48199552 a Study on Impact of Stock Market Volatility on Individual Investor’s Investment Decisions With Reference to Religare SRIKANTH K MT2 FINAL REPORT

8/12/2019 48199552 a Study on Impact of Stock Market Volatility on Individual Investors Investment Decisions With Reference to Religare SRIKANTH K MT2 FINAL RE

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Management Thesis II

A REPORT

ON

A study on impact of stock market volatility on

individual investors investment decisions with

reference to Religare. Guntur

Under the esteemed guidance of

Mr. D. Sudhir a!u

Faculty Supervisor

Icfai National College Guntur

Su!mitted !"

K.Srikanth

7NBGU00

#


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MANA$EMENT T%ESIS &II

A REPORT

ONA study on impact of stock market volatility on individual

investors investment decisions with reference to Religare.

Guntur

Under the su'er(ision ofMr. D. Sudhir a!uFaculty supervisor

ICF!I N!"I#N!$ C#$$%G% GUN"U&

Su!mitted !"K.Srikanth

7NBGU00

! report su'(itte) in partial fulfill(ent of the re*uire(ents of

"+% ,B! -G&!,

"+% C$!SS #F /001

INC2 GUN"U&

)


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3%C$!&!"I#N

I here!" dec*are that this management thesis entit*ed A stud" on im'act of stoc+ mar+et (o*ati*it"

on indi(idua* in(estor,s in(estment decisions -ith reference to Re*igare. $untur carried out under

the guidance of m" /acu*t" guide Mr. D. Sudhir a!u is m" origina* -or+. This fina* re'ort0 neither

in fu** nor in 'art has !een su!mitted for a-ard of an" other degree of either this uni(ersit" or an"

other uni(ersit".

1.Sri+anth

2N$U334

4


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C%&"IFIC!"%

This is to certif" that the management thesis entit*ed A stud" on im'act of stoc+ mar+et (o*ati*it"

on indi(idua* in(estor,s in(estment decisions -ith reference to Re*igare. $untur a !ona fie*d -or+

of 1.Sri+anth is origina* and has !een done under m" su'er(ision is 'artia* fu*fi**ment for the a-ard

of Masters of usiness Administration . I am '*eased to sa" that his 'erformance during the 'eriod

-as e5treme*" satisfactor".

Date

P*ace6

Dr.M.SUD%A Mr. D. Sudhir

a!u

7enter %ead /acu*t" guide

I7/AI Nationa* 7o**ege I7/AI Nationa* 7o**ege

8


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ACKNOWLEDGEMENTS

I -ish to e5'ress m" sincere gratitude to m" Princi'a* Dr. Sudha of IN7 $UNTUR for gi(ing

me the o''ortunit" to do Management thesis at su'er mar+ets.

It gi(es me '*easure to e5'ress m" most 'rofound regards and sense of great inde!tedness and

sincere gratitude to m" facu*t" guide Mr. D. Sudhir a!u for coordinating the 'ro9ect -or+ and

gi(ing me a** the (a*ua!*e guidance and for his constant ins'iration. This 'ro9ect cou*d not ha(e

!een 'ossi!*e -ithout his he*'.

I -ou*d a*so *i+e to than+ em'*o"ees at Re*igare -ho ga(e guidance and su''ort during the

com'*etion of the 'ro9ect.

.

1.Sri+anth

2N$U334

:


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OCER A>> $OA> O/ RESEAR7%

The 'ro'osed to'ic is A stud" on im'act of stoc+ mar+et (o*ati*it" on indi(idua* in(estors

in(estment decisions -ith reference to Re*igare in $untur.

This 'ro9ect -ou*d gi(e the understanding of the reasons for the (o*ati*it" in stoc+ mar+ets and

its im'act on in(estment decisions of the indi(idua* customers. The stud" a*so focuses on the

(arious factors that '*a" ro*e in in(estment decisions of the indi(idua* in(estors in stoc+ mar+ets.

It a*so concentrates on ho- to forecast the 'rice changes of shares and other securities so that it

-i** !e he*'fu* to in(estors to ma+e sound decisions.

NEED /OR STUD?

The main 'ur'ose of the research 'a'er is to find and ana*"e the +e" factors that insist or

moti(ate indi(idua* in(estors to in(est in stoc+ mar+ets and ho- their decisions are effected !"

the (o*ati*it" in stoc+ 'rices. In the 'resent da" scenario in(estments in stoc+ mar+ets has

!ecame a 'art of the indi(idua* in(estors 'ortfo*io. Es'ecia**" for those in(estors -ho are read"

to ta+e more ris+ !ut -ant higher returns stoc+ mar+et in(estments are the great sources. The

in(estment o!9ecti(es of the in(estors are (ar" from one to other. A carefu* ana*"sis and c*ose

o!ser(ation he*'s the in(estors to 'redict the future changes of the stoc+ 'rices.

/RAMEOR1 O/ T%E T%ESIS

The 'ro9ect,s o!9ecti(e is to do an ana*"sis on the factors that ha(e an im'act on stoc+ 'rice

changes and the other factors that indi(idua* in(estors consider -hi*e in(esting in stoc+ mar+ets.

In the first 'hase the stud" is carried out on the reasons for the 'rice changes or (o*ati*it" in stoc+

mar+ets.

In the second 'hase (arious 'arameters that are considered !" in(estors -hi*e in(esting in stoc+

mar+ets are identified !" 're'aring a Fuestionnaire and co**ecting data from indi(idua* stoc+

mar+et in(estors.

In the third 'hase data ana*"sis and suggestions and conc*usions !enefiting the com'an".

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The stud" -ou*d !e !ased on information co**ected from indi(idua* stoc+ mar+et in(estors of

Re*igare stoc+ !ro+ing firm and the other sources *i+e com'anies records0 internet etc. /urther

reFuired data -ou*d !e co**ected -ith the he*' of Fuestionnaire and its res'onse !" the

customers. The co**ected data -ou*d !e ana*"ed to find the im'act of stoc+ mar+et (o*ati*it" on

in(estment decisions of indi(idua* in(estors. And the stud" a*so focuses to find out the (arious

strategies ado'ted !" Re*igare to contro* the in(estors.

"+%SIS5 -%C" &%S%!&C+ #&K


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#B6%C"I8%S

To +no- the reasons for the stoc+ mar+et (o*ati*it".

To find the (arious 'arameters that are ta+en into consideration !" indi(idua* in(estors

-hi*e in(esting in stoc+ mar+ets.

To stud" the (arious ser(ices 'ro(ided !" Re*igare to its customers.

To find -eather stoc+ mar+et (o*ati*it" ha(e an im'act on in(estment decisions of the

indi(idua* in(estors or not.

$I,I"!"I#NS

Secondar" data can !e genera* and (ague and ma" not rea**" he*' in getting the com'*ete

'icture.

The data co**ected through interaction is 'rone to !iased in'uts !" the 'erson.

This 'ro9ect is *imited to on*" one geogra'hica* *ocation that is $untur -hich ma" *ead to

*ess accurac".

,%"+#3#$#G9

=


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-ri(ary 3ata:5

Primar" data is co**ected from the in(estors of Re*igare financia* ser(ices through a

Fuestionnaire. Sam'*e sie is ta+en as #33 for more accurac".

Secon)ary 3ata

Secondar" data is co**ected from (arious sources -hich are *isted !e*o-.

7om'an" records and re'orts

Magaines0 9ourna*s0 'am'h*ets0 ad(ertisements.

Standard reference te5t!oo+s

e!sites *i+e nseindia.com and mone" contro*.com

The 'ur'ose of using the secondar" data is to increase the accurac" of ana*"sis.

Sa(ple si;e:#33

Sa(pling Units:#. 7ustomers of Re*igare stoc+ !ro+ing firm.

Sa(pling ,etho):Non&'ro!a!i*it" sam'*ing Gcon(enience and 9udgment sam'*ingH

IN"UC"I#N

#3


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Perce'tion is defined as the 'rocess !" -hich an indi(idua* se*ects0 organies0 and

inter'rets stimu*i into a meaningfu* and coherent 'icture of the -or*d. It can !e descri!ed as

ho- -e see the -or*d around us. T-o indi(idua*s ma" !e e5'osed to the same stimu*i under

the same a''arent conditions0 !ut ho- each 'erson recognies0 se*ects0 organies0 and inter'rets

these stimu*i is a high*" indi(idua* 'rocess !ased on each 'erson,s o-n needs0 (a*ues0 and

e5'ectations. The inf*uence that each of these (aria!*es has on the 'erce'tua* 'rocess and its

re*e(ance to mar+eting -i** !e e5'*ore *ater. /irst0 ho-e(er0 -e -i** e5amine some of the !asic

conce'ts that under*ine the 'erce'tua* 'rocess. These -i** !e discussed -ithin the frame -or+ of

consumer !eha(ior.

Indi(idua*s act and react on the !asis of their 'erce'tions0 not on the !asis of o!9ecti(e

rea*it". /or each indi(idua*0 rea*it" is a tota**" 'ersona* 'henomenon0 !ased on that 'erson,s

needs0 -ants0 (a*ues0 and 'ersona* e5'eriences. Thus0 to the mar+eter0 consumers, 'erce'tions

are much more im'ortant than their +no-*edge of o!9ecti(e rea*it". /or if one thin+s a!out it0 it,s

not -hat actua**" so is0 !ut -hat consumers thin+ is so0 that affects their actions0 their !u"ing

ha!its0 their *eisure ha!its and so forth. And0 !ecause indi(idua*s ma+e decisions and ta+e actions

!ased on -hat the" 'ercei(e to !e rea*it"0 it is im'ortant that mar+eters understand the -ho*e

notion of 'erce'tion and its re*ated conce'ts to more readi*" determine -hat factors inf*uence

consumers to !u". efore the introduction of *o-&ca*orie !eer0 consumers had no 'reconcei(ed

(ie- of the 'roduct. ecause Mi**er understood the !eha(ior of !eer drin+er0 it 'ro(ided the

com'an" -ith a -a" to inter'ret the ne- offering in a manner congruent -ith their needs0 -hich

$a!*inger,s fai*ed to do ear*ier for the same 'roduct.

