Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country's economic state of health. The purpose of doing this project is mainly to understand the different asset classes and to create awareness about different asset classes.
Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country's economic state of health. The purpose of doing this project is mainly to understand the different asset classes and to create awareness about different asset classes.
Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country's economic state of health. The purpose of doing this project is mainly to understand the different asset classes and to create awareness about different asset classes.
KESs Institute of Excellence in Management Science, Hubli 1 | P a g e
1 Introduction 1.1 Background: Stock exchanges to some extent play an important role as indicators, reflecting the performance of the country's economic state of health. Stock market is a place where securities are bought and sold. It is exposed to a high degree of volatility; prices fluctuate within minutes and are determined by the demand and supply of stocks at a given time. Stock brokers are the ones who buy and sells securities on behalf of individuals and institutions for some commission. The Securities and Exchange Board of India (SEBI) is the authorized body which regulates the operations of stock exchanges, banks and other financial institutions. The past performances in the capital markets especially the securities scam by Harshad Mehta has led to tightening of the operations by SEBI. In addition the international trading and investment exposure has made it imperative to better operational efficiency.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 2 | P a g e 1.2 Purpose : The purpose of doing this project is mainly to understand the different asset classes and to create awareness about different asset classes. 1.3 Importance of study : To know the best investment option for individual investors. To study the investors preference for different asset classes.
1.4 Research objectives : To know the pattern of investment and factors they consider while investing. To make comparison of different asset classes. To analyze the investors preference for different asset classes. To study the perception towards different asset classes.
1.5 Assumptions and limitations : Difficulty to make comparison between different asset classes Lack of accurate data Difficult to collect relevant data 1.6 Industry & Company profile: COMPNAY PROFILE Khandwala Securities is promoted by Jayantilal Khandwala & Sons, one of the large broking houses in India with over 60 years of experience in Capital Markets and Mr. Samir S Doshi, a professional member of the Stock Exchange, Bombay, having a wide experience in various financial activities. The promoter Group today comprises of two broking firms, five memberships of the Stock Exchange, Bombay and two dealerships of OTCEI. The Company is managed by the Board and a team of professionals with KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 3 | P a g e considerable experience in capital markets, banking and law. Khandwala Securities commenced its activities by providing investment and financial consultancy services to corporate and individual clients. In 1993, the Company was accredited by SEBI as a Category I Merchant Banker and expanded its range of financial services to achieve a balanced mix of fund based and non-fund based activities. The Company currently offers a range of diversified financial services with focus on investment banking and investment advisory services. The Company is in the process of consolidating similar operations that are currently under different entities. The Company has embarked upon a further and extensive exercise of internal restructuring and transparency, in order to achieve global standards. Khandwala Finances Ltd., a wholly owned subsidiary of the company is being merged with the company. About us KIFS Securities Ltd. (Formerly known as "Khandwala Integrated Financial Service Ltd") is an established premier stock broking house with a vision to offer broking & financial services and products is such a way that it leads to optimum gains for the entities involved in these transactions. Incorporated by the Khandwala Brothers, KIFS Group started its equity broking business operations in 1987 and incorporated flagship entity of the group in 1995. Currently, the Group is engaged in various capital market related operations like equity broking, commodity broking, arbitrage trading, investment activities, margin funding and distribution of financial of financial products. All the group companies are held 100%, directly or indirectly by the promoters. KIFS Securities limited is the flag-ship company of KIFS Group, and started its broking operations under corporate license in 1995. Currently, KIFS is engaged in equity broking, arbitrage trading, depository operations and distribution of financial products.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 4 | P a g e KIFS SECURITIES LTD. is in the business of shares and stocks broker ship, investment advisory, financial services and portfolio management in stock markets, debt markets and derivatives markets. We are also providing dematerialized accounts services.
We are corporate member of National Stock Exchange. We are equipped with sophisticated infrastructure in various cities in India. We have well qualified human resources doing research and analysis work. We have a dedicated team to provide support services to our customers. KIFS Financial Services Limited (KIFS FSL) is a Non Banking Financial Company registered with RBI under the Category of Loan Company and is a Subsidiary Company of KIFS Securities Limited A Khandwala Integrated Venture, Ahmedabad, the flagship company of the Khandwala group. The group is into the business of Stock & Commodities Broking, Arbitrage, Depository Services and Portfolio Manager. The flagship Company of the Croup viz; KIFS Securities Limited is a member of NSE, BSE, MCX-SX, USE, OTCEI, and DP of NSDL & Portfolio Manager. One of the other subsidiary companies of KIFS Securities Limited is KIFS Commodities Pvt. Ltd. which is FMC Registered Commodity broker & member of MCX, NCDEX and ACE. Stock broking This division offers our clients the facility for transacting their trades through the NSE and the BSE. We serve the investment needs of more than 64000 of our investors through a country wide branch network and a state of art network infrastructure. We are committed to providing better quality services to our clients. This client base includes Corporate, High Net worth Individuals and small retail investors. Our business has flourished based on strong relationship of trust with our clients that have helped us to establish a clear leadership position. We provide a range of trading & clearing platforms comprising NSE Capital Market, NSE futures & Options, NSE Currency Derivatives and BSE Cash Segments. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 5 | P a g e Depositary service We offer Depository services to facilitate a seamless transaction platform as a part of our package of value added services for our clients. We serve to more than 100000 DP Accounts across India. We are a depository participant with National Securities Depository Ltd. (NSDL) for trading and settlement of dematerialized shares. Apart from being "cost competitive" in nature, brokerage services integrated with DP services guarantee a quicker and smoother conduct of investment and trading affairs of our clients. We offer a whole range of Depository Services like dematerialization custody, transfer and pledge of shares. Depository services make the share transactions faster, cheaper and easier.The other benefits are low fees; access to beneficiary demat accounts through internet and phone, portfolio valuation on the account statements, online execution of transactions at branches, special rates for stock market intermediaries and sub brokers, transactions update from back office etc.
Primary Market Distribution: We are actively involved in distribution of IPOs & FPOs and hold 4th rank all over India (Source: Prime Database). We have made very easy mechanism to apply in IPOs and FPOs for the benefit of investors. We have been able to carve out a good market share in the IPO & FPO market through better investors servicing and wide reach in the state of Gujarat.
Debt Products: We provide services in Fixed Income Securities (Treasury Bills, Government securities, State Development Loans, Non SLR Bonds and Corporate Bonds) and Short Term Money Market instruments (Certificates of Deposit, Commercial Paper, Inter Corporate Deposits, and Call & Notice Money Deposits). Commodities: KIFS Commodities enables the retail & corporate investors to diversify their portfolio and KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 6 | P a g e enjoy the benefits of commodity trading in MCX, NCDEX and ACE. It is a trading-cum- clearing member of the leading national commodity exchanges. We have an extensive network spread across the country through our branches and registered franchisees DEMAT KIFS Advantages View your DP activity Any Time - Any Where through net Competitive charges for demat No hidden cost Nomination facility available Highly trained & personalized Help-desk Wide branch / franchisee network (more than 30 branches & 525 franchisee) Reduce paper work Hassle free automated pay-in of your Market Sell obligation with no need of physical instruction All Demat staff is NCDO/ NCFM qualified We are providing single account opening form for DP, NSE & BSE with single documentation KIFS Facilities Automated Pay in Facility Monthly DP statement with valuation (for transact B.O.) Quarterly DP Statement with valuation (for both transact & non-transact B.O.) Additional Statement on Request Facility to view your DP transaction & Holding Commodity Trading FS Commodity Pvt. Ltd., 100% subsidiary of KIFS Securities Ltd. offers commodity brokerage services to its customers. It is a registered Trading-cum-Clearing member of Multi Commodity Exchange of India Ltd. (MCX), ACE and National Commodity and Derivatives Exchange Ltd (NCDEX). These Commodity Exchanges have shown a KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 7 | P a g e phenomenal growth in trading volumes. Significant Trading and Arbitrage opportunities exist for informed players in the futures market.
Our retail branch network is one of the largest retail branch networks in the private financial services sector and provides our customers with an unmatched distribution and service capability. The Commodities Broking Services cater to the retail private investor segment, while the Hedging Services are offered through our corporate desk to the producing/consuming firms that have either direct or economic exposure to the underlying commodity. Our offerings also include Arbitrage products that are backed by our experts.
Currency Trading The Currency market is the largest and most liquid financial market in the world. It is the arena in which a nations currency is exchanged for that of another at a mutually agreed rate. It was created in the 1970''s when international trade transitioned from fixed to floating exchange rates. Traditionally, the currency market has been the preserve of banks and larger financial institution. However with advances in technology, and the global nature of the market, it is now possible for traders of all levels of experience to take part in online currency trading. It offers traders huge opportunities to benefit from fluctuations in the currency markets and eliminate underline foreign currency fluctuation risk arising due to revision such as commodity trading, international trading, frequent overseas travelling, close correlations with equity indexes and international investments. KIFS Securities Limited offers a comprehensive range of services which include equity broking and currency futures and options broking.
Exchange-driven currency trading has shown remarkable growth over the past few years. It is the basis for cross-border diversification and business deals. It is our strong belief that a valuable broking franchise is one that has a very high level of client retention and can provide differentiated services based on client needs. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 8 | P a g e At KIFS, we enable our clients to seize investment opportunities in the currency market by facilitating futures and options trades in four currency pairs: US$-Indian Rupee Euro-Indian Rupee Pound Sterling-Indian Rupee Japanese Yen-Indian Rupee
Business Operations KIFS Securities Pvt Ltd (KIFS Securities), a part of the Khandwala group, was established in 1995. The company operates in the equity cash market, equity Derivatives and currency futures segments. The company also provides demat services, distribution of financial products, investment advisory services, PMS and research services such as derivatives strategies, IPO research and mutual fund research. The company is a member of cash and derivative segment of NSE and BSE. The company is also a member in currency derivative segment of NSE, USE and MCX-SX. It is a DP with NSDL. KIFS Securities operates in the commodity segment through its subsidiary company, KIFS Commodities Pvt Ltd which is a member of MCX and NCDEX. As on Mar 31, 2011, the total terminal count of the company stood at 2,393 which comprises of 187 NEAT terminals, 126 BOLT terminals and 2,080 CTCL terminals. In FY11, The Company added 7,331 client accounts taking total number of client accounts to 58,961
Vision To become one of the most respected and preferred Financial Services Organization through innovative products enabling wealth creation for all our stakeholders.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 9 | P a g e Mission To provide personalized, fast, reliable, quality-driven, convenient, and cost effective solutions to our clients through Innovative Product Structure, Personalized Approach & Services, Effective Cost Management, Ethical and transparent Practices and delivering what we promise KIFS Financial Services Limited is a professionally managed company. The overall management is vested in the Board of Directors, comprised of qualified and experienced persons. There are currently four Directors on the Board.
