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Copyright © 2012 National Stock Exchange of India Ltd.
NATIONAL STOCK EXCHANGEInvestor Awareness
Who is an Investor
An Investor is a person who allocates capital with the expectation of a financial return.
NATIONAL STOCK EXCHANGE OF INDIA LTD.2
Income Expenses Savings Investment
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Savings v/s InvestmentSavings Investment
Short term Longer term
Emergency Planned Outlay
Low returns Beating the inflation
Investment & Returns
NATIONAL STOCK EXCHANGE OF INDIA LTD.3
Why People Invest
• Achieve financial goals
• Increase current income
• Financial security
• Retirement
Investment
Returns
• Interest
• Dividend
• Rent
• Capital Gain
Investment Planning
4
Start of Career RetirementMarriage House Car
Children’s Education
Children’s Marriage
5
Goal SettingWhat are the key financial stages in my life? In how much time will I reach these stages?How much money would I require at these stages?
Assessment
Monitoring
What is my risk taking ability?How much return can I expect with the risk taking ability?How much money do I need to invest each month?
What is the performance of my investments?Have my needs or risk taking capabilities changed?Is there any need to adjust my investment portfolio?
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investment Avenues
NATIONAL STOCK EXCHANGE OF INDIA LTD.5
There are many options today to invest your money in
An investor who owns a stock is known as a shareholder
SMALL SAVING SCHEMES
PPF
FD/RD
STOCKS
MUTUAL FUNDS
CORPORATE DEBT
REAL ESTATE
GOLD
EXCHANGE TRADED FUNDS
Traditional Avenues
Modern Avenues
Risk-Return Relationship
High Risk
ModerateRisk
Low Risk
ZeroRisk
6% 18%9% 12% 15%
Govt. Bonds, Post office,
PPF
Bank Fixed Deposits
Corporate bonds, Debt funds
Mutual Fund, ETFs
Equities
Expected return6
Why Capital Markets?
NATIONAL STOCK EXCHANGE OF INDIA LTD.7
Easy Liquidity
Risk Diversificati
on
Maximum Returns
Tax Benefits
One can easily buy and sell shares and gets quick redemption of investment.
Products available for all classes of investors. Allows investments customized to personal risk appetite.
Historically outperformed all other asset classes – Compound Annual Growth Rate (CAGR) of over 18%.
No Income is payable if shares are sold after 1 year of purchase.
Tax Exemption is also available for investing in ELSS and RGESS schemes.
Price Transparency
Trading is screen based and information about current prices of shares are available easily.
Why NSE
NATIONAL STOCK EXCHANGE OF INDIA LTD.8
Technology
Innovation
Investor Protection
Transparency
We are the pioneers in developing the latest of technologies to ensure efficiency in markets.
We have a consistent track record of successfully introducing innovative products in the financial markets. We enable you to explore opportunities in the markets.
We have the developed a world class surveillance system that ensures integrity of the markets.• All investors, big and small are now on the same
platform.
• No one has advantages over the other.
• There is an enhanced transparency as you yourself can verify your trades directly on NSE website.
Asset Classes at NSE
AssetClasses
EquityDerivatives
Capital Markets
Other Markets
Other Derivatives
Stock Futures
Stock Options
Index Futures
Index Options
Currency Futures and OptionsInterest Rate Futures
SLBS
Debt Market
MFSS
Equities,Debt, ETFs,
Mutual Funds
IPO
NATIONAL STOCK EXCHANGE OF INDIA LTD.
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Highly liquid Index
Covering more than 24 sectors
Nifty is calculated using free-float market capitalization
method.
Captures the largest market capitalization, represents
about 65% of total free-float market capitalization of
NSE.
Nifty linked Derivatives contracts available for trading
on Singapore Exchange, Chicago Mercantile Exchange
& Osaka Securities Exchange.
Over 30 International and Domestic ETFs/Index Funds
on Nifty.
Structured Products/ Index-linked Debentures issued in
domestic and international market across the Globe.
Our Flagship Index – NIFTY 50
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Mutual Funds
NATIONAL STOCK EXCHANGE OF INDIA LTD.11
A Mutual Fund is a type of professionally managed collective investment scheme that pools money from many investors to purchase securities.
Systematic Investment Plan (SIP) is a vehicle offered by mutual funds to help investors save regularly. Investor commits to invest a fixed amount every month.
Currently there are around 45 Mutual Fund Companies.
Introduction to ETFs
An Exchange Traded Fund (ETF) is primarily a mutual fund scheme which is listed and traded on a stock exchange. An ETF can invest in:
Equities – replicating the composition and performance of an equity index.
Commodities – tracking the actual price of a commodity like Gold. Money market instruments like short-term government securities and
call money.