The 's"cho*ogica* and 'h"sio*ogica* !ases of human 'erce'tion and discusses the

'rinci'*es that inf*uence our 'erce'tion and inter'retation of the -or*d -e see. 1no-*edge of

these 'rinci'*es ena!*es astute mar+eters to de(e*o' ad(ertisements that ha(e a !etter&than&

a(erage chance of !eing seen and remem!ered !" their target consumers.

7onsumer,s se*ection of stimu*i from the en(ironment is !ased on the interaction of their

e5'ectations and moti(es -ith the stimu*us itse*f. The 'rinci'*es of se*ecti(e 'erce'tion inc*ude

the fo**o-ing conce'ts6 se*ecti(e e5'osure0 se*ecti(e attention0 'erce'tua* defense0 and

'erce'tua* !*oc+ing. Peo'*e usua**" 'ercei(e things the" need or -ant and !*oc+ the 'erce'tion

of unnecessar"0 unfa(ora!*e0 or 'ainfu* stimu*i.

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A consumer,s !u"ing !eha(ior refers to the res'onse and reaction of the u*timate

consumer to (arious situations in(o*(ed in 'urchasing and using (arious goods and ser(ices.

$enera**"0 consumers !u" 'roducts0 -hich are ca'a!*e of satisf"ing their needs. Thus a 'roduct

is an"thing that is offered to a mar+et and is ca'a!*e of satisf"ing the needs of the customer.

According to consumer 'erce'ti(e 'roducts are di(ided into the fo**o-ing -a"s6 &

aH Tangi!i*it"

!H Dura!i*it"

cH A(ai*a!i*it"

De'ending on the *e(e* of a(ai*a!i*it" e5'ected !" the customers0 'roducts can !e 'ut in

three categories6 &

aH 7on(enience 'roducts

!H Sho''ing 'roducts

cH S'ecia*t" 'roducts

The (o*ume of goods and ser(ices that a consumer !u"s de'ends on his reFuirements and his

-i**ingness and a!i*it" to 'roducts. Thus0 the (o*ume of !usiness in a 'articu*ar mar+et de'ends

on the fo**o-ing6 &

aH 7onsumer 'o'u*ation

!H 7onsumer reFuirements

cH 7onsumer 'otentia*

The decision ma+ing 'rocess of the customer ta+es '*ace in si5 ste's6 &

Stimu*us

Pro!*em a-areness

Information search

E(a*uation of a*ternati(es

Purchase Post 'urchase !eha(ior

hene(er a customer 'urchases a 'roduct0 he goes through a 'rocess of decision&ma+ing.

%e ma" or ma" not go through a** the si5 ste's mentioned a!o(e in the decision&ma+ing 'rocess.

C#,-!N9 -FI$%

#)


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&eligare Securities $t).

Re*igare Securities >td is a Ran!a5" 'romoter grou' com'an"0 is one of India,s *argest and

fastest gro-ing integrated financia* ser(ices institutions. The com'an" offers a *arge and di(erse

!ouFuet of ser(ices ranging from eFuities0 commodities0 insurance !ro+ing0 to -ea*th ad(isor"0

'ortfo*io management ser(ices0 'ersona* finance ser(ices0 In(estment !an+ing and institutiona*

!ro+ing ser(ices. The ser(ices are !road*" c*u!!ed across three +e" !usiness (ertica*s& Retai*0

ea*th management and the Institutiona* s'ectrum. Re*igare Enter'rises >imited is the ho*ding

com'an" for a** its !usinesses0 structured and !eing o'erated through (arious su!sidiaries.

Re*igare,s retai* net-or+ s'reads across the *ength and !readth of the countr" -ith its

'resence through more than =33 *ocations across more than 433 cities and to-ns. %a(ing s'read

itse*f fair*" -e** across the countr" and -ith the 'romise of not resting on its *aure*s0 it has a*so

aggressi(e*" started e"eing g*o!a* geogra'hies.

8ision

To !ui*d Re*igare as a g*o!a**" trusted !rand in the financia* ser(ices domain and 'resent it

as the In(estment $ate-a" of India,

,ission

Pro(iding financia* care dri(en !" the core (a*ues of di*igence and trans'arenc".

Bran) %ssence

Re*igare is dri(en !" ethica* and d"namic 'rocesses for -ea*th creation

Re*igare Enter'rises >imited GRE>H0 is one of the *eading integrated financia* ser(ices grou's of

India. The com'an" offers a di(erse !ouFuet of ser(ices ranging from eFuities0 commodities 0

insurance !ro+ing to -ea*th management0 'ortfo*io management ser(ices0 'ersona* financia*

ser(ices0 in(estment !an+ing and institutiona* !ro+ing ser(ices. The ser(ices are !road*" c*u!!ed

across three +e" !usiness (ertica*s& Retai*0 ea*th management and the Institutiona* s'ectrum.

Re*igare Enter'rises >imited is the ho*ding com'an" for a** its !usinesses0 structured and !eing

o'erated through (arious su!sidiaries.

In)ustry

: Finance 5 GeneralBS%

Co)e :


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Group : &eligareNS%

Co)e :&%$IG!&%

,arket

Cap :&s. /2>7?.@ Cr.

ISIN

No : IN%@/4+04040,arket

$ot :

4Face

8alue :

&s. 40.00

Registered & Corporate Office Registrar & Sare Transfer Agent

19, Nehru Place, New Delhi, Delhi - 110019

Tel !30815100, 66552200,

"a# !30815288,

E$ail [email protected]

We%site!www.religare.in

Karv !o"#u$er%hare Priva$e &$'

Plo$ No. 1(-2),

*i$$al +ao Nagar,

a'ha#ur

'eraa' - 500086, /n'hra Pra'e%h.

Tel !1-800-3)5)001

Ke Officials

Na$e Designation

alvin'er ohan ingh

unil o'hwani+avi a$ra

Non 4ecu$ive !hair"an

anaging Direc$or !*ice Pre%i'en$ !o"#an ecre$ar

Oter Details

Listings Incorporation '(%lic Iss(e Date

)SE * NSE +,-,.-./01 2/-.,-2,,3

Re*igare Enter'rises >imited GRE>H0 is one of the *eading integrated financia* ser(ices

grou's of India. RE>Js !usinesses are !road*" c*u!!ed across three +e" (ertica*s0 the Retai*0

Institutiona* and ea*th s'ectrums0 catering to a di(erse and -ide !ase of c*ients.

The (ision is to !ui*d Re*igare as a g*o!a**" trusted !rand in the financia* ser(ices domain

and 'resent it as the JIn(estment $ate-a" of IndiaJ. A** em'*o"ees of the grou' guided !" an

#8
mailto:[email protected]://www.religare.in/mailto:[email protected]://www.religare.in/


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e5'erienced and 'rofessiona* management team are committed to 'ro(iding financia* care0

!ac+ed !" the core (a*ues of di*igence and trans'arenc".

RE> offers a mu*titude of in(estment o'tions and a di(erse !ouFuet of financia* ser(ices

-ith its 'an India reach in more than #::3 *ocations across more than 8B3 cities and to-ns. RE>

a*so current*" o'erates from #3 countries g*o!a**" fo**o-ing its acFuisition of >ondonJs o*dest

!ro+erage K in(estment firm0 %ichens0 %arrison K 7o. '*c.

ith a (ie- to e5'and0 di(ersif" and introduce offerings !enchmar+ed against g*o!a* !est

'ractices0 Re*igare o'erates its >ife Insurance !usiness in 'artnershi' -ith the g*o!a* ma9or

Aegon. /or its -ea*th management !usiness0 Re*igare has 'artnered -ith Austra*ia !ased

financia* ser(ices ma9or&MacFuarie. Re*igare has a*so 'artnered -ith Cistaar Entertainment to

*aunch IndiaJs first SEI a''ro(ed /i*m /und offering a uniFue a*ternati(e asset c*ass of

in(estments.

S#" !N!$9SIS #F &%$IG!&%

S"&%NG"+S

It is the Ran!a5" 'romoter grou' com'an".

It has a good research team.

No Annua* maintenance charges for their on*ine !ro+ing ser(ices.

%!KN%SS%S

It has changed its name from /ORTIS to RE>I$ARE -here the ma5imum

#:


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7ustomers don,t +no- a!out this.

#--#&"UNI"I%S

/inancia* ser(ices sector in India is gro-ing !" *ea's and !ounds.

In the u' coming da"s RE>I$ARE is coming u' -ith their o-n mutua* fund andan+ing.

"+&%!"S

7ut&throat com'etition from cor'orate !ig houses *i+e Re*iance and I7I7I

As the" ha(e changed the name of their com'an" the customer sti** did not +no- a!outRE>I$ARE.

Services ren)ere) 'y religare securities lt):

#B

Institutional DistributionServices

DepositoryServices

Commodities

BrokingServices

International

Equity &Commodities

WealthManagement

Services

InvestmentBanking

Internetrading

!rivate Equity

Insurance Broking

"ending Services

Equity & Derivativerading


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%AUI"9 !N3 3%&I8!"I8% "&!3ING:

The term eFuit" deri(ati(e descri!es a c*ass of financia* instruments -hose (a*ue is at *east'art*" deri(ed from one or more under*"ing eFuit" securities. Mar+et 'artici'ants trade eFuit"deri(ati(es in order to transfer or transform certain ris+s associated the under*"ing. O'tions are!" far the most common eFuit" deri(ati(e0 ho-e(er there are man" other t"'es of eFuit"

deri(ati(es that are acti(e*" traded.

INS"I"U"I#N!$ 3IS"&IBU"#N S%&8IC%

The 7*ient Ser(ice Manager -i** !e res'onsi!*e for a** as'ects of c*ient re'orting for institutiona*in(estment c*ients and industr" organiations. The candidate -i** a*so !e res'onsi!*e for c*ientser(icing -hich inc*udes -or+ing -ith c*ients0 interna* grou's and U1 !ased 'ortfo*iomanagement.