1. Shri Rajesh P. Khandwala, chairman cum MD Shri Rajesh P. Khandwala, son of Shri Parmanand G. Khandwala aged about 48 years, holds the Bachelors Degree in Commerce and has an experience of more than two decades in capital market activities. He has rich and varied experience in the field of Primary market, Secondary market and Mutual Funds. He is an independent thinker and a measured risk taker with a passion for equities. With his expertise in the field of derivatives, arbitrage and margin trading activities, Shri Rajesh P. Khandwala is taking up the Company to the new heights, growth and success. 2. Shri Atul Parikh Non executive Independent Director Shri Atul Parikh aged about 61 years is having a Bachelors Degree in Commerce, Diploma in Taxation Law & Practice, Post Graduation diploma in Business Management and a CAIIB. He has been seasoned banker for more than 3 decades. He has wide range of banking experience in Operations; Audit; Retail Banking; Foreign Exchange; Credit Management; Training; Merchant Banking; Capital Market operations etc. He has held various positions in Banking Industry and at the time of his retirement he was designated as a Sr. Vice President with one of the best private sector bank. With his vast and rich experience in Banking and Financial Services sector coupled with his knowledge and education, he is contributing significantly in the growth of the Company. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 10 | P a g e 3. Shri Dharmendra Soni Non executive Independent Director Shri Dharmendra Soni is commerce graduate and involved in the securities market for more than a decade. With his expertise in the field, he has significantly contributed in the development of the business of the company. FUTURES AND OPTIONS The National Stock Exchange and The Stock Exchange, Mumbai have commenced trading in Derivatives Market with Index Futures being the first instrument. Now, both the exchanges provide trading in Index Futures and Options and Stock Futures and Options. A derivative is a financial contract, between two or more parties, which is derived from the future value of an underlying asset. At any point of time there will always be available near three months contract periods. For e.g. in the month of January 2010 one can enter into January, February or March contracts. The last Thursday of each month is the expiry day for that months contract. When one contract expires, a new contract is introduced. For instance, on expiry of Jan 2010 contract, April contract shall get activated. Currently, settlements of all Derivatives trades are in cash. There is Daily as well as Final Settlement. As long as the position is open, the same will be marked to Market at the Daily Settlement Price, the difference will be credited or debited accordingly and the position shall be brought forward to the next day at the daily settlement price. Any position which remains open at the end of the final settlement day (i.e., last Thursday) shall be closed out by the Exchange at the Final Settlement Price which will be the closing spot value of the underlying. There are two types of margins collected on the open position, viz., Initial Margin which is collected upfront and Mark to Market Margin to be paid on T+1 day. As per SEBI Guidelines it is mandatory for clients to give margin, failing which the outstanding positions may be closed out. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 11 | P a g e There are three types of Members in the Futures and Options Segment:
Trading Members: These are only eligible to trade, their trades are settled by the Clearing Members. Trading cum Clearing members: The members who are eligible to trade and also settle trades on their own behalf and also settle on behalf of other trading members. Professional Clearing Members: Here the members who are only specialized in the clearing and settlement activities. They do not trade on their own behalf or on behalf of other members Self Clearing Members: Members are those who trade and settle only their own trades KIFS Financial Services Ltd is trading cum clearing member at NSE. MARGIN TRADING FUNDING SCHEME KIFS Financial Services Ltd. offers Margin Trading Funding facility to all offline customers under the scheme of Margin Funding approved by SEBI.
Key features of the Scheme are as follows: 1. Easy and prompt account opening formalities 2. No processing fees 3. Margin funding of up to 50% of the purchase value 4. Shares purchased are credited to customers Demat account maintained specifically for the purpose of Margin Trading 5. Bonus, and Rights are also directly credited to the customers said demat account. Similarly dividend shall be credited to the bank account stated in the said demat account. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 12 | P a g e 6. Margin calls are made if there is fall of 10% in the Margin Funded Portfolio. Margins can be replenished by cheque or by transferring funds from Normal Trading account. 7. Liquidation if margins are not topped up on a 20% falls in the Margin Funded Portfolio. In such an event liquidation will be at the lenders discretion. 8. This is a product to facilitate investments for short term. Interest is charged a monthly rests at the rate of 1.50% per Month. 9. Purchases can be made only against clear funds 10. We provide Margin Funding only for scrips traded at NSE only. Margin Ratios Margin Ratio: 50:50 Maintenance margin/ Call Margin: 40 % Liquidation Margin: 30 % Registration Procedure: Currently, customers who have an offline trading account with KIFS Financial Services can avail the Margin Trading Funding facility. Clients desirous of registering for Margin Trading Funding Scheme are required to complete / provide the documents given below. Rs.300/- is recovered towards Agreement and documentation charges for opening the Margin Trading Funding Account. Margin Trading Agreement Separate Demat account to be opened for the purpose (standard demat charges shall apply) KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 13 | P a g e POA to be issued in favor of KIFS Financial Services Ltd. to operate the said demat account. Authorization to KIFSs DP to debit demat account for shares sold Undertaking that MTFS has been availed of from only one broker Authorization letter to transfer funds from/to MTF ledger DEPOSITORY SERVICES A depository can be compared to a bank. It holds securities such as shares, debentures, bonds, government securities, units etc. of investors in electronic form. There are two depositories in India, The National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). An individual who desires to avail the depository services can approach a Depository Participant (DP). Banks, financial institutions, custodians, brokers or any other entity eligible as per SEBI (Depositories and Participants) Regulations, 1996 can apply to the Depository to become a Depository Participant. As on 31st March, 2010 there are 526 Depository Participants in India.
KIFS, is a depository participant of NSDL & CDSL. Investors can open demat accounts with NSDL & CDSL through KIFS. One can approach the nearest branch of KIFS for opening an account. Agreement charges (statutory charges) along with Annual Maintenance Charge (AMC) are collected upfront while opening an account. It takes two to three days to open a demat account. Upon activation of the demat account, a Welcome Letter is sent to the customer along with the Delivery Instruction Slip book.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 14 | P a g e DP facilities offered by KIFS De-materialization: Customer can convert physical shares into electronic form by surrendering the shares for dematerialization at the KIFS branch. Re-materialization: Re-materialization enables customer to convert the dematerialised shares into physical form. Repurchase: This facility helps the customer to submit the units of open-ended Mutual Funds in case of re-purchase. Pledge: Customer can pledge securities to avail a loan. Transfer: Here customer can transfer securities from one demat account to another. IPOs: In case the customer has applied for an IPO and receive an allotment then the securities are transferred directly to his/her demat account. The same applies for bonus and rights issues. Commodity De-mat Account: If customer is a commodity player, then they may need to open a commodity de-mat account with KIFS. Speed-e: If customer register for Speed-e services, then transfer instructions can be placed online over the internet to pre-notified Clearing Members Pool a/c. This does away with the need to submit a physical delivery instruction slip. Internet Services : If customer have access to Internet then they can register with us to view thier demat account over the Internet. This is very beneficial as the customers can avail of a host of services at no extra cost. Customer will be able to view their holdings,reports,ledger and will have free access to our research reports at any time. SMS Alert Facility : The alert messages for debits(transfers) and IPO credits would be sent to the account holders who have subscribed to this facility. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 15 | P a g e Depository provides this facility and no charge is levied on DPs for providing this service to investors. COMMODITY FUTURES TRADING KIFS Commodities, a subsidiary of KIFS Financial Services Limited, is mainly engaged in the business of Commodity Futures Trading. KIFS Commodities is a member of: National Multi Commodity Exchange of India limited (NMCE) National Commodity & Derivatives Exchange Limited (NCDEX) Multi Commodity Exchange (MCX) India Pepper and Spice Trade Association (IPSTA) Singapore Commodity Exchange (SICOM) KIFS provides information on commodity futures, along with technical and fundamental analysis online at its website and also through the company's large branch network. The company conducts Seminars, distributes free in-house literature and holds interactive sessions that help raise awareness on the futures market. The number of participants is continuously on the rise thus leading to increased volumes and market efficiency.