Exchange Traded Fund (ETF)
– Simplicity– Transparency– Lower
Expenses– Diversification– Open-End Fund
– On Exchange– Real time
prices– Trading
flexibility– Trading
strategies
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INDEX MUTUAL FUND
STOCK
EXCHANGE TRADED FUND
NATIONAL STOCK EXCHANGE OF INDIA LTD.
What is an ETF?
NATIONAL STOCK EXCHANGE OF INDIA LTD.13
Affordable exposure
Real time prices
Real time trading
Full transparency
No entry and exit fees
What makes it attractive?
ETFs have been pioneered in India by NSE
Exposure to an index or a basket of securities
Lists and trades on a stock exchange
Not actively managed
What is an ETF?
GOLD
NIFTY
CPSE
LIQUID
ETFs: BENEFITS FOR THE RETAIL INVESTOR
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1
2
3
4
5
Very Simple to Trade: Can be traded on NSE like any stock
Quick Diversification: Opens up multiple asset classes are affordable costs
Economical: Lowest expense ratio amongst all equity mutual funds
Only brokerage payable in buying or selling on exchange
You can track your investment value in real time
Safe
Sim
ple
Fast
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Gold ETF
NATIONAL STOCK EXCHANGE OF INDIA LTD.15
Typically,
ETFs are safe and secureThey hold physical gold
But then why ETFs?
You can buy just one unit It is very easy to buy Buy it unit by unit as you want
and build wealth
SIMPLE
You can be assured of quality Demat holding allows security
SAFE
Accepted as collateral for loansTRUSTEDGOLD V/s GOLD ETF
Quality risk No quality risk
Less price transparency
High level of transparency
Very high bid-ask spread Low bid-ask spread
Not tax efficient Tax Efficient
1 ETF unit ≈1g of Gold in spot
JUST REMEMBER
ETF is an easier and more secure way to buy gold.
NIFTY ETF
NATIONAL STOCK EXCHANGE OF INDIA LTD.16
Instant Diversification Affordable Diversification No bias towards sectors or
stocks Minimum expense ratio
Nifty ETF is the simplest and safest
way to enter into equity markets
Narrow Broad Broad
High Low Low
Low High Low
High Low Low
Market Rates NAV at EOD Market Rates
EXPOSURE
VOLATILITY
COST OF MAINTENANCE
CAPITAL REQ
PRICE
STOCKS NIFTY MUTUAL FUND NIFTY ETF
CPSE ETF
Central Public Sector Enterprises (CPSE) ETF is a part of the Government of India initiative to dis-invest some of its stake in selected CPSEs through the ETF route.
The ETF was opened for subscription in March 2014 and the same was listed on NSE in the first week of April 2014.
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Ability to participate in the long-term development of India.
Instant Diversification: Single scrip to trade in diverse set of PSEs.Economical: Lowest expense ratio amongst all equity mutual funds.Enables large investment in blue chip Public Sector enterprises without the constraint of market liquidity on the underlying individual stock.
KEY BENEFITS OF CPSE ETF
NATIONAL STOCK EXCHANGE OF INDIA LTD.
Liquid ETF
Liquid ETFs are funds whose unit price is derived from money market securities comprising of Government bonds, treasury bonds, call money market, etc.”
Benefits of Liquid ETFs: • NAV per unit is maintained at Rs.1000/-• Daily returns are passed on as dividend• The dividend after Dividend Distribution Tax in units• No STT• Listed and Traded on the NSE with a minimum lot size of 1 unit
Liquid ETFs listed on NSE
NATIONAL STOCK EXCHANGE OF INDIA LTD.18
Symbol Underlying Asset Unit Price AMC Name
LIQUIDBEES Government Securities
Rs.1000(Face value)
Goldman Sachs Mutual Fund
Regulatory/Safety Measures
Unique Client Code, KYC, PAN
Client code at the time of order entry
Price Time Priority
Contract Notes, Quarterly Statement
Stringent Compliance on members in respect of dealings
with investors
Trade Verification
Direct information to investors on random basis
SMS Notification to Investors
19 NATIONAL STOCK EXCHANGE OF INDIA LTD.
Investor, Information, Awareness
Information dissemination through multiple
channels
Key information on Corporate entities,
Members, Complaints on Exchange website
Programs on products, safety aspects
Investor related alerts
Rumor verification
20 NATIONAL STOCK EXCHANGE OF INDIA LTD.
Takeaways
NATIONAL STOCK EXCHANGE OF INDIA LTD.21
• Clear Understanding of various asset classes in terms of risks and returns
• Historically Stock Market provides best return on investment in the long term
• NSE aspires to Educate, Empower and Protect all Investor
• Stock Exchanges are highly regulated and ensure investor protection
• However the decision of Investing is solely of the Investor
• Stock Markets are market driven and are subject to market risks
NATIONAL STOCK EXCHANGE OF INDIA LTD.22
THANK YOU