies.


68/95

Does online trading motivate you to deal in securities?


PercentCumulative

Percent

Valid

Yes84 80.8 80.8 80.8

No 20 19.2 19.2 100.0Total 104 100.0 100.0

84

20

Yes

No

Comments-It is clear and transparent that online trading has becomemore convenient way to deal in securities as majority (as much as 85% )of the sample population voted for it.


69/95

Have you heard about Reliance money?


PercentCumulative

Percent

Valid Yes 81 77.9 77.9 77.9No 18 17.3 17.3 95.23 5 4.8 4.8 100.0

Total 104 100.0 100.0

81

18

5

Yes

No

3

Comments Out of the 100 people surveyed, Reliance Money has itsslice of share as it is familiar and popular among 80% of the samplepopulation. Hence Reliance Money is a well heard off name among theinvestors.


70/95

Which brokerage firm do you prefer for online trading?


PercentCumulative

Percent

Valid ICICIDirect

14 13.5 13.5 13.5

Reliancemoney

27 26.0 26.0 39.4

Indiabulls

23 22.1 22.1 61.5

Kotak

Securities

21 20.2 20.2 81.7

5 Paisa 18 17.3 17.3 99.07 1 1.0 1.0 100.0Total 104 100.0 100.0

ICICI Direct Sharekhan Indiabulls Kotak

Securities

5 Paisa 7

0

5

10

15

20

25

30

Frequency

14

27

23

21

18

1

Comments- This question was framed to understand the effectiveness of

Reliance money among its competitors. The push and pull factor worked

out well for Reliance Money as it grabbed 27% of the market share out of


71/95

the 100 people surveyed. But the survey also reveals an interesting point

that there is not much variation among the players in terms of investors

consideration for a brokerage firm.

What differentiates your share trading company fromothers?


PercentCumulative

Percent

Valid Brokerage 32 30.8 30.8 30.8ResearchReport

51 49.0 49.0 79.8

Dial upTrade

facility

8 7.7 7.7 87.5

Exposure 3 2.9 2.9 90.4Accountopeningcharges

7 6.7 6.7 97.1

Others 3 2.9 2.9 100.0Total 104 100.0 100.0

BrokerageResearchReport

Dial upTradefacilityExposure

Account openingchargesOthers

0

10

20

30

40

50

60

Frequency

32

51

8

37

3

Comments- This question was framed to read the mind of an investor.The survey reveals that investors have become more analytical andrationale over the period of time as they have compelled themselves totake decisions on the basis of pre and post market research reportsoffered to them at regular intervals. Also to some extent investors look in


72/95

for the brokerages charged by the trading firm while other options werehardly considered as pre requisites for online trading.

How often do you trade?


PercentCumulative

Percent

Valid Daily 53 51.0 51.0 51.0Weekly 31 29.8 29.8 80.8Monthly 7 6.7 6.7 87.5Yearly 13 12.5 12.5 100.0

Total 104 100.0 100.0

Daily Weekly Monthly Yearly

0

10

20

30

40

50

60

Frequency

53

31

713

Comments- This shows how stock market has swept the nation as a

whole. Most of the investors prefer daily and weekly trading to keep a

watch on the volatility of the stock market so as to take decisions

accordingly.


73/95

In which category does your income fall?(Per month in Rs)


PercentCumulative

Percent

Valid 0-15000 26 25.0 25.0 25.015000-35000 61 58.7 58.7 83.735000-60000 17 16.3 16.3 100.0

Total 104 100.0 100.0

0-15000

15000-35000

35000-60000

0 10 20 30 40 50 60 70

Frequency

17

61

26

Comments- People from different categories of income group have takentheir chance to invest in the booming stock market. The upper middle andmiddle class (income category ranging from 15000 35000) people havetaken the primary seat as far as the number of people involved in tradingis concerned.


74/95

What percentage of your earnings do you invest in sharetrading?


PercentCumulative

Percent

Valid Up to10%

39 37.5 37.5 37.5

Up to25%

33 31.7 31.7 69.2

Up to50%

13 12.5 12.5 81.7

Above50%

14 13.5 13.5 95.2

5 5 4.8 4.8 100.0Total 104 100.0 100.0

Up to 10% Up to 25% Up to 50% Above 50%

0

10

20

30

40

Frequency

40

34

15 15


75/95


76/95

(i) Rank the attribute "customer service" of a share tradingcompany?


PercentCumulative

Percent

Valid mostImportant

27 26.0 26.0 26.0

Important 24 23.1 23.1 49.0Neutral 22 21.2 21.2 70.2LessImportant

18 17.3 17.3 87.5

NotImportantat all

13 12.5 12.5 100.0

Total 104 100.0 100.0

most Important Important Neutral Less Important Not Important at

all

0

5

10

15

20

25

30

Frequency 2724

22

18

13

Comments- Investors feel that they should be provided with the best ofthe services in order to associate themselves with a brokerage companyover a long period of the time. Hence more than half of the sample sizesurveyed preferred it to be an important parameter of a brokerage firm.


77/95


78/95

(iii) Rank the attribute "regular updates" of a share tradingcompany?


PercentCumulative

Percent

Valid mostImportant

20 19.2 19.2 19.2


35 33.7 33.7 82.7

Not Importantat all

18 17.3 17.3 100.0

Total 104 100.0 100.0

35

Comments- Surprisingly about 35 people out of the 104 surveyedthought that the regular updates provided by the company were not thatimportant. Only 34 of the sample population felt the importance of regularmarket updates.


79/95

(iv)Rank the attribute "trustworthiness" of a share tradingcompany?


PercentCumulative

Percent

Valid mostImportant

10 9.6 9.6 9.6


25 24.0 24.0 67.3

Not Importantat all

34 32.7 32.7 100.0

Total 104 100.0 100.0

most Important Important Neutral Less Important Not Important atall

0

10

20

30

40

Frequency

10

7

28

25

34

Comments- A mere 20% of the sample population do consider thesignificance of the trustworthiness of the brokerage company with whomthey have been associated.


80/95


81/95

(i) Rank the company "RELIANCE MONEY" according to thequality of service?


PercentCumulative

Percent

Valid Excellent 31 29.8 29.8 29.8VeryGood

24 23.1 23.1 52.9

Good 29 27.9 27.9 80.8Average 17 16.3 16.3 97.1BelowAverage

3 2.9 2.9 100.0

T