KIFS Commodity offers futures trading through multiple exchanges in varied commodities such as: Agri commodities: oilseeds, soya, groundnut, pulses, rice, wheat, sugar, spices, rubber, guar, pepper, cardamom, coffee, etc Precious metals: gold and silver, Base metals: steel, aluminium, nickel, zinc, copper, etc Energy products: crude oil and furnace oil KIFSs clientele in commodities range from investors, co-operative societies, state and national institutions to dealers, traders, manufacturers, financiers, speculators, arbitragers, etc. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 16 | P a g e KIFS does not have proprietary interest in any commodity and therefore is price neutral. Transaction costs are highly affordable attracting a spectrum of investors. Membership in multiple exchanges gives clients the added advantage of arbitrage. KIFS has specialized staff that provide the required guidance, help and enable clients to enter at the appropriate price. How to trade in Commodities at K.I.F.S Open a trading account and maintain initial margin with K.I.F.S. When an order request is entered for buying/selling for a match with the existing orders in the Exchange system. If the order matches another order in the system it results in a trade. Contract note is issued in the exchange specified format containing details such as transaction, quantity, price etc. Contract note is a legal document enforceable in the court of law. The open purchase/sale positions can be squared off at any time during the contract period. NMCE however does not allow members to enhance their position during the settlement month. Existing positions can be squared off. On the first (tenth in case of gold & silver) day of settlement month, margins on existing position are increased by 20%. From 1st to 15th of the contract month (10th to 15th in case of gold & silver), seller can tender warehouse receipt for settlement. This means that the seller has the right to make delivery of the sold position any time between the 1st to 15th (10th to 15th in case of gold & silver) of the contract month. The first buyer (as per the exchange records) shall have to necessarily take delivery of the same. The seller shall receive payment from the exchange on T+3 day while the buyer has to make payment on T+1 day. (T is the transaction day) The seller who places his commodity with Central Warehousing Corporation (CWC) is issued a CWC receipt against this delivery. This receipt is accepted by KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 17 | P a g e K.I.F.S and sent to the exchange that gives it to the buyer. The buyer presents it at CWC and takes delivery of his commodity
Commodity Depository 1. The Commodity Depository account can be opened by individuals, partnerships firms, companies, etc. unlike in the capital market segment where Partnership firms cannot open the demat account in the firm name. 2. The content of the Agreements shall differ for each category 3. Depository charges differ for each category 4. Only warehouse electronic receipts are considered for the purpose debiting / crediting depository account 5. Commodities depository account can be availed at both the Depositories i.e. NSDL and CDSL 6. The Commodities Identification number i.e. INC is akin to the ISIN The Commodities Depository account may be credited in the following situations: 1. Demat 2. Revalidation 3. Actual purchase from market.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 18 | P a g e Demat: If the customer has some commodities with him, he may unload it in the warehouse and take the warehouse receipt after due verification of the Assayer appointed by NCDEX and MCX . To convert the warehouse receipt in demat form, he has to fill up necessary details in the Commodity Deposit Form available in the Warehouse. The Warehouse shall inform the Registrar and Transfer Agents (RTA) with the required details who shall then arrange to credit the depository account of the customer through NSDL/CDSL. Currently, there is only one RTA for commodities i.e. Karvy Revalidation: If the client doesnt wish to open the DP account then he may trade directly in the market with the physical warehouse receipts ( in MCX AND NMC) Normally the warehouse receipt (whether demat or physical) is for duration of 3 months. After the expiry of 3 months the owner of the receipt needs to revalidate it. He will request the Warehouse to revalidate the receipt. The assayer will examine the commodity and take into account the wear and tear (normal as well as abnormal) for revalidating the warehouse receipt. PORTFOLIO MANAGEMENT SERVICES KIFS, a SEBI registered Portfolio Manager (Reg. No.INP000000316) offers discretionary portfolio management services. KIFS has a team of experts who carefully take investment decisions based on the clients' objectives. The Portfolio Management team has a successful track record of more than 10 years in the capital market. The team has access to KIFS's strong Equity Research, and Fundamental & Technical Analysis . Investment Objective
To generate medium to long-term capital growth (2-3 years) by identifying undervalued stocks and those with growth opportunities from a select list of well researched stocks.
Strategy
Identifying growth stocks from a select list through extensive research.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 19 | P a g e Minimum Investment
Rs.10 lakhs for resident Indians and Rs.25 lakhs for Non-Resident Indians.
Reports
Portfolio and NAV are communicated bi-weekly via e-mail.
Risk factors
As the stocks are normally held for medium to long term, the net asset value will be affected by market volatility.
PMS fee
Option 1: 3% p.a. (charged @0.75% at the end of every quarter on the average of beginning and ending NAV)
Option 2: 1% p.a. (charged @0.25% at the end of every quarter on the average of beginning and ending NAV) and performance fee
Performance fee
20% on gain in NAV over and above 12% p.a. based on the high watermark concept charged at the end of the year or on withdrawal.
DISTRIBUTION SERVICES KIFS undertake the distribution of variety financial instruments such as Mutual Funds, Bonds, Life Insurance products, Fixed Deposits etc. The wealth centre team understands the universe of investment options analyzes the risk and return from these options and recommends investment options to clients to help them achieve their financial goals. KIFS have a tie up with all the Mutual Funds across the country. KIFS offer life insurance products of the following life insurance companies: MetLife India Insurance Company Limited LIC of India ICICI Prudential KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 20 | P a g e For general insurance, KIFS has partnered with the following: Bajaj Allianz General Insurance Company National Insurance Company Ltd KIFS also helps its customers in investing in 8% RBI taxable bonds, Capital gain bonds (Sec 54 EC bonds), fixed deposits (KPFC, KTDFC) etc. through its tie- up with the required organizations. RESEARCH KIFS have a team of experts who track the markets and related events very closely. Sophisticated tools are used for technical analysis and research to offer recommendations, technical analysis and research reports. Each day KIFS Research team brings to table information that helps you profit from it. Daily Market View: Technical Analysis - Market, a daily report on markets gives a clear picture on the expected market movements (NSE and BSE). It also covers the key support and resistance levels. It also provides clues on market direction and the expected profit booking levels. Daily Stock View: Technical Analysis - Stocks, a daily report on the stocks for the day. These are prepared with "Departure Oscillators" tool that have a high degree of accuracy on stock readings; which in turn helps investors, day traders, High Net worth Individual's with stock ideas that may benefit them. F&O Analysis: F&O Analysis is a daily report that gives near 100% accurate reading on both Futures and Options. Tools such as PC ratios, Open Interest and volatility combined with RSI indicator are used for the purpose. It is helpful for day traders, long-term holders and HNI clients SMS: SMS alerts are sent to those who have registered for the service. These are prepared with utmost care, ensuring that it is suitable for both the Bulls and the KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 21 | P a g e Bears. It provides instantaneous buy/sell/hold recommendations purely on technicals. It also provides option strategies with the use of Implied/Historical Volatility study. SMS is especially handy for Index Traders. Geo Data: Geo Data is a monthly research report covering most financial instruments. It is quite comprehensive, and provides in-depth information on stocks to watch out for, recommended Mutual Funds, performance of schemes, Futures and Options update and a review of the commodities markets.
ACCOUNT OPENING FOR DEMAT & TRADING Documents to be submitted for registration you need to submit the documents mentioned below while opening an Online Trading and Demat account. It helps in faster registration. Trading account is opened in single name while demat account may be opened in joint name with a maximum of 3 holders. It is however essential that the customer maintains a demat account with KIFS for availing the online Trading facility. In case the permanent address is different from the correspondence address then the proof of address has to be submitted for separately for each of them from the list given below.
For a two-in-one account: i.e. Trading and Demat Two recent passport size photographs Proof of Bank Account: Any one of the following may be submitted 1. Copy of Bank Statement 2. Copy of first page of the Bank Pass Book. 3. A cancelled cheque (only if the account holder's name is printed on it) Copy of Client Master towards proof of an existing Demat Account DP Proof in case of DP's other than KIFS DP Proof of Identity: Pan Card KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 22 | P a g e Proof of Address: Any one of the following may be submitted 1. Passport copy 2. Voter Id card copy 3. Driving license copy 4. Bank Pass book copy 5. Verified copies of a. Electricity bill or telephone bill in the customers name (not more than two months old) b. Leave and license agreement/agreement for sale. 6. Copy of Ration Card 7. Identity card/document with address, issued by a. Central/State government and its departments b. Statutory /Regulatory Authorities c. Public Sector Undertakings d. Scheduled Commercial banks e. Public Financial Institutions f. Colleges affiliated to Universities g. Professional Bodies such as ICAI, ICWAI, ICSI, Bar council etc to their Members ACCOUNT OPENING PROCEDURE 1. You need to fill and / or sign following documents The 'Know Your Client' form, also attach all the documents as mentioned in the checklist, The client agreement, Power of Attorney for trading account Power of attorney for DP account
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 23 | P a g e 2. You may then draw a cheque of Rs.500/- in favor of 'KIFS Financial Services Ltd.' towards the account opening charges. In case you need any assistance in filling up the form and understanding the documents you may want to contact our marketing executive / branch official. After you have submitted all the documents and the cheque these will be processed at centralized 'Client Registration Department' at the Head Office in Kochi, Kerala. If any document / information is missing then you will be contacted by the concerned IT executive or the branch. If all the documents / information are correct then your account will be activated and an email will be sent to your registered email id (as mentioned in your account opening documents) with the welcome letter, your user id and password. You can login to the KIFS system immediately on receipt of the user ID and Password. On logging in for the first time you have to necessarily change your password for security reasons.
KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 24 | P a g e BROKERAGE RATES AT KIFS Brokerage rates applicable w.e.f. December 1, 2010 for Online Retail Trading ** provided linked demat account is with KIFS Financial Services Ltd. Delivery-based Volumes * Volume *(Rs.) New Brokerage Rate < 10 lacs 0.30% (current) > 10 lac < 50 lac 0.25% > 50 lac < 1 cr 0.20% > 1 cr < 2 cr 0.15% > 2 cr 0.10%
KESs Institute of Excellence in Management Science, Hubli 25 | P a g e F&O Volumes * Volume *(Rs.) New Brokerage(per lot)(Rs.) < 9 cr 75(current) > 9 cr < 18 cr 65 > 18cr < 27 cr 50 > 27cr < 36 cr 40 > 36 cr 30 * Applicable for a calendar month and should be achieved through online channels.
** Applicable to Ordinary Resident account only # Subject to minimum brokerage as under: Rs.20 per Contract or 1 paisa per share whichever is higher subject to a maximum of 2.5% per share. In case the contract note is delivered by post then Rs.20/- per Contract or 5 paisa per share whichever is higher subject to a maximum of 2.5% per share.
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KESs Institute of Excellence in Management Science, Hubli 26 | P a g e Overview of different asset classes An asset class is a grouping of similar investments whose prices tend to move together. Asset classes can be defined on a very general level, such as stocks or on a more specific level, such as American silver producing companies. The concept of asset classes is important because one of the goals when building an investment portfolio is to use different asset classes which are not correlated with each other. It is critical to know what type of asset classes you currently own to see if your asset allocation (amounts of each asset class) is appropriate.