3%-#SI"#&9 S%&8IC%S

De'ositor" is an organisation -hich ho*ds "our securities in e*ectronic Ga*so +no-n as !oo+entr",H form0 in the same manner as a !an+ ho*ds "our mone". /urther0 a de'ositor" a*so

transfers "our securities -ithout actua**" hand*ing securities0 in the same da" as a !an+ transfersfunds -ithout actua**" hand*ing cash.

C#,,#3I"I%S BKING S%&8IC%S

7ommodit" ro+ing Ser(ices s'ecia*ises in offering on*ine accounts to c*ients -ishing to dea* inthe /oreign E5change0 u**ion0 /utures0 7ommodities0 7/Ds and Internationa*


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!ro+ing is carried out toda" !" man" t"'es of organiations inc*uding traditiona* !ro+erages0Inde'endent /inancia* Ad(isers GI/AsH and te*e'hone or -e!&!ased firms.

ac+ed !" one of the *argest retai* net-or+s in India -ith its 'resence in more than #::3

*ocations across more than 8B3 cities and to-ns0 Re*igare caters to a *arge num!er of retai*

c*ients !" offering a** 'roducts under one roof through the !ranch net-or+ and on*ine mode.

%*uity "ra)ing

Trading in EFuities -ith Re*igare tru*" em'o-ers "ou for "our in(estment needs. e ensure

"ou ha(e a su'er*ati(e trading e5'erience through &

A high*" 'rocess dri(en0 di*igent a''roach

Po-erfu* Research K Ana*"tics and

One of the !est&in&c*ass dea*ing rooms

Co((o)ities "ra)ing

Re*igare 7ommodities >imited GR7>H0 a -ho**" o-ned su!sidiar" of Re*igare Enter'rises

>imited -as initiated to s'earhead E5change !ased 7ommodit" Trading. As a mem!er of

N7DE0 M7 and NM7E0 R7>0 'resent in :)= *ocations 'ro(ides o'tions in !oth agri and

non&agri commodities for E5change !ased commodit" trading !ac+ed !" incisi(e dedicatedresearch.

#nline Invest(ent -ortal

Re*igare On*ine is "our sing*e gate-a" for a** "our financia* needs. No- "ou not 9ust trade

on*ine in EFuities0 7ommodities0 a''*" for IPOs0 in(est in Mutua* /unds0 !u" Insurance0 !ut a*so

get Trade Re-ards each time "ou in(est on*ine -ith our 4B3 degree 'orta*

---.re*igareon*ine.com.

-ersonal Financial Services

Toda"0 more and more 'eo'*e *oo+ u' to -a"s and means -hich can fu*fi** their financia*

as'irations such as Sa(ings0 Retirement '*anning0 Ta5 '*anning K ea*th '*anning0 etc. A** this

cou'*ed -ith mu*ti'*e and cut throat com'etiti(e offerings ma+es it (er" difficu*t for an

indi(idua* to come to a decision and this *eads to the search of a 'artner -ho can he*' an

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indi(idua* understand the com'*e5 in(estment instruments and ma+e the !est use of them to meet

hisife0 $enera* and

Reinsurance domains.

To 'ro(ide customied -ea*th ad(isor" ser(ices to high net -orth indi(idua*s G%NIsH0

Re*igare offers an e5ce'tiona* se*ection of in(estment o''ortunities0 in e(er" asset c*ass. Our

mar+et +no-*edge and formida!*e resources faci*itate -ea*th acce*eration0 di(ersification and

ca'ita* 'reser(ation.

ealth ,anage(ent

Re*igare o'erates its -ea*th management !usiness in 'artnershi' -ith MacFuarie through the

9oint (enture & Re*igare MacFuarie ea*th Management >imited Ga :36:3 9oint (entureH. The C

is a com!ination of strengths & MacFuarieQs strong g*o!a* e5'ertise -ith Re*igareQs strong *oca*

insights.

-ortfolio ,anage(ent Services -,S1

Re*igare offers PMS to address (ar"ing in(estment 'references. As a focused ser(ice0 PMS

'a"s attention to detai*s0 and 'ortfo*ios are customied to suit the uniFue reFuirements of

in(estors.

#=


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Re*igare PMS current*" e5tends si5 'ortfo*io management schemes0 (i MonarFue0 Panther0

Tortoise0 E*e'hant0 7ater'i**ar and >eo. Each scheme is designed +ee'ing in mind the (ar"ing

tastes0 o!9ecti(es and ris+ to*erance of our in(estors

SC+%,%S:

-anther

The Panther 'ortfo*io aims to achie(e higher returns !" ta+ing aggressi(e 'ositions across

sectors and mar+et ca'ita*iations. It is suita!*e for the %igh ris+ high return in(estor -ith a

strateg" to in(est across sectors and ta+e ad(antage of (arious mar+et conditions.

"ortoise

The Tortoise 'ortfo*io aims to achie(e gro-th in the 'ortfo*io (a*ue o(er a 'eriod of time !" -a"

of carefu* and 9udicious in(estment in fundamenta**" sound com'anies ha(ing good 'ros'ects.

The scheme is suita!*e for the Medium Ris+ Medium Return in(estor -ith a strateg" to in(est

in com'anies -hich ha(e consistenc" in earnings0 gro-th and financia* 'erformances.

%lephant

The E*e'hant 'ortfo*io aims to generate stead" returns o(er a *onger 'eriod !" in(esting in

securities se*ected on*" from SE #33 and NSE #33 inde5. This '*an is suita!*e for the >o-

Ris+ >o- Return in(estor -ith a strateg" to in(est in !*ue chi' com'anies0 as these com'anies

ha(e stead" 'erformance.

Caterpillar

The 7ater'i**ar 'ortfo*io aims to achie(e ca'ita* a''reciation o(er a *ong 'eriod of time !"

in(esting in a di(ersified 'ortfo*io. The in(estment strateg" -ou*d !e to in(est in scri'ts -hich

are 'oised to get a re&rating either !ecause of change in !usiness0 'otentia* fanc" for a 'articu*ar

sector in the coming "ears


21/63

!rts Initiative

Toda"Js com'*e5 mar+et structures ha(e s'un art out of the cocoon of mere aestheticism into

a more rooted ro*e as a recognied financia* asset0 a deri(ati(e -ith immense 'o-ers of -ea*th

generation0 eFua* to those of an" !ric+ and mortar industr". $i(en this !ase0 it is no- for the

greater 'u!*ic&dri(en organiations concerned -ith the -e** !eing of art0 to ensure that a** the

di(erse dimensions of art are nurtured and gi(en the right e5'osure0 so that art 'ermeates more

com'*ete*" into the societa* fa!ric and enriches a -ider consciousness.

International !)visory Fun) ,anage(ent Services

In(esting in internationa* mar+ets o'ens a(enues for re*ati(e*" sta!*e in(estments and

di(ersification.

e at Re*igare 'ro(ide our c*ients an o''ortunit" to in(est in internationa* eFuities to sca*e

u' in(estment horions and to ena!*e them to gain from 'rofits of g*o!a* ma9ors. An asset

a**ocation modu*e is de(e*o'ed !ased on the ris+&return criteria of the in(estor and on countr"

attracti(eness0 sector and industr" strength0 com'an" strengths and g*o!a* trends.

IN3US"&9 -FI$%

Financial Services Sector

/inancia* ser(ices are (ita* too*s of machiner" for econom" and the" *u!ricate the -hee*s of

economic de(e*o'ment. In ad(anced nations0 giant economies *i+e USA0U10a'an0etc..0.ma9or

'ortion of the nationa* income is accounted from the ser(ices sector and minimum from the

'roduct sector.

Indian econom" has undergone a sea change in its structure0 'o*ic" and regu*ation0 due to

*i!era*iation and g*o!a*iation0 since #==#.Mar+ets for ser(ices are no e5ce'tion to this. The

contri!ution of ser(ice sector Ginc*uding financia* ser(ices sectorH for $DP has increased to :#

in )3340from 4B in #=3.The financia* ser(ice sector inc*ude factoring0 merchant !an+ing0

(enture ca'ita* 0etc.

/inancia* ser(ices *i+e !an+ing0 merchant !an+ing0 factoring0 Insurance0 Centure ca'ita* 0act as

(ita* machiner" of an econom". These financia* ser(ices that faci*itate0 financia* transactions of

indi(idua*s and institutiona* ser(ices resu*ting in their resources a**ocation acti(ities through

time. The sector that dea*s -ith such financia* ser(ices is +no-n as financia* ser(ices sector.

)#


22/63

Once the econom" crosses the su!sistence *e(e*0 financia* ser(ices !ecome more 'rominent and

im'ortant to that econom". /inancia* ser(ices in current da"s are emerging as a crucia* industr"

-or*d o(er and is termed as a sun rise industr". The ser(ices offered !" this sector not on*" raise

the reFuired funds0 !ut a*so *ead to the efficient management of funds.Toda"0the financia* ser(ice

'roducts0 as turned out to !" financia* ser(ices industr" are inno(ati(e and 'a(ing -a"s for (i(id

o''ortunities for further economic de(e*o'ment.

%(ergence of financial services in)ustry in In)ia

Ser(ices sector industr" has started gaining *arge sca*e momentum since the 'rocess of

*i!era*iation in #==#.Prior to its contri!ution to $DP -as around 83 0!ut since #==) it has

!een gro-n ra'id*" and reached a (a*ue of :# $DP.7ontri!ution of ser(ice sector to $NP in

ad(anced counties *i+e USA is as high as 2:.In India man" inno(ati(e financia* 'roducts and

ser(ices *i+e credit cards0ATMs0consumer finance0 (enture financing ha(e !een emerging since

#=3s And these financia* ser(ices ha(e !ecome an integra* com'onent of Indian financia*

s"stem. This integration is *arge*" attri!uted to the *i!era*iation of economic 'o*icies and

deregu*ation that *ed to economic changes 0de(e*o'ment and contem'orar" e(o*ution of ca'ita*

mar+et and financia* dis&intermediation.