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KESs Institute of Excellence in Management Science, Hubli 27 | P a g e INVESTMENT OPTIONS FOR INVESTORS 1. Life Insurance: Life insurance is a contract for payment of a sum of money to the person assured (or to the person entitled to receive the same) on the happenings of event insured against. Usually the contract provides for the payment of an amount on the date of maturity or at specified dates at periodic intervals or if unfortunate death occurs. Among other things, the contracts also provide for the payment of premium periodically to the corporation by the policy holders. Life insurance eliminates risk. There are many variants of a life insurance policy: 1. Whole Life Assurance Plans: These are low-cost insurance plans where the sum assured is payable on the death of the insured 2. Endowment Assurance Plans: Under these plans, the sum assured is pay-able on the maturity of the policy or in case of death of the insured individual before maturity of the policy. 3. Term Assurance Plans: Under these plans, the sum assured is payable only on the death of the insured individual before expiry of the policy. 4. Pension Plans: These plans provide for either immediate or deferred pension for life. The pension payments are made till the death of the annuitant (person who has a pension plan) unless the policy has provision of guaranteed period. Life Insurance Corporation (LIC) is a government company. Till the year 2000, the LIC was the sole provider of life insurance policies to the Indian public. However, the Insurance Regulatory & Development Authority (IRDA) has now issued licenses to private companies to conduct the business of life insurance. Some of the major private players in the sector are:
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KESs Institute of Excellence in Management Science, Hubli 28 | P a g e Bajaj Allianz Life Insurance Corporation Birla Sun Life Insurance Co. Ltd. HDFC Standard Life Insurance Co. Ltd. ICICI Prudential Life Insurance Co. Ltd. ING Vysya Life Insurance Co. Pvt. Ltd. MAX New York Life Insurance Co. Ltd. MetLife India Insurance Co. Pvt. Ltd. Kotak Mahindra Old Mutual Life Insurance Co. Ltd. SBI Life Insurance Co. Ltd. TATA AIG Life Insurance Co. Ltd. AMP Sanmar Assurance Co. Ltd. AVIVA Life Insurance Co. Pvt. Ltd. Sahara India Life Insurance Co. Ltd. Shriram Life Insurance Co. Ltd.
The major advantages of life insurance are given below: Protection: Saving through life insurance guarantees full protection against risk of death of the saver. The full assured sum is paid, whereas in other schemes only the amount saved is paid. Easy payments: For the salaried people the salary savings schemes are introduced. Further, there is an easy installment facility method of payment through monthly, quarterly, half yearly or yearly mode. Liquidity: Loans can be raised on the security of the policy.
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KESs Institute of Excellence in Management Science, Hubli 29 | P a g e Tax relief: Tax relief in Income Tax and Wealth Tax is available for amounts paid by way of premium for life insurance subject to the tax rates in force. 2. Mutual Funds: Investment companies or investment trusts obtain funds from large number of investors through sale of units. The funds collected from the investors are placed under professional management for the benefit of the investors. The mutual funds are broadly classified into open-ended scheme and close-ended scheme.
Open-ended scheme: The open-ended scheme offers its units on a continuous basis and accepts funds from investors continuously. Repurchase is carried out on a continuing basis thus, helping the investors to withdraw their money at any time. In other words, there is an uninterrupted entry and exit into the funds. The open-end scheme has no maturity period and they are not listed in the stock exchanges. Investor can deal directly with the mutual fund for investment as well as redemption. The open-ended fund provides liquidity to the investors since the repurchase facility is available. Repurchase price is fixed on the basis of net asset value of the unit. In 1998 the open-ended schemes have crossed 80 in number.
Closed-ended funds: The close-ended funds have a fixed maturity period. The first time investments are made when the close end scheme is kept open for a limited period. Once closed, the units are listed on a stock exchange. Investors can buy and sell their units only through stock exchanges. The demand and supply factors influence the prices of the KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 30 | P a g e units. The investors expectation also affects unit prices. The market price may not be the same as the net asset value. Sometimes mutual funds with the features of close-ended and open-ended schemes have been launched, known as interval funds. They can be listed in the stock exchange or may be available for repurchase during specific periods at net asset value or relative prices. Interval Funds Interval funds combine the features of open-ended and close-ended schemes. They are open for sale or redemption during pre-determined intervals at NAV related prices. Let us now classify Mutual Fund Schemes on the Basis of its Investment Objective: Growth Funds The aim of growth funds is to provide capital appreciation over the medium to long-term. Such schemes normally invest a majority of their corpus in equities. It has been proven that returns from stocks, have outperformed most other kind of investments held over the long term. Growth schemes are ideal for investors having a long-term outlook seeking growth over a period of time. Income Funds The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income Funds are ideal for capital stability and regular income. Balanced Funds The aim of balanced funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. In a rising stock market, the NAV of these schemes may not normally keep pace, or fall equally when the market falls. These are ideal for investors looking for a combination of income and moderate growth. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 31 | P a g e TAX IMPLICATIONS ON MUTUAL FUNDS While dividend paid on closed-ended mutual funds is fully tax exempt, on redemption or sale of units in the secondary market, your realization will attract short-term capital gains tax of 10 per cent. However, you can save tax by investing in Equity-Linked Savings Scheme (ELSS) under Section 88 of the Income Tax Act, 1961, according to which 20 per cent of the amount invested in ELSS which have a lock-in period of 3 years-can be deducted from your tax liability subject to a maximum investment of Rs.10,000 per year. Also available under Section 88 are two pension plans: Unit Trust of Indias Retirement Benefit Unit Plan (RBP) and Kothari Pioneers Pension Plan. 3. Equity Shares: Equity shares are commonly referred to common stock or ordinary shares. Even though the words shares and stocks are interchangeably used, there is difference between them. Share capital of a company is divided into a no. of small units of equal value called shares. The term stock is the aggregate of a members fully paid up shares of equal value merged into one fund. It is a set of shares put together in a bundle. The stock is expressed in terms of money and not as many shares. Stock can be divided into fractions of any amount and such fractions may be transferred like shares. Equity shares have the following rights according to section 85(2) of the companys act 1956. Right to vote at the general body meetings of the company. Right to control the management of the company. Right to share in the profits in the firm of dividends and bonus shares. Right to claim on the residual after repayment of all the claims in the case of winding of the company. Right of pre-emption in the matter of issue of new capital. Right to apply to court if there is any discrepancy in the rights set aside. Right to receive a copy of the statutory report, copies of annual accounts along with audited report. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 32 | P a g e Right to apply the central government to call an annual when a company fails to call such a meeting. Right to apply the Company Law Board for calling an extraordinary general meeting. In a limited company the equity shareholders are liable to pay the companys debit only to the extent of their share in the paid up capital. The equity shares have certain advantages. The main advantages are Capital Appreciation Limited liability Free tradability Tax advantages (in certain cases) and Hedge against inflation. TAX IMPLICATIONS ON EQUITY SHARES While dividend is not taxable at the hands of the investor, capital gains are. When you sell your shares at a profit, it attracts a capital gains tax. Gains realized within one year of purchase of shares come under the short-term capital gains tax, and are included in gross taxable income. If the duration is more than one year, it is termed as long-term capital gains tax. The rate is 10 percent for short-term capital gains and nil for long-term capital gains (long-term capital gains is exempted totally).
4. Bonds: Bond is a long term debt instrument that promises to pay a fixed annual sum as interest for specified period of time. The basic features of the bond are given below. Bonds have face value. The face value is called par value. The bonds may be issued at par value or at discount. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 33 | P a g e The interest rate is fixed sometimes it may be variable at as in the case of floating rate bond. Interest is paid semi-annually or annually. The interest rate is known as coupon rate. The interest rate is specified in the certificate. The maturity date of the bond is usually specified at the issue time except in the case of perpetual bonds. The redemption value is also stated in the bonds. The redemption value may at par value or at premium. Bonds are traded in the stock market. When they are traded the market value may be at par or at premium or at discount. The market value and redemption value need not be the same. The different bonds are: Secured bonds and unsecured bonds Perpetual bonds and redeemable bonds Fixed interest rate bonds and floating interest bonds Zero coupon bonds Deep discount bonds Capital indexed bonds Debentures: According to Companies Act 1956 debenture includes debenture stock, bonds and any other securities of company, whether constituting a charge on the assets of the company or not. Debentures are generally issued by the private sector companies as a long-term promissory note fro raising loan capital. The company promises to pay interest and principal as stipulated. Bond is an alternative form of debenture in India. Public sector companies and financial institutions issue bonds. Some of the characteristic features of debentures are from it is given in the form of certificate of indebtedness by the company specifying the date of redemption and interest rate.
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KESs Institute of Excellence in Management Science, Hubli 34 | P a g e Interest: The rate of interest is fixed at the time of issue itself which is known as contractual or coupon rate of interest. Interest is paid as a percentage of the par. Redemption As earlier the redemption date would be specified in the issue itself. The maturity period may range from 5 years to 10 years in India. They may be redeemed in installments. Redemption is done through a creation of sinking fund by the company. A trustee In charge of the fund buys the debentures either from the market or owners. Creation of the sinking fund eliminates the risk of facing financial difficulty at the time of redemption because redemption requires huge sum. Buy back provisions help the company to redeem the debentures at a special price before the maturity date. Usually the special price is higher than the par value of the debenture. Indenture It is a trust deed between the company issuing debenture and the debenture trustee who represents the debenture holders. The trustee takes the responsibility of protecting the interest of the debenture holders and ensures that the company fulfills the contractual obligations. Financial institutions, banks, insurance companies or firm attorneies act s trustees to the investors.
In the indenture the terms of the agreement, description of debentures, rights if the debenture holders, rights of the issuing company and the responsibilities of the company are specified clearly. Debentures are classified on the basis of the security and convertibility as KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 35 | P a g e Secured or unsecured Fully convertible debenture Partly convertible debenture Non-convertible debenture TAX IMPLICATIONS ON BONDS There are specific tax saving bonds in the market that offer various concessions and tax-breaks. Tax-free bonds offer tax relief under Section 88 of the Income Tax Act, 1961. Interest income from bonds, up to a limit of Rs.12,000, is exempt under section 80L of the Income tax Act, plus Rs.3,000 exclusively for interest from government securities. However, if you sell bonds in the secondary market, any capital appreciation is subject to the Capital Gains Tax. Tax-Saving Bonds Some bonds have a special provision that allows the investor to save on tax. These are termed as Tax-Saving Bonds, and are widely used by individual investors as a tax-saving tool. Examples of such bonds are: Infrastructure Bonds under Section 88 of the Income Tax Act, 1961 Capital Gains Bonds under Section 54EC of the Income Tax Act, 1961 RBI Savings Bonds (erstwhile, RBI Relief Bonds) Tax Saving Infrastructure Bonds Infrastructure bonds are available through issues of ICICI Bank and IDBI, brought out in the name of ICICI Safety Bonds and IDBI Flexi bonds. These provide tax-saving benefits under Section 88 of the Income Tax Act, 1961, up to an investment of Rs.1, 00,000, subject to the bonds being held for a minimum period of three years from the date of allotment.
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KESs Institute of Excellence in Management Science, Hubli 36 | P a g e Tax Saving Capital Gains Bonds Investments in bonds issued by the Rural Electrification Corporation (REC) are at present eligible for capital gains tax savings. Gains made out of a capital transfer need to be invested in the above bonds within six months of sale of capital assets in order for the proceeds of such sale to be exempt from capital gains tax.
RBI Savings Bonds RBI Savings Bonds are an instrument that are issued by the RBI, and currently has two options one carrying an 8 percent rate of interest per annum, which is taxable and the other one carries a 6.5 percent (tax-free) interest per annum. The interest is compounded half-yearly and there is no maximum limit for investment in these bonds. The maturity period of the 8 percent (taxable) bond is six years and that of the 6.5 percent (tax-free) bond is five years 5. Real Estate: The real estate market offers a high return to the investors. The word real estate means land and buildings. There is a normal notion that the price of the real estate has increased by more than 12 percent over the past ten years. The population growth and the exodus of people towards the urban cities have made the prices to increase manifold. Recently, the recession in the economy has affected the real estate. Prices marked a substantial fall in 1998 from the 1997 prices. Reasons for investing in real estate are given below: High capital appreciation compared to gold or silver particularly in the urban area. Availability of loans for the construction of houses. The 1999-2000 budget provides huge incentives to the middle class to avail of housing loans. Scheduled banks now have to disburse 3 percent of their incremental deposits in housing finance. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 37 | P a g e Tax rebate is given to the interest paid on the housing loans. Further Rs.75, 000 tax rebate on a loan up to Rs.5 lakhs which is availed of after April 1999. If an investor invests in a house for about Rs.6-7lakh, he provides a seed capital of about Rs.1-2 lakh. The Rs.5 lakh loan, which draws an interest rate of 15 percent, will work out to be less than 9.6 percent because of the Rs.75, 000 exempted from tax annually. In assessing the wealth tax, the value of the residential home is estimated at its historical cost and not on its present market value. The possession of a house gives an investor a psychologically secure feeling and a standing among his friends and relatives. Apart from making investment in the residential houses, the people in the higher income bracket invest their money in time share plans of the holiday resorts and land situated near the city limit with the anticipation of a capital appreciation. Farm houses and plantations also fall in the line. In spite of the fast capital appreciation investors generally do not invest in the real estate apart in the real estate apart from owning one or two houses. The reasons are:
Requirement of huge capital: To purchase a land or house in the urban area, the investor needs money in lakhs whereas he can buy equity, gold or other form of investment by investing thousands of rupees. Malpractices: often-gullible investors become cheated in the purchase of land. The properties already sold are resold to the investors. The investor has to lose the hard-earned money. Restriction of the purchase: The land ceiling Act restricts the purchase of agriculture land beyond a limit. Lack of liquidity: If the investor wants to sell the property, he cannot immediately realize the money. The waiting period may be months or years. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 38 | P a g e The points to be taken care of while purchasing the real estate are: The plots should be approved by the local authority because on the un approved layout construction of a house is not permitted.
Possibility of capital appreciation. It depends upon the locality and facilities of the site.
Originality of title deeds. The site should be free from encumbrance. Encumbrance certificate for a minimum period of latest 15 years should be got from the registrars office. Plinth area should be verified.
Earliest records of securities trading in India are available from the end of eighteenth century. Before 1850 there was business conducted in Mumbai in the share of bank and the securities of east India Company, which were consider as securities for buying, selling and exchange. The share of commercial bank, mercantile bank and bank of Bombay were some of the prominent shares traded. The business was conducted under a sprawling banyan tree in front of the town hall, which is known as horniman Circle Park. In 1850, the companies act was passed and that heralded the commencement of joint stock companies in India. It was the American civil war that helped Indians to established broking business. The leading broker, Shri Premchand Roichand designed and developed a procedure to be followed while dealing in shares. In 1874 the dalal street became the prominent place for meeting of the brokers to conduct business. The broker organized an association on 9 th
July 1875 known as native share and stock broker association to protect the character, status of the native brokers. That was the foundation of the stock exchange, Mumbai. The exchange was established with 318 members. The stock exchange, Mumbai did not have to look back as it started raiding high ladder of growth. The stock exchange KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 39 | P a g e is a market place, like any other centralize market where buyers and sellers can transact business in securities at given point of a time in a convenient and competitive manner at the fairest possible prizes. In Jan 1899, Mr. James M Mac Len, MP inaugurated the brokers hall. After the first world war the stock exchange was housed properly at an old building near the Town hall in1928, the present premises where acquired surrounded by Dalal street, Mumbai samachar marg and hamam street. A new building a present location was constructed and was occupied on 1 st Dec 1930.In 1950 the regulation of business in securities and stock exchange became an exclusively central Government sub following adaptation of constitution of India. In 1956, the security contract act was passed by the parliament of India. to regulate the securities market, SEBI was initial established on Oct 12 1988 as an interim board under control of ministry of finance, Government of India. In 1992, SEBI act was passed through which the SEBI came into existence. Hence SEBI acquired statutory status on 30 th Jan 1992 by passing an ordinance, which was subsequently converted into an act passed by the parliament on April 4 th 1992. The main objective of SEBI is to protect the interest of investor, regulate and promote the capital market by creating an environment, which would facilitate mobilization of resource through efficient allocation and to generate confidents among the investor. As such SEBI is responsible for regulating stock exchanges and other intermediaries who may be associated with capital market and the process of the public companies rising capital by issuing instrument that will be traded on capital market. SEBI has been empowered by the central government to develop and regulate capital markets in India and there by protect the interest of investors. In 1992, OTCI (Over the counter exchange of India) came in to existent where equities of small companies are listed. In 1994, NSE(national stock exchange) came into existent which brought an and to the open but cry system of trading securities which was in vogue for 150 years, and introduced screen based trading system. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 40 | P a g e BSE (Bombay stock exchange) online trading system was launched on March 14 th 1995. Online trading can be done who are authorized by the stock exchange. In screen based trading, investor place there buy and sale orders with brokers whose enter the orders in the automated trading system. When buy and sale order matches, a trade is generated and trade details are given to respective brokers. After a trade has taken place, the buyer as to pay money and seller has to deliver the securities. On the stock exchange hundred & thousands of trades take place every day. Buyers and sellers are spread over a large geographical area. Due to these problems completing a trade by paying cash to the seller & securities to buyer immediately on execution of trades on an individually basis is virtually impossible. So the exchange allows trading to take place for a specified period which is called trading cycle. A unique settlement number identifies each trading cycle. Once the trading period is over, buyer broker pays money and seller broker delivers securities to the CC/CH on a predefined day. This process is called as pay in, after pay in securities are given to the buyer brokers and money is given to seller brokers by the CC/CH, this process is called as pay out. This process of pay in & payout is called settlement. Initially the trading cycle was of one fortnight, which was reduced to one week. The transactions entered during this period, of a fortnight or one week, were used to be settled either by payment for purchase or by delivery of shares certificates sold on notified days one fortnight or one week of expiry of the trading. The settlement schedules are made known to the members of the exchange in advance. The weekly settlement period was reduced by daily settlement popularly known as rolling settlement, in which each day is separate trading day. With effect from December 2001, t+% rolling settlement cycle was introduced for all equities where T is the trading day and pay in & pay out for the settlement was done on the 5 th business day after the trade day.
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KESs Institute of Excellence in Management Science, Hubli 41 | P a g e 6. GOLD
Of all the choice of investments available, can this yellow metal take pride of the place as a financial investment alternative option? Opinion on the subject of gold is divided, on several issues are the yields from an investment in gold positive? Are its uses productive? Is the strain on the economy evident? Should gold be allowed to be brought into India freely for purposes of investment or otherwise. Well, yields or no yields, there is hardly an Indian household that can ignore gold and keep its entire savings in financial assets alone. Every investment has an intrinsic appeal to its holder and to suggest that hundreds of tones of gold is bought every year without regard to its economic value is to suggest that Indians dont act rationally. The fact is, they do and probably do it better than others. Indians faith in GOD and GOLD dates back to the Vedic times; they worshipped both. According to the World Gold Council Report, India stands today as the worlds largest single market for gold consumption. In developing countries, people have often trusted gold as a better investment than bonds and stocks. Gold is an important and popular investment for many reasons:
In many countries gold remains an integral part of social and religious customs, besides being the basic form of saving. Shakespeare called it the saint seducing gold. Superstition about the healing powers of gold persists. Ayurvedic medicine in India recommends gold powder and pills for many ailments. Gold is indestructible. It does not tarnish and is also not corroded by acid except by a mixture of nitric and hydrochloric acids. Gold has aesthetic appeal. Its beauty recommends it for ornament making above all other metals. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 42 | P a g e Gold is so malleable that one ounce of the metal can be beaten into a sheet covering nearly a hundred square feet. Gold is so ductile that one ounce of it can be drawn into fifty miles of thin gold wire. Gold is an excellent conductor of electricity; a microscopic circuit of liquid gold printed on a ceramic strip saves miles of wiring in a computer. Gold is so highly valued that a single smuggler can carry gold worth Rs.50 lac underneath his shirt. Gold is so dense that all the tones of gold, which has been estimated; to be mined through history could be transported by one single modern super tanker. Finally, gold is scam-free. So far, there have been no Mundra type or Mehta type scams in gold.
Apparently, gold is the only product, which has an investment as well as ornamental value. Going beyond the narrow logic of yield and maturity values, thus, the lure of this yellow metal continues.