The far&reaching change in the Indian econom" since *i!era*iation in the ear*" #==3s ha(e had a

dee' im'act on the Indian financia* sector. The financia* sector has gone through a com'*e5 and

sometimes 'ainfu* 'rocess of restructuring0 ca'ita*iing on ne- o''ortunities as -e** as

res'onding to ne- 7ha**enges. During the *ast decade0 there has !een a !roadening and

dee'ening of financia* mar+ets. Se(era* ne- instruments and 'roducts ha(e !een introduced.

E5isting sectors ha(e !een o'ened to ne- 'ri(ate '*a"ers. This has gi(en a strong im'etus to the

de(e*o'ment and moderniation of the financia* sector. Ne- '*a"ers ha(e ado'ted internationa*

!est 'ractices and modern techno*og" to offer a more so'histicated range of financia* ser(ices to

cor'orate and retai* customers. This 'rocess has c*ear*" im'ro(ed the range of financia* ser(ices

and ser(ice 'ro(iders a(ai*a!*e to Indian customers.

The entr" of ne- '*a"ers has *ed to e(en e5isting '*a"ers u'grading their 'roduct offerings and

distri!ution channe*s. This continued to !e -itnessed in )33)&34 across +e" sectors *i+e

commercia* !an+ing and insurance0 -here 'ri(ate '*a"ers achie(ed significant success.

))


23/63

These changes ha(e ta+en '*ace against a -ider s"stemic !ac+dro' of easing of contro*s on

interest rates and their rea*ignment -ith mar+et rates0 gradua* reduction in resource 're&em'tion

!" the go(ernment0 re*a5ation of sti'u*ations on concessiona* *ending and remo(a* of access to

concessiona* resources for financia* institutions. O(er the 'ast fe- "ears0 the sector has a*so

-itnessed su!stantia* 'rogress in regu*ation and su'er(ision. /inancia* intermediaries ha(e

gradua**" mo(ed to internationa**" acce'ta!*e norms for income recognition0 asset c*assification0

and 'ro(isioning and ca'ita* adeFuac".

This 'rocess continued in )33)&340 -ith RI announcing guide*ines for ris+&!ased su'er(ision

and conso*idated su'er(ision. hi*e maintaining its soft interest rate stance0 RI cautioned

!an+s against ta+ing *arge interest rate ris+s0 and ad(ocated a mo(e to-ards a f*oating rate

interest rate structure. The 'ast decade -as a*so an e(entfu* one for the Indian ca'ita* mar+ets.

Reforms0 'articu*ar*" the esta!*ishment and em'o-erment of securities and E5change oard of

India GSEIH0 mar+et&determined 'rices and a**ocation of resources0 screen&!ased nation&-ide

trading0demateria*isation and e*ectronic transfer of securities0 ro**ing sett*ement and deri(ati(es

trading ha(e great*" im'ro(ed !oth the regu*ator" frame-or+ and efficienc" of trading and

sett*ement.

On account of the su!dued g*o!a* economic conditions and the im'act on the Indian econom" of

the drought conditions 're(ai*ing in the countr"0 )33)&34 -as a su!dued "ear for eFuit" mar+ets.

Des'ite this0 the Nationa* Stoc+ E5change GNSEH and the om!a" Stoc+ E5change GSEH ran+ed

third and si5th res'ecti(e*" among a** e5changes in the -or*d -ith res'ect to the num!er of

transactions. The "ear a*so -itnessed the grant of a''ro(a* for setting u' of a mu*ticommodit"

e5change for trading of (arious commodities.

The US ) !i**ion Indian financia* sector has gro-n at around #: 'er cent and has dis'*a"ed

sta!i*it" for the *ast se(era* "ears0 e(en -hen other mar+ets in the Asian region -ere facing a

crisis. This sta!i*it" -as ensured through the resi*ience that has !een !ui*t into the s"stem o(er

time. The financia* sector has +e't 'ace -ith the gro-ing needs of cor'orate and other

!orro-ers. an+s0 ca'ita* mar+et 'artici'ants and insurers ha(e de(e*o'ed a -ide range of

'roducts and ser(ices to suit (aried customer reFuirements. The Reser(e an+ of India GRIH has

successfu**" introduced a regime -here interest rates are more in *ine -ith mar+et forces.

)4


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/inancia* institutions ha(e com!ated the reduction in interest rates and 'ressure on their margins

!" constant*" inno(ating and targeting attracti(e consumer segments. an+s and trade financiers

ha(e a*so '*a"ed an im'ortant ro*e in 'romoting foreign trade of the countr". %ere -e -i** stud"

the three industries -ith res'ect to India.

Insurance !n) In)ia

The insurance sector in India has !ecome a fu** circ*e from !eing an o'en com'etiti(e mar+et to

nationa*iation and !ac+ to a *i!era*ied mar+et again. Tracing the de(e*o'ments in the Indian

insurance sector re(ea*s the 4B3 degree turn -itnessed o(er a 'eriod of a*most t-o centuries.

! 'rief history of the Insurance sector

The !usiness of *ife insurance in India in its e5isting form started in India in the "ear ## -ith

the esta!*ishment of the Orienta* >ife Insurance 7om'an" in 7a*cutta. Some of the im'ortant

mi*estones in the *ife insurance !usiness in India are6

44/6 The Indian >ife Assurance 7om'anies Act enacted as the first statute to regu*ate the *ife

insurance !usiness.

4/?6 The Indian Insurance 7om'anies Act enacted to ena!*e the go(ernment to co**ect

statistica* information a!out !oth *ife and non&*ife insurance !usinesses.

4?6 Ear*ier *egis*ation conso*idated and amended to !" the Insurance Act -ith the o!9ecti(e of

'rotecting the interests of the insuring 'u!*ic.

4


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4@?6 The Insurance Act amended to regu*ate in(estments and set minimum so*(enc" margins

and the Tariff Ad(isor" 7ommittee set u'.

47/6 The $enera* Insurance usiness GNationa*iationH Act0 #=2) nationa*ied the genera*

insurance !usiness in India -ith effect from #st anuar" #=24.

#32 insurers ama*gamated and grou'ed into four com'anies (i. the Nationa*

Insurance 7om'an" >td.0 the Ne- India Assurance 7om'an" >td.0 the

Orienta* Insurance 7om'an" >td. and the United India Insurance 7om'an"

>td. $I7 incor'orated as a com'an".

Key -layers in insurance Sector of In)ia

Re*iance $enera* Insurance 7om'an" >td

>ife Insurance 7or'oration of India %D/7 Insurance

1ota+ Mahindra

I7I7I Prudentia*

SI >ife Insurance 7om'an" >td

Orienta* Insurance 7om'an" >td

Nationa* Insurance 7om'an" >td

a9a9 A**ian >ife Insurance 7om'an" >td

,U"U!$ FUN3S !N3 IN3I!

>et us start the discussion of the 'erformance of mutua* funds in India from the da" the conce't

of mutua* fund too+ !irth in India. The "ear -as #=B4. Unit Trust of India in(ited in(estors or

rather to those -ho !e*ie(ed in sa(ings0 to 'ar+ their mone" in UTI Mutua* /und.

/or 43 "ears it goa*ed -ithout a sing*e second '*a"er. Though the #= "ear sa- some ne-

mutua* fund com'anies0 !ut UTI remained in a mono'o*" 'osition.

The 'erformance of mutua* funds in India in the initia* 'hase -as not e(en c*oser to satisfactor"

*e(e*. Peo'*e rare*" understood0 and of course in(esting -as out of Fuestion. ut "es0 some )8mi**ion shareho*ders -as accustomed -ith guaranteed high returns !" the !eginning of

*i!era*iation of the industr" in #==). This good record of UTI !ecame mar+eting too* for ne-

entrants. The e5'ectations of in(estors touched the s+" in 'rofita!i*it" factor. %o-e(er0 'eo'*e

-ere mi*es a-a" from the 're'aredness of ris+s factor after the *i!era*iation.

):


26/63

The Assets Under Management of UTI -as Rs. B2!n. !" the end of #=2. >et me concentrate

a!out the 'erformance of mutua* funds in India through figures. /rom Rs. B2!n. the Assets

Under Management rose to Rs. 823 !n. in March #==4 and the figure had a three times higher

'erformance !" A'ri* )338. It rose as high as Rs.#0:83!n.

The net asset (a*ue GNACH of mutua* funds in India dec*ined -hen stoc+ 'rices started fa**ing in

the "ear #==). Those da"s0 the mar+et regu*ations did not a**o- 'ortfo*io shifts into a*ternati(e

in(estments. There -ere rather no choice a'art from ho*ding the cash or to further continue

in(esting in shares. One more thing to !e noted0 since on*" c*osed&end funds -ere f*oated in the

mar+et0 the in(estors disin(ested !" se**ing at a *oss in the secondar" mar+et.

The 'erformance of mutua* funds in India suffered Fua*itati(e*". The #==) stoc+ mar+et scanda*0

the *osses !" disin(estments and of course the *ac+ of trans'arent ru*es in the -herea!outs

roc+ed confidence among the in(estors. Part*" o-ing to a re*ati(e*" -ea+ stoc+ mar+et

'erformance0 mutua* funds ha(e not "et reco(ered0 -ith funds trading at an a(erage discount of

#3)3 'ercent of their net asset (a*ue.

The su'er(isor" authorit" ado'ted a set of measures to create a trans'arent and com'etiti(e

en(ironment in mutua* funds. Some of them -ere *i+e re*a5ing in(estment restrictions into the

mar+et0 introduction of o'en&ended funds0 and 'a(ing the gate-a" for mutua* funds to *aunch

'ension schemes. The measure -as ta+en to ma+e mutua* funds the +e" instrument for *ong&

term sa(ing. The more the (ariet" offered0 the Fuantitati(e -i** !e in(estors.

At *ast to mention0 as *ong as mutua* fund com'anies are 'erforming -ith *o-er ris+s and higher

'rofita!i*it" -ithin a short s'an of time0 more and more 'eo'*e -i** !e inc*ined to in(est unti*

and un*ess the" are fu**" educated -ith the dos and don,ts of mutua* funds.

Key -layers in ,utual Fun)s Sector in In)ia

AN AMRO Mutua* /und.

ir*a Sun >ife Mutua* /und.

an+ of aroda Mutua* /und GO Mutua* /undH..