7. Company Fixed Deposits Fixed deposits in companies that earn a fixed rate of return over a period of time are called Company Fixed Deposits. Financial institutions and Non-Banking Finance Companies (NBFCs) also accept such deposits. Deposits thus mobilized are governed by the Companies Act under Section 58A. These deposits are unsecured, i.e., if the company defaults, the investor cannot sell the company to recover his capital, thus making them a risky investment option. NBFCs are small organizations, and have modest fixed and manpower costs. Therefore, they can pass on the benefits to the investor in the form of a higher rate of interest. NBFCs suffer from a credibility crisis. So be absolutely sure to check the credit rating. AAA rating is the safest. According to latest RBI guidelines, NBFCs and companies cannot offer more than 14 per cent interest on public deposits KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 43 | P a g e 8. BANK DEPOSITS
When you deposit a certain sum in a bank with a fixed rate of interest and a specified time period, it is called a bank Fixed Deposit (FD). At maturity, you are entitled to receive the principal amount as well as the interest earned at the pre-specified rate during that period. The rate of interest for Bank Fixed Deposits varies between 4 and 6 per cent, depending on the maturity period of the FD and the amount invested. The interest can be calculated monthly, quarterly, half-yearly, or annually, and varies from bank to bank. They are one the most common savings avenue, and account for a substantial portion of an average investors savings. The facilities vary from bank to bank. Some services offered are withdrawal through cheques on maturity; break deposit through premature withdrawal; and overdraft facility etc.
PROVIDENT FUND Employees Provident Fund Scheme The Employees Provident Fund (EPF) was first established on 1 October 1951 under the EPF Ordinance 1951 which was subsequently known as the EPF Act 1951. The EPF Act 1951 has since then been replaced by the EPF Act 1991 in June 1991. Besides being the worlds oldest national provident fund, EPF is also one of the most successful funds of its kind, providing a compulsory savings scheme to ensure security and well being in old age. The first contributions were received in July 1952, totaling Rs.2.6 million. The EPF is under the jurisdiction of a Board, which consists of 20 members who are appointed by the Minister of Finance. The EPF Board is made up of a Chairman, a Deputy Chairman and 18 other members, which comprise of 5 Government Representatives 5 Employer Representatives KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 44 | P a g e 5 Employee Representatives 3 Professional Representatives The EPF Board is responsible for formulating EPF policies and to ensure implementation of these policies. Apart from the Board, the EPF also has an Investment Panel, which is responsible to formulate EPF investment policies. The Minister of Finance also appoints the members of the Investment Panel. The Panel is made up of a Chairman, a representative of the Governor of Bank Negara Malaysia, a representative from the Ministry of Finance and three others who are experts in financial, business and investment related matters. The EPF Headquarters is situated in the EPF building in Kuala Lumpur. Apart from the Headquarters, the EPF has 14 State Offices and 33 Local Offices throughout the country. Public Provident Fund (PPF) A Public Provident Fund (PPF) is a long-term savings plan with powerful tax benefits. Your money grows @ 8 per cent per annum, and this is guaranteed by the Government of India (GOI). You may consider this option if you are not looking for short-term liquidity or regular income. Normal maturity period is 15 years from the close of the financial year in which the initial subscription was made. Maturity values for your PPF account depending on what you invest each year.
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KESs Institute of Excellence in Management Science, Hubli 45 | P a g e 1 LITERATURE REVIEW 2.1 Introduction : The role of liquidity in determining asset prices is the subject of a vast research literature spanning a period of more than thirty years. The primary purpose of this report is to provide a summary of the main conclusions of researchers albeit with the objective of refining methods for ongoing estimation of the price of liquidity in specific asset markets. Given the volume of research which has been produced on this topic, it is not practical to review every reference in detail so we have concentrated our effort on recognised seminal work, papers that may have practical application or which provide useful insight into market dynamics and very recent research which analyses market behaviour over the past two years. This price of liquidity the liquidity premium and its variability is currently the subject of enormous interest from accountants, actuaries, financial intermediaries and regulators given its role in determining prices, fair (i.e. market consistent) values for known liabilities and its impact on risk capital. 2.2 Various sources in relation with the project : The main content of the paper is broken down into three sections. In section 2 we review definitions and sources of illiquidity. Section 3 summarises the theoretical evidence for liquidity premia and in section 4 the empirical evidence is summarised with a particular focus on corporate bond markets. An extensive (although not exhaustive) list of references is provided. The research studies are summarised in Table 2.1 and illustrated graphically in Figure 2.2. Liquidity Researchers identify two distinct types of liquidity. Trading liquidity refers to the ease with which an asset can be traded. Funding liquidity concerns the access of traders or firms to funding. We are concerned with the effect of trading liquidity on asset prices. In practice, market and funding liquidity will be linked - particularly during periods of market stress. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 46 | P a g e Market microstructure theory is concerned with the trading mechanisms and processes of markets and how they affect transaction costs and other characteristics of markets. The quality of a market is judged by reference to three characteristics tightness (measured by the size of spreads); depth (measured by trade impact); resilience (measured by the speed at which trade impact dissipates). These ideas are important for the purposes of understanding liquidity premia since, as we shall see, one of the primary drivers of liquidity premia are market transaction costs. The literature identifies and tests the usefulness of various proxy measures of trading costs including dealing spreads, measures of individual trade impact and activity, asset size and asset volatility. All of these turn out to be helpful in quantifying real-world liquidity premia. Liquidity and asset prices - theory Asset pricing theory tells us that, in a frictionless market (i.e. where there are no trading costs) two assets with identical cash flows will have the same price. If this were not the case arbitrage profits could be realised. However, financial economists (see for example Amihud et al. [1986, 2005]) discuss pricing models of increasing sophistication in which investors face frictional costs where prices must be adjusted downwards and returns adjusted upwards to compensate investors for bearing illiquidity. They conclude that a liquidity premium may be observed in the pricing of any asset in a market subject to trading costs. The literature also considers so-called clientele effects whereby different groups of investors have different expected holding periods i.e. they face different probabilities of suffering a liquidity shock which requires them to sell an asset. In the extreme, these investors are characterised as buy-and-hold (with no immediate needs for liquidity) and mark-to-market with a need to trade specified by a simple trading intensity or liquidity policy. The equilibrium that emerges in this class of models shows that investors with the shortest holding periods hold the assets with the lowest trading costs and investors with the longest holding periods hold assets with the highest trading costs. Correspondingly, KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 47 | P a g e they show that illiquid assets must offer higher returns relative to more liquid assets. The theoretical research tells us we should expect investors with long horizons to earn liquidity premia by holding relatively illiquid assets. The (absolute) liquidity premium for a given security (or portfolio) can be thought of as being the price discount or excess return/yield offered by the security relative to some hypothetical, perfectly liquid security with otherwise equivalent characteristics. In practice these absolute liquidity premia are difficult to measure since all assets, with the exception of cash in the reference currency of the investor, are subject to illiquidity in varying degrees. In practice, researchers choose to define relative liquidity premia as the difference in price between two otherwise identical securities with differing levels of liquidity. At any point in time, different assets and asset portfolios will contain different liquidity premia dependent on their fundamental liquidity characteristics and market conditions. We can think of a family of spreads (or price discounts) for different asset pools exhibiting varying degrees of illiquidity. In practical terms, this means that measures of liquidity premia will therefore be required to reference some benchmark asset pool. Portfolios of corporate bonds exhibit low levels of liquidity relative to government bonds and offer a liquidity premium as a result. However, corporate bonds do offer better liquidity than some financial assets so their associated liquidity premium should be viewed as one point on a wider spectrum of values. Liquidity and asset prices - evidence The theoretical literature of is strongly supported by empirical studies showing that illiquid securities are priced at discounts to identical liquid securities irrespective of the time period studied or the methodology used. In other words, hard-to-trade assets sell at a different price to more liquid assets with otherwise equivalent characteristics. The price of liquidity changes through time. In times of market stress, both the level of illiquidity and the price of liquidity appear to rise. This is consistent with the microstructure theory.As predicted by the theory on clientele effects (the demand from KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 48 | P a g e long-term buy-and-hold investors to hold illiquid assets and earn the liquidity premia), the reward for illiquidity appears to be a decreasing function of transaction cost size. Corporate bonds The consensus from the academic literature seems clear: liquidity premia do exist in corporate bond markets. They can be substantial, but vary significantly through time. A number of different approaches have been adopted to quantify the impact of liquidity on corporate bond prices. Microstructure approaches provide worthwhile insights into why liquidity premia could and should exist in markets with trading frictions, although they tend not to lend themselves well to empirical estimation. Direct approaches (including the CDS approach) involve choosing a pair of assets or asset portfolios which other than liquidity are assumed to be equivalent and then comparing prices, expected returns or yields. Structural model approaches using the Merton model. These are closely related to the direct method in that a corporate bond is compared to the cost of manufacturing an approximately equivalent synthetic position from a risk-free (liquid bond) and an option on the issuing firms total assets. Equities Much of the so-called small-cap effect (the out performance of small companies equity over long horizons) is now attributed to their relative illiquidity compared to larger companies. These equity market liquidity premia have been estimated at 3-8% p.a. across different equity markets. KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 49 | P a g e Government bonds & covered bonds Government bond markets provide a rich information set because researchers are able to compare assets with virtually identical characteristics. The primary focus of researchers has been on US markets where they have estimated liquidity premia in a range of circa10- 50 basis points. Other studies examine the liquidity effect in Japanese treasury markets and Pfandbrief covered bond markets and identify comparable effects on pricing. Other assets In addition to stock and fixed income markets, other empirical studies have analysed the liquidity effect across a variety group of asset classes. The results demonstrate that the discount for illiquidity can be substantial, particularly for transitionally leveraged stock, derivatives, real-estate funds, hedge funds and closed-end funds. Further studies reveal illiquidity effects on the value of currency options, interest rate swap contracts and equity index-linked bonds. Audience This paper should be of interest to all those concerned with the valuation of assets and liabilities where market prices can be demonstrated, in part, to be determined by liquidity factors. Given the ongoing development of market-consistent, fair valuations, the academic consensus will be of interest to accountants, actuaries, financial intermediaries and regulators.
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KESs Institute of Excellence in Management Science, Hubli 50 | P a g e 3 RESEARCH METHODOLOGY 3.1 Introduction : The data in this project is enabling in primary in nature. Interviewing primary and secondary data have been the sources of data. Study derives its data mainly from primary sources of information from the employee of the company and through the questionnaire. This primary data is used to fill in the gaps while preparing this report and to know the latest procedure adopted by the company. 3.2 Nature of study: The study was carried out through primary as well as secondary data.
3.3 Statement of problem : Stock market has been important barometer of Indian economy. Of late higher volatility has lead into the decrease of retail participation. Though overall participation and volume has been consistently maintained but the retail investors are away from the market since 2-3 years. Primarily investments are risky in nature and investors have to consider various factors before investing in investment avenues. Therefore the study aims to educate the investors towards different asset classes. 3.4 Objectives : To know the pattern of investment and factors they consider while investing. To make comparison of different asset classes. To analyze the investors preference for different asset classes. To study the perception towards different asset classes. To educate the investors towards different asset classes.
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KESs Institute of Excellence in Management Science, Hubli 51 | P a g e 3.5 Study of Area : Study is conducted in Hubli city. And the interactions were carried out for 100 respondents.
3.6 Data Collection Method : The information necessary for this research study is collected by tapping primary and secondary sources.
3.7 Primary Data : Questionnaire Interaction with people
3.8 Secondary Data : Company broachers. Company Data. Company Reports. Company Websites. 3.9 Sampling : Sample size : 100 respondents Sample unit : Investors
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KESs Institute of Excellence in Management Science, Hubli 52 | P a g e 3.10 Sampling Method: Convenient sampling
4 DATA ANALYSIS : 1. How much do you save per month ?
Interpretation: From the above data out of 100 respondents, 60 investors are saving their income between 5000 to 10000 income . So it helps them to invest in investment avenues that to decide where to invest.
2 4.00% 9 18.00% 30 60.00% 9 18.00% Rs.15000 above 10000-15000 Rs.5000-10000 Rs. 0 to 5000 How much do you save per month ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 53 | P a g e 2. In which investments avenue are you investing ? Investment avenues Investors Equity 56 Derivative 14 Commodity 36 Mutual fund 14 Insurance 40 Fixed deposit 18 Real estate 36 Gold 26
Interpretation :This above chart shows that majority of the investors i.e 56 respondents are investing in equity . And 36 respondents are investing in real estate 40 respondents are investing insurance and 36 people are investing in commodity.
KESs Institute of Excellence in Management Science, Hubli 54 | P a g e 3. Are you investing in equity ?
Frequency Percent Valid Percent Cumulative Percent Valid Yes 56 56.0 56.0 56.0 No 44 44.0 44.0 100.0 Total 100 100.0 100.0 Interpretation: This chart shows that 56% of the respondents are investing in equity. So we can understand by this they are investing in equity is to get more return. Most of the respondents are believed that investing in equity is subjected to risk and return will be also more.
Are you investing in equity ? No Yes F r e q u e n c y 60 50 40 30 20 10 0 44 44.00% 56 56.00% Are you investing in equity ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 55 | P a g e 4. what parameters do you consider before investing in equity? Frequency Percent Valid Percent Cumulative Percent Valid Safety 12 21.4 21.4 21.4 Risk 28 50.0 50.0 71.4 Return 13 23.2 23.2 94.6 Comfort 3 5.4 5.4 100.0 Total 56 100.0 100.0
Interpretation: This chart shows that 50% of the respondents are considered that investing in equity is risk, as the same way the second highest respondents i.e 32% of respondents believes that investing in equity is return. So by this we can consider this as where there is higher risk there will be a higher return.
what parameters do you consider before investing in equity? Comfort Return Risk Safety F r e q u e n c y 30 20 10 0 3 5.36% 13 23.21% 28 50.00% 12 21.43% what parameters do you consider before investing in equity? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 56 | P a g e 5a) From how many years you are trading in equity investment ?
Frequency Percent Valid Percent Cumulative Percent Valid lessthan a year 16 28.6 28.6 28.6 1--3 years 22 39.3 39.3 67.9 3--5 years 8 14.3 14.3 82.1 5 years & above 10 17.9 17.9 100.0 Total 56 100.0 100.0 Interpretation: 39% of the respondents have been investing in equity between 1 to 3 years. So it clears that more number of investors are preferring to invest in equity. They have considered equity is one of the important investment avenue because of high return associated with stock market. q5a 5 years & above 3--5 years 1--3 years lessthan a year F r e q u e n c y 25 20 15 10 5 0 10 17.86% 8 14.29% 22 39.29% 16 28.57% q5a KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 57 | P a g e 5b) What return do you expect from equity investment ? Frequency Percent Valid Percent Cumulative Percent Valid High 10 17.9 17.9 17.9 Medium 46 82.1 82.1 100.0 Total 56 100.0 100.0 Interpretation: Form the above pie chart we can understand 82 % of the respondents are expecting medium return from equity investment because as the same way risk is also associated with equity investment . so thats why more number of investors are investing in equity.
46 82.14% 10 17.86% Medium High q5b KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 58 | P a g e 5c) What average amount do you invest in Equity Market ? Frequency Percent Valid Percent Cumulative Percent Valid Rs. 5000 34 60.7 60.7 60.7 Rs. 15000 14 25.0 25.0 85.7 Rs. 25000 6 10.7 10.7 96.4 Rs. 35000 & above 2 3.6 3.6 100.0 Total 56 100.0 100.0
Interpretation: From the above chart, out of 100 respondents 61 % of the respondents are investing their average amount Rs. 5000 in equity and 25% of the respondents are investing their average amount of RS. 15000 in equity. q5c Rs. 35000 & above Rs. 25000 Rs. 15000 Rs. 5000 F r e q u e n c y 40 30 20 10 0 2 6 10.71% 14 25.00% 34 60.71% q5c KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 59 | P a g e 5d) What type of trading you do in Equity ?
Frequency Percent Valid Percent Cumulative Percent Valid Short term 12 21.4 21.4 21.4 Long term 14 25.0 25.0 46.4 Intra day 30 53.6 53.6 100.0 Total 56 100.0 100.0
Interpretation: 54% of the investors prefer intra day transaction. As they feel that trading by intraday gives them high and quick and short term gain
30 53.57% 14 25.00% 12 21.43% Intra day Long term Short term q5d KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 60 | P a g e 5e) How do you choose your equity investments (based on) ? Frequency Percent Valid Percent Cumulative Percent Valid Performance 22 39.3 39.3 39.3 Dividend record 16 28.6 28.6 67.9 Bonus / right issue 8 14.3 14.3 82.1 Growth rate of a firm 8 14.3 14.3 96.4 Past record of a firm 2 3.6 3.6 100.0 Total 56 100.0 100.0
Interpretation: The above graph reveals that majority of the investors choose their investments based on performance of a firm. So it shows investors perception towards investment avenue
2 3.57% 8 14.29% 8 14.29% 16 28.57% 22 39.29% Past record of a firm Growth rate of a firm Bonus / right issue Dividend record Performance q5e KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 61 | P a g e 6. Are you investing in commodity ?
Frequency Percent Valid Percent Cumulative Percent Valid Yes 36 36.0 36.0 36.0 No 64 64.0 64.0 100.0 Total 100 100.0 100.0
Interpretation: The above graph reveals that 36% of the investors are investing in commodity market. And 64% of the investors are not investing in commodity market . these investors are believed that investing in commodity is risk. 64 64.00% 36 36.00% No Yes Are you investing in commodity ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 62 | P a g e 7. what parameters do you consider before investing in commodity ?
Interpretation: The above chart shows that majority of the investors consider comfort and return as their parameter before investing in commodity. It shows perception of investors towards particular investment avenue. what parameters do you consider before investing in commodity ? Comfort Return Risk safety F r e q u e n c y 12 10 8 6 4 2 0 11 30.56% 11 30.56% 10 27.78% 4 11.11% what parameters do you consider before investing in commodity ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 63 | P a g e 7a) How did you come to know about Commodity market ?
Frequency Percent Valid Percent Cumulative Percent Valid Through friend 15 41.7 41.7 41.7 Through dealers 11 30.6 30.6 72.2 Through mass media 9 25.0 25.0 97.2 Others 1 2.8 2.8 100.0 Total 36 100.0 100.0
Interpretation : This chart reveals that majority of investors i.e nearly 42% of investors come to know about commodity market through friends. And 30 % investors are come to about commodity market through dealers.
q7a others Through mass media Through dealers Through friend F r e q u e n c y 15 10 5 0 1 2.78% 9 25.00% 11 30.56% 15 41.67% q7a KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 64 | P a g e 7b) How long you are trading in commodity market ?
Frequency Percent Valid Percent Cumulative Percent Valid below 1 year 4 11.1 11.1 11.1 1--2 year 12 33.3 33.3 44.4 2 years & above 20 55.6 55.6 100.0 Total 36 100.0 100.0 Interpretation: This chart shows that majority of the investors are trading from 2 years and above in commodity market. These investors having good knowledge about commodity market.
q7b 2 years & above 1--2 year below 1 year F r e q u e n c y 20 15 10 5 0 20 55.56% 12 33.33% 4 11.11% q7b KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 65 | P a g e 7c) Your awareness of trading in Commodity market ?
Frequency Percent Valid Percent Cumulative Percent Valid Total awareness 4 11.1 11.1 11.1 Good awareness 22 61.1 61.1 72.2 Awareness to some extent 10 27.8 27.8 100.0 Total 36 100.0 100.0 Interpretation: By this chart, we can understand that majority of the investors i.e 61% are having good awareness about trading in commodity market. And 27% of respondents are having awareness to some extent. 10 27.78% 22 61.11% 4 11.11% Awareness to some extent Good awareness Total awareness q7c KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 66 | P a g e 7d) What do you think as the specialty of trading in Commodity market ?
Interpretation: This chart shows that majority of the investors marked that probably they have recommended others to enter into commodity market. 18 50.00% 6 16.67% 10 27.78% 2 5.56% Quality products Low risk Regulated marketing Price hedging q7d KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 67 | P a g e 8) Are you investing in Real estate ?