)B
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27/63

IN$ C"s"a Mutua* /und.

Prudentia* I7I7I Mutua* /und.

Sahara Mutua* /und.

State an+ of India Mutua* /und.

Tata Mutua* /und.

3e(at !ccount !n) In)ia

There are Fuite a fe- institutions that are direct*" and and 7DS> are 'rimari*" 'romoted !" the t-o *eading stoc+ e5changes (i.0

Nationa* Stoc+ E5change of India >td GNSEH and The Stoc+ E5change0 Mum!ai GSEH

res'ecti(e*". esides0 there are man" other institutiona* 'romoters in !oth the de'ositories. oth

are registered as organiations&for&'rofit and 'rofessiona**" managed. Inter&connecti(it" !et-een

these t-o de'ositories has !een esta!*ished0 thus DPs and in(estors can transfer smooth*" their

shares from one account to another !et-een the de'ositories. Most of the stoc+ e5changes are

connected -ith the de'ositories to 'ro(ide trading in demateria*iation segment. E(entua**"0 a**

the e5changes -i** !e connected to either of or !oth the de'ositories. Resu*tant*"0 functioning of

e5changes a*tered -ith the commencement of de'ositories shorter trade c"c*es0 neg*igi!*e !ad&

de*i(eries0 immediate transfer of !eneficia* o-nershi' and *o-er transaction costs. An in&de'th

stud" on transaction cost for eFuit" shares in India !" Ra9u G)333H re(ea*ed su!stantia* decrease

in transaction costs and o!ser(ed that the demateria*iation as one of the im'ortant factor for this

trend.

/unctioning of c*earing cor'orations < c*earing houses materia**" changed after the entr" of

de'ositories reduced man'o-er reFuirements and faster c*earing o'erations. It a*so he*'ed them

)2
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28/63

to di(ersif" into re*ated !usinesses such as on&*ine stoc+ *ending. De'ositor" 'artici'ants are the

ne- commercia* intermediaries that s'rang u'. The" inter'ose !et-een in(estor and de'ositor".

It can !e stated that the" are the !ac+&!one for the success of demateria*iation. RTAs faci*itate

demateria*isation and remateria*isation of shares.

,aor -layers In #nline "ra)ing Brokerage +ouses in In)ia

I7I7I Securities >td.

1ota+ Securities >td.

India !u**s /inancia* Ser(ices >imited

India Info*ine

I>K/S in(estmart >imited

SS1I >td.

Moti*a* Os-a* Securities

Re*igare Securities >td.

$eo9it Securities

%D/7 Securities

#nline "ra)ing: In)ian scenario

In the Indian conte5t 0on*ine trading can !e right*" ca**ed as a recent 'henomenon 0-hich too+

root -ith the change of centur" i.e. A'ri* )3330and e(en ti** da" on*ine trading is not much

'o'u*ar among in(estors for -hich a *ist of factors can !e !*amed. This fact is more c*ear from

the information a(ai*a!*e that -here num!er of stoc+s e5changes in India has gro-n from 2

e5changes in #=8B to tota* )4 e5changes ti** )33:0on*" ) stoc+ e5changes are 'ro(iding on*ine

share trading .Indian stoc+ e5changes ha(e started ado'ting techno*og" !ecause it 'ro(ides the

necessar" im'etus for the organiation to retain its com'etiti(e edge and ensure time*iness and

satisfaction in customer ser(ice.

)


29/63

Mar4et sare in Online Trading

7!7!7'irec$

508

7n'ia ull%

268

$her%

2)8

7!7!7'irec$

7n'ia ull%

$her%

On*ine trading has gained momentum from 9ust 3.: of tota* traded (o*umes : ?rs !ac+0

-hich no- account for : of tota* trading (o*ume of a''ro5imate*" Rs #8333 7r. On Once&

O(er the 'ast t-o "ears 0the (a*ue of a** trades e5ecuted through internet on NSE has gro-n from

*ess than Rs #33 7r in une )334 to o(er Rs 233 7r in une )33:.On*ine trading is gro-ing !"

#:3 'er annum.No- NSE has #3 registered !ro+ers and #.3:4 mi**ion internet trading

su!scri!ers.

%o-e(er main*" : com'anies contro* =3 of the mar+et in Internet trading.I7I7Idirect.comhas around :3 mar+et share 0-hereas India u**s ho*d )B share 0other dominant '*a"ers are

1ota+ securities and Share 1han .I7I7I has !een a!*e to gain its dominant 'resence in Internet

trading !ecause the" ha(e strong connecti(it" of stoc+ trading0demat account0 !an+ account

0etc.I7I7IDirect has recorded B02:0333 registered customers and has !ecome #3th*argest on*ine

!ro+er in US -hereas share +han and :'aisa are *oosing their -a".

Toda"0 SE is the -or*d,s num!er # e5change in terms of the num!er of *isted com'anies

and the -or*d,s :th in transaction num!er.

Of the )4 stoc+ e5changes in the India0 om!a" Stoc+ E5change is the *argest0 -ith o(er

B0333 stoc+s *isted. The SE accounts for o(er t-o thirds of the tota* trading (o*ume in the

countr". Esta!*ished in #2:0 the e5change is a*so the o*dest in Asia. Among the t-ent"&t-o

Stoc+ E5changes recognied !" the $o(ernment of India under the Securities 7ontracts

)=


30/63

GRegu*ationH Act0 #=:B0 it -as the first one to !e recognied and it is the on*" one that had the

'ri(i*ege of getting 'ermanent recognition a!&initio.

Moreo(er0 The SE SENSE is not on*" scientifica**" designed !ut a*so !ased on g*o!a**"

acce'ted construction and re(ie- methodo*og". The inde5 is -ide*" re'orted in !oth domestic

and internationa* mar+ets through 'rint as -e** as e*ectronic media.

The /ree&f*oat Mar+et 7a'ita*iation methodo*og" of SE inde5 construction is regarded

as an industr",s !est 'ractice g*o!a**". A** ma9or inde5 'ro(iders *i+e MS7I0 /TSE0 STO0

SKP and Do- ones use the /ree&f*oat methodo*og". Due to its -ide acce'tance amongst the

Indian in(estors SENSE is regarded to !e the 'u*se of the Indian stoc+ mar+et.

As the o*dest inde5 in the countr"0 the SENSE has o(er the "ears !ecome one of the most

'rominent !rands in the countr".

The 'a'er therefore em'hasies main*" on SE sense5 and ma9or f*uctuations re*ated to it

from time 'eriod of )33B to )33. The 'a'er a*so 'ut the *ight on ho- (arious factors such as

inf*ation0 in(estments made through 'artici'ator" notes0 rising crude oi* 'rices0 the su!&'rime

mortgage -oes in US0 concerns o(er a s*o-ing do-n US econom" and !ig ro*e of /oreign

Institutiona* In(estors G/IIsH determines mar+et,s situation and o'erate SENSE.

S%NS%:

The SENSE0 short form of the SE&Sensiti(e Inde50 is a Mar+et 7a'ita*iation&

eighted inde5 of 43 stoc+s re'resenting a sam'*e of *arge0 -e**&esta!*ished and financia**"

sound com'anies.

43


31/63

#'ectives of S%NS%

To measure mar+et mo(ements

enchmar+ for funds 'erformance

/or inde5 !ased deri(ati(e 'roducts

Calculation of S%NS%

SENSE is ca*cu*ated using a Mar+et 7a'ita*iation&eighted methodo*og". As 'er this

methodo*og"0 the *e(e* of inde5 at an" 'oint of time ref*ects the tota* mar+et (a*ue of 43

com'onent stoc+s re*ati(e to a !ase 'eriod. The mar+et ca'ita*iation of a com'an" is

determined !" mu*ti'*"ing the 'rice of its stoc+ !" the num!er of shares issued !" the com'an".

An inde5 of a set of a com!ined (aria!*es such as 'rice and num!er of shares is common*"

referred as a J7om'osite Inde5J !" statisticians. A sing*e inde5ed num!er is used to re'resent the

resu*ts of this ca*cu*ation in order to ma+e the (a*ue easier to -or+ -ith and trac+ o(er time.

The ca*cu*ation of SENSE in(o*(es di(iding the tota* mar+et ca'ita*iation of 43

com'anies in the Inde5 !" a num!er ca**ed the Inde5 Di(isor. The Di(isor is the on*" *in+ to the

origina* !ase 'eriod (a*ue of the SENSE. It +ee's the Inde5 com'ara!*e o(er time and is the

ad9ustment 'oint for a** Inde5 maintenance ad9ustments.

9ear /00@ at a glance:

In the secondar" mar+et0 the u'trend continued in )33B&32 -ith SE indices c*osing a!o(e

#8333G#803#:H for the first time on anuar" 40 )332. After a some-hat du** first ha*f conditions

on the !ourses turned !uo"ant during the *ater 'art of the "ear -ith *arge inf*o-s from /oreign

4#


32/63

Institutiona* In(estors G/IIsH and *arger 'artici'ation of domestic in(estors. During )33B0 on a

'oint&to&'oint !asis0 Sense5 rose !" 8B.2.

The 'ic+u' in the stoc+ indices cou*d !e attri!uted to im'ressi(e gro-th in the 'rofita!i*it" of

Indian cor'orate0 o(era** higher gro-th in the econom"0 and other g*o!a* factors such as

continuation of re*ati(e*" soft interest rates and fa** in the internationa* crude 'rices.

SE Sense5 Gto' 43stoc+sH -hich -as =04= at end&Decem!er )33: and #304== at end& Ma"

)33B0 after dro''ing to 0=)= on une #80 )33B0 reco(ered soon thereafter to rise steadi*" to

#422 !" end&Decem!er )33B.

According to the num!er of transactions0 NSE continued to occu'" the third 'osition among the

-or*d,s !iggest e5changes in )33B0 as in the 're(ious three "ears. SE occu'ied the i5th

'ositionin )33B0 s*i''ing one 'osition from )33:. In terms of *isted com'anies0 the SE ran+s first in the

-or*d.