Frequency Percent Valid Percent Cumulative Percent Valid Yes 36 36.0 36.0 36.0 No 64 64.0 64.0 100.0 Total 100 100.0 100.0
Interpretation: This chart reveals that, majority of the investors i.e 36% investors are preferring to invest in real estate. And 64% of investors are not investing in real estate. Most of these respondents believe that investing in real estate can get more return. Are you investing in real estate ? No Yes F r e q u e n c y 60 40 20 0 64 64.00% 36 36.00% Are you investing in real estate ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 68 | P a g e 9) What parameters do you consider before investing in real esate?
Frequency Percent Valid Percent Cumulative Percent Valid Safety 7 19.4 19.4 19.4 Risk 6 16.7 16.7 36.1 Return 13 36.1 36.1 72.2 Comfort 10 27.8 27.8 100.0 Total 36 100.0 100.0 Interpretation: This chart shows that majority of the investors thinks that return as parameters for investing in real estate. So these investors can get more return on this investment avenues. what parameters do you consider before investing in real estate ? Comfort Return Risk Safety F r e q u e n c y 12.5 10.0 7.5 5.0 2.5 0.0 10 27.78% 13 36.11% 6 16.67% 7 19.44% what parameters do you consider before investing in real estate ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 69 | P a g e 9a) What is your Investment Strategy for Real Estate ?
Frequency Percent Valid Percent Cumulative Percent Valid short term 14 38.9 38.9 38.9 long term 16 44.4 44.4 83.3 both a & b 6 16.7 16.7 100.0 Total 36 100.0 100.0
Interpretation: This chart shows that, majority of the investors i.e 44% of investors having long term strategy for investing in real estate. And 38 % of the investors are having short term strategy and 16% are having both short term and long term strategy for investing in real estate . q9a both a & b long term short term F r e q u e n c y 20 15 10 5 0 6 16.67% 16 44.44% 14 38.89% q9a KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 70 | P a g e 7b) How will you hold Title for your Real Estate Investments ?
Frequency Percent Valid Percent Cumulative Percent Valid sole ownwe 26 72.2 72.2 72.2 Partnership 10 27.8 27.8 100.0 Total 36 100.0 100.0
Interpretation: By this chart we can understand majority of the investors i.e 72% of the investors are sole owner and 28% are partnership hold title for investing in real estate.
q9b partnership sole ownwe F r e q u e n c y 30 20 10 0 10 27.78% 26 72.22% q9b KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 71 | P a g e 7c) How will you finance your Real Estate Investments ?
Interpretation: This chart shows that 50% of the investors are financing for real estate from conventional. And 27 % financing from unconventional. q9c private money loan hard money loan unconventional conventional F r e q u e n c y 20 15 10 5 0 4 11.11% 4 11.11% 10 27.78% 18 50.00% q9c KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 72 | P a g e 9d) Can you please specify the reasons for investment in real estate ? Frequency Percent Valid Percent Cumulative Percent Valid expecting a good long return on investment 9 25.0 25.0 25.0 expecting a good rental return 4 11.1 11.1 36.1 expecting a quick short term return on investment 21 58.3 58.3 94.4 Others 2 5.6 5.6 100.0 Total 36 100.0 100.0 Interpretation: By this chart we can understand majority of the investors i.e 58 % of investors expecting a quick short term rental return for investment in real estate. q9d others expecting a quick short term return on investment expecting a good rental return expecting a good long return on investment F r e q u e n c y 25 20 15 10 5 0 2 5.56% 21 58.33% 4 11.11% 9 25.00% q9d KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 73 | P a g e 10) Which investment avenue do you think best ? Frequency Percent Valid Percent Cumulative Percent Valid Equity 30 30.0 30.0 30.0 Commodity 18 18.0 18.0 48.0 Real estate 52 52.0 52.0 100.0 Total 100 100.0 100.0 Interpretation: This pie chart reveals that . majority of the respondents are considered real estate is the best investment avenue to invest and to get more quick short term return.
which investment avenue do you think best ? Real estate Commodity Equity F r e q u e n c y 60 50 40 30 20 10 0 52 52.00% 18 18.00% 30 30.00% which investment avenue do you think best ? KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 74 | P a g e 5 FINDINGS : 1. 56% of the investors are investing in equity. These majority investors feels that more risky to investing in equity. 2. 82% of the equity investors expecting medium return from equity, because it is having more risk is associated with stock market. 3. 25% of the investors investing their average amount of Rs 15000 in equity market. Because most of the investors are middle class people. 4. 53% of equity investors are using intraday trading, because they feel that market is continues fluctuating. 5. 22% of the equity investors are choosing equity on the basis of performance of a firm 6. 36% of the investors are investing in commodity, because most of them consider return as their parameter. 7. 41% of investors are come to know about commodity market through friends. 8. 61% of the investors are having good awareness about commodity market. So it helps them to trade regularly in commodity market. 9. 18% of the investors have thought commodities are quality products. So they are investing in commodity market. 10. 36% of the investors are trading in commodity market, they consider return as their parameters before investing in commodity market 11. 44% of the investors are having long term strategy for investing in real estate. 12. 72% of investors are holding sole owner title for real estate investment. 13. 50% of the real estate investors financing from conventional for real estate investment. 14. 58% of investors specified reason of expecting a quick short term return on investment of real estate. 15. 52% of the total investors have thought real estate is best investment avenue to invest, we can consider return and comfort as their parameter before investing.
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KESs Institute of Excellence in Management Science, Hubli 75 | P a g e 6 SUGESSTIONS : 1. Majority of the equity share holders feel that investing in equity is risk , so the company need to guide them in a proper manner. 2. Majority of the equity share holders expecting medium return , so the company need to give proper suggestions in investing pattern of equities. So it helps them to expect higher return. 3. The company need to create awareness in the market for commodity market for increase commodity trade. 4. The company need to educate the investors towards different asset classes. 5. SEBI should conduct training programme, so that investors get much about different asset classes. 6. As most of the investors consider return and safety as very important investment parameter while investing , so company should explain to the non investors of equity market about how best return they can earn from different asset classes. 7. Companies should promote its products on a mass scale to increase its client base. 8. Investors should study the plans investment objectives. Take a note of the risks of investing in the plan. And check whether they are comfortable with them.
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KESs Institute of Excellence in Management Science, Hubli 76 | P a g e 7 CONCLUSION : The study was conducted to know the investors preference towards different asset classes. Through this study I found that most the investors know the all the investment options. And investors should know the difference between savings and investment . so it clearly states that investors are educated towards the risk return of the investment, choose to invest in those avenues. And investors also should not invest in single investment avenue.
In todays scenario when all services are going to be online, KIFS securities ltd. is creating awareness about online trading and that client can trade from anywhere the world. And to expand its services still more better, and KIFS can come with few new schemes.
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KESs Institute of Excellence in Management Science, Hubli 77 | P a g e 8 BIBLIOGRAPHY: 8.1 Books and Magazine : Financial market service, Punitavati pandyan Financial Management, Khan and Jain Business Line 8.2 Web Based : www.nseindia.com www.bse.com www.khandwalagroup.com
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KESs Institute of Excellence in Management Science, Hubli 78 | P a g e ANNEXURE I, Jayaprakash, a student of K.E.Ss Institute of Excellence in Management Science, Hubli, studying in second Semester M.B.A, I am conducting a survey on Investment preference for different Asset Classes. as a part of my Project Work. I request you to kindly fill in the following details Name _____________________________________________________________________________ Phone __________________________ Mobile __________________________________ Gender: Male Female Age _______________ Income __________________________
1) How much do you save per month ? a)Rs.0 to 5000 b)Rs.5000 to 10000 c) Rs.10000 to 15000 d)Rs. 15000 & above 2) Your Current Investment is in investment avenues are.
Investment Avenues tick ( ) mark a) Equities b) Derivatives c) Commodities d) Mutual funds e) Insurance f) Fixed deposit g) Real estate h) Gold i) Any other, please specify KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 79 | P a g e 3) What parameters do you consider before investing ? Equity Derivative commodity MF Insurance F D Real estate Gold Safety Risk Return Comfort
4) Are you investing in equity ? if yes go to question 5 a) yes b) no 5) A) From how many years you are trading in equity investment ? a) Less than a year b) 1---3 years c) 3---5 years d) 5 years and above B) What return do you expect from equity investment ? a) High b) medium c) low C) What average amount do you invest in Equity Market ? a) Rs.5000 b) Rs.15000 c) Rs.25000 d)Rs.35000 and above D) What type of trading you do in Equity ? a) Short term b) Long term c) Intra day E) How do you choose your equity investments (based on) ? a) Performance b) Dividend record c) Bonus/Right issue d) Growth rate of a firm e) Firm expansion f) Past record of a firm KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 80 | P a g e 6) Are you investing in commodity ? if yes go to question 7 a) Yes b) No 7 ) A) How did you come to know about Commodity market ? a) Through friend b) Through dealers c) Through mass media d) others B) How long you are trading in commodity market ? a) below 1 years b) 1-2 years c) 2 years & above
C) Your awareness of trading in Commodity market ? a) Total awareness b) Good awareness c) Awareness to some extend d) Unaware
D) What do you think as the specialty of trading in Commodity market ? a) Price hedging b) Regulated marketing c) Low risk d) Quality products E) Would you recommend others to enter into Commodity market ? a) Definitely b) Probably c) Not sure d) Probably not 8) Are you investing in Real Estate ? if yes go to question 9 a) yes b) no KIFS Securities Limited
KESs Institute of Excellence in Management Science, Hubli 81 | P a g e 9) A) What is your Investment Strategy for Real Estate ? a) short term b) long term c) both a&b B) How will you hold Title for your Real Estate Investments ? a) sole owner b) partnership C) How will you finance your Real Estate Investments ? a) conventional b) unconventional c) hard money loan d) private money loan D) Can you please specify the reasons for investment in real estate ? a) expecting a good long return on investment b) expecting good rental return c) expecting a quick short term return on investment d) others
10) Which investment avenue do you think best ? a) Equity b)Commodity c) Real estate d) others