In terms of (o*ati*it" of -ee+*" returns0 uncertainties as de'icted !" Indian indices -ere higher

than those in outside India such as SKP :33 of United States of America and 1os'i of South

1orea. The Indian indices recorded higher (o*ati*it" on -ee+*" returns during the t-o "ear

'eriod. anuar" )33: to Decem!er )33B as com'ared to anuar" )338 to Decem!er )33: The

mar+et (a*uation of Indian stoc+s at the end of Decem!er )33B0 -ith the Sense5 trading at a P


33/63

S%NS% )uring /00@: (Economic Survey 2007-08)

)33B SE

an ==)3

/e! #3423

Mar ##)3

44


34/63

A'r #)384

Ma" #34==

un #3B3=

u* #3288

Aug ##B==

Se' #)8:8

Oct #)=B)

No( #4B=B

Dec #422

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov De

BSE9920 1037 112 120! 1039 10"0 107! 11"9 12!# 129" 13"9 137

0

2000

!000

"000

000

10000

12000

1!000

1"000

#$isitle

BSE

!n overvieD of year /00@:

During Decem!er )33:0 the greatest demerger of Indian histor" !et-een the Am!anis 'a(ed the

-a" for =333. And the sense5 entered the "ear )33B -ith a =333 figure. On /e!. #3th )33B0 -e

sa- t-o roaring figures0 !oth sense5 and sachin tendu*+ar crossing 40000 mar+. ut the reason

!ehind roaring sense5 -as not sachin,s records rather it -as ra**ied !" strong FII infloDs an)

ro'ust )ata. The go(ernment forecasted a $DP gro-th of .# in current "ear0 -ith

48


35/63

manufacturing and the agricu*ture sectors estimated to gro- at =.8 and ).4 res'ecti(e*". The

)4&'oint ra**" -as contrar" to e5'ectations as it came des'ite negati(e ne-s f*o- a!out a fresh

tuss*e !et-een Am!ani !rothers o(er transfer of o-nershi' of the four com'anies demerged

from erst-hi*e RI>.

Sense5,s surge to 44000'oints on )#st march )33B -as 'rom'ted !" PM Manmohan Singh,s

announce(ents on Capital !ccount Converti'ility. On Saturda"0 Prime Minister Manmohan

Singh hinted at mo(ing to-ard a free f*oat of the ru'ee and on Tuesda"0 the SE res'onded !"

crossing the ##0333 mar+ in a *ifetime intrada" high. The ne- trading high -as reached )= da"s

after Sense5 entered the e*ite #30333 c*u! on /e!ruar" B. On*" Ni++ei0 %ang Seng and Do-

ones cou*d !oast of !eing a!o(e #30333 at that time. Since fu** con(erti!i*it" -as e5'ected to

attract more foreign mone" and a*so a**o- *oca* com'anies to ta' foreign de!t mar+ets more

easi*"0 it -as e(ident that the mo(e -i** encourage in(estors and !oost the confidence of the

mar+ets.

RI said it -as constituting a 'ane* to thrash out the contours for fu** con(erti!i*it". A*though

the inde5 *ater ended *o-er -ith in(estors -anting to !oo+ gains0 'artici'ants said it -as e(ident

the mar+ets had sent out a message & that the gro-th stor" of Asia,s third *argest econom" is

intact and that *iFuidit" f*o-s into the !ourses -ou*d continue to remain firm.

After hitting a high of ##03#2.): 'oints in mid&afternoon trade0 Sense5 *ost 4:.=# 'oints to c*ose

at #30=3:.)30 f*uctuating #:4 'oints0 -ith most of the (o*ati*it" coming in the *ast hour of

Trading. The rise in share 'rices -as 'art*" attri!uted to a fa** in oi* 'rice. The US A'ri* crude

oi* 'rices '*unged 4.2 or ).4:0 to sett*e at B3.8) a !arre*0 on the Ne- ?or+ Mercanti*e

E5change due to am'*e US in(entories.

After fa**ing !" 432 'oints on #)th A'ri* )33B on account of +eavy selling 'y FIIs in !oth cash

and futures mar+ets and a (ove 'y stock eEchanges to raise (argins on share transactions 'y

a'out /


36/63

!eaten to the #)0333 mar+ !" (arious g*o!a* indices0 the time it too+ to !reach this mi*estone has

!een one of the fastest. Traders 'oint to the fact that foreign investors2 'uoye) 'y a 'oo(ing

econo(y2 have chosen In)ia as one of their top invest(ent )estinations.

No-0 e(er"thing -as going fine;.'erha's it -as the *u** !efore the storm. Sudden*" the Da*a*

Street e5'erienced its -orst sing*e da" crash on Thursda"0 #th ma" )33B as an a('iguous

Govern(ent circular on taEing invest(ent gains pro(pte) foreign fun)s to 'ook profits2

+noc+ing the !ottom off the 9itter" stoc+ mar+et. O'ening a(i)st Deak glo'al (arkets an)

reports of rising US interest rates0 the SE&43 Sense5 -ent on to c*ose )B.4. %o-e(er the

Dea*ers said the fa** -as accentuated 'y large5scale selling of client positions 'y 'roking fir(s

)ue to (argin calls or the lack of (argins. The Ma" crash sa- the Sense5 shedding its mar+et

ca'ita*iation !" as much as #8 in 9ust one month.

enchmar+ stoc+ indices (au*ted to ne- highs on Monda"0 oct 43th )33B dri(en !" a hea)y

cocktail of strong corporate earnings2 a rapi)ly groDing econo(y an) relatively sta'le

cru)e oil prices. The Sense5 ended at its highest c*osing *e(e* of #43)8.)B0 a gain of ##2.8:

'oints or 3.=. Marauding !u**s defied the -ea+ trend g*o!a**"0 -hich -as sparke) off 'y Deak

US G3- groDth figure0 'ointing to a s*o-do-n.

ac+ home0 the mood -as u'!eat e(en as some e5'ect that the &BI (ay raise interest rates 'y

/< 'asis points in its (i)5ter( cre)it policy on "ues)ay. Mar+et -atchers said sentiment

cou*d !e affected on*" if the hi+e is more than ): !asis 'oints0 -hich is un*i+e*". %igher interest

rates dri(e u' !orro-ing costs for cor'orate as -e** as the retai* consumer0 -ho cou*d then cut

!ac+ on their in(estments and s'ending0 in turn causing a s*ac+ in domestic demand.

The !enchmar+ 43&share sense5 !rief*" crossed the 's"cho*ogica* #80333&mar+ on Tuesda"0

Decem!er :0 )33B. hi*e foreign institutional investors have 'een aggressive 'uying stocks

over the past feD (onths2 the response of )o(estic (utual fun)s has 'een guar)e). In the

*ast t-o months a*one0 /IIs !ought net stoc+s -orth Rs #2033# crore -hi*e *oca* mutua* funds

ha(e 'um'ed in a net Rs B4.32 crore.

9ear /007 at a glance:

4B


37/63

In the secondar" mar+et segment0 the mar+et acti(it" e5'anded further during )332&3 -ith SE

and NSE indices sca*ing ne- 'ea+s of )#0333 and B04330 res'ecti(e*"0 in anuar" )33. A*though

the indices sho-ed some intermittent f*uctuations0 ref*ecting change in the mar+et sentiments0 he

indices maintained their north&!ound trend during the "ear. This cou*d !e attri!uted to the *arger

inf*o-s from /oreign Institutiona* In(estors G/IIsH and -ider 'artici'ation of domestic in(estors0

'articu*ar*" the institutiona* in(estors. During )3320 on a 'oint&to&'oint !asis0 Sense5 and Nift"

Indices rose !" 82.# and :8. 'er cent0 res'ecti(e*". The !uo"ant conditions in the Indian

!ourses -ere aided !"0 among other things0 India 'osting a re*ati(e*" higher $DP gro-th

amongst the emerging economies0 continued u'trend in the 'rofita!i*it" of Indian cor'orate0

'ersistence of difference in domestic and internationa* *e(e*s of interest rates0 im'ressi(e returns

on eFuities and a strong Indian ru'ee on the !ac+ of *arger ca'ita* inf*o-s.

The SE Sense5 Gto' 43 stoc+sH too echoed a simi*ar trend to NSE nift". The se**&off in Indian

!ourses in August )332 cou*d 'art*" !e attri!uted to the concerns on the 'ossi!*e fa**out of the

su!&'rime crisis in the est. hi*e the c*im! of SE Sense5 during )332& 3 so far -as the

fastest e(er0 the 9ourne" of SE Sense5 from #0333 to #=0333 mar+ -as achie(ed in 9ust four

trading sessions during Octo!er )332. It further crossed the )30333 mar+ in Decem!er )332 and

)#0333 in an intra&da" trading in anuar" )33. %o-e(er0 SE and NSE indices dec*ined

su!seFuent*" ref*ecting concerns on g*o!a* de(e*o'ments. SE Sense5 "ie*ded a 7om'ounded

return of 4B.: 'er cent 'er "ear !et-een )334 and )332. In terms of sim'*e a(erage0 SE Sense5

has gi(en an annua* return of more than 83 'er cent during the *ast three "ears.

Sense$ during %'( (source: Economic Survey 2007-08)

)332 SE

an #83=#

/e! #)=4

Mar #432)

42


38/63

A'r #42)

Ma" #8:88

un #8B:#

u* #:::#

Aug #:4#=

Se' #2):#

Oct #=4

No( #=4B4

Dec )3)2

1!091129313072

13721!#!!1!"#11###11#319

172#1

193193"32027

0

#000

10000

1#000

20000

2#000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

BSE

SenseE )uring year /00?

After sca*ing ne- heights of )33330 sense5 entered "ear )33 -ith ros" 'ictures. The trade

'undits0 !ro+ers and e(en in(estors 'redicted ne- heights for the "ear. And the" fe*t their

'redictions coming true -hen sense5 touched the )#333 mar+ on th anuar" )33. It,s

interesting if one sees in terms of f*o-s the 9ourne" from )30333 to )#0333 is dominated !"

domestic institutiona* in(estors /IIs -ere negati(e se**ers0 the" so*d in the cash mar+et to the

4


39/63

tune of USD 8: !i**ion. So if one has to ta+e out some 'ointers from this 9ourne" from )30333 to

)#03330 it is the *ongest 9ourne" -hich -e ha(e seen in the *ast :0333 mar+s0 the midca's and

sma**ca's ha(e !een out'erformers and in terms of f*o-s0 it has !een domestic institutiona*

in(estors -hich ha(e !een rea**" 'utting the mone".

ut the ros" 'icture soon turned g*oom". The s+"roc+eting sense5 sudden*" started heading

south and Sense5 sa- the !iggest a!so*ute fa** in histor"0 shedding )3B) 'oints intra&da". It

c*osed at #20B3:.4:0 do-n #83.4: 'oints or 2.8 'er cent. It fe** to a *o- of #B0=:#.:3. The fa**

-as triggered as a resu*t of -ea+ness in g*o!a* mar+ets0 !ut the im'act of the g*o!a* rout -as the

!iggest in India. The mar+et tum!*ed on account of a !road !ased se**&off that emerged in g*o!a*

eFuit" mar+ets. /ears o(er the so*(enc" of ma9or estern !an+s ratt*ed stoc+s in Asia and

Euro'e.

After the -orst anuar" in the *ast )3 "ears for Indian eFuities0 /e!ruar" turned out to !e a f*at

month -ith the SE sense5 do-n 3.8. India finished the month as the second -orst emerging

mar+et. The under'erformance can 'art*" !e attri!uted to the fact that Indian mar+ets

out'erformed g*o!a* mar+ets in the *ast t-o months of )332and hence -e -ere seeing the *agged

im'act of that out'erformance. In the shorter term0 de(e*o'ments in the US econom" and US

mar+ets continued to dominate in(estor sentiments g*o!a**" and -e sa- (o*ati*it" mo(e u'

shar'*" across most mar+ets.

The om!a" Stoc+ E5change GSEH Sense5 fe** 8.88 'ercent on Monda"0 4#st march the *ast

da" of the financia* Fuarter0 to end the Fuarter of March do-n )).= 'ercent0 its !iggest Fuarter*"

fa** since the une #==) Fuarter0 as re'orts of rising inf*ation and g*o!a* economic s*o-do-n

dam'ened mar+et sentiments. /inancia* stoc+s *ed the Sense5 s*ide a*ong -ith IT. According to

mar+et ana*"sts0 IT stoc+s fe** on -orries a!out the hea*th of the US econom". Indian IT firms

de'end on the US c*ients for a ma9or share of their re(enues.

&easons for the sloD)oDn F9 0?501

The first month of the financia* "ear 3&3= 'ro(ed to !e a good one for in(estors -ith the month

ending on a 'ositi(e note. The SE sense5 sho-ed a gain of #3.: to c*ose at #2)2 'oints. A

com!ination of firming g*o!a* mar+ets and technica* factors *i+e short co(ering -ere the main

reasons for the u' mo(e in the mar+ets. Though inf*ation touched a high of 2.:2 against B.B

4=


40/63

in march )33 as a resu*t RI hi+ed 7RR !" :3 !'s to ta+e the figure to 0 sti** emergence of

retai* in(estors -as a*so seen a fact reinforced !" the strong mo(ement in the mid&ca' and

sma**& ca' inde5 that rose #B and # res'ecti(e*".

So A'ri* -as the *ast month to c*ose 'ositi(e. Then after no!od" sa- a sta!*e sense5 e(en.

Sometimes it surged !" B33 'oints0 !ut (er" ne5t da" it '*unged !" some 33 odd 'oints and

this stor" is sti** continuing. E(er" 'rediction0 e(er" forecasting has fai*ed. The sense5 is dancing

on the music of *ifetime high inf*ation rates0 historic crude 'rices0 tightening RI 'o*icies0 -ea+

industria* 'roduction data0 'o*itica* uncertainties and o!(ious*" the sentiments of domestic as

-e** as /IIs. The on*" re*ief came in the form of -ea+ening Indian ru'ees -hich en*ightened the

IT sector and most recent*" the UPA gaining (ote of confidence. Present*" it is re(o*(ing around

the figures of #8333 and no one +no-s -hat ne5tV

The 43&share SE Sense5 fe** ##2.= 'oints or 3.B2 at #20424.3# on Tuesda"0 B Ma" )33.

The +e" !enchmar+ indices ended *o-er as in(estors resorted to 'rofit !oo+ing due to *ac+ of

'ositi(e triggers in the mar+et. On 43th Ma" an imminent hi+e in domestic retai* fue* 'rices due

to soaring crude oi* 'rices -eighed on the mar+et *ast -ee+. /oreign institutiona* in(estors so*d

c*ose to Rs ))38 crore in the first three trading sessions of the -ee+ -hich accentuated the

do-nfa**. %o-e(er !etter than e5'ected @8 gross domestic 'roduct figures 'ro(ided some re*ief

to the !ourses on /rida". IT stoc+s gained on s*i''ing ru'ee. SE Sense5 rose in t-o out of fi(e

trading sessions. In Ma"0 Indian inf*ation stood at .).

The mar+et dec*ined shar'*" as a hi+e in fue* 'rices !" a!out #3 announced !" the Union

go(ernment on ednesda"0 8 une )330 triggered 'ossi!i*it" of a surge in inf*ation to dou!*e

digit *e(e*. The SE Sense5 dec*ined 84.4= 'oints or :.#8 to #:0:2).# in the -ee+ ended B

une )33. The SKP 7N Nift" fe** )8).4 'oints or 8.=2 to 8B)2.3 in the -ee+.

On B une )330 *oca* !enchmar+ indices under'erformed their g*o!a* 'eers0 hit !" rumours that

the Reser(e an+ of India GRIH ma" hi+e cash reser(e ratio G7RRH orinterest rate *ater in the

da" to tame runa-a" inf*ation. The 43&share SE Sense5 dec*ined #=2.:8 'oints or #.): to

sett*e at #:0:2).#.

On =thune )330 om!a",s Sense5 inde5 c*osed :3B.3 'oints do-n at #:03BB.#30 ha(ing

ear*ier fa**en 8.8 and s*i''ed !e*o- #:0333 for the first time since March . Oi* 'rices surged to

record *e(e*s2fanning fears that the" -i** +ee' c*im!ing and hurt -or*d gro-th.

83


41/63

7entra* !an+s across the g*o!e -arned that interest rates ma" ha(e to rise as the" *oo+ to +ee'

inf*ation under contro*0 des'ite the fact that economic gro-th is s*o-ing in +e" nations such as

the US and U1.

On the -ee+ ending )2th une )33 Sense5 dec*ined 2B=.32 'oints or :.) to #403).)). The

SKP 7N Nift" *ost )#3.=3 'oints or 8.: to 8#4B.B: in the -ee+. EFuities e5tended *osses for

the fifth straight da" on )8 une )33 -ith the !arometer inde5 SE Sense5 fa**ing !e*o- the

's"cho*ogica**" im'ortant #80333 mar+ for the first time in #3 months since *ate August )332.

On ): une )330 eFuities staged a so*id re!ound after touching fresh ca*endar )33 *o-s in

ear*" trade. The initia* 9o*t -as caused !" the Reser(e an+ of IndiaJs mo(e to hi+e the +e"

*ending rate. A set!ac+ to stoc+s in Asia and US0 shar' s'urt in crude oi* 'rices and 'o*itica*

uncertaint" due to Indo&US nuc*ear dea* ratt*ed !ourses on )2 une )33.

On u*" #:th )330 Indian shares fe** 8.= 'er cent to their *o-est c*ose in #: months0 9oining a

-or*d eFuities rout as in(estors dum'ed financia*s on concerns a!out the fa**out from -orsening

g*o!a* credit turmoi*. A*though Indian !an+s ha(e no direct e5'osure to the US su!'rime

mortgage sector0 the g*o!a* financia* sector turmoi* im'acts sentiment in the *oca* mar+et and

raises -orries of more -ithdra-a*s !" foreign funds.

An 33 'oint surge -as e5'erienced in the mar+et on the da" fo**o-ing UPA gaining (ote ofconfidence !ut the (er" ne5t da" mar+et cou*dn,t maintain the momentum and since then its in a

do*drums, 'osition.

Present*"0 -e can sa- mar+et '*unging after the RI announced further hi+es in Re'o rate as

-e** as 7RR !oth increased to =. A*so0 the seria* !*asts at Ahmada!ad and anga*ore adding to

the -orries and enhancing the negati(e sentiments. And a!o(e a** -e canJt see an" 'ositi(e

trigger that can di*ute the f*o- of negati(e ne-s.

Current Situation of year /00?

ith ma9or financia* crisis eru'ting in the U.S.0 Indian Stoc+ Mar+et !enchmar+ inde5 GSense5H

fe** !" 8B=.:8 'oints or 4.4: 'er cent on Monda" to c*ose at #4:4#.)2. Rea*t" stoc+s *ed the fa**

-ith a *oss of 2.B: 'er cent.

8#


42/63

The Nationa* stoc+ e5change0 the NSE Nift" *ost #::.:: 'oints or 4.B 'er cent. A** sectora*

indices c*osed in the negati(e territor".

An e(entfu* -ee+ of turmoi* has !egun in the g*o!a* financia* scenario as stoc+ 'rices '*unged

across much of the g*o!e on ne-s that in(estment !an+ers0 >ehman rothers %o*dings fi*ed for

!an+ru'tc" and Merri** >"nch K 7o,s forced sa*e to an+ of America.

E(en American Internationa* $rou' GAI$H0 the -or*d,s *argest insurance com'an"0 as+ed the

U.S. /edera* Reser(e for an emergenc" funding !efore announcing a ma9or restructuring '*an.

The in(estments in Indian firms !" these U.S. in(estment !an+ers are a ma9or -orr" for Indian

in(estors. In(estor confidence is at its *o-est e!!. In(estors are -orried that a** these are *i+e*" to

trigger another round of trou!*es for !an+s and financia* institutions around the g*o!e. Si5

months ago0 in March0 ear Stearns0 the fifth !iggest U.S. in(estment !an+0 -itnessed a fu**

circ*e !efore its fa** and se**&off to P Morgan 7hase K 7o for a roc+ !ottom 'rice of ) 'er

share.

&%8I% #F $I"%&!"U&%

A stud" of fund se*ection !eha(ior of indi(idua* in(estors to-ards mutua* funds & -ith

reference to Mum!ai cit".

Ms. 1a(itha Ranganathan GM.Phi* 7ommerceH0 Madurai 1amara9 Uni(ersit"

Sadha+0 %.0 Mutua* /unds in India Mar+eting Strategies and In(estment Practices0 Res'onseoo+s0 Ne- De*hi0#==20 B4 B8.SEI N7AER0 Sur(e" of Indian In(estors0 SEI0 Mum!ai0 )333.

8)


43/63

!'stract

7onsumer !eha(ior from the mar+eting -or*d and financia* economics has !rought

together to the surface an e5citing area for stud" and research6 !eha(iora* finance. The

rea*iation that this is a serious su!9ect is0 ho-e(er0 !are*" da-ning. Ana*"sts seem to treat

financia* mar+ets as an aggregate of statistica* o!ser(ations0 technica* and fundamenta* ana*"sis.

A rich (ie- of research -aits this so'histicated understanding of ho- financia* mar+ets are a*so

affected !" the financia* !eha(ior, of in(estors. ith the reforms of industria* 'o*ic"0 'u!*ic

sector0 financia* sector and the man" de(e*o'ments in the Indian mone" mar+et and ca'ita*

mar+et0 Mutua* /unds -hich has !ecome an im'ortant 'orta* for the sma** in(estors0 is a*so

inf*uenced !" their financia* !eha(ior. %ence0 this stud" has made an attem't to e5amine the

re*ated as'ects of the fund se*ection !eha(ior of indi(idua* in(estors to-ards Mutua* funds0 in

the cit" of Mum!ai. /rom the researchers and academicians 'oint of (ie-0 such a stud" -i** he*'

in de(e*o'ing and e5'anding +no-*edge in this fie*d.

In(estment Strategies in Indian Stoc+ Mar+et

Author6Dr. Canita Tri'athiSenior >ecturerDe'artment of commerceDe*hi Schoo* of EconomicsUni(ersit" of De*hi.

asu0 San9o".#=22.In(estment Performance of 7ommon Stoc+s in Re*ation to their Price&Earnings Ratios6 A Test of Efficient Mar+et %"'othesis0 ourna* of /inance

!'stract

This 'a'er e5amines the 'erce'tions0 'references and (arious in(estment strategies in

Indian stoc+ mar+et on the !asis of a sur(e" among =4 in(estment ana*"sts0 fund managers and

acti(e eFuit" in(estors !ased at De*hi and Mum!ai during Ma"&Octo!er0 )332. Sur(e" findings

re(ea* that in(estors use !oth fundamenta* as -e** as technica* ana*"sis -hi*e in(esting in Indian

stoc+ mar+et. Most of the res'ondents strong*" agree that (arious com'an" fundamenta*s G such

as sie0 !oo+ to mar+et eFuit"0 'rice earnings ratio0 *e(erage etc.H significant*" inf*uence stoc+

'rices and hence addition of these factors in asset 'ricing mode* can !etter e5'*ain cross

84


44/63

sectiona* (ariations in eFuit" returns in India. /i(e most -ide*" used in(estment strategies in

Indian eFuit" mar+et are sie !ased strategies0 momentum strategies0 fo**o-ing /IIs in(estment

!eha(iour0 !u"ing stoc+s on the !asis of 43 da"s mo(ing a(erage and !u"ing stoc+s on the !asis

of re*ati(e strength inde5. There has !een su!stantia* change in in(estment strategies used !"

acti(e in(estors in Indian stoc+ mar+et o(er the 'ast fi(e "ears. In a nutshe** there has !een a

shift from 'ure*" technica* ana*"sis !ased strategies to the one -hich in(o*(es !oth fundamenta*

and technica* ana*"sis. Moreo(er the in(estment horion of in(estors has a*so reduced due to

higher (o*ati*it".

/oreign Direct In(estment from 7hina0 India and South Africa in su!&Saharan Africa6 A Ne- or

O*d PhenomenonV

ohn %en*e"0 Stefan 1ratsch0 Mithat 1W*Wr0 and Tamer Tandogan0 E> c*assification6 D)#0 /)40

M#B0 O::0 UNU&IDER 'ro9ect on Southern Engines of $*o!a* $ro-th0 ISSN ##3&)B##ISN =2&=)&=)43&323&0 March )33.

e**s0 >. T. G#=4H. Third or*d Mu*tinationa*6 the Rise of /oreign In(estment fromDe(e*o'ing 7ountries. 7am!ridge0 MA6 MIT Press.

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!'stract:5

The !urgeoning *iterature on out-ard foreign direct in(estment from emerging mar+ets has

*arge*" focused on ana*"sing the moti(es of in(estors as re'orted !" 'arent com'anies.

This 'a'er0 instead0 focuses on firm&*e(e* in(estments originating from 7hina0 India or

South Africa in fifteen host countries in su!&Saharan Africa GSSAH. The ana*"sis is !ased

on a su!&set of firms dra-n from the o(era** sam'*e of #0)#B foreign&o-ned firms

'artici'ating in the UNIDO Africa /oreign In(estor Sur(e"0 carried out in )33:. The

sam'*e of in(estments originating from 7hina0 India and South Africa is ana*"sed in

terms of firm characteristics0 'ast and forecast 'erformance in SSA o(er three "ears and

management,s 'erce'tion of ongoing !usiness conditions. 7om'arisons are made -ith

foreign in(estors from the North. The 'a'er conc*udes that -hi*e in(estors in SSA from

the three countries are 'rimari*" using their in(estment to target s'ecific mar+ets0 the" are

*arge*" o'erating in different su!&sectors. hi*e there a''ear to !e s'ecific features that

firms from a gi(en countr" of origin share0 there are no o!(ious o'erating&*e(e* features

the" a** share a'art from mar+et see+ing. Acti(e in(estment manager 'ortfo*ios and

'references for stoc+ characteristics. Schoo* of an+ing and /inance0 The Uni(ersit" of

Ne- South a*es0 1ensington0 N.S.. )3:)

Securities Industr" Research 7entre of Asia&Pacific GSIR7AH Simone rands0 Da(id R.

$a**agher0 Adrian >ooi

A!stract

This 'a'er in(estigates the stoc+ characteristic 'references of acti(e Austra*ian eFuit"

managers. e e5amine the fo**o-ing characteristics6 stoc+ 'rice (ariance0 momentum0 sie0

transaction costs0 earnings "ie*d0 ana*"st co(erage and the standard de(iation of ana*"st forecasts.

In aggregate -e find that acti(e managers e5hi!it 'references for stoc+s e5hi!iting high 'rice

(ariance0 *arge mar+et ca'ita*iation0 *o- transaction costs0 (a*ue&oriented stoc+s0 greater *e(e*s

of ana*"st co(erage0 and stoc+s -ith *ess (aria!i*it" in ana*"st earnings forecasts. The stud" a*so

recognies the im'ortance of trac+ing error in 'ortfo*io management !" e5amining stoc+

'references -ith res'ect to !oth sma** and *arge stoc+s. e find e(idence of momentum trading

in *arge stoc+s0 and higher (o*ati*it" and -ider ana*"st co(erage amongst sma** stoc+s. Acti(e

managers are a*so e(a*uated on the !asis of sie and in(estment st"*e. Sma** in(estment

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managers e5hi!it a 'reference for stoc+s -ith higher (o*ati*it" and ana*"st co(erage Ginc*uding

consensus of forecastsH. /ina**" -e find e(idence of an industr" effect0 -here $I7S

c*assifications ha(e an im'ortant im'act on the stoc+ho*dings of Austra*ian institutiona*

in(estment managers.

8B


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3!"! !N!$9SIS

%o- do "ou come to +no- a!out the 7om'an" Re*igareV

"a'le: 4

Source of information No of 7ustomers

usiness Magaines 4B

/riends )

E*ectronic Media )3

Other sources #B

Chart54

Inference: It is o!ser(ed that 4B of Re*igare customers are coming to +no- a!out Re*igarethrough !usiness magaines. ) in(estors are getting Re*igare information through friends-hich is the ne5t !iggest source of information for the in(estors.

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"a'le5/

%a(e "ou e(er in(ested in stoc+ mar+etsV

Res'onse No of in(estors?es 2

No ))

Chart5/

Inference: 2 of the Re*igare customers are a*read" in(ested in stoc+ mar+ets either direct*"through shares or indirect*" through mutua* funds. ut the remaining )) are in(ested ininsurance 'o*icies.

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"a'le5

In(estors moti(ating factors to in(est in stoc+ mar+ets

Moti(ating factors No of in(estors moti(ated%igh returns :)

Ta5 !enefits 42

An" other factors ##

Chart

Inference: It -as found that :) of the customers are moti(ated !" the high returns that the"can gain !" in(esting in shares. 42 of the customers are in(esting in stoc+ mar+ets !ecausethe" -ant ta5 e5em'tions in the form of *ong term ca'ita* gains.

8=


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"a'le5>

Ta!*e sho-ing the in(estors o!9ecti(es of in(esting in stoc+ mar+ets

O!9ecti(e No of in(estors

Regu*ar income ))7a'ita* a''reciation 8:

Ta5 sa(ings )8

An" other o!9ecti(e =

Chart5 >

Inference: It -as found that )) of the in(estors are in(esting in stoc+ mar+ets !ecause the"-ant regu*ar income in the form of di(idends. 8:of the in(estors are 'referring ca'ita*a''reciation rather than short term regu*ar income. And remaining in(estors ha(e (ariousconsiderations *i+e ta5 !enefits.

"a'le5

48199552 a Study on Impact of Stock Market Volatility on Individual Investor’s Investment Decisions With Reference to Religare SRIKANTH K MT2 FINAL REPORT